Mark Latham Commodity Equity Intelligence Service

Wednesday 22 May 2024
Background Stories on www.commodityintelligence.com

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Featured

Southern Copper eyes start of stalled Peru mine project as soon as this year

Southern Copper hopes to begin construction as soon as this year at a once fiercely contested copper mine in Peru’s coastal mountains as socio-political tensions ease and authorities get behind the project.

The company has had permits to build its Tia Maria project for years yet held back because of environmental opposition. A 2019 decision to approve its license unleashed weeks of protests and then-President Pedro Castillo called the mine a non-starter. The current government says it’s supportive.

“The opportunity that this presents for the region and the country is being seen,” CFO Raul Jacob said Monday in an interview.

Developing Tia Maria would be a big deal for the company, Peru and the global copper market. The stalled project has stood as a symbol of the difficulties of building new mines — a key reason for copper’s surge to record prices this year as investors bet on demand exceeding supply.

Southern Copper is working with farming groups, building houses and planting trees, with more than 200 people working in the area and $350-million in equipment ready to be assembled, Jacob said. That provides a pathway to start work late this year or early next year on a project that will probably cost about $500-million more than the official $1.4-billion estimate, he said.

With all permitting and board approval in place, the only thing to do before pulling the trigger on construction is to “check that we are in an appropriate social environment to start construction,” Jacob said.

Bringing Tia Maria on stream by the end of 2027 would generate a much needed 120 000 metric tons a year of metal for a market hit by a string of supply setbacks of late, including the closure of a major copper mine in Panama.

Tia Maria would consolidate Southern Copper’s annual copper production above one-million tons a year. The project would also be a major breakthrough in a country where mining’s relations with isolated rural communities often sour.

Southern Copper expects to increase copper output by 3% or more this year, with production so far tracking just above expectations, Jacob said. Output beyond this year at existing copper operations will depend largely on ore quality, he said.


https://www.miningweekly.com/article/southern-copper-eyes-start-of-stalled-peru-mine-project-as-soon-as-this-year-2024-05-21

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Macro

Saudi Ma'aden has extracted lithium from seawater, CEO says

Saudi Arabian Mining Company Ma'aden has successfully extracted lithium from seawater, although not at levels that are commercially viable and its project remains at the pilot stage, its CEO told Reuters on Tuesday.

"We are actually producing lithium from seawater now," Robert Wilt said, without giving further details.

Wilt, who is vice chairman of Manara Minerals, also said that company was not looking at acquiring diamond business De Beers. "We are not looking at De Beers at all," he said.

London-listed miner Anglo American AAL has considered selling off its less profitable businesses like De Beers as it fends off BHP Group's $43 billion takeover offer.

"The kingdom does not need diamonds for its downstream development," Wilt said. "Manara's mandate is industrial metals that fuel the downstream growth."

Manara Minerals is a joint venture between Ma'aden and Saudi Arabia's $925 billion sovereign wealth fund, the Public Investment Fund (PIF), to invest in mining assets abroad.

Ma'aden, the kingdom's flagship mining company, is 67% owned by the PIF.

The United States and China are locked in a race over acquiring access to lithium, a mineral key for electric car batteries, laptops and smartphones.

Saudi Arabia has joined the pack and hopes to use lithium to manufacture batteries for electric vehicles (EVs) as part of its ambitions to transform itself into an EV hub.

The kingdom's growing mining industry is a key pillar in de-facto ruler Crown Prince Mohammed Bin Salman's Vision 2030 programme to diversify the economy away from oil dependency.

Saudi Arabia's national oil giant Aramco is also attempting to extract lithium from brine in its oilfields, although Wilt says Aramco's efforts are so far separate from Ma'aden's.

"We are both working parallel paths. Ma'aden on extracting lithium from seawater. Aramco from brines where lithium has higher concentration," he said.

"There are ongoing discussions about how we can join forces," he added.

While these projects remain in their early stages, Saudi Arabia is seeking to acquire lithium abroad, along with other critical minerals.

"We are looking overseas for interests in copper, lithium, iron ore, and nickel," said Wilt.

Manara's first major venture abroad was to acquire a 10% stake in Brazil's $26 billion copper and nickel miner Vale Base Metals. Through Vale, Wilt said Manara had gained access to the Brazilian miner's operations in Canada and Indonesia. Manara is also in talks with other companies to open new ventures.

