Weekly Metals News Digest (Dec 11-15)
Copper Prices Rebound on the London Metal Exchange
Copper prices on the London Metal Exchange have started to rise after a prolonged slump, prompting analysts to revise their forecasts for a surplus of the red metal in the global market. For instance, Macquarie Bank now predicts a surplus of 100 thousand tonnes in 2024 and 287 thousand tonnes in 2025, a decrease from the previously expected 203 and 369 thousand tonnes, respectively.
Meanwhile, Brazilian mining giant Vale anticipates its copper production to range between 320-355 thousand tonnes next year, aiming for 325 thousand tonnes by the end of 2023. Significantly influencing these revised forecasts was Anglo American Corporation's announcement that its copper production in 2024 might be 20% lower than earlier estimates, at 730-790 thousand tonnes, and in 2025, it could be 18% lower at 690-750 thousand tonnes.
This news comes alongside developments at the Cobre mine, owned by First Quantum, where Panama's highest court ruled that First Quantum's ownership was illegal. Cobre contributes about 1% of the world's copper production, and its closure is expected to impact the global market.
Nickel Demand Dwindles as LME Stocks Grow
At the London Metal Exchange warehouses, nickel stocks have risen by 14.2% to 43 thousand tonnes by the end of November. Stocks from Australia increased by 9% to 20.5 thousand tonnes, and those from China doubled to 3 thousand tonnes. This growth in nickel stocks is attributed to two factors: the commissioning of new nickel smelting capacities in Indonesia, boosting global supply, and a decrease in demand due to the rising production of nickel-free lithium-iron-phosphate batteries for electric cars. As a result, nickel prices, which exceeded USD 31.3 thousand per tonne in January 2023, have fallen below USD 17 thousand. Consequently, 20-25% of the world's nickel producers are operating at the edge of profitability or incurring losses. Their continued operation contributes to a surplus of metal on the market, which is likely to persist into 2024.
Russian Scientists Aim to Transform Aluminium into Fuel
Aluminium, widely used in various industries and construction, could potentially serve as a fuel in the energy and automotive sectors. Scientists at Perm National Research Polytechnic University are researching the combustion of oxygen in hydrogen and helium under high-pressure conditions to develop software that can automatically calculate aluminium combustion parameters. This research could lead to new technological and energy plants utilizing aluminium.
While the concept of aluminium energy, based on its reaction with water to form hydrogen, exists, it has not progressed beyond experimental stages. Additionally, aluminium-ion batteries are being developed, though they currently lag behind lithium-ion batteries in efficiency and reliability.
South Korea Focuses on Rare Earth Metals
The National Rare Metal Centre has opened in South Korea, tasked with developing technologies for mining and processing rare metal raw materials, conducting scientific and industrial research, and enhancing the national industry's use of rare metals. The Centre will employ 14 highly qualified specialists, marking a significant step towards the qualitative growth of South Korea's rare metal industry. This initiative follows the South Korean Ministry of Trade, Industry and Energy's May 2023 draft amendment for establishing the Centre, reflecting the country's heavy reliance on imported rare metals used in electronics, magnet production, metallurgy, and other industries.
Rusal's Plants Face Potential Shutdowns Amid Economic Challenges
Rusal may close several plants due to deteriorating economic conditions and an increased tax burden, according to the Aluminium Association. While specific plants weren't named, it's likely that the Kandalaksha, Volgograd, and Novokuznetsk aluminium smelters, the least profitable in Rusal's portfolio, are at risk. These plants' combined capacity is 500,000 tonnes of primary aluminium per year, a significant portion of Rusal's total production of 3.83 million tonnes. Additionally, environmental modernization programs at the Krasnoyarsk and Bratsk aluminium smelters might be halted.
Rusal is under pressure from high alumina prices in Asia and declining primary aluminium prices on the London Metal Exchange, which have fallen from a high of $3,523 per tonne in March 2022 to around $2,100-2,130 per tonne.
Forecast: Rusal's Global Market Position at Risk
Rusal's problems stem from a history of focusing on primary aluminium production plants without developing facilities for semi-finished aluminium products like profiles, rolled products, and wheel rims. The company's smelters are divided into two groups: older ones in European Russia and modern ones in Siberia, including the Khakassky and Taishet smelters. When aluminium prices approach $2,000 per tonne, Rusal's older smelters become unprofitable, as seen in January 2013 when the Volkhov and Nadvoitsky smelters were shut down. A similar situation is unfolding now, potentially leading Rusal to close more plants. This would concede market space to players from China and the Middle East, weakening Rusal's position in the global market.
