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Contents
ECONOMIC NEWS
ADB
The Asian
Development Bank has trimmed its forecast for economic growth in the developing
Asia region (excluding Japan, Australia, and New Zealand) from 4.8% to 4.7%
citing weakness in China’s property sector and El Nino-related risks to food
security. However, its growth forecast for next year remained unchanged at
4.8%.
CHINA
New bank
loans in China surged in August to 1.36 trillion yuan, nearly quadrupling from
July’s total and providing a sign that China’s beleaguered property sector may
be finally starting to recover. On a negative note, trading in shares of
property development giant China Evergrande Group were halted again in late
September and the company’s chairman and founder put under police investigation.
UNCTAD
UNCTAD has published
its latest 2023 review of maritime transport. The report found that maritime
trade volume contracted marginally by 0.4% in 2022 but is expected to grow by
2.4% in 2023. Over the medium term out to 2028, total seaborne trade is
expected to grow by 2.1% to 2.2% per year. As a result of disruptions from the
war in Ukraine, shipments of grain travelled longer distances in 2023 than any
other year on record.
WTO
The World
Trade Organisation’s latest World Trade Report confirms that geopolitical
tensions are beginning to affect trade flows, including in ways that point
towards fragmentation of trading relationships. The WTO looked at two
hypothetical geopolitical blocs base on voting patterns at the UN General
Assembly. They calculate that trade flows between the blocs had grown 4-6% more
slowly than trade within the blocs. However, despite these findings, the WTO
contends that international trade continues to thrive and that talk of
de-globalisation is on balance still not supported by the data.
STEEL
OECD
The OECD
Steel Committee has expressed grave concern about the deterioration in global
steel market conditions currently being driven by growing overcapacity,
softening demand for steel, and government interventions in some economies.
They noted that world steelmaking capacity has swollen to a record-high of 2.5
billion tonnes in 2023 leaving a gap 612 million tonnes between global capacity
and global production.
WSA
The latest August
2023 crude steel production data from the World Steel Association had global
output across 63 reporting countries at 152.6 million tonnes, up 2.2% compared
to August 2022. Chinese output for the month was reported as 86.4 million
tonnes, a rise of 3.2% year-on-year. There were notable year-on-year falls in Iran
(-24.1%), South Korea (-5.9%), Brazil (-5.9%), the EU (-4.4%), Turkey (-2.9%) and
Japan (-2.9%). These losses were offset by year-on-year gains in India (+17.4%),
Russia (+8.9%) and the US (+1.1%). The WSA estimated Chinese crude steel output
in the first eight months of 2023 at 712.9 million tonnes, up 2.6%
year-on-year. India’s output over the same period totalled 92.2 million tonnes,
up an impressive 10.5% year-on-year.
AUSTRIA
Voestalpine
Group has launched its phased plan to produce green steel by deciding to build
an electric arc furnace at each of its Linz and Donawitz
sites. The construction of the EAF at Donawitz is
projected to start next year and take three years to complete and will have a
production capacity of 850,000 tonnes/year.
BELGIUM
ArcellorMittal Belgium said it had temporarily shut its Blast Furnace A at its Ghent
steelworks from mid-September to the end of November for essential maintenance.
The company said that the work would ensure the smooth transfer of production
to new direct reduced iron and electric arc furnaces (see the note in our July
report for further details).
BRAZIL
Brazil’s
Vale said it has signed an agreement with Sweden’s H2 Green Steel to study the
joint development of industrial hubs in Brazil and North America as part of its
decarbonisation programme. Industrial plants would focus on low-carbon products
such as green hydrogen and hot briquetted iron (HBI). As we reported last
month, Vale has contracted to supply H2 Green Steel with iron ore pellets for
its green steel project at Boden in northern Sweden. Vale had previously
announced that it expects to start building mega hubs to produce HBI in the
Middle East next year with the first to be operational in 2027.
Vale has
commenced load tests at the first iron ore briquette plant at its Tubarao works as part of the commissioning process. The
process reduces the emission of particulates and gases and eliminates the use
of water. The briquettes can be used in the direct reduction route replacing
pellets. A second plant is due to start up in 2024. The two plants will have a
combined capacity of 6 million tonnes/year. The company was reported to be
considering approving two more plants this year and a further three plants in
2024. Vale is planning to expand briquettes and pellet production to 100
million tonnes/year after 2030.
