Renewables Index Falls To Another New Low After Chinese Demand Wanes

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Renewable energy sector metals and materials inputs fell again this month as Chinese demand has fallen with the second-largest economy in the world’s stock market.

Renewables_Chart_September-2015_FNLThe monthly Renewables MMI® registered a value of 54 in September, a decrease of 5.3% from 57 in August, another all-time low.

Prices Keep Falling

Steel plate, cathodes and silicon could not increase much in value this month and even grain-oriented electrical steel (GOES), the standout performer of our renewables metals, looks to have fallen. (More on that later this week.)

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Without strong demand from Europe and China for end-use products such as silicon photovoltaic solar panels and wind turbines, it’s difficult to foresee a price turnaround for these metals in the near future. One would think that prices falling so low would eventually increase demand and spur on bargain purchasing, but demand has not picked up, particularly in China where all markets are falling.

European Market Maturity

The problem in Europe is that much of the renewable energy generation market is already mature and won’t expand much anytime soon.

Around 80% of the electricity demand in Germany on a sunny Sunday last month was covered by photovoltaic and wind power. According to the evaluation by the German forum “Together against interim storage, and for responsible energy politics,” the photovoltaic plants at noon produced more than 24 gigawatts of solar power. Much of Europe is now a replacement market and not a building market. This is not the case with the emerging markets that panel and turbine manufacturers depend on.

Despite massive solar energy generation projects in India and China, the emerging markets are still moving slowly toward the technology. India’s “Solar Parks” are not slated for completion until 2022 and delays beyond that look possible.

Chinese Power Generation

Fixed government payments to Chinese solar power generation companies are determined partially by electricity consumption within the country. So with Chinese demand waning on the consumer side, solar power investments by utilities are decelerating with the rest of China’s economy. These firms’ revenues will likely fall as well. This could push China’s ruling communist party to move funding from solar companies back to the dirty coal-fired plants that Beijing has only recently admitted need to be shut down.

Despite the lack of demand, renewables prices have not broken out of the range we’ve seen for most of this year and are only marginally lower than they were before that, so most buyers should be able to wait to make their purchases without any great threat of missing out on a bargain.

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This Month’s Exact Prices and Trends

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A 6.0% drop over the past month left neodymium at $49,352 per metric ton. At $388.92 per metric ton, Korean steel plate was down 4.2% for the month. US grain-oriented electrical steel (GOES) fell 3.7% over the past month to $2,620 per metric ton. Chinese cobalt cathodes prices decreased by 2.8% this month, ending at $33,058 per metric ton.

After dropping the previous month, the price of Chinese steel plate prices rose 2.6% to $369.75 per metric ton. US steel plate shifted up 2.1% last month to settle at $573.00 per short ton.

Silicon held pat last month at $2,021 per metric ton. Last month was consistent for Japanese steel plate, which did not move from $660.55 per metric ton.

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.

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