"We like things in East Asia through Africa, because we are potentially a centralized processing hub," he said, referring to Saudi Arabia's position in the supply chain.


https://www.tradingview.com/news/reuters.com,2024:newsml_L1N3HO1CL:0-saudi-ma-aden-has-extracted-lithium-from-seawater-ceo-says/

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Oil and Gas

India Makes Rare Request for Refiners to Join on Russia Oil Deal

India has made a rare request to its state-run oil refiners and private processor Reliance Industries Ltd. to jointly negotiate a long-term supply deal with Russia, according to people familiar with the matter.

The government wants its refiners to lock in at least a third of their contracted supply from Russia at a fixed discount to help shield the nation’s economy from volatile prices, the people said, asking not to be named due to the sensitivity of talks. The appeal to join forces was informal, they added.

However, Reliance is unlikely to share sensitive information with the state oil refiners given they’re competitors in the domestic fuel market, stifling the government’s efforts at collaboration, they said.

An oil ministry spokesman didn’t immediately reply to a text message seeking comment. Reliance, Indian Oil Corp., Bharat Petroleum Corp. and Hindustan Petroleum Corp. also didn’t reply to emails seeking comment.

India has been a major buyer of Russian crude since the invasion of Ukraine, but tighter enforcement of US sanctions crimped the trade and led to refiners needing to buy more expensive oil. The South Asian nation wants state processors to work together and boost their bargaining power during supply negotiations, rather than competing, the people said.

There is precedent for collaboration. State refiners have held joint talks with suppliers in the Middle East and West Africa previously to secure more favorable terms, but it’s unusual for India to request help from a private refiner.

State refiners have been seeking oil at a discount of more than $5 a barrel to Dated Brent, but Moscow is offering crude at a discount of $3 and is showing an unwillingness to budge, according to the people. The discount for one Russian grade blew out to more than $30 after the war before narrowing.

Indian Oil is the only state refiner to previously have a long-term supply deal with Russia, but that expired at the end of March and hasn’t been renewed due to a lack of consensus on volumes and price.


https://finance.yahoo.com/news/india-makes-rare-request-refiners-083236485.html

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EOG Resources (EOG) Receives a New Rating from a Top Analyst

In a report released yesterday, Neal Dingmann from Truist Financial downgraded EOG Resources (EOG) to a Hold, with a price target of $136.00. The company’s shares closed yesterday at $129.86.

According to TipRanks, Dingmann is a top 100 analyst with an average return of 12.6% and a 71.34% success rate. Dingmann covers the Energy sector, focusing on stocks such as APA, Civitas Resources, and Devon Energy.

EOG Resources has an analyst consensus of Moderate Buy, with a price target consensus of $148.00, representing a 13.97% upside. In a report released on May 8, RBC Capital also maintained a Hold rating on the stock with a $147.00 price target.

Based on EOG Resources’ latest earnings release for the quarter ending December 31, the company reported a quarterly revenue of $6.36 billion and a net profit of $1.99 billion. In comparison, last year the company earned a revenue of $2.71 billion and had a net profit of $2.28 billion

TipRanks has tracked 36,000 company insiders and found that a few of them are better than others when it comes to timing their transactions. See which 3 stocks are most likely to make moves following their insider activities.

EOG Resources (EOG) Company Description:

Incorporated in 1985 and based in Texas, EOG Resources, Inc. is engaged in the exploration, development, production and marketing of crude oil and natural gas and natural gas liquids. It operates in the United States, Trinidad and Tobago, China and Canada.


https://markets.businessinsider.com/news/stocks/eog-resources-eog-receives-a-new-rating-from-a-top-analyst-1033405688

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Natural Gas Giant Chesapeake Begins Layoffs

Chesapeake Energy this week started laying off employees following the divestment of its assets in the Eagle Ford play, Reuters reported, citing the company.

Also according to the company, the layoffs had nothing to do with its $7.4-billion merger with Southwestern Energy.

Chesapeake Energy, which went through bankruptcy in 2020 when oil and gas prices crashed, has been solidifying in the past year its strategic focus on its gas assets in the Marcellus shale in Appalachia and in the Haynesville shale play in Louisiana while reducing its Eagle Ford position where it held oil assets.

