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India’s renewable energy sector, the fourth-most attractive renewable energy market in the world today, is all set to get a new player.

U.S.-based ArcVera Renewables, which specializes in consulting and technical services, has announced its entry into India’s solar, wind and hybrid energy storage market.

ArcVera has opened up an office in Bengaluru in the southern part of India. From there, it will deliver its expertise to project developers, lenders and investors — not only in India but also neighboring Southeast Asia and Pacific Rim countries.

The MetalMiner 2021 Annual Outlook consolidates our 12-month view and provides buying organizations with a complete understanding of the fundamental factors driving prices and a detailed forecast that can be used when sourcing metals for 2021 — including expected average prices, support and resistance levels.

ArcVera joins the fray in India’s renewable energy sector

The Colorado-based ArcVera Renewables has over 40 years of global experience. The firm is now providing expert technical, financial and independent engineering services for stand-alone energy storage or hybrid projects.

Gregory S. Poulos, CEO of ArcVera Renewables, told the Indian media a combination of factors had made the company take this decision to expand. He said, on the one hand, India is a large and rapidly growing renewables market. With the entry of energy tenders and hybrid project requirements, the country presents an even more complex and competitive market.

On the other hand, a competitor departure from the Indian wind market left a vacuum that ArcVera is ideally positioned to fill, Poulos added.

What also drove ArcVera’s decision is the fact that Indian developers and investors are on the lookout for technical expertise to lower project risk and raise project value.

ArcVera’s services cover the full project life cycle. That cycle includes: finance-grade resource assessments, project design, technology assessments, financing, M&A, due diligence, construction, operations and repowering.

The company has atmospheric scientists, engineers, and data analysts.

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The widely, if not universally, held belief that globalization is a win-win panacea for growth has never looked shakier.

While President Donald Trump has led the charge on calling out the failings of unfettered engagement with China and all that entails in terms of loss of manufacturing capability and sharing of hard-won technology, he is by no means alone.

The MetalMiner 2021 Annual Outlook consolidates our 12-month view and provides buying organizations with a complete understanding of the fundamental factors driving prices and a detailed forecast that can be used when sourcing metals for 2021 — including expected average prices, support and resistance levels.

Globalization and China

There is a growing groundswell of opinion that the long-held liberal beliefs that engagement would change China’s behavior have proved flawed.

China today is arguably more centrist, more actively and belligerently nationalistic and worryingly less influenced by world opinion than it has been for decades.

And yet it has, from an economic point of view, proved remarkably successful so far.

China’s economy has bounced back faster than those in the West. Furthermore, its economy has recovered faster than even its close Asian neighbors. That is because, in part, the party’s control meant it could enforce harsh — compared to in the U.S. or Europe — lockdown measures in the face of the pandemic. That enforcement extends to continued adherence to social distancing and hygiene standards since.

It is unlikely that a change of president in January, were that to happen following the November election, would have a meaningful impact on U.S.-China relations. A Biden presidency may try to foster a more collaborative international approach. However, the direction would likely be similar.

Europe, too, is following a less bellicose but similar path.

Europe’s investments in China and reliance on China as a trading partner are greater than that of the U.S., for whom China trade still represents a modest percentage of GDP.

Yet, even in Europe, there is increasing talk of decoupling supply chains and restrictions of technology transfers to China. Furthermore, these is talk of restricting Chinese technology companies’ access to the European market.

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It is not often the world’s largest carmakers engage in mergers and acquisitions among themselves.

Fiat Chrysler and Renault Nissan announced a $35 billion plan to merge back in May 2019. The merger would have created the third-biggest carmaker, behind Volkswagen and Toyota.

But within 10 days of the announcement, FCA pulled out and it came to nothing.

The MetalMiner 2021 Annual Outlook consolidates our 12-month view and provides buying organizations with a complete understanding of the fundamental factors driving prices and a detailed forecast that can be used when sourcing metals for 2021 — including expected average prices, support and resistance levels.

Take two: Fiat Chrysler, PSA to merge

Now, still keen for a tie-up, FCA has announced it will merge with the French group PSA.

PSA is the owner of brands like Peugeot, Citroen, Vauxhall, and DS. The deal, valued at $50 billion, would form a 50/50 partnership with a turnover of some €170 billion ($200 billion) a year and annual production of some 8.7 million units.

As such, the deal would put them, again, third. By other measures, they would be fourth, behind at least Volkswagen and Toyota, and possibly the Renault–Nissan–Mitsubishi Alliance (if you consider that one entity).

The combined FCA-PSA company will be renamed Stellantis. The name comes from the Latin “stello,” meaning “to brighten the stars.” (Yes, I know, who thinks up these names?)

