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Contents
ECONOMIC NEWS
OECD
The OECD’s
latest global economic outlook forecasts a moderation of global GDP growth from
3.3% in 2022 to 2.7% in 2023 followed by a pick-up to 2.9% in 2024. The report
notes that lower energy prices are easing the strain on household budgets,
business and consumer sentiment are recovering, albeit from low levels, and the
re-opening of China has provided a boost to global activity.
UNCTAD
The United
Nations Conference on Trade and Development’s latest Global Trade Update
reported that 1Q23 trade in goods rose by 1.9% on the previous quarter.
However, UNCTAD expects a slowdown in global trade growth in the second quarter
of 2023 pointing to recent downgraded world economic forecasts and factors such
as persistent inflation, financial vulnerabilities, the war in Ukraine and
geopolitical tensions. The report’s outlook for the second half of 2023 is also
pessimistic as negative factors dominate the positive. The war in Ukraine, the
decoupling of US-China trade interdependence and the consequences of Brexit
have played a significant role reshaping key bilateral trade trends. There has
been a decline in diversification of trade partners implying that global trade
has become more concentrated among major trade relationships, with increased “friend-shoring”.
STEEL
OECD
The OECD’s
Steel Unit estimated that steelmaking capacity additions in the period
2023-2025 will total 166 million tonnes potentially creating additional demand
for 196 million tonnes of iron ore, 94 million tonnes of coking coal and 58
million tonnes of scrap. Most new additions are occurring in Asia with blast
furnaces accounting for 55%. Worryingly for the OECD, capacity is being added
in regions where demand is not growing in line or is falling suggesting excess
capacity will be pushed out into world markets.
TradeViews
comment – Items in
this report and earlier reports point to multiple schemes, particularly in
Europe, to replace existing blast furnaces with new electric arc furnaces often
in conjunction with DRI projects alongside which will process beneficiated iron
ore as an alternative to reliance on scrap metal.
WSA
The latest May
2023 crude steel production data from the World Steel Association had global
output across 63 reporting countries at 161.6 million tonnes, down 5.1%
compared to May 2022. This was mainly down to a drop in Chinese output to 90.1
million tonnes, a fall of 7.3% year-on-year. There were notable year-on-year falls
once again in Europe (inside and outside the EU) plus Turkey (-10.4%), Brazil
(-5.5%), Japan (-5.2%) and the US (-2.3%). The WSA estimated Chinese crude
steel output in the first five months of 2023 at 444.6 million tonnes, up 1.6%
year-on-year. India’s output over the same period totalled 56.4 million tonnes,
up 5.7% year-on-year.
BELGIUM
The European
Commission has approved a 280 million euros Belgian state aid grant to
ArcelorMittal to help it decarbonise steel production at its Ghent site. The
money will go towards the construction of a directly reduced iron plant and a
new electric arc furnace which will replace one of two existing blast furnaces.
The project is expected to be operational by 2026 and will initially be powered
by natural gas before an eventual switch to renewable hydrogen.
CHINA
In last
month’s report, we noted that China’s largest steelmaker Baowu
Steel Group said it wanted to enhance cooperation with Australia in the production
of directly reduced iron in a meeting with the Australian Minister for Trade
and Tourism. It has now been reported that Baowu and
Rio Tinto have signed a MoU to develop projects aimed at using low and medium
grade iron ores in the production of directly reduced iron including a
pilot-scale plant at one of Baowu’s mills in China.
Four leading
Chinese steel companies, in a meeting organised by the China Iron & Steel
Association, said that they are not optimistic about the second half of 2023
due to disappointing demand, lagging profitability and pressure to cut costs.
CISA reported that almost half of major steel mills were loss-making in the
first five months of this year.
EU
The EU has
tightened sanctions to eliminate the risk of Russian steel being inadvertently
imported. Importers of iron and steel goods processed in a third country will
now be required to provide proof that inputs used in the manufacture did not
originate from Russia.
FRANCE
ArcelorMittal
was ordered to shut down steelmaking operations at its Fos-sur-Mer site in late
June following a labour inspection that highlighted excessive employee exposure
to toxic products and dust. The site has two blast furnaces with a combined
annual capacity of 5 million tonnes.
GABON
Fortescue
Metals’ 2 million tonne/year Belinga hematite project in Gabon was reported to
have produces its first iron ore ahead of the originally planned start up at
the end of this year.