Reports of a Chesapeake-Southwestern merger first surfaced in the autumn of 2023 as the U.S. shale patch began a new major consolidation phase that saw U.S. supermajors Exxon and Chevron each announce large acquisitions valued at over $50 billion.

The merger between Chesapeake and Southwestern will create the largest natural gas production company in the United States in terms of both output and market value. Ahead of the deal, Chesapeake sold $1.4 billion worth of Eagle Ford assets to Ineos Energy and another $700 million worth of assets in the shale play to SilverBow Resources.

Chesapeake reported robust financial figures for 2023, with the net result at a respectable $2.4 billion, down from $3.5 billion in 2022. This year, however, has been weaker because of the slump in U.S. natural gas prices. As a result, Chesapeake missed analyst expectations for its first-quarter results—hardly a surprise when natural gas prices shed 20% during that same quarter.

In response to the slump in prices, Chesapeake was among natural gas producers that said they would reduce production.

“Given current market dynamics, the company plans to defer placing wells on production while reducing rig and completion activity,” Chesapeake said in February.

“The company will drop a rig in the Haynesville and Marcellus in March and around mid-year, respectively, and a frac crew in each basin in March. These activity levels will be maintained through year end,” Chesapeake also said at the time.


https://oilprice.com/Latest-Energy-News/World-News/Natural-Gas-Giant-Chesapeake-Begins-Layoffs.html

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Phillips 66 to buy PE-owned Pinnacle Midland for $550 mln

Phillips 66 on Monday agreed to acquire Pinnacle Midland, a midstream company owned by private equity firm Energy Spectrum Capital, for $550 million in cash, expanding the U.S. refiner’s natural gas gathering and processing footprint in the Midland Basin.

Oil and gas producers in the United States went on a nearly $250 billion buying spree in 2023, taking advantage of their high stock prices to secure lower-cost reserves, continuing the trend in 2024. In 2023, some 39 private companies were acquired by public companies.

The Midland basin in Texas, in the Permian shale, is the nation’s biggest oil and second biggest gas producing basin.

“Pinnacle is a bolt-on asset that advances our wellhead-to-market strategy,” said Mark Lashier, CEO of Phillips 66.

“Further, this transaction aligns with our long-term objectives to build out our natural gas liquids value chain.”

Phillips 66 holds 11 natural gas liquids (NGL) fractionation plants, along with natgas and NGL storage facilities and NGL pipelines, and 22,000 miles of pipelines.

Pinnacle’s assets include the Dos Picos natgas complex with a processing capacity of 220 million cubic feet per day (mmcfd), and 80 miles of pipelines.

The complex could be scalable toward a second 220 mmcfd gas plant and would integrate well into Phillip 66’s existing downstream infrastructure, the company said in a statement.

The transaction is expected to close mid-2024.

(Reporting by Seher Dareen in Bengaluru; Editing by Shailesh Kuber)


https://boereport.com/2024/05/20/phillips-66-to-buy-pe-owned-pinnacle-midland-for-550-mln/

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ExxonMobil, Shell weighing bids for Galp Energia’s “major” Mopane oil discovery offshore Namibia

(Bloomberg) – Exxon Mobil Corp. and Shell Plc are among oil and gas giants evaluating bids for a stake in Galp Energia SGPS SA’s major oil field offshore Namibia, according to people familiar with the matter.

TotalEnergies SE and Equinor ASA are also among those considering acquiring the 40% stake Galp is seeking to sell in the Mopane offshore discovery, said the people, asking not to be identified as the matter is private.

Based on Galp’s recent “in place” estimates for 10 Bboe in the Mopane complex, the entire discovery could be worth around $20 billion, or potentially more, some of the people said. The Portuguese firm said in an April filing that the oil estimate is before drilling additional exploration and appraisal wells.

Galp, which is working with a financial adviser to sell half of its 80% holding in the Namibian asset, has called for first round bids in mid-June, according to the people. Shares of Galp were up 2.8% at 3:14 p.m. Tuesday in Lisbon, putting it on track for the biggest daily gain in about a month and giving the company a market value of €15.2 billion ($16.5 billion).

Deliberations are in the early stages and other bidders could emerge, while the Lisbon-based company could also decide to retain the stake if it cannot reach a final agreement with any of the parties, the people said.

Representatives for Galp, Shell, Exxon, Equinor and TotalEnergies declined to comment.

