nickel

Metals – Aluminium gains on EU sanction threats

    Aluminium prices rose over 3% yesterday and led the gains among base metals after reports suggesting the possibility of further sanctions by the European Union on Russian aluminium. There are speculations of a potential complete ban on aluminium imports in the upcoming Russian sanctions package scheduled to be released next month. Russian metals had broadly escaped sanctions until last month, when the UK prohibited British individuals and entities from trading physical Russian metals, including aluminum, nickel and copper. UK is the only country in Europe to have adopted such measures. This could potentially lead the LME to reopen the debate over whether it should ban deliveries of Russian metal. Just under 80% of the aluminium on the LME was of Russian origin at the end of November. Steel inventories at major Chinese steel mills rose for a second consecutive week to 15.4mt in mid-January, up 6.7% compared to early January, accordin

Summarised Fluctuations Of Gold, Crude Oil, Bitcoin And Rouble Since The Russia-Ukraine War Started (with chart)

Summarised Fluctuations Of Gold, Crude Oil, Bitcoin And Rouble Since The Russia-Ukraine War Started (with chart)

Mikołaj Marcinowski Mikołaj Marcinowski 08.03.2022 12:27
It’s been almost two weeks since Russia invaded Ukraine. Even if the first day weren’t affected by huge rises, recent days show a major lift across markets. Source: TradingView.com Nickel There are some sensational rises beginning with Nickel price which increased by over 150% what can significantly affect many branches as Nickel is used, among others, in automotive and medical industries. Gold Gold raised by ‘only’ 4%, but it trades over magic $2000 level which nears ATH of Ca. $2100 (2020). XAU is believed to be a safe-haven as tensions rise and other assets’ fluctuations scare off investors. Crude Oil – BRENT and WTI Crude Oil prices have been rising since the first sights of invasion, but hitting Ca. $130 per barrel (to put it mildly) confused both investors and drivers around the world. Generally speaking, Crude Oil price has increased by Ca. 30% since the beginning of the war. Bitcoin BTC hasn’t fluctuated much and sticks to the levels near $40k, increasing by Ca. 5% since the invasion. Russian Rouble Currency of the invader has weakened significantly – by ca. 40% as RUBUSD chart shows. It will be really hard to get the Russian currency back to the game after such decrease. MOEX Some say Russian Index (RTSI – RU50) ‘surrendered’ shortly after the invasion has started as it remains closed since 1/03. At that time RTSI had been ca. 26% higher than on the first day of the warfare. DAX (GER 40) One of the greatest European index has lost almost 10%, what shows how broad is the influence of Russia-Ukraine War. Wheat Last but (definitely) not least… Wheat price increased by over 40% as conflicted countries – Russia and Ukraine are the major suppliers of such commodities. Don’t forget to follow us on Twitter! Data: TradingView.com
Ringing the Bell

Ringing the Bell

Monica Kingsley Monica Kingsley 09.03.2022 16:03
S&P 500 once again gave up intraday gains, and credit markets confirmed the decline. Value down significantly more than tech, risk-off anywhere you look. For days without end, but the reprieve can come on seemingly little to no positive news, just when the sellers exhaust themselves and need to regroup temporarily. We‘re already seeing signs of such a respite in precious metals and commodities – be it the copper downswing, oil unable to break $130, or miners not following gold much higher yesterday. Corn and wheat also consolidated – right or wrong, the market seeks to anticipate some relief from Eastern Europe.The big picture though hasn‘t changed:(…) credit markets … posture is very risk-off, and the rush to commodities goes on. With a little check yesterday on the high opening prices in crude oil and copper, but still. My favorite agrifoods picks of late, wheat and corn, are doing great, and the pressure within select base metals, is building up – such as (for understandable reasons) in nickel and aluminum. Look for more to come, especially there where supply is getting messed with (this doesn‘t concern copper to such a degree, explaining its tepid price gains).And I‘m not talking even the brightest spot, where I at the onset of 2022 announced that precious metals would be the great bullish surprise this year. Those who listened, are rocking and rolling – we‘re nowhere near the end of the profitable run! Crude oil is likely to consolidate prior steep gains, and could definitely continue spiking higher. Should it stay comfortably above $125 for months, that would lead to quite some demand destruction. Given that black gold acts as a „shadow Fed funds rate“, ......its downswing would contribute to providing the Fed with an excuse not to hike in Mar by 50bp. After the prior run up in the price of black gold that however renders such an excuse a verbal exercise only, the Fed remains between a rock and hard place, and the inflationary fires keep raging on.Let‘s move right into the charts (all courtesy of www.stockcharts.com).S&P 500 and Nasdaq OutlookS&P 500 is reaching for the Feb 24 lows, and may find respite at this level. The upper knot though would need a solid close today (above 4,250) to be of short-term significance. Remember, the market remains very much headline sensitive.Credit MarketsHYG clearly remains on the defensive, but the sellers may need a pause here, if volume is any guide. Bonds are getting beaten, and the outlook remains negative to neutral for the weeks ahead. Gold, Silver and MinersPrecious metals keep doing great, but a pause is knocking on the door. Not a reversal, a pause. Gold and silver are indeed the go-to assets in the current situation, and miners agree wholeheartedly.Crude OilCrude oil is having trouble extending gains, and the consolidation I mentioned yesterday, approaches. I do not think however that this is the end of the run higher.CopperCopper is pausing already, and this underperformer looks very well bid above $4.60. Let the red metal build a base, and continue rising next, alongside the rest of the crowd.Bitcoin and EthereumCryptos upswing equals more risk appetite? It could be so, looking at the dollar‘s chart (I‘m talking that in the summary of today‘s analysis).SummaryEvery dog has its day, and the S&P 500‘s one might be coming today or tomorrow. It‘s that the safe havens of late (precious metals, commodities and the dollar) are having trouble extending prior steep gains further. These look to be in for a brief respite that would be amplified on any possible news of deescalation. In such an environment, risk taking would flourish at expense of gold, silver and oil especially. I don‘t think so we have seen the tops – precious metals are likely to do great on the continued inflation turning into stagflation (GDP growth figures being downgraded), and commodities are set to further benefit from geopolitics (among much else).Thank you for having read today‘s free analysis, which is available in full at my homesite. There, you can subscribe to the free Monica‘s Insider Club, which features real-time trade calls and intraday updates for all the five publications: Stock Trading Signals, Gold Trading Signals, Oil Trading Signals, Copper Trading Signals and Bitcoin Trading Signals.
OPEC+ Meeting: Saudi Arabia Implements Deeper Voluntary Cuts to Boost Oil Prices

