Metal & Steel Updates (21 Apr): Retreat in industrial metals at concerns on demand
- Asia’s iron ore prices rise slightly as buyers return while iron ore shipments drop on covid delays, flagging China risks. Seaborne iron ore prices increased on returning buying interest, with the 62% Fe Iron Index rising US¢0.85/dmt to US$150.70/dry mt CFR North China. In 1Q22, iron shipments were lower than expected due to the risks from sustained high inflation, a resurgence of covid – 19 lockdowns in China, and a prolonged Russia – Ukraine war. In particular, Rio Tinto’s Production for 1Q22 stood at 71.7 Mt, falling by 6.2% from 1Q21 and 15% from 4Q21. Links to article: https://pmc.spglobal.com/Article.aspx?id=5668fc4b-b1ca-499b-b2cc-5360f0943dcf&nl=SBB%20Steel%20Markets%20Daily&nl2=Archive%20News https://www.mining.com/web/rio-tinto-iron-ore-shipments-drop-on-labour-crunch-project-delays/
- China to keep steel output below 2021 below upends carbon policy amid falling steel demand. While China will keep its crude steel production in 2022 below last year’s level to boost decarbonization, its production is expected to fall given the sharp slowdown in demand from the government’s crackdown on the metal-intensive property sector and amid the latest COVID-19 outbreak. The steel output in 1Q22 languished more than 10% below 1Q21, and it is likely in April to further fall due to a new round of lockdowns in the production hub of Tangshan. Meanwhile, China’s apparent crude steel consumption declined by 3.8% y-o-y to 72.29 million mt in March amid a slowing property sector. Link to the article: https://pmc.spglobal.com/Article.aspx?id=0fbdd9a4-b579-4d25-b88b-84ded6a739b3&nl=SBB%20Steel%20Markets%20Daily&nl2=Archive%20News https://pmc.spglobal.com/Article.aspx?id=edb23884-63bd-4475-b680-7b47b10a7ef3&nl=SBB%20Steel%20Markets%20Daily&nl2=Archive%20News https://www.bloomberg.com/news/articles/2022-04-20/china-s-sudden-pledge-to-cut-steel-output-upends-carbon-policy
- Fifth of Peru copper mining goes offline with more shutdowns likely as Las Bambas mine suspends operations from the protest. Sky-high metal prices and accelerating general inflation are fueling another uptick in resource nationalism and social unrest in Peru. About a fifth of the country’s copper output will be off-line as the Las Bambas copper mine in Peru will suspend operations from April 20 due to community protests. At the same time, unions in the mineral-rich Cusco region are staging strikes against rising prices, while residents near a Glencore Plc copper mine are preparing to resume protests. Link to the article: https://www.mining.com/web/las-bambas-mine-suspends-operations-following-protest/ https://www.mining.com/web/copper-mines-are-shutting-in-peru-with-social-conflicts-mounting/
- China buys cheap Russian coking coal as world shuns Moscow. China more than doubled imports of coking coal from Russia in March y o y, taking advantage of the steep discount rate as other nations move to ban deliveries due to the war in Ukraine. Coking coal imports from Russia jumped to 1.4 million tonnes in March, compared to 550,000 tonnes for the same month last year and 1.1 million tonnes in February. Imports of thermal coal fell as mild weather curbed demand and China boosted domestic output. Link to article: https://www.mining.com/web/china-buys-cheap-russian-coking-coal-as-world-shuns-moscow/
- Putin wants Russia to boost its use of metals to counter sanctions. Putin called for structural changes in Russia’s metallurgical industry to counter Western sanctions by expanding the capacity of metal industries and the range of products Russia produces. Russia should increase its domestic consumption of metals by building factories, infrastructure, and housing. To support demand for domestic metal, they will launch long–term projects and programs. Link to article: https://www.mining.com/web/putin-wants-russia-to-boost-its-use-of-metals-to-counter-sanctions/
- China’s spreading lockdowns keeping metal supply chains snarled. China’s virus lock-down is spreading to other parts of the country, such as Suzhou and Zhengzhou, keeping metal supply snarled and demand subdued even as the situation in Shanghai seems to be improving. Copper prices closed down 0.3% on the Shanghai Futures Exchange. Aluminum slipped 0.1%, while zinc rose 0.3% to the highest since 2007, and nickel climbed 1.2%. Link to the article: https://www.mining.com/web/chinas-spreading-lockdowns-keeping-metals-supply-chains-snarled/
Metal & Steel Prices (20 April)
| Unit | Last Price | d-o-d | w-o-w | m-o-m | y-o-y | ytd | ||
| Aluminium | US$/ton | 3,240 | (2.2) | 1.0 | (4.2) | 39.4 | 15.5 | |
| Copper | US$/ton | 10,215 | (1.6) | (0.7) | (0.3) | 8.7 | 5.4 | |
| Zinc | US$/ton | 4,510 | (0.4) | (0.1) | 17.1 | 59.6 | 24.2 | |
| Lead | US$/ton | 2,425 | 0.0 | (1.0) | 7.3 | 19.7 | 4.1 | |
| Nickel | US$/ton | 33,800 | 0.3 | 2.4 | (8.9) | 109.4 | 61.5 | |
| Tin | US$/ton | 43,400 | (0.5) | (0.1) | 2.2 | 52.8 | 9.5 | |
| Cobalt | US$/ton | 81,775 | (0.0) | (0.0) | (0.1) | 64.2 | 16.5 | |
| Lithium carbonate | US$/ton | 74,854 | (0.8) | (1.2) | (4.3) | 446.6 | 71.5 | |
| Gold | US$/oz | 1,958 | 0.4 | (1.0) | 1.9 | 10.1 | 7.0 | |
| Silver | US$/oz | 25.2 | 0.1 | (2.1) | 1.0 | (2.5) | 8.1 | |
| China rebar | RMB/ton | 5,143 | 0.4 | 1.3 | 4.4 | 1.3 | 8.9 | |
| China HR sheet | RMB/ton | 5,273 | 0.1 | 0.5 | 2.4 | (4.8) | 11.0 | |
| LME rebar | US$/ton | 944.5 | (0.6) | 0.7 | 2.7 | 48.2 | 35.1 | |
| Iron ore | US$/ton | 150.7 | 0.8 | (0.5) | (0.4) | (19.7) | 26.6 | |
| Coking coal (FOB Australia) | US$/ton | 514.0 | 0.4 | 1.6 | (23.3) | 365.2 | 43.9 | |
| Coking coal (CFR China) | US$/ton | 531.0 | 0.2 | 4.1 | 17.2 | 138.9 | 57.3 | |
| China HR spread* | US$/ton | 131.9 | (4.1) | (4.5) | 383.0 | (61.3) | (38.7) | |
| * China HR spread = China HR sheet after VAT – cost of iron ore & coking coal |
Source) Bloomberg Finance L..P, Platts, DBS Bank