Insight Magazine: 2021 Global Metals Awards

Near term scrap futures contracts on the London Metal Exchange saw heavy declines over the week to June 16, while the trading volumes increased week on week. Platts, part o S&P Global Commodity Insights, assessed the June contract down $31/mt over the week to $388.50/mt on June 16, while the July contract fell $51.25/mt to $365/mt. The August contract fell $55/mt to $364.50/mt, while the September contract dropped $49.50/mt to $371.50/mt. The backwardated structure over the June-July portion of the forward curve strengthened significantly week on week, suggesting that futures traders expect physical scrap prices to fall sharply in the near term. The slight contango over the July-August portion of the curve shifted into a slight backwardation, while the contango over the August-September portion of the curve strengthened. Spot prices for physical imports of premium heavy melting scrap 1/2 (80:20) dropped $47/mt week on week to $378/mt CFR Turkey on June 16, amid a lack of noticeable deals. Several market players said the stand-off between buyers and sellers continued, as their price ideas were too wide apart to match. A Turkish buyer said he would wait another 10 days before making a fresh scrap purchase, as the market was going down fast. He said scrap import workable levels should be significantly lower than current offers in the market amid a lack of demand for finished products along with a recent sharp decrease in finished product prices. Weekly LME scrap futures trading volumes over the week to June 16 totaled 106,160 mt, down from 79,270 mt for the week ending June 9. Near-term rebar futures contracts also saw heavy declines in the week to June 16. Platts assessed the June contract down $27/mt on week to $697.50/mt, according to S&P Global data. The July contract fell $53.50/mt week on week to $670/mt, while the August contract dropped $55.50/mt to $666/mt. The September contract dropped $44/mt to $675.50/mt. The backwardation over the June-July portion of the forward curve strengthened significantly over the course of the week, suggesting that futures traders expect prices to fall significantly in the near term. The backwardation over July-August portion of the curve strengthened slightly, while the backwardation over the August-September portion of the curve shifted into contango. Turkish physical rebar export prices fell $35/mt week on week to $700/mt FOB on June 16, as buyers continued to hold back amid expectations of lower prices in the near term, driven by softening scrap import levels, while mills have tried to maintain elevated offers amid high energy costs. "No previous raw material purchase is workable for the current [rebar] prices," one mill source said, but added that mills will need to adapt to the market level somehow. Rebar futures weekly trading volumes in the week to June 16 on the LME totaled 12,540 mt, down from 2,230 mt for week ending June 9. The daily outright spread between Turkish export rebar and import scrap was assessed at $322/mt on June 16, up $12/mt week on week. Elsewhere, Indian scrap futures, which settles basis the Platts CFR Nhava Sheva shredded scrap assessment, traded 390 mt in the week to June 16. The contract has seen a total volume of 5,700 mt traded since its launch in July 2021.

The London Metal Exchange is to introduce a weekly over-the-counter (OTC) position reporting framework for all its physically delivered metals to enhance market trade visibility, effective July 18, despite members' reservations, the LME said June 17. It will also extend accountability levels to OTC positions from the same date, it said in a statement. The steps follow consultation with the exchange's market users: however the majority of respondents expressed concerns over the new measures, the LME said. From July 18 the LME therefore withdraws the existing requirement to daily report OTC nickel positions, introduced March 14, it added. The planned introduction of the new regulations follows widespread criticism of the exchange's lack of adequate market oversight in the run-up to a speculative play by a single investor in nickel trading in early March, which led LME nickel prices to soar 250% in just three days to more than $100,000/mt before trading in the metal was suspended March 8 for over a week. Cancellation of an estimated $3.9 billion-worth of nickel trades made just before the market suspension angered market players, some of whom have since filed court action demanding compensation for monies lost. The steps now to be taken in "enhancement of the LME's visibility of OTC markets is, we believe, in the interests of the market as a whole and will improve our ability to oversee activity holistically, ensuring future market stability and continued compliance with our regulatory obligations," an LME spokesperson said June 17. The new regulation will oblige members to report all OTC positions in aluminum, aluminum alloy, cobalt, copper, lead, NASAAC, nickel, tin and zinc on a weekly basis with no minimum position size threshold. This will provide the LME with timely visibility of significant positions in the OTC market, it said. The LME's analytical capabilities regarding this data will initially be limited by a lack of historical data, the manual nature of submission, and the short implementation timelines, it noted. However, the LME will continue to increase its capabilities that will improve its analysis of OTC data over time, it said. Price bands The LME also acted to ensure greater market stability by introducing upper and lower price limits to guarantee orderly trading when its nickel trading reopened March 16 following the suspension. Price limits were also applied to other non-ferrous metals trading on the LME, in a move well-accepted by the market, the LME has said. Price bands to prevent extreme volatility had already been in operation on steel and metals trading at other exchanges including Shanghai Futures Exchange and CME. Both ferrous and non-ferrous metals prices have historically shown volatility due to the global nature of their trade and susceptibility to geopolitical changes. This volatility however became extreme in the weeks immediately after Russia's Feb. 24 invasion of Ukraine, as sanctions against Russia sparked supply concerns. Russia has typically supplied 15% of the world's battery-grade nickel. Members' reporting reservations The LME said in its June 17 statement it had received 27 timely responses to its consultation on OTC reporting. While generally supportive of ensuring fair and orderly market operation, a majority of respondents had concerns about the practicality or form of reporting and how the information might be used, it said. Some respondents felt it might make more sense to wait until the publication of an independent review and other analysis of the LME's nickel market troubles: regulatory reviews were announced by the Financial Conduct Authority and Bank of England April 4. The exchange said that despite members' individual reservations, it has decided to go ahead with prompt introduction of the OTC reporting regulation in the interest of the market as a whole, as any relevant review finding could be considered and factored into the LME's plans in due course. OTC data must be reported to the exchange in encrypted form to ensure client confidentiality, it said. In the event a member holds no OTC positions, it should confirm this via submission of a nil file return, to ensure that the information available to the LME is as complete as possible. Category 5 members who do not hold positions directly (but only indirectly through another member) will not be directly subject to the reporting obligation in the weekly OTC position reporting proposal. "The LME will not delay taking appropriate actions," it stated. "The LME believes that the benefits to the market of receiving regular OTC data to monitor trading in instruments linked to the LME are such that it would be inappropriate to delay the Proposal. The Proposal will further assist the LME to reduce the risk of the occurrence of disorderly trading conditions on its market, in line with the LME's regulatory obligations, in the context of recent events in the LME Nickel market which have demonstrated the effects that OTC activity can have on the wider LME market," it said. A consultation last year on whether regular OTC reporting should be made compulsory at the LME had also not found approval from the majority of members, a spokesperson noted earlier this year.

