December 10, 2021 – Record investment in the automotive chips sector. LME and SHFE are moving sideways today. Nickel is expected to rise to $ 21,000 to $ 21,500 per tonne in 2022. China increasingly dependent on bauxite imports. And price increases for raw materials.
Record investment in chips for the automotive sector
Chip producers are expected to invest €8.8 billion in 2021 to address the semiconductor shortage in the automotive industry. According to Deutsche Bank, this could eliminate the bottlenecks in 2022 and increase sales of semiconductors in the automotive sector by 12%.
Semiconductor demand could increase by 17% per year until 2024
According to a study, the demand for semiconductors in the automotive sector is expected to grow even faster than that of other end markets with an average annual rate of a good 17 percent until 2024.
The automotive industry as an economic engine
This shows once again that the influential automotive industry will not let itself be ruined. And the semiconductor manufacturers have also realised that they are facing rosy times, even if an expansion of supply could put pressure on chip margins in the short term. In the medium to long term, the outlook is rosy and will also bring further upside to other sectors, such as steel and aluminium, in 2022.
LME & SHFE move sideways
The LME and SHFE have moved in tandem so far today. However, this is only a snapshot for now, even towards the weekend. At least for nickel, conservative forecasts assume a price range of $ 21,000 to $ 21,500 per tonne in the coming year.
ANZ: Nickel demand to remain strong in 2022
Analysts at ANZ said in a note: “We believe nickel demand for stainless steel and other steel products will remain strong in 2022.” “Electric car sales targets are expected to drive nickel demand,” the analysts added. Copper prices are also expected to remain at high levels between $9,500 and $10,000 per tonne, according to ANZ.
China increasingly dependent on bauxite imports
The Chinese aluminium industry is the largest in the world. And it is becoming increasingly dependent on bauxite imports from overseas. As early as 2022, bauxite imports are expected to amount to 49% of annual demand, according to the state-owned research company Beijing Antaike Information Development Co. a 2% increase from 2021 and a 19% increase from 2015.
Bauxite procurement is becoming increasingly difficult
Currently, China meets its import bauxite needs primarily in Guinea, Australia and Indonesia. In September, a coup d’état in Guinea shook up the bauxite market. For 2022, the Indonesian government has announced its intention to stop bauxite exports. This increases the pressure on China to adjust its raw material procurement.
Price increases in raw material procurement
The cost of raw materials has risen since the pandemic began in 2020. Buyers have also noticed this. Especially in the areas of aluminium, steel, plastics and wood, the strongest price increases were noticeable. According to a recent survey, most companies have reacted to the price increases by passing them on to their customers. But adjustments in the supply chain and optimisation at suppliers were also high on the agenda.
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