Leonard Hockley Dry Cargo A
review of the fundamental demand changes to the global forecast August 2024
Contents
The IMF have
updated their World Economic Outlook leaving global growth in 2024 unchanged
from the April review at 3.2%. Growth in 2025 is increased marginally to 3.3%. The report concludes that the global economy
is in a sticky spot. Services price inflation is holding up progress on
disinflation, which is complicating monetary policy normalisation. First
quarter growth this year surprised on the upside in many countries with the
notable exception of Japan and the US. There were signs of economic recovery in
Europe, led by an improvement in services activity. Chinese GDP growth rates were
raised to 5.0% in 2024 and 4.5% in 2025 on the back of resurgent domestic
consumption, aided by what looked to be a temporary surge in exports.
The UN Trade
& Development’s latest Global Trade Update report noted that global trade
trends turned positive in the first quarter of 2024, with the value of trade in
goods increasing by around 1% quarter-on-quarter and services by about 1.5%. This growth was primarily driven by increased
exports from China (9%), India (7%) and the US (3%).
The World
Bank’s latest commodity prices review found that energy prices increased by
1.1% in June, led by natural gas (+9.9%). Raw material prices saw little change
(+0.2%) while fertiliser prices surged by 9%. Metal prices contracted by 4% led
by nickel (-10.7%), iron ore (-9.6%) and zinc (-5.1%).
The Third
Plenum, a twice-a-decade conclave of Communist Party officials, concluded in
July with few steps to boost infrastructure investment or fix the country’s
property crisis.
An IMF
consultation with the common euro area found that the area is recovering
gradually, with a modest acceleration of 0.9% growth projected for 2024,
strengthening to 1.5% growth in both 2025 and 2026. However, population aging
and subdued productivity growth cloud the medium-term outlook.
An IMF
mission to France concluded that the country’s GDP growth is projected to reach
1.3% in 2025 from 0.9% in 2024. Over the medium term, growth is projected to
converge towards the potential rate of 1.3%. The outlook remains subject to
high uncertainty due to political fragmentation.
An IMF
mission to Germany concluded that the country’s economy has begun to recover
from the energy-price shock. Real wages are growing, and the economy expanded
in 1Q24. Real GDP growth is forecast to be a modest 0.2% this year rising to
1.3% in 2025. Over the medium term, rapid population aging is expected to slow
GDP growth to below 1%, absent significant increases in productivity or much
higher-than-expected immigration.
India’s
federal government announced that it will spend a record 11.11 trillion rupees
on infrastructure in the financial year to March 2025 to support growth and
create more jobs, in a move that is expected to boost demand for cement and
steel.
The Commerce
Department’s Bureau of Economic Analysis said that its advanced estimate for US
2Q24 GDP showed that the economy had increased at a 2.8% annualised rate,
faster than expected by most analysts.
The latest June 2024 crude steel
production data from the WSA had global output across 71 reporting countries at
161.4 million tonnes, up 0.5% year-on-year. Chinese output for the month was estimated
at 91.6 million tonnes, up 0.2% year-on-year. Outside China, other major
producers that recorded year-on-year losses in June included Iran (-8.5%), South
Korea (-7.2%), Japan (-4.2%), Russia (-4.1%), and the US (-1.5%). There were
year-on-year gains in Brazil (+11.8%), India (+6.0%), the EU (+5.1%), and Turkey
(+4.3%). The WSA estimated Chinese crude steel output in the first six months
of 2024 at 530.6 million tonnes, down 1.1% year-on-year. Over the same period India’s
output totalled 74.2 million tonnes, up 7.4% year-on-year, while EU production
totalled 67.2 million tonnes, up 0.9% year-on-year.
A fire at Anglo American’s Grosvenor coking coal mine in Queensland at the end of June caused no injuries but is expected to shut down the mine for several months. The mine was expected to produce around 3.5 million tonnes this year with lower output in 2H24 due to a planned longwall move. A prolonged closure into 2025 could tighten the seaborne coking coal market.
Voestalpine
has secured a 300-million-euro loan from the European Investment Bank to
support research and development of green steel production. In a first step,
the company plans to partly replace its existing coal-based blast furnaces with
electric arc furnaces powered by green electricity from 2027.
Vale said
that it was confident that it would reach the high-end of its 2024 guidance for
iron ore production of 310-320 million tonnes. This was after posting 2Q24
output of 80.6 million tonnes, up 2.4% year-on-year.