Commodities: US Crude Oil Output Is Forecast To Average A Record 12.41MMbbls/d This Year, The Nickel Surplus Is Expected To Grow Further

ING Economics ING Economics 11.01.2023 08:44
The bulk of the commodities complex managed to edge higher yesterday despite some hawkish comments from Fed officials. Markets await US CPI data which will be released on Thursday Energy- Record US oil output expected in 2023 and 2024 The oil market managed to eke out a small gain yesterday despite some hawkish comments from Fed officials. However, in early morning trading today, the market appears to be coming under some pressure following the release of US inventory numbers from the API. The API reported that US crude oil inventories increased by 14.9MMbbls, while gasoline and distillates also saw builds of 1.8MMMbbls and 1.1MMbbls respectively. Expectations were for a crude oil draw of around 2MMbbls. The more widely followed EIA inventory numbers will be released later today. The EIA published its latest Short-Term Energy Outlook yesterday, which included the latest US oil output forecasts for 2023 as well as the first forecast for 2024. US crude oil output is forecast to average a record 12.41MMbbls/d this year, up a little more than 500Mbbls/d YoY. Early estimates are for 2024 output to continue growing, increasing by around 400Mbbls/d to a record 12.81MMbbls/d. These annual growth rates remain fairly modest compared to previous upcycles seen in the oil market in recent years. Metals – nickel market developments First Quantum Minerals is close to striking a deal with Panama’s government on a copper mine after reporting progress on resolving tax and royalty terms for the project. First Quantum and Panama have been negotiating new tax terms for more than a year on the open pit mine. First Quantum started commercial production at Cobre Panama in 2019.  The mine can produce 300,000 metric tonnes of copper a year. Lead inventories in the LME warehouses fell by 9.3% to the lowest since October 2007. Total stocks fell by 2,400 tonnes to 23,375 tonnes with the decline driven by withdrawals from Taiwan. Xiang Guangda’s (the billionaire at the centre of last year’s nickel short squeeze) Tsingshan Holding Group Co. is in discussions with several struggling Chinese copper plants about processing its material into the more valuable refined metal, according to a report from Bloomberg. If successful, Tsingshan’s plant, together with similar moves by its peers, could double Chinese refined nickel production this year, from about 180,000 tonnes in 2022 – adding roughly a fifth to global refined output, according to Bloomberg. According to the latest report from SMM, the nickel surplus is expected to grow further in 2023. In 2023, total supply will reach 3.808mt in Ni content while demand will be 3.54mt in Ni content, resulting in a supply surplus of 269kt in Ni content, which is mainly driven by Nickel Pig Iron (NPI) supply. The LME published the results of a report into March’s crisis in the nickel market, recommending the exchange tighten its rules and enforcement processes to avoid a similar situation in the future. The LME said it will announce a plan by the end of March to implement the recommendations. Read this article on THINK TagsUS oil production Oil Nickel EIA Copper API Disclaimer This publication has been prepared by ING solely for information purposes irrespective of a particular user's means, financial situation or investment objectives. The information does not constitute investment recommendation, and nor is it investment, legal or tax advice or an offer or solicitation to purchase or sell any financial instrument. Read more
Share of Russian metal grows in LME warehouses

