Covid, inflation top risks to global economy: Australia

  • Market: Coal, Coking coal, Metals, Natural gas
  • 04/02/22

The largest risks to the global economy were health-related, on the Covid-19 pandemic, and inflation concerns, which could trigger tighter monetary conditions that might impact commodity prices and demand, the Reserve Bank of Australia (RBA) said.

The most significant downside risks to global and domestic economies are health related, the RBA said in its latest quarterly statement on monetary policy. The economic outlook from the RBA is similar to that of the International Monetary Fund last month.

The global outlook is also subject to a range of risks outside the health sphere. "If the upswing in global inflation turns out to be larger or more persistent than currently expected, it could trigger an earlier and larger tightening in global monetary policy," the RBA said.

This could be disruptive, particularly for some emerging market economies, it added. The Chinese economy is subject to some specific risks related to the various policy trade-offs that the authorities have made.

"There are also risks to the Chinese economy should a widespread outbreak of Covid-19 occur and require large-scale suppression measures there. Geopolitical risks have also come to the fore in recent weeks," the RBA said. China is Australia's largest trading partner, accounting for around 34pc of Australia's total exports in 2021.

A larger-than-expected slowdown in China's economy would reduce demand for iron ore and other commodities. "This would be particularly relevant to Australia," the bank said. "Alongside lower resource export volumes, this could result in a decline in commodity prices, impacting Australia's terms of trade, corporate profits and tax revenues. Further trade restrictions could also delay the recovery in Australian exports."

Australia's terms of trade are expected to decline over the forecast period to June 2024, after reaching a record high level in the July-September 2021 quarter, it said. Australia reported a record trade surplus of A$122bn ($87bn) in 2021.

An increase in energy-related export prices, particularly for LNG and thermal coal, is offset by higher import prices in the forecasts. Iron ore prices have been above $100/t since the end of 2021, but are forecast to gradually decline to around $80/t by the end of the forecast period, the bank said.

Iron ore prices have been volatile in recent months, in contrast to energy commodities, but remain well below their historically high levels in early 2021. Prices fell early last year as Chinese authorities enforced steel production curbs, but have retraced about half of the fall in the past two months because of a stronger outlook for steel demand from the real estate and infrastructure construction sectors, the RBA said.

Australian households' confidence and willingness to spend their accumulated savings could be higher if health outcomes are better than expected, the central bank said.