GERMANY
The German government
is planning to make 2 billion euros available to help fund Thyssenkrupp’s
proposed 2.5 million tonne/year green steel plant at its Duisburg works. The
plant will use hydrogen-fuelled directly reduced iron (DRI) with startup
scheduled for 2026 subject to the aid being approved by the European
Commission.
INDIA
The Union
Minister of Steel said that India is looking to diversify its coking coal
sourcing beyond Australia, its largest supplier. The country already has a MoU
with Russia and is looking at whether Mongolia could also be another source.
There are also plans to ramp up coking coal supply from Mozambique were Indian
companies own mines.
SOUTH KOREA
Korean
steelmaker Posco is in a consortium along with
several Korean power companies managing a $7 billion project to produce
renewable ammonia in Oman. The French company Engie is to build 5 gigawatts of
new wind and solar power and an integrated renewable ammonia plant in Oman that
will export 1.2 million tonnes of the green fuel to its Korean partners by the
mid-2030s, helping to decarbonise South Korean steel production.
SPAIN
ArcelorMittal
is expected to restart its Gijon blast furnace A in early July after production
was halted in late March following a fire. Gijon’s two blast furnaces have a
combined capacity of 4.5 million tonnes/year.
SWEDEN
Swedish
industrial start-up H2
Green Steel has secured a full environmental permit for its first 5 million
tonne/year green steel plant, which is being built just outside Boden, in northern
Sweden.
SSAB has
decided to invest in a new electric arc furnace to convert its Oxelosund works to produce green steel starting in 4Q26
using recycled scrap and hydrogen-based directly reduced iron. SSAB and the
energy company Fortum announced a study to produce hydrogen-reduced sponge iron
on an industrial scale at the Raahe steelworks.
TRINIDAD
Trinidad and
Tobago’s TT Iron Steel Company is reported to have agreed to buy the idled
Point Lisas steel plant from ArcelorMittal. The plant, idled for seven years, produced
steel via the electric arc furnace route fed by scrap and directly reduced
iron. The deal is subject to approval by Trinidad and Tobago’s government with
a restart scheduled after two years of refurbishment.
UKRAINE
Ukraine’s
Largest steelmaker, ArcelorMittal Kryvyi Rih, temporarily stopped steel processing
to reduce water consumption following the destruction of the Kakhovka dam. Subsequent
reports indicated that the company has cut crude steel output by half due to
water supply problems and that building infrastructure to utilise alternative
water supply will take at least six months.
UNITED KINGDOM
UK Steel,
the country’s steel association, has lobbied the government to implement a
Carbon Border Adjustment Mechanism similar to that due
to come into force in the EU from 2026 with a transition phase starting in 2024.
Without such a policy, UK Steel fears that large amounts of EU destined steel
imports will end up being diverted to the UK market while UK steel exports to
the EU, currently accounting for 75% of total exports, would also be put at
risk.
POWER COAL
CHINA
China’s National
Bureau of Statistics reported that raw coal production in May totalled 390
million tonnes, up 4.2% year-on-year. Output in the first five months of 2023
was 1.91 billion tonnes, up 4.8% year-on-year.
INDIA
India’s
domestic coal output in May 2023 rose 7.1% year-on-year to a record 76.26
million tonnes.
The Indian
government announced that that power plants operating on imported coal will
have to run at full capacity until the end of September, extending an earlier
timeline by three and a half months. The country has been hit by a severe
heatwave.
ITALY
Italy’s
Environment Minister said that the country could shut down its coal-fired power
stations in 2024, a year earlier than planned, if gas prices remain at low
levels.
PHILIPPINES
The
country’s leading coal producer Semirara Mining and
Power Corp said it is shipping a second trial shipment of just over 78,000
tonnes of mid-grade coal to Japan’s Shikoku Electric Power as it seeks to
diversify export markets and cut reliance on China. Semirara’s 1Q23 coal
shipments to China fell 50% year-on-year to 1.1 million tonnes.
UNITED KINGDOM
The UK will
run just one coal-fired power plant this coming winter after Drax scrapped
proposals to keep open two remaining coal-fired units at is power station in
Yorkshire. Earlier, EDF chose to reject proposals to keep open its West Burton
A coal-fired plant and is to move ahead with plans to close the site.
VIET NAM
Viet Nam’s
Quang Tri Province has proposed building a 160-km conveyor belt to transport
15-20 million tonnes/year of coal from Laos to the My Thuy seaport, either for
domestic consumption or for export to third countries.