Vale has
signed an agreement with the Brazilian port of Acu to
study the development of a hot briquette iron plant, reportedly with a capacity
of 2.5 million tonnes/year and a startup date of 2028.
EGYPT
The Egyptian
government has announced a plan to build a 1.8 million tonne/year integrated
plant to produce flat steel for both the domestic and export markets. The
project is reported to have been approved by the General Authority for Suez
Canal Economic Zone and will be established with a yet-to-be-named
international company.
Production
of iron ore pellets at publicly owned Delta Steel Mill Company has increased to
250,000 tonnes/year with completion of its Phase 1 expansion plan. The
government is reported to have approved Phase 2 which will double capacity to
500,000 tonnes/year.
EU
The EU’s
Carbon Border Adjustment Mechanism (CBAM) comes into force on 1 October 2023.
The European steel association EUROFER said that the initial phase of CBAM,
with simplified monitoring and reporting, will be crucial to assess how
watertight its functioning is in preventing carbon leakage to other countries
that continue to invest in highly CO2 intensive technologies.
The
increased electrification of steelmaking in Europe is expected to boost EU
scrap consumption resulting in shortages of feedstock which could eventually
result in creating demand for scrap imports according to participants at the
European Steel Congress in Poland.
The EU has
amended its Critical Raw Materials Act to include strategic secondary raw
materials including ferrous scrap. The head of the German recycling federation
expressed concern that political limitations on ferrous scrap exports would
take away overseas markets for EU scrap merchants.
GERMANY
Salzgitter
has selected Andritz to supply a 9,000 tonne/year green hydrogen plant which
will be used to produce green steel starting in 2026. This is part of an
overall transition plan which by end 2033 will see the company’s three blast
furnaces shut down in favour of direct reduced iron and EAF facilities.
Arcelor
Mittal said it planned to temporarily curtail production at its Bremen steel
plant to allow repairs and maintenance work to be carried out. The plant has
two blast furnaces with a combined capacity of 3.8 million tonnes/year and one
furnace will shut for 30 days and the other for 41 days. The sintering plant
will close for 60 days.
HUNGARY
Liberty
Steel was reported to have idled the last operational blast furnace at its
recently acquired Dunaferr mill. The Dunaferr plant has two blast furnaces with a total capacity
of 1.2 million tonnes/year. The plant’s rolling mills have reportedly stopped
due to lack of feedstock. Liberty Steel has announced that it is planning to
install a new electric arc furnace at the site subject to EU regulatory
approval.
INDIA
The Indian
Steel Secretary has pointed out that a shortage of steel scrap availability
will be one of the issues threatening the country’s steel growth noting that
more than 60 countries have either banned or are in the process of banning
scrap exports. The Steel Ministry had recently urged primary steel producers to
boost their recycled steel usage from around 10% currently to 50% by 2047.
South
Korea’s POSCO announced plans to set up an integrated steel plant in India in a
bid to tap into growing Indian demand for automotive steel products.
JAPAN
The Japan
Iron and Steel Federation said that the country’s crude steel output is
expected to stay below 90 million tonnes in the fiscal year to end-March 2024
due to weak domestic demand in the construction and other sectors. A shortage
of labour and soaring material prices has caused delays in large construction
projects. The export market for steel is
also expected to be very weak.
Japan’s
industry ministry announced a plan to more than double its financial support to
the steel sector to accelerate the development of manufacturing green steel.
The equivalent of 3 billion dollars will be allocated to the project.
Nippon Steel
Corp. has now shut down all facilities at its Kure plant having taken the
decision in February 2020 in response to falls in domestic steel demand. The
company also plans to stop operations at its Kashima plant by the end of March
2025 cutting its annual crude steel production from 50 million tonnes to 40
million tonnes.
MEXICO
Grupo Deacero plans to invest US $1 billion over the next three
years to build a new steel mill in Saltillo, Coahuila, and expand its
facilities in Guanajuato. This will increase steel production capacity by 1.2
million tonnes/year.
