The Renewables MMI (Monthly Metals Index) continued its downward trend this month, falling an additional 7.10% between July and August. However, this trend is not likely to continue if the US senate passes the so-called “surprise climate bill.” Were this to happen, it would put fresh focus on renewable resources, likely causing the MMI adopt a much more bullish path.
Source: MetalMiner Insights
Renewable Resources Could Soar in Demand
The surprise climate bill, currently on the table at the US Senate, hopes to cut 40% of all of the US’ carbon emissions by 2030. If passed, the “Inflation Reduction Act” would place a heavy emphasis on renewable energy resources such as solar and wind power. Of course, this would have significant pros and cons for both the environment and the industrial metals industry.
For instance, most windmills in the US are composed of steel, copper, aluminum, and different forms of iron (outside of steel alloys). Along with this, solar panels are well known for their extensive use of silicon semiconductors. Therefore, it’s not hard to see how a reallocation of resources toward wind and solar energy could dramatically boost US demand for these metals, parts, and components.
That said, such a move could also make the US further reliant on other countries. After all, while many US wind turbines are produced by American companies like GE, most US solar panels are currently imported from Asia. If the bill does end up boosting demand for solar panels, it would most likely ramp up US dependence on imports.
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Renewable Resources and Wind Power in Texas
Texas, the second largest US state, harbors over 11,000 wind turbines. This can power millions of homes and take much strain off of Texas’ power grid during the hot summer months when people are reliant on AC, leading to higher energy costs. But it’s not as straight-forward as that.
Oftentimes, these wind turbine networks become too congested to run efficiently. This keeps them from effectively supplying the power they generate to higher population areas. And while the proposed Inflation Reduction Act could prove a huge boon to wind turbine production, Texas may not benefit as much as one would think.
The Heat Is On
Just last month, Texas experienced a major heat wave. As with previous waves, this put enormous strain on the state’s power grid. However, it also highlighted one of the many problems facing the states’s wind turbines: low wind speed. In fact, during the heat wave, it was estimated that Texas wind farms were operating at just 8% capacity. In short: without sufficient winds, wind power will not be able to offset the strain on Texas’ power grid.
Offshore wind power could prove a possible solution. After all, wind is much more abundant over open waters like the Gulf of Mexico because of fewer obstacles in the way of wind streams. However, many debate the logistics of such an endeavor, especially how to secure turbines to the sea bed in such deep waters. Still, proponents maintain this could be the best solution for Texas’ wind power problems.
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The GOES/Grain-Oriented Electrical Steel MMI (Monthly Metals Index) continued its bullish trend this month. However, its rise was not as significant as in previous months – just 2.26% in total.
Summer Electricity Woes and Surging GOES Demand
In the past month, a staggering 100 million Americans found themselves amid dangerously hot conditions. And with so many people feeling the “heat,” both figuratively and literally, US power grids have been pushed to the limit. After all, high temperatures, sometimes into the triple-digits, mean more and more homes are using AC.
This proves incredibly stressful on power grids nationwide, increasing the likelihood of black outs. In times like these, having renewable energy sources like solar and wind power certainly helps. However, these energy sources still aren’t always enough to stand up to heat so intense (or persistent).
This could be the reason why GOES prices have remained so bullish over the past 2-3 months. As more transformers are constructed to help “take the heat off,” more GOES coils are required. GOES themselves already make up around 50% of electric steel sales, but the hot weather can cause major surges in demand.
Renewables/GOES Price Changes:
- GOES/grain-oriented electrical steel went from $4,142 per coil to $4,236 per coil
- Chinese silicon didn’t see any price change between July and August, remaining a stable $1,519.42 per metric ton
- Cobalt dropped 12% in price, currently sitting at $48,930.21 per metric ton
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