Articles in Category: Supply & Demand

The Rare Earths Monthly Metals Index (MMI) fell 2.7% for the July MMI reading.

July 2021 Rare Earths MMI chart

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First shipment establishes new US-EU rare earths supply chain

Energy Fuels Inc. and Neo Performance Materials Inc. announced that they have executed the first shipment of mixed rare earth carbonate from a mill in Utah to a separation facility in Estonia.

On July 7, Energy Fuels announced the first shipment, containing approximately 20 metric tons of the mixed rare earth carbonate, from the White Mesa Mill in Utah. The material was en route to Neo Performance Materials’ rare earths separation facility.

The announcement represents the start of a fledgling U.S.-E.U. rare earths supply chain. Both the U.S. and the E.U. have long sought to mitigate dependence on China, which dominates an overwhelming majority of rare earths mining and refining.

The shipment marked the first of an expected 15 containers of carbonate to be sent to the Estonia facility, Energy Fuels said in the July 7 announcement.

“Additional shipments of RE Carbonate are expected as Energy Fuels continues to process natural monazite sand ore mined in Georgia (U.S.) by Chemours for both the rare earth elements and naturally occurring uranium that it contains,” Energy Fuels said.

Monazite is produced as a byproduct of existing heavy mineral sands mining, Energy Fuels said. The material also contains naturally occurring uranium that Energy Fuels recovers for use in the generation of carbon-free nuclear energy, the company added.

Furthermore, the companies announced the signing of a contract for a definitive supply agreement.

“Under the Agreement, Colorado-based Energy Fuels will ship all or a portion of its RE Carbonate to Neo’s Silmet rare earth separations facility,” Energy Fuels added. “Neo will then process Energy Fuels’ RE Carbonate into separated rare earth materials for use in rare earth permanent magnets and other rare earth-based advanced materials.”

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India’s steel story continues to grow in 2021. New plants are being commissioned and major steel companies are reporting growth in production, too.

India’s leading producer, Tata Steel, for example, has reported in the current quarter of fiscal year 2022, production of 4.62 million tons against 2.99 million in the same period last year.

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India’s steel highs and lows

India

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In March-April 2020, India’s steel capacity utilization plunged as a result of the nationwide lockdown imposed to curb the spread of COVID-19.

But now, things are changing for the better, according to production reports, uptake reports and analyst forecasts.

The World Steel Association (WSA) reported India’s production rose by almost 47% in May this year.

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Analysis, specifically what’s termed fundamental analysis of metal supply and demand, and its impact in driving metal prices, is often a blunt tool.

That is particularly true since the financial crisis. Then, traders and hedge funds discovered the wheeze of buying spot and selling far forward (typically from 18-month to a few years) when the market is in a strong contango (when the higher forward price is sufficiently above spot to more than cover the cost of storage, insurance and finance, leaving a profit for the company).

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Metal stock levels don’t match price movements

aluminum ingot

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As we all know, this has at times driven the creation of off-market inventory, sometimes termed shadow stocks, in non-exchange warehouses (because rents are cheaper).

For some metals, like zinc and copper, this has, at times, been hundreds of thousands of tons. For aluminum, it has been in the millions, dwarfing the exchange stocks on the LME and SHFE.

Trying to take these stocks into consideration is a nightmare. The LME’s increased reporting regime has helped. However, even so so-called shadow stocks are in their entirety at best an estimate.

So, when commentators say LME stocks have fallen as a justification supporting increased demand — or, vice versa, rising LME stocks are proof of weak demand — take such comments with a pinch of salt.

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U.S. steel capacity utilization reached 82.7% for the week ending June 26, the American Iron and Steel Institute reported Monday.

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Steel capacity utilization takes small step back

capacity utilization

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However, U.S. steel capacity utilization for the aforementioned week dipped from 82.9% the previous week.

Steel production during the week ending June 26 totaled 1,835,000 net tons, down 0.2% from the previous week. Meanwhile, production jumped by 44.3% on a year-over year basis.

During the same week in 2020, steel capacity languished at just 56.8%, as the industry had only just started to recover from the demand hit from March-May 2020.

As we noted last week, global crude steel production gained by 16.5% year over year in May. However, production dipped slightly in May from the previous month.

As Stuart Burns explained, the U.S. steel market remains tight, despite the steady rise in capacity utilization over the past year. Furthermore, U.S. buyers looking to import will likely have to look somewhere other than Europe.

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It would seem Beijing only has to speak and the market reacts — this time, it’s about base metals.

Worried by what it sees as excessive inflation in commodity prices, which it fears will lead through into factory gate increases, China warned speculators last month over “excessive speculation.” The warning from China’s National Food and Strategic Reserves Administration hit the iron ore market hard, the Financial Times reports, sending the price 10% lower.

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China turns to base metals

China aluminum

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This month, Beijing has turned its attention to base metals.

The authorities have hinted they may release metal from their strategic reserves. The move would be an overt attempt to dampen further price rises in what it sees as a speculator-fueled rally. Where applicable, it would provide additional supply for those metals where supplies are genuinely tight.