NIGERIA
India’s
Jindal Steel and Power is reported to have committed to invest $3 billion to
revive Nigeria’s steel sector as part of a wider investment pledge agreed
between the two nations. Earlier, Nigeria’s Minister of Steel Development had
stressed the need to resuscitate the idled Ajaokuta
Steel Company.
OMAN
Jindal
Shadeed Group is set to start construction work in October on its 6 million
tonnes/year green steel plant at the port of Duqm with start of operations set
for 2026. The project will be carried out in conjunction with Jindal Steel’s
Vulcan Green Steel arm. It will be powered by renewable energy and green
hydrogen. The plans for the plant were initially unveiled at the end of last
year.
SAUDI ARABIA
Last month
we reported that the Essar Group had signed an agreement with Bahrain Steel to deliver
4 million tonnes/year of direct reduction-grade pellets for its greenfield
integrated steel plant being set up in Ras Al Khair, Saudi Arabia. Essar has
now followed this up with a new deal with Brazil’s Vale to also supply 4
million tonnes/year of direct reduction-grade pellets. This means the project
has covered 100% of its raw material requirements. Essar’s Green Steel Arabia
will have two direct reduced iron plants with a combined capacity of 5 million
tonnes/year. The project will also include 4 million tonnes/year of hot strip
capacity and 1 million tonnes/year of cold rolling capacity plus galvanising
and tin plate lines.
SOUTH AFRICA
The Saldanha
Iron Ore Terminal is due to shut down for 28 days starting in late September to
perform maintenance work on major equipment. The terminal is the main export
route for South African iron ore.
SOUTH KOREA
Posco aims
to accelerate its use of its own green hydrogen HyREX
steelmaking technology to produce directly reduced iron to feed electric arc
furnaces. The company aims to complete a 300,000 tonne/year hydrogen reduction
plant by 2026 and to establish a 1 million tonne/year commercial production
plant by 2030. If successful, the process will gradually replace Posco’s blast furnaces.
SWEDEN
Following on
from our report last month, Sweden’s H2 Green Steel announced that it has
raised equity funding of about 1.5 billion euros to build its large-scale green
steel plant in Boden. Start of steelmaking operations is set for the end of
2025.
TURKEY
The Turkish
Steel Producers’ Association (TCUD) has called for government help to stem the
growth in steel imports, particularly from China. The association noted that
domestic steel production rose in July for the first time in 14 months, but the
share of steel imports also pushed higher. TCUD said it needed more competitive
energy prices as energy costs were lower for steel producers in the Gulf and
Europe.
UNITED KINGDOM
The UK
government has reached agreement with Tata Steel to provide up to £500 million in
aid to help build an electric arc furnace to replace two existing blast
furnaces at the company’s Port Talbot steelworks. The deal remains subject to
information and consultation processes led by Tata Steel. The deal is also
expected to result in major job losses.
British
Steel is delaying steel deliveries and is reported to be only using one of its
two blast furnaces as it struggles to make pig iron of sufficient quality. The
company had closed its coking ovens in favour of using imported coke and is
rumoured to have had problems with a batch of imports.
POWER COAL
AUSTRALIA
The New
South Wales State Government has entered talks with Origin Energy to discuss
extending the life of Australia’s largest coal-fired power station beyond its
planned closure date of 2025 amid concerns over energy shortfalls. The Eraring Power Plant has a capacity of 2,922MW and accounts
for a quarter of NSW’s power requirements.
CHINA
The National
Statistics Bureau reported that China’s coal production totalled 382.17 million
tonnes in August, up 1.2% month-on-month and 2% year-on-year. The increase in
output was partly attributed to increased government mine safety inspections curbing
output in July.
FRANCE
President
Macron said that France will phase out coal by the start of 2027 by converting
its last two coal-fired power plants in Cordernais
and Saint-Avold to run on biomass.
GERMANY
Germany’s
state-owned power generation company Uniper has
announced that it plans to permanently decommission the 875 MW capacity Heyden
4 hard coal-fired power plant at the end of September 2024. The plant was idled
in December 2020 but restarted in August 2022 amid the energy crisis.
INDIA
The Indian
government has directed domestic coal-based power generating companies to blend
4% imported coal through to March 2024 to ensure ample stocks at power plants.
