Australia raises Chinese iron ore demand forecast

Spanish Market: Metals
20/12/20

Australian government commodity forecaster the Office of the Chief Economist (OCE) has raised its forecast for Chinese iron ore demand in 2020 but cut its projection for Brazilian exports by over a quarter.

The OCE has raised its 2020 Chinese demand forecast by 4.5pc to 1.21bn t from its previous projection of 1.16bn t in September, reflecting the impact of government spending on transport infrastructure including rail and road projects.

But it now sees Brazil's iron ore exports at just 269mn t, down by 26pc from its previous forecast of 366mn t, because of mine production problems at the country's largest producer Vale.

Strong Chinese demand and supply disruptions from Brazil have sent iron ore port prices to near record highs. The Argus-assessed ICX iron ore price settled at $159.75/t cfr Qingdao on a 62pc Fe basis on 17 December, just short of its six-year high of $160.30/t on 11 December.

The sharp rise in iron ore prices in recent months has been supported by robust demand in China linked to government stimulus measures, the OCE said in its latest Resource and Energy Quarterly report. It expects iron ore prices to remain well above $100/t until mid-2021 before easing to just over $75/t by the end of 2022.

China's iron ore demand is expected to remain high over the next 12 months, although Chinese steelmakers may seek to reduce production slightly should iron ore prices remain at a level that renders many of them unprofitable, the OCE said. Demand in many other countries is expected to stay below its 2019 level, with range of steelmakers in Europe and south Asia remaining on hiatus or shut down and not expected to return to production until iron ore prices drop.

But Chinese iron ore demand growth may be nearing its end. "Chinese demand for iron is likely at its peak, with a decline expected over the next 10 years as a growing share of its steel production is drawn from domestic recycling. This will result in reduced Chinese dependence on the seaborne iron ore market," it said.

Steel outlook

World steel consumption is likely to decline by 2.2pc in 2020 because of the Covid-19 pandemic and resulting economic downturn, but is expected to rebound by 3.8pc next year and then grow by 3.6pc in 2021, the OCE said. Steel production is expected to follow a similar pattern to consumption over the period.

China's September steel production was almost 40pc above the level a year earlier. "This has placed the country in a position of unprecedented dominance in steelmaking globally, with numerous other countries continuing to face manufacturing and steelmaking recessions," the OCE said.

China will release its 14th five-year plan for 2021-25 in March next year. The plan is expected to include a renewed focus on infrastructure rollouts and more rapid urbanisation, particularly in central and western China, which will in turn impact steel demand, the report said.

Steelmaking outside China is showing signs of recovery, led by growth in other Asian countries. South Korean production has recovered to around pre-Covid levels. India's steel production has shown solid growth in recent months, but it is not yet clear how rapidly its long-held plans to expand domestic steel production will proceed in light of disruptions related to Covid-19 and high iron ore prices, which affect the viability of proposed steel plants, the OCE said.

By Kevin Morrison

Global iron ore export, import forecasts				(mn t)
	2019 (actual)	2020	2021	2022

Global iron ore trade	1,555	1,647	1,783	1,861
Importers
China	1,071	1,209	1,343	1,421
EU 27	137	128	125	125
Japan	120	96	101	100
South Korea	74	69	74	75
Exporters
Australia	836	876	896	923
Brazil	336	269	281	301
Source: OCE

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30/04/24

Milei's bid to open Argentina's economy passes

Montevideo, 30 April (Argus) — Argentina's congress today approved the government's sweeping economic legislation that could open the door to more private-sector investment in energy and commodities. The bill passed on a 142-106 vote, with five abstentions, after a marathon 20-hour debate. Changes include privatizing some state-owned companies, controversial labor reforms and measures to promote LNG development. The omnibus legislation, which includes 279 articles, is an important victory for President Javier Milei's administration and will change the way many sectors, including energy, operate in the country. Lawmakers aligned with Milei's Liberty Advances party swiftly moved to the second stage of the process, which requires approval of individual articles. The omnibus bill was initially approved in February, but the administration withdrew it after congress failed to approve several key individual articles. That original version included 664 articles. Several of the more controversial articles were brought up immediately after the blanket approval and easily passed. They included an article allowing for privatization of state-run enterprises — national power company Enarsa is on the list — and another delegating to the administration the power to eliminate state agencies without having to consult with congress. Also approved was the article on labor reform. The country's oilseed industry and port workers' unions called a strike the previous day to pressure congress to modify the labor reform. That did not happen. It passed in a separate 136-113 vote. The strike started to fizzle with approval of the legislation. Approval of the package includes several articles the administration says will open the door to major investments in the energy sector. Chapter II specifically covers natural gas, and introduces new regulations for LNG. The chapter includes five articles that allow for 30-year contracts for LNG export projects and guarantees that gas supply cannot be interrupted for any reason. The energy secretariat has six months to design the implementing rules for LNG. The government wants to speed up monetization of the Vaca Muerta unconventional play, which has an estimated 308 trillion cf of natural gas reserves. It is pushing for Malaysia's Petronas to fully commit to a large-scale LNG facility that would start with a $10bn investment. Chapter IX of the legislation creates a new framework, known as the Rigi, for investments above $200mn. It offers tax, fiscal and customs benefits. Companies have two years from implementation of the legislation to take advantage of the Rigi. The chapter on this framework is one of the most complex in the bill, including 56 articles. It includes specific references to energy projects, from power generation to unconventional oil and gas development. The administration claims the legislation will help tame inflation and stabilize the economy. Inflation was 276pc annualized through February, but is declining, and Milei announced that monthly inflation would be in single digits when the March numbers are announced. The country recorded a 0.2pc quarterly fiscal surplus in the first quarter of this year, something not achieved since 2008. By Lucien Chauvin Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

