AutoForecast cuts NorthAm auto rates for 2022

  • Market: Chemicals, Coking coal, Metals, Oil products
  • 05/03/22

North American automotive production should come in at 2pc lower than previously expected, mirroring other regions, according to consultancy AutoForecast Solutions.

Regional production estimates have fallen by 330,000 vehicles to 14.82mn units in 2022 from estimates laid out in its March outlook.

In western Europe, AutoForecast Solutions cut production estimates by 500,000 vehicles to 11.16mn, while it expects a cut of eastern European production of 810,000 to 6.26mn vehicles.

It reduced the production outlook for the Asia-Pacific region by 2pc to 46.68mn units.

Last week original equipment manufacturer (OEM) Magna International cut its 2022 forecasts for European auto production by 11pc to 16.4mn vehicles and North American production by 500,000 units to 14.7mn.


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02/22/24

Analysis: Iron ore increasingly divorced from steel

Analysis: Iron ore increasingly divorced from steel

London, 22 February (Argus) — Some ferrous market participants have long called to scrap "new iron ore" because of its increasing usage in lower carbon intensity steelmaking and potential threat to iron ore in the future. But Turkish scrap is currently much more highly correlated with Chinese hot-rolled coil compared to Chinese iron ore, despite the latter being the primary input for the world's largest steel consuming and producing region. Just 9.5pc of Chinese steel is produced via electric arc furnace, according to Worldsteel trade association data. Since the start of 2023 the straight correlation between Chinese iron ore import prices and HRC export prices has been a meagre 25pc, implying little relationship. Even lagged for the lead time from purchasing the raw material to consumption, the correlation is still below 45pc. That lower correlation encourages direct hedging of fob China HRC as opposed to hedging steel via raw materials: the LME's fob China HRC contract saw volumes jump over 89pc in January compared to the October-December 2023 monthly average volume. The straight correlation between Turkish scrap imports and Chinese HRC exports over the same period is 80pc, much higher than for iron ore. There are a number of reasons for the tighter relationship between scrap and HRC. China imports made up more than a third of Turkish HRC imports in 2023, selling over 1.6mn t into the country, up sharply from just over 562,000t the previous year. Last year 8.4pc of all China's HRC exports went to Turkey, with only Vietnam taking more. China was aggressive in terms of HRC exports last year. Overall it sold almost 24mn t of HRC into overseas markets, even higher than 2015, when its total steel exports surpassed 112mn t and the price of steel anywhere in the world was effectively the Chinese price plus freight. This aggressiveness affected all markets, including Europe, where Asian sellers gained significant import share from their Turkish counterparts. Turkish mills regularly flex between scrap, semi-finished products and to some extent finished steel, depending on price competitiveness. For example, where the price of scrap is too high, they may opt for slab or, if workable, HRC. Sources suggest Chinese HRC has been purchased in Turkey, and transformed into hot-dip galvanised coil before being sold into the EU. When entering the scrap market, the price of steel in China, which clearly has a strong influence on the global market, helps Turkish mills gauge value for their purchasing. At the same time, some suggest iron ore is trading out of line with fundamentals, given its tight supply base — scrap supply is much more fragmented — and the impact of Chinese government policy. Where the government wants to bolster gross domestic product figures, increased industrial production remains a key policy lever given the difficulty of shifting to become a consumer-led economy. Iron ore is also impacted very heavily by macroeconomic news, given how dependent on finances it has become, whereas scrap is more driven by steel supply and demand. Blast furnace and basic oxygen furnace-based producers in parts of the world have also ramped up their scrap charge to help lower their carbon footprint for certain consumers that want greener products, such as European carmakers. Even some integrated producers in Asia have nearly doubled their charge for this reason, according to supply- and buy-side sources. By Colin Richardson Iron ore losing relevance? Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

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Rising prices weigh on WAF gasoil imports


