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Contents
ECONOMIC NEWS
CITIGROUP
Citigroup
has cut its 2023 economic growth forecast for the euro area from 1.1% to 0.8%,
citing pressures from a high interest rate environment as the European Central
Bank has signalled further hikes.
CHINA
China’s
second quarter 2023 GDP grew 6.3 % year-on-year. This was below market
expectations adding to fears that the country’s post-pandemic recovery is
faltering.
IMF
The IMF has
released its latest World Economic Update in which global growth this year is
raised slightly to 3% while the forecast for 2024 is held at 3%. US GDP growth
is expected to slow from 2.1% in 2022 to 1.8% in 2023 and to just 1.0% in 2024.
Euro area growth is projected to fall from 3.5% in 2022 to 0.9% in 2023 and
then to rise to 1.5% in 2024. The growth forecast for China is unchanged at
5.2% in 2023 and 4.5% in 2024.
STEEL
WSA
The latest June
2023 crude steel production data from the World Steel Association had global
output across 63 reporting countries at 158.8 million tonnes, down 0.1%
compared to June 2022. Chinese output for the month was reported as 91.1
million tonnes, a fall of 0.4% year-on-year. There were notable year-on-year falls
in Brazil (-12.5%), the EU (-11.1), Japan (-1.7%) and Turkey (-1.5%). These
losses were offset by strong year-on-year gains in Iran (+17.4%) and India
(+12.9%). The WSA estimated Chinese crude steel output in the first six months
of 2023 at 535.6 million tonnes, up 1.3% year-on-year. India’s output over the
same period totalled 67.9 million tonnes, up 7.4% year-on-year.
ARCELORMITTAL
The
steelmaking group reported that it now expects global steel demand excluding
China to grow by 1-2% this year, down from its previous forecast of 2-3%, due
to higher US interest rates and weak construction activity in Europe.
CHINA
China’s
National Bureau of Statistics reported that the country’s steel output in June
was 91.11 million tonnes, up 0.4% year-on-year.
There have
been reports that several Chinese steel mills have received state instructions
that their total output this year should not exceed 2022 levels.
EU
The European
Steel Association (Eurofer) has downgraded its outlook for steel demand in the
EU this year from a 1% decline to a 3% fall citing persistently high energy
prices and sluggish demand. However, the association is more optimistic about
2024, raising its steel demand forecast to 6.2% from the 5.4% estimate made in
May.
FINLAND
Norway’s
Blastr Green Steel is planning to build a 2.5 million tonne/year low-carbon
steel mill at Inkoo in Finland. The project is in the preliminary study phase
with production startup scheduled for 2027/28.
FRANCE
ArcelorMittal
is expected to restart shortly its 3 million tonne/year No. 4 blast furnace at
its Dunkirk plant following repairs. The furnace was shut down on 30 March due
to a fire.
ArcelorMittal
has secured an 850-million-euro grant approved by the EU to shift to EAF
steelmaking at its Dunkirk plant. This includes building a 2.5 million
tonne/year direct reduced iron unit and two electric arc furnaces which will
replace two of the three existing blast furnaces. Construction is expected to
be completed by 2026 and initial natural gas power will be gradually phased out
by renewable or low-carbon hydrogen.
A Marseille
judge has suspended an order to shut down ArcelorMittal’s steelmaking
operations at its Fos-sur-Mer site issued 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.
GERMANY
The European
Commission has approved the German government’s planned 2 billion euros subsidy
package 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 the end of 2026.
OMAN
Vulcan Steel
was reported to be in talks to raise 2.6 billion dollars to help fund a new 5
million tonne/year green steel plant to be built at the Omani port of Duqm.
UAE
Emirates
Steel Arkan, AD Ports Group, Itochu and JFE Steel have signed a MoU to
collaborate on the establishment of an integrated low-carbon iron supply chain
complex in Abu Dhabi. The project is envisioned to be constructed in several
phases including pellet plants, directly reduced iron plants, electric arc
furnaces and other relevant infrastructure.