The global nickel and copper markets remained in deficit over the January-April 2022 period, while aluminum, tin and zinc were all in surplus, the World Bureau of Metals Statistics said June 16. A deficit of 51,700 mt was recorded in the nickel market over the four-month period, compared to a deficit of 146,900 mt for the whole of 2021 and a deficit of 46,100 mt in the first quarter of 2022. Refined nickel output for January-April was 867,800 mt against demand of 919,500 mt, WBMS said. Total mined nickel production for the period rose 58,000 mt year on year to 882,700 mt, the data showed. In China, smelter/refinery output dropped 16,000 mt on the year during the period, while apparent demand increased 34,000 mt year on year to 481,300 mt. Indonesian smelter/refinery production for the four-month period rose 16% to 321,100 mt. Global apparent nickel demand climbed 52,000 mt year on year, WBMS said. London Metal Exchange reported nickel stocks were 27,200 mt lower at the end of April than at the end of 2021, but 2,400 mt higher than at the end of March. S&P Global Commodity Insights assessed spot battery-grade nickel sulfate with minimum 22% nickel content and maximum 100 ppb magnetic material at Yuan 42,600/mt ($6,348.73/mt) DDP China June 16, up 25.7% since the start of 2022. Copper deficit A deficit of 409,000 mt was recorded in the copper market in the four-month period, which compared to a deficit of 473,000 mt for the whole of 2021 and 189,000 mt for the first quarter of 2022, WBMS said. Global copper production for the January-April period fell 0.7% year on year to 6.88 million mt, while global refined production rose 1.1% to 8.1 million mt, driven by a 161,000 mt increase in China. Total global demand for January-April rose 5.7% year on year to 8.54 million mt, with apparent demand in China up 4.4% to 4.6 million mt, while reported output of semi-finished copper products in China dropped 0.9%. Refined copper production in the US dropped 22,000 mt to 305,800 mt, WBMS said. Copper stocks were reported to be 115,500 mt higher than at the end of December, and up by 21,000 mt compared with the end of March. Other base metals Meanwhile, the primary aluminum market recorded a surplus of 400,000 mt over January-April, after a 2021 deficit of 1.8 million mt, WBMS said. Primary aluminum demand for the period dropped 750,000 mt year on year to 21.9 million mt while production rose 0.5%. Total reported primary aluminum stocks at the end of April were 417,000 mt below the end-December 2021 level at 833,000 mt. The zinc market also recorded a surplus of 76,600 mt in the January-April period, while lead was in a deficit of 82,000 mt, the WBMS said.

