Articles in Category: Non-ferrous Metals

Global copper mine production picked up by 4.9% during the first half of the year, the International Copper Study Group said this week.

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Copper production gains

copper mine

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Broken down further, concentrate production rose by 6.4% during the six-month period. Meanwhile, solvent extraction-electrowinning fell by 1.5%.

Chile, the world’s top copper producer, saw its copper production fall 1.2% during the first half of the year.

Meanwhile, Peru, the second-biggest copper producer, saw its output bounce back by 14% year over year. However, its half-year output remained down 9% from H1 2019 levels.

As a result of rising output at the Grasberg mine, Indonesia’s output rose by 69% year over year.

Refined production up 3.2%

Meanwhile, on the refined side of the picture, production rose by 3.2% year over year, the ICSG reported.

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Before we head into the weekend, let’s take a look back at the week that was and some of the metals storylines here on MetalMiner, including stainless steel consumption’s impact on nickel prices, surging aluminum prices and much more:

stainless steel rods

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Week of Sept. 13-17 (stainless steel drives nickel, aluminum prices rise and more)

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It is a curious insight into E.U. thinking when there is a clear case for anti-dumping duties only for them to be rowed back at the 11th hour after complaints from just two aluminum users and one importer.

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Chinese aluminum and European anti-dumping duties

China aluminum

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You must assume they are well connected. Pretty much the whole aluminum manufacturing sector had been behind the original case to investigate.

Currently, following an announcement made in April 2021, provisional duties of between 19.3% and 46.7% were set to become definitive duties of between 14% and 25% from October.

Those duties would have stayed in place for five years. But it seems the rapid rise in aluminum prices has sparked panic, if not in Brussels then at least among importers with the most to lose.

As such, pressure has been applied to postpone the investigation.

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The Construction Monthly Metals Index (MMI) picked up by 4.9% for this month’s reading.

September 2021 Construction MMI chart

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US construction spending

U.S. construction spending reached a seasonally adjusted annual rate of $1,568.8 billion in July, the Census Bureau reported earlier this month.

The July rate marked a 0.3% increase from the previous month. Furthermore, the July figure jumped by 9.0% compared with July 2020.

During the first seven months of the year, construction spending totaled $883.2 billion, up 6.2% year over year.

Private construction spending reached a rate of $1,231.0 billion, or up 0.3%. Within private construction, residential construction reached an annual rate of $773.0 billion in July, up 0.5% from June. Nonresidential construction came in at $458.0 billion in July, or down 0.2%.

Meanwhile, public construction reached $337.8 billion, up 0.7%. Educational construction checked in at $79.7 billion, down 0.5%. Highway construction rose by 1.9% to a rate of $94.5 billion.

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This morning in metals news: the U.S. steel capacity utilization rate rose to 85.3% for the week ending Sept. 11; Norsk Hydro signed an energy deal; and, lastly, aluminum prices have continued to skyrocket.

Stop obsessing about the actual forecasted aluminum price. It’s more important to spot the trend. See why.

Steel capacity utilization rises to 85.3%

steelmaking in an EAF

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The U.S. steel capacity utilization rate picked up to 85.3% for the week ending Sept. 11, the American Iron and Steel Institute (AISI) reported.

U.S. steel production during the week totaled 1.88 million net tons. Production for the week rose by 0.9% from the previous week. Furthermore, output jumped by 22.4% year over year.

For the year to date, production totaled 65.8 million net tons at a capacity utilization rate of 80.8%.

Hydro signs natural gas deal

Oslo-based Norsk Hydro said it had signed a 15-year deal for the supply of liquefied natural gas (LNG) to its Alunorte alumina refinery in Brazil.

Hydro signed the supply deal with New Fortress Energy.

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This morning in metals news: global aluminum production picked up in July; the WTI crude price continues to hover around $70 per barrel; and, lastly, the Producer Price Index for final demand increased by 0.7% in August.