UNITED KINGDOM
A potential
new directly reduced iron plant at Redcar Bulk Terminal is planned by green
steel producer Blastr. The company plans to produce six million tonnes/year of DRI
pellets, with approximately half going to the company’s planned ultra-low CO2
steel plant at Inkoo in Finland (see comment under Finland) and the rest sold
to global markets via Cargill Metals. The
option of siting the plant in Norway stalled due to lack of access to grid
capacity. The company expects to make a final investment decision in 2025.
POWER COAL
AUSTRALIA
The
Australian Department of Industry, Science and Resources expects the value of
the country’s thermal coal exports to more than half over the next two
financial years from US$ 43 billion to US$ 20 billion as prices fall and
consumers look to alternative sources of energy.
CANADA
EverWind
Fuels announced that it will invest one billion dollars in renewable energy to
power its green hydrogen and ammonia production project in Nova Scotia. The
production facility will be located at a former oil storage facility and marine
terminal at Point Tupper. Annual green ammonia production is expected to be
200,000 tonnes at startup in 2025 rising to one million tonnes by 2026. The
project is aimed at helping Nova Scotia end its reliance on coal-fired power and
to generate 80% of its electricity from renewables by 2030.
CHINA
China’s National
Bureau of Statistics reported that raw coal production in June totalled 390.1
million tonnes, up 2.5% year-on-year. Output for the first half of this year hit
2.3 billion tonnes, up 4.4% year-on-year. Electricity generation from
coal-fired plants in the first six months of 2023 increased by 8% year-on-year
and accounted for 71% of all electrical output, up from 69% in the same period
a year ago.
GERMANY
Spain’s
Tecnicas Reunidas and Italy’s Ansalso Energia are to build an 800 megawatts
hydrogen-ready combined cycle power plant for Germany utility RWE at its
Weisweiler site near Cologne, part of a plan to replace the utility’s existing
coal-fired power plants. The plant will initially use 50% hydrogen and 50%
natural gas, with the potential to upgrade to 100% hydrogen. Construction is
scheduled to start in 2025 and take 40 months.
INDIA
India’s
domestic coal output in the second quarter of 2023 rose 8.4% year-on-year to 222.93
million tonnes according to the Ministry of Coal.
SOUTH AFRICA
State-owned
freight rail operator Transnet Freight Rail is losing around 18.5 million
tonnes of freight capacity to export coal due to a long-standing locomotive
spares supply impasse with Chinese manufacturer CRRC. The company’s CEO
commented that locomotives were designed for specific routes making it
difficult to make use of locomotives from other corridors on the coal network.
ALUMINIUM
IAI
The
International Aluminium Institute reported that global primary aluminium production
rose 0.85% year-on-year in June to total 5.699 million tonnes, with 59%
produced in China. It also noted that metallurgical grade alumina production
totalled 10.71 million tonnes in June, down 3.4% year-on-year.
AUSTRALIA
Rio Tinto
and Sumitomo Corporation are to build a pilot hydrogen plant in Gladstone aimed
at lowering carbon emissions in the alumina refining process. The project is
expected to be operational by 2025 and has also received federal funding from
the government’s Australian Renewable Energy Agency.
CHINA
China’s
National Bureau of Statistics reported that the country’s primary aluminium
production in June totalled 3.46 million tonnes, up 2.9% year-on-year. Output
in first half 2023 totalled 20.16 million tonnes, up 3.4% year-on-year.
EU
In a
last-minute move, the European Union added aluminium plus alumina and bauxite
feedstocks to its list of minerals and metals covered by its Critical Raw
Materials Act. European producers will be hoping that this will help stem the
slide in the region’s primary aluminium production through access to affordable
green energy pricing.