New lower-emissions steel products are growing in the market, with Kobe Steel and Thyssenkrupp marketing grades which take into account the positive impact on carbon emissions from hot-briquetted iron and ferrous scrap used alongside iron ore to produce steel. Kobe Steel's new zero-emissions steel made its way into suspension used in a Toyota Motor Corp. Corolla hydrogen-fuelled race car last week at the Fuji International Speedway, while Salzgitter and other companies are offering lower-emissions and carbon-accounted steels to buyers focusing on their procurement-related upstream Scope 3 emissions. Steel producers operating blast furnaces are looking to optimize and introduce new ways to work with raw materials, such as HBI, hydrogen and biomass, and add renewable energy and fuel processes to downstream steel plants. Such changes may boost lower emissions steel volumes ahead of potential expansion in new technologies and applications later this decade in hydrogen-based direct reduction iron and molten oxide electrolysis which promise to slash steelmaking carbon emissions closer to zero. Kobe Steel and Germany's Thyssenkrupp, which launched the HBI-based bluemint pure and scrap-based bluemint recycled flat steel product range, have taken on the approach of capturing the benefits of using HBI and scrap in their existing blast furnace process and applying the CO2 savings to a proportion of steel products. Rather than using average carbon intensity in actual steel production methods, emissions savings are isolated to a portion of output with certified lower emissions being applied, using the so-called mass balance methodology. By selling steel with verified emissions, the companies can apply a carbon saving to the relevant product, appropriate with the raw material and calculated volume, and buyers are invited to use the emissions savings against their Scope 3 benchmarking. Kobe Steel last month launched Kobenable Premier, a steel product with 100% reduction in CO2 emissions during manufacturing, and Kobenable Half, with a 50% reduction in emissions, compared with similar steel using a 2018-2019 fiscal year baseline. The Kobenable range with certified emissions reductions is available for steel sheet, steel plate, wire rod and bar products manufactured at the Kakogawa Works in Hyogo Prefecture, Japan, and the Kobe Wire Rod & Bar Plant. The mass balance methodology, allocates CO2 reductions to specific steel products, in accordance with ISO 20915, Kobe Steel said. "This approach has been used for products such as recycled plastics, bioplastics, electricity generated from renewable energy sources, and certified food products like cocoa and palm oil, for which separation of product properties are difficult due to the characteristics of the manufacturing process or the supply chain," Kobe Steel said in a statement. "In the ironmaking process, it becomes possible to reduce the amount of coke used and thereby reduce CO2 emissions by replacing a portion of iron ore with HBI, a raw material for steel that has already been reduced." Certification in emissions savings Thyssenkrupp highlighted the benefits of using emissions savings directly from using the materials in the blast furnace process into steel products, over applying carbon offsets to steel through other emissions reductions projects and third-party certificates. Thyssenkrupp compared the emissions savings with its conventional reference steel product emissions of 2.1 mt emissions per ton of strip steel on a life cycle analysis basis taking into account Scopes 1-3. By using modelling, it simulated scrap charged at 100% into the blast furnace in the case of bluemint recycled, which is marketed with 0.75 mt carbon emissions. Scrap is already used in the basic oxygen furnace combined with pig iron for its conventional steel, and is not included in comparative savings applied, it said. Bluemint pure using HBI is marketed with 0.6 mt of carbon emissions, it said. Cleveland Cliffs, Voestalpine and other companies are utilizing HBI in blast furnaces, also lowering the carbon intensity of steel produced at existing plants by cutting the need for coal and other reductant fuels. Voestalpine and Kobe Steel have published studies using HBI with iron ore in reducing overall solid fuels to produce hot metal, with a cut mainly seen in PCI coal use rather than met coke. Coke's characteristics help support the burden during smelting, which has limited PCI's rates of substitution. Trials may see blast furnaces use greater proportions of HBI and scrap replacing iron ore products in blast furnaces, although blast furnaces traditionally fed mainly using iron ore products such as sinter, pellets and lump. Cliffs said in 2021 its Scope 1 and Scope 2 greenhouse gas emissions on a per unit basis fell, aided by the use of HBI supplied internally from its Toledo DRI plant. Overall greenhouse gas emissions in 2021 rose to 34.5 million mt CO2 equivalent from 32.2 million mt in 2020, due to increased production volumes following the COVID effect in 2020, it said. "Our increased consumption of scrap and our successful use of HBI in our furnaces to reduce coke rate, enhance productivity and quality, and stretch hot metal production led to an overall reduction in carbon intensity per ton in 2021," the steel, mining and scrap processing group said in its latest sustainability report. In Europe, ArcelorMittal and Arvedi have long been producing flat steel via the EAF route, using mainly scrap in a process which leads to a lower carbon intensity compared with the blast furnace route. US and Japanese EAFs also produce flat steel products using scrap. ArcelorMittal and Salzgitter earlier announced the production of flat steel using EAFs with certified use of renewable power, demonstrating low-emissions steel products for users trialing new grades and benchmarking for emissions. ArcelorMittal has a range of long and flat steel products under the XCarb brand of recycled and renewably produced steel made via EAFs using scrap. ArcelorMittal also sells steel bundled with certificates from emissions reductions projects at its sites. ArcelorMittal's EAF in Sestao, Spain, used 100% renewable power and a high proportion of scrap to produce HRC with less than 0.5 mt of CO2 on a cradle to gate life cycle basis, the company said after the first sale of the grade to re-roller Grupo Arania in March. Salzgitter has offered cold-rolled and galvanized coil with emissions reductions of as much as 66% by producing the grades using its Peine EAF combined with rolling at the Salzgitter Flachstahl works. Bypassing its regular blast furnaces, the company is offering small volumes of low-emissions certified flat steel to Mercedes-Benz, Bosch, Siemens, Gaggenau, Miele, and Neff. SSAB supplied Volvo Group pilot EAF-based steel in trials, produced with partners as the Swedish company invests in its first EAF in Europe to start up in 2026. Thyssenkrupp and Salzgitter have plans to invest in DRI plants and seek to contribute to lowering emissions significantly with major operational changes. While Thyssenkrupp intends to decommission its blast furnaces over time, the company sees integrating HBI-based steel production into the current integrated site at Duisburg-Hamborn as already cutting emissions towards its goal, while gaining experience in handling HBI for steel production.

Depreciation of the Turkish lira against the US dollar hit demand in the Turkish domestic long steel market, while Turkish mills' rebar offers in the export market have come under pressure amid falling scrap prices, mill and trading sources told S&P Global Commodity Insights June 10. Platts assessed Turkish imports of premium heavy melting scrap 1/2 (80:20) at $425/mt CFR on June 9, down $4/mt on the day. The assessment has fallen $225/mt since reaching $650/mt CFR on April 11, according to S&P Global data. Some Turkish producers, who are facing higher energy costs since June 1, have halved their production capacities, while others are mulling shutting down for short periods of maintenance, sources said. A major long steel producer in Turkey said his company had halved working hours at its melt shop and was contemplating pausing output if the sluggish sentiment persisted, while another steelmaker said his company was implementing short output breaks, depending on market conditions. A trading company manager said a large producer in southern Turkey had taken a week-long maintenance break, but production was expected to restart from June 13. "Another producer in our region is also expected to start maintenance in the coming weeks, due to the market slackness," he said. On June 1, Turkey's energy prices were raised sharply with the state gas distributor Botas saying natural gas prices had gone up by 30% for residential use and 10% for industrial use. The Energy Market Regulatory Authority, or EPDK, also said that electricity prices had gone up 25% for industrial use. A further rise in electricity costs is expected in July, with the EPDK due to change the method of calculating electricity prices for industrial use from July 1, which could increase rates by as much as 71%-86%, according to some sources. Workable levels for Turkish rebar in the export market continued to soften, as buyers held back amid weakening scrap prices. Platts assessed Turkish exported rebar down $5/mt on the day at $735/mt FOB on June 9. Workable prices could fall further in the coming days amid a decline in imported scrap prices, a service center manager said June 10. A scrap cargo from the EU was heard to have been booked by a large Turkish mill at below $400/mt CFR, further pressuring prices, an industry source said June 10.

