TELF AG 2023 Market Roundup 2023 Week 27
Macro
• Oil. Brent crude futures steadied above $74 per barrel on Friday and were set to book monthly gains as signs of tightening global supply outweighed demand concerns. Official data showed that US crude inventories declined by 9.6 million barrels last week, surpassing market expectations of a 1.8 mln barrel draw. That comes as Saudi Arabia’s plans to reduce output by an additional 1 million barrels per day kick in tomorrow, complementing the broader OPEC+ agreement to limit supply until 2024. Meanwhile, a significant upward revision in US first-quarter GDP growth supported the case for further monetary tightening from the Federal Reserve. Other major central banks, including the European Central Bank and the Bank of England, also indicated a willingness to keep raising interest rates, clouding the outlook for global growth and overall demand. Elsewhere, the latest data showed that manufacturing activity in top crude importer China remained contractionary in June.
• Gas. Natural gas futures in Europe were little changed at €32 per megawatt hour, after rising more than 10% earlier, as investors monitor supplies following a rebellion in Russia over the weekend. Gas imports from Russia to the European Union, including pipeline gas and LNG imports, have been significantly reduced but still represented about 25% last year. Natural gas prices in Europe soared about 20% in June amid volatility related to supply and hotter weather as the summer season arrived. Several outages at Norwegian gas fields have been extended, and repair works are set to continue into July. Norway has replaced Russia as one of the biggest sources of natural gas imports in the European Union, accounting for around 25%. Also, the Netherlands is set to close Europe’s largest gas site near Groningen due to the risks of earthquakes from October 1st. However, Europe’s gas storage is almost 76% full, a record level for this time of the year.
Ferro-alloys
• Chrome ore. UG2/MG chrome ore prices edged down in the week to Tuesday, June 27, with reports from some market participants that deals had taken place at lower levels over the course of the week amid expectations of a decrease in the next monthly FeCr tender price. The ongoing depreciation of the Chinese yuan against the US dollar also continued to be a cause for concern, as the cost to import materials has risen in domestic currency terms while the price in dollars has remained comparatively high. Turkish lumpy chrome ore prices also drifted lower during the session in a generally quiet spot market during the Eid al-Adha holiday in Turkey.
• Port inventories of Cr ore continued to remain at their 4-year lows at 2.030 mmt, representing 6.9 weeks of consumption. On a w-o-w basis, they decreased by 210kt or 9.4%.
• According to the latest customs data from China, the country imported 1.68 million MT of chrome ore in May, up 14.2% month on month or up 18.0% year on year. It imported 220,000 MT of FeCr in the month, down 46.6% from April but up 38.8% over the same month in 2022.
FeCr.
• The European charge and high-carbon ferrochrome benchmark for Q3 2023 have been settled at $1.51 per lb, a decrease of 12.2% from $1.72 per lb for Q2. The decrease in the latest settlement reflects a weakening spot market in Europe. High carbon ferrochrome prices in Europe have been falling steadily since May 16 amid poor downstream demand, partly because of the traditional summer lull started recently and ongoing cost considerations among steel mills. Sources on the sellers’ side reported that they began reducing their offers as a way to help maintain liquidity; buyers said they were no longer able to afford the consistently high prices quoted between March and May. There have also been ongoing reports that more material of Indian origin meeting higher grade specifications has become available in Europe. This has also been sold more cheaply, dampening spot prices.
• Leading Chinese stainless steel mill Tsingshan cut its tender price for July-delivery high carbon ferrochrome by 200 yuan per tonne to 8,795 yuan ($1,217) per tonne on Tuesday, June 27, amid lower raw material and power costs. Market participants were quite satisfied with this reduction, given that they previously expected a drop of 300-350 yuan per tonne drop, sources said. “The new tender price is quite acceptable,” a Chinese ferrochrome trading body said, “at this price level, ferrochrome smelters can realize a tiny profit margin or break even, and stainless steel mills can secure alloy supply.”
• FeCr prices in the Chinese domestic market remained stable, with producers awaiting the release of the July stainless steel output plan. Imported charge chrome prices edged down slightly, meanwhile, as some sources suggested offers may be reduced in line with prices for domestically produced material.
• The US HC FeCr markets held flat during the week ended Thursday, June 22, with spot inactivity preventing any major price changes. Mills continue to engage less with the spot market as the summer months progress. Suppliers remain concerned with the threat of lower-priced imported material, which may result in further price softening in the near term. Prices for all grades of US LC FeCr continued their decline this week. Multiple sources confirmed seeing very aggressive offers in the market as sellers look to offload the material. Sources commented that the lowest prices in the market appear to be for Indian materials.
• SiMn. China’s SiMn prices decline ahead of July tender. Chinese spot SiMn prices edged lower this week amid an overall weak market outlook ahead of the mills’ July tenders. The market is stagnant. Smelters are not very willing to lower prices further before the tenders, but mills and traders are unwilling to buy because many believe that in the next round of tenders, prices will continue to move down.
