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DBS: Metal/Steel/EV battery Updates (17 Jan): Iron ore price retreated from its recent peak

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Iron ore/Coking coal/Steel

  1. Asian iron ore prices declined w-o-w due to continued maintenance from Chinese steel mills. Asian iron ore prices dropped by 6.9% w-o-w to US$130/tonne on 16 Jan due to continued maintenance from Chinese blast furnace (BF) steel mills amid poor steel margins. Link to the article: https://pmc.spglobal.com/Article.aspx?id=9346884e-84d8-4150-8376-356b33611249&nl=SBB%20Steel%20Markets%20Daily&nl2=Archive%20Newshttps://pmc.spglobal.com/Article.aspx?id=62b3583f-b055-495d-a96c-e35221ae3a8d&nl=SBB%20Steel%20Markets%20Daily&nl2=Archive%20Newshttps://pmc.spglobal.com/Article.aspx?id=d9203c0a-8289-4bf9-8f00-2a3da04c1154&nl=SBB%20Steel%20Markets%20Daily&nl2=Archive%20News
  2. Asia met coal FOB Australia remained stagnant while CFR China declined w-o-w. Seaborne Asia met coal FOB Australia prices remained steady w-o-w at US$337/tonne on 16 Jan while CFR China prices decreased by 2.1% w-o-w to US$320/tonne on 16 Jan amid sluggish coking coal demand in the domestic market. Link to the article: https://pmc.spglobal.com/Article.aspx?id=d9203c0a-8289-4bf9-8f00-2a3da04c1154&nl=SBB%20Steel%20Markets%20Daily&nl2=Archive%20News

Base Metals

  1. China copper smelter margins squeezed by tight supply of raw material. Competition for mined copper supplies is expected to intensify due to tighter concentrate supply, further eroding margins for Chinese smelters. Chinese producers are under pressure to maintain or raise production targets and are considering curbing refined copper production in 2Q23. Link to the article:  https://www.mining.com/alcoa-to-cut-kwinana-refinery-production-in-phased-out-shutdown/ 
  2. Cochilco raises 2024 copper price projection to US$3.85/Ib./Peru copper production rose 10.9% y-o-y in Nov. Cochilco raised copper price forecast for 2024 to US$3.85/Ib (US$8,485/tonne) from previous US$3.75/Ib (US$8,265/tonne). Peru copper production increased by 10.9% y-o-y in Nov to 254k tonnes with strong performance at Anglo American’s Quellaveco mine and Glencore’s Antappaccay and Antamina mine. The country saw 14% y-o-y growth in its copper output to 2,500k tonnes in 11M23. Link to the article: https://www.mining.com/web/cochilco-raises-2024-copper-price-projection-to-3-85-lb/ https://www.mining.com/web/peru-copper-production-in-november-up-10-9-from-year-ago/
  3. Indonesia produced 535k tonnes of ferronickel in 2023, missing the government’s target/ Indonesia approves Freeport’s mining quota for 2024-2026. Indonesia’s ferronickel production increased by 3.6% y-o-y to 535k tonnes in 2023, however, came below the government’s target of 629k tonnes. Meanwhile, its nickel matte production declined by 6% y-o-y to 71k tonnes in 2023, also below the target of 75k tonnes. Indonesia has approved a mining quota for copper miner Freeport Indonesia totaling 219.8m tonnes of copper ore for the next three years Link to the article: https://www.nasdaq.com/articles/indonesia-produces-535200-metric-t-of-nickel-in-ferronickel-in-2023-misses-targethttps://www.mining.com/web/indonesia-approves-freeports-mining-quota-for-2024-2026/
  4. First Quantum to cut Australian nickel mine output. First Quantum Minerals will cut production at its Ravensthorpe nickel mine in Australia due to a significant nickel price decline. Link to the article: https://www.reuters.com/markets/commodities/first-quantum-suspend-mining-operations-australian-nickel-mine-2024-01-15/ 
  5. Vale’s US$10bn spend on Canada targets existing potential. Vale is spending US$10bn in Canada over the next decade to keep operations for its low-carbon production. The company may also announce Bécancour nickel sulphide processing project to supply 25k tonnes of nickel p.a. to General Motors. https://www.mining.com/future-minerals-forum-vales-us10b-for-canada-targets-existing-potential/
  6. Global zinc market deficit grows m-o-m in Nov/Nystar to suspend Budel zinc operations in second half of Jan. The global zinc market deficit increased to 71.6k tonnes in Nov from 62.5k tonnes in Oct, according to ILZSG. Accordingly, the market registered a surplus of 211k tonnes in 11M23 vs. a deficit of 86k tonnes in 11M22. Nystar will suspend its Budel zinc smelting operations in Netherlands in the second half of Jan due to high energy costs and market conditions after the temporary closure of its two US zinc mines in Nov. Link to the article: https://www.nasdaq.com/articles/global-zinc-market-deficit-grows-in-november-ilzsg https://www.reuters.com/markets/commodities/nyrstar-suspend-budel-zinc-operations-second-half-january-2024-01-15/ 

EV Battery 

  1. China cobalt buyers use global glut to challenge pricing. A rapid expansion of cobalt mining in DRC and Indonesia has output racing ahead of demand, dragging down the global prices. It also prompted a push by squeezed Chinese refiners to make changes in how cobalt is bought and sold. CMOC Group and Eurasian Resource Group have agreed to sell more of their material against the local Chinese cobalt sulphate price, shifting from pricing against refined cobalt metal. Link to the article: https://www.mining.com/web/china-cobalt-buyers-use-global-glut-to-challenge-pricing/
  2. China lithium carbonate production to fall further m-o-m in Jan/China Lithium carbonate inventory up on w-o-w amid pre-holiday stockpiling. China’s lithium carbonate production is likely to drop by 4% m-o-m in Jan due to falling downstream orders and maintenance approaching CNY holiday. The total lithium carbonate inventory held by the smelters, downstream players, and traders increased by 2.6% w-o-w. Link to the article: https://www.mysteel.net/news/all/5046686-china-lithium-carbonate-production-to-fall-further-in-jan https://www.mysteel.net/news/all/5046686-china-lithium-carbonate-production-to-fall-further-in-jan   
  3. SK On may start mass producing LFP batteries for automakers in 2026. SK On plans to start mass producing Lithium Iron Phosphate (LFP) batteries as early as 2026 once the discussion with several automakers is finalized. Link to the article: https://www.reuters.com/business/autos-transportation/sk-may-start-mass-producing-lfp-batteries-automakers-2026-executive-2024-01-11/
  4. BYD in talks with Sigma Lithium on a supply deal. BYD held talks with Sigma Lithium over possible supply agreement, JV or acquisition, according to the media. Link to the article: https://www.mining.com/web/byd-in-talks-with-brazils-sigma-lithium-on-supply-deal/ 

ESG

  1. Voestalpine commissions Primetals to supply EAF for Linz site for the CO2 reduction. Primetals Technologies Austria GmbH will supply Voestalpine electric arc furnace (EAF) at the latter’s Linz site with 1.6m tonnes of steel p.a. by 2027. This is to realise the CO2 reduction target under the steelmaker’s Greentec project. Link to the article: https://pmc.spglobal.com/Article.aspx?id=afb56e75-33cc-49c7-9698-d3aa2427e215&nl=SBB%20Steel%20Markets%20Daily&nl2=Archive%20News

Metal & Steel Prices (16 Jan): 

* China HR spread = China HR sheet after VAT – cost of iron ore & coking coal

Source) Bloomberg Finance L.P., Platts, DBS Bank

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