Polish coking coal output shows signs of recovery

Spanish Market: Coal, Coking coal, Metals
29/08/19

Signs of recovery are emerging in Polish coal output but plans by producer Jastrzebska Spolka Weglowa (JSW) to substantially increase its coking coal output may take some months and are not without challenges.

Poland's overall coal production, comprising coking and thermal, recovered from a slump in June and rose by nearly 3pc from a year earlier and 13pc against the previous month to more than 5.3mn t in July, data from Poland's government statistics office GUS show. But January-July output was still 2.5pc down from the previous year at 36.2mn t.

JSW's output of coal increased in July and August following a weak start to the year. The company maintains its plans to slightly increase its thermal and coking coal output this year to about 15.5mn t from 15mn t in 2018. This is despite output in the first half falling by 11.5pc from a year earlier to just over 7mn t.

Investment to access new deposits at its existing mines will ensure recovery in production in the second half of the year, the company said.

JSW also plans to increase the share of coking coal in its overall coal production. Coking coal accounted for 69pc of JSW's total coal output in the first half, with the company planning to increase this share to over 70pc at the end of this year.

JSW plans to increase the share of coking coal in its Budryk mine to about 60pc in November from just more than 21pc currently. But the plan involves mining at a depth of 1,290m, the deepest mine in Poland. JSW also plans to increase the share of coking coal over thermal coal at some of its other mines next year.

JSW's plans have the potential to ease tight supplies of coking coal in Poland. Lower domestic output this year have forced steel producers to increase imports despite weakening demand for steel. The mining firm declared force majeure following a fatal shaft collapse at its Zofiowka mine in May. Earthquakes in January also caused a collapse at the Polska Grupa Gornicza's Rydlutowy mine and also hit JSW's Knurow-Szczyglowice mine in southern Poland.

Output of coke and steel in the country remained subdued in July. Coke production in July fell by 3.5pc from the previous year to 762,000t, GUS data show. January-July output was 4.5pc lower at 5.3mn t.

Crude steel output in July rose by 2pc from the previous year to 826,000t but remained 7pc down at 5.7mn t for January-July.

JSW is still optimistic about demand from coke plants and steel producers in the second half of this year that may see some relief in their costs because of falling prices of coking coal. The company said it has not received any request from any of its customers to reduce supplies below contracted volumes and expects European steel producers may reconsider earlier plans to scale back output.

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27/12/24

Viewpoint: US stainless recovery expected in 1H

Houston, 27 December (Argus) — US finished and scrap stainless steel market participants are cautiously optimistic for 2025 because of low inventories, waning imports and expected policy changes when president-elect Donald Trump takes office in January. The stainless steel market expects a challenging early start to 2025 before a rebound later in the first half of the year, as renewed demand from the oil and natural gas sector combines with low inventories and potential Trump policies. US stainless meltshop production in the first half of 2024 totaled just over 1mn metric tonnes (t), up from the atypically low 2023 levels of roughly 940,000t, according to data from World Stainless. These figures are well below prior years with the US averaging about 1.18mn t in the first half of 2021 and 2022. The market has struggled to hit its full stride in 2024 as consistent finished imports and falling nickel prices undercut the market. Flat rolled coil ex works US prices for 304 declined to $1.60-1.77/lb for December shipments, compared with $1.68-1.86/lb a year earlier. Still, this trend could soon stabilize and begin to reverse. Sources estimate US service center finished stainless steel inventory levels for both flat rolled and long bar products are at lows last seen in 2021, a time when US demand was still crimped from the Covid-19 pandemic. Service centers have kept unusually low inventories because of a mix of moderate demand and higher-than-usual interest rates raising end-of-year accounting costs. Weaker service center demand has subsequently capped scrap generation, limiting how low US mills can push their raw material costs for new scrap. Average US stainless steel scrap 304 solids prices have held within a tight 2¢/lb spread of 56.5-58.5¢/lb since early August as falling generation rates ran up against lower demand. The incoming Republican administration has fostered an atmosphere of optimism among market sources, who expect Trump policies will support the domestic industry by cutting oil and gas permitting restrictions, shifting US spending away from overseas investments and broader deregulation of American businesses. Trump has also proposed a myriad of tariffs, including specifically targeting China and the US' largest trading partners — Canada and Mexico. US imports of flat rolled stainless of any size climbed by 22pc to 404,000t in 2024 so far, according to US customs data. Mexico contributed roughly 7pc of these volumes, while Indonesia — home to multiple Chinese stainless mills — contributed 8pc of US imports. By raising import costs, US producers could in theory make up some of this difference. Stainless producers will likely have to raise prices as a result of tariffs, following a year with far fewer base prices adjustments. Long producer Universal Stainless raised base prices only once in 2024 compared to five times in 2023. Nickel-scrap disconnect widens US mills have offset the persistent weak demand by tweaking the nickel payable — the percentage of the price of nickel they are willing to pay for nickel recovered from scrap — each month since April. The nickel payable rate reached a historic low of 42-43pc in 2023, before rebounding. Although up from historic lows, nickel payable has decreased from 57-59pc in March of this year to 50-54pc for procurements in November. At these lower levels scrap is more disconnected from the movements in the nickel market. Some market participants still remain concerned, chiefly over slowing growth in China, which consumes nearly 50pc of the world's nickel. China has ramped up production of nickel largely in Indonesia in recent years to service the growing electric vehicle market. Market conditions in Europe also continue to undercut demand. Spanish stainless producer and owner of US-based North American Stainless, Acerinox, highlighted in its third quarter results that the European manufacturing sector is undergoing a "drastic contraction". It added that while destocking efforts were completed at the time, demand remained weak. By Pete J Stavretis Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