According to AutoExpress, based on 2018 figures, Stellantis will have approximately 46% of its revenues from Europe and 43% from North America. PSA has long held ambitions to expand into North America. As such, a merger with FCA would make that much easier.

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We may be coming out of the first pandemic lockdown and business does, broadly, appear to be picking up; however, but some sections of manufacturing, including U.K. car manufacturing, are still suffering badly.

The MetalMiner 2021 Annual Outlook consolidates our 12-month view and provides buying organizations with a complete understanding of the fundamental factors driving prices and a detailed forecast that can be used when sourcing metals for 2021 — including expected average prices, support and resistance levels.

U.K. car industry, supply chain face challenges

An article in the Financial Times starkly outlines the continued pain the U.K. car industry is experiencing and, by extension its extended supply chain.

U.K. car manufacturing fell 44% last month compared with a year earlier. Domestic orders and exports remain severely depressed. Last month’s performance marked the sector’s second-worst since car plants restarted after lockdown.

The Financial Times went on to advise that just 51,039 cars rolled off British production lines. The total fell from 92,153 in August 2019. Meanwhile, August output for U.K. buyers fell 58% to just 7,795 vehicles. The number of cars made for export fell 41% to 73,443 cars.

To be fair, several plants working during summer 2019 boosted August 2019 performance. Summer output followed a three-week closedown in the spring to prepare for the expected Brexit in 2019, which in the end did not transpire.

So, looking at the first half of each year gives a fairer comparison. Yet, even in that view the decline remains dramatic.

Between January and August, the U.K. produced 40.2% fewer cars than in the same months a year earlier. The period included several weeks of complete stoppages during the first lockdown in March and April.

Year-to-date production is now down by 348,821 units worth more than £9.5 billion to U.K. carmakers, according to the Society of Motor Manufacturers and Traders (SMMT). Furthermore, projections suggest U.K. car manufacturers are now on track to produce just below 885,000 cars this year – down 34% on 2019.

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As copper prices have continued to rise over the last six months, copper mine production has fallen.

According to the International Copper Study Group (ICSG), copper mine production fell 1% during the first half of the year.

Furthermore, the global copper market posted a deficit of 235,000 tons during the first half of 2020, according to the ICSG.

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Mine production drops 4% in April-May

The most significant slowdown in mine production came in April and May. The ICSG estimated mine production fell 4% during the two-month period, when coronavirus-related lockdown measures affected output.

Peru, the second-largest copper producer, saw its copper output impacted by the pandemic.

“In Peru, stoppages resulting from the COVID-19 pandemic combined with operational issues/adverse weather that affected a few major mines, led to a 20% decline in mine output over the first half of 2020 including a significant decline of 38% in April-May compared to the same period of 2019,” the ICSG reported.

Mine production also fell in Australia, Canada, Mexico, Mongolia and the U.S.

Meanwhile, Chile, the top copper producer, increased its mine production by 2.6%.

Refined copper production up 1%

However, global refined copper production in the first half of the year increased by 1%.

Primary production rose 2.3%, while secondary production fell 5.2%.

“Globally, constrained scrap supply due to the COVID-19 lockdown and lower copper prices have negatively impacted world secondary refined production,” the ICSG reported.

Total refined copper output in Chile increased 12.5%.

Copper price gains

As readers of the MetalMiner Monthly Metal Outlook know, copper prices have been on the rise this year, supported by both Chinese demand and supply concerns.

The average LME cash price in August jumped 2.3% from the previous month’s average, up to $6,497 per metric ton.

The average for the year, however, remains down 4.4% compared with the 2019 annual average.

The MetalMiner 2021 Annual Outlook consolidates our 12-month view and provides buying organizations with a complete understanding of the fundamental factors driving prices.

OPEC+’s production cuts have been pretty successful at steadying the oil price this year.

First, the cuts steadied the market. Furthermore, rising prices came in the face of oversupply and a pandemic-induced collapse in demand.

However, the alliance of producers remains far from a solid coalition.

The MetalMiner 2021 Annual Outlook consolidates our 12-month view and provides buying organizations with a complete understanding of the fundamental factors driving prices and a detailed forecast that can be used when sourcing metals for 2021.

Attempts to support the oil price

Elements of game theory have long plagued OPEC’s attempts to control oil prices.

The incentive to cheat is huge. The sense by many smaller players that they suffer from output agreements more than the “big boys” breeds a sense of resentment at times.

That is particularly true among parties that have little else in common other than a desire to maximize oil revenues.

So, the Saudi oil minister’s thinly veiled dressing down of OPEC partners UAE, Nigeria and Iraq for overproducing is met with protestations but little in the way of immediate compliance.

OPEC’s production cuts have tapered from 9.7 million barrels per day in May to 7.7 million barrels per day now.

