TELF AG Market Roundup 2024 Week 10
Energy & Freight:
• European natural gas futures declined for the second consecutive session due to ample inventories and subdued demand despite supply concerns. This decline, pulling the price down to €26.5/MWh, reflects the ongoing impact of warmer temperatures and lingering uncertainties surrounding the duration of the Freeport LNG outage, which continues to disrupt LNG flows.
• Container rates are anticipated to reach their peak, leading to changes in import-export dynamics. Importers and exporters of scrap materials note shifting preferences, with Chinese buyers favoring North American nonferrous scrap over European shipments and Indian buyers seeking materials in alternative regions to bypass the Red Sea. Despite recent upward momentum in freight rates following the Chinese New Year, signs of fading demand have emerged, with Container Xchange predicting a further decrease in rates, particularly in Asia.
FeCr:
• Chrome ore prices rose, driven by increased liquidity and robust demand in China, while concerns about tensions in the Red Sea affected Turkish lumpy chrome ore prices. Fastmarkets reported rising UG2/MG chrome ore prices fueled by strong demand and high FeCr capacity utilization in China, although domestic spot market prices remain capped due to elevated production costs and potential oversupply. In Europe, high-grade ferrochrome prices increased amid reports of growing liquidity, particularly in the automotive and defense sectors, while the US market remained static, with consumers covering their needs through contracted tonnages.
• CRU highlighted the resilience of Chinese smelter output despite the seasonal effects of the Chinese New Year, with production rebounding in March driven by expectations of heightened stainless steel (STS) production. However, the divide between Northern and Southern provinces in China is widening, with Northern provinces accounting for an increasing share of smelter production. Forecasts anticipate challenges for Chinese smelter margins in light of increased chrome ore costs, potentially impacting production dynamics across regions.
Bulk Ferroalloys & Steel:
• Prices in Europe increased despite soft demand, driven by supply-related factors, while the US market faced pressure due to weakened demand from key sectors. CRU highlighted the varied price trends across regions in February, with rising prices in Europe, declining prices in the US, and mixed performance in Asia. European prices recovered lost ground from January, supported by supply tightness, low stock levels, and rising scrap prices. However, Asian prices were influenced by holiday disruptions, while US prices faced pressure from softening demand and competitively priced imports.
• Chinese steel exports continued to rise, impacting global long steel markets, with concerns over infrastructure project cancellations potentially increasing exports. Despite the positive expectations following the Lunar New Year holidays, global long steel markets continue to face pressure from Chinese mills offering aggressive prices. Meanwhile, seaborne iron ore prices saw a slight increase due to rising demand for finished steel products, with the EU market remaining quiet, particularly in Northern Europe.
Various:
• The French Government pledged support for New Caledonia’s nickel industry as part of upcoming reforms, while German industrial production rebounded in January, showing the first increase in nine months. The French Government’s commitment includes relief support to alleviate existing debt within the Eramet Group and sustain operations at Prony Resources. In Germany, the rebound in industrial production, led by construction and improvements in manufacturing, offers a glimmer of hope amid a prolonged downturn in the industrial sector.
• Copper prices faced downward pressure due to the absence of substantial stimulus from China, with investors monitoring US economic data for further insights. Hellenic Shipping News highlighted the impact of macroeconomic factors on copper prices, including the dollar’s response to US economic data and expectations regarding Federal Reserve interest rate adjustments. Despite dwindling stocks in LME-registered warehouses, copper prices continue to face challenges from shipping delays and increased total inventory in certain regions.
Base Metals:
• Canada-based Dundee Precious Metals (DPM) has conditionally agreed to sell its Tsumeb copper smelter in Namibia to the Sinomine Resource Group of China for US$49 M (€45.2 M). Dundee acquired the smelter in 2010 to secure a processing outlet for the complex concentrate produced at the company’s Chelopech underground copper-gold mine in Bulgaria. “With developments in the global smelting market and changes in the quality of the Chelopech concentrate, DPM is able to place its Chelopech concentrate at several other third-party facilities, providing secure and reliable processing alternatives at favorable terms,” the Toronto-headquartered company said. Sinomine says it will use the smelter to develop its own copper mining business, Chinese business publication Yicai Global reported. The smelter in Tsumeb is one of the few in the world able to process copper concentrate with high levels of arsenic, according to Sinomine. The plant’s current capacity is 260,000 t/y of such concentrate, but following upgrades, that figure is expected to reach 370,000 t/y.
• At 902,000 t, China shipped in 2.6% more unwrought copper during January and February than in the corresponding months last year, according to customs service statistics. The comparison is with a period when the country was adapting to the lifting of Covid-19 restrictions. However, market observers say consumption is likely to be subdued in the months ahead due to a slowdown in the property market, a key copper consumer. Imports of copper concentrate were a record 4.66 Mt in the two months, and up 0.6% year-on-year. Chinese customs combines data for January and February to overcome distortions caused by the Lunar New Year holidays falling in either month: this year it was in February.
Battery Materials:
• Commodity trader Glencore has agreed to loan US$75 M (€68.6 M) more to battery recycler Li-Cycle of Canada. The investment will improve the company’s liquidity position while it comprehensively reviews how best to progress its development plans, said CEO Ajay Kochhar. Executive chairman Tim Johnston added: “Li-Cycle is continuing to review our global recycling network. We are also reviewing our go-forward strategy for the paused Rochester hub, including analyzing potential end-product mix options and construction strategy.” Rochester is in New York state. Back in 2022, Glencore and Toronto-headquartered Li-Cycle formed a partnership with the goal of supplying primary and recycled critical battery materials worldwide. Switzerland-based Glencore invested US$200 M into the project, based on it providing battery feedstock, including black mass, for Li-Cycle to process into reusable materials. Commenting on the fresh funding, Glencore’s recycling head, Kunal Sinha, said: “Glencore is committed to bringing scalable and sustainable circularity into the supply chain of battery materials.”
• Cobalt miner Jervois Global is reducing staffing levels and implementing other cost savings, the Melbourne-headquartered company said in an Australian Securities Exchange (ASX) filing. The actions are in response “to adverse cobalt market conditions caused by Chinese overproduction and its impact on pricing,” the company said. At the senior corporate management level, 30% of positions have been made redundant or part-time, and the company’s non-executive directors reduced their fees by 30% from 1 February. Annual salary increases have been frozen, where legally permissible, while “organization optimization” has resulted in a 5% workforce reduction at the company’s operations in Finland, saving €1.0 M in wage costs during H1. “The Jervois Finland team continues to advance innovation and cost-saving measures in response to challenging market conditions,” the company said. “Jervois is committed to maintaining a safe work environment during these organization changes and is determined to deliver a responsibly sourced, Western supply chain of critical minerals in the face of ongoing adverse cobalt market conditions,” it added.