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23/05/24

RE monazite demand shifts mineral sands supply chain

RE monazite demand shifts mineral sands supply chain

London, 23 May (Argus) — Interest in monazite as a feedstock for rare earth (RE) processing is rising as producers look for sources outside China, bringing mineral sands projects into the RE supply chain. Deposits of RE elements are typically found in rock formations including carbonatites and granites, in calc-silicate sequences and ionic adsorption clay deposits — primarily in China and surrounding countries. But as downstream consumers and governments increasingly look to diversify their supply chains, monazite is becoming attractive as an alternative source. Monazite is a phosphate mineral that contains about 55-60pc RE oxides. It contains 17 RE elements, including cerium, neodymium, lanthanum, thorium and yttrium. Reflecting this, US-based uranium and rare earths producer Energy Fuels is acquiring Australia-based mineral sands developer Base Resources to gain access to the monazite stream from its Toliara project in Africa as an RE feedstock. The Toliara heavy mineral sands project in Madagascar plans to produce monazite as a by-product of its primary titanium and zirconium output. The acquisition marks Energy Fuels' entry into the mineral sands business as it invests in operations in Australia, Brazil and Madagascar to supply RE concentrate. Toliara's monazite stream will provide the feedstock Energy Fuels needs for RE oxide production at its White Mesa uranium and vanadium mill in Utah. The facility will also process the uranium content from the feed and if needed, it can recover thorium. The mill has been processing monazite to produce a mixed RE carbonate, which it has been selling commercially since 2021. "We're putting together two pieces of the puzzle that nobody has put together," Energy Fuels president and chief executive Mark Chalmers said at the recent Metal Events Rare Earths conference in Singapore. "We're putting together the physical metallurgy and the hydrometallurgy." White Mesa has been processing monazite supplied by US titanium dioxide producer Chemours. But its output has been limited as there is not enough monazite in the feed, Chalmers said, whereas Toliara contains more than 1mn t of monazite and has about 1.5mn t of existing tailings capacity. Energy Fuels is in the process of commissioning its Phase 1 neodymium-praseodymium (NdPr) separation facility, which is scheduled to start production by the end of the first half of 2024. It plans to produce 35t of NdPr oxalate in 2024. Phase 1 will have the capacity to process 8,000-10,000 t/yr of monazite to produce up to 800-1,000 t/yr of NdPr oxide. The company plans to increase its NdPr capacity to 3,000 t/yr in 2026-27 and add heavy RE processing in 2027-28. It is starting to pilot heavy RE separation and is exploring moving downstream into metal and alloy production. The first stage of Base's Toliara project, scheduled for September 2027, aims to produce an average of 17,400 t/yr of monazite. The second stage would ramp up to 26,100 t/yr. Energy Fuels also owns the Bahia project in Brazil, which could supply 4,000-5,000 t/yr of monazite to White Mesa Mill to produce 400-500 t/yr of NdPr oxide and 20-25 t/yr of dysprosium and terbium oxides. Energy Fuels has the potential to produce 4,000-6,000 t/yr of NdPr oxide, 150-225 t/yr of dysprosium oxide and 50-75 t/yr of terbium oxide, which would supply enough magnetic RE oxides to supply 3mn-6mn electric vehicles (EVs) per year. RE oxides are in demand from US, European and Asian EV, wind energy and other clean energy manufacturers, as well as emerging commercial metal-making, alloying and magnet-making facilities that are under development in the US. The US defence industry could include offtake of other non-magnetic oxides contained in monazite. Developments at other mineral sands producers outside China also indicate that demand for concentrate for its monazite content rather than zircon or titanium is on the rise. Indonesia-focused zircon producer PYX Resources said last week that it has made its first shipment of monazite-rich zircon concentrate to a customer in Hainan, China, exporting 750t. PYX expects to report further exports in the future. Mineral sands producer Iluka is also moving into the RE market using its monazite by-product. The company has stockpiled monazite since the 1990s at its Narngulu Mineral Separation Plant in Eneabba, Western Australia. Iluka is now developing RE production at Eneabba, commissioning a concentrator plant to process the stockpiled material. It will separate the monazite and additional zircon to produce a 90pc concentrate to feed its RE refinery. The company aims to produce neodymium, praseodymium, dysprosium and terbium oxides from 2026. It holds other mineral sands deposits that could feed the RE refinery, and it will be able to handle third-party deposits if it requires additional feedstock. Companies had stopped processing monazite owing to the high cost of disposing radioactive thorium. But thorium is now becoming attractive for advanced nuclear reactor design and medical isotopes, which could drive offtake. By Nicole Willing Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

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Record-high EU antimony prices in 'uncharted territory'


23/05/24
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23/05/24

Record-high EU antimony prices in 'uncharted territory'

