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Contents
ECONOMIC NEWS
IMF
The IMF has upgraded
its estimate of UK GDP growth this year to 0.4% compared to a 0.25% contraction
in its World Economic Outlook report published in April.
STEEL
WSA
The latest April
2023 crude steel production data from the World Steel Association had global
output across 63 reporting countries at 161.4 million tonnes, down 2.4%
compared to April 2022. This was partly down to a drop in Chinese output, down 1.5%
year-on-year. There were notable year-on-year falls once again in Europe (inside
and outside the EU) plus Japan (-3.1%), US (-5.3%), Brazil (-5.9%), and Turkey
(-20.6%), the latter due to the lingering impact of the two massive earthquakes
in February. The WSA estimated Chinese crude steel output in the first four
months of 2023 at 354.4 million tonnes, up 4.1% year-on-year. India’s output over
the same period totalled 43.9 million tonnes, up 3.0% year-on-year.
CHINA
Spot steel
rebar prices were reported to have hit their lowest level in three years in
late May reflecting flagging growth and a weak property sector.
China’s
National Bureau of Statistics reported that China produced 92.64 million tonnes
of steel in April, down 3.2% month-on-month and down 1.5% year-on-year amid a
slump in steel mill profit margins.
China’s
largest steelmaker Baowu Steel Group says it wants to enhance cooperation with
Australia in the production of directly reduced iron in a meeting with the
Australian Minister for Trade and Tourism.
The China
Iron and Steel Association (CISA) met to debate how to speed up the revision of
standards for steel scrap to boost imports which would help cut steel industry
emissions and reduce reliance on imported iron ore. State planners set a target
last year to boost the share of steel produced from electric arc furnaces from
9.7% in 2022 to over 15% by 2025.
EU
The European
steel association Eurofer expects EU apparent steel consumption in 2023 to fall
by 1% before rebounding by 5.4% in 2024. High uncertainty is expected to
undermine demand from steel-using sectors at least through the first half of 2023.
FRANCE
Under a
signed MoU, Vale is to supply iron ore briquettes to a new 2 million
tonnes/year GravitHy DRI plant to be built at Fos-sur-Mer which is due to be commissioned
in 2027.
INDIA
The Indian
Steel Association reported that the country’s installed steel-making capacity
was 154 million tonnes at the end of the financial year ending March 2023. The
ISA expects India’s steel consumption to grow by 9 million tonnes to 128.9
million tonnes in the current financial year to March 2024, a rise of 7.5%. The
ISA expects further expansion of 8-9 million tonnes/year in the following two
financial years.
The Chairman
of Assocham’s National Council on Iron and Steel said that 35-40 million tonnes
of new steel capacity are due to be commissioned by FY 2026 and that total
Indian steel-making capacity is expected to hit 300 million tones and crude
steel output to reach 255 million tonnes by FY 2031.
ITALY
DRI D’Italia
are planning to build two 2-2.5 million tonne/year directly reduced iron plants
to provide feedstock to Acciaierie d’Italia and a consortium of private
steelmakers with production scheduled to start in 2026.
JAPAN
Japan’s
largest steel producer Nippon Steel is to replace one of its basic oxygen
furnaces at its Kyushu works with an electric arc furnace (EAF) and is to add
another EAF at its Setouchi works. These projects aim to accelerate the
company’s decarbonisation drive.
NEW ZEALAND
The
government has agreed to help subsidise NZ Steel to reduce its reliance on
blast furnace steel production through the construction of a new electric arc
furnace. This will replace the existing steel furnace and two of the four
coal-fired kilns. The target date for completion is the start of 2027.
OMAN
Oman and
Etihad Rail Company and Brazilian miner Vale have signed a MoU to explore using
rail to transport iron ore and pellets from Vale’s distribution terminal at the
port of Sohar in Oman to the Freezone industrial park in the UAE.
RUSSIA
Russian
authorities have approved the phase 2 Elga coking coal project to raise output
to 45 million tonnes/year. The site miner Elegaugol produced just over 20
million tonnes in 2022. The mine is due to be connected to a new 30 million
tonne/year coal export port on the Sea of Okhotsk via the Pacific railway with
completion scheduled in 2024/25.