Viewpoint: Indian FeCr to face pressure in 1Q 2025

27/12/24

Viewpoint: Indian FeCr to face pressure in 1Q 2025

Mumbai, 27 December (Argus) — India's ferro-chrome market is expected to remain under pressure in the first quarter because of muted spot demand as a result of sluggish stainless steel consumption. Producers will likely keep ferro-chrome output low in the coming months. The market is widely expected to remain sluggish until after the lunar new year holiday in February. There is little to no optimism that spot liquidity and supplier profit margins will increase in the short term, because demand from the stainless steel industry is weak. Prices for Indian high-carbon ferro-chrome 60pc fluctuated significantly in 2024. Prices hit a high of 120,000-121,000 rupees/t ($1,400-1,415/t) ex-works on 21 February, bolstered by tight ore availability and rising feedstock costs. But weak demand for stainless steel, both locally and globally, kept many market participants on the sidelines, causing prices to fall sharply in April-August, reaching Rs102,000-104,000/t ex-works on 20 August. Prices have since remained around this level, with the Argus assessment on 12 December at Rs104,000-106,000/t. Low demand from the stainless steel sector has effectively removed any possibility of a price recovery in the near term. Spot liquidity has been markedly lower than normal and a rebound is not expected. Volumes signed on long-term contracts for delivery in 2025 have also taken a dip and are at around 70-80pc of the volumes signed in 2023 for 2024 delivery. Weaker ferro-chrome demand and prices have led to lower production. India's ferro-chrome output declined from 1.3mn-1.4mn t in 2023 to an estimated 1.2mn t in 2024, and monthly consumption in the country is estimated to have decreased from 30,000-35,000t to 20,000-25,000t. Consumption is unlikely to rebound significantly until global and local stainless steel demand recovers. Suppliers typically turn to the export market when there is a supply surplus, with exports from India typically accounting for around 50pc of the country's output. But India's ferro-chrome exports are also falling. Shipments declined by 38pc year on year to 402,817t in January-September, compared with 648,475t over the same period a year earlier. Macroeconomic headwinds have dented global demand for stainless steel, and in turn ferro-chrome. European and Chinese demand was high in the first half of 2024 but has slowed significantly since then, with European buyers shifting their focus towards cheaper Kazakh material. Increased freight rates, port congestion and higher production costs have further weighed on exports. In addition, China has increased production and its domestic output now exceeds domestic consumption. This has weighed on domestic prices since August and increased supply in the export market. The market is unlikely to pick up until ferro-chrome inventories at China's port are consumed, a source told Argus . Decreasing demand and prices have made some suppliers' margins negative, forcing some to cut output by 50-60pc and others to shift their focus to producing manganese alloys, which offer stronger margins despite higher production costs. The cost of production for high-carbon ferro-chrome in India is around Rs116,000-119,000/t ex-works. Only producers with their own captive chrome ore mines are making a profit at present, sources said. Indian ferro-chrome suppliers also face issues with deteriorating chrome ore grade, which has led to increased production costs and lower-quality ferro-chrome output. The deterioration in ore quality is particularly evident in state-owned Odisha Mining Corporation (OMC) auctions — the premium for OMC's 50-52pc ore over its 48-49.99pc ore rose to above Rs1,000/t in early December. The higher premiums for high-grade ore, coupled with the drop in demand, have limited ferro-chrome producers' appetite to participate in OMC's auctions, as supply of high-grade ore is limited and only available at high premiums while low-grade ore is unfavourable as its consumption raises production costs. A lack of interest in OMC's monthly tender boosted this bearish sentiment and created further downward pressure on India's ferro-chrome prices. By Deepika Singh Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