This followed a surge in power demand in August amid hot weather and what
turned out to be the driest August in a century. According to the Grid
Controller of India, electricity consumption in August hit a record 152 billion
kilowatt-hours, way above the previous record of 140 billion kWh set in June.
Electricity generation in August increased by 21 billion kWh year-on-year of
which 16 kWh came from coal-fired units.
NETHERLANDS
The Dutch
government said it would pay RWE 331.8 million euros in compensation for
capping the company’s coal-fired electricity production at 35% of capacity in
the 2022-24 period. Compensation for the other two coal-fired generators, Uniper and Onyz, has yet to be
agreed. The cap was temporarily removed in mid-2022 to reduce gas use following
Russia’s invasion of Ukraine. All coal-fired plants will still be forced to
close by 2030 under Dutch law.
SOUTH KOREA
South Korea
was reported in September to have set a quota of 13 million tonnes on Russian
coal imports for the remainder of 2023. This is likely to limit spot purchases
of Russian coal and boost voyage lengths of alternative supplies.
UNITED KINGDOM
The Kilroot coal-fired power station in Northern Ireland has
shut down and is to be replaced by a new gas-fired unit under construction at
the same site and due to be commissioned at the start of next year.
ALUMINIUM
IAI
The
International Aluminium Institute reported that global primary aluminium production
rose 1.58% year-on-year in August to total 6.044 million tonnes, with just
under 60% produced in China. Global production in the first eight months of 2023
totalled 46.54 million tonnes, up 1.66% year-on-year.
CHINA
China’s
National Bureau of Statistics reported that the country produced a record
monthly total of 3.60 million tonnes of primary aluminium in August, up 3.1%
year-on-year aided by the recovery of hydropower generation in Yunnan province.
Cumulative primary aluminium production in the first eight months of this year
totalled 27.11 million tonnes, a rise of 2.6% year-on-year.
The Shanghai
Metals Market survey’s PMI index of the domestic aluminium industry for August
registered a 1.5 month-on-month fall to 51.6. Despite the fall, the PMI index
continued to hover above 50 for the third month in a row.
China
Hongqiao Group has started up 1.5 million tonnes/year of aluminium smelting
capacity in Yunnan province where it aims to move 4 million tonnes of capacity
by end-2025. The southwest province has abundant hydro power and allows the
company to shift its smelting away from coal-fired power dependency.
EU
The European
Parliament has included aluminium in the Strategic Raw Materials list of the
EU’s Critical Raw Materials Act following lobbying by the trade association
European Aluminium and 11 other industry associations.
MOZAMBIQUE
Mozal
Aluminium is planning to boost its primary aluminium production by 40,000
tonnes to 578,000 tonnes in the current financial year which commenced in June.
USA
The Aluminum Association reported that demand for aluminium in
North America (USA and Canada) declined by 4.5% in 1H23 following a buoyant
2022.
VIET NAM
Vinacomin
is to invest in increasing the capacity of its Nhan Co alumina plant to two
million tonnes/year by 2029.
AGRIBULK
FAO
The UN’s
Food and Agriculture Organisation’s world food price index fell in August to a
two-year low reversing the July rise which reflected the termination of the
Black Sea Grain Initiative and India’s trade restrictions on rice exports. Price
declines in most food commodities offset price rises for rice and sugar. The
rice price index rose 9.8% to reach a 15-year high.
USDA
The US
Department of Agriculture’s September grain season trade updates contained a markup
to 2022/23 estimates but a further downward adjustment to 2023/24 forecasts.
Looking across export trade forecasts of the principal commodities (wheat,
coarse grains, rice, soyabeans, and soyabean meal), net changes to the 2022/23
season saw an overall trade increase of 6.43 million tonnes, a rise of 0.89%. In
the 2023/24 season overall export trade was reduced by 3.87 million tonnes, a
fall of 0.52%. This is the third successive monthly fall in the USDA’s overall
trade assessments which are now down 15 million tonnes since their June report.
This month, 2023/24 wheat export trade was marked down by 2.05 million tonnes
with lower shipments out of Argentina, Australia, Canada, and the EU only
partially offset by a rise in the estimates for Russian and Ukrainian exports.
