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Northvolt's future unclear as Sweden rejects stake

  • Spanish Market: Battery materials, Metals
  • 20/09/24

The future of Swedish battery and cathode active material (CAM) producer Northvolt is unclear after the country's Prime Minister Ulf Kristersson confirmed this week that the government will not invest in the company. Northvolt has had to cut back its expansion plans because of challenging macroeconomic and market conditions.

Northvolt's difficulties were thrown into the spotlight last week when chief executive and co-founder Peter Carlsson said the company will scale back its expansion plans for a second CAM factory in Borlange, Sweden – a facility that is intended to help ease regional dependence on imports from China which currently accounts for over 70pc of global CAM production, according to the IEA.

The adjustment at Borlange is one of several setbacks at Northvolt, whose Skellefteå factory in the far north of Sweden delivered less than 1GWh of battery production last year – enough to power around 20,000 cars and far below the plant's nameplate capacity of 16GWh. Back in June, German carmaker BMW pulled out of a €2bn ($2.2bn) order, albeit just 4pc of Northvolt's order book of $55bn, according to its 2022 annual report – underscoring the slowdown in European demand for electric vehicles (EVs) and therefore battery materials.

Carlsson maintains that the "long term outlook for cell manufacturers — including Northvolt — is strong", despite the "challenging macroeconomic environment."

And while the Swedish government has declined to invest, Northvolt did receive a €5bn ($5.58bn) loan in January — the largest loan raised by a climate tech firm in Europe to date, along with €942mn from the European Investment Bank (EIB). Overall, the company has received around €15bn ($16bn) of investments to date — in debt and equity — since its founding in 2017 by two former Tesla executives, comfortably making it Europe's best-funded start-up, ahead of fintech firm Klarna at $4.6bn.

However the road ahead is challenging and costly, and additional support will be needed. "Northvolt haven't gone under but are not going to produce any CAM material until 2026 at the earliest, so difficult times, the EU needs to step up and support," a market participant commented.

The scale of growth and support being given to China's battery and electric vehicle (EV) sectors is also compounding the difficulties raising investment for European projects. China accounted for 83pc of global battery production last year, according to the IEA, and subsidy-funded EV manufacturers CATL and BYD have continued to expand capacity this year (see graph). China has subsidised its EV industry to the tune of around $230bn between 2007 and 2023, including $45bn last year, according to a study by the Centre for Strategic and International Studies (CSIS).

"This scares off the capital from the [European] battery market. It takes a full reassessment of the industry, which takes a long time. Capital is not cheap and rate cuts are only coming in now, so it will be a while," another market participant said.

China's battery dominance continues to hamper Europe

"This narrative is bigger than Northvolt – Asian manufacturers generally and Chinese manufacturers specifically are in the lead, very clearly", said Jeffrey Chamberlain, chief executive of US-based venture fund Volta Energy Technologies.

"The idea that a start-up can catch up and manufacture cells, of equal or better quality at volume, might have been viable 10-15 years ago, but it is increasingly becoming incredibly challenging," Chamberlain said, arguing that western firms at all stages of the supply chain should sign joint ventures with China instead of engaging in direct competition, offering access to their markets with local manufacturing as well as "innovation for next-generation products".

Despite recent setbacks, Northvolt has not revised its goal of building four large factories before the end of the decade in Sweden, Germany and Canada – remaining committed to a scale of ambition that is drawing concern from some industry participants.

"The only way for success now is through strategic alliances, just look at InoBat and Gotion," said Ben Kilbey, former director at Britishvolt. "[It] feels like recent history repeating [itself]. Britishvolt was advised that it could make a battery factory in two global locations (UK and Canada) before it had made a single cell […] Now Northvolt is in a pickle and having to scale back its global, vertical integration, ambitions. And it's had around €15bn thrown at it," Kilbey added.

Chinese companies have outlined lithium-ion battery manufacturing capacity for next year that far exceeds expected demand (see graph), which may further weigh on prices for component materials, squeezing the margins of any manufacturers of these materials outside China such as Northvolt.