Rio Tinto
said in mid-July that it had initiated a coordinated shutdown at its subsidiary
Iron Ore Company of Canada in Newfoundland and Labrador in response to an
evacuation order issued by the local government over wildfires. Champion Iron
Ore also said that it was temporarily shutting down operations at its Bloom
Lake mine.
The National
Statistics Bureau reported that China produced 91.61 million tonnes of crude
steel in June, up a marginal 0.2% year-on-year but up nearly 2% on May when
measured on an average daily tonnage basis.
China
imported 97.61 million tonnes of iron ore in June according to the General
Administration of Customs, down 4.3% on the previous month. Iron ore imports in
the first six months of 2024 totalled 611.18 million tonnes, up 6.2%
year-on-year. Over the same six-month
period China’s steel exports leapt 24% year-on-year to 53.4 million tonnes.
It was
reported that China has approved no new coal-based steel projects in the first
half of 2024 while approving 7.1 million tonnes/year of new scrap-fed electric
arc furnace projects.
The Chinese
government announced in late June that mandatory quality standards for steel
rebar would replace current voluntary guidelines from 25 September. This has
led to inventory sell downs and Chinese steel traders are reported to be
seeking a delay in implementation claiming insufficient time to work through
existing stockpiles.
The European
steel association, Eurofer, has cut its steel forecasts due to demand recovery
lags caused by the consequences of the war in Ukraine, the deteriorating
manufacturing outlook and the overall economic environment. Apparent EU steel
consumption decreased by 3.1% in 1Q24, after a rise of 2.9% in the previous
quarter. Eurofer’s forecast steel consumption growth for 2024 was revised down
from 3.2% to 1.4%. However, growth was forecast to rebound to 4.1% in 2025.
Germany’s
crude steel production saw a modest recovery from last year’s historical low.
Output in the first half of 2024 totalled 19.4 million tonnes, up 4.5%
year-on-year. EAF mills saw output rising by 8.7% to 5.89 million tonnes while
blast furnace mills raised output by 2.7% to 13.48 million tonnes.
Rio Tinto
said that its giant Simandou iron ore project in Guinea, that it is developing
with its Chinese partner Chinalco, has received all the regulatory approvals it
needs, including those from the local and Chinese governments. Rio Tinto hopes
to begin production at the end of 2025. The whole Simandou project, including
the half being developed by the Winning consortium, is eventually expected to
achieve annual output of around 120 million tonnes.
India’s
Ministry of Steel was reported to have asked the trade ministry to investigate
cheaper steel imports from China and Viet Nam. India has recently become a net
importer of steel and domestic steel producers are apparently in talks with the
federal government over trade measures to combat rising steel imports.
India’s
Steel Ministry is looking to diversify its sourcing of coking coal, identifying
Russia and Mongolia as key new suppliers. After discussions with industry, it
is to trial two shipments from land-locked Mongolia over the next three to six
months using a rail link via Russia. The ministry also wants to establish
central buying of coking coal, but India’s steel sector has yet to get on board
with the plan.
Turkish steel conglomerate Tosyali
and Libya United Steel Company for Iron and Steel Industry (SULB) have signed
an agreement to build the world’s largest direct reduced iron complex in
Benghazi, Libya. The DRI plant will have an initial capacity of 2.7 million
tonnes/year rising eventually to 8.1 million tonnes/year. The plant will be
able to operate using hydrogen and will supply hot briquetted iron to regional
and European buyers seeking to produce green steel.
Workers at ArcelorMittal’s steel
production site in Lazaro Cardenas ended their 55-day strike and blockade on
July 19 after reaching a settlement with the company. ArcelorMittal said that
the action had resulted in an estimated loss of one million tonnes of steel
output.
Liberty Galati said in late July that
it would restart its blast furnace No.5 in coming days on the back of healthy
demand for plate and coated products. The company had recently been in talks
with the Romanian government on its plans for a blast furnace restart and
investment in green steel production.
ArcelorMittal’s
South African division announced in early July that it has decided not to shut
down its steelworks in KwaZulu-Natal province, after having agreed to delay
closure six months earlier for consultations with government and labour unions.
Hydnum Steel
is set to receive government support ahead of planned construction of its new
steelmaking plant beginning next year. This
followed it being declared a priority project by the Castilla-La Mancha
regional government. The greenfield Puertollano plant is to be powered by
renewable energy and green hydrogen producing up to 1.5 million tonnes/year of
rolled steel by 2026 rising to 2.6 million tonnes/year from 2030. Brazil’s Vale
agreed in February 2024 to potentially build a co-located iron ore briquette
plant at the Hydnum site.