Overproduction by some players has contributed to a failure to lift Brent Crude prices past U.S. $46 per barrel. Even the current U.S. $42 level is looking vulnerable.

For example, the UAE fell in the region of 520,000 barrels over its quota last month, the Financial Times reported.

Saudi losing patience with fellow oil producers

Saudi Arabia may be losing patience with its less disciplined partners.

The kingdom is reportedly cutting its benchmark Arab Light crude more than expected. In addition, Saudi Arabia is lowering the grade to a discount for the first time since June for buyers in Asia. As such, it marks the second-consecutive month of cuts for barrels to Asia, World Oil reported.

Aramco will also trim pricing for lighter barrels to northwest Europe and the Mediterranean region.

Other Middle Eastern suppliers — including Iraq and the UAE, the second- and third-largest producers in OPEC — are expected to follow suit.

High stocks, low demand depress oil price

Refined petroleum stocks, particularly diesel stocks, are high, according to OilPrice.com.

Furthermore, demand remains weak.

Supply is being met by drawdown on high refined stocks and not feeding through to crude demand with little on the horizon likely to change that anytime soon.

Nevertheless, Goldman Sachs remains positive. The investment banker sees Brent crude rising to $49 per barrel before the end of the year.

“We estimate that the oil market remains in deficit with speculative positioning now at too low levels,” OilPrice quoted Goldman Sachs as saying to clients.

It is hard to see the price pushing much through that level before the end of this year. The oil price last reached that point at the beginning of March 2020.

Such a rise would require market conditions to be heading back to where they were this time last year, when the oil price traded at in the U.S. $60-65 range.

Much will depend on U.S. demand during the winter months. Sentiment will no doubt be supported by falling virus infection rates.

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FurAccording to the Indian Financial Express, the country is intending to take a leaf out of the European Union’s book and introducing an import surveillance scheme for aluminum and copper imports.

Does your company have an aluminum buying strategy based on current aluminum price trends?

India’s rising copper, aluminum imports

Like the E.U.’s scheme, the scheme will require importers to first register and then report imports. That way, the authorities can track the source and volume of imports.

Specifically, the government is focused on imports from China and other southeast Asian markets, the article notes.

Only by accumulating hard data can the country develop sensible policies, promoters of the scheme argue.

As such, China, Japan, Malaysia, Vietnam, and Thailand are among the major exporters of copper. Those countries accounted for 45% of India’s $5 billion in copper imports for 2019-2020, the article reports.

Meanwhile, aluminum imports amounted to nearly as much at $4.4 billion worth in 2019-2020. Of those imports, some 58% has been in the form of scrap this year.

China checked in as the biggest supplier, shipping aluminum worth just over $1 billion. Furthermore, the country has been a major supplier of semi-finished products, sometimes competing directly with India’s substantial domestic producers.

“China is a huge threat to India’s aluminium industry,” said B.K. Bhatia, joint secretary general at Federation of Indian Mineral Industries (FIMI), the country’s biggest mining lobby.

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An article in the Australian Financial Review (AFR) underlines the bullish narrative accompanying the iron ore price’s performance this year.

“Chinese steel consumption has just blown consensus out of the water this year,” the report notes, citing analyst comments, adding, “The macro backdrop, in terms of China, is very strong for all commodity consumption, and steel and iron ore is doing particularly well.”

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Rising money supply

The post points to rising money supply, which moved up 10.4% year over year in August, as a market-leading indicator of further strength in demand this year and iron ore producers’ relative underperformance relative to projections.

That is particularly true for Vale, which would need to achieve a run rate of close to 400 million tons per annum for the second half of the year to achieve its earlier production guidance of between 310 million and 330 million tons as a whole after a poor, COVID-impacted first half.

Source: Australian Financial Review

Iron ore price recovery

The recovery in iron ore prices has been impressive.

Dalian iron ore has risen more than 60% this year. The Singapore SGX benchmark has gained about 50%, underpinned by China’s strong demand, Reuters reported. China continues to ramp up steel output after rolling out infrastructure-led economic stimulus measures.

Source: Australian Financial Review

Relatively robust steel prices and a lack of significant inventory build despite record-high run rates supports a story of strong demand recovery. Meanwhile, the rising iron ore price provides support for steel prices. Margins remain constrained, meaning mills have little scope of overproduction if prices were to slide in an oversupplied market.

Source: Australian Financial Review

Iron ore takes a step back

Yet, prices have eased in recent days.

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The Global Precious Monthly Metals Index (MMI) gained 3.0% for this month’s MMI value, as the silver price steadied in the second half of August.

September 2020 Global Precious MMI

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Silver surge

Last month, MetalMiner’s Stuart Burns delved into the rise of the silver price and how much further it could go.