Higher C919 adoption to boost China's Ti demand

30/04/24

Higher C919 adoption to boost China's Ti demand

Beijing, 30 April (Argus) — Higher adoption of the C919 airliner, China's first self-developed single-aisle passenger jet, is likely to boost demand for titanium mill products in the coming years, according to market participants. China Southern Airlines, one of the country's top three airlines, ordered 100 C919 aircraft from its manufacturer Commercial Aircraft Corporation of China (Comac) yesterday. These aircraft will be delivered in 2024-2031. China's flag carrier Air China on 26 April also announced that it will purchase 100 C919 aircraft from Comac during the same period. Another major airline, China Eastern Airlines, in September 2023 placed an order for 100 C919 aircraft from Comac, which delivered the fifth unit this March. This means all three top China airlines have invested in 100 aircraft deals for C919. Market participants estimate a single C919 aircraft contains 3.92t of titanium mill products. Demand for titanium mill products from a single C919 aircraft will reach 49t based on an overall yield rate of 8pc for mill products used in aviation parts. Titanium mill products typically include titanium strip, rod, section bar, wire, plate, sheet, tap and foil. Comac launched the C919 development programme in 2008 and began prototype production in 2011. The airliner had its maiden flight in 2017 and received its airworthiness certification from Chinese authorities in September 2022. A continued increase in orders and deliveries of the C919 airliner is likely to continue to boost demand for titanium mill products in the coming years. Comac has received over 1,400 orders for C919 from domestic and international airlines so far. China's 32 major manufacturers produced 159,000t of titanium mill products in 2023, up by 5.3pc from 151,000t in 2022, according to statistics from China nonferrous metals industry association titanium zirconium and hafnium branch (CNIA-TI). Aerospace, the second-largest consumption industry for titanium mill products, consumed 29,377t of titanium mill products in 2023, accounting for 19.8pc of China's total domestic production. "Demand from the aerospace industry has large potential in China," a source at a Baoji-based mill products manufacturer told Argus . "Only 20pc of titanium mill products is used in China's aerospace industry now, while the proportion is as high as 70-80pc in Europe and the US." A number of titanium mill products manufacturers in Baoji, which is known as China's "titanium valley", have begun to supply Comac as they have improved their product quality to meet Comac's criterion. Comac designated the country's largest producer Baoji Titanium (BaoTi) as the sole supplier of titanium mill products for the airliner just last year. Argus -assessed prices for titanium ingot, the main feedstock in the production of mill products, held stable from 23 April at 60,000-62,000 yuan/t ex-works for TA2 grade today, in response to firm titanium sponge feedstock costs and steady demand from mill products manufacturers. Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

