Author Archives: Fouad Egbaria

The Renewables Monthly Metals Index (MMI) picked up by 6.0% for this month’s reading, as cobalt prices picked up and the U.S. government last month announced a number of efforts aimed at strengthening domestic supply chains for critical minerals.

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US supply chains and rare earths

As we noted in the Rare Earths MMI, the U.S. government is moving to strengthen its supply chains for critical minerals.

A majority of the world’s cobalt is mined in the Democratic Republic of the Congo, where substandard labor conditions (including the use of child labor) have led several NGOs to raise supply chain ethics concerns of cobalt sourcing.

Cobalt finds applications in a number of high-tech cases, from cellphones and computers to electric vehicles.

The White House last month announced a number of ventures aimed at strengthening domestic supply chains for critical minerals.

“Redwood Materials will discuss a pilot, in partnership with Ford and Volvo, for collection and recycling of end-of-life lithium-ion batteries at its Nevada based facilities to extract lithium, cobalt, nickel, and graphite,” the White House said. “This builds upon Redwood’s recent announcements including a joint venture with Ford to build a recycling facility in Tennessee and its intention to begin construction on a new cathode manufacturing facility in Nevada in 2022.”

Cobalt prices gain

Like a number of other commodities, cobalt prices have surged over the last month.

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The Rare Earths Monthly Metals Index (MMI) rose by 15.0% for this month’s index value, as rare earths prices rose across the board.

Keep an eye out for rare earths news and analysis in the MetalMiner weekly newsletter. 

White House announces developments in domestic rare earths sector

The White House last month announced new efforts to develop the country’s rare earths supply chain.

For years, the U.S. has discussed such efforts, aimed at mitigating dependence on China, which dominates an overwhelming majority of global rare earths supply.

The Department of Defense’s Industrial Base Analysis and Sustainment program awarded MP Materials $35 million. The firm will separate and process heavy rare earth elements at its facility in Mountain Pass, California, “establishing a full end-to-end domestic permanent magnet supply chain.”

“These minerals power phones and computers, household appliances, electric vehicles and batteries, solar panels, wind turbines, and so much more,” President Joe Biden said in remarks Feb. 22. “Without these minerals, we simply cannot fun- — they can’t function.  And we expect to — demand to — for them to increase by 400 to 600 percent over the next several decades.”

Furthermore, the White House cited China’s control of 87% of the global permanent magnet market.

In addition, the White House said Berkshire Hathaway Energy Renewables will break ground on a facility in California. It will test the viability of its sustainable lithium extraction process at the California site.

“Imperial Valley contains some of the largest deposits of lithium in the world,” the White House said. “Once at scale, BHE Renewables facilities could produce 90,000 metric tons of lithium per year.”

Whether you source rare earths or not, it’s important to familiarize yourself with sourcing best practices that are applicable across metal categories. 

Biden administration invests in batteries

Also last month, the Biden administration announced it would invest $3 billion toward strengthening the U.S. supply chain for advanced batteries. The batteries are for vehicles and energy storage.

The funding would go toward:

  • Battery materials refining and production plants
  • Battery cell and pack manufacturing facilities
  • Recycling facilities

“With the global lithium-ion battery market expected to grow rapidly over the next decade, DOE is making it possible for the United States to be prepared for market demand,” the Department of Energy said last month. “Responsible and sustainable domestic sourcing of the critical materials used to make lithium-ion batteries — such as lithium, cobalt, nickel, and graphite — will help close the gap in supply chain disruptions and accelerate battery production in America.”

Rare earths prices surge, Chinese exports rise

Like seemingly every other commodity, rare earths prices have also been on the rise.

China exported a cumulative 7,835 tons of rare earths in January and February this year, the General Administration of Customs reported. The total marked an increase of 10.9% year over year.

Meanwhile, the value of those exports reached $127.6 million, or up 61.8% year over year.

In that vein, the Ministry of Industry and Technology has sought to control the run-up in prices. According to Reuters, the ministry asked rare earths producers in the country to prevent market speculation or hoarding.

Actual rare earths prices and trends

The Chinese yttrium price rose by 12.28% month over month to $52.09 per kilogram as of March 1.

Meanwhile, the terbium oxide price rose 10.44% to $2,401 per kilogram. Neodymium oxide rose 7.01% to $190,894 per metric ton. Lastly, dysprosium oxide rose 2.47% to $493 per kilogram.

The Construction Monthly Metals Index (MMI) rose by 4.7% for this month’s reading, as metal prices continue to see support from geopolitical turmoil, in addition to ongoing supply fears.

Invasion impact on US real estate? Minimal, NAR says

We have overviewed the impact of the Russian invasion of Ukraine on everything from oil prices to automotive.

But what about the real estate market? In the U.S., at least, the invasion impact is minimal, the National Association of Realtors said.