Share of Russian metal grows in LME warehouses

ING Economics ING Economics 10.02.2023 15:48
The London Metal Exchange (LME) has published its first report breaking down inventories by country of origin, showing a large increase in the proportion of Russian metal sitting in the exchange’s warehouses. The bourse said the increase was in line with its expectations Source: Shutterstock First LME report to provide more transparency After a market consultation late last year, the LME decided to continue to allow Russian metal to be delivered into its warehouses as a significant portion of the market was still planning to buy it next year. The LME was looking at potentially banning the delivery of Russian metal into its warehouses, limiting Russian flows or taking no action. Instead, the exchange said it will publish regular reports from January 2023 detailing the percentage of Russian metal stored under warrant in LME warehouses to provide more transparency. There have been concerns that LME warehouses could be used as a dumping ground for unwanted Russian metals, leading to a disconnect between LME and actual traded prices. Russia is a major producer of metals, including nickel, aluminium and copper. The proportion of Russian metal in LME warehouses has increased significantly, unsurprisingly, given the self-sanctioning that we have seen when it comes to Russian metal. While metals have been mostly spared in the rounds of sanctions imposed on Russia that followed its invasion of Ukraine in February last year, some metal consumers have been self-sanctioning and shunning Russian metal. Last year, Novelis, a division of Hindalco Industries and Norsk Hydro's extrusions unit said they would not enter into new Russian purchase contracts for 2023. Russian copper share near highest in a decade As of 31 January, Russian copper made up 94.2% of total LME copper inventories. This is up from 63% in early October 2022, and just shy of a historical high of 95% seen in September 2021. However, the LME noted that market participants do continue to withdraw Russian copper from its warehouses, indicating continued demand for the material. For nickel, Russian material made up 15.8% of total inventories, up from 1.4% in early October, but still well below the highs of 64.8% seen in January 2013. Finally, Russian aluminium accounted for 40.6% of total LME aluminium inventories, up from 14.9% in early October, but still some distance from the highs of 73.7% seen back in November 2014. However, given the increase in aluminium inventories this week, it is likely that the proportion of Russian material is currently higher than the report suggests. Read next: Tesla Will Increase Output For 2023, Deliveroo Are Planning To Cut Jobs| FXMAG.COM LME aluminium inventories jumped by more than 100,000 tonnes on 7 February, in the largest increase in nearly a year, with metal going into South Korea’s Gwangyang port. This followed a 40,200 tonnes inflow on 25 January. There is speculation that recent LME inventory increases in aluminium are being driven by Russian metal. The South Korean exchange warehouses are viewed as an attractive storage hub for Russian metal due to its proximity to Vladivostok, which is the main regional export hub for Russia’s aluminium. The LME said higher Russian stocks of aluminium in Asian warehouses were expected by the exchange as during the consultation period Asian-based respondents tended towards not supporting a ban on the warranting of Russian metal, because Russian brands are broadly acceptable to many Asia-based consumers. If we continue to see an increasing amount of self-sanctioning of Russian metals, the risk is that we see more Russian metal being delivered into LME warehouses and staying there, which could potentially mean that LME prices trade at discounted levels to actual traded prices. The LME said the rising levels of Russian metal had not yet reached a point where the bourse needed to take action. US plans 200% tariff on Russian aluminium Meanwhile, the US is reportedly preparing to impose a 200% tariff on Russian-made aluminium. If the US goes ahead and imposes the tariff on Russian material, it will likely have a limited impact on the global market. The US is not a significant buyer of Russian aluminium, which usually accounts for about 10% of total US imports, though this share has been even smaller recently. US purchases of aluminium products from Russia fell to about 200,000 tonnes last year, just 3% of total US imports – a small fraction of the global market of around 90 million tonnes.  Russia was the sixth largest importer of aluminium into the US in 2022, behind Canada with the biggest share, then UAE, Bahrain, China and Australia. These reports shouldn’t come as too much of a surprise given that last year it was reported that the White House was considering either an outright ban of the metal, sanctions on Russian aluminium producer, Rusal, or imposing prohibitively high tariffs. If the US were to go the sanctions route, it would have a more severe impact on the market. The LME said there was no Russian aluminium in its warehouses in the US “in the context of market speculation around potential US tariffs on Russian aluminium.”   The LME said it intends to continue to publish country of origin stock reports on the LME website – the next report is due to be published on 10 March 2023 and provide country of origin stock data as of 28 February 2023. Percentage of live tonnage of Russian brands Source: LME Read this article on THINK TagsMetals Copper Aluminium Disclaimer This publication has been prepared by ING solely for information purposes irrespective of a particular user's means, financial situation or investment objectives. The information does not constitute investment recommendation, and nor is it investment, legal or tax advice or an offer or solicitation to purchase or sell any financial instrument. Read more
Treading Carefully: Federal Reserve's Rate Hike Pause, ECB and Bank of England on the Horizon