SAUDI ARABIA
China’s
Baosteel is reported to be taking a 50% stake in a Saudi project to build a “green
steel” plant in Ras al-Khair Industrial City in partnership with Saudi Aramco
and the Public Investment Fund. The target is to produce 1.5 million
tonnes/year of low-carbon emission thick steel plates with completion scheduled
for 2026. The plant will have a 2.5 million tonne/year direct reduced iron
furnace and an electric arc furnace both powered by natural gas which could
eventually be converted to using hydrogen fuel.
POWER COAL
CHINA
China’s average
daily coal production fell to 12.72 million tonnes in April from March’s record
13.46 million tonnes. Bad weather and maintenance work on the major coal
transport railway from Datong to the port of Qinhuangdao impacted coal
production. Nevertheless, output in the first four months of 2023 was still up 4.8%
year-on-year.
INDIA
India’s
domestic coal output hit a record 73.02 million tonnes in April 2023, up 8.67%
year-on-year. The Minister of Coal and Mines stated that India is advancing
steadily towards total self-sufficiency in thermal coal production by FY
2025/26.
As we
reported last month, India’s Central Electricity Authority has updated its
National Energy Plan and now envisions the need for additional new coal-fired
power generation capacity ranging from 17 GW to 28 GW until 2031-32 over and
above the 25 GW already under construction. However, a new draft policy
awaiting federal approval would see an end to building new coal-fired power
plants beyond those already under construction.
VIET NAM
Viet Nam has
approved a new power plan for this decade that would more than double the
country’s power generating capacity to 158 gigawatts by 2030. The plan aims to
boost wind and gas-based energy but the rapid growth in overall demand will
still require more coal-fired power plant capacity rising from 21.4 GW at the
end of 2020 to 30.1 GW by 2030. However, the plan pledges no new coal-fired
plants after 2030.
ALUMINIUM
IAI
The
International Aluminium Institute reported that global primary aluminium production
rose 0.3% year-on-year in April to total 5.628 million tonnes, with just under
56% produced in China. The IAI also reported that world alumina production in
the first four months of 2023 totalled 44.607 million tonnes down just over 1%
year-on-year.
AUSTRALIA
Alcoa has
signed an agreement to supply alumina from its refineries in Western Australia
to Emirates Global Aluminium’s smelters. Starting next year, 15.6 million
tonnes of alumina will be supplied to the UAE over a period of eight years.
CHINA
China’s
aluminium production in the first four months of 2023 rose 3.9% year-on-year to
13.3 million tonnes according to the National Bureau of Statistics. Electricity
generation issues in Yunnan province continues to limit the country’s aluminium
output.
GUINEA
Australian-listed
Lindian Resources has signed a supply agreement with C&D Logistics (owned
by Xiamen C&D) to provide 23 million tonnes of Guinean bauxite over a
six-year period from its Gaoul project beginning in 2025. The deal reflects how
Indonesia’s bauxite export ban is accelerating demand for new Guinean bauxite
resources.
INDONESIA
The
Indonesian government continues with its plan to end bauxite exports by 10th
June this year. China’s Shandong Nanshan plans to expand its new 2 million
tonnes/year alumina plant at the Galang Batang special economic zone on the
island of Bintan by adding aluminium smelting operations. The company plans to
start building a 250,000 tonne/year aluminium smelter later this year, part of
an overall plan to create a 1 million tonne/year aluminium facility by 2028.
Adaro
Minerals reported that its first-phase 500,000 tonne/year aluminium smelter
will commence operations in 2Q25 fed by a mixture of domestically produced and
imported alumina.
IRAN
The Iranian
Mines and Mining Industries Development and Renovation Organization (IMIDRO)
reported that Iran produced 225,942 tonnes of alumina in the Iranian calendar
year to 20 March 2023, down 2% year-on-year.
MONTENEGRO
The country’s
aluminium producer Uniprom has announced that it will be shutting aluminium
smelting operations after over a half-century in production. Production of
aluminium logs and alloys will continue using third-party feedstock.