Global EV battery installations, by supplier GWh

Announced lithium-ion battery manufacturing capacity and demand in 2025 GWh

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04/11/24

US railroad-labor contract talks heat up

US railroad-labor contract talks heat up

Washington, 4 November (Argus) — Negotiations to amend US rail labor contracts are becoming increasingly complicated as railroads split on negotiating tactics, potentially stalling operations at some carriers. The multiple negotiating pathways are reigniting fears of 2022, when some unions agreed to new contracts and others were on the verge of striking before President Joe Biden ordered them back to work . Shippers feared freight delays if strikes occurred. This round, two railroads are independently negotiating with unions. Most of the Class I railroads have traditionally used the National Carriers' Conference Committee to jointly negotiate contracts with the nation's largest labor unions. Eastern railroad CSX has already reached agreements with labor unions representing 17 job categories, which combined represent nearly 60pc of its unionized workforce. "This is the right approach for CSX," chief executive Joe Hinrichs said last month. Getting the national agreements on wages and benefits done will then let CSX work with employees on efficiency, safety and other issues, he said. Western carrier Union Pacific is taking a similar path. "We look forward to negotiating a deal that improves operating efficiency, helps provide the service we sold to our customers" and enables the railroad to thrive, it said. Some talks may be tough. The Brotherhood of Locomotive Engineers and Trainmen (BLET) and Union Pacific are in court over their most recent agreement. But BLET is meeting with Union Pacific chief executive Jim Vena next week, and with CSX officials the following week. Traditional group negotiation is also proceeding. BNSF, Norfolk Southern and the US arm of Canadian National last week initiated talks under the National Carriers' Conference Committee to amend existing contracts with 12 unions. Under the Railway Labor Act, rail labor contracts do not expire, a regulation designed to keep freight moving. But if railroads and unions again go months without reaching agreements, freight movements will again be at risk. By Abby Caplan Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

US light vehicle sales hit 6-month high in Oct


04/11/24
04/11/24

US light vehicle sales hit 6-month high in Oct

Houston, 4 November (Argus) — Domestic sales of light vehicles climbed in October, rising to a seasonally adjusted rate of 16mn on the back of greater truck purchases. Sales of light vehicles — trucks and cars — increased from a seasonally adjusted annual rate of 15.8mn in September, the Bureau of Economic Analysis reported today. Last month's rate was the highest since 16.1mn in April and greater than the 15.3mn unit rate in October 2023. US consumers, boosted by solid hiring and salary gains, stepped up purchases as borrowing costs have started to come down in the wake of the Federal Reserve's half point cut in its target rate in September, the first cut since Covid-19 struck in early 2020. With inflation nearing the central bank's 2pc target, the Fed has signaled another 200 basis points of rate cuts are likely into 2026. Sales of light truck sales increased by 1.6pc to just under a 13mn unit rate in October, while sales of cars rose by 2.2pc to a 3.1mn unit rate in the same timeframe. Domestic auto production rose to a seasonally adjusted rate of 123,900 in September from 121,500 in August. That compared with 143,400 in September 2023. Auto assemblies are reported with a one-month lag to sales. By Alex Nicoll Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

Mexico GDP outlook dims in October survey


04/11/24
04/11/24

Mexico GDP outlook dims in October survey

Mexico City, 4 November (Argus) — Private-sector analysts have again lowered their projections for Mexico's gross domestic product (GDP) growth this year, with minimal changes in inflation expectations, the central bank said. For a seventh consecutive month, median GDP growth forecasts for 2024 have dropped in the central bank's monthly survey of private sector analysts. In the latest survey conducted in late October, analysts revised the full-year 2024 growth estimate to 1.4pc, down from 1.46pc the previous month. The 2025 forecast also dipped slightly, to 1.17pc from 1.2pc. The latest revisions are relatively minor compared to the slides recorded in preceding surveys, suggesting negativity in the outlook for Mexico's economy may be moderating. This aligns with the national statistics agency Inegi's preliminary report of 1.5pc annualized GDP growth in the third quarter, surpassing the 1.3pc consensus forecast by Mexican bank Banorte. Inflation projections for the end of 2024 inched down to an annualized 4.44pc from 4.45pc, while 2025 estimate held unchanged at 3.8pc. September saw a second consecutive month of declining inflation, with the CPI falling to 4.58pc in September from 4.99pc in August. The survey maintained the year-end forecast for the central bank's target interest rate at 10pc, down from the current 10.5pc. This implies analysts expect two 25-basis-point cuts to the target rate, most likely at the next meetings on 14 November and 19 December. The 2025 target rate forecast held steady at 8pc, with analysts anticipating continued rate reductions into next year. The outlook for the peso remains subdued, following political shifts in June's elections that reduced opposition to the ruling Morena party. The median year-end exchange rate forecast weakened to Ps19.8 to the US dollar from Ps19.66/$1 in the previous survey. The peso was trading weaker at Ps20.4/$1 on Monday, reflecting temporary uncertainty tied to the US election. Analysts remain wary of Mexico's political environment, especially after Morena and its allies pushed through controversial constitutional reforms in recent months. In the survey, 55pc of analysts cited governance issues as the primary obstacle to growth, with 19pc pointing to political uncertainty, 16pc to security concerns and 13pc to deficiencies in the rule of law. By James Young Mexican central bank monthly survey Column header left October September Headline inflation (%) 2024 4.45 4.44 2025 3.80 3.80 GDP growth (%) 2024 1.40 1.46 2025 1.17 1.20 MXN/USD exchange rate* 2024 19.80 19.66 2025 20.00 19.81 Banxico reference rate (%) 2024 10.00 10.00 2025 8.00 8.00 Survey results are median estimates of private sector analysts surveyed by Banco de Mexico from 17-30 October. *Exchange rates are forecast for the end of respective year. Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