02/22/24
News
02/22/24

Rising prices weigh on WAF gasoil imports

London, 22 February (Argus) — Gasoil and diesel imports to west Africa are on track to slide to a 16-month low in February as rising prices weigh on demand. Vortexa data show 728,000t of gasoil and 10ppm diesel arrived in west Africa by sea on 1-21 February, equivalent to 34,700 t/d. This is 15,100 t/d lower than the daily average across the whole of January. Cameroon has not imported any at all so far this month after receiving 2,000 t/d in January. Imports to Ghana, Angola and Senegal are all down on a daily average basis. Market participants say buying interest in Ghana has been constrained by a weaker local currency, which has reduced access to US dollars. Currency depreciation is also affecting purchasing power in Nigeria, although gasoil imports to Nigeria have bucked the regional trend and are running 1,900 t/d higher so far this month than the January daily average. Market participants say traded volumes in the region have been below average this month. Higher prices are a key factor. The price of 10,000-20,000t high-sulphur gasoil cargoes delivered by ship-to-ship transfer at the regional offshore Lome trading hub in Togo were indicated at around $45/t above the front-month Ice gasoil futures contract on 22 February. For comparison, 30,000t cargoes of ultra low-sulphur diesel cif ARA were assessed at a much lower premium of $27.25/t to Ice gasoil on 21 February. Ice gasoil itself has rallied in recent weeks, hitting a more than three-month high of $918.25/t on 9 February as concerns over supply disruption in the Atlantic basin persist in the wake of attacks on commercial shipping by Yemen's Houthi rebels in and around the Red Sea, a key route for getting diesel and gasoil from east of Suez to northwest Europe. Inland shortfalls The drop in seaborne imports to west Africa is squeezing supply to inland countries in the landlocked Sahel region, which increasingly rely on volumes shipped to Togo. Gasoil and diesel imports to Togo have been on a downward trend since September last year and this is likely to continue this month, with only 27,500t arriving on 1-20 February, according to Vortexa. As a result, Togo and landlocked Burkina Faso, which relies entirely on overland deliveries, are currently experiencing a shortage of gasoil, market sources said. Another aggravating factor is landlocked Niger's inability to transport gasoil from its Soraz refinery by land to neighbouring Burkina Faso and Mali because of Islamist security threats along those countries' borders, one market participant said. The refinery has had to readjust run rates as it has built up ample gasoil stocks, the source added. Traders in Niger are exploring opportunities to export gasoil to neighbouring Chad instead. Chad is experiencing a shortage of gasoil after product from the country's 20,000 b/d Ndjamena refinery was sold to the Central African Republic at higher prices than domestic values, with traders taking advantage of the lack of Sudanese exports since the country's sole 100,000 b/d Khartoum refinery was bombed in November . The gasoil undersupply in the Sahel comes as Niger's president Abdourahamane Tiani, who took power in a coup in July last year, met with representatives from Togo, Burkina Faso, Mali and Chad on 17 February to discuss regional energy projects, with a view to reaching greater energy autonomy for the landlocked region. Tiani said in December last year that he wants an increase in domestic refining capacity , after a project to increase jet fuel yields at the Soraz refinery was delayed by July's coup. By George Maher-Bonnett Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

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Ship speeds on Red Sea rerouting to 'erode' GHG cuts


02/22/24
News
02/22/24

Ship speeds on Red Sea rerouting to 'erode' GHG cuts

Edinburgh, 22 February (Argus) — Ships increasing speed as they are forced to sail longer routes to avoid Houthi attacks in the Red Sea could "erode" environmental gains in shipping, the United Nations Conference on Trade and Development (UNCTAD) said today. The shipping sector has for over a decade reduced sailing speeds to cut fuel costs and reduce greenhouse gas (GHG) emissions, UNCTAD said. Speed optimisation is one of the solutions shipowners can consider to improve their rating under the International Maritime Organisation's (IMO) carbon intensity indicator (CII) measures which came into force in January 2023. Container ships' speeds for voyages around the Cape of Good Hope at the southern tip of Africa have increased since the Red Sea disruption started late last year. Container trade flows measured in tonnes account for over half of traffic through the Suez Canal, according to the Suez Canal Authority. Higher speeds are likely being used as a way of adhering to delivery schedules but also to manage fleet capacity, as longer routes mean vessels are employed for a longer period of time. UNCTAD said that these trends could erode environmental gains previously achieved by ships reducing speeds, or slow steaming. The organisation calculated that a ship increasing speed to 16 knots from 14 knots would increase bunker fuel consumption per mile by 31pc. "In this context, longer distances travelled due to rerouting away from the Suez [Canal] and through the Cape of Good Hope imply that greenhouse gas emissions for a round trip from Singapore to northern Europe would rise by over 70pc," it said. Ship tonnage entering the Gulf of Aden declined by over 70pc between the first half of December 2023 and the first half of February 2024, while ships passing the Cape of Good Hope increased by 60pc, UNCTAD noted. The security issues in the Red Sea have also affected insurance costs for shipowners, UNCTAD said. "By early February 2024, some reports indicate [risk] premiums rising to around 0.7pc to 1pc of a vessel's value, from under 0.1pc previously," UNCTAD said, citing a report by ratings agency Moody's. Ships avoiding the Suez Canal, particularly container vessels, also pose a risk to "global supply chains, potentially leading to delayed deliveries, heightened costs and inflation", it said. "The war in Ukraine had already shown the impact of longer distances and freight rates on food prices." UNCTAD estimates that about half of the increase in food prices observed in 2022 resulted from increased transport costs caused by longer distances and higher freight rates. By Caroline Varin Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

