TELF AG Market Roundup 2023 Week 48
Macro & Energy
Gas: Stable European natural gas futures at €44/MWh despite cold forecasts, thanks to abundant supplies. The upcoming cold snap is projected to increase energy demand, with Berlin and London experiencing below-average temperatures. German and French gas reserves are nearly full, and Italy’s exceed 97%. High wind output in Germany is anticipated to boost continental power supplies, reaching near-record levels soon.
Oil: Brent crude steadied above $81/barrel, recovering from recent volatility, but faced pressure due to OPEC+ disagreements on output quotas. Prices dropped nearly 5% on Wednesday, rebounding as OPEC+ postponed its meeting amid disputes over quotas for African members. Analysts anticipated potential supply cut extensions before the delay. Ro-bust non-OPEC supplies, highlighted by an 8.7 million barrel increase in US crude inventories (far exceeding the expected 1.16 million), also contributed to the pressure.
Chrome ore
Chrome ore price moves through October were largely rangebound, with no month-on-month (m/m) moves greater than 2%. More indicative of the current market sentiment is that the majority of chrome ore prices weakened in the last week, which is in line with our expectations, as Chinese smelters reduce demand as they prepare to cut back production in Q4.
Chrome ore stocks at Chinese ports on the 24th of November were 2.270 mln mt, a decrease of 42kt. Stocks in weeks of consumption – 6 weeks, showing a w-o-w 1.8% decrease
FeCr
EU FeCr markets remain depressed, and the LP market is still holding. High interest rates are leading to a postponement in demand as financing is too expensive, coupled with the non-traditional FeCr with higher impurities and lower chrome content that some end-users are willing to accept. This is applicable to both FeCr suppliers and steel producers. Additionally, the fact that newcomers have entered the market and are selling at different prices has led to a widening of the spreads of high and low, which some consumers are using as a bargaining tool. In terms of electricity prices, they have come down substantially and have normalized. However, they remain above historical norms. In terms of Low Phosphorus grades, where demand has remained strong, cost support continues, especially due to elevated coke prices, along with robust demand from the spot market. The demand from the aerospace sector is still strong enough to lend support to the LP FeCr price levels.
TISCO cuts FeCr tender price for December. TISCO led the December round of HC FeCr tenders, with its price decreasing from November levels. The latest tender price was at RMB 8,295 /t, DDP, down RMB200/t from November, according to local Chinese sources. The price cut was mostly within market expectations as the recent spot FeCr market has been weak due to stainless-steel prices continuously falling.
TSS pushes December HC FeCr purchase price down. TSS pushed the tender price down on the back of increasing supply. Meanwhile, stainless steel producers had to reduce steel output and, consequently, HC FeCr consumption over the past few months due to absent margins. At the same time, Chinese HC FeCr suppliers say that the current spot prices are about to bottom out. A further decline may cause a reduction in HC FeCr output at local plants.
Prices for EU HC 54-60% edged higher this week as buyers were willing to pay more for material. CRU assessed EU HC 54-60% Cr at $128-141c/lb, DDP, up from $125-136c /lb previously. Sources reported that the automotive sector is prepared to pay more for materials with a lower carbon footprint. Given the limited availability of this material, sellers are charging small premiums for their products. Prices are expected to soften in the near future as Western and Asian prices continue to diverge.
Prices for EU LC decreased by 0.10% this week as competition to secure spot business intensified. Following a recent industry event, opinions were mixed about the market trend for next year. On the one hand, a few sources reported that they managed to conclude some long-term contracts, while others claim that they will keep their books closed till the second half of 2024. Competition in the spot market has been fierce, especially in Italy, where traders conducted business aggressively to generate sales. Material availability remains plentiful, with new supply coming from Asia.CRU assessed LC FeCr 0.10% C at 245-285c /lb, DDP, down from 250-292c /lb, DDP, previously.
