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The main effects of the coronavirus pandemic for the commodity complex have been
sudden demand destruction, upheaval in supply chains and uncertainty about the timespan
required for recovery.
Against this background, S&P Global Platts is celebrating effective leadership, excellence in
service and innovation in the metals industry with its eighth annual Global Metals Awards,
recognizing that it is precisely in such challenging times that these qualities are most needed.
Taken as a single category, the metals sector has been hit like every other. Sales of consumer
goods were slashed for months, and major outlets for metal products such as autos and
construction also ground to a halt in many parts of the world.
But in contrast to the oil industry, for example, the narrative for metals during the crisis has
been much more varied. Steel and aluminum demand has been hit hard by long shutdowns in
autos, but as Sarah Baltic writes, a bright spot in the US has been demand for can sheet, as
manufacturers have benefited from higher consumption of canned drinks at home (page 46).
In Europe, the pandemic has painted a fairly bleak picture for steelmaking as lockdowns have
piled additional pressure on an industry already suffering from overcapacity and struggling to
compete with low-priced imports (page 76).
However, iron ore has proved resilient this year in terms of price. Julien Hall and Fiona Boal
examine the financialization of iron ore and what this new segment of market participants
means for physical trade from page 14.
Turning to oil markets, Meghan Gordon surveys the recent efforts by President Donald
Trump’s administration to influence global prices and bolster producers in the US (page 70)
in her policy column from Washington. Robert Perkins uses S&P Global Platts Analytics
forecasts to visualize the impact of the pandemic on demand across countries and oil product
segments (page 74).
From page 22, we survey the progress in Brazil’s gas market liberalization and what it means
for midstream competition, offshore gas production and LNG imports.
This issue of Insight incorporates our recent special report, Women in Metals and Mining,
featuring interviews with 13 inspirational women who have built successful careers in the
sectors. They share personal stories and views on gender diversity, and lift the lid on their
most challenging and meaningful experiences in the industry (page 52).
Finally, turn to page 88 for this year’s Global Metals Award winners, where achievements from
individual leadership, to innovative service provision and corporate social responsibility are
recognized, along with standout performances in specific metals categories.

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A hike in rhodium prices, South Korean nuclear availability and European power prices are all in the mix in this week’s selection of trends to watch in energy and raw materials markets.

1. Will supply-constrained rhodium see more upside after all-time high?

What’s happening? After a period of lower prices in the first and second quarter of 2020 as lockdowns and low automotive production weighed on demand, the rhodium market once again picked up the bullish streak seen early this year. The base price climbed to an all-time high of $14,500/oz on September 16, before falling back in the following days.

What’s next? The latest rally was caused by anticipated supply shortages from South Africa, which accounts for around 80% of global rhodium mine supply, strong buying ahead of the seasonally strong Q4-Q1 period, and optimism stemming from a recovery in Chinese vehicle sales. Nearly 80% of demand for rhodium comes from the global automotive industry, for catalytic converters to control emissions of greenhouse gases and pollutants. China sales growth turned positive in May, supported by dealer and government incentives, but uncertainty over electricity supply from troubled South African utility Eskom is adding to the supply concerns. Given the volatility of rhodium prices, a new high should not be ruled out, though a quick decline is also possible.

2. S. Korea’s typhoon-shuttered nuclear to underpin thermal generation

What’s happening? Two typhoons hit South Korea in less than a week and shut down six nuclear reactors. The first typhoon, Maysak, hit South Korea on September 3 and four nuclear reactors were shut in the Kori nuclear complex. The second typhoon, Haishen, hit on September 7 and led to the outage of two additional reactors, this time at the Wolsong nuclear complex, losing a combined capacity of 1.4 GW.

What’s next? The outages have led to the temporary loss of a 5.3 GW of nuclear capacity. With plenty of spare capacity, generation from thermal fuels is set to pick up and replace the decline in nuclear generation. S&P Global Platts Analytics estimates that demand for both coal and gas will increase, with about 3 GW more coal-fired generation and the remainder from gas. For every week the units are offline, Platts Analytics assumes South Korea will need to buy another cargo of LNG.

3. European wind volatility drives hourly prices up to Eur800/MWh

What’s happening? European wind generation plunged September 15, sending spot power prices to 2020 highs. Reduced nuclear availability saw a scramble for back-up capacity, with intra-day prices spiking in Germany, France, and the UK. National Grid was forced to issue a UK capacity notice warning of tight margins, and was seen buying power on interconnectors inside and outside of the Balancing Mechanism, before and after gate closure, causing system prices to rise over GBP600/MWh in the evening peak.