After falling to $12.59 per ounce as of March 20, the silver price surged as high as $29.14 in the first half of August.

But, as Burns noted, the price did retrench thereafter, generally hovering around $27 per ounce.

“Both gold and silver retrenched yesterday,” Burns wrote Aug. 12. “Gold fell below $2,000/ounce, while silver dropped toward $27/ounce.

“But whether that will be enough to dampen spirits for a push higher in coming weeks will depend on the course of the dollar, indications on post-pandemic recovery and further action by the Fed regarding longer for lower interest rates.

“You’d be brave to bet against it.”

Since then, silver has continued to trade sideways, starting this week just under $27 per ounce before ticking up to $27.20 per ounce Wednesday.

As Burns notes, how much silver and fellow precious metal gold can continue to gain depends on the aforementioned factors.

From March 20 until the end of July, the U.S. dollar index declined by nearly 10%. Since then, the dollar has trended mostly sideways.

The index stood at 93.20 Wednesday afternoon. By comparison, the index stood at nearly 103 in late March, when the coronavirus pandemic began to significantly impact U.S. health systems and the economy.

Gold, silver could see further gains

In the same vein, the Bank of Montreal adjusted its long-term forecasts for gold and silver, Kitco News reported.

The bank forecast average gold prices of $1,920 per ounce in the fourth quarter. The new forecast marked a 4% increase from its previous forecast, according to the report.

Furthermore, the bank forecast an average Q4 silver price of $27.50 per ounce. The adjusted forecast for silver marked a 47% increase from the bank’s previous forecast, per the report.

Fed targets long-term inflation rate of 2%

As Burns noted, the Federal Reserve’s monetary policy will also have a hand in the strength of gold and silver prices.

On Wednesday, the Fed released a statement announcing its long-term stance on inflation.

“The Committee seeks to achieve maximum employment and inflation at the rate of 2 percent over the longer run,” the Fed said in a statement. “With inflation running persistently below this longer-run goal, the Committee will aim to achieve inflation moderately above 2 percent for some time so that inflation averages 2 percent over time and longer-term inflation expectations remain well anchored at 2 percent. The Committee expects to maintain an accommodative stance of monetary policy until these outcomes are achieved.”

Furthermore, the Fed opted to maintain the existing federal funds rate of 0-0.25%. The Fed said it will maintain the target range until “labor market conditions have reached levels consistent with the Committee’s assessments of maximum employment and inflation has risen to 2 percent and is on track to moderately exceed 2 percent for some time.”

According to the most recent Consumer Price Index (CPI) reporting from the U.S. Department of Labor, the all items index increased 1.3% over the previous 12-month period.

Actual metals prices and trends

The U.S. silver price gained 15.0% month over month to $28.14 per ounce as of Sept. 1.

The U.S. platinum bar price rose 2.9% to $926 per ounce. Fellow platinum-group metal palladium  gained 8.1% to $2,133 per ounce.

The U.S. gold bullion price fell 0.4% to $1,967.40 per ounce.

The Chinese gold bullion price, meanwhile, rose 0.7% to $61.81 per gram.

The MetalMiner 2021 Annual Outlook consolidates our 12-month view and provides buying organizations with a complete understanding of the fundamental factors driving prices and a detailed forecast that can be used when sourcing metals for 2021.

The Copper Monthly Metals Index (MMI) increased 5.1% for this month’s value, as copper prices continue to pick up globally.

September 2020 Copper MMI chart

LME copper prices increased throughout August, trading over $6,500/mt the last few weeks of the month. SHFE prices also increased during the same period, as local demand remained strong and refined production tightened.

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Copper prices pick up, find further support

LME copper prices declined for the first half of the month and, after increasing, traded sideways, moving from $6,439/mt at the end of July to $6,702/mt in August. The SHFE price followed a similar trend to the LME price. Both prices had not reached this level since June 2018.

Copper inventories in LME warehouses continued to decrease, closing at 89,350 tons. Stocks have not fallen to this low of a level since January 2006.

On the other hand, SHFE stocks had the exact opposite trend. SHFE stocks continued to increase throughout the month, rising to 170,086 tons this month. These trends have only accelerated in the first weeks of September.

Copper prices are partly driven by high Chinese demand. Consumption increased 14.9% year over year during the January to June period, up to 12 million tons.

Cuts on the supply side may have resulted in temporary fears in the market.

Chinese refinery capacity declined in recent months. Summer maintenance, along with concentrate supply tightening due to the pandemic, brought down refined production. Production fell by 5.3% to 814,000 tons in July, according to the National Bureau of Statistics.

China does not appear to be the only country producing less refined copper.

For example, Rio Tinto delayed the restart of its Kennecott mine in Utah due to maintenance.

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