NIGERIA
Russian
aluminium producer Rusal is reported to be considering restarting the Alscon
aluminium smelter in Nigeria following talks at the Russian-Africa summit in
St. Petersburg. Rusal has an 85% stake in the plant which was built with a
primary aluminium production capacity of 193,000 tonnes/year. However, it has been
idle for a decade.
AGRIBULK
FAO
The UN’s
Food and Agriculture Organisation’s world food price index fell in June to its
lowest level in more than two years following drops in the cost of sugar,
vegetable oils, cereals, and dairy products. The index of the most globally
traded food commodities is now 23.4% below the all-time peak reached in March
2022 following the start of Russia’s invasion of Ukraine.
In a
separate report, the FAO forecast world cereal production this year at 2.819
billion tonnes, up 11% on 2022 levels. This latest assessment is up 5.9 million
tonnes primarily driven by improved prospects for global wheat production. The
FAO’s latest forecast for world trade in total cereals in 2023/24 shows a 0.9%
decline compared to 2022/23.
OECD-FAO
The latest
OECD-FAO Agricultural Outlook 2023-2032 report foresees agricultural demand
growing more slowly over the coming decade due to a slowdown in both population
and per capita income growth. Production of agricultural commodities is also
projected to grow at a slower pace due to weakening global demand, decelerating
productivity growth resulting from increased input prices (notably fertilisers)
and tightening environmental regulation.
USDA
The US
Department of Agriculture’s July forecast updates saw an overall minor upward adjustment
to 2022/23 season grain export trade forecasts. In contrast, its 2023/24 season
forecasts tracked lower. Looking across export trade forecasts of the principal
commodities (wheat, coarse grains, rice, soyabeans, and soyabean meal), net
changes saw an overall trade decrease of 2.55 million tonnes, a fall of 0.34%. 2023/24
wheat export trade was marked lower with higher shipments out of Australia and
Russia more than offset by declines in the estimates for Argentinian and
Canadian exports. Russian wheat exports are expected to reach a record 47.5
million tonnes. European wheat production was marked down due to the recent
heatwave, but exports were held flat on reduced stocks. The ending of the Black
Sea Grain agreement is likely to see further significant adjustments next
month. There were small increases to 2023/24 season global exports of coarse
grains, rice and soyabean meal. The key adjustment to the USDA’s 2023/24 soyabean
export forecast was a 3.4 million tonne downgrade of US exports attributed to a
lower harvested area.
INDIA
Rumours in
July that India was considering banning non-Basmati rice exports in a move to
limit inflation ahead of upcoming elections were realised. The government’s ban
is expected to cut Indian rice exports by 75-80%. The latest USDA WASDE report
showed India exporting 23 million tonnes of rice in the 2023/24 season,
accounting for 41% of global rice export trade. The IMF has warned that this
will exacerbate volatility in global food prices and has urged India to
reconsider its restrictions.
RUSSIA
Russia’s
Agriculture Minister was reported as saying the country has the potential to
export 55 million tonnes of grain in the 2023/24 season, adding that Russia
expects to harvest 123 million tonnes of grain including 78 million tonnes of
wheat.
SOUTH KOREA
The South
Korea Agriculture Minister is to sign an agreement with eight African nations
to help boost their rice production and cut dependence on rice imports. The
“K-Ricebelt Project” will see South Korea build facilities in Ghana, Guinea,
Guinea-Bissau, Gambia, Senegal, Cameroon, Uganda, and Kenya to produce rice
seeds better suited to local conditions that could boost yields by two to three
times compared to domestic varieties.
UKRAINE
Russia
decided to terminate the Black Sea grain deal allowing safe exports of
Ukrainian grain to world markets prompting the UN Secretary General to express
his deep regret. Russia followed up its decision by attacking the Ukrainian
port of Odessa.
FERTILISER
CANADA
Nutrien
announced that it has curtailed production at its Cory potash mine due to the
loss of export capacity through Canpotex’s Neptune Terminal following a strike
at the Port of Vancouver by the International Longshore and Warehouse Union.
