Viewpoint: Metals demand to ride green energy wave
Plans to reduce carbon emissions worldwide are likely to accelerate as governments unveil green stimulus measures to revive economic growth in the post-Covid-19 era, increasing demand for many minor metals.
Economies worldwide are renewing their focus on the electrification of power generation and transport sectors to cut their dependency on fossil fuels, such as coal and oil, by increasing low or zero-carbon energy sources and ramping up electric vehicle (EV) production.
Countries such as China, Japan and South Korea have pledged to cut greenhouse gas emissions and plot a path to a zero-carbon future by mid-century. In December, the world's largest emitter of CO2, China, outlined plans to raise its share of non-fossil fuels in primary energy consumption to around 25pc.
With the current energy policies in place, renewables capacity, including solar photovoltaics (PV), onshore, offshore wind and hydropower are expected to meet 80pc of global demand in the next decade, the International Energy Agency (IEA) said in October.
And to complement the swift rise in renewables supply amid expectations of higher electricity demand, nuclear, natural gas, liquified natural gas and hydrogen are likely to play a bigger part in the energy mix to provide firm and flexible sources of energy.
This transition to a clean energy future, which has already spurred demand for metals including cobalt, nickel and lithium from the automotive sector, is likely to boost demand for other light and high temperature metals.
Alloys such as S and 242 contain around 15-25pc molybdenum and are used in gas turbines, while 304 stainless steel, chromium, nickel, manganese and molybdenum are used in nuclear reactors. Selenium and tellurium are used in solar panels, while vanadium and lithium are key for electric battery storage.
The IEA touted solar PV as the "new king" of the electricity markets, adding that the number of final investment decisions for gas-fired generation rose in 2020 for the first time since 2016. The IEA estimates that worldwide nuclear capacity will rise by an additional 140GW to be built by 2030, or an extra 180GW capacity in the best-case scenario of a net-zero emissions future.
Competition grows as new demand emerges
Traditional markets for most minor metals are having to rapidly grapple with the growth of demand from the transition to low-carbon technology, which impacts supply availability and increases price volatility.
The healthcare industry, which uses cobalt in the sterilisation of medical equipment and in radiosurgery devices, is facing a supply shortage and now largely competes with the automotive industry for material. Government incentives in Europe and China are driving demand for EVs and battery metals higher.
Cobalt, which is also used in the pigments and superalloys industries, faces increasing pressure on its supply and cost. The nickel market is witnessing a similar trajectory, with a structural deficit in supply likely to hit the traditional stainless steel and aerospace sectors, along with the fast-growing battery and automotive industries. This has led to consumers such as Tesla's Elon Musk to call for increased production of nickel to meet future demand, despite current low prices.
The London Metals Exchange's three-month official nickel year-to-date 2020 price of $13,680/t by mid-December is more than 11pc lower than the 20-year average of $15,395/t.
To mitigate the supply and price risks, traditional and newer market players are increasingly seeking long-term supply volumes. For example, Chinese solar panel producers are locking in long-term volumes of polysilicon, while EV producers are seeking long-term cobalt contracts.
Some companies are focusing on acquiring minor metal assets in anticipation of higher demand. Diversified metals producer China Molybdenum became the world's second-largest cobalt producer after buying 95pc of the Kisanfu copper-cobalt mine in the Democratic Republic of Congo from US miner Freeport-McMoRan for $550mn.
As prices and demand rises, and countries look to reduce their dependency on China for commodities, newer sources of supply could emerge.
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South Korea to require use of SAF for flights from 2027
South Korea to require use of SAF for flights from 2027
Singapore, 30 August (Argus) — South Korea said it plans to require all international flights departing from its airports to use a mix of 1pc sustainable aviation fuel (SAF) from 2027. This comes as more countries are adopting SAF mandates in accordance with the Carbon Offsetting and Reduction Scheme for International Aviation (CORSIA). Singapore earlier this year announced a 1pc SAF blending mandate from 2026 , with plans to increase to 3-5pc by 2030, subject to global developments and wider SAF availability and adoption. The Ministry of Trade, Industry and Energy and the Ministry of Land, Infrastructure and Transport announced the 'SAF Expansion Strategy' on 30 August, which includes a target for South Korea to capture 30pc of the global blended SAF export market. While not explicitly stated in the statement, some South Korean refineries expect co-processed SAF to be allowed to meet the country's mandate, sources said. This is important as the country already produces small quantities of SAF via co-processing at existing refining facilities, with three of South Korea's four domestic refineries planning to produce SAF through co-processing by the end of this year . Key strategies The ministries outlined three key strategies to achieve the SAF consumption target — gradual expansion of domestic SAF demand, ensuring a stable domestic supply capacity, and establishing a SAF-friendly legal and institutional environment. Airlines can already refuel with SAF at Korean airports, making South Korea the 20th country to do so as part of their plan to increase domestic SAF