London, 23 May (Argus) — European antimony prices hit fresh record highs this week after a prolonged period of supply constraints, and the latest hikes are drawing concern from even the most experienced traders as they navigate an increasingly opaque and speculative spot market. Prices for regulus grade II and trioxide in Europe were assessed at $18,500-19,500/t today, up by 14pc from a week ago and 55pc higher than this time last year, when prices were $12,000-12,400/t. Higher price indications are emerging daily, with some offers heard as high as $20,000/t in Rotterdam this week. The upswing has gathered pace significantly since 9 April, underpinned by depleting domestic resources in China and limited concentrate coming into Europe from various parts of the world. The continuing war in Myanmar (Burma) — a major source of antimony ore, most of which is exported to China — is exacerbating the supply tightness. Meanwhile, Oman-based strategic and precious metals firm SPMP suspended production at its Oman Antimony Roaster plant at the start of 2024 and is still not offering material, chief executive Joel Montgomery told Argus this week. The reasons for the suspension have not been disclosed. The status of Russian producer Polyus remains unclear, but the firm is not delivering as much raw material as in the past, Argus understands. And Tajikstan is currently producing more antimony ingot and selling less ore, according to market participants. "The market is becoming more opaque, with less information on the largest players," consultancy firm Hallgarten's principal and mining strategist, Christopher Ecclestone, told Argus . He added that supply of ore — or concentrate — is inelastic, as artisanal producers are currently operating at maximum capacity. On the demand side, China is directing significant volumes of antimony trioxide and antimony selenide toward its manufacturers of solar photovoltaic glass. With a container to Europe now costing around half a million dollars, traders have largely stepped back from the spot market, waiting for the current volatility to ease, and minimal stocks are available in Rotterdam for spot bookings. A significant volume of antimony arrived in Rotterdam recently and has already been locked into long-term contracts, but this has not stunted the rally, a market source told Argus . "Antimony is becoming a crazy dangerous market," a trader told Argus . It is hurting the industry, causing irreparable damage," he added, noting that consumers are getting hit by the higher prices and reduced availability. Antimony is largely used as a flame retardant in electrical and electronic equipment and textiles, alloys (lead-acid batteries), wires and cables, ceramics, and glass. With prices at record highs, market participants are looking for ways to ease the supply crunch or their consumption rates, but there are no easy options available. On the supply side, recycling streams are already heavily utilised after a major push in 2011, when prices hit their previous record high of around $17,100/t. Around a quarter of global antimony supply is currently produced through the recycling of antimony-bearing metal alloys. On the consumption side, demand from the flame-retardant sector fell by around 20pc in 2023 because of the weak macroeconomic environment, according to one buyer. It is difficult to develop alternative materials that can act as a substitute. Zinc borates and zinc stannates can sometimes substitute antimony trioxide, but only in specific formulations. Antimony substitutes can run into performance issues in various applications, especially in flame retardants because of the weakening of the polymer, sources said. "Antimony could be replaced in solar uses, but that is still a small portion of the market, even though it is growing," Ecclestone said. For now, speculation remains rife as to how high prices are likely to go before hitting a ceiling. "When the increase is supply driven, there is a moment when it falls [...] It cannot stick for too much longer," a trader said. Some sources expect the price rally to run out of steam in July-August because of the summer demand lull. Producers of flame-retardant products typically pause operations in June-July, and there could be a two-week period of maintenance, Argus understands. "The bubble is going to burst once it reaches $20,000/t," another trader estimated. By Cristina Belda Antimony trioxide Europe vs China $/t Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

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India’s AMNS signs 10-year LNG supply deal with Shell


23/05/24
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23/05/24

India’s AMNS signs 10-year LNG supply deal with Shell

Mumbai, 23 May (Argus) — Indian steel manufacturer ArcelorMittal Nippon Steel (AMNS) has signed a 10-year deal to buy LNG from Shell, with deliveries to start from 2027, people with direct knowledge of the matter have said. Under the terms of the deal, the steelmaker's direct reduced iron (DRI) plant in the western Gujarat state of Hazira will receive 500,000 t/yr of LNG, Argus understands. The Hazira plant has crude steel production capacity of 8.8mn t/yr, according to ArcelorMittal's 2023 annual report. As much as 65pc of the capacity is based on DRI. AMNS also has a deal with TotalEnergies for 500,000 t/yr that is scheduled to expire in 2026 . This deal comes at a time when AMNS plans to expand its steel capacity to 20mn t/yr in the long run . This supply pact also underscores a trend in the global steel industry to use cleaner energy sources to produce the so-called 'green steel'. The firm imports up to 75pc of its 1.72mn t in natural gas requirements on an annualised basis, a source said. The deal was signed at a 11.5pc percentage of Brent crude prices, trading firms said, adding that this is so far the lowest-heard slope for an Indian term LNG supply contract. AMNS sought LNG supply for a period of 5-10 years starting in 2027 under a tender that closed in mid-March. The firm last sought long-term LNG in 2022 through a tender for 400,000 t/yr of LNG to be delivered across 2025-30. Indian importers will continue to seek term supply despite softening spot prices, mostly to hedge their risks in a market that can still be volatile, trading companies said. The Argus front-month price for LNG deliveries to India was assessed at $11.50/mn Btu today, up from $10.16/mn Btu a week earlier. The price reached as high as $48.30/mn Btu in August 2022. The firm has lowered its carbon emissions by 32pc in calendar year 2022 from 2015 levels, it said. By Rituparna Ghosh Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

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Shell to step up gas exploration in Oman


