Metal/Steel/EV battery Updates (7 Feb): Base metal & iron ore prices fell strongly.
Iron ore/Coking coal/Steel
- Asian iron ore prices significantly fell w-o-w on sluggish restocking activity from steel mills ahead of the CNY holidays. Asian iron ore prices declined by 1.3% d-o-d and 6.9% w-o-w to US$125.5/tonne on 6 Feb due to tepid restocking activity among most steel mills ahead of the CNY holidays. Link to the article: https://www.mysteel.net/news/all/5048362-weekly-china-iron-ore-prices-to-dip-as-cny-restocking-endshttps://pmc.spglobal.com/Article.aspx?id=dc4b18d0-49cd-409a-a091-9e96c4cbe8e5&nl=SBB%20Steel%20Markets%20Daily&nl2=Archive%20News
- Asia met coal FOB Australia and CFR China prices decreased w-o-w due to weak demand. Seaborne Asia met coal FOB Australia and CFR China prices edged down by 2.8% and 0.9% w-o-w to US$315/tonne and US$321/tonne on 6 Feb due to weak end-user demand, respectively. Link to the article: https://pmc.spglobal.com/Article.aspx?id=03c4f94b-8114-4ab4-b51c-fdece5f69575&nl=SBB%20Steel%20Markets%20Daily&nl2=Archive%20News
- Slower steel and aluminium flows to Europe on Red Sea troubles add to the sector’s woes. The flow of steel and aluminium into Europe has slowed by 775k tonnes/month due to Red Sea attack, according to Platts. While there are still no obvious repercussions, the crisis in the Red Sea could add negativity to European steel markets. The total steel export to EU from South Korea, Japan, Taiwan, India, and Vietnam were 5m tonnes of HRC and 1.3m tonnes of CRC in 11M23. Link to the article: https://pmc.spglobal.com/Article.aspx?id=2fddffa5-14f0-44c9-bf45-67ce73e97ebc&nl=SBB%20Steel%20Markets%20Daily&nl2=Archive%20News
- Baowu Steel raises US$1.4bn via bond, mostly for Simandou iron ore project. Baowu Steel raised RMB10bn (US$1.4bn) from a bond issue, where at least 70% of the capital raised will be used for Simandou project in Guinea. The project is set to be the world’s largest and highest-grade new iron ore mine and will be put into operation in 2026. Link to the article: https://www.mining.com/web/china-baowu-raises-1-4-billion-via-bond-mostly-for-simandou-iron-ore-project/
Base Metals
- Codelco’s 2023 production declined but expects recovery in 2024/Chile’s copper production unchanged y-o-y in Dec. Codelco’s production fell by 14.6% y-o-y to 1,325k tonnes in 2023. However, the company expects recovery by 2.1% y-o-y to 1,353k tonnes in 2024. Chile’s copper production remained unchanged y-o-y at 496k tonnes in Dec. Link to the article: https://www.mining.com/web/codelcos-2023-production-declines-but-recovery-seen-this-year/https://www.nasdaq.com/articles/chile-copper-output-production-unchanged-in-december-manufacturing-output-slips
- Nickel price extends slump on Indonesian glut/Trafigura-Backed Nickel Mine seeks new partner for bailout. LME nickel price fell by 3.3% w-o-w to US$15,620/tonne on 6 Feb amid Indonesian gluts. Prony Resources Nouvelle-Caledonie, Trafigura-backed nickel mine, will need other new investor as Trafigura refused the French government’s request to contribute fresh capital as a part of a French government’s rescue package for the struggling New Caledonian mining industry. The government has been meeting with the key shareholders of three processing plant, Trafigura, Glencore, and Eramet. Link to the article: https://www.bloomberg.com/news/articles/2024-01-31/trafigura-backed-nickel-mine-seeks-new-partner-to-secure-bailout
- No new import bans in the next EU Russia sanctions package. The EU Commission will not add any new import bans in its next package of sanctions on Russia, according to EU diplomats, despite calls from some EU countries to ban more Russian exports like aluminum. Link to the article: https://www.reuters.com/world/europe/no-new-import-bans-next-eu-russia-sanctions-package-sources-2024-02-04/
EV Battery
- LME approves China’s CNGR nickel cathodes as a deliverable brand. LME has approved CNGR’s listing of nickel cathodes produced at its plant in China as a deliverable brand. The Guangxi CNGR New Science & Technology plant has a production capacity of 25k tonnes p.a. Source: Bloomberg
- Ronbay Technology and LG Energy Solution ally on developing lithium battery materials. Ronbay New Energy Technology and LG Energy Solution will jointly research and develop three new lithium battery cathode materials, including lithium ferro manganese phosphate (LFMP), precursor-free cathodes, and medium-nickel high-voltage materials. Link to the article: https://www.yicaiglobal.com/news/ronbay-lg-energy-to-co-develop-lithium-battery-materials-for-japan-south-korea-europe-us
- Ternary materials prices were stable, cathode manufacturing costs increased slightly. Ternary precursor prices were stable w-o-w. On the demand side, domestic cathode production exceeded expectations. Precursor market saw better demand from cathode manufacturers with production resumption and early stockpiling activities. Ternary cathode prices were also stable w-o-w while cathode manufacturing costs increased slightly with a rebound in lithium prices. Link to the article: https://news.metal.com/newscontent/102615976/%5bSMM-Cobalt-Lithium-Morning-Meeting-Minutes%5d-Ternary-material-prices-were-stable-cathode-manufacturing-costs-increased-slightly
ESG
- China sets tougher regulations for carbon trading market. China announced new regulations for its carbon emissions trading system including introducing stricter penalties for entities that falsify information. China launched its carbon emissions trading scheme (ETS) in 2021 which currently focuses primarily on the power sector and is exploring to expand to other high-emitting sectors, including cement and aluminum. Link to the article: https://www.esgtoday.com/china-sets-tougher-regulations-for-carbon-trading-market/
- China’s export of aluminium covered by EU CBAM was down 30% in 2023. Chinese aluminium export volume under Carbon Border Adjustment Mechanism (CBAM) fell 30% y-o-y to 689k tonnes in 2023, accounting a 9% of China’s total export. While the EU launched the first phase of CBAM in Oct 2023, it will not begin collecting any CO2 emission charges until 2026. However, EU importers need to report the GHG emission embedded during the production of imported products. Link to the article: https://www.nasdaq.com/articles/chinas-export-of-aluminium-covered-by-eu-carbon-tax-down-30-in-2023
Metal & Steel Prices (6 Feb):
* China HR spread = China HR sheet after VAT – cost of iron ore & coking coal
Source) Bloomberg Finance L.P., Platts, DBS Bank