China's Imports Recover: Crude Oil, Natural Gas, and Copper Boost Market Sentiment

ING Economics ING Economics 07.06.2023 10:48
The Commodities Feed: China's imports recover China’s crude oil and natural gas imports recovered strongly in May, which could help improve market sentiment. For copper, China’s concentrate imports jumped to a fresh high, while unwrought copper imports remain soft.   Energy – China's crude oil imports recover China’s crude oil imports recovered to 51.44mt or around 12.16MMbbls/d (up 17% month-on-month and 12% year-on-year) in May 2023, as some of the refineries increased their utilisation rate after concluding maintenance. Demand slowdown from China has been a major concern for the crude oil market recently, and a recovery in oil imports is likely to provide some comfort to the oil market. Higher refinery utilisation has also increased refined product supplies in the Chinese market, with China reverting to being a net exporter of refined products last month. Among other energy products, natural gas imports into China increased 17.3% YoY to 10.6mt in May as lower gas prices in the Asian market supported demand for storage.   In its latest short-term energy outlook report, the Energy Information Administration (EIA) revised higher domestic oil production estimates, as the decision by OPEC+ to extend output cuts could push oil prices higher and bring more investments into exploration.   The administration revised higher the production estimates to 12.61MMbbls/d for 2023 compared to earlier estimates of 12.53MMbbls/d and output of 11.88MMbbls/d in 2022. For 2024, production estimates are revised higher to 12.77MMbbls/d compared to earlier estimates of 12.69MMbbls/d. On the other hand, US demand for crude oil is revised down from 20.47MMbbls/d to 20.42MMbbls/d on slow demand for distillates – although this is still higher than the 20.28MMbbls/d of consumption in 2022.   Meanwhile, the American Petroleum Institute (API) reported that the US crude oil inventories decreased by 1.71MMbbls over the last week, in contrast to market expectations for the addition of around 350Mbbls. Cushing crude oil stocks are reported to have increased by 1.53MMbbls. On the products side, API reported that gasoline and distillates inventories rose by 2.42MMbbls and 4.5MMbbls respectively over the week ending 2 June. The more widely followed EIA report will be released later today.     Metals – Chinese copper concentrate imports at record highs China released its preliminary trade data for metals this morning, which shows total monthly imports for unwrought copper fell 4.6% YoY to 444kt in May, largely on account of higher domestic production of the refined metal. Cumulatively, unwrought copper imports fell 11% YoY to 2.14mt in the first five months of the year.   Meanwhile, imports of copper concentrate rose 16.7% YoY to a fresh record of 2.56mt last month, with year-to-date imports up 8.8% YoY to 11.31mt from January to May this year. In ferrous metals, iron ore monthly imports rose 3.9% YoY (+6.3% MoM) to 96.17mt last month, while cumulative imports are up 7.7% YoY to 480.7mt from January to May.   On the exports side, China’s unwrought aluminium and aluminium products shipments fell 29.7% YoY to 475.4kt last month while year-to-date exports declined 20.2% YoY to 2.32mt in the first five months of the year. Exports of steel products jumped 41% YoY to 36.4mt from January to May this year.   Meanwhile, data from the Mines and Geosciences Bureau shows that nickel output in the Philippines rose 5.4% YoY to 3.9dmt in 1Q23 despite only a few mines being in production. The bureau reported that only 13 out of the nation’s 33 operating mines reported output for the above-mentioned period, as some were impacted by unfavourable weather conditions while few were undergoing scheduled maintenance.   However, the bureau remains optimistic about the outlook for the mining industry over the long term, following the expected recovery of the global economy and strong demand for nickel ore.     Agriculture – Chinese soybean imports surge The latest trade numbers from Chinese Customs show that soybean imports in China rose 24.3% YoY (+65.6% MoM) to a record high of 12.02mt in May. The imports surged sharply as the delayed cargoes (due to last month's strict inspections) were finally unloaded at ports. Cumulatively, soybean imports rose 11.2% YoY to 42.3mt over the first five months of the year.   Weekly data from the European Commission show that soft wheat shipments from the EU reached 28.9mt for the season as of 4 June, up 11.4% compared to 25.9mt from the same period last year. Morocco, Algeria, and Nigeria were the top destinations for these shipments. Meanwhile, the EU’s corn imports stood at 24.6mt, compared to 15.3mt reported a year ago.
Strong August Labour Report Poses Dilemma for RBA: Will Rates Peak or Continue to Rise?

