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.
LG Energy Solution signs cobalt, nickel access deal
Last month, LG Energy Solution announced it had signed an agreement that will give it access to nickel and cobalt supply from Australian Mines Ltd.
“LG Energy Solution has secured 100% rights to battery-grade nickel and cobalt materials from Australian Mines Limited amid growing concerns about future supplies of raw materials,” LG said.
“LG Energy Solution announced Monday it has entered into a binding long form offtake agreement with Australian Mines Ltd. for nickel and cobalt, which will be supplied in the form of mixed hydroxide precipitate (MPH) from the Sconi Project in North Queensland.”
The battery maker will have access to 71,000 tonnes of nickel for six years starting from the end of 2024. For cobalt, the total is 7,000 tonnes.
LG said the supply of nickel and cobalt will allow it to manufacture batteries for 1.3 million “high-performance electric vehicles.”
The battery materials will come from Australian Mines’ Sconi Project, which is currently under development.
The gold price bounced back after falling to around $1,730 per ounce in early August.
From there, the U.S. gold bullion price rose to $1,815 by the end of the month.
Meanwhile, the U.S. dollar, which typically has an inverse correlation with gold, picked up in the first two-thirds of the month. The dollar index peaked at 93.57 on Aug. 19 before retracing, closing the month at 92.63.
In other relevant indicators, 30-year Treasury bond yield rates opened August at 1.86% and climbed to a high of 2.03% on Aug. 12 before retreating. The 30-year yield rate closed the month at 1.92%.
Thus far in September, the 30-year yield has continued to retreat, closing Tuesday, Sept. 14, at 1.85%.
Meanwhile, the 10-year yield opened August at 1.20% before closing the month at 1.30%.
Lynas Rare Earths Ltd. last month offered an update on its processing operations in Malaysia.
The plant is operating at reduced rates due to the COVID-19 pandemic.
“The Lynas Malaysia plant continues to operate at reduced rates in line with our commitment to the health and safety of our people and in compliance with the Malaysian Government’s Standard Operating Procedures (SOPs),” Lynas said in a release. “As the vigorous 3rd wave of COVID-19 in Malaysia persists, Lynas continues to maintain strict health and hygiene protocols, including COVID-19 testing for all staff and contractors prior to entry to the site.”
Furthermore, Malaysian regulatory authorities extended the deadline for “satisfaction of the licence condition related to the commencement of construction of the Permanent Disposal Facility (PDF) for WLP residue” by six months. The deadline is now March 2, 2022.
“This recognises the constraints presented by current COVID-19 conditions,” Lynas said. “We continue to engage productively with the relevant government and regulatory authorities to progress the approvals for the PDF.”
The company’s processing operations in the country has been the source of outcry from environmental activists. Activists have appealed a court’s decision to dismiss their request for review of the decision to renew the company’s operating license in 2019.
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.
Exchange-traded funds, or ETFs, are sometimes punted as an alternative to direct investments on metals exchanges, like the LME or CME.
But in reality, it is a different kind of investor who buys ETFs, even if they are largely buying into the same metal story.
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ETF investors and looking ahead
ETF investors are often longer-term investors wanting to buy into a trend rather than take a short-term position. More retail or private investors buy ETFs, seeing themselves as investors rather than speculators (if that distinction is a fair one).
But as a recent article in the Financial Times suggests, ETF investors are facing a similar question to trade or hedge fund speculators in estimating how long this run in price rises has to go. Furthermore, they are also facing the question of whether it is part of a much longer-term supercycle or a shorter-term supply chain restocking – pandemic bounce-back recovery.
The supercycle narrative is based on the transition to a new clean energy landscape and the demand that new, low-emission technologies will generate for certain metals like cobalt, nickel, copper and aluminum.
A similar narrative is driving agricultural ETFs. Climate change will create more challenging conditions for farmers and increase the likelihood of poor harvests. In turn, that would usher in decades of higher prices for agricultural products.
When Chinese steel group Tsingshanannounced 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.
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.
Both NAS and Outokumpu announced price increases effective Sept. 1.
Outokumpu increased base prices by reducing the discount by one point for all 200 series, 301, 304, 304L, 316L and 430. All other 300 series alloys will see increases by virtue of discount reductions by three points. Outokumpu raised all of its other 400 series alloys by reducing the discount by four points.
In addition to base price increases, Outokumpu increased its width extra for under 48″ to $0.12/lb and added a $0.15/lb gauge extra for 301 18 gauge and lighter. It also increased cut-to-length charges.
NAS increased its base price by reducing the functional discount by one point for 304, 304L and 316L. All other alloys — except for automotive ferritics — will be increased by reducing the discount by two points. Non-430 ferritics will be increased by $0.08/lb, which means these alloys have increased $0.27/lb in 2021.
The Raw Steels Monthly Metals Index (MMI) dropped by 1.4%, as Chinese steel and U.S. scrap prices declined.
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Chinese steel merger to form third-largest steel producer
On Aug. 20, Chinese steelmakers Ansteel Group and Ben Gangformally began the process of merging their operations. If the process is completed, this will create the world’s third-largest steelmaker, behind China Baowu Group and ArcelorMittal.
Since both companies are state-owned, there will be no money changed in the transaction. Instead, the merger will be a government-backed restructuring in an effort to consolidate production in China’s bloated steel sector. Ansteel will be taking a 51% stake in Ben Gang.
The merged entity will keep the Ansteel name. Its annual production capacity will reach 63 million metric tons of crude steel.
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).
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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.