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Aluminum production increases in July

aluminum ingot

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Global aluminum production totaled 5.74 million metric tons in July, the International Aluminum Institute reported.

The total marked an increase from 5.52 million metric tons in July 2020. Furthermore, the total increased from 5.56 million tons in June 2021.

China’s estimated production rose to 3.34 million metric tons in July 2021. The total marked an increase from 3.24 million tons in June 2021.

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When Chinese steel group Tsingshan announced its Indonesian nickel operations would supply matte — a form of the metal used only for stainless steel production — to battery makers back in February, the news undercut the narrative that only refined nickel would be sufficiently high grade for the electric vehicle sector.

nickel price

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The price proceeded to crash. Furthermore, he Chinese government’s decision May 1 to revoke the VAT tax rebate supporting exports of stainless-steel products removed a plank of support for metal exporters in a bid to help domestic consumers.

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Nickel narrative

From a bear narrative of oversupply in the first half of this year the nickel market has swung dramatically to a bull story of rampant demand.

That demand, however, is from solid stainless steel consumption, not from last year’s expectation of battery demand.

China is largely driving the nickel price. A technical squeeze on the SHFE and strong physical demand, manifested by rising imports, are supporting the price.

A Reuters report explains how SHFE inventory had fallen to just 4,455 tons at the end of August. That marked its lowest level since the contract began in 2015.

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The Copper Monthly Metals Index (MMI) decreased by 3.4% in August, as forms of the metal included in the index dropped (with the exception of Chinese copper scrap).

September 2021 Copper MMI chart

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Copper prices trend downward

Similarly to the index, LME copper prices dropped by 3.3%. LME trading volumes spiked as the price declined from Aug. 16-19. This sell-off signaled a strong negative trend.

Since then, prices recovered. However, trading volumes remained muted, reinforcing the negative market sentiment.

SHFE prices behaved similarly to LME prices. Meanwhile, the volatility of the dips did not appear as strong. The SHFE’s heaviest trading volumes occurred toward the end of the month, when prices jumped, thus signaling a strong positive indicator.

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An aluminum market that has lived with Chinese oversupply for two decades is experiencing a very different year in 2021.

According to Reuters, it is starting to price in a very different future.

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Aluminum prices of the future

aluminum ingot

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The world needs more aluminum to go green. However, the smelters that produce the stuff use huge amounts of power. Those smelter account for around 2% of all manmade emissions each year, much of which is due to Asia’s overwhelming reliance on coal as a power source.

Squaring the circle between aluminum’s huge power demands and efforts to meet emissions commitments is proving very challenging for China’s aluminum industry. The post reports IAI estimates that the world will need another 25 million tons of primary metal production to meet an expected 80% rise in demand by 2050, fueled in large part by the drive to decarbonize.

Yet, even that daunting target assumes a 100% recycling rate. Even with the best of intentions, that is unlikely to happen.

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The Aluminum Monthly Metals Index (MMI) increased by 4.1% for this month’s reading.

September 2021 Aluminum MMI chart

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LME three-month aluminum prices are only $100/mt away from 2011 prices.

Overall, LME aluminum traded up despite some volatility in August.

Prices took their largest dip Aug. 16-19 before recovering. During the same period, LME trading volumes got heavier, marking a negative trend.

However, volumes got even heavier as the price increased. This ultimately signals that the market remains bullish.

Chinese prices also climbed this month. SHFE volumes — along with prices — picked up heavily toward the end of the month, consistent with a strong bullish trend.

Beijing wary of rising aluminum prices

Rising aluminum prices have become a concern for China.

Bloomberg reported that the China Nonferrous Metals Association believes the steep increase of the aluminum price is not supported by fundamentals and substitutions could emerge.

Record high prices have already deterred the manufacturing sector in China.

China’s Caixin Index has dropped since June. In August, the index dropped below the 50 level, meaning factory activity is contracting.

On Sept. 1, China released its third batch of metals from state reserves. The move is an attempt to control prices and prevent commodities inflation from hurting economic growth. However, the release did not dent prices.

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