Mn
Chinese manganese markets remained quiet this week. This was unusual as the week following the conclusion of the Hesteel tender is usually busy, as other steel mills and smelters normally conclude business once the outcome of the largest tender is clear. One reason for mills staying out of the market was the fall in the silicomanganese futures price, which dropped to a low of RMB6,480 /t on Friday, the lowest level since mid-July. Participants decided to watch and wait to see whether this fall was reflected in the physical market. Traders also felt that steel mills would not restock at this point, given they anticipated some cuts in production but would need to do so in January. The ore market was quiet, too, as smelters delayed purchases to see what happened to ferroalloy prices. There were no changes in assessed prices; however, there were reports of lower offer prices for seaborne semi-carbonate ore for December shipment.
October Chinese manganese ore imports were 2.71 Mt, down 11% m/m. A 20% m/m rise in imports from South Africa was offset by falls in arrivals from Gabon, Australia, and Ghana. Early indications from Kepler are that Chinese imports in November are running at a similar level, whereas exports from South Africa are lower. Despite the slow trading, alloy prices in the spot market did fall, with silicomanganese prices dropping 0.4% w/w to RMB6,625 /t, DAP for SiMn, 65% Mn. There were also falls in the HC and MC Ferromanganese prices.
FeSi.
LL Resources signs a 20,000-tonne FeSi offtake deal with Baku Steel. European mining and trading company LL Resources has secured a one-year offtake agreement with Azerbaijan’s Baku Steel Co to market 20,000 tonnes of ferrosilicon globally. The deal, recently finalized, grants LL Resources global marketing rights, with a focus on the European market. Baku Steel, located near Baku on the Caspian Sea, produces ferrosilicon and plans to expand into silico-manganese, ferro-chrome, and ferro-manganese production.
Bratsk Ferroalloy Plant (Mechel) cuts FeSi sales by 20% in Q3. In July-September, Bratsk Ferroalloy Plant reduced sales by 20% quarter-on-quarter to 17,000 MT. Of that amount, 12,000 MT (-11%) was sold to third parties. Metal Expert hears that the decline was attributed to the completion of supplies as part of the big export contract. In the first nine months of this year, FeSi sales amounted to 55,000 t (-2% year-on-year), while FeSi sales to third parties dropped by 3% to 39,000 t. Mechel produces FeSi (65% Si) and FeSi (75% Si) at the Bratsk Ferroalloy Plant, which is equipped with four furnaces (two 25 MVA furnaces and two 33 MVA units). The plant produces 100,000 types of FeSi.
Thyssen Krupp Europe boosts loss for FY 2022-23. Thyssenkrupp reported a net loss of EUR 2 billion for FY 2022-23, primarily attributed to worse operating performance and impairment losses of EUR 2,111 million on steel assets. The losses were influenced by higher capital costs and the challenging economic situation in the steel industry. Lower spot prices and increased costs for raw materials and energy impacted the operating results of the steel business.TK Europe’s adjusted EBIT was EUR 320 million, down from EUR 1,200 million in FY 2021-22. Despite a 6% decline in sales to EUR 12.4 billion, long-term steel contracts, especially with automotive customers, mitigated a sharper drop in sales.
According to estimates by the American Iron and Steel Institute, crude steel production in the US was 1.696 Mt in the week ending 18 November 2023, up 0.8% compared to the week prior and up 6.4% y/y. Based on this production level, the AISI estimates capacity utilization to be 73.8%, compared with 71.5% for the same period last year.
Base Metals
China releases customs statistics for copper cathode:
– In October 2023, China imported 333,783 MT of copper cathodes, up 1.73% MoM and 34.09% YoY. Imports in the first ten months totaled 2.82 million MT, down 4.89% YoY.
– In October 2023, China exported 16,240 MT of copper cathodes, down 11.06% MoM and up 73.96% YoY. Exports in the first ten months totaled 251,671 MT, up 18.35% YoY.