ALUMINIUM
IAI
The
International Aluminium Institute reported that global primary aluminium production
rose 0.6% year-on-year in May to total 5.851 million tonnes, with 59% produced
in China. The IAI also reported that global alumina production rose to 11.918
million tonnes in May, up 1% month-on-month when measured in terms of average
daily output.
CANADA
Rio Tinto is
planning to invest 1.1 billion dollars to expand its “low-carbon”
aluminium smelter at Complexe Jonquiere in Quebec. This
will boost annual capacity by around 160,000 tonnes. New production capacity is
to startup in the first half of 2026 and be fully ramped up by the end of that year.
GUINEA
UAE-owned Guinea
Alumina Corporation and the Aluminium Corporation of China (Chalco) have signed
a collaboration agreement to build an alumina refinery in Guinea.
INDONESIA
The
Indonesian government went ahead with its bauxite export ban from 10 June.
RUSSIA
UC Rusal
announced plans to build a 2.4 million tonnes/year alumina plant near St.
Petersburg for commissioning by the end of 2028. A second phase would double
capacity by 2032. The plans also include adding port infrastructure at Ust-Luga on the Baltic Sea to handle bauxite supplies from
Rusal’s mines in Guinea.
AGRIBULK
USDA
The US
Department of Agriculture’s June forecast updates saw minor adjustments to
2022/23 season export trade forecasts. However, in its 2023/24 season
forecasts, first released last month, there were upgrades to global wheat and
coarse grain exports of 2.9 and 3.0 million tonnes respectively. Global export
trade in rice and soyabeans were left unchanged and there was a minor downgrade
to soyabean meal exports. 2023/24 Ukrainian corn and wheat exports were raised
by 2.5 and 0.5 million tonnes respectively on anticipated higher production.
This may be subject to a rethink following the Ukrainian dam destruction which
occurred shortly before publication of the USDA reports.
WEATHER PATTERNS
The US
National Oceanic and Atmospheric Administration’s Climate Prediction Centre
issued an advisory that El Nino is back after three years of the La Nina
climate pattern. Australia’s Bureau of Meteorology has also issued a bulletin
noting a 70% chance of El Nino developing this year. Early signs of hot, dry
weather caused by El Nino are threatening agricultural producers across Asia
while American farmers could see heavier summer rainfall to help alleviate
drought conditions.
AUSTRALIA
The Department of Agriculture,
Fisheries and Food said that Australia’s winter crop production is set to fall
from record highs, with wheat output declining by 34% to 26.2 million tonnes
and barley production dropping 30% to 9.9 million tonnes, given predicted
dryness due to the onset of the El Nino weather pattern.
EU
The EU is to
phase out by 15 September temporary restrictions on imports of Ukrainian wheat,
maize, rapeseed, and sunflower seed to five member states bordering Ukraine,
namely Bulgaria, Hungary, Poland, Romania, and Slovakia.
INDONESIA
Indonesia’s
weather agency has warned of a severe dry season from the impact of the El Nino
weather pattern, threatening harvests and raising the risks of forest fires.
UKRAINE
The Ukrainian
agriculture ministry fears losing several million tonnes of crops because of
flooding caused by the destruction of the Kakhovka dam in the south of the
country. The loss of water for irrigation could also turn at least half a
million hectares into “deserts”.
The Kyiv
School of Economics has produced a report which suggests that some agricultural
sectors will not reach pre-war production levels even after seven years of
peace. Sunflower, barley and wheat sectors were expected to recover by 2040,
while the maize, rye, oats and rapeseed sectors were not expected to fully recover
until 2050.
VIET NAM
Viet Nam’s
government has announced that its rice export strategy aims to cut exports to 4
million tonnes by 2030, down from 7.1 million tonnes in 2022. The policy is
based on boosting the export of high-quality rice, ensuring domestic food
security, protecting the environment, and adapting to climate change.
FERTILISER
ANGOLA
Minbos
Resources has signed a contract to construct the Cabinda Phosphate Fertiliser
Plant which will be fed by output from the Cacata
Phosphate mine.
AUSTRALIA
NeuRizer
announced it has achieved a significant milestone in the approval process to
build a 1 million tonne/year urea plant in South Australia enabling it to move
on to the preparation of an Environmental Impact Statement. The proposed urea
production plant could also be expanded by adding a second train.
