Metal/Steel/EV battery Updates (10 Jan): Coking coal FOB Australia prices increased strongly while aluminium prices plunged.
Iron ore/Coking coal/Steel
- Asian iron ore prices declined w-o-w due to lower steel production in China. Asian iron ore prices decreased by 0.2% d-o-d and 2.9% w-o-w to US$139/tonne on 9 Jan due to a decline in Chinese steel production. Link to the article: https://pmc.spglobal.com/Article.aspx?id=b4bbddbe-b945-44c0-8c7f-21ce35bc274c&nl=SBB%20Steel%20Markets%20Daily&nl2=Archive%20Newshttps://pmc.spglobal.com/Article.aspx?id=90fc9b35-21c7-4fec-8217-b0b8b9da3474&nl=SBB%20Steel%20Markets%20Daily&nl2=Archive%20News
- Asia met coal FOB Australia increased while CFR China declined w-o-w. Seaborne Asia met coal FOB Australia prices inclined by 3.5% w-o-w to US$336/tonne on 9 Jan due to supply tightness from shipping delays in Australia and increased coking coal demand from Indian end-users. Meanwhile, CFR China prices decreased by 1.2% w-o-w to US$327/tonne on 9 Jan amid sluggish coking coal demand in the domestic market. Link to the article: https://pmc.spglobal.com/Article.aspx?id=4f78d1df-4344-41c7-a934-6381f7aa0c4c&nl=SBB%20Steel%20Markets%20Daily&nl2=Archive%20Newshttps://pmc.spglobal.com/Article.aspx?id=daa70d9f-572b-4881-8f53-02693c5f97e3&nl=SBB%20Steel%20Markets%20Daily&nl2=Archive%20News https://pmc.spglobal.com/Article.aspx?id=0c33bfd6-374a-4392-8352-a624e99dfabf&nl=SBB%20Steel%20Markets%20Daily&nl2=Archive%20News
- Chinese steel production continues to decline with weak demand. Chinese output of five major steel products from steel mills covering 60-70% of the market, declined by 99k tonnes w-o-w to 8.8m tonnes last week. Chinese steel demand is also falling due to seasonality, especially from rebar and wire rods. Link to the article: https://m.mysteel.net/news/all/5046600-a-glance-of-the-china-steel-market-week-2-january-2024
Base Metals
- Aluminium price fell strongly with an increase in LME inventories/Alcoa to cut Kwin refinery production in phased-out shutdown. LME Aluminium price slumped by 5.8% ytd to US$2,200/tonne on 9 Jan with 3.0% ytd increase in LME inventories. Alcoa plans to stop production at its loss-making Kwinana refinery in Western Australia from 3Q24 considering the plant’s 60-year age, scale, operating cost, and current market conditions. Link to the article: https://www.mining.com/alcoa-to-cut-kwinana-refinery-production-in-phased-out-shutdown/
- First Quantum in talks with Jiangxi Copper on sales of stake in Zambian mine. First Quantum is in talks to sell a stake in its Zambian copper mine to Jiangxi Copper, aiming to bolster its finances, according to market sources. The company currently wholly owns the Sentinel mine and 80% of the Kansanshi mine in Zambia, with the rest owned by the Zambian government. Link to the article: https://www.reuters.com/markets/commodities/first-quantum-talks-with-jiangxi-copper-sale-stake-zambian-mines-source-2024-01-04/
- Asian buyers profit from record discounts for near-term LME copper. Oversupply weighing on the near-term prices of copper on LME has created record discounts against longer-dated contracts and an opportunity for Asian buyers to purchase the metal cheaply. The discount for the cash copper contract against the LME benchmark 3-month contract hit US$108/tonne on 8 Jan, the highest since 1992 due to the expectation of ample copper supply on LME. These discounts are being used by Asian buyers to negotiate lower prices with copper sellers. Link to the article: https://www.reuters.com/markets/commodities/lme-copper-cash-three-month-discount-hits-highest-since-1992-2024-01-08/ https://www.kitco.com/news/article/2024-01-09/asian-buyers-profit-record-discounts-near-term-lme-copper
EV Battery
- EV battery material prices are likely to be under pressure in the near term. Lithium carbonate prices are projected to fall slightly in the near term after falling 1.4% w-o-w to US$13,321/tonne on 9 Jan on the news that smelters in Qinghai province will release new batch of products. The ternary and LFP cathode prices are also likely to decline due to weak demand from majors such as CATL and Farasis Energy. Link to the article: https://m.mysteel.net/news/all/5046596-a-glance-of-china-lithium-ion-battery-materials-market-20240109
ESG
- Nippon Steel to acquire US Steel, maintains decarbonization commitments. Nippon Steel will acquire US Steel at US$14.9bn to meet growing global demand for high-grade steel with a commitment to decarbonize by 2050. Nippon Steel is developing three such technologies, including hydrogen injection into blast furnaces, use of electric arc furnaces, and use of hydrogen for the direct iron reduction process. U.S. Steel also strives to reduce energy use in current operations and has begun integrating electric arc furnaces as well. Link to the article: https://www.environmentenergyleader.com/2023/12/nippon-steel-to-acquire-u-s-steel-maintains-decarbonization-commitments/
Metal & Steel Prices (9 Jan):
* China HR spread = China HR sheet after VAT – cost of iron ore & coking coal
Source) Bloomberg Finance L.P., Platts, DBS Bank