SSAB has
awarded Italian steel plant maker Danieli the contract to build a new 2.5
million tonnes/year mill in Lulea, northern Sweden. The plant will consist of
two electric arc furnaces, a secondary metallurgy facility, a direct
strip-rolling mill and a cold rolling complex. The plant will run off a mix of
fossil-free sponge iron from the Hybrit demonstration plant at Gallivare and
recycled scrap. Startup is planned for the end of 2028 reaching full operating
capacity one year later. When completed, SSAB will decommission its existing
blast furnace production system in Lulea.
A derailment
occurred in early July on the Iron Ore Line delivering Swedish iron ore to the
Norwegian port of Narvik, the third derailment in just over six months.
Previous derailments in late 2023 and early 2024 led to a traffic closure on
the rail link lasting around three months.
Turkey’s
overall steel exports increased 31% year-on-year to 8.8 million tonnes in the
first half of 2024, according to the Egean Ferrous and Non-ferrous Metal
Exporters’ Association. This was attributed to increased competitive power and
higher shipments to the EU. The latter was aided by security challenges on
shipments through the Suez Canal for Turkey’s Asian steel sector competitors.
The association UK Steel said that
the new UK government needs to deliver the lowest electricity prices in Europe
if it wishes to deliver on its decarbonisation targets with the impending
switch to EAF steel production. UK Steel quoted data showing that the UK’s
wholesale electricity price over the past three months was more than double the
cost of French and Spanish electricity.
The US and Mexico announced new steps
to fight the circumvention of US tariffs on steel and aluminium by certain
countries that ship products through Mexico. Imports of steel products from
Mexico will be subject to 25% US Section 232 tariffs unless the steel is
documented to have been melted and poured in Mexico, the US or Canada.
The International Energy Agency’s latest update on the coal market forecasts that coal demand is set to remain largely flat this year and next as higher electricity demand in some major economies is offset by the rapid expansion of solar and wind power. The report also notes that global use of coal rose by 2.6% in 2023 to an all-time high, driven by strong growth in the two largest coal consumers, China and India.
China’s coal-fired power plants
generated 2,793.5 terawatt hours in the first half of 2024 according to energy
specialist Ember. This represented 59.6% of China’s total electricity output,
the first time on record that coal produced less than 60% of electricity
production. However, the coal-fired output was still up 2.4% year-on-year.
The General Administration of Customs
reported that China imported 44.6 million tonnes of coal in June, up 12%
year-on-year and up from 43.82 million tonnes in May. Record high temperatures
across northwest and east China has boosted demand for electricity while
domestic coal supply has been running lower than last year.
China’s coal production in June rose
to a six-month high of 405.38 million tonnes, up 3.6% year-on-year. The National Bureau of Statistics also reported
that production in the first six months of this year totalled 2.27 billion
tonnes, down by 1.7% year-on-year.
The National Development and Reform
Commission announced plans to test run decarbonisation technologies at
coal-fired power plants, including co-firing with ammonia and biomass and the
use of carbon capture and storage.
The IEA’s mid-year coal report said that EU demand for coal is set to fall by 19% in 2025 to 287 million tonnes, marking a significant shift to cleaner energy sources.
India’s Central Electricity Authority
has carried out generation planning studies through to the financial year
2031-32. To meet its base load requirement in 2032, the required coal and
lignite-based installed capacity would be 283 GW against the present installed
capacity 0f 217.5 GW. Given this, the government proposes to set up an
additional minimum 80 GW of coal-based capacity by 2031-32.
The Power Minister was reported to
have asked power companies to order $33 billion of coal-fired power equipment
this year to help meet booming electricity demand. This would result in record
tendering to help add 31 gigawatts of new capacity in the next 5-6 years.
The Ministry of Coal reported that India
produced 247.40 million tonnes of coal in 2Q24, up 10.75% year-on-year
Pakistan’s power ministry said that
Chinese power plant operators in the country will be asked to use domestic coal
from the Thar region rather than imported coal starting in July. The ministry
also argued that the switch would reduce pressure on Pakistan’s foreign
exchange reserves making it easier for Chinese-owned power companies to
repatriate dividends and improve returns in dollar terms. Subsequently, China
was reported to have approved the conversion of three coal-fired power plants
in Pakistan to use domestic rather than imported coal.
The Polish government is planning to
increase the output of its coal-fired power plants to increase electricity
exports to Ukraine ahead of the winter season. It also expects not to pay for
additional CO2 emissions, given that the additional power supply is intended
for Ukraine and paid for by EU funds.