23/05/24
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23/05/24

Shell to step up gas exploration in Oman

Dubai, 23 May (Argus) — Shell Oman is actively looking to explore more wells in the sultanate's onshore blocks after production reached a "little above" the plateau target of 500mn ft³/d (5.2bn m³/yr) in its core block 10 this month, according to the oil company's country chairman, Walid Hadi. Hadi told Argus that the company has embarked on an "aggressive exploration" campaign to unlock the potential in Oman's core onshore blocks 10 and 11 in which Shell has operating stakes. The blocks are part of the gas-rich Greater Barik area in the northern segment of state-controlled PDO's block 6 concession in the central region of Oman. "Oman is a niche gas sector," Hadi said. "It may not be the biggest LNG exporter in the world, but there is quite a sophisticated and high-quality gas system in place." Shell, which is also the majority private shareholder in state-owned Oman LNG, expects to boost gas production for domestic purposes and eventually for exports, according to Hadi. "We will require new gas if we are going into LNG," he said. "We know there is more potential in the blocks, but we still don't know at what scale it can produce as the two blocks are a combination of undiscovered and discovered resources." TotalEnergies said earlier this year that Oman LNG was eyeing a fourth train at its 11.4mn t/yr Qalhat LNG export terminal, having already added 1mn t/yr in liquefaction capacity through plant debottlenecking. Hadi said that Shell is planning on a "material increase" in gas production and would be able to conclude the growth potential of the blocks by mid or late 2025, when it completes the exploration programme. Gas from block 10 is sold to the government through the Integrated Gas Company, which is the entity that allocates the gas across different sectors based on certain policies and value criteria, according to Hadi. Shell has a 53.45pc stake in the block, with Marsa LNG and OQ holding 33.19pc and 13.36pc, respectively. The partners signed the concession agreement for block 10 in December 2021. The adjacent block 11 was awarded to OQ and TotalEnergies in 2021. When it comes to block 11, the company did make a material gas discovery, which is being appraised this year, but it is too early to talk about the production potential, Hadi said. "We also see quite a bit of potential in block 11 already." "Exploration is a very tricky business," he added. "You have to go after a lot of things and only few will end up working. We are at a very aggressive exploration campaign at the moment. We also expect by the end of 2025, we would be in a much better position to determine the next wave of growth and where it's going to come from." By Rithika Krishna Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

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Indonesia’s nickel mining quotas fall short of demand


23/05/24
News
23/05/24

Indonesia’s nickel mining quotas fall short of demand

Singapore, 23 May (Argus) — Indonesia's ministry of energy and mineral resources has approved 204 nickel mining work plans for exploration and production, according to market participants, with a combined quota of 220.7mn t. The approved quotas, also known as RKAB work plans, allocated to the production segment is unknown. But participants said that the quotas may not be enough to meet expected demand this year because more than 90pc of the production RKABs are expected to have been approved. Nickel ore demand is forecast to reach 220mn t in 2024 based on projected nickel output, according to data compiled by Argus. Indonesia's nickel ore output was 175.6mn t in 2023. A large portion of the approvals was granted to the Morowali region, participants said, while the approval rates for RKABs in other regions, such as Sulawesi and Weda Bay, were significantly lower. This could potentially lead to a regional shortage of nickel ore. Nickel consumption is trending higher with an influx of overseas investment into Indonesia. Indian steel producer Jindal Stainless is planning a 1.2mn t/yr stainless steel melt shop , while Chinese battery metals and materials manufacturer Green Eco-Manufacture is building a 30,000 t/yr battery cathode precursor plant . But nickel intermediate supplies have been tight, dampened by tighter spot availability and lower term-contracted availability from Indonesia-based plants with a bearish nickel-cobalt-manganese battery precursor market. Civil unrest in New Caledonia has sparked concerns of a further tightening of supplies, pushing London Metal Exchange nickel prices on 20 May to their highest level in nine months at $21,625/t. Several businesses in the French-controlled territory's nickel value chain were disrupted during the riots, affecting production and transportation. Nickel prices will likely remain volatile in the coming months, depending on the approval rates of new RKABs, availability from swing suppliers such as New Caledonia and the growth rate of Chinese stainless steel and electric vehicle demand. By Sheih Li Wong Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

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