“Any decline in international real estate transactions will have little direct impact on the U.S. housing market,” NAR said this week. “Russian foreign buyers account for less than 1% of foreign buyer purchases, and overall, foreign buyers account for about 2% of existing-home sales, according to NAR’s 2021 International Transactions in U.S. Residential Real Estate Report. Moreover, the decline in foreign demand will ease supply constraints for domestic buyers.”

Metal prices for construction could see impacts from Russia-Ukraine war

As the conflict continues, however, material shortages and supply disruptions will continue to bite.

This is particularly for European buyers who source materials — or energy — from either Russia or Ukraine.

In particular, inflation stemming from surging energy costs will continue to weigh on consumers, including the construction sector.

Furthermore, sanctions on Russia continue to roll in, with more potentially to come depending on the course of the war.

NLMK chairman cites ‘serious changes’ in operating environment

Russian steelmaker NLMK is a producer of rebar, among other products, at its Ural operations in Russia. Ural received certification to sell rebar into Europe in 2016.

Last month, MetalMiner experts walked through the potential impacts on the company of the (then-hypothetical) Russian invasion.

Furthermore, NLMK operates multiple U.S. mills, including in Pennsylvania and Indiana.

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The Automotive Monthly Metals Index (MMI) fell by 0.7% for this month’s value, as palladium prices have surged while steel prices have retreated.

Last year, MetalMiner added a suite of precious metals prices to the MetalMiner Insights platform. 

Russia-Ukraine war, the auto sector and palladium prices

The Russian invasion of Ukraine has yielded commodity price volatility spanning across sectors.

palladium bars

Piotr Pawinski/Adobe Stock

Russia is a major producer of platinum and palladium. Palladium primarily goes toward catalytic converters in car exhausts.

As Western countries hit Russia with sanctions, some companies will have to look for alternative sources. (As always, buying organizations should make sure they are up to date on the best sourcing strategies.)

Palladium prices have surged in recent weeks, rising by 13% month over month as of Friday.

“Russia and Ukraine lead global production of metals such as aluminum, nickel, copper, and iron ore,” according to a special report by Dun & Bradstreet titled “Russia-Ukraine Crisis: Implications for the global economy and businesses. “Nonavailability of Russian as well as Ukrainian supplies could cause high prices along with volatility. For rare metals like neon, palladium, and platinum, Russia has been the primary supplier to Europe. Ukraine is also a vital source of rare metals (iron ore, manganese, titanium, gallium, kaolin, zirconium, and germanium) to Europe and the rest of the world.”

Platinum, nickel prices rise

On the other hand, platinum typically goes into diesel catalytic converters. Russia is also a major producer of platinum.

As the Dun & Bradstreet notes, South Africa is a potential alternative source of platinum for automotive manufacturers (or other platinum end users).

Meanwhile, nickel prices have also surged.

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The Renewables Monthly Metals Index (MMI) rose by 2.9% for this month’s reading.

January 2022 Renewables MMI chart

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EIA: electricity generation from renewables to rise in 2022, 2023

The Energy Information Administration forecast the U.S. share of electricity generation from renewables will rise in 2022 and 2023.

“Our forecast for the natural gas share as a generation fuel declines primarily as a result of increased generation from new renewable energy generating capacity,” the EIA reported in its Short-Term Energy Outlook released Jan. 6.

The EIA forecast solar capacity growing at a faster rate than wind. Furthermore, the EIA forecast an uptick in hydropower.

“The extreme drought conditions in the West may moderate somewhat in the next year, and we forecast that the share of U.S. generation from hydropower will rise from 6% in 2021 to 7% in 2022 and 2023,” the EIA reported.

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The Global Precious Monthly Metals Index (MMI) rose by 4.1% for this month’s reading.

January 2022 Global Precious MMI chart

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Gold prices make gains to close 2021

ar130405/Adobe Stock

Gold prices picked up steam throughout the final month of 2021.

The U.S. gold spot price opened December at $1,774 per troy ounce, according to MetalMiner Insights data (MetalMiner Insights added a precious metals suite last year). The price rose to $1,818 per troy ounce to close the year.

Since then, the price has continued to rise, reaching $1,825 per troy ounce last week.

Meanwhile, the U.S. dollar, which typically has an inverse relationship with gold, moved mostly sideways in December. After opening December at just over 96, the U.S. dollar index fell marginally to just under 96.

Treasury yield rates rise in December

Elsewhere, U.S. Treasury yield curve rates picked up in December.

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The Rare Earths Monthly Metals Index (MMI) rose by 1.7% for this month’s reading.

January 2022 Rare Earths MMI chart

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China consolidates trio of rare earths units

As Beijing has sought to control its domestic metals production in the form of state-directed company consolidation, it has also done so in the rare earths sector.

