October 11, 2021 – Prices for steel and aluminum found further support in the United States. Demand for scrap remains firm. Despite subdued demand in some areas, prices remain just below record levels. Freight costs already picking up again after brief dip, as expected. Nickel demand expected to double by 2040. And in China, heavy rains flooded 60 coal mines.
Prices for steel and aluminum have found support
U.S. prices of primary aluminum and flat-rolled steel found support last week, holding just below record levels. Despite subdued sentiment among U.S. automakers due to the semiconductor shortage and lack of manufacturing labor, demand remains high, especially for service centers.
Scrap prices hold up
Scrap prices for Used Beverage Cans (UBC) in aluminum, shredded scrap and busheling scrap in steel are holding up and demand is firm. More scrap will be in demand in the future due to global efforts to reduce CO2 emissions.
General price support
Logistical challenges, energy shortages in China, increased prices for silicones and magnesium have provided additional support to aluminum prices currently. The situation is very similar for steel. Iron ore, pig iron, scrap and energy costs continue to keep prices at a high level.
Freight costs already on the rise again
With the short-term price decline in spot freight, as reported last week, it is already over again. Freight costs are rising again, after some bulk freights had slightly depressed prices before the Chinese national holidays. In general, market participants expect demand for cargo space to pick up significantly within the next months regarding to Chinese New Year in February 2022.
Nickel consumption to double by 2040
Demand for nickel in 2021 has already increased by about 16% compared to 2019. This is according to figures from the International Nickel Study Group. A further increase of about 10% is expected in 2022. Analysts at Wood Mackenzie (WoodMac) expect demand for nickel to double to about 4.9 million tons per year by 2040.
China: Coal mines closed after heavy rains
During heavy rains in the northern Chinese province of Shanxi, 60 coal mines were flooded, about 10% of the mines there. This poses further challenges to China, which is currently trying at all costs to get a grip on its energy supply before the heating season. Currently, the Chinese need to close a supply gap of 30 to 40 million tons of coal, according to a recent report by Citic Securities Group.
The closure of 60 coal mines has led to a further significant increase in coal futures.
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