Carbon capture utilization and storage can provide a transitional solution to European steelmakers as the industry looks to cut carbon dioxide emissions. However, a final solution for achieving net-zero steel production will depend on how the steel is produced and the location of the mill, analysts with S&P Global Commodity Insights said June 8. In a webinar discussing the potential use of CCUS to decarbonize the steel and cement industries, analysts from S&P Global's Clean Energy Technology Group said that while these sectors are among the top emitters of industrial CO2, they also are core pillars of today's society, being two of the most important engineering and construction materials. Combined, global steel and cement production contributes to 13% of global CO2 emissions, representing a major challenge for global net-zero emissions targets, with major steelmakers targeting net-zero emissions by 2050. To achieve emissions reductions above 80% in Europe's steel industry, currently three options are the most attractive: hydrogen, natural gas with CCUS, or utilizing steel scrap, said Paola Perez Pena, principal research analyst at S&P Global. However, she noted that scrap has some limitations, depending on the region. CCUS only part of solution The top three steel producers in Europe are considering CCUS to reduce emissions but are also exploring hydrogen-based technologies as part of the solution, Perez Pena said. In Europe, carbon emissions trading system allowances will make multiple decarbonization routes economical to replace blast furnace and basic oxygen furnace production by 2030, but only hydrogen will provide deep decarbonization, she said. "Although CCUS is one of the technologies that the steel industry is evaluating, the complexity of the capture process for this industry is one of the big challenges since the most common steel production process has multiple CO2 sources," Perez Pena said. Steel production via blast furnace is the most carbon intensive method and is the most widely utilized method of production in Europe currently. "As the predominant production method of this industry is the conventional coal-dependent blast furnace process, the need to assess alternative breakthrough technologies to reduce CO2 emissions is high," Perez Pena said. However, the decarbonization pathway of individual steelmakers will depend on which production process is being utilized. As a result, it is important that flexibility in the choice of decarbonization technologies is maintained to account for the differences in regional characteristics, including natural resources and infrastructure, she said. Government support key to decarbonization The EU steel industry has collectively committed to reduce emissions by 30% by 2030 versus 2021 but is seeking ways for this to be achieved as cost efficiently as possible. Eurofer, the European Steel Association, is advocating for greenhouse gas emissions benchmark-based free allocation of CO2 allowances, compensation of indirect costs and complementary carbon adjustment as the elements that will help through the transition; the EU parliament is expected to vote on its proposals soon. Currently, the steel industry accounts for 5% of the current CCUS pipeline of large-scale projects, mainly in Europe. "Although these numbers seem small in the overall pipeline of projects, this is a significant step ahead," Perez Pena said. While China accounts for more than 55% of all global steel production, Europe is one of the first regions facing the decarbonization challenge as carbon regulations increase in the region, Perez Pena said. Changing customer demand and growing investor and public interest in sustainability are further driving the need to decarbonize. An analysis by the Clean Energy Technology Group found that steel can decarbonize at a lower premium than cement, but the right conditions need to exist for steelmakers. The production premium for steel could go up to 15% for the European steel sector. However, when factoring in paying for the cost of carbon emitted, producing steel with some decarbonization solutions could be cheaper in some cases, based on 2030 estimates, Perez Pena said. "Given how competitive the market is and the thin industry margins, decarbonization is not easy for business and governments will need to provide the right conditions in place to make sure the domestic industry is not destroyed," she said.