BANGLADESH
The Bangladesh
Agricultural Development Corporation has signed an agreement to import 180,000
tons of muriate of potash from Russia for the year 2023/24.
EGYPT
It was
reported that subsidiaries of Italian company Maire have been awarded a
contract to build a nitric acid and ammonium nitrate plant for Egyptian
Chemical Industries Company. The plant, due to be completed in the first half
of 2026, will be able to produce 800 tonnes/day of fertiliser-grade ammonium
nitrate for sale to domestic and international markets.
INDIA
India is
reported to have finalised a multi-year deal to import Russian fertilisers
under a barter arrangement with India supplying various commodities such as
tea, raw material and auto parts thus avoiding dollar payments subject to US
sanctions.
MOROCCO
State-owned
OCP plans to invest $7 billion in an ammonia plant located in Tarfaya in southern Morocco using green hydrogen produced
from solar-and-wind-powered electrolysis. The plant is expected to produce
200,000 tonnes of ammonia in 2026, rising to 1 million tonnes in 2027 and 3
million tonnes by 2032.
USA
Koch
Fertilizer’s Fort Dodge, Iowa plant has been revamped raising ammonia
production capacity by 85,000 tonnes/year.
FOREST PRODUCTS
AUSTRALIA
Australian
softwood log exports to China were running over 3.5 million cubic metres/year
up until the end of 2020 when China banned the trade on the grounds that bark
beetles had infected the logs. The recent improvement in relations between the
two countries has resulted in the ban being lifted, opening
up a potential resumption in trade.
CANADA
There were
reports that Canada’s worst-ever spring wildfire season has forced several
sawmills to temporarily shut down driving up lumber prices. The Forest Products
Association of Canada said that wildfires have already consumed at least 4
million hectares.
GEMANY
The German
Sawmill and Timber Industry Association reported that a member survey showed
half assessed current business as poor and almost 80% are already recording
significant production reductions following a large fall in German construction
sector activity.
NEW ZEALAND
The New
Zealand Forestry Minister has met with China’s National Forestry and Grassland
Administration to strengthen forestry cooperation including deepening bilateral
trade including in value-added products.
TradeViews
comment – New
Zealand agriculture is experiencing a major shift away from sheep farming
towards planting new pine forests. A dwindling supply of imported logs from
other sources has left New Zealand as the major supplier to China. As countries
push to add value to forestry exports, China will have to look to importing
more processed timber to meet it domestic market requirements.
VIET NAM
The Viet Nam
Timber and Forest Products Association said that the value of wood exports in
the first five months of this year had fallen 30% year-on-year due to falling
demand in major markets such as the US, Japan, Korea, China, and Europe.
CEMENT
ARGENTINA
The
country’s cement association, AFCP, reported that Argentina’s cement market contracted
by 1.5% year-on-year in May 2023. Cement production in the first five months of
2023 increased by 1.6% year-on-year to 5.096 million tonnes.
BRAZIL
Brazil’s
cement market excluding imports increased by 1.2% year-on-year in May 2023
according to the country’s cement association, SNIC. In the first five months
of this year, domestic cement dispatches declined by 2.2% year-on-year to 24.9
million tonnes.
CAMBODIA
Conch KT
Cement is expected to start production from its new 2 million tonnes/year
cement plant in the Oral district in Cambodia. The county’s five existing
cement plants have a combined capacity of 9 million tonnes/year.
ETHIOPIA
Derba MIDROC
Cement was reported to be about to sign a contract with China National Building
Material to commence construction of its 2.74 million tonnes/year Mughar Valley cement plant.
LAOS
Oudomxay Jiangge Cement has commenced cement sales from its new 2
million tonne/year Oudomxay cement plant in Namor District.
MALAYSIA
CMS Cement
is reported to have secured board approval to build a new 1.9 million
tonne/year clinker line at its Kuching cement plant, more than tripling clinker
capacity to 2.8 million tonnes/year. The company aims to replace its clinker
imports with output from the new project which is expected to take three years
to complete.
MOROCCO
Morocco’s
cement deliveries in the first five months of 2023 were reported to have fallen
2.3% to total 5,153,000 tonnes.
NIGERIA
BUA Cement
is to use recently secured loans to fund the construction of two new three
million tonnes/year cement plants in Sokoto State. The plants will run partly
on alternative fuels derived from waste and solar power.
USA
Heidelberg
Materials North America has inaugurated its new 2.4 million tonne/year Mitchell
cement plant in Indiana.