Chile Copper Output Declines as Operational Issues Persist; Aluminium Stockpiles Show Mixed Trends

ING Economics ING Economics 03.07.2023 09:16
Metals – Chile copper output declines The latest data from the National Statistics Institute of Chile shows that domestic copper output contracted for a second consecutive month by 1.1% MoM and 14% YoY to 413kt in May following a series of operational issues. Cumulative output declined 4.7% YoY and totalled 2.1mt in the first five months of the year. Meanwhile, recent reports suggest that Codelco halted mining activities at its El Teniente copper mine in Chile on Friday, following an accident at the mine while installing a generator. In aluminium, the latest LME data shows that on-warrant stockpiles rose by 13,725 tonnes (the biggest daily addition since 23 May) to 271,475 tonnes on Friday. Most of the rise came from warehouses in Gwangyang, South Korea. Net outflows for June were still higher at 126,025 tonnes, compared to outflows of 94,175 tonnes a month earlier. Total LME exchange inventories for aluminium rose by 11,925 tonnes to 543,150 tonnes on Friday, after having declined for seventeen consecutive sessions. Weekly data from Shanghai Futures Exchange (ShFE) show that inventories for base metals remained mixed over the last week. Aluminium weekly stocks fell by 32,994 tonnes (-25% WoW) to 98,079 tonnes (the lowest since the start of the year). Copper inventories rose by 7,889 tonnes (+13% WoW) to 68,313 tonnes, while nickel inventories declined by 319 tonnes (-9.2% WoW) to 3,133 tonnes at the end of last week.
The Influence of Rising Oil Prices on Fed Rate Expectations and the US Dollar

Tightening EV Battery Supply Chains: Impact of Soaring Demand and Volatile Metal Prices

ING Economics ING Economics 26.07.2023 14:14
The dynamics of tightening supply and soaring demand for electric vehicle batteries are becoming increasingly fragile. Battery manufacturers are now looking into new technology with advanced chemistry compositions to ensure long-term metals supply, but progress will be impacted by the outlook for metals prices.   More minerals are used in electric cars compared to conventional cars   Surging battery metal prices pose challenges to the EV industry The rapid increase in electric vehicle sales during the Covid-19 pandemic has exacerbated concerns over China’s dominance in lithium battery supply chains. Meanwhile, the ongoing war in Ukraine has pushed prices of raw materials – including cobalt, lithium, and nickel – to record highs.   The dependence on specific suppliers is not the only concern. Batteries make up a big part of an EV’s total cost and typically account for 30% to 40% of their value, but this proportion increases with larger battery sizes. Rising demand for EVs amid tightening supply chains has also pushed prices of battery materials (including cobalt and lithium) to multi-year highs. This impacts prices, which in turn makes consumers more hesitant to make the shift to electric vehicles. While prices for nickel and cobalt have come down in the first half of 2023, they are still higher than they have been in previous years. For example, Chinese prices of lithium carbonate (a refined form of the metal that goes into EV batteries) jumped more than 1000% from the end of 2020 to reach a high in November last year. They then lost more than two-thirds of their value through late April, according to data from Asian Metal.       What does the EV battery supply chain look like?   The five key materials for lithium-ion batteries (Li-ion) are lithium, cobalt, nickel, manganese, and graphite, all of which provide the battery with the power to store and release energy for boosting EVs. Most of the key materials used in electric vehicle production are mined in resource-rich countries, including Australia, Chile and the Democratic Republic of Congo (DRC). There are likely sufficient reserves of minerals in the earth’s crust to satisfy future demand for EV batteries, but scaling up mining is a long and expensive process. For battery production alone, a conservative estimate from the International Energy Agency (IEA) suggests that by 2030, we will need 50 additional lithium mines and 60 for nickel. We will also need to add 50 new cathode and 40 new anode active material manufacturing plants to produce high-performance battery materials. Currently, it can take between two and seven years to build a new factory, depending on the technology and member state. It takes 10 years on average until a new mine comes online.     Top battery raw materials producing countries in 2022   Lithium Batteries are now the dominant driver of demand for lithium. For Li-ion batteries, lithium is irreplaceable. Over 70% of global lithium production comes from just two countries: Australia and Chile. Australia is the world’s largest supplier and produces most of its lithium by mining hard rock spodumene, unlike Argentina, Chile and China, which produce it mostly from brine. Chile comes in second, holding more than 40% of the world’s known reserves. Cobalt The intensity of cobalt in Li-on batteries has decreased significantly over recent years, with battery makers moving to higher nickel content chemistries. Cobalt is mainly mined as a by-product of copper or nickel mining, and more than 70% of it is produced in the DRC. Artisanal and small-scale mining is responsible for around 10-20% of the DRC’s cobalt production. Refining is concentrated in China, accounting for around 80% of global capacity, although the country has little of the raw material. Nickel In Li-ion batteries, the use of nickel lends a higher energy density and more storage capacity to batteries. Class 1 nickel (>99.8% purity) is required in battery production, while class 2 nickel (<99.8% purity) cannot be used without further processing. Nickel is primarily found in two types of deposits: sulphide and laterite. Sulphide deposits are mainly located in Russia, Canada and Australia and tend to contain higher grade nickel. Russia is the world’s largest supplier of Class 1 battery-grade nickel, accounting for around 20% of the global supply. Trade restrictions on Russia would therefore pile pressure on prices. Laterite, which contains lower grade nickel, is mainly found in Indonesia, the Philippines and New Caledonia. Indonesia, which holds almost a quarter of global nickel reserves, prohibited the export of nickel ore in January 2020 and is now attracting investments into higher-value processing, mostly from China.   Approximate mineral composition of different battery cathodes   Impact of Russia’s invasion of Ukraine on battery supply chains Lithium and cobalt were relatively unaffected by the supply disruptions following Russia’s invasion of Ukraine. For nickel, it's a different story. Russia is the third-largest producer, supplying around 9% and processing around 6% of global nickel in 2021 – but most importantly, it is the world’s largest Class 1 nickel supplier and accounts for around 20% of global supply, most of which is supplied by Norilsk Nickel. Volatility in the nickel market has become increasingly common over the past year. We've seen reduced liquidity ever since the short squeeze seen back in March, when fears of sanctions on Norilsk Nickel (following Russia’s invasion of Ukraine) coincided with a huge short bet by the world’s largest stainless steel producer, Tsingshan. This caused prices to more than double in just a matter of days. The LME was forced to suspend trading for a week and cancel billions of dollars worth of nickel trades.   LME volumes have declined since then, with many traders reducing activity or cutting their exposure due to a loss of confidence in the LME and its nickel contract in the aftermath of the March short squeeze. These low levels of liquidity have left nickel exposed to sharp price swings – even amid small shifts in supply and demand balances. But as the exchange introduced daily price limits and margin requirements fell, volumes started to pick up. The resumption of Asian trading hours has also encouraged more volumes and improved liquidity, which in turn has reduced volatility in the contract. While volumes have stabilised over the past few months, they remain at lower levels than before the nickel crisis last year.        
Copper, Nickel, and Iron Ore: A Look at China's Demand Impact and Price Projections