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Anglo American adds iron ore capacity at Minas Rio


02/22/24
News
02/22/24

Anglo American adds iron ore capacity at Minas Rio

Singapore, 22 February (Argus) — UK-South African mining firm Anglo American will integrate the Serra da Serpentina iron ore resource, owned by Brazilian producer Vale, into its nearby Minas Rio operations in Brazil. The deal, expected to concluded by this year's fourth quarter, has Vale contributing the Serra da Serpentina operations and $157.5mn in cash to acquire a 15pc shareholding in the enlarged Minas Rio. Anglo American will continue to control, manage and operate Minas Rio, including any future expansions. Serra da Serpentina has an estimated resource of 4.3bn t. Minas Rio's pellet feed ore production was 24mn t in 2023, up by 12pc from a year earlier. Vale will receive its pro rata share of Minas Rio production with completion of the deal. It will also have an option to acquire an additional 15pc stake in the enlarged Minas Rio for cash, if and when certain events relating to a future expansion of Minas Rio occur. If the average benchmark iron ore price, or the 62pc Fe cfr China price, remains above $100/t or below $80/t for four years, a purchase price adjustment payment will be made to Anglo American or Vale respectively, in line with an agreed formula and up to certain limits. The Argus 62pc cfr China index averaged $119.62/dry metric tonne (dmt) last year, compared with $120.11/dmt in 2022. The year-to-date index average is $131.86/dmt. The Argus 65pc cfr China index averaged $131.88/dmt last year, down from $138.74/dmt in 2022. The year-to-date index average is $143.78/dmt, although prices have come off since December in line with thin steel margins. By Deepali Sharma Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

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Australia’s Qantas flags higher 2023-24 jet fuel costs


02/22/24
News
02/22/24

Australia’s Qantas flags higher 2023-24 jet fuel costs

Sydney, 22 February (Argus) — Australian airline Qantas Airways still expects to incur a record fuel bill in the 2023-24 fiscal year to 30 June, according to its half-year results. Its fuel costs are expected to be A$5.4bn ($3.54bn) at current fuel prices, inclusive of hedging, with 2023-24 jet fuel consumption, including sustainable aviation fuel, predicted to be 81,000 b/d or 19pc higher than the 68,000 b/d recorded in 2022-23. Qantas group's fuel expenditure in 2022-23 was A$4.6bn. New Airbus A321LR aircraft delivered to its budget subsidiary Jetstar are resulting in a 20pc improvement in fuel burn per seat, Qantas said, contributing to a 12pc unit cost improvement compared with the older A320 aircraft they will replace. The airline said this is helping it reach an interim emissions reduction target of 25pc by 2030 . Qantas ordered a further eight A321XLRs for domestic flights for a total order of 28, with the first aircraft arriving in early 2025. Qantas' domestic group capacity guidance for 2023-24 was left unchanged at 103pc of its pre-Covid-19 pandemic figure. But international capacity guidance, excluding Jetstar Asia, was revised down to 94pc from a previous 95pc. Jetstar Asia capacity will reach 42pc of the pre-Covid figure, Qantas said, up from a previous guidance of 40pc. Qantas' July-December profit after tax was A$869mn, down from A$1bn in the previous corresponding period, while revenue of A$11.1bn was up on the 2022-23 first-half figure of A$9.9bn. By Tom Major Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.