Viewpoint: US gas market poised for more volatility

26/12/24

Viewpoint: US gas market poised for more volatility

New York, 26 December (Argus) — US natural gas markets may be subjected to more dramatic price swings in 2025 as growing LNG exports and increasingly price-sensitive producers place greater pressure on the US' stagnant gas storage capacity. Those price swings could pose challenges for consumers without ample access to gas supplies, as well as producers interested in keeping some output unhedged to capture potentially higher prices without taking on excessive financial risk. But volatility may also present opportunities for traders looking to exploit unstable price spreads, and for producers that can adapt their operations to fit a more unpredictable pricing environment. Calm before the storm High storage levels and low spot prices this year — averaging $2.11/mmBtu through November this year at the US benchmark Henry Hub — triggered by an unusually warm 2023-24 winter, may have obscured some of the structural factors pushing the US gas market into a more volatile future. But those structural factors remain and loom increasingly large for prices. The US has moved from a roughly 60 Bcf/d (1.7bn m³/d) market eight years ago to a more than 100 Bcf/d market today, "and we haven't grown our storage capacity at all", Rich Brockmeyer, head of North American gas and power at commodity trading house Gunvor, said earlier this year. As supply and demand for US gas grow, the country's roughly 4.7-Tcf storage capacity becomes ever less effective in stemming demand shocks, such as extreme winter weather events, which can more rapidly draw down inventories than in years past. Additionally, a growing share of US gas is being consumed by LNG export terminals being built and expanded on the US Gulf coast. When those facilities encounter unexpected problems and cease operations — as has happened numerous times at the 2 Bcf/d Freeport LNG terminal in Texas in recent years — volumes that were previously being liquefied and sent overseas were instead backed up into the domestic market, crushing prices. More LNG exports may mean more opportunities for such supply shocks. US LNG exports are expected to increase by 15pc to almost 14 Bcf/d in 2025 as operations begin at Venture Global's planned 27.2mn t/yr Plaquemines facility in Louisiana and Cheniere's 11.5mn t/yr Corpus Christi, Texas, stage 3 expansion, US Energy Information Administration data show. Spot price volatility will be most acutely felt in regions like New England that lack underground gas storage. "In areas like the Gulf coast, where you have a lot of storage, it won't be a problem," Alan Armstrong, chief executive of Williams, the largest US gas pipeline company, told Argus in an interview. Producers' trade-off Volatile gas markets are a mixed bag for producers, many of whom profit from volatility while also struggling to plan and budget based on uncertain revenues for unhedged volumes. Though insufficient gas storage deprives the market of stability, "from the standpoint of a marketing and trading guy that's trying to manage my gas supply to customers and my trading book, I love volatility",said Dennis Price, vice president of marketing and trading at Expand Energy, the largest US gas producer by volume. BP chief financial officer Sinead Gorman in November 2023 specifically named Freeport LNG's eight-month-long shutdown in 2022-23 from a fire as a driver of volatility in the global gas market. The supermajor was able to exploit the "incredibly fragile" gas market, she said, which was a key factor driving the success of its integrated gas business. "Those opportunities are what we typically seek and enjoy," Gorman said. Increasingly, producers have also been adapting to a more volatile market by switching production on and off in response to prices, but often without revealing the price at which a supply response will occur. Expand Energy, for instance, told investors in October that it was amassing drilled but uncompleted wells and wells that had yet to be brought on line, which it could activate relatively quickly when prices rise. It declined to name the price at which that would occur. Market participants, attempting to price in this phenomenon by anticipating producers' next moves may respond more dramatically to supply signals than in the past, when production was steadier. Producers' increased responsiveness to prices could help to balance the market somewhat, though more aggressive intervention into operations could take a toll on well performance and pipelines, FactSet senior energy analyst Connor McLean said. Producers are "treating the reservoir itself like a storage facility", Price said. By Julian Hast Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