The country holds strategic reserves in copper built up over decades. During slumps, like after the financial crisis, Beijing has stepped in to support domestic producers.

State secrets

As a strategic reserve, copper stocks are a state secret.

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This morning in metals news: the Biden administration today released a 250-page report detailing the findings of its 100-day supply chain review; meanwhile, the US steel capacity utilization rate ticked up to 82.3%; and, lastly, the U.S. goods and services deficit fell in April compared with the previous month.

Each month, MetalMiner hosts a webinar on a specific metals topic. Explore the upcoming webinars and sign up for each on the MetalMiner Events page.

Biden administration releases 100-day supply chain review

supply chain chart

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Earlier this year, President Joe Biden signed an executive order calling for 100-day reviews of critical U.S. supply chains. The reviews in question included those for things like critical minerals, semiconductors and high-capacity batteries.

The 100-day period has come and gone. Today, the administration released a 250-page report detailing its findings.

“The COVID-19 pandemic and resulting economic dislocation revealed long-standing vulnerabilities in our supply chains,” the report’s introduction states. “The pandemic’s drastic impacts on demand patterns for a range of medical products including essential medicines wreaked havoc on the U.S. healthcare system. As the world shifted to work and learn from home, it created a global semiconductor chip shortage impacting automotive, industrial, and communications products, among others.”

In addition to its deeper analysis, the report included six broad recommendations for strengthening U.S. supply chains:

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Before we head into the weekend, let’s take a look back at the week that was here on MetalMiner, which included coverage of the Section 232 tariffs, the recent metals price pullback, China’s warning to commodity speculators and much more:

Each month, MetalMiner hosts a webinar on a specific metals topic. Explore the upcoming webinars and sign up for each on the MetalMiner Events page.

Week of May 24-28 (Section 232 tariffs, price pullback and more)

tariffs overlaid on US currency

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Global copper mine production rose by 3.5% through the first two months of the year, the International Copper Study Group reported.

Furthermore, copper concentrate production rose by 5% during the period, while solvent extraction-electrowinning fell by about 3%.

The MetalMiner Best Practice Library offers a wealth of knowledge and tips to help buyers stay on top of metals markets and buying strategies.

Recovering copper production

copper mine

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Strong Chinese demand powered metals markets last year, particularly as demand still lagged in Europe, the United States and elsewhere.

Meanwhile, on the supply side, copper mine production took a hit, particularly in South America, as the COVID-19 pandemic worsened. (MetalMiner contributor Christopher Rivituso recently summarized developments in the copper market and where prices could go this year.)

However, output recovered throughout the year and into 2021.

Chile, the top copper producer, saw its copper mine production fall by 2.6% during the first two months of the year.

Meanwhile, Peru, the second-largest producer, saw its output fall by 7.5% in January. Peru’s mine output bounced back in February, leading to an aggregated 3.7% drop for the two-month period.

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Before we head into the weekend, let’s take a look back at the week that was and the metals storylines here on MetalMiner, including copper price developments, an upcoming MetalMiner webinar and more:

The MetalMiner Best Practice Library offers a wealth of knowledge and tips to help buyers stay on top of metals markets and buying strategies.

copper mine

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Week of May 17-21 (copper prices, MetalMiner webinar and more)

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The Rare Earths Monthly Metals Index (MMI) fell by 9.8% for this month’s reading.

May 2021 Rare Earths MMI chart

The MetalMiner Best Practice Library offers a wealth of knowledge and tips to help buyers stay on top of metals markets and buying strategies.

Biden’s DOE awards $19M in funding for rare earths, critical minerals production initiatives

As MetalMiner contributor Sohrab Darabshaw explained this week, the Department of Energy has awarded $19 million toward 13 initiatives geared toward rare earths and critical minerals production.

“The very same fossil fuel communities that have powered our nation for decades can be at the forefront of the clean energy economy by producing the critical minerals needed to build electric vehicles, wind turbines, and so much more,” Secretary of Energy Jennifer M. Granholm said. “By building clean energy products here at home, we’re securing the supply chain for the innovative solutions needed to reach net-zero carbon emissions by 2050 – all while creating good-paying jobs in all parts of America.”

The DOE’s Office of Fossil Energy’s National Energy Technology Laboratory (NETL) will manage the 13 projects.

The projects cover 12 areas of interest. They correspond to “selected U.S. basins that have the potential to produce rare earth elements and critical minerals.”

The project leaders include Pennsylvania State University, Virginia Polytechnic and State University, the New Mexico Institute of Mining and Technology, and the University of North Dakota, among others.

Electrification and cobalt

Earlier this month, MetalMiner’s Stuart Burns delved into the shift toward electrification in the automotive market.

Namely, he zoomed in on rising EV demand’s impact on materials prices — particularly for critical battery metals, like cobalt. Cobalt prices, like many other metals, surged in Q1 2021.

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