The UK’s last coal-fired power
station at Ratcliffe on-Sour was reported to have received its final coal
delivery by rail from the port of Immingham in early July. The plant is
scheduled to be closed at the end of September.
The EIA’s latest
short-term energy outlook expects the US electric power sector to consume about
395 million short tons of coal in 2024, up from 387 million short tons in 2023.
Consumption is expected to fall back to the 2023 level in 2025.
Zambia’s
Maamba Collieries is to build a 300-megawatt coal-fired power plant over a
two-year period starting in August 2024. Hydropower has been the country’s main
source of power, but a devastating drought has forced Zambia to import and
ration electricity. The project is underpinned by a 20-year power purchase
agreement with state-owned ZESCO.
The
International Aluminium Institute reported that global primary aluminium production
in June rose 3.2% year-on-year to total 5.940 million tonnes, with 59.4%
produced in China. Global production in the first six months of this year
totalled 38.838 million tonnes, up 3.9% year-on-year. The IAI also reported
that global alumina production in June totalled 11.922 million tonnes, up 0.8%
year-on-year. Global alumina production from January to June 2024 totalled 70.965
million tonnes, up 2.3% year-on-year.
South32 has
received support from the Environmental Protection Authority for its expansion
plans for the Boddington bauxite mine which it requires to extend the Worsley
alumina refinery’s operations for an additional 15 years. The endorsement is
subject to appeal and comes with conditions designed to mitigate environmental
impacts.
Cameroon has
signed a bauxite mining deal with Camalco, a subsidiary of Australia-based
Canyon Resources, worth at least $2 billion. The Minim-Martap mine in northern
Cameroon is expected to produce around 5 million tonnes/year of high-grade
bauxite over a period of 20 years. Camalco plan to process bauxite into alumina
and transport it via an existing railway to the port of Douala or the ore
terminal at the port of Kribi for export.
China’s
primary aluminium production in June totalled 3.67 million tonnes according to
the National Bureau of Statistics, up 6.2% year-on-year. Production in the
first six months of this year totalled 21.55 million tonnes, up 6.9% from the
same period last year. These increases were driven by higher aluminium prices
and lower electricity costs boosting industry profit margins.
China’s
metallurgical-grade alumina production totalled 6.842 million tonnes in June,
up 5.9% year-on-year. Output in the first six months of 2024 totalled 40.293
million tonnes, up 3.84% on the same period last year.
Chinese
imports of unwrought aluminium and products in the first half of 2024 totalled
2.04 million tonnes, up 70.1% year-on-year. The General Administration of
Customs also reported that bauxite imports over the same period totalled 77.35
million tonnes, up 7.4% from a year earlier.
Winning
International Group is reported to have ordered six 325,000 dwt very large ore
carriers (VLOCs) from Hengli Heavy Industry at a cost of $116 million per
vessel for employment in the Guinea to China bauxite trade. Delivery is set to
start in the second half of 2027. The ships are reported to be fitted with
methanol fuel tanks.
Indonesia is
reported to be planning to review its bauxite export ban imposed in mid-2023 to
encourage more domestic processing. During a meeting with the mining minister,
lawmakers asked the government to reassess the ban and reopen shipments to help
revive the economies of areas that rely on bauxite mining.
Century
Aluminium said that its bauxite mining and alumina refining joint venture,
Jamalco, resumed full production following the impact of Hurricane Beryl on
Jamaica on 3 July. However, a portion of the alumina conveyor at its port
facility was damaged and is expected to be repaired in the next few weeks. The
company has arranged for an alternative port to be used to ensure continued
alumina shipments to its customers.
The Tiwai
Point Aluminium Smelter, jointly owned by Rio Tinto and Sumitomo Group, has
agreed to cut its power usage by 185 megawatts to ease pressures on New
Zealand’s electricity grid. Historically low hydro lake levels have adversely
impacted local energy provider Meriden Energy’s power generation. The drop in
usage will involve stopping one-third of operations at Tiwai before restarting
in April next year.
The US and
Mexico announced new steps to fight the circumvention of US tariffs on steel
and aluminium by certain countries that ship products through Mexico. Imports
of aluminium products from Mexico will be subject to 10% US Section 232 tariffs
if they contain primary aluminium that is smelt or cast in China, Russia,
Belarus or Iran.