Copper, Nickel, and Iron Ore: A Look at China's Demand Impact and Price Projections

ING Economics ING Economics 08.09.2023 13:07
Iron ore prices surged more than 15% over the past three weeks as China has continued its efforts to boost the steel-intensive property sector. Steel mills are also expected to ramp up as the building season begins again this month. However, the uncertainty around mandatory curbs will weigh on the outlook. After China’s steel output climbed to a record of more than one billion tonnes in 2020, the government responded by ordering production cuts in each of the next two years to cut back on emissions and match supply with demand. The intensity and the timeline of production cuts this year are still unknown, but any steel output cut would add to bearish risks for the iron ore market.   CISA daily average crude steel output at member companies   Meanwhile, China’s iron ore stockpiles are hovering around the lowest level since August 2020 as mills have been cautious about restocking amid property woes. From July to August, total iron ore inventories in China across major ports fell 16% to less than 120 million metric tonnes. However, the arrival of the construction season might encourage domestic mills to start restocking. China's iron ore imports in August were at their strongest in almost three years at 106.415 metric tonnes. Low inventories should also support iron ore’s price at elevated levels.   China iron ore total ports inventory   The supply side has been largely stable, with total iron ore production from the top four miners (Vale, Rio Tinto, BHP and Fortescue) ticking up to 539 million metric tonnes in the first half of the year – 4% higher than a year earlier. We believe that with the supply side largely stable, it will be demand in China that will continue to be the main driver for iron prices moving forward. We believe prices will remain volatile as the market continues to respond to any policy change from Beijing. We expect prices to average $105/t in the third quarter, with seasonal demand supporting. We're expecting $100/t in the fourth quarter and we see the 2023 average at $108/t. Risks will remain to the downside heading into year-end amid China steel output cuts, an uncertain outlook for the property sector and healthy supply.   Copper struggles for direction Against the backdrop of an uncertain path of US rate hikes and China’s lacklustre economic recovery, copper has been struggling for direction lately. Beijing’s latest measures to support the housing market helped copper make a recovery from a low in mid-August, but it has failed to hold above the $8,500/t mark.   After two weeks of rising prices, copper is falling again as the market assesses the effects of China’s measures to support its property market and how they might translate into demand for industrial metals.   LME copper warehouse stocks have been rising   Copper’s inventory levels in LME warehouses have been growing, up more than 40% in August after doubling in July. This shows clear signals of weakening demand. They do, however, remain at historical lows. We believe low inventories fuel the possibility for spot prices to rise rapidly if consumption picks up sooner than expected.   China's imported copper demand is showing signs of improvement   The Chinese market has just entered a peak demand season, which should be supportive for copper prices in the near term. China copper ore and concentrate imports are up 9% year-to-date to 18.104m tonnes, while imports in August climbed to all-time highs at 2.697m tonnes ahead of a seasonal pick-up in demand.  Signs of improvement are also emerging for China’s imported copper demand. The Yangshan copper cathode premium – which usually serves as an indicator of China’s import needs – has steadily been moving up over August to stand at $58/mt compared to a year-to-date low of $19.50/mt in March. Still, it remains even below the post-pandemic average of around $65/mt. A boost for China's property sector will be crucial in supporting demand going forward. We remain wary about the short-term outlook for copper, and China remains a key source of caution. We believe commodity-intensive stimulus is needed to support short to medium-term demand growth. In the longer term, we believe copper’s supportive decarbonisation trend should support prices. We maintain our price forecast at $8,400/t in the third quarter and $8,500/t in the fourth quarter, taking the 2023 average to $8,582/t.   