Striking Boeing workers to vote on new proposal


01/11/24
01/11/24

Striking Boeing workers to vote on new proposal

Houston, 1 November (Argus) — Boeing workers next week will vote on a third labor proposal from the aerospace manufacturer that could end a seven-week work stoppage that has halted production of several commercial aircraft programs. More than 32,000 Boeing employees represented by the International Association of Machinists and Aerospace Workers (IAMAW) will cast their ballots on 4 November after union leadership and the company struck a tentative agreement on Thursday. The new offer comes with a 38pc general wage increase (GWI) spread over four years and a $12,000 ratification bonus — both up from 35pc and $7,000, respectively, from Boeing's previous proposal that workers rejected on 24 October. Sticking points during contract negotiations have centered around pay raises, with workers seeking a 40pc GWI, and the reinstatement of employees' pension plans. The latter is not addressed in the company's latest offer. Boeing's machinists have been on strike since 13 September, putting a squeeze on the company's finances with output of its flagship 737 MAX aircraft stalled. Production of Boeing's 767 and 777 models also has been disrupted. If the deal is approved, the earliest workers could return to their jobs would be 6 November, with everybody having to be back by 12 November at the latest, the union said. By Alex Nicoll Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

US job growth slumps in October, jobless rate at 4.1pc


01/11/24
01/11/24

US job growth slumps in October, jobless rate at 4.1pc

Houston, 1 November (Argus) — The US added only 12,000 nonfarm jobs in October, reflecting the impacts of two hurricanes, a strike at aircraft manufacturer Boeing and a slowing trend in hiring prompted by high borrowing costs. The unemployment rate remained unchanged at 4.1pc, still close to a five-decade low of 3.4pc reached in early 2023, the Labor Department reported today. Last month's gains were far fewer than the 113,000 forecast by analysts surveyed by Trading Economics. Job gains for the prior two months were revised down by a combined 112,000 jobs, leaving September with a still robust 233,000 and August with 78,000 jobs. A Labor Department report earlier this week showed job openings in September were at their lowest since January 2021. Still, job gains for the 12 months through October averaged 194,000, a little higher than the 12-month period before Covid-19 struck the US beginning in early 2020, causing millions of job losses and a sharp but short recession. Today's employment report, the last before next week's US presidential election, cements odds of a quarter point cut in the Federal Reserve's target rate next week to nearly 100pc from about 96pc Thursday, according to CME's FedWatch tool. The Fed cut its rate by half a point in late September, the first cut since 2020, as it is just beginning to loosen monetary policy after the sharpest tightening in decades to battle surging price gains. Inflation has since moved close to its 2pc target and job gains have gradually slowed, even as the economy remains robust, growing by nearly 3pc in the second and third quarters of the year. Hurricane Helene made landfall in northern Florida in late September and slammed northwards into Georgia, the Carolinas and Virginia, leaving major damage in its wake. Hurricane Milton struck Florida on 9 October, within the period of both surveys used for the job report. About 32,000 unionized workers at Boeing have been on strike since early September. Job growth trended up in government and in health care and social services, which added 40,000 and 51,000, respectively, while manufacturing declined by 46,000, partly due to strikes. Construction added 8,000 jobs. Average hourly earnings edged up to an annual 4pc from 3.9pc. By Bob Willis Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

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