Weekly Metals News Digest (Oct 9-13)

Nornickel expects copper market growth

In the remaining months of 2023 and into next year, Norilsk Nickel forecasts steady growth in the global copper market at a rate of 2–3%.
The company’s forecast emphasizes the revival of economic activity in China, which is the main producer of red metal on the planet, while also being its main consumer. It also highlights the development of electric vehicles and renewable energy (solar and wind), as well as the expansion of power lines in various countries.

As a result, Norilsk Nickel estimates that global copper consumption will rise 2% to 25.3 million tons in 2023 and 3% to 26 million tons in 2024.

Norilsk Nickel’s forecast is close to the expectations of the International Copper Study Group, which holds that global demand for the red metal will increase by 2% to 26.357 million tons in 2023 and by 2.7% to 27.076 million tons in 2024.

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Novelis is betting on the power of light

The US aluminium manufacturer Novelis will be one of the investors in a solar power plant construction project being implemented by Southern Company, a power generating company with 9 million commercial and residential customers in the US.

The project involves the construction of two solar power plants in Alabama. Their total capacity will be 80 MW.

Novelis does not plan to invest directly in the construction of power plants, but will subscribe to receive electricity from the new plants for its future enterprise producing aluminium tape, which will be used in the manufacture of beverage cans. At the same time, however, Novelis intends to invest in the construction of its own solar power plant as part of another project being developed in Italy.

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Zinc deficit to persist for two more years

Next year, global zinc production will increase by 3.3% to 14.3 million tons, and in 2025 even more – by 3.7% to 13.8 million tons. Equally, demand will rise over the same two-year period, by 2.5% to 13.9 million tons and 1.1% to 13.6 million tons respectively. These are the expectations of the International Lead and Zinc Study Group.

A significant zinc deficit is therefore being forecast for 2024–2025, with China, the main consumer of zinc on the planet, playing a major role. At the same time, neither the increase in zinc output in China, nor in Australia and Norway (where the expansion of existing zinc plants is underway), nor the drop in its consumption in Germany, Poland, Slovakia and Great Britain will fundamentally change the situation in the balance of supply and demand of the metal.

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Rusal is preparing for the new year

Rusal is developing a sales plan for aluminium and aluminium-based products for the next year, focusing on the most profitable sales areas.

At the same time, a number of Rusal’s western clients prefer not to enter into new deals with the company, despite the fact that no sanctions have been imposed on it or its products in the European Union or the United States.

For example, Novelis Europe (the European division of Novelis, a US producer of rolled aluminium products) has openly stated that it does not intend to include Russian aluminium in the list of products in its procurement plans for 2024.

This situation has already led to an increase in the share of Russian metal in the total volume of aluminium stored at London Metal Exchange warehouses to 81% at the end of August 2023, and it is unlikely to have decreased much by now.

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Barrick Gold cuts production but does not spook investors

Barrick Gold, the world’s largest gold miner, showed good production and sales results in Q3 2023: it produced 1.04 million troy ounces of the yellow metal and sold 1.0 million troy ounces.

Of course, its performance could have been better, but the company faced some issues with equipment needed for the extension of mining at the Pueblo Viejo mine. The latter affected the schedule and therefore the output of the company. Nevertheless, amidst the current decline in global gold prices, Barrick Gold expects to increase production until the end of 2023, as gold prices may change course.

Forecast: Gold is “doomed” to rise in price

Barrick Gold’s plans to buy new gold deposits and expand their reserves may indicate intentions to increase production of the yellow metal. Consequently, in the long term, global gold prices may continue the increase that has been observed since 2000: at that time gold cost $257 per troy ounce, while today it is near $2,000.

In the next two or three weeks, gold prices also have a good chance of rising due to the ongoing Palestinian–Israeli conflict, which could lead to a full-scale war (in which the entire Middle East will be involved), the fall of the US dollar and crisis phenomena in the global economy. Therefore, investors are viewing gold as a protective asset and trying to buy more of it, thereby causing the yellow metal to grow in value.

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