• FeSi. China’s FeSi prices move down on slow demand. China’s FeSi market has continued to slow as a result of persistently weak demand and low raw material prices. Prices are still moving down, although major smelters started cutting production in the past one to two months. In June, China produced a total of 413,000t of FeSi, down 18,300t from May, and the average operating rate was around 53%. Exporters also reported a very bearish export market as prices moved down significantly on lower bids, as well as a strong US dollar vs. RMB
• Turkiye’s competitiveness in the steel sector was strongly affected in H1 2023. The uncertain position of Turkiye’s steel segment amid the energy crisis, the effects of Russia’s war in Ukraine on the supply chain, and economic instability, exacerbated by the February earthquake, caused the country to lose its competitiveness in the international steel arena. Over the last ten years, Turkiye’s monthly steel production figures have touched the bottom level three times. The first time was when the Chinese steel export surged in 2016, then in 2020 because of the pandemic impact, and this year in February due to the devastating earthquakes in the southeast of the country. The crude steel output was around 13 mln MT in January-May in Turkiye, down 19.1% YoY (WorldSteel)
• ArcelorMittal Spain to restart fire-hit BF A next week. AM plans to restart its BF A in Gijon, Spain, at the end of next week after three months of downtime. The 2.4 mln MT/annum BF was stopped on March 22 after a fire hit the site when hot metal came into contact with water in the hearth of the furnace.
• ArcelorMittal Fos-sur-Mer shutdown. AM was ordered by the French government to close steelworks at its Fos-sur-Mer operations due to the high levels of exposure of employees to toxic products and dust and insufficient measures the company takes to reduce such emissions.
Base Metals & battery materials
• LME base metals were boosted by a weaker US dollar but largely down from early 2023. Base metals futures prices on the London Metal Exchange were mixed at the close on Friday, June 30, with aluminum and nickel trading lower while the rest of the complex showed strength into month, quarter, and half-year end. Copper was $8,315.50 per tonne, up 1.7%, Aluminium: $2,151.50 per tonne, down 0.4%; Nickel: $20,516 per tonne, down 0.6%. The US consumer expenditures price (PCE) index eased in May, with inflation rising 3.8% year on year, compared to 4.3% in April. This is the smallest increase in consumer expenditure inflation since April 2021, with energy prices falling notably. The PCE is a key inflation measure for the US Federal Reserve when deciding upon interest rate hikes. “The numbers have knocked the dollar back, rolled back the earlier back-up we saw in the US 10-year rates, and have placed US equity markets on a much firmer footing,” Marex analyst Ed Meir said on Friday.
• Copper. Copper cathode Inventory in China Bonded Zone Fell This Week. As of Friday, June 30, copper inventories in the domestic bonded zones decreased by 5,100 MT from June 21 to 66,800 MT. Import losses continued to narrow this week and turned into profit on Friday amid high premiums in the domestic spot market. Most of those cargoes will be delivered directly to buyers under long-term contracts, limiting arriving shipments in the bonded zones.
• Nickel. Diverging priorities are emerging among consumers of nickel sulfate and other battery raw materials in Europe and North America. Producers of nickel sulfate are grappling with the different demands of their customers while battery supply chains in Western markets ramp up. Nickel sulfate is the material form of nickel that is included in nickel-rich cathodes, which remain favored by participants in the North American and European markets. Through multiple discussions across the supply chain, according to Fastmarkets that one of the key driving priorities of European consumers is securing low-carbon, or environmentally conscious, material. Meanwhile, in North America, the focus is more on securing material that fulfills legislative requirements such as the Inflation Reduction Act (IRA).“It is becoming increasingly clear that the US market is much more driven by geopolitics, while Europe is focused on sustainability,” a producer source said. This, in turn, is impacting premium levels within each respective region, resulting in differentiated price levels. “Broadly speaking, premiums that we are quoted for [nickel sulfate] going to Western markets is much higher than elsewhere in the world,” a consumer told FM. At present, domestic production of sulfate is still relatively small in Europe and North America, in comparison to Asia, with most consumers relying on imports of material from Asia to fulfill requirements. But participants have noted that the focus on these two factors limits the pool of suppliers available to consumers in each region.
Battery materials.
• Livista Energy Europe is to build its first low-carbon lithium refinery at Emden in Lower Saxony, Germany, in a bid to supply the growing European electric vehicle (EV) industry, the company said on Thursday, June 29. Production is forecast to begin in 2026, with up to 40,000 tonnes per year of lithium and the potential to double production capacity over time. The plant will provide enough battery-grade lithium to produce 850,000 EVs each year, comprising 30,000 tpy of li-hydroxide and 10,000 tpy of lithium carbonate equivalent (LCE), according to company chief executive officer Daniel Bloor. The site selection follows a competitive bidding process resulting in a letter of intent with Niedersachsen Ports to allocate a 32-hectare plot of land. Emden is the third-largest German North Sea port. The development of Livista’s lithium chemicals refinery in Europe comes with the region’s move to comply with the requirements of the Critical Raw Material Act, which mandates that all batteries produced in Europe contain a minimum percentage of lithium battery grade product produced locally by 2030.
• Greater demand for black mass in Southeast Asia and China meant that South Korean buyers were gearing up for a more intense competition to acquire battery-making materials over the coming months, according to market participants. Demand for black mass generated from shredded nickel cobalt manganese (NCM) lithium-ion batteries has been on the rise in South Korea recently, with refiners in the country raising their intake due to increased metal prices. But China was still the world’s highest-paying buyer of black mass and scrap batteries due to the country’s superior lithium extraction ability and strong demand for battery raw materials. Although importing black mass into China is officially illegal, and further crackdowns have been reported recently, market sources said that a raft of China-affiliated recyclers in countries such as Indonesia, the Philippines, and Laos was known to process black mass into recycled mixed hydroxide precipitate (MHP), which is often exported to China. There was also heard to be greater competition for used batteries among Chinese buyers.
