The first week of October 2024 has concluded, bringing significant updates that shape the current state and outlook of the global non-ferrous metals market. Below are some of the key highlights.
LME Eyes Hong Kong for Non-Ferrous Metal Warehouses
The London Metal Exchange (LME) is considering several locations near Hong Kong to establish non-ferrous metal warehouses. This decision is driven by regional traders' interest in Hong Kong as a financial and trading hub in Southeast Asia, and LME's intention to boost trading activity and stay competitive in the non-ferrous metals sector.
Despite its dominant position in aluminium and copper markets, the LME has been losing ground in the lithium and cobalt markets, crucial for battery production in electric vehicles and electronics. It has been overtaken by the US CME Group in trading volumes and faces growing competition from China’s Guangzhou Futures Exchange, which is expanding its lithium carbonate futures.
Since being acquired by Hong Kong Exchanges and Clearing in 2012, the LME has expanded its warehouse network across the US, Europe, and Asia, currently with 465 facilities. Establishing a warehouse in Hong Kong will depend heavily on approval from the Chinese government and cooperation with Chinese traders, who prefer to expand their networks in the EU and North America or develop relationships with local industries.
The outlook for opening a warehouse in Hong Kong remains uncertain, as international players are more inclined to hedge price risks across multiple exchanges rather than committing to a single one.
Botanickel Seeks to Grow Nickel on Plantations
French startup Botanickel is conducting research in the Balkans to grow Alyssum murale, a plant known for accumulating non-ferrous metals like cobalt, zinc, and nickel. Alyssum murale extracts metals from the soil and accumulates them in its above-ground parts. After harvesting, the plants are dried and turned into biomass pellets, which are processed in an experimental autoclave to produce pure metals, mainly nickel. The plant can accumulate up to 30,000 micrograms of nickel per gram of dry mass.
Botanickel was established in February 2024 by the EU’s largest stainless steel producer, Aperam, along with biotechnology company Econick, a spinoff of the University of Lorraine. Although the ability of certain plants to accumulate nickel has been known for some time, this marks the first attempt to use such plants for industrial-scale nickel production.
If Botanickel’s technology proves viable, it could significantly boost nickel production in the EU and reduce dependence on imports from New Caledonia, China, and Indonesia.
Demand for Copper Remains Strong
Global copper consumption increased by 2.9% to nearly 15.6 million tonnes in the first seven months of 2024, while production grew by 5.9% to 16.1 million tonnes, resulting in a surplus of 528,000 tonnes compared to 79,000 tonnes during the same period last year.
The International Copper Study Group attributes this growth primarily to Japan, China, and the Democratic Republic of Congo. Copper production rose by 3.6% in Japan, 7% in China, and 18% in Congo, driven by increased utilization of existing smelters and the commissioning of new ones.
Meanwhile, Chile's copper output declined by 6.6%, but this did not offset the surplus, as China and Congo account for more than half of the world's copper production. While demand was weak in the US, EU, and Japan, other parts of Asia saw strengthened demand, especially in China, which remains the world's largest copper consumer.
Rusal Expects Aluminium Surplus to Decrease
Rusal forecasts that the global aluminium surplus may shrink to 200-300 thousand tonnes in 2025, down from 500 thousand tonnes at the end of 2024. This outlook is linked to economic stimulus measures by the Chinese government, the largest aluminium consumer globally. Rusal also predicts a slower growth rate for aluminium consumption in China in 2025, with domestic supply lagging behind demand, while outside China, a surplus may continue, partly due to weakening demand in North America and the EU.
The International Aluminium Institute reported that primary aluminium production rose by 3.2% to 48.2 million tonnes in the first eight months of 2024. Rusal expects global aluminium consumption to grow by 2.5-2.7% in 2024 and 3.5% in 2025.
Nickel Production in Indonesia Slows
Nickel production in Indonesia is expected to reach 2.2 million tonnes by the end of 2024, slightly below the earlier forecast of 2.25 million tonnes, according to Macquarie Group. The decline is attributed to reduced production of laterite ore, which has caused shortages at Indonesian smelters, particularly affecting nickel pig iron output, which fell by 12.1% in July and 5.9% in August compared to the previous year.
Despite this, the International Nickel Study Group expects global nickel production to grow by 4.9% to 3.52 million tonnes in 2024 and by 3.7% to 3.65 million tonnes in 2025.
The increase in Indonesian nickel production and exports has driven a significant drop in global prices, reaching a range of $17,900-$18,000 per tonne after hitting a low of $16,190 per tonne in August. Prices may drop again if Indonesian nickel exports resume growth.