Galp shares jumped 21% after the company said in April that a well test “potentially” indicated Mopane could be an important commercial find in Namibia following the completion of the first phase of its exploration. The “in place” estimates for 10 Bboe are the first in a series of tests to determine how much oil the offshore discovery contains and is recoverable.

Galp’s oil finds have added to discoveries drilled offshore Namibia, with Shell and TotalEnergies also finding oil in the area in the past two years. The finds are helping to turn the sparsely populated country into a hotspot for exploration. While no fields have yet been given the green light for development, hopes are high in the country that an economic boom similar to that seen in Guyana could follow.

Officials from Namibia’s Ministry of Mines and Energy and state oil company Namcor visited Guyana late last year seeking advice about oil developments, while Patrick Pouyanne, chief executive officer of TotalEnergies, recently drew parallels between the two countries.

Galp is the operator of the Mopane license area with an 80% stake. Namcor, or National Petroleum Corp. of Namibia, and Custos each hold 10% stakes.


https://worldoil.com/news/2024/5/21/exxonmobil-shell-weighing-bids-for-galp-energia-s-major-mopane-oil-discovery-offshore-namibia/

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Russian oil output up in June, still outperforming cuts deal

MOSCOW (Reuters) - Russian daily oil output rose in June to 11.15 million barrels per day (bpd), up from 11.11 million bpd in May, still below the amount agreed in a global deal to cut production, Energy Ministry data showed on Tuesday.

The production data for June was in line with what industry sources told Reuters on Monday.

Russian oil output has been restrained after contaminated oil was discovered in Russia's Druzhba pipeline network in April that led to the suspension of exports via the system that supplies crude to Europe and beyond.

Russian pipeline monopoly Transneft said on Monday it had fully resumed oil supplies via the Druzhba pipeline, RIA news agency reported.

All major oil producers, including Rosneft and Lukoil , increased production last month, while output at projects run by foreign majors under production sharing agreements fell by 11.2% from May.

In tonnes, oil output reached 45.653 million in June versus 47.004 million in May, which is one day longer than June. Reuters uses a tonnes/barrel ratio of 7.33.

Under a deal agreed with OPEC and other oil producers, Russia had agreed to reduce output by 228,000 bpd from the October 2018 baseline, indicating it should keep total output around the 11.17 million-11.18 million bpd level.

OPEC agreed on Monday to extend oil supply cuts until March 2020 as the group's members overcame their differences in order to prop up the price of crude amid a weakening global economy and soaring U.S. production.

Later on Tuesday, another meeting of OPEC and other large oil producers led by Russia will decide on whether to continue with the joint cuts.

The deal is expected to continue after Russian President Vladimir Putin said on Saturday he had agreed with Saudi Arabia to extend the reduction.

According to the energy ministry data, oil exports via Druzhba have been on the mend. Russian oil pipeline exports in June rose to 4.394 million bpd from 4.209 million bpd in May.

Russian natural gas production was at 54.38 billion cubic metres (bcm) last month, or 1.81 bcm a day, versus 63.28 bcm in May, the data showed.

(Reporting by Vladimir Soldatkin, editing by Louise Heavens)


https://uk.style.yahoo.com/style/russian-oil-output-june-still-071818858.html

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Alternative Energy

China's Moves to Solar pricing

JINAN, China (AP) — Shi Mei and her husband earn a decent enough living by growing corn and millet on their small farm in eastern China’s Shandong province. In 2021, they diversified by investing in solar energy — signing a contract to mount some 40 panels on their roof to feed energy to the grid.

Now, the couple get paid for every watt of electricity they generate, harvesting the equivalent of $10,000 per year that Shi can track through an app on her phone.

“When the sun comes out, you make money,” Shi said.

https://apnews.com/article/china-solar-energy-transition-shandong-renewable-34ec874e5b0ac1b3e370f928337ae752

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Precious Metals

Centerra Gold First Quarter 2024 Earnings: Beats Expectations

Centerra Gold (TSE:CG) First Quarter 2024 Results

Key Financial Results

- Revenue: US$305.9m (up 35% from 1Q 2023).

- Net income: US$66.4m (up from US$73.5m loss in 1Q 2023).

- Profit margin: 22% (up from net loss in 1Q 2023). The move to profitability was primarily driven by higher revenue.