The company warned that a prolonged strike could also impact its other potash
mines in Saskatchewan.
NORWAY
Norge Mining
has assessed the extent of its phosphate rock deposit in Norway as a massive 70
billion tonnes, just below the 71 billion tonnes of proven world reserves as assessed
by the US Geological Survey. The European Commission has welcomed the news as
it will contribute to its proposed Critical Raw Material Act. Now comes the
long process of obtaining mining permits.
USA
Dutch
fertiliser company OCI is building a $1 billion-dollar blue ammonia plant in
Beaumont, Texas, that will capture and sequester 95% of emissions. The company
sees plenty of sales opportunities in addition to making fertiliser, including selling
to Asian power utilities and as a potential fuel for shipping. The plant is
expected to produce 1.1 million tonnes/year of ammonia, with startup in 2025.
If utility premiums for using its ammonia are not forthcoming, OCL plans to use
the output to produce fertiliser in the Netherlands where the company has
under-utilised plants due to high natural gas prices.
BASF and
Yara Clean Ammonia have set up a joint study to develop and construct a 1.2 –
1.4 million tonne/year low-carbon blue ammonia plant in the US Gulf.
FOREST PRODUCTS
CAMEROON
Cameroon’s
Ministry of Forestry and Wildlife has expanded the list of tree species that
can no longer be exported as raw logs from 31 to 76. Along with other Congo
Basin countries, Cameroon is edging closer to a complete ban on exports of
unprocessed timber which is now expected to come into force in January 2026.
The policy seeks to expand domestic timber processing industries, creating jobs
and adding value to exports.
CANADA
Canada’s
Trade Minister was reported to be very disappointed with a US decision to
maintain tariffs on Canadian exports of softwood lumber following an
announcement by the US Commerce Department that most Canadian softwood lumber
would be subject to a 7.99% tax.
RUSSIA
The Russian
Federal Statistical Service (Rosstat) reported that Russian sawn timber
production in January to May 2023 fell 10.1% year-on-year to 11.5 million cubic
meters. In late July, Rosstat reported that Russian plywood production in the
first six months of 2023 declined by 16.4% which was attributed to sanctions
imposed following Russia’s invasion of Ukraine.
VIET NAM
The Department
of Forestry estimated that the value of the country’s forest products exports
in the first half of 2023 fell by 28.8% year-on-year.
CEMENT
ARGENTINA
The
country’s cement association, AFCP, reported that Argentina’s cement dispatches
increased by 0.9% year-on-year in the first half of 2023. Over the same period,
cement production increased by 0.5% year-on-year to 6.18 million tonnes.
INDIA
Indian
ratings agency ICRA estimates that the country’s annual cement production
capacity will rise by 6% year-on-year to 610 million tonnes during the 2024
financial year and that the industry will invest $14.6 billion over four years
to the end of the 2027 financial year to expand annual capacity by 26% to 725
million tonnes.
Adani Group
subsidiary ACC said that it will add 16 million tonnes/year of new cement
capacity in the five years up to the end of the 2028 financial year.
INDONESIA
The
Indonesian government instigated a moratorium on new cement plants as capacity
utilisation fell to 51% in the first half of 2023. Cement production during
this period totalled 29.3 million tonnes.
IRAQ
China’s
Sinoma has reached an agreement to build a 2 million tonne/year cement plant in
southern Iraq with startup set for 2025.
MOROCCO
Morocco’s
cement deliveries in the first half of 2023 were reported to have fallen 4.6% year-on-year
to total 6,206,000 tonnes.
USA
The US
Geological Survey reported that the US consumed 40.54 million tonnes of Portland
and blended cement shipments, including imports, in the first five months of
2023, a fall of 2.3% year-on-year.
VIET NAM
Xuan Khiem
Group has been given permission to build the 2.3 million tonne/year Xuan Son
cement plant. It is expected to commence operation in late 2024.