Nickel underperforms Nickel has been the worst-performing metal on the LME so far this year, with year-to-date prices down more than 30%. One of the key drivers of the price decline has been the disappointing recovery in Chinese demand, with nickel prices dropping to a one-year low in August. We believe this underperformance is likely to continue amid a weak macro picture and sustained market surplus, with supply from Indonesia continuing to surge to meet the growing demand from the battery sector. In the past, market surpluses have been due to Class 1 nickel – but in 2023, the surplus will be on account of Class 2 nickel.   LME nickel stocks are critically low The LME’s Class 1 nickel stocks are critically low. However, we believe that LME’s new initiative – which has reduced waiting times for approving new brands that can be delivered against its contract – could potentially increase inventories.   China's refined Class 1 nickel output has been increasing in 2023       China’s refined Class 1 output has seen a solid increase in 2023 in response to historically elevated LME prices, and we believe Chinese producers will continue to submit fast-track LME nickel brand applications. This will allow them to deliver their Class 1 material to LME warehouses. The LME has already approved nickel produced by Quzhou Huayou Cobalt New Material Co, a subsidiary of China's Zhejiang Huayou Cobalt Co, as a listed brand in July. GEM Co. Ltd., a subsidiary of Jingmen Gem Co. Ltd. also applied last month to become an LME-deliverable brand. China’s refined Class 1 nickel output jumped 34.5% year-on-year to 129,400 metric tonnes in the first seven months of the year. This was faster than the 33.9% year-on-year increase in the country’s total output of battery-grade nickel sulphate over the same period, according to data from Shanghai Metals Market. Shanghai Metals Market estimates that 145,300 t/y of new refined class 1 nickel production capacity will be added in China this year. We forecast nickel prices to remain under pressure in the short term as a surplus in the global market builds and a slowing global economy mutes stainless steel demand. We see prices averaging $21,000/t in the third quarter and $20,000/t in the fourth quarter. However, the downside will be limited due to tightness in the LME deliverable market. Prices should, however, remain at elevated levels compared to average prices seen before the historic LME nickel short squeeze in March last year due to nickel’s role in the global energy transition. The metal’s appeal to investors as a key green metal will support higher prices in the longer term. We believe that demand for use in electric vehicle batteries remains a key factor for the longer-term narrative for nickel.    ING forecasts      
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Indonesia's Exports Beat Expectations, Boosting Trade Surplus and Easing Pressure on Central Bank"

ING Economics ING Economics 16.11.2023 11:26
Indonesia’s exports fall less than expected Exports and imports fell less than expected leading to a bettter-than-expected trade surplus.   Trade surplus beats expectations Indonesia's exports and imports fell as expected in October although both slipped at a less pronounced pace. Exports fell 10.4% year-on-year compared to the drop of 16.2% YoY in September. Lower global prices for mainstay exports of coal, nickel and palm oil contributed to the lower export performance. Meanwhile, imports were down a modest 2.4% YoY compared to -12.5% YoY reported in the previous month.  This resulted in the trade balance staying largely unchanged from the previous month at roughly $3.5bn, much lower than the record high in 2022 but better than the lows of less than a billion recorded earlier in this year.      Another decent trade surplus to help support the IDR   Better than expected trade surplus supports a BI pause next week November's better-than-expected trade surplus indicates that there will be less pressure on Bank Indonesia (BI) to hike rates next week. BI increased policy rates at its most recent meeting in a bid to steady the rupiah, which was under significant pressure prior to the hike last 19 October. With the trade surplus beating market expectations of a $3.0bn level, we believe the improved external balance should be enough to stabilise the IDR with BI likely keeping rates untouched at the 23 November meeting.
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Metals: Nickel Faces Pressure as Supply Concerns Mount