India’s Vedanta is gearing up to construct a 100,000 t/y continuous copper rod plant in Saudi Arabia through its Malco Energy subsidiary. Proposed to be built in Dammam, the plant will cater to increasing requirements for high-quality wire rods and aim to meet evolving market demands, India’s online newspaper BusinessLine reported. Vedanta will also explore more opportunities in Saudi Arabia’s copper value chain, said Puneet Khurana, deputy CEO of the company’s copper business. The Saudi Arabian regime’s policy is to promote manufacturing and industrial development as part of a diversification from reliance on oil and gas. The metal and mining sectors will play a key role in the country’s economic transformation, Khurana noted.
Battery materials
Swedish battery development company Northvolt says it has produced a sodium-ion battery at its research and development labs. The company claims the new cell, suitable for energy storage systems, is more sustainable than conventional nickel, manganese, and cobalt (NMC) or iron phosphate (LFP) batteries and is produced with abundant minerals such as iron and sodium. It is made with a hard carbon anode and a Prussian White-based cathode and is free from lithium, nickel, cobalt, and graphite. Northvolt says it plans to produce the new type of battery on an industrial scale and then bring it to commercial markets. Longer term, the company intends to develop sodium-ion batteries suitable for higher energy density uses as required by electric vehicles (EVs)
During the assessment period of 17-23 November, cobalt metal prices were recorded within the range of RMB 218,000-270,000 /t, down from RMB 225,000-270,000 /t in the previous assessment. Cobalt sulfate prices were assessed between RMB 34,000-35,000 /t, retreating from RMB 35,000-36,000 /t. While traders and refiners report that overall market activity was unchanged since the previous assessment period, offers have decreased. A metal trader commented that by the end of the assessment period, cobalt metal prices had retreated to RMB218,000 /t, with the price decrease primarily attributed to negative sentiment in the battery section. Sulfate refiners concurred, reporting that cobalt sulfate offers have retreated to between RMB34,000-35,000 /t. Some very small volume deals were concluded below RMB34,000 /t for cobalt sulfate, but the majority of downstream players were not making spot market purchases. “There’s no demand in the spot market, and it’s likely to remain as it is until at least the end of the year,” a refiner commented.
Japan’s Sumitomo Metal Mining is considering producing cathode battery materials in the US, among other locations, in the next stage of a planned output increase to meet growing demand from electric vehicle (EV) manufacturers. The company is building a plant in Niihama, western Japan, to take cathode capacity up to 84,000 t/y in 2025, a 40% rise on the current potential. The corporate goal is to raise the figure to 120,000 t/y by March 2028 and 180,000 t/y by March 2031. “Where and when to increase our production capacity next time depends on each country’s regulations and laws,” managing executive officer Katsuya Tanaka was quoted as telling analysts by Reuters news agency. “We are examining the impact that any changes to laws and regulations, including the US Inflation Reduction Act (IRA), will have on business if we were to invest in the United States, especially with the presidential election coming up next year.” The IRA’s purpose is to cut carbon emissions while boosting domestic production and manufacturing. Sumitomo Metal Mining supplies the nickel-cobalt-aluminum (NCA) cathode materials for Panasonic’s lithium-ion batteries used in Tesla EVs.
North America cathode supply lags swelling demand. While this will be Sumitomo’s first battery-focused project in the US, the mining major joins a number of other foreign companies investing in North American cathode refining. In mid-October, Umicore announced plans to construct a cathode and precursor plant in Ontario, with almost half of the project’s CAPEX being covered by local governments. Meanwhile, in August, Ford, EcoPro, and SK On revealed that they will build a 45,000 t/y cathode plant in Quebec, Canada, anticipated to begin construction in 2026 H1. A number of other cathode plants are being built in North America to feed the growing cell production capacity in the region, given almost no cathode material is currently produced in North America. Projects such as Sumitomo’s potential plant are facilitating significant pipeline capacity growth, although the North American market still faces a cathode shortfall of 750-1,000 kt by 2030. The remaining supply will have to be imported from Asia, most notably South Korea.