Taiwan's scrap imports fall in March as demand slows

30/04/24

Taiwan's scrap imports fall in March as demand slows

Singapore, 30 April (Argus) — Taiwan's ferrous scrap imports fell on a year-on-year basis in March, as a slight rise in spot prices in January combined with slow domestic steel demand to discourage purchases. Taiwanese steel demand has weakened since the beginning of the year, market participants said. "Market fundamentals in 2023 were still okay, but slowed down in January as scrap buyers were unsure about the market post-Chinese new year," a trader said. Marginally higher spot scrap prices in January also suppressed buying appetite. The spot price for HMS 1/2 80:20 containerised scrap from the US west coast was as high as $380t/t on 17 January and was assessed at $375/t cfr by the end of that month. The higher spot prices encouraged steel mills and scrap buyers to take a wait-and-see approach. Loadings and delivery of containerised scrap bookings are usually made 8-10 weeks after an agreement is signed. Import volumes for the second quarter of 2024 are expected at steady-to-lower levels on seasonal weakness, market participants said. Production is likely to fall in the upcoming summer season because of electricity restrictions set by local authorities. A rise in electricity rates in April will also cap any upside in imported scrap prices and volumes, as mills are likely to reduce output by 20-40pc to curb their electricity use. Taiwan ferrous scrap imports t Country Mar % ± vs Feb % ± vs Mar'23 Jan-Mar % ± y-o-y US 121,298 49.29% 12.2% 323,030 5.74% Japan 44,316 -20.17% -56.7% 161,710 -23.04% Australia 15,942 60.69% -58.8% 37,850 -45.67% Dominican Republic 14,920 -15.05% 0.4% 48,878 -0.81% Others 76,671 40.31% 29.1% 198,780 25.86% Total 273,148 24.79% -15.6% 770,249 -2.81% Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

Japan's ferrous scrap exports slip in March

29/04/24

Japan's ferrous scrap exports slip in March

Shanghai, 29 April (Argus) — Japan's ferrous scrap exports declined sharply in March as import demand from Vietnam diminished, while the South Korean market remained bearish. Total exports in March retreated by 17pc on the month and by 10pc from the previous year, reaching 516,000t, according to Japan's customs data. Total exports dropped by 4.6pc on the year to 1.6mn t in the first quarter. Japanese scrap exporters encountered challenges because of declining overseas demand since March, as buyers became more cautious in the face of weaker-than-expected downstream demand recovery. Scrap exports will likely remain subdued in the coming months, according to trade sources. Vietnamese buyers were active in the seaborne market at the beginning of the year, but rising inventory levels and uncertainties in the steel sector outlook led them to step back after February. Exports to Vietnam in March dropped by 21pc on the month. The South Korean market is not expected to rise significantly in the near term as domestic scrap prices continued to fall, dropping by $50-60/t over the past three months. "South Korean buyers only fulfilled long-term contracts and stayed away from the spot market," a Japanese trader said. Exports to South Korea plummeted by 38pc to 470,000t in the first quarter. Exports to Taiwan dropped significantly by 41pc from the previous month as buyers were more focused on purchases of containerised scrap. Exports to Malaysia remained steady above 30,000t in March, while exports to the Philippines decreased from 34,000t in February to 13,000t. But a depreciation of the Japanese yen allowed exporters to offer relatively more competitive prices compared to other suppliers, with buyers price sensitive given a sluggish steel market. The yen started to weaken in March, reaching above ¥155:$1 at the end of April from $146.8:$1 in mid-March. Japan ferrous scrap exports (t) Country March % ± vs Feb % ± vs Mar '23 Jan-Mar % ± on year Vietnam 210,014 -20.7 20.7 683,821 48.0 South Korea 156,851 -9.8 -32.2 469,644 -38.1 Bangladesh 43,755 13.8 N/A 91,205 79.0 Taiwan 35,329 -40.8 -62.8 140,755 -28.8 Others 70,023 -20.6 -7.2 213,587 3.0 Total 515,971 -17.4 -10.4 1,599,011 -4.6 Source: Japan customs Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

STB chair Oberman to leave rail agency on 10 May

26/04/24

STB chair Oberman to leave rail agency on 10 May

Washington, 26 April (Argus) — US Surface Transportation Board (STB) chairman Martin Oberman (D) said today that he would retire in two weeks, though a replacement has not been named. Oberman informed President Joe Biden of his decision in a letter earlier today. Oberman said in mid-November 2023 that he would exit the agency in early 2024 . His five-year term expired on 31 December but he continued to serve into his one-year holdover term. No additional details have been announced, but vice chairman Karen Hedlund (D) is expected to lead the rail regulator until a formal appointment has been made. Chairman Oberman's "commitment to exploring all sides of an issue was pivotal in helping to find solutions for stakeholders," the Freight Rail Customer Alliance said. National Grain and Feed Association chief executive Mike Seyfert said pointed to Oberman's actions in working toward significant regulatory milestones for agricultural shippers and railroads. Under Oberman's leadership, STB has moved forward on long-standing proposal to allow reciprocal switching. The switching plan would allow a shipper served by a single railroad to request that its freight be transferred to another major railroad at a designated interchange point. STB is expected to act on reciprocal switching as early as this month, after introducing a plan tied to railroad service performance in September 2023. His term was also highlighted by several major industry events, such as the Covid-19 pandemic, the merger of Canadian Pacific and Kansas City Southern and the 2022 rail service crisis. Oberman was nominated by former US president Donald Trump in July 2018. His appointment was confirmed by the US Senate in January 2019 and he was appointed chairman by President Joe Biden in January 2021. By Abby Caplan Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

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