According to the state-run Xinhua, China established the China Rare Earth Group Co., Ltd. late last month in the country’s Jiangxi province.

Aluminum Corporation of China, China Minmetals Corporation and Ganzhou Rare Earth Group Co., Ltd. established the new company jointly.

Companies aim to develop REE-making technology

Last month, Energy Fuels Inc., the U.S.’s top producer of uranium, announced a memorandum of understanding with Nanoscale Powders LLC to develop novel technology for the production of rare earth element metals.

“We believe this Technology, which was initially developed by NSP, and will be advanced by the Company and NSP working together, has the potential to revolutionize the rare earth metal making industry by reducing costs of production, reducing energy consumption, and significantly reducing greenhouse gas emissions,” Energy Fuels said in its announcement. “Producing REE metals and alloys is a key step in a fully integrated REE supply chain, after production of separated REE oxides and before the manufacture of neodymium iron boron magnets used in electric vehicles, wind generation and other clean energy and advanced technologies.”

Among its other operations, Energy Fuels produces mixed rare earth element carbonate. It also recovers uranium from natural monazite sands.

“The Company is also moving quickly toward producing REE Oxides at the Mill using proven solvent extraction technologies,” the firm added. “The Mill has over 40 years of experience producing uranium and vanadium oxides using SX technology.”

Companies, industry groups weigh in on Section 232 neodymium magnet probe

Last September, the Department of Commerce announced the initiation of a Section 232 investigation covering neodymium magnets.

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The Automotive Monthly Metals Index (MMI) fell by 3.4% for this month’s reading, as auto sales continued to slump in the face of ongoing supply and inventory constraints.

January 2022 Automotive MMI chart

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US auto sales

In the U.S. market, General Motors reported Q4 2021 sales of 440,745 vehicles, or down 43% year over year.

Despite the decline, the automaker indicated the semiconductor supply shortage improved in the fourth quarter.

“GM entered the quarter with record low inventories; however, the company’s fourth-quarter production and wholesale deliveries were up significantly from the third quarter as semiconductor supply conditions improved,” GM said in a release.

However, Toyota outsold GM in the U.S. in 2021, marking the first time GM did not hold the top sales spot since 1931, according to Reuters.

Toyota sold 2,332,262 vehicles in 2021 compared to 2,218,228 vehicles for GM.

Meanwhile, Ford reported its total December sales fell 17.1% to 173,740 vehicles. Truck sales fell 15.5%. SUV sales dropped by 11.1%.

However, while still a relatively small part of the whole, Ford’s electrified vehicle sales jumped by 121.1% to 12,284.

In that vein, Ford announced a commitment to further expand its EV production. The automaker said it plans to nearly double production of the F-150 Lightning pickup to 150,000 vehicles per year at its Rouge Electric Vehicle Center in Dearborn, Michigan.

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This morning in metals news: aluminum prices have surged this week; U.S. nonfarm payroll employment rose by 199,000 in December; and, lastly, electricity prices surged throughout 2021, in large part on the back of rising natural gas prices.

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Aluminum prices surge

aluminum price

Grispb/Adobe Stock

Aluminum prices are on the ascent once again.

The LME three-month aluminum price peaked back in October, reaching as high as $3,200 per metric ton, according to MetalMiner Insights data.

After falling to just over $2,500 per metric ton in early November, aluminum prices traded largely sideways for the next month.

Since mid-December, however, aluminum prices have surged. LME three-month aluminum closed Wednesday at $2,923 per metric ton, its highest in over two months. The price is up 13.05% month over month.

US adds 199K jobs

U.S. nonfarm payroll employment rose by 199,000 in December, the Bureau of Labor Statistics reported.

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The Construction Monthly Metals Index (MMI) rose by 3.3% for this month’s reading, as construction spending picked up in November.

January 2022 Construction MMI chart

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U.S. construction spending reached a seasonally adjusted annual rate of $1,625.9 billion in November, or up 0.4% from October, the Census Bureau reported.

Furthermore, the November rate marked a 9.3% year-over-year increase.

Meanwhile, through the first 11 months of 2021, construction spending reached $1,463.2 billion, or up 7.9% year over year.

Spending on private construction reached a rate of $1,273.6 billion in November, or up 0.6% from October. Public construction spending reached $353.2 billion, or down 0.2%.

“Private nonresidential spending appears to be on a solid upswing, with five consecutive months of growth, but public outlays for construction remain erratic,” said Ken Simonson, chief economist for the Associated General Contractors of America, in a release. “The public side isn’t likely to post steady gains until funds from the new infrastructure law become available and turn into actual projects.”

ABI growth slows

The Architecture Billings Index, a leading indicator of nonresidential construction activity in the U.S., reached 51.0 for November. Any reading greater than 50 indicates billings growth.

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