Global
exports of rice in the 2023/24 season were reduced by 0.84 million tonnes with a
forecast reduction of 1.5 million tonnes in exports from India partially offset
by minor increases in exports from other source countries. The USDA had already cut Indian rice exports
by 4 million tonnes in its August report following government restrictions on the
trade announced in July. There were only minor adjustments made to overall
coarse grain, soyabean and soyabean meal trade forecasts.
ARGENTINA
The Buenos
Aires grains exchange estimates the country’s 2023/24 soybean crop at 50
million tonnes, the highest level of the last five years, as the El Nino
weather pattern is expected to bring higher rainfall. However, in late
September the exchange warned that if much-needed rains did not arrive quickly
the country’s wheat yields during the 2023/24 season could continue to fall.
The Rosario
grain exchange trimmed its forecast for the 2023/24 wheat harvest to 15 million
tonnes, down from the previous forecast of 15.6 million tonnes, following dry
conditions in some of the country’s agricultural areas.
BRAZIL
Brazil’s
food supply and statistics agency Conab expects the
country’s 2022/23 maize production to hit a record 131.8 million tonnes driven
by an abundant second crop. The soybean production forecast was kept at 154.6
million tonnes, also a record high. Conab also
forecast that Brazil’s overall grain production in the 2023/24 grain season
will fall 1% to 319.5 million tonnes. This total includes 119.8 million tonnes
of maize and 162.4 million tonnes of soybean, down 9.1% and up 5.1%
respectively compared to 2022/23.
CANADA
Statistics
Canada, in collaboration with Agriculture and Agri-Food Canada, estimated that
the country’s wheat production in 2023 will decrease by 13.1% year-on-year to
29.8 million tonnes due to lower yields caused by dry conditions across the
Prairies. Maize production in 2023 is projected to increase by 2.7%
year-on-year to 14.9 million tonnes as lower yields are more than offset by a
larger harvested area. Soybean production in 2023 is also expected to rise by
2.7% year-on-year to 6.7 million tonnes.
KAZAKHSTAN
Kazakhstan’s
Agriculture Minister said that they will be forced to reduce grain exports due
to lower yields. The export forecast for the 2023/24 agricultural year starting
in July is now 6 million tonnes plus 1.2-1.5 million tonnes of flour.
RUSSIA
Russia’s
Agriculture Ministry has raised its estimate for potential grain exports this
agricultural year from 55 million tonnes to 60 million tonnes.
UKRAINE
Poland,
Slovakia and Hungary announced their own unilateral restrictions on Ukrainian
grain imports after the European Commission decided not to extend its ban on
imports into Ukraine’s five EU neighbours following Ukraine’s promise to
tighten control of its exports. The three countries will continue to allow the
transit of Ukrainian grain shipments. Subsequently, Slovakia and Ukraine agreed
a grain trade licensing system which will see the Slovak ban lifted once the
system is set up.
A Ukrainian
official said that the country has started to export grain via Croatia using
Croatian ports on the Danube River and the Adriatic Sea. In another move,
Romanian port operators at the Black Sea port of Constanza are reported to be
investing in grain handling capacity to ship out Ukrainian grain exports. The
Romanian government plans to boost monthly Ukrainian grain shipments to 4
million tonnes having shipped around 2.7 million tonnes in August.
A cargo of
17,600 tonnes of wheat was reported to have been loaded onto a bulk carrier at
the Ukrainian port of Chornomorsk that then sailed
for Egypt via what Kyiv calls its new temporary humanitarian corridor which
hugs the Romanian and Bulgarian coastlines.
USA
The National
Weather Service reported that a key stretch of the lower Mississippi River
dropped to within inches of its lowest-ever level in late September and is
expected to remain at historic lows just as the US grain export season gets
underway. This has already impacted export=bound barge deliveries of corn and
soybeans as barge shippers were forced to lighten loads to prevent groundings.
FERTILISER
AUSTRALIA
The
specialist agribusiness bank Rabobank said in its Australian Fertiliser Outlook
2024/25 report that improved affordability of agricultural fertiliser is set to
prompt a recovery in demand and application rates by farmers next year. Lower
fertiliser prices had only come late in the 2023/24 cropping season.