Viewpoint: Real, tariffs to hit Brazil steel imports

26/12/24

Viewpoint: Real, tariffs to hit Brazil steel imports

Sao Paulo, 26 December (Argus) — Steel importers in Brazil are likely to face a tougher market in 2025 as government measures and the Brazilian real's depreciation to the US dollar make products from abroad less attractive. Brazilian steel importers are concerned that tariff-quota and antidumping policy changes made this year by the federal and state governments could raise costs for importing cargoes in 2025, likely exacerbating the impacts of a sharply depreciated Brazilian real relative to the dollar. The concerns come as US president-elect Donald Trump is already raising global trade tensions, with specific focus on Mexico, Canada and China, that could unleash waves of dueling trade measures. After seeing strong import growth in the post-Covid-19 recovery, Brazil steel importers are fretting they may lose momentum. Brazil's steel imports year-to-date November rose by nearly 24.4pc to 5.6mn metric tonnes (t) from the same period a year earlier. They are expected to end the full year 2024 up by 24pc, according to steel association Aco Brasil, after climbing by 50pc in 2023. Apparent consumption rose by 9.6pc to 24mn t in the 11 months through November, while production increased by just 5.6pc to 31.17mn t from a year earlier. Even with a 28pc depreciationof the real to the dollar in the 12 months through 24 December, prices for dollar-denominated steel imports still have a cost advantage over domestically produced steel. But that advantage is narrowing as the real weakens, with the price difference from imports over the domestic market narrowing to just $112/t in the latest assessment for hot-rolled coils (HRC) from $172/t in mid-October . "The dollar's [appreciation to the real] is messing up imports," one market participant told Argus , saying a wider price advantage for importers was necessary to offset issues like the exchange rate risk and the shipping time. Market participants also cited rising borrowing costs in Brazil as an additional challenge for imports, as many buyers rely on financing to purchase material from abroad. Brazil's central bank on 11 December unexpectedly hiked its target interest rate by a full percentage point to 12.25pc , citing the country's uncertain fiscal situation, accelerating inflation and challenging external conditions. Importers recently expressed concerns over Santa Catarina state's decision to no longer grant tax incentives for imports of six different steel and iron products for commercialization or resale in 2025. Although the timeline for implementing the measure was postponed to July and could face changes, importers remain concerned and are monitoring any possible reviews of the decision, sources told Argus . Santa Catarina's main port, Sao Francisco do Sul, accounted for over one-third of every steel product that is imported to Brazil from January to September, according to data from the country's distributors association, INDA, published in September. On the federal front, the government is likely to announce new and renewed antidumping measures for products coming mainly from China, Brazil's largest steel supplier. Another obstacle for importers would be a possible review of the tariff system for steel imports, which was implemented in June 2024 and led to additional tariffs of up to 25pc. The measure proved mostly ineffective at curbing imports into Brazil, and the industry group Aco Brasil said it would ask for adjustments . Despite the challenges, there is still room for importers to bring material to Brazil , as the country lacks steel to supply its domestic demand, another market participant said. "Brazil will always need imports because it still lacks some key home-made products to feed its market," the participant said. By Carolina Pulice Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

China's GFEX launches polysilicon futures contracts

26/12/24

China's GFEX launches polysilicon futures contracts

Beijing, 26 December (Argus) — China's Guangzhou Futures Exchange (GFEX) has launched futures contracts and options for polysilicon today. This is the third contract that GFEX has launched, following the launch of its contracts for silicon metal in December 2022 and lithium carbonate in July 2023. The launch of polysilicon contracts is aimed at easing a supply surplus and ensuring market development, given increasing new capacities at polysilicon producers and lower-than-expected demand from the downstream silicon wafer industry in the past two years, according to market participants. The new contracts are for benchmark N-type polysilicon and substitute P-type polysilicon. The exchange has set a premium of 12,000 yuan/t ($1,644/t) for the N-type over the P-type. It is offering seven contracts starting from June 2025 until December. The most-traded June contracts for N-type polysilicon on the GFEX closed at Yn41,570/t on 26 December, up from the launch price of Yn38,600/t, with trading volumes totalling 301,655 lots, equivalent to around 905,000t. GFEX has established delivery points for the new contracts in eight provinces, including Inner Mongolia, Sichuan, Yunnan, Shaanxi, Gansu, Qinghai, Ningxia and Xinjiang. Output and consumption in these regions account for 93.1pc and 91pc of the country's total output and consumption respectively, according to GFEX. South China-based GFEX launched in April 2021 and is partly owned by China's four operational futures exchanges — the Shanghai Futures Exchange, Zhengzhou Commodity Exchange, Dalian Commodity Exchange and the China Financial Futures Exchange — with each holding a 15pc stake. Market reaction Some market participants expect the new futures contracts will ease pressure from ample spot inventories and shore up spot market sentiment in the coming months. But the market has yet to see immediate effects on the first trading day. Argus -assessed domestic prices for 5-5-3 grade silicon metal — a key feedstock in the production of silicon powder, which is the feedstock for polysilicon — held at Yn11,200-11,400/t delivered to ports on 26 December, unchanged from 24 December given limited buying interest from consumers. The most-traded February contracts for 5-5-3 grade silicon on the GFEX closed at Yn11,190/t on 26 December, down from Yn11,585/t on 25 December. China is the world's largest polysilicon producer, producing 1.74mn t during January-November, up by 33pc from a year earlier, according to data from the China nonferrous metals industry association (CNIA). It has an production capacity of over 2mn t/yr, according to industry estimates. Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

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