China’s lofty ambitions to hit peak carbon emission by 2030 and achieve carbon neutrality by 2060 have pushed major Chinese steelmakers to chart a greener route to production as they increasingly become interested in developing direct reduced iron, or DRI, plants using hydrogen and natural gas. But rising decarbonization costs and the expected dominance of traditional blast furnace-converter route in the Chinese steel industry for the foreseeable future is set to slow the sector’s transition to utilizing low-carbon DRI-electric arc furnace production route until at least 2030. Reducing emissions at blast furnace-converter route would also be costly and challenging. A quest for hydrogen-based zero-carbon steel Over 2021-2025, China is likely to have at least 8.2 million mt/year of low- or zero-carbon DRI capacity coming on stream, calculations by S&P Global Commodity Insights showed, with Baosteel and Hebei Iron & Steel Group as the two major trailblazers.Baosteel is part of the Baowu Group, the world’s largest steelmaker, while Hebei Iron & Steel ranks third in global steel production. Despite the efforts, hydrogen-run DRI plants remain at a relatively smaller production scale. According to Baosteel, the technology of using pure hydrogen as reducing gas at DRI plant is still on trial or experimental stage in China. The company aims to boost the hydrogen ratio at its DRI plant to 80%-90% in 2030. Reducing gases at the first DRI plants at both Baosteel and Hebei Iron & Steel will be a combination of hydrogen, natural gas and coke oven gas. Baosteel aims to reduce its carbon emissions by 30% from 2020 levels in 2027, while Baowu is targeting the same in 2035. Baosteel further amps up its carbon goals by targeting to produce total carbon-free auto sheet covering the entire process — right from raw material processing to finished steel — in 2030. While the carbon-free auto sheet will be coming from the DRI-EAF route, to reduce carbon emissions effectively, market sources expect Baosteel and its parent company Baowu Group will have to mainly depend on using decarbonizing blast furnace-converter route as well as the carbon capture, use and storage (CCUS) technology. Steel production through the traditional blast furnace-converter route at Baowu Group accounted for about 93.5% of its total crude steel output of 115 million mt in 2020, while EAF steel output was only 6.5%. It’s not just the Baowu Group. This is true for the entire Chinese steel industry as well. China’s crude steel capacity of blast furnace-converter route is currently at over 1 billion mt/year, while EAF steelmaking capacity is just close to 200 million mt/year, according to S&P Global calculations. Costly decarbonization Carbon-free steel refers to the production of one metric ton of steel that emits less than 0.5 mt of CO2, which means steelmaking in blast furnace-converter route will need to cut its carbon emissions by over 80% to meet carbon-free steel standards. Currently, producing 1 mt of crude steel in blast furnace-converter route emits about 2 mt of CO2, while consuming pure scrap in EAFs emits 0.8 mt of CO2. Steelmaking in conventional DRI and EAF route produces 1.4-1.95 mt of CO2, depending on types of reducing materials. Blast furnaces using biomass, zero-carbon electricity and CCUS technology could reduce emissions in pig iron production by close to 80%. But there’s a catch.Production costs will soar, requiring more than $150/mt extra to produce iron, compared to iron that comes from conventional blast furnaces, according to Baosteel data. Bring in hydrogen and even seemingly costlier low-carbon production prices pale in comparison. Hot metal production at DRI plants using green hydrogen as reducing gas could cut CO2 emission by almost 100%, but the costs will be $425/mt higher than conventional iron-making process. DRI plants, using coal, zero-carbon electricity and CCUS, will also be able to reduce the CO2 emission by close to 100%, but the cost will still be over $400/mt higher.Given high decarbonization cost and still immature technologies – either via DRI-EAF or blast-converter route – low- or zero-carbon steel products are unlikely to dominate the market at least before 2030, some sources said. Controlling steel output Upgrading of China’s manufacturing sector will require more high-end and deep-processed steel products, which are more complex to produce and generate higher carbon emissions than ordinary steel products, a market source said. China last year came out with mandatory output cut measures, a short-term but effective solution to control emissions. Steel output cuts will prevent the steel industry’s carbon emissions from rebounding while developing high-end steel products. Meanwhile, China’s urbanization is seen almost reaching saturation levels, and steel demand has plateaued. This could assist China’s efforts to reduce its steel production, some market participants said. They expected China’s crude steel output to hover from 900 million mt/year to 1 billion mt/year for the next few years, before production starts coming down. Before any decarbonization technology reaches a scale at which costs could drive costs down, China’s steel output controls could be the only cost-effective way to rein in carbon emissions.

Saudi Arabia is planning to develop a $2 billion EV battery metals plant and a $4 billion steel plate mill complex as part of $32 billion of investments targeting the kingdom's mining sector amid economic diversification in the world's biggest oil exporter. Nine projects are currently underway to increase local production and boost global exports, the minister of industry and mineral resources Bandar al-Khorayef said in a May 5 statement. "These targeted investments represent an important 'down payment' in our efforts to move beyond exploration and extraction and into the creation of integrated value chains, a central focus of our overall mining strategy," Khorayef said in the statement. "The investments will continue to position the kingdom as a mining production and logistics hub for a region that stretches from Africa to Asia, while also supporting the transformation of our mining sector so it can achieve its potential." The projects include a $4 billion steel plate mill complex that will produce various grades of steel plate for the shipbuilding, oil and gas, construction and defense sectors, the minister said. Another integrated green flat steel complex will supply the automotive, food packaging, machinery and equipment, and other industrial sectors, he added. A $2 billion EV battery metals plant will provide inputs for EV batteries, in support of the development of the electric vehicles industry in the kingdom, he said. The investments also include several other projects, all of which are focused on metals due to the growing demand expected from the developing Saudi industrial sectors, including a fully integrated aluminum complex and base metals smelter/refinery complex for copper and other metals, the minister added. No other details about the capacity and timeline of these projects were disclosed. Vision 2030 The ministry is currently processing an additional 145 exploration license applications from foreign companies, Khorayef said. Under Saudi Arabia's Vision 2030 diversification plan, the kingdom aims to support promising sectors and foster their success so that they become new pillars of its economy. In mining, Saudi Arabia is planning several structural reforms, including stimulating private sector investments by intensifying exploration, building a comprehensive database of its resources, reviewing the licensing procedures for extraction, investing in infrastructure, developing funding methods and establishing centers of excellence. Panelists at the Future Minerals Forum held in Riyadh in January noted that Saudi Arabia could play an important role in the critical mineral supply chains, due to its reliable and lower cost energy, optimal geological location to serve different areas including Asia and Europe, welcoming investment climate and aim to diversify its industries. Saudi Arabia has attracted some global names to its mining and industrial sector, including sustainable mobility company Lucid, which plans to build its first international plant in the country. Lucid, which counts the Saudi sovereign wealth fund as its largest shareholder, is building the factory to assemble vehicles that will ultimately produce up to 150,000 cars per year. Saudi Arabia has pledged to purchase over a 10-year period up to 100,000 electric vehicles, including Lucid Air and other future models, built and assembled at the company's existing Arizona factory and its future international manufacturing facility in the kingdom, it said in an April 26 statement.

