TELF AG 2024 Market Insight: A Six-Month in Review
Macro & Energy
China’s Economic Growth: China’s economic growth moderated to 4.7% year-on-year in Q2 2024, marking the slowest pace in five quarters. This moderation is due primarily to a decline in domestic demand, with retail sales stagnating and deflationary pressures present. The export sector, however, continues to see robust gains. Policymakers are focused on addressing the property sector and stimulating domestic demand, expecting these efforts to support economic stability. The industrial sector showed the most robust growth, followed by construction, while the service sector, including real estate, saw slower growth.
PMI Data: The latest PMI data for May 2024 indicates contraction across major regions, with the EU at 47.30, the USA at 48.70, and China at 49.50. However, there are signs of potential recovery or stabilization compared to previous months, suggesting that these economies are adjusting and could see improvement in the near future.
ECB Rate Cuts: The European Central Bank is carefully adjusting interest rates due to political and economic factors. Following a quarter-point reduction in June, further cuts are expected later in the year, with the goal of managing inflation and supporting economic recovery. This gradual approach reflects the ECB’s cautious stance amid various uncertainties.
Metals & Mining
Chrome Ore and Ferrochrome: Chrome ore prices have experienced fluctuations, with UG2 42% Cr prices edging lower due to reduced stainless-steel production in China. Despite low liquidity, logistics challenges from South Africa persist. Chrome ore port stocks in China reached a three-month high, driven by price concessions from FeCr producers. Tharisa’s chrome output increased in fiscal Q3, supported by sustainable mining practices and structural improvements, indicating a positive outlook for the company’s production targets.
Manganese and Ferrosilicon: China’s port Mn ore prices have shown mixed trends, with high-grade seaborne Mn ore prices rising due to supply constraints, while FeMn market activity remains subdued following lower tender prices from major mills. The Indian market saw a slight decrease in prices for manganese alloys due to lower liquidity.
Stainless Steel: The European stainless steel market has seen price increases despite moderate real demand, driven by supply bottlenecks and higher input costs. China has approved new EAF-based steel capacity, focusing on environmentally friendly production methods, signaling a shift towards greener practices. India’s SMEL reported significant increases in stainless steel production in June.
Base Metals
Copper: Copper demand has softened due to recent price increases, with Chinese semis production slowing down. However, there is optimism for long-term growth driven by the global energy transition. CMOC Group aims to significantly increase copper output from its mines in the Democratic Republic of Congo by 2028.
Nickel and Cobalt: Chinese cobalt metal prices have decreased slightly amid a quiet market. BHP announced a temporary suspension of its Nickel West operations in Western Australia, citing global market conditions. LG Energy Solution has secured additional lithium supplies, extending its agreement with Liontown Resources to support future production needs.
Key Trends and Outlook
- Energy Market Adjustments: The European natural gas market has shown variability due to weather conditions and supply dynamics, a trend expected to continue as storage levels fluctuate and geopolitical factors play a role.
- Geopolitical Influences: Oil and chrome ore markets have been influenced by geopolitical events. These factors are likely to maintain a degree of risk in pricing.
- Battery Technology Advancements: Innovations in battery technology, such as sodium-ion and LMFP batteries, are progressing, with implications for energy storage and electric vehicle markets.
- Varied Performance in Metals and Mining: Different sectors within metals and mining are experiencing varied performance, with some areas like copper showing strength while others face supply and demand challenges.
- Economic Trends: The EU and Eurozone are seeing modest growth adjustments, while Japan faces economic contraction. These trends are expected to influence market conditions across multiple sectors.
- Freight and Shipping Dynamics: Adjustments in shipping patterns and costs due to geopolitical and market factors continue to impact global trade dynamics.
The first half of 2024 has seen notable trends and adjustments across various markets. The influences of geopolitical events, technological advancements, and economic conditions are expected to continue shaping market dynamics in the coming months.