demand. The country had tested six flights using 2-4pc imported blended SAF between South Korea and Los Angeles since August 2023. An incentive system is being developed to encourage public and private adoption of SAF, with benefits such as preferential allocation of transport rights, reduced airport facility usage fees and the introduction of airline carbon mileage system for passengers and other benefits. A mid- to long-term roadmap for the gradual expansion of domestic SAF demand will be prepared in early 2025, the ministries said. The country's strategy to secure stable domestic supply capabilities includes considering investment support for domestic SAF production such as tax credits. South Korea's four domestic refineries already plan to invest 4 trillion won ($3bn) in renewable fuels, including SAF by 2030, the ministries said. The government estimates a Hydrotreated Esters and Fatty Acids (HEFA) SAF plant with a production capacity of up to 250,000 t/yr will require an investment of approximately W1 trillion. The supply-side strategy also aims to ease regulations on waste recycling to increase the availability of domestic feedstocks for SAF production. Another strategy is to diversify feedstock and SAF production technology options, with pre-testing expected later this year. The government plans to explore alternative feedstock like microalgae and production pathways such as e-SAF, with a view to developing supply chains. South Korea plans to establish a national standard, certification and testing method for SAF with preparation planned for December 2024. By Deborah Sun Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
Fortescue hold firms on 2024-25 iron ore target
Fortescue hold firms on 2024-25 iron ore target
Beijing, 30 August (Argus) — Australian iron ore producer Fortescue has reiterated its iron ore shipment target for the 2024-25 fiscal year ending 30 June of 190mn-200mn t, including 5mn-9mn t from its Iron Bridge project on a 100pc basis. The Iron Bridge magnetite project in Western Australia shipped its first cargo in July last year, with Fortescue's iron ore shipments totalling 191.6mn t for the full year . It had targeted to ship 192mn-197mn t for 2023-24. The company achieved a hematite average revenue of $103/dry metric tonne (dmt), up by 9pc on a year earlier. Hematite C1 costs for 2023-24 rose by 4pc from the previous year to $18.24/wet metric tonne (wmt) because of higher labour rates and mine plan driven cost escalation, although Fortescue said its cost control measures offset the partial increase. It forecasts hematite C1 costs for 2024-25 to rise to $18.50-19.75/wmt. The Argus ICX seaborne iron ore fines assessment for 62pc Fe cfr Qingdao averaged $119.40/dmt for 2023-24. Fortescue is on track to achieve real zero, or no fossil fuels and no offsets, for its scope 1 and 2 terrestrial emissions across its Australian iron ore operations by 2030. It is aiming to achieve this with building a new solar farm, deployment of electric excavators and the use of battery electric and hydrogen fuel cell haul truck prototypes. Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
US OCTG, line pipe imports fall in July
US OCTG, line pipe imports fall in July
Houston, 29 August (Argus) — Preliminary data from the US Department of Commerce shows that imports of oil country tubular goods (OCTG) and line pipe products fell in July. OCTG volumes fell by 88,100 metric tonnes (t) from the prior year, as volumes from Japan dropped by 15,500t, South Korea and Thailand both dropped by 13,500t, and volumes from Vietnam and Mexico fell by 11,300t and 9,300t, respectively. Volumes of line pipe less than or equal to 16in fell by 12,300t, as Italian volumes dropped by 4,500t, Ukraine dropped to zero from 4,400t in the prior year, and Brazilian volumes fell by 3,100t. Standard pipe imports increased by 13,400t on a 7,900t increase from Turkey. Heavy structural shape volumes jumped by 39,700t as Spanish volumes increased by 21,700t from the prior year, and imports from Germany rose by 9,200t. By Rye Druzchetta US pipe and tube imports metric tonnes Product Jul-24 Jul-23 Volume change ±% Jun-24 OCTG 95,792 183,909 -88,117 -47.9% 126,760 Line pipe 69,387 80,875 -11,488 -14.2% 87,976 Standard 66,100 52,716 13,384 25.4% 76,317 Heavy Structural Shapes 107,979 68,253 39,726 58.2% 54,096 US Department of Commerce July 2024 data is preliminary data, which is subject to change. Line pipe is all diameters. Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
Higher flats volumes lead US steel imports up
Higher flats volumes lead US steel imports up
Houston, 29 August (Argus) — Higher volumes of flat steel imports led overall US steel imports higher in July. Total US steel imports for consumption were 2.2mn metric tonnes (t) in July, according to preliminary data from the US Department of Commerce. Hot-rolled coil (HRC) imports rose by 22,600t from the prior year, driven by a 32,900t jump in Japanese volumes, which were offset slightly by a 9,200t drop from Canada. Cold-rolled coil (CRC) volumes were up by 37,000t in July, with Canada exporting 8,800t more than the prior year. Hot-dipped galvanized (HDG) coil imports from Brazil jumped by 17,200t from the prior year, while volumes from Mexico rose by 13,000t. Volumes of blooms, billets and slabs dropped by 121,900t, as Mexico's volumes dropped to zero from 95,800t in the prior year. By Rye Druzchetta US steel imports metric tonnes Product Jul-24 Jul-23 Volume change ±% Jun-24 HRC 156,952 134,326 22,626 16.8% 156,861 CRC 172,746 135,778 36,968 27.2% 113,400 HDG 233,511 165,607 67,904 41.0% 238,809 Blooms, billets, slabs 364,138 486,053 -121,915 -25.1% 395,478 Total (all items)* 2,197,347 2,153,126 44,221 2.1% 1,955,800 US Department of Commerce July 2024 data is preliminary data, which is subject to change. Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
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