Weekly Metals News Digest (Nov 6-10)
China increases red metal imports
China has a pleasant surprise for the market, with imports of pure copper and copper-based semi-finished products exceeding 500,000 tons in October this year. This is the highest result since December 2022, when imports of the red metal in China amounted to 404,414 thousand tons amid stagnant industry demand.
The growth in imports of copper and copper products to China is the result of several factors. Firstly, consumer activity in the country traditionally grows after the summer vacation season. Secondly, Chinese industry is now revitalizing after the lifting of severe restrictions related to the coronavirus pandemic. Thirdly, the Chinese authorities have adopted a set of measures aimed at stimulating economic growth, which include the provision of preferential loans for infrastructure projects that use copper. Finally, the expansion of copper imports was helped by a decline in copper prices on the London Metal Exchange and other stock exchanges from $4,200 in January this year to $3,700 in November.
Bullish expectations in the aluminium market
An optimistic forecast from Morgan Stanley pleased participants of the global aluminium market. The bank’s analysts expect that the average price of the winged metal on the London Metal Exchange will be $2,350 per ton in 2024, $2,450 in 2025 and $2,650 in 2026.
According to Morgan Stanley experts, aluminium will play a major role in the process of decarbonizing the global economy, although its production is energy-intensive and involves significant emissions of harmful substances into the atmosphere. Nevertheless, the metal will be in demand for the production of electric cars, the construction of solar and wind power plants, intelligent household appliances and more.
Over the past decade, a number of major aluminium companies have been implementing projects to reduce the carbon footprint of their products. For example, the British Rio Tinto announced five years ago that it had created the world's first zero-carbon aluminium smelting process.
In the meantime, Australia's South32 is accelerating the decarbonization project at its Hillside smelter, which accounts for 63% of the company's total aluminium output.
Aurubis bets on hydrogen
German steel giant Aurubis has completed a series of experiments at its Hamburg plant which are aimed at using a low-carbon fuel to replace natural gas. Aurubis chose ammonia, which was supplied by its pilot partner the Abu Dhabi National Oil Company (ADNOC), a hydrocarbon production and refining company.
Ammonia is made up of nitrogen and hydrogen and burns without producing carbon dioxide. ADNOC is developing the production of "green" ammonia through the use of renewable energy sources and delivered an initial batch to Aurubis last October.
Aurubis in turn has been conducting a series of experiments over a period of several months, in which it used ammonia as a source of energy in the production of copper rod.
Copper rod is used as a billet for the manufacture of cables and wires for a wide variety of industrial and construction purposes, and particularly for power supply to enterprises and homes.
Aurubis is now exploring opportunities to apply pure hydrogen directly to metallurgical processes.
Global airlines are short of titanium
The global aviation industry is facing a catastrophic shortage of titanium, which has caused numerous failures in aircraft maintenance and repair chains. The underlying issues in the global titanium market are in fact related to Russia.
The Russian corporation VSMPO-AVISMA is one of the world's largest suppliers of titanium to global aviation concerns. For example, the American aviation giant Boeing received approximately one third of the titanium it needed from VSMPO-AVISMA, while its European competitor Airbus acquired half of its volumes. At the same time, Boeing operated a joint venture with VSMPO-AVISMA for titanium machining, which gave it a competitive advantage over Airbus.
After Russia launched a special military operation in Ukraine, Boeing and Airbus decided to refuse titanium produced by VSMPO-AVISMA, which resulted in a shortage on the global market and higher prices. As a result, they have been forced to look for other suppliers, particularly in China.
Nickel Asia pulls to financial bottom
The Philippine Nickel Asia Corporation (NAC) is experiencing great financial difficulties due to the fall in global prices for nickel ores and concentrates. As a result, its net profit for the first nine months of this year decreased by 47% compared to the same period in 2022.
At the same time, Nickel Asia's production performance is growing: in January–September 2023, its enterprises increased nickel ore production by 5% to almost 13 million tons. The company's exports grew by 8% to 7.3 million tons, with the rest of the volume being processed into nickel pig iron and ferronickel at the corporation's enterprises. At the same time, its average sale price of nickel ore amounted to $29,150 per ton, compared to $38,870 in the first nine months of the previous year.
The collapse in prices for nickel raw materials on the global market is due to the growth in production in Indonesia and its strong expansion of nickel pig iron and ferronickel exports. It is not clear how long the decline in prices for nickel ores and concentrates will continue for, but no rise is expected before the end of this year.
Forecast: After redistribution, where is the global titanium market headed?
The situation in the global aviation industry is looking serious as a result of the skewed global titanium market, given aircraft manufacturers cannot abandon it and switch to other non-ferrous metals such as aluminium or copper. This is because the metals’ properties mean that they cannot be used for the manufacture of all components of airliners.
Titanium is critical to the aircraft industry because of its lightness, corrosion resistance and stability at high temperatures, allowing it to be used in the production of airframe components. It is also used to produce key aircraft engine components such as fans, compressors, combustion chambers and turbines.
As a result of Boeing and Airbus' rejection of Russian VSMPO-AVISMA and Embraer's intention of doing the same, they are developing cooperation with manufacturers from China, which in recent years has overtaken Russia in terms of titanium output. Despite this, purchases made there will lead to a dependence among global aviation concerns on Chinese metallurgical companies.
Nevertheless, it is possible to forecast that by the end of 2023, titanium production in the world will grow by 7.7% to 280,000 thousand tons, including a rise in China of 13% to 170,000 tons.