- EPS: US$0.31 (up from US$0.34 loss in 1Q 2023).


Centerra Gold Revenues and Earnings Beat Expectations

Revenue exceeded analyst estimates by 3.6%. Earnings per share (EPS) also surpassed analyst estimates by 197%.

Looking ahead, revenue is expected to decline by 13% p.a. on average during the next 3 years, while revenues in the Metals and Mining industry in Canada are expected to grow by 12%.

Performance of the Canadian Metals and Mining industry.

The company's shares are up 11% from a week ago.


https://finance.yahoo.com/news/centerra-gold-first-quarter-2024-113059611.html

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Base Metals

Copper Forges Blowoff Top Formation

COPPER

While the copper market on Monday once again posted a major range up move, it reversed sharply providing another blowoff top type formation. However, the market has managed to overcome similar “blowoff top” type action recently. In fact, it appears that copper is starting to flow into LME copper warehouse stocks which could be a sign of a frothy market and a sign that physical owners are beginning to step in and capitalize off record pricing. However, the trade remains concerned about Panamanian, Chilean, and Peruvian supply flows. On the other hand, high prices are likely to stimulate scrap supply and could begin to reduce demand from already high-cost green energy demand. In a positive demand development Chinese April refined copper output jumped sharply by 9.2%.

GOLD & SILVER

Clearly, volatility has expanded and is likely to stay elevated with gold and silver continuing to march to their own drummer. It should be noted that gold ETF holdings are beginning to rise consistently, with last week posting an inflow of 230,227 ounces, and with the addition of 135,000 ounces in just the last two sessions. However, in addition to a need to balance yesterday’s sharp run up, the market saw Chinese bullion imports slow last month reportedly due to record prices. On the other hand, it should be noted that yuan silver futures prices posted a record in China. Apparently, Chinese gold imports declined to 136 tons last month for a 30% decline from March and they posted the lowest monthly import tally this year. However, Russian central bank gold holdings reportedly increased by 5.1 tons providing an offset to the drop in Chinese gold demand. A portion of yesterday’s rally might have been attributable a US Fed comment suggesting that US rates are currently restrictive has that ever so slightly pushes the rate policy pendulum in favor of the doves. It should be noted that the silver market is reportedly seeing an increase in demand from the solar industry providing a short-term overbought market with fresh fundamental support. It should be noted that gold and silver at times showed definitive divergence with gold softening and silver generally holding its gains. Certainly, the gold market is significantly overbought in spec and fund categories while the silver market has a smaller relative long position and therefore it should retain significant buying capacity if conditions warrant.


https://www.admis.com/copper-forges-blowoff-top-formation/

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Copper Shortfall Threatens Green Energy Transition, Warns Report

Copper mining may be unable to keep pace with soaring demand for the metal that anchors the transition to electric vehicles and renewable energy sources, warns a report from the International Energy Forum (IEF).

Under a baseline business-as-usual scenario, the world will need to mine 905 million tons of copper between 2018 and 2050 – 115% more than the 757 million tons mined before 2018.

Meanwhile, electrifying the global fleet of vehicles would require a 55% increase in new mine output compared to baseline trends. This equates to bringing 54 major new copper mines into production by 2050, requiring an unprecedented 1.7 new mines to open annually over the next decade.

An electric vehicle (EV) is manufactured using 60 kg of copper, compared to 24 kg for an internal combustion engine (ICE) automobile. However, the copper needed for the electrification of vehicles goes beyond just manufacturing; it will also be required for grid upgrades to support charging.

Transitioning the entire global energy system away from fossil fuels to renewable sources like wind and solar by 2050 would require a 460% increase in copper mine production – equivalent to developing 194 major new copper mines beyond baseline levels in just 26 years.

The report states that it is “highly improbable” that there will be sufficient new mines to meet the surging demands from vehicle electrification and the energy transition on the desired timelines under current policies and industry outlooks.

Copper resources in the earth’s crust are enough to satisfy long-term global needs estimated at 6.6 billion tons. However, the rate at which prospective deposits can be identified, permitted through often-contested regulatory processes, and then developed into operating mines is challenging. On average, it takes over two decades between discovering a copper deposit and start production.

Despite a surge in mining exploration budgets, a mere 16 out of the 224 copper deposits unearthed after 1990 were discovered within the last decade.