AGRIBULK
FAO
The FAO’s
world food price index rose in April for the first time in a year but is still down
20% from the record high in March 2022 caused by the war in Ukraine.
USDA
The US
Department of Agriculture’s May forecast updates saw an uptick in 2022/23 grain
export trade after recent monthly markdowns. Looking across 2022/23 export
trade forecasts of the principal commodities (wheat, coarse grains, rice,
soyabeans, and soyabean meal), net changes saw an overall trade increase of 3.9
million tonnes, a rise of 0.55%. However, the main interest was the release of
the USDA’s first estimates for the 2023/24 season. A comparison of the export
trade of the principal commodities between 2023/24 and the latest 2022/23
estimates showed overall trade rising to just under 743 million tonnes, an
increase of 22.7 million tonnes or 3.2%. This total is also up 6.0% when
compared to the average of the previous five seasons. All the commodity
categories recorded increased export trade except for wheat which was marked
down by 5.5 million tonnes. The biggest swings were in exports out of Australia
and Argentina. Argentine exports are expected to jump 8 million tonnes in
2023/24 following the impact of drought on this year’s trade. In contrast,
Australian wheat exports are expected to fall by 10 million tonnes as yields
revert to average levels. There were also sizeable markdowns in 2023/24 wheat
exports out of India and Ukraine.
The USDA
expects strong growth in in coarse grain exports in 2023/24, up by just under
20 million tonnes. A large recovery is expected in Argentine maize exports, up
15.5 million tonnes while US maize exports were increased by 8.25 million
tonnes. However, most of the improvement in the 2023/24 US maize crop was
pencilled in for stock increases (up by just under 20.5 million tonnes).
2023/24 total rice exports saw only a modest increase, while soybean and
soybean meal 2023/24 export trade were both up by 4 million tonnes primarily on
higher shipments our of South America. Overall, the expected growth in 2023/24
grain exports with much of it centred on South America augers well for shipping
demand.
The USDA has
also released 2023/24 sugar trade analysis in its latest six-monthly sugar
market update. Global export trade is estimated at just over 72.1 million
tonnes, up 9.1% on 2022/23 and up 17.5% when compared to the average of the
previous five seasons. The top three sugar exporting nations, namely Brazil,
India and Thailand, are all expected to record higher shipments in 2023/24.
Brazilian export trade is forecast to jump to 32.4 million tonnes, a rise of
4.2 million tonnes on 2022/23.
ARGENTINA
The Buenos
Aires grains exchange said that the El Nino weather phenomenon is unlikely to
bring heavy rains to Argentina’s drought hit agricultural area before
September.
BRAZIL
The
government’s food supply and statistics agency Conab, raised its forecasts of
soybean and maize production in the current season. Soybean production is set
to hit a record 154.8 million tonnes while maize production is predicted to hit
a record 125.5 million tonnes. The latest USDA estimates stand at 155 million
tonnes for soybeans and 130 million tonnes for maize.
CHINA
China’s
agriculture ministry has released its latest Agricultural Outlook Report
(2023-2032) which noted that the country’s total grain output in 2022 reached a
record 687 million tonnes, up 0.5% on 2021. The report expects that the impact
of science and technology in boosting crop yields will likely result in 1.2%
annual growth in total grain production over the next ten years. This growth in
domestic output is expected to reduce grain imports by 19.7% over the next
decade. Over the same period, China’s rice exports are expected to grow by 24%.
Underlying
the role of science in boosting grain output, China’s agriculture ministry has
approved the safety of a locally developed gene-edited soybean which is the
country’s first approved use of such technology.
China is
reported to have stepped up sampling inspections of soybean cargoes following
on from new customs procedures for discharging soybeans, all of which has added
to ship delays.
FRANCE
The French
Agriculture Minister said that there is no major drought problem threatening
cereals due to be harvested at the end of June and the beginning of July
despite low groundwater levels in most of the country following a dry winter.
INDIA
India’s
Ministry of Agriculture said that the country is likely to harvest a record
112.7 million of wheat in 2023 despite lower crop yields due to unseasonal
rains in February and March.
RUSSIA
Russia’s
Agricultural Minister said that Russian grain exports would be between 50 and
55 million tonnes in the 2023/24 season.