Kabanga Nickel is accelerating work on its "development-ready" nickel sulfide deposit in western Tanzania, now planned to start production Q4 2025 or Q1 2026 to coincide with an "inflection point" foreseen in electric vehicle manufacturing, according to the UK-registered private company's CEO. The project was sold by previous owners Barrick Gold and Glencore to the current owners around two years ago, with the Tanzanian government also taking a 16% stake and agreeing a 6% mineral royalty package. Already fully licensed, Kabanga Nickel is now updating an existing bankable feasibility study from 2015, CEO Chris Showalter said. However, management doesn't plan to wait another 12-14 months to complete the update, due to the favorable market prospects for the battery-grade nickel that the project will produce for EV batteries manufacture, he added. "We're not waiting for the feasibility study to complete before proceeding [with construction]," Showalter said in an interview with S&P Global Commodity Insights. "We have sufficient confidence in the existing feasibility study, and investment to allow procedures to continue." The project's planned start-up in 2025-26 should coincide "with a massive increase in EVs demand," he said, noting that Volkswagen is reported to have "sold out" of EVs for the European and US markets for the rest of this year due to surging demand. According to a January statement, BHP has agreed to invest $100 million in the project – with an initial $50 million and $50 million later this year, provided certain conditions are met. In turn, the mining major will acquire equity in the nickel mining and processing company. Of the initial tranche, $40 million has been invested in Kabanga Nickel and $10 million in Lifezone, which holds patents for the environmentally friendly hydrometallurgical process that will allow Kabanga to produce what Showalter describes as "clean" nickel, in the absence of a definition of "green" nickel. The total investment required in Kabanga Nickel is put at $1.3 billion, including $950 million in the mine and $350 million in the hydrometallurgical plant. The project's refined product output is expected to be some 48,000 mt/year of nickel; 7,000-8,000 mt/year of copper and 4,000 mt/year cobalt, in cathode or rounds form, produced to LBMA 99.9% purity standards. Due to the use of hydrometallurgy, CO2 equivalent emissions per mt of nickel produced at Kabanga will be 4-5 mt, making this one of the world's lowest nickel production carbon footprints, according to Showalter. Offtake 'competition' A "competition process" will be run at a later date for offtake by battery manufacturers, with carmakers and traders having already shown interest, Showalter said. No discussions have yet taken place for the potential setting up of a local battery precursors plant, although this could potentially be a "next step," he said. Kabanga Nickel, with a 33-year mine life at the production levels currently foreseen, is a "scalable" project whose useful life could be extended or production levels increased due to the high-grade nature of the deposit and exploration programs, Showalter said. Regional exploration, potential metals hub Due to the outstanding opportunities, Kabanga Nickel's developers are moreover already extending exploration activities into six contiguous areas in the region's mineral-rich Kibaran complex, Showalter said. The developers expect to be able to help create an east African mineral producing and processing hub based on hydrometallurgy, using LifeZone technology, he said. The Kibaran nickel mineral complex, said to be one of the most important worldwide, is a geological belt extending through Tanzania to Rwanda, Burundi and the Democratic Republic of Congo. Discussions have already taken place in the region about the possibility of establishing a mineral processing hub for the use of various companies and countries, according to Showalter. Tanzania's enlarged hydroelectric power capacity – with the recent coming on stream of the Rusumo dam and a grid expansion, as well as planned expansion of the rail network – should favor the development of the regional mining industry, Showalter indicated. Tanzania, whose government is now seen favorable to mineral development, including by foreign investors, has reserves of gold, copper, cobalt and graphite as well as nickel. London Metal Exchange cash nickel prices closed at $30,200/mt May 5, down 0.61% on the day. Used in stainless steel and battery manufacturing, the metal started the year with a price of $20,925/mt.

India's crude steel production reached 9.85 million mt in April, up 3.1% year on year, data from the Joint Plant Committee showed May 4, amid an increase in production capacity. The annual output rise is a result of JSW Steel firing up a second blast furnace at Dolvi, Maharashtra on Oct. 3, 2021, which doubled the Dolvi Steel Works' production capacity to 10 million mt/year. Likewise, production of finished steel hovered at 9.35 million mt in April, 0.9% higher from the previous year while hot metal production grew by a similar 1% from a year ago. Nevertheless, steel demand from domestic vehicle makers is under downward pressure as a global semiconductor shortage has prevented the makers from meeting demand. There was strong demand for passenger vehicles but waiting periods were long due the shortage of automotive parts, which has hindered vehicle production, according to Federation of Automobile Dealers Association, or FADA. India's biggest carmaker Maruti Suzuki manufactured 157,392 vehicles in April, down 1.6% from 159,955 vehicles a year ago. "The shortage of electronic components had a minor impact on the production of vehicles during the month," Maruti said May 1. FADA cautioned in April that the Russia-Ukraine war and COVID-19 lockdowns in China will further dent supply chains, thus hampering production further. FADA expects the Indian automotive industry to return to pre-pandemic highs in the fiscal year 2023-24 (April-March). As for finished steel trades, both imports and exports fell in April against the year before due to lower international demand. In Europe, buyers refrained from making new deals with overseas suppliers due to long lead times, while they expected import prices to move down further. Buyers also avoided bookings with European steelmakers as they anticipated domestic prices will drop due to competitive import offers. Indian Steel Data (million mt) Mar 2022 Apr 2022 Change (%) Apr 2021 YOY Change (%) Apr 2020 Apr 2022/2020 Change (%) Crude Steel Output 10.94 9.85 -9.9 9.55 3.1 3.29 199.2 Finished Steel Output 10.56 9.35 -11.4 9.27 0.9 1.57 495.2 Finished Steel Imports 0.35 0.33 -6.8 0.36 -10.2 0.41 -19.7 Finished Steel Exports 1.20 0.74 -37.8 0.95 -21.9 0.43 73.2 Source: Joint Plant Committee

