Policy Drives Siemens, Vestas Wind Power Deals: Where Metal Prices Fit

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The price drop of neodymium, used in permanent magnet generators (PMGs) of wind turbines, single-handedly accounted for the slight decrease in MetalMiner’s metals price index tracking the renewable energy industry, which has featured big contracts for Siemens and Vestas in 2013.

All other metals, including steel plate across four regions and the grain-oriented electrical steel (GOES), either rose in price or kept steady.

Compare with last month’s trends – here’s our free December MMI® Report.

Wind power companies were scurrying to retain the wind production tax credit from US Congress before Jan. 1, only to have them expire. Some parties feel as though the market for wind power is skewed in the US:  According to a report by the Institute for Energy Research, “taxpayers in 30 states and the District of Columbia paid more to the federal government in 2012 to support wind subsidies than wind producers in those states received…of those 30 net losing states, 11 states and the District of Columbia had no wind production and received zero subsidies but still paid their share of the tax burden related to federal wind subsidies.”

But other indicators, such as huge wind turbine deals recently signed by Siemens, Vestas and other producers, point to rather healthy demand for turbines (and, by extension, the neodymium, steel plate and other raw materials comprising them).

“Under a recent agreement, among the largest in land-based wind power, MidAmerican will buy 448 turbines from Siemens,” according to the NYT. “The turbines, which Siemens will maintain for the first 15 years of operations, are to be installed in five projects in Iowa.”

With a yearly boom-and-bust cycle driven to such a high degree by (generally wacky) US energy policy, the wind market and its impact on the prices of raw materials used by the sector are difficult to reconcile. However, the PV market may get a boost due to Ford’s hopes to make solar-powered hybrids; indeed, the plug-in electric vehicle market (the other major user of neodymium) is strong – in America, nearly 40% more cars were sold between July and December.

Key Price Drivers of Renewables Index

Our neodymium price was down 10.0 percent for the month.

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The price of US steel plate climbed 4.5 percent. Chinese steel plate finished the month up 3.2 percent. Japanese steel plate saw its price rise 2.7 percent. US grain-oriented electrical steel (GOES) rose 0.6 percent after falling the previous month.

Chinese cobalt cathodes traded sideways last month. Silicon remained unchanged. Korean steel plate did not budge the entire month.

Don’t forget to read December 2013 MMI analysis before January’s full report comes out next week!

The Renewables MMI® collects and weights 8 metal price points used extensively within the renewable energy industry to provide a unique view into renewable energy metal price trends over a 30-day period. For more information on the Renewables MMI®, how it’s calculated or how your company can use the index, please drop us a note at: info (at) agmetalminer (dot) com.