Environmental opposition has also derailed some high-profile proposed copper mines, including Alaska’s Pebble Mine, which the U.S. Environmental Protection Agency blocked in 2023 over potential impacts on salmon fisheries.


https://www.mercomindia.com/copper-threatens-green-energy-transition

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Steel

Southeast Asian steel demand to rise in 2024: Seaisi

The Southeast Asia Iron and Steel Institute (Seaisi) estimates that southeast Asian countries' steel demand will grow by 3.7pc from 2023 to 76.5mn t in 2024.

But the growth rate fell below previous expectations considering high global inflation risks, volatile prices and a demand slowdown in China and many other regions, the institute said at the 2024 Seaisi conference in Vietnam held over 13-16 May.

Steel demand in the six major countries of the Association of Southeast Asian Nations (Asean-6) fell by 1.9pc from 2022 to 73.5mn t in 2023, Seaisi said. Asean-6's steel production also dropped by 2.1pc on the year to 49.4mn t in 2023, in line with contracting demand. Asean-6's net imports slid by 1.3pc on the year to 24.3mn t in 2023.

Lower external demand, high inflation and interest rates as well as tightening global financial markets were the main reasons for steel industrial setbacks last year. It led to a slowdown in construction sectors and steel industrial destocking activities in the region. Steel demand in Malaysia, Philippines and Vietnam fell by 14pc, 7.5pc and 4.8pc respectively in 2023, weighing on regional industrial performance although demand rose by 18pc in Singapore and 6.3pc in Indonesia, Seaisi said. Thailand's steel demand edged down by 0.1pc in 2023.

Asean regional steel demand was expected to increase in 2024 because Asean-6 governments were optimistic about achieving their economic growth targets, given strong private consumption in most countries, the rolling out of infrastructure and construction projects, a recovery in tourism and electronics, and as inflation rates move towards targeted ranges. But the region will continue to experience challenges from supply chain uncertainties on the back of escalating geopolitical tensions and wars, weakening Asean currencies except for the Singapore dollar, economic slowdowns outside of Asean, volatile commodity prices, and extreme weather, Seaisi said.

Seaisi did not provide a forecast for regional steel production in 2024, but it sees steel capacity expansions in the region leading to overcapacity issues. It expects Asean-6 crude steel capacity to rise from 78mn t/yr in 2022 to 94mn t/yr in 2024.


https://www.argusmedia.com/en/news-and-insights/latest-market-news/2570280-southeast-asian-steel-demand-to-rise-in-2024-seaisi

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SAIL gets clearance for Rs one-lakh cr expansion plan

The Steel Authority of India (SAIL) has received approval, at the board and Ministerial levels for a Rs 1,00,000-crore capex plan, which will contribute to capacity ramp up by approx. 75 percent to 35 MTPA by 2030.

Simulataneously, the company is also working on a concrete decarbonisation plan to bring down its carbon footprint. both greenfield and brownfield ones, The board has already approved a greenfield expansion plan for IISCO Steel Plant in West Bengal to hike capacity to four MTPA. The mill will produce higher grade hot rolled coil (HRC) and API-grade steel products for the oil and gas sector and steel in automotive components. The new mill is expected to be completed in about four years. IISCO’s current capacity is 2.6 MTPA of crude steel, and is utilised for conversion to rebar, wire rods and heavy structural products.

For expansion at Bokaro steel plant, the pre-feasability report studies (PFR) have been completed, as well as a consultant has been appointed for preparation of DPR. Alos, the brownfield expansion and modernisation efforts at the Durgapur Steel Plant have been initiated and plans submitted in October. While a product mix is under-discussion, there will be a new TMT mill of 1.4 MTPA coming up as part of the expansion plan.

A part of the capex will also go towards introduction of 'new technologies', and embedded carbon emissions in steelmaking would be 'substantially lower'. SAIL has already achieved around 20 percent reduction in its first phase of decarbonisation.

The company is now preparing time-bound action plans to achieve less than 2.3 tonne/ tonne of crude steel of CO2 emissions by 2030-31.


https://www.projectstoday.com/News/SAIL-gets-clearance-for-Rs-one-lakh-cr-expansion-plan

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US scrap market resists June price recovery

Fundamentals in the US scrap market are not yet strong enough to support a possible price rise during June trading. Consequently, market participants expect prices either to remain unchanged from May values or decline slightly.