Bullish sentiment for finished steel prices cools in the US ahead of May, as concerns around the sourcing of raw materials have started to dissipate and scrap prices have fallen under pressure, according to the latest S&P Global Commodity Insights US steel market participant survey. Buyers are still facing higher transportation costs and logistical bottlenecks. In the survey of US producers, distributors, traders, and end-users, 50% of those surveyed expected prices to remain flat, compared with 91% expecting increases in April, with 32% expecting prices to fall slightly in May with only 9% of participants bullish on prices for the month. Most respondents attributed the stability in prices to decreasing scrap prices, but the Russian invasion of Ukraine and changes in the supply chain could add further volatility to pig iron imports later in the year, demand was also expected to remain strong in the near term. Service centers have been more actively inquiring in the spot market, but mills were still holding firm on offers. Related blog: ‘Interesting times’ likely now the norm for US metals markets "We are expecting to buy more steel month on month on stronger orders," a flats distributor said. Steel flats and longs market participants continued to see tightening inventories month on month, with only 10% seeing a slight increase in inventories. This dynamic of the flats market has come as higher inventories were the main driver of the price decline that started in September 2021. The daily TSI US hot-rolled coil assessment was steady for most of April, rising $50 by April 12, then falling slightly, last settling at $1,440/st May 3 as buyers held out for lower levels and await lower input costs, according to the Platts assessment from S&P Global, adding to now two consecutive months of rises. The May scrap buy week kicked off with all grades offered down $75/lt as mills assess if they can bid some grades even lower. Finished steel production is expected to remain steady again this month, as 70% of participants expected it to remain flat and 2% expected a rise. Mills and distributors of flats were mainly seeing production steady to slightly lower. Around 85% of those surveyed expected inventories to shrink or remain level. Longs distributors and traders were more constructive on inventories than they have been previous, but supply still remains tight, especially in Florida. Mills have announced price increases on 20-foot rebar to become more competitive with imports along with increases in freight rates as even imports are facing "nasty" port congestion and higher trucking costs from the ports. "We expect prices to remain stable with no immediate foreign pressure to push domestic mills," a longs distributor said. Other distributors throughout the US are still very constructive on demand outlooks, with scrap supply becoming more available. Long steel market participants were not expecting mills to increase again in May, but are continuing to see tight domestic supply. Scrap prices were again in focus, with 65% of participants expecting prices to fall and 2% expecting a decline of 5% or more during the May buy week. Mill margins in the US were under pressure to start the year, with rising input costs and the continued push to utilize more scrap in furnaces and incorporate more obsolete grades in the mix, but mills have been able to raise their offers as the import arbitrage has started to disappear, or even flip, for some products, thus supporting recent margins even before the decline in prime and obsolete grades of scrap.

Livent unveiled a slate of production expansion projects across its global operations May 3 that could increase total lithium hydroxide capacity to 55,000 mt/year by the end of 2025 and its lithium carbonate capacity to 100,000 mt/year by the end of 2030. The lithium carbonate projects are focused on Livent's existing operation in Argentina, which has a current capacity of 20,000 mt/year and is undergoing a first phase expansion to add another 20,000 mt/year by the end of 2023, according to the company's first-quarter earnings statement. Livent said in February it would proceed with a second phase expansion in Argentina to expand output by another 20,000 mt/year in 2025. However, the company said May 3 that the second expansion would now include an additional 10,000 mt/year. The lithium producer also said it was now evaluating a third expansion in Argentina to lift capacity again by 30,000 mt/year by 2030. "By re-engineering the use of freshwater, the second expansion will not require access to any additional fresh water," the company said. "It also allows Livent to improve overall lithium yields and reduce water use intensity for current and future operations." "[The third expansion] in Argentina would add up to 30,000 mt of additional lithium carbonate capacity," Livent added. "This expansion would deploy a more conventional pond evaporation-based process and require significantly less capital versus prior expansions." In its lithium hydroxide portfolio, the Philadelphia-based company said it expects to add 15,000 mt/year of capacity in China at a "new location" by the end of 2023. It also plans to build a battery recycling facility in either North America or Europe that will produce secondary lithium hydroxide, it added. "The company is exploring multiple opportunities for partnership and funding and believes the new facility could be in operation by the end of 2025, with production capacity of at least 10,000 mt/year," Livent said. By the end of this year, Livent said it expects to complete its previously announced 5,000 mt/year lithium hydroxide capacity expansion in the US at its Bessemer City, North Carolina, facility. The global lithium hydroxide capacity target for 2025 does not include the potential 34,000 mt/year of production that Nemaska Lithium could bring online in Quebec in 2025. Livent increased its ownership stake in Nemaska to 50% from 25% May 2. Projects follow strong quarter Livent's string of announcements follow a strong quarter for the company as revenue climbed amid escalating lithium prices. "Strong lithium demand growth has continued in 2022," CEO Paul Graves said in the statement. "Published lithium prices in all forms have increased rapidly amid very tight market conditions and Livent continues to achieve higher realized prices across its entire product portfolio." S&P Global Commodity Insights assessed the price of seaborne lithium hydroxide at $80,000/mt CIF North Asia April 29, up sharply from $31,700/mt at the beginning of 2022 and $9,000/mt at the start of 2021. Meanwhile, lithium carbonate on the same basis was assessed at $75,000/mt, rising from $33,800/mt at the start of 2022 and from $6,350/mt at the start of 2021. Livent reported a Q1 net income of $53.2 million on revenue of $143.5 million, compared with an $800,000 loss on sales of $91.7 million in Q1 2021. For 2022, Livent said it now projects revenue to be in the range of $755 million to $835 million.

