TELF AG 2023 Market Roundup 2023 Week 17

Macro

– According to market analysts, the failure of Silicon Valley Bank (SVB) and the acquisition of Credit Suisse are unlikely to cause severe financial disturbance on the scale of the global financial crisis. However, these events further amplify the probability of recession in the US and Europe, and they have certainly got the market talking about whether a new market turmoil is imminent. This could potentially result in downward pressure on commodities in general, specifically metals prices, on the back of worsening demand and tightening monetary policy by the Fed.
– Brent crude futures rose above $75 per barrel on Friday but was still set for their worst week this year, having faced heavy selling pressure earlier in the period from a global banking turmoil that stoked fears of broader weakness in the world economy and spurred a broad selloff in risk assets. The international oil benchmark is currently down more than 9% for the week and is hovering near its lowest level since December 2021. Meanwhile, traders are watching closely for any potential response to the rout from OPEC+, with representatives from Saudi Arabia and Russia reportedly meeting on Thursday and discussing efforts to “promote market balance and stability.” Saudi Arabia energy minister Prince Abdulaziz bin Salman recently stated that OPEC+ would stick to production cuts agreed upon in October until the year’s end. Investors also remained optimistic about a rebound in Chinese demand, with OPEC raising its forecast for the country’s oil demand growth in 2023.

Ferro-alloys

– Supplies of metallurgical grade chrome are expected to keep tight as South-African miners have yet to announce any expansion plans for the previous year. On the demand side, we see mixed sentiment: low level of chrome ore inventories at China’s main ports, possible capacity expansion of ferrochrome in northern China, and the strong prospect of the stainless steel industry in the country provide robust support for chrome ore market. On the other hand, some large Chinese buyers are quite bearish about the persistently subdued performance in the country’s chemical and metallurgical industries
– HC FeCr prices in Europe have generally been strong in recent months, with almost continuous increases since November 2022. Sellers have reported an uptick in demand along with greater visibility from end users over future requirements
– South Africa’s railway operator, Transnet, has restored partial service on the North East Corridor railway damaged by heavy rains last week. The line mainly carries Cr ore, FeCr, magnetite, coal, and phosphate exports from Eswatini, Zimbabwe, Mozambique, Zambia, and the DRC. Transnet suspended services on February 10 after heavy rains in the Mpumalanga and Limpopo areas washed away ballast that supports the track’s sleepers, making it unsafe to run trains. They were also stopped in unaffected regions as a precautionary measure
– Chinese output of HC FeCr increased 6% m/m in February and by over 10% vs. Feb 2022. The m/m increase was driven by production returning to Southern Chinese producers, increasing by almost 37% m/m. Electricity shortages had squeezed production in this region in December and January, but with this being alleviated in February, output was able to bounce back. March is also expected to show growth as smelters are encouraged by a better-than-expected increase in tender prices published by the most prominent Chinese steel mills.

Stainless steel and bulk alloys

– Turkish steel mills are resuming production. Following recovery from one of the most devastating earthquakes in the country’s history, rebar producer Ekinciler Demir Celik began production with an annual production capacity of around 1.25 million tons of crude steel. Another large producer, Isdemir, Turkey’s largest blast furnace plant, whose yearly production accounts for one-third of the domestic market, will also recover production to alleviate current supply issues
– European mills are showing signs of recovery and unveiled plans of restarting production on higher steel price: SSAB resumed its Finnish operations in January, Arcelor is restarting its Fos-sur-Mer and Gijon plants, US producers US Steel (Kosice plant) and Liberty (Galati) are also preparing to restart their blast furnaces. Market sources have expressed concerns that increased output might have a negative impact on the European market (specifically in the South of Europe), potentially affecting the price recovery
– Chinese stainless output for February is estimated to have been within the 2.7-2.8 mt range, up over 18% from January 2023. March output is also expected to be close to 3.00 Mt. However, this increase in production does not appear to be matched by demand. Inventories remain high (over 1.17 Mt in February), a level not seen since the start of the Covid pandemic. Much of this is due to the dampening of real demand over the first two months of 2023, while stainless production rebounded with force.

Copper & Nickel Ore

– China’s Exports of Copper Cathode Estimated at 20,000MT in February. China’s copper cathode exports stand at 20,000MT in February 2023. But in terms of total domestic exports, the total exports in February may be around 40,000MT. After the CNY holiday, the logistics resumed, and the import losses once narrowed to approximately 1,000 yuan/mt, which continued to drive up the exports of smelters. Some goods flowed to domestic bonded warehouses, and some flowed into LME warehouses in Singapore and Busan, Korea
– Nickel Ore Inventories at Chinese Ports Dip 295,000 wmt WoW. As of March 17, the nickel ore inventories at Chinese ports dropped 295,000 wmt from a week earlier to 6.59 million wmt. Total Ni content stood at 52,000MT. The port inventory across seven major Chinese ports stood at 3.22 million wmt, 295,000 wmt lower than last week.
– Prices for nickel ore crashed this week as the NPI plants had to lower their quotes on the dropping NPI prices. The upstream and downstream companies still bargained over the prices despite some mines’ price cut. NPI plants only purchased on rigid demand. The port inventory may maintain a downward track soon

Battery materials

– Prices for cobalt in Europe edged higher this week after three weeks of slow trade. Market supply is shrinking as producers try to set higher prices for end users. Demand was sparse, but a flurry of activity was seen in the spot market this week. Multiple sources commented that it seemed as if cobalt prices had hit bottom during the past weeks, and traders have now lifted their offer prices. Additionally, sellers appear unwilling to cut prices any more than they already have.
– Indonesian nickel miner Trimegah Bangun Persada (TBP) intends to increase processing capacity, partially funded by an initial public offering (IPO) planned in April. The fund-raising target is $650 M (€609 M). The company and partner, Lygend Resources of China, operate the Halmahera Persada Lygend nickel-cobalt mine and a high-pressure acid leach (HPAL) plant on Obi island, eastern Indonesia. Output capacity is 55,000 t of mixed hydroxide precipitate (MHP). TBP also has subsidiaries that operate ferronickel smelters with a combined capacity of 305,000 t/y.The company’s planned investment will add three lines for MHP and 12 more to produce ferronickel, CEO Roy Arman Arfandy said. “[TBP] is strategically positioned to benefit from the growing need for batteries in the electric vehicle industry in response to energy transition initiatives. This will increase demand for nickel ore and MHP,” he said to Reuters news agency.