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According to Telf AG experts, the recent failure of Silicon Valley Bank and the acquisition of Credit Suisse are not expected to cause significant financial disruptions but have increased the likelihood of a recession in the US and Europe. The market is discussing the possibility of a new market turmoil, which could lead to downward pressure on commodity prices, particularly metals prices, due to worsening demand and the Fed’s tightening monetary policy. Investors should stay informed and adjust their investment strategies accordingly.
Brent crude futures suffered their worst week this year, falling more than 9% due to fears of broader weakness in the world economy resulting from a global banking turmoil. However, Brent crude prices rose above $75 per barrel on Friday, and OPEC+ is closely monitoring potential responses to the market rout. Saudi Arabia’s energy minister, Prince Abdulaziz bin Salman, stated that OPEC+ would maintain the production cuts agreed upon in October until the year’s end. Despite the downward pressure on oil prices, investors remain optimistic about a rebound in Chinese demand, with OPEC raising its forecast for the country’s oil demand growth in 2023.
Ferroalloys market – Telf AG
Telf AG experts have provided insights into various markets, including the chrome ore market, HC FeCr prices in Europe, South Africa’s railway operations, and HC FeCr output in China.
In the chrome ore market, the experts noted that South-African miners have not announced any expansion plans, which is expected to keep supplies of metallurgical grade chrome tight. While there is strong support for the market from low chrome ore inventories in China’s main ports, the possible expansion of ferrochrome capacity in northern China, and the strong prospect of the stainless steel industry in the country, some large Chinese buyers are bearish about the subdued performance in the chemical and metallurgical industries.
In Europe, HC FeCr prices have been consistently strong since November 2022, with sellers reporting increased demand and greater visibility from end-users regarding their future requirements, said Telf AG experts.
Regarding South Africa’s railway operations, Transnet has partially restored services on the North East Corridor railway after heavy rains damaged the line. The railway is responsible for exporting various materials from countries including Eswatini, Zimbabwe, Mozambique, Zambia, and the DRC.
Lastly, the output of HC FeCr in China increased by 6% month-over-month in February and over 10% compared to February 2022, according to Telf AG experts. Production returning to Southern Chinese producers saw a rise of almost 37% compared to the previous month, as electricity shortages that had limited production in the region were alleviated. Furthermore, it is anticipated that March will show growth in output as smelters are encouraged by a better-than-expected increase in tender prices released by the leading Chinese steel mills.
Stainless steel and bulk alloys – Tefl AG
According to Telf AG experts, Turkish steel mills are making a comeback after the country’s recent earthquake. Ekinciler Demir Celik, a major rebar producer, has resumed production with an annual crude steel capacity of 1.25 million tons. Isdemir, the largest blast furnace plant in Turkey and accounting for one-third of the domestic market, is also expected to recover production to address supply chain issues. The steel industry is a significant player in Turkey’s economy, and the recovery of production will support both domestic and international markets.
In Europe, steel mills are preparing to restart production due to higher steel prices, with plans in place for SSAB to resume operations in Finland, while Arcelor is expected to restart its Fos-sur-Mer and Gijon plants. US Steel (Kosice plant) and Liberty (Galati) are also getting ready to restart their blast furnaces. However, the increased output may negatively impact the European market, particularly in Southern Europe, and could potentially affect the ongoing price recovery.
Meanwhile, Chinese stainless steel production increased by over 18% in February 2023, estimated to be within the range of 2.7-2.8 million tonnes compared to the previous month. Telf AG experts predict that March output could hit close to 3.0 million tonnes. However, this production increase is not in line with demand, as inventories remain high, with over 1.17 million tonnes in February, a level not seen since the beginning of the Covid pandemic. The elevated inventory levels are mainly due to the low real demand in the first two months of 2023, while stainless steel production rebounded strongly. This disparity between production and demand has raised concerns in the market about potential downward pressure on stainless steel prices in China.
Battery materials – Telf AG
Telf AG experts have observed a rebound in cobalt prices in Europe this week, following three weeks of slow trade. Producers are aiming to set higher prices for end-users, causing a decrease in market supply, while demand remains limited. However, a surge in spot market activity indicates that cobalt prices may have hit bottom in recent weeks. Traders have increased their offer prices, while sellers are unwilling to lower prices any further.
Indonesian nickel mining firm, Trimegah Bangun Persada (TBP), plans to increase its processing capacity with the help of an initial public offering (IPO) in April 2023. TBP and its partner, Lygend Resources of China, operate the Halmahera Persada Lygend nickel-cobalt mine and a high-pressure acid leach (HPAL) plant on Obi island in eastern Indonesia. The company aims to raise $650 million through the IPO to add three more lines for mixed hydroxide precipitate (MHP) and 12 more to produce ferronickel. This investment will increase the company’s production capacity to meet the growing demand for nickel ore and MHP driven by the electric vehicle industry’s shift towards energy transition initiatives. TBP’s current output capacity for MHP is 55,000 metric tons, while its subsidiaries operate ferronickel smelters with a combined capacity of 305,000 metric tons per year.