Russia's alumina imports from China rose sharply in March as the country sought to replace its two major suppliers Australia and Ukraine, which made up over two-thirds of its alumina inflows a year ago. Russia purchased 9,950 mt of alumina from China in March, up from just 105 mt in the same period a year ago, the latest data from Chinese customs showed. China's alumina supplies to Russia were at 10,650 mt over January-March, compared with 330 mt in Q1 2021. The Q1 2022 volume from China was about five times higher than the whole of 2021. S&P Global Commodity Insights assessed Chinese alumina at $445.770/mt ex-works April 29, down $6.78/mt on the day. China's alumina supplies have helped partially offset a combined 275,000 mt/month that Russia imported from Australia and Ukraine prior to Ukraine's invasion on Feb. 24, with Rusal as the key recipient of the volumes, according to S&P Global estimates. Rusal's Nikolaev refinery in Ukraine, which produced 1.77 million mt of alumina in 2021 and typically supplies its entire output to Rusal's Russian smelters, halted operations days after the Russian invasion. Australia stopped exports of aluminum ores, including bauxite, alumina, and related products, to Russia on March 20 as part of its wider sanctions on the country. Australia was the second biggest alumina supplier to Russia after Ukraine in 2021 with volumes at 1.52 million mt. "Between December 2021 and February 2022, Australia recorded approximately 422,000 mt [140,000-141,000 mt/month] of alumina exports to the Russian Federation, accounting for 10% of Australia's total exports, by weight, during this period," a representative of Australian foreign minister told S&P Global in an email on May 3. The representative said Australia has banned both direct and indirect exports of aluminum ores to Russia. S&P Global estimates that the ban also likely affected possible Australian supplies to Rusal-owned refineries outside Russia, including the Aughinish alumina refinery in Ireland. It is not known if Rusal has ramped up imports from other alumina producing countries, such as Kazakhstan, and Rusal-owned refineries in Ireland, Jamaica, and Guinea, which exported 26%, 36% and 70% of their alumina production, respectively, to Russia in 2021. Rusal did not respond to S&P Global's request for comment. Russian Customs Service no longer publishes the country's foreign trade statistics. Rusal has said it cut its May aluminum prices for domestic buyers by 9% month on month, in line with the London Metal Exchange. The LME aluminum spot price fell to roughly $3,040/mt April 29, from $3,480/mt April 1.

A cargo of Russian pig iron sailing to Mobile, Alabama, and destined for Steel Dynamics Inc. is the last in a supply contract since nullified by SDI in a declaration of force majeure, the steelmaker has told S&P Global Commodity Insights. The 56,810 dwt Marshall Islands-flagged ore carrier LMZ Vega shipped out of Novorossiysk, Russia, on April 16 with the cargo and is set to arrive in May 10-13 in Mobile, according to Platts' cFlow ship and commodity tracking software. S&P Global reported April 29 that a US buyer had booked the first cargo of Russian pig iron since mid-March, but the buyer could not be confirmed. The US and other countries have responded to Russia's Feb. 24 invasion of Ukraine with economic sanctions, including an import ban on multiple raw materials, though Russian pig iron has not been banned. Fort Wayne, Indiana-based SDI, in response to Russia's war in Ukraine, was reviewing its options regarding its contracts with Russian pig iron producers when the cargo was shipped, a spokesperson said. "We are disputing a contract with one of these producers and have communicated force majeure on the remaining shipments," SDI's Tricia Meyers said in a email. "However, the shipment arriving mid-May 2022 was shipped during the period of time when we were determining our options regarding contract cancellations." Russia was the top exporter of pig iron to the US at 2.07 million mt in 2021, but the US has not received a pig iron cargo from Russia since 53,200 mt of Russian pig iron arrived in Charleston, South Carolina, on March 17, according to Panjiva, the trade analysis unit of S&P Global Market Intelligence, SDI has used the Novorossiysk-to-Mobile route extensively to bring Russian pig iron for use to its Columbus, Mississippi, electric arc furnace, including a 48,651 mt cargo that arrived on March 3 and a 50,341 mt cargo that arrived on Feb.12. In 2021, there were eight identifiable cargoes of pig iron shipped to SDI using this route, totaling 418,791 mt, with the listed shipper identified as Russia's Metalloinvest Trading, according to Panjiva data. SDI CEO Mark Millett said April 21 that the company was able to cover its pig iron needs for the rest of 2022 by sourcing from Brazil and India, while also lowering overall pig iron requirements to about 14% of the mill input compared to the typical level of 22% by developing a higher-quality scrap mix. "We are currently in the process of pursuing opportunities to become even more pig iron self-sufficient for the future," Millett said during the company's first-quarter conference call. The disruption to Russian and Ukrainian cargo flows caused pig iron prices to surge from $563/mt CIF New Orleans on Feb. 18 to a multi-year peak at $1,030/mt on the same basis on March 18. Platts' last weekly pig iron import price assessment $940/mt CIF New Orleans on April 29.

May 2022 Nashville, Tennessee, USA As the steel industry expands to meet growing demand, decarbonization, sustainability, and modernization are all growing priorities for the world's largest producers. Join us this May in the music city, where we will bring together industry leaders to network and discuss how scrap, new technology, and new projects coming online are building the groundwork for the steel industry's future.The agenda for the Steel Markets Conference is currently in production. Sign up to get updates as the program develops. Get insight into: -Decarbonization of the steel industry -Modernization and technology developments -Scrap and raw materials market update -Price and risk management And much more.Click HERE for more info.