ING Economics ING Economics 25.01.2024 13:08
Metals: Nickel under pressure Nickel continues to trade under pressure this year after slumping more than 40% in 2023 as increased supplies from Indonesia have raised concerns over a global supply glut. Lower prices have been prompting miners to cut back on supplies. Wyloo Metals Pty Ltd., owned by Andrew Forrest, said it’s shutting down mine operations in Western Australia from 31 May due to the prolonged weakness in the nickel market. As a result, parts of BHP’s Kambalda concentrator will also be suspended starting in June because they can no longer receive ore supply from Wyloo’s halted mines. Recent numbers from the International Aluminium Association (IAI) show that the average daily global primary aluminium output was flat at around 194.9kt in December, compared to 195kt reported a month earlier. Total monthly output rose 2.1% year-on-year (+3.3% month-on-month) to 6.04mt last month, following improved production levels from almost all major producing countries. Meanwhile, cumulative aluminium production rose 2.3% YoY to 70.6mt for the full year 2023. Similarly, Chinese output is estimated to have increased 2.4% YoY (+3.3% MoM) to 3.57mt last month, while year-to-date production is seen rising by 3.1% YoY to 41.7mt in Jan’23-Dec’23. Production in Western and Central Europe also recovered 3.1% MoM to 231kt in December, while year-to-date output still declined 6.9% YoY to 2.7mt last year. Meanwhile, aluminium production in Asia (ex-China) rose 2.6% YoY to 401kt in December. The International Copper Study Group’s (ICSG) latest update shows that the global copper market remained in a supply deficit of 119kt in November. Meanwhile, the Group estimates a total deficit of 130kt over the first 11 months of the year amid subdued mine production and higher demand (particularly in China). Global mine and refined copper production increased by 1% YoY and 5.5% YoY, respectively, while overall apparent refined demand increased by 4% YoY over the first 11 months of the year.
Metals Market Update: Aluminium Surges on EU Sanction Threats, Chinese Steel Mills Restock, Nickel Faces Global Supply Surplus, and Copper Positions Adjust

Metals Market Update: Aluminium Surges on EU Sanction Threats, Chinese Steel Mills Restock, Nickel Faces Global Supply Surplus, and Copper Positions Adjust

ING Economics ING Economics 25.01.2024 15:13
Metals – Aluminium gains on EU sanction threats Aluminium prices rose over 3% yesterday and led the gains among base metals after reports suggesting the possibility of further sanctions by the European Union on Russian aluminium. There are speculations of a potential complete ban on aluminium imports in the upcoming Russian sanctions package scheduled to be released next month. Russian metals had broadly escaped sanctions until last month, when the UK prohibited British individuals and entities from trading physical Russian metals, including aluminum, nickel and copper. UK is the only country in Europe to have adopted such measures. This could potentially lead the LME to reopen the debate over whether it should ban deliveries of Russian metal. Just under 80% of the aluminium on the LME was of Russian origin at the end of November. Steel inventories at major Chinese steel mills rose for a second consecutive week to 15.4mt in mid-January, up 6.7% compared to early January, according to data from the China Iron and Steel Association (CISA). This indicates that Chinese mills are restocking inventories as they remain optimistic about the near-term demand outlook. Meanwhile, crude steel production at major mills rose 3.7% from early January to 2.09mt/d in mid-January, as many mills resumed production activities post-maintenance. In nickel, the data from the International Nickel and Study Group (INSG) shows that the global nickel market remained in a supply surplus of 35,300 tonnes in November, when compared to a marginal surplus of 7,800 tonnes in the same period last year. Earlier, the global nickel market saw an oversupply of 26,000 tonnes in October as well. Cumulatively, the nickel market encountered a supply surplus of 212,500 tonnes in the first eleven months of 2023, up from the surplus of 80,200 tonnes seen in the same period last year. Lastly, the latest LME COTR report released yesterday shows that investors decreased net bullish positions for copper by 2,478 lots for a third consecutive week to 54,375 lots in the week ending on 19 January. Similarly, money managers reduced net bullish bets in aluminium by 4,459 lots for a second straight week to 109,596 lots as of last Friday. In contrast, net bullish bets for zinc rose by 2,322 lots (after reporting declines for two straight weeks) to 29,776 lots at the end of last week.

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