Weekly Metals News Digest – July 15-19
China's Aluminum Production Hits Ten-Year High Amid Surging Demand
China achieved a ten-year high in aluminum production in June 2024, reaching nearly 3.7 million tons, a 6.2% increase from June 2023, according to the National Bureau of Statistics. This surge brought the first half of 2024's total production to 21.55 million tons, up 6.9% year-on-year.
The rise in aluminum production is attributed to several factors. Yunnan Province saw increased output due to higher hydropower generation from the summer rainy season. Additionally, new aluminum electrolysis capacity was commissioned in Inner Mongolia last month. Meanwhile, aluminum futures on the Shanghai Futures Exchange rose to around $2,755 per ton, compared to $2,500 per ton on the London Metal Exchange.
However, the ongoing construction crisis in China has led to significant aluminum stockpiles, which could pressure production volumes in the future.
Copper Demand for Electric Vehicles to Boost Mining Needs
The demand for copper, essential for electric vehicle (EV) motors, is set to rise sharply, necessitating a 55% increase in new mines, according to the International Energy Forum. By 2050, copper ore production must grow by 82%, from 20.4 million tons to 37.1 million tons, potentially reaching 49 million tons by 2086.
To meet these targets, six new mines need to be developed annually, requiring substantial investment. The complex and remote nature of many copper deposits, along with lengthy exploration and development processes, adds to the challenge.
Barrick Gold Reports Strong Performance in First Half of 2024
Barrick Gold Corporation reported producing 948,000 troy ounces of gold in Q2 2024, with sales of 956,000 troy ounces. For the first half of the year, gold production was 1.888 million troy ounces, with sales of 1.866 million troy ounces. Copper production for the same period was 83,000 tons, with 81,000 tons sold.
Increased output at the Veladero, Porgera, Tongon, and North Mara mines contributed to these results. Barrick aims to produce 3.9-4.3 million troy ounces of gold by the end of 2024, with capital investments between $2.5 billion and $2.9 billion.
Japanese Companies Agree to Higher Aluminum Premiums for Q3
Japanese consumers have agreed to a premium of $172 per ton for aluminum in Q3 2024, 16-19% higher than in Q2. Despite this increase, the premiums are still below the $175-190 per ton range proposed by aluminum producers, reflecting the tough negotiating stance of Japanese buyers.
Japan, which produces no primary aluminum, relies on imports and produces about 1 million tons of secondary aluminum annually. The country's main aluminum users include the construction, mechanical engineering, electronics, and household appliance sectors.
Lithium Industry Anticipates Major Growth Despite Price Drop
The lithium industry is undergoing significant changes, anticipating a 40-fold increase in demand by 2030 despite a recent price drop. Companies like Lithium South Development and Sigma Lithium are advancing exploration and development projects.
Lithium South Development's Hombre Muerto North project plans to produce 15,600 tons of lithium carbonate annually. The project has attracted interest from several investors, including South Korean company Posco.
Global lithium reserves totaled 303.5 million tons in Q1 2024, a 52.2% increase from three years ago, positioning the industry for substantial growth.
Aluminum Prices Unlikely to Reach $3,000 per Ton in 2024
Rising aluminum production in China is putting downward pressure on global prices, which have stagnated around $2,400 per ton since May 2024. China's production is nearing the government's cap of 45 million tons, suggesting limited future increases.
Weak domestic demand in China is forcing suppliers to boost exports, particularly to the European Union, where Russian shipments have decreased. This dynamic, along with a strong U.S. dollar, is likely to keep aluminum prices below $3,000 per ton by the end of 2024.