Tecnicas Reunidas and Allied Green Ammonia are to commence the first
phases of green hydrogen and green ammonia production facilities located in the
Northern Territory. They plan annual production of 165,000 tonnes of green
hydrogen and 912,500 tonnes of green ammonia starting in 2028.
CHINA
China
appears to be restricting urea exports following a price surge. Two Chinese
state-owned urea producers said that they would prioritise domestic supply.
There were also reports that port inspections of some urea export cargoes had
been suspended and that half a million tonnes of urea destined for India was
held up. China is the world’s largest urea producer.
INDIA
Concerns
have been raised over shipments of Canadian potash to India following the
diplomatic row between the two countries. Indian Potash said it hopes to extend
its current contract with Canada’s Canpotex beyond
the end of September.
ROMANIA
Azomures is
to resume fertiliser production in October having concluded contracts for the
supply of natural gas. One of two ammonia producing plants will restart with a
capacity to produce 1.6 million tonnes/year with 80-85% intended for the
domestic Romanian market.
SWEDEN
Cinis
Fertilizer has signed a long-term agreement with K+S Minerals and Agriculture
GmbH covering the purchase and delivery of potassium chloride to two new Cinis production facilities in Sweden. The Ornskoldsvik
plant will produce around 100,000 tonnes/year of potassium sulphate from early
2024. The Skelleftea plant will produce around 200,000 tonnes/year of potassium
sulphate from mid-2025.
USA
Cinis
Fertilizer has signed a 10-year supply agreement with Ascend Elements for
240,000 tonnes/year of sodium sulphate starting in 2026 to coincide with the
startup of its 300,000 tonnes/year fertiliser plant to be built in
Hopkinsville, Kentucky. Cinis Fertilizer also has a
letter of intent from K+S Minerals to supply potassium chloride from its facility
in Saskatchewan, Canada, plus a sales off-take agreement for the finished
product, potassium sulphate.
FOREST PRODUCTS
FINLAND
Finland’s
forest products sector is facing a shortage of supply due to the ending of raw
timber imports from Russia. Stora Enso has announced that the Sunila pulp mill
in Kotka is to close by the end of the year due to no longer being profitable
following the loss of Russian timber supply.
ROMANIA
The European
Commission has authorised a Romanian scheme worth 200 million euros to
compensate forest owners for timber not cut for mandatory ecological reasons.
The scheme, which runs to the end of 2027, aims to halt and reverse
biodiversity loss, improve ecosystem services and preserve habitats and
landscapes.
CEMENT
GHANA
The Ghanian
government has ceased issuing permits for new cement plants anywhere in the
country in a move aimed at ensuring the sustainable and responsible growth of
the domestic cement industry.
INDIA
The ratings
agency Crisil has forecast that Indian cement consumption will grow 10-12%
year-on-year to around 440 million tonnes in the fiscal year through to the end
of March 2024 driven by a surge in infrastructure spending.
INDONESIA
Hongshi
Indonesia Tonga Cement has inaugurated its 4 million tonnes/year cement plant
in East Kutai, East Kalimantan. The company has plans
to eventually double the plant’s capacity.
JAMAICA
Caribbean
Cement plans to expand its Rockfort cement plant’s
capacity by 30% to 1.3 million tonnes/year. The new capacity is expected to
come online in early 2025.
LIBYA
China-based Senomaly has been looking at the feasibility of restarting
the 1.6 million tonnes/year Mahrouga cement plant
near Sebha. This follows the Chinese government
directing businesses to return to Libya in late August.
NORWAY
The
Norwegian government has signed an agreement with Heidelberg Materials Sement Norge confirming funding of up to US$14.1 million
for the construction of a full-scale carbon capture system at its Brevik cement
plant.
UKRAINE
The
Ukrainian cement association, Ukrcement, said that
the country’s cement production grew 30% year-on-year in the first eight months
of 2023 to total 4.75 million tonnes.
VIET NAM
Vietnamese
cement production in the first nine months of 2023 is estimated at 89.8 million
tonnes according to the country’s General Statistics Office, a fall of 4%
year-on-year.