SOUTH AFRICA
The first
significant cargo of South African maize was reported to have arrived in China.
The 53,000-tonne cargo was bought by state-owned trader COFCO. China is seeking
to diversify its overseas grain purchasing markets.
UKRAINE
Russia
agreed to extend the Black Sea grain deal by 60 days allowing the resumption of
ship arrivals to load Ukrainian grain exports.
FERTILISER
AUSTRALIA
Perdaman
Chemical and Fertilisers has started construction of a 2.3 million tonne/year
urea manufacturing plant in Western Australia’s Pilbara region using locally
produced natural gas as a feedstock. Completion is scheduled for mid-2027.
Incitec Pivot Fertilisers has a 20-year offtake agreement to supply the urea fertiliser
to Australia’s agricultural sector.
INDONESIA
Four
Danish-based companies have signed a MoU with Indonesian renewable energy
companies to produce one million tonnes of low emissions ammonia for use in
fertiliser production. The project is planned to open in 2028 and will be
powered by a small modular nuclear reactor.
PARAGUAY
UK-based
Atome Energy announced plans to expand its Villeta green hydrogen and ammonia
project in Paraguay io include premium green fertiliser production. Atome plans
to produce 250,000 tonnes/year of calcium ammonium nitrate starting in 2025.
RUSSIA
It has been
reported that Russia would only be able to export ammonia via Ukrainian Black
Sea ports if the recently renewed Black Sea grain deal with Russia is expanded
to include more Ukrainian ports and a wider range of commodities.
Uralchem,
Russia’s biggest potash and ammonium nitrate producer, said that the first
stage of a specialised ammonia terminal is due to be completed by the end of
2023 on Russia’s Taman Peninsula which could be a substitute for the ammonia
pipeline to the Ukrainian Black Sea port of Pivdennyl. The new Taman terminal
will be able to handle 1.5 million tonnes/year of ammonia rising to 3.5 million
tonnes/year by the end of 2025.
USA
Italian
company Maire is to build a 450 tonne/day green ammonia plant in the US for use
in producing nitrogen-based fertiliser. Plant completion is set for 2026.
Tecnicas
Reunidas and Atlas Agro have signed a contract to build a green fertiliser
plant for Pacific Green Fertilizer in Richland, Washington producing 650,000
tonne/year of calcium ammonium nitrate.
FOREST PRODUCTS
CHINA
China has
notified the Australian minister of agriculture that it will resume imports of
Australian timber ending a ban that has been in place since late 2020.
RUSSIA
Russian
forest regulator, Roslesinforg, reported foreign sales of Russian timber in
1Q23 dropped more than 20% to 4.5 million cubic meters primarily due to EU
sanctions. The organisation expects foreign trade to recover as export flows
are redirected eastward, particularly to China.
CEMENT
ARGENTINA
The
country’s cement association, AFCP, reported that Argentina’s cement market contracted
by 1% year-on-year in April 2023. Consumption in the first four months of 2023
was up by 2.4% year-on-year.
BRAZIL
Brazil’s
cement market contracted by 11% year-on-year in April 2023 according to the
country’s cement association, SNIC. It attributed the fall to rising
unemployment, slow wage growth and high interest rates which in turn has seen a
drop in building material sales and a fall in real estate starts and financing.
SAUDI ARABIA
China based
Sinoma International Engineering has won a contract to build two new 5,000
tonnes/day cement production lines at Southern Province Cement’s Jizan cement
plant. The first line is expected to take 18 months to build while the second
is due to be completed within 24 months.
SPAIN
The Spanish
cement association Oficemen reported that the country’s cement consumption in
April 2023 fell by 11.6% year-on-year to 1.18 million tonnes. This was partly
down to a bounce back in cement consumption in April 2022 following the ending
of a transport strike. In the first four months of 2023, cement consumption
rose by 1.6% year-on-year to 4.88 million tonnes.
VIETNAM
The Vietnam
National Cement Association reported that its members produced 40 million
tonnes of cement in the first four months of 2023, down 4.3% year-on-year. Over
the same period, domestic cement sales dropped by 16% year-on-year to 18.645
million tonnes.