Some mills’ outages and inconsistent domestic market and scrap export values are seen exerting strong pressure on scrap prices, making any upswing unlikely.

A scrap dealer tells Kallanish: ”Low scrap prices have a negative impact on supply. However, I think other factors will outweigh and prices will not be able to hold. In the best-case scenario, we may see stabilisation but not a rise.”

On the West Coast, US-origin containerised HMS 1&2 80:20 price declined to $348/tonne cfr Taiwan due to weak demand amid electricity limitations last week, with current week’s indicative values at around $345/t cfr. Taiwan mill Feng Shin has maintained its scrap and rebar offers this week.

On the East Coast, Turkish mills concluded four US-origin cargoes, most at $380/t cfr for HMS 1&2 80:20 with one sale at $382.5/t cfr. Amid squeezed costs and weak steel sales, Turkish mills are not willing to pay higher for scrap.


https://www.kallanish.com/en/news/steel/market-reports/article-details/us-scrap-market-shows-no-signs-of-june-recovery-0524/

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Iron Ore

Iron ore rises on China demand optimism

Iron ore futures rose on Tuesday, as resilient demand and improved prospects in top consumer China continued to support the market.

The most-traded September iron ore contract on China's Dalian Commodity Exchange (DCE) TIO1! ended daytime trade 1.7% higher at 908 yuan ($125.47) a metric ton.

The benchmark June iron ore (SZZFM4) on the Singapore Exchange rose 1.9% to $120.4 a ton, as of 0751 GMT.

On Friday, China announced steps for its crisis-hit property sector, with the central bank facilitating 1 trillion yuan ($138 billion) in extra funding and easing mortgage rules, among others.

"There's still a lot of hot air built into iron ore prices and China's wider industrial metals complex, which have been propped up by optimism and positive sentiment around the recent bouts of housing sector-related support packages," said Atilla Widnell, managing director at Navigate Commodities.

However, Widnell added that "while the measures are supportive of house prices and will address the wider wealth and value destruction created by excess inventory, we do not believe it will be a silver bullet for construction activity and associated steel demand."

Chinese steel mill margins also remain weak, placing pressure on prices of steel making raw materials, ANZ Research said in a note.

Other steelmaking ingredients on the DCE were mixed, with coking coal NYMEX:ACT1! edging up 0.1% and coke (DCJcv1) slipping 0.1%.

Steel benchmarks on the Shanghai Futures Exchange were mostly up. Rebar RBF1! rose 0.4%, hot-rolled coil EHR1! advanced 0.3% and stainless steel HRC1! was up 0.4%, while wire rod (SWRcv1) slipped 0.1%.

($1 = 7.2369 Chinese yuan)


https://www.tradingview.com/news/reuters.com,2024:newsml_L1N3HO07J:0-iron-ore-rises-on-china-demand-optimism/

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Steel, Iron Ore and Coal

India’s JSW Steel secures Mozambique coking coal mine

JSW Steel, a major player in India's steel industry, has strategically secured essential raw materials by acquiring a Mozambique-based mining firm specializing in high-grade coking coal, Kallanish notes.

JSW Steel will obtain a 92% equity stake in Minas de Revuboe (MDR) and shareholders' loans for $73.7 million.

This deal grants JSW Steel access to over 800 million metric tonnes of premium hard coking coal reserves in Mozambique, as revealed in an investor presentation from 17 May 2024.

This strategic step highlights JSW Steel's dedication to bolstering its raw material supply chain.

Coking coal is a vital ingredient in primary steel production, and owning a mining operation in Mozambique will help JSW Steel mitigate supply chain risks and reduce dependency on external suppliers.

The company is reportedly also considering acquiring a 20% stake in Australia's Whitehaven Coal's Blackwater coal mine, valued between $750 million and $1 billion.

However, its previous attempt to acquire up to 75% of Canada's Teck Resources' metallurgical coal business fell through last year.

Indian steel mills heavily rely on imports to fulfil their coking coal needs due to a shortage of good quality domestic coking coal.

In 2023, India imported approximately 55 million tonnes of coking coal, with JSW Steel accounting for approximately 23% of total imports, according to customs data.

Source:Kallanish


https://www.seaisi.org/details/24726?type=news-rooms

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