What’s next? Europe’s wind fleet, at over 200 GW installed, has graduated from enfant terrible status to fully-fledged monster. Feast can become famine in hours, pulling prices from negative territory up to the hundreds of euros per MWh as weather systems change. Last week’s daily low saw the fleet average under 15 GW September 15 versus 40 GW for the preceding week, a relatively low-wind period. COVID-19 demand fluctuations have already inflated UK balancing costs this year. The growing need to constrain wind looks set to put added pressure on network management in Q4, presenting lucrative earnings for the small, flexible gas engines that have done so well out of the UK’s Capacity Mechanism.

4. Norway’s Equinor aims for bigger share of Asian pie

Norway oil exports to China

What’s happening? North Sea crude oil suppliers are confident Asia’s firm base requirements will keep their exports to the Far East at healthy levels, despite the region’s volatile product margins and fragile fuel demand during the coronavirus pandemic, industry executives told S&P Global Platts at the 36th Asia Pacific Petroleum Virtual Conference in Singapore over September 14-16. Norway’s state-controlled Equinor, for one, is boosting its presence in the Asian oil market, having doubled crude sales to the region.

What next? Despite the coronavirus pandemic, Equinor has seized the opportunity to grab as much market share as possible amid ongoing output cuts by OPEC+. Chinese exports of Norwegian crude rose to 7.96 million mt over January-July, compared with just 119,000 mt a year earlier. Equinor has also extended its crude oil storage contract with the Korea National Oil Corporation, to store approximately 5 million barrels of oil at KNOC’s Yeosu storage tanks for marketing purposes in Northeast Asia. It is crucial for Asian refiners to have the flexibility to respond quickly to the volatile markets by adjusting refinery operations and crude slate, said JY Lim, oil markets adviser at S&P Global Platts Analytics, especially as OPEC+ started to trim back on production cuts.

Pittsburgh — The global refined copper balance through June plunged to an apparent deficit of 235,000 mt after reaching a 130,000 mt surplus at the end of the first quarter, according to data released Sept. 21 by the International Copper Study Group.

Estimated data from the ICSG indicated that monthly world refined copper usage rose to 2.25 million mt in June from 2.09 million mt in May, but production remained mostly unchanged at 2.06 million mt.

Global apparent refined copper usage in the first half of 2020 stayed flat year over year at 12.1 million mt as markets slowly recovered from coronavirus pandemic-related lockdowns that negatively impacted the world economy and copper end-use sectors, according to the trade association.

ICSG said the stability in copper demand was mostly supported by China, where net refined copper imports and apparent usage increased by 31% and 9%, respectively, in the first half of 2020.

Conversely, apparent refined copper usage slid 9% year over year ex-China during the first six months. On a regional basis, usage declined by 12% in Japan, 10% in the EU, 4.5% in the US and 8% in Asia ex-China.

The global refined copper balance from January to June adjusted for changes in Chinese bonded stocks indicated a market surplus of about 278,000 mt, the ICSG added.

Copper mine production slips through June

World copper mine production during the first half of the year slipped only 1% compared with the year-ago period to 9.8 million mt, as mine production recovered in June after temporary shutdowns caused by the pandemic in April and May, the ICSG said.

Mines in Peru were impacted most by the pandemic in April and May when mine suspensions, operational issues and adverse weather led to a 38% year-on-year fall in output during the two-month period. Mining production in June then declined by only 9% year over year as the country’s industry came back online.

Chile, the world’s biggest copper mining country, saw a 2.6% increase in output.

Copper-mine production in the Democratic Republic of Congo rose 5% in the period as mining ramp-ups offset the temporary closure of the Mutanda mine in 2019.

In Indonesia, the ICSG said copper production in the first half of the year grew by 18% as output levels improved following the transition of the country’s two major copper mines to different ore zones.

ICSG analysts said year-to-date copper mine output through June declined in Australia, Canada, Mexico, Mongolia and the US.

Through June, global copper concentrate production fell 1.2% and solvent extraction-electrowinning output slipped by 0.4%.

Refined copper production rises slightly

ICSG data showed a 1% increase in world refined copper production to 11.9 million mt during the first six months of 2020, compared with the first half of 2019, with primary production from electrolytic and electrowinning operations increasing by 2.3% and secondary production from scrap falling 5.2%.

Total refined copper production in Chile through June climbed 12.5% year over year, mainly supported by a 51% surge in electrolytic refined output.

The ICSG said Chinese refined production growth was negatively impacted by temporary shutdowns related to the pandemic, limited scrap supply, disrupted copper concentrate imports and oversupply in the sulfuric acid market.

In Africa, refined production in the DRC increased 4%, but production in Zambia slid 16% due to operational issues and temporary shutdowns.

Output in India is estimated to have declined by 25% year over year through June due to the suspension of Birla Copper’s operations at the end of March following a nationwide lockdown, ICSG analysts said.

ICSG said refined production in Japan rose by 4%, mainly representing a recovery from a number of maintenance shutdowns in the same period of 2019.

US refined copper production dropped 12% due to maintenance shutdowns and the ongoing labor strike at Asarco’s US operations that began in October.