Source: International Aluminium Institute
A concise summary of what’s moving markets, the impact on base, precious and ferrous markets, including Theme of the Day.
What’s moving markets?
- Global equities marked time, as investors were reluctant to open new positions ahead of Friday’s highly anticipated April US personal consumption expenditure data for a read on inflation. The USD index regained some ground above the 90 levels amid rising yields, recovering as Fed officials continued to downplay the prospects of increased prices pressures. Richard Clarida, the Fed’s vice chair, said that the central bank could curb an outburst of inflation without compromising the country’s economic recovery.
- Ford is accelerating EV spending to more than $30bn by 2025, CEO Jim Farley, said at the company’s capital markets day and reported by Fastmarkets. Ford is accelerating investments and increasing planned total spending on electrification. This will be achieved while deriving efficiencies from Ford’s EV architecture and modular technologies, Ford is anticipating that 40% of its global vehicle volume will be fully electric by 2030, Farley said. This includes the Mustang Mach-E, which is bringing new customers to Ford – to date, 70% of buyers of the vehicle are new customers.
- The regulatory crackdown on Bitcoin mining rolls on, with China’s push to rein in the practice reportedly triggered by a surge in illegal coal extraction. Iran has banned crypto mining ahead of summer peak electricity demand. The energy consumption used to mine Bitcoins is very substantial. Cambridge researchers say it consumes around 121.36 terawatt-hours a year, more than that of Argentina! The energy it uses could power all kettles used in the UK for 27 years!
- Precious metals were lower led by gold which slipped below the $1,900 level, making a dramatic reversal after hitting an over four-month high of $1,913 earlier, as strong momentum in the USD capped further advances. The sharp moves came after several Fed officials once again downplayed the risk of a sustained rise in inflation, which also pushed Treasury yields higher although real rates remain negative.
- Aluminium and nickel led the base metals sector higher despite further comments by Chinese authorities warning about speculative activity ramping metals prices up. These comments are reminiscent of similar complaints during the 2003-8 commodity supercycle. Whilst traders and speculators/investors can have an effect on prices in the very near-term and lift prices above fundamentally-justified levels, the reality is current price rises are driven by supply and demand fundamentals. Further consolidation ahead of month-end looks likely.
- Ferrous markets remained under pressure; iron ore, steel rebar, HRC and stainless steel prices were all lower on the day.
Theme of the Day: Post-consumer aluminium scrap tops 20 million tonnes for the first time
- Could higher metals prices mean that increased demand will be met by a combination of increased recycling and/or primary supply, and is enough attention being paid to the risk of substitution associated with higher prices? Aluminium is one of the most recyclable materials on the planet and the International Aluminium Institute (IAI) is campaigning to ensure end-of-life products are returned into the aluminium recycling loop given the economic and environmental value of the metal in the global economy. In 2019, recycled production has now exceeded one-third (33Mt) of total semis production (95Mt). Primary production totalled 64Mt.
- The IAI can look back at nearly 70 years of historical data from mining to product, recycling, and trade for nine regions and globally. The 2021 update includes a complete historical dataset for 2019 as well as 2020 partial dataset.
- The latest IAI update includes two key industry scenarios on all aspects of aluminium production and demand up to 2050. This takes into account the impact of Covid-19 and plays a key data source for IAI’s recently launched Aluminium Sector Greenhouse Gas Pathways to 2050 report.
- The IAI has released new data revealing a record 20 million tonnes of post-consumer scrap intake in 2019. This avoids 300 million tonnes of greenhouse gas emissions as the recycled metal reduces demand for primary aluminium. This new high, represents nearly 60% of total scrap intake as post-consumer continues to outstrip pre-consumer scrap levels. The post-consumer scrap intake came from three main sources – packaging, vehicles and building and construction.
- Commenting on the data, IAI’s Director – Scenarios & Forecasts, Marlen Bertram, said: “Aluminium demand is expected to increase by about 80% in 2050 due to rapid population and economic growth and the drive for sustainable solutions for a low-carbon society. The IAI forecasts that recycled aluminium could meet half of that demand, based on 2019 collection rates for end-of-life products. With ambitious collection targets for used beverage cans and improved recycling technologies for foil, this rate could even be higher.” “Historical figures indicate that measures to increase the amount of post-consumer aluminium products being put back into production continue to be successful”, Ms Bertram added.