Metals &Mining Alert:Daily prices and news,China's output restrictions to impact steel demand
Industrials (/lb): aluminum $0.95 (+0.4%), copper $3.08 (-0.3%), lead $1.14(+0.2%), molybdenum $7.14 (+0.0%); nickel $5.49 (-1.5%); zinc $1.46 (+1.4%);Precious (/oz): gold $1,275 (-0.8%), silver $16.88 (-0.7%); Steel (/mt): ChinaHRC $621 (+0.4%), SHFE Rebar $568 (-0.4%), MB Scrap Index $296 (+0.0%);Bulks: iron ore (/dmt) $63 (+0.4%), coking coal (/mt) $188 (+3.9%), freight (BCI)3,360 (+0.3%); Energy: Brent (/bbl) $63.52 (-0.6%), WTI (/bbl) $56.74 (-0.8%),natural gas (/mmBtu) $3.21 (+0.4%), thermal coal (/t) $98 (-0.1%).
China’s “2+26” policy to tackle pollution in 26 cities will reduce steel demandmore than it cuts production, per WoodMac. Severe restrictions ondownstream projects in major provinces will reduce demand by 9.6mt in 4Q17,impacting steel prices as well. Output restrictions in the 26 cities are expectedto be offset by production surges in the unregulated areas (South and EastChina and areas away from Beijing), shrinking supply shortage to 4mt in 4Q17(vs. demand reduction of 10mt). (Wood Mackenzie)Global nickel deficit expected to shrink to 53kt in 2018 (vs. 98kt in 2017) due toa recovery in Chinese production. Global consumption to rise 5.5% YoY to2.15mt in 2017, while output will rise 3% YoY to 2.05mt. Increased output inIndonesia (more than doubled in 2017) to offset declining Chinese output (-2%YoY). Battery sector to account for 9% of global nickel usage in 2025 (vs.
current 2.6%). Nickel consumption in Chinese battery sector to reach 49kt in2017, which includes 11kt for EV power cells. Usage of nickel in Chinese EVpower cells to grow to 45kt by 2020 and 150kt by 2025. (Antaike)Iron ore price rises to $62.7/t (+2% WoW) on consistent demand from East andSouth Chinese steel mills. Mills in Northern China were procuring less amidsintering and steel output cuts, whereas Southern China mills continued tochase productivity as they were unaffected by environmental limitations.
However, demand is expected to decrease as Northern mills will cut output by50% from November 15 onwards. (SBB)US Oil & Gas rig count increases by 9 WoW to 907 (+339 YoY). Oil-directedrigs rose by 9 to 738 (+286), while gas-directed rigs remained flat WoW at 169(+54 YoY). Canadian count increased by 11 to 203 (+27). (Baker Hughes)Freeport-McMoRan closes main supply route to its Grasberg copper and goldmine, Indonesia after shooting incident. Armed rebels have occupied 5 villagesnearby and blocked movement for ~1,000 villagers. Around 200 police andmilitary personnel have been deployed to secure the area by force, ifnecessary. (Mining.com)Nucor has stopped production at its Louisiana DRI facility (capacity: 2.5mt/yr)after an equipment failure. This is the fourth outage at the facility in 2017. Thelongest and most recent one took place from July 26 to September 8 asnecessary repairs were needed to be made to the material handling system.
There is no estimate as to when the current outage will end. (SBB)