The FAO’s World Food Price Index was
unchanged in June averaging 120.6 points. The FAO cereal index in June declined
by 3.0% compared to the previous month, with quotations for coarse grains,
wheat and rice all down, driven by improved production prospects in major
exporting countries. The FAO sugar price index increased by 1.9% from May after
three consecutive monthly declines, driven up by concerns over the likely
impact of adverse weather and monsoons on production in Brazil and India. The
FAO’s forecast for international trade in total cereals remained unchanged at
481 million tonnes, a 3.0% fall from 2023/24.
The latest edition of the OECD-FAO
Agricultural Outlook has been published looking at medium-term prospects for
agricultural commodity markets from 2024 to 2033. India and Southeast Asian
countries are projected to account for 31% of global consumption growth by
2033, driven by their growing urban population and increasing affluence. Total
agricultural and fisheries consumption is projected to grow by 1.1% annually
over the next decade. The volumes of agricultural commodities traded globally
is expected to increase between net exporting regions and net importing regions,
but with regional shifts reflecting increased consumption in India and
Southeast Asia.
The US
Department of Agriculture’s July forecast updates contained only minor
adjustments to 2024/25 season export trade forecasts. Looking across all the
principal commodities (wheat, coarse grains, rice, soyabeans, and soyabean
meal), net changes to the 2024/25 season saw an overall export trade decrease
of just 0.83 million tonnes, a fall of 0.11%.
US and
Canadian 2024/25 wheat export forecasts were marked up by 0.68 and 0.5 million
tonnes respectively, both based on forecast larger crops. This was partly
offset by a 0.5 million tonnes cut in the EU wheat export estimate based on a
reduced crop. The US maize export forecast for 2024/25 was raised by 0.64
million tonnes on price competitiveness and demand from North American
neighbours. However, this was offset by trims to Russian and EU maize export
forecasts based on expected lower production. Pakistan’s 2024/25 rice export
forecast was raised by 0.6 million tonnes based on an expected record crop
boosted by good planting conditions and water availability. There were no
significant changes to the USDA’s 2024/25 export forecasts for soyabeans or
soyabean meal
Australia’s
largest sugar producer Wilmar Sugar and Renewables said in mid-July that it is
closing its eight sugar mills for up to 16 hours due to a strike by unionised
workers demanding better pay. A further strike day was planned for later in the
month.
Egypt is
reported to have made it biggest wheat purchase in two years with its state
buyer booking 770,000 tonnes in a tender, with most supplies coming from
Russia. It was also seen as a sign that the drop in grain prices is starting to
rekindle demand.
Data
released during Indian Prime Minister Modi’s meeting with President Putin in
Moscow showed that India increased its imports of Russian grain and grain
products 22-fold in the 2023/24 agricultural season. As noted later, Modi also
thanked Russia for providing a stable supply of fertilisers to Indian farmers.
A joint statement after the talks set out that Russia and India aim to boost
bilateral agriculture and fertiliser trade further, pledging to ease the
existing phytosanitary and veterinary barriers.
The Indian
government plans to sell wheat from state reserves to bulk purchasers such as
flour millers and biscuit makers from August at below prevailing market prices
in a bid to keep a lid on local consumer prices.
India’s rice
stocks at state warehouses jumped to 48.51 million tonnes at the start of July
according to the Food Corporation of India. This was up nearly 19% year-on-year
and a record high for this time of year. This has led to speculation that the
government is likely to cut the minimum export price floor for basmati rice to
boost shipments.
Mexico’s new
Agricultural Minister appointed by the incoming government said the country
would discard the previous policy to reduce imports of yellow maize with an aim
to achieve self-sufficiency. Imported yellow maize is mainly used as fodder for
livestock and largely supplied by the US. Efforts to restrict the trade caused
an ongoing trade dispute with the US. A ban on genetically modified maize will
now only apply for use in human consumption.
The Nigerian
agricultural minister said in early July that the government plans to suspend
import taxes on certain food categories including wheat and maize for 150 days
to bring rising prices under control. Food price inflation in the country has
climbed to over 40% year-on-year.
The
Philippine Agriculture Secretary said that he wants to boost cooperation with
Viet Nam to ensure food security during a visit to the country. Viet Nam has
become the world’s third largest exporter of rice, and the Philippines has been
its largest buyer in recent years. Viet Nam exported 45.4% of its total rice
shipments to the Philippines in the first five months of this year. The
Philippines has also recently lowered its tariff on rice imports from 35% to
15% to manage inflationary pressures.
Russia was
reported to have made its first grain export shipment from the Lugaport
terminal in the Baltic Sea port of Ust-Luga. The new terminal is owned by the
Russian private transport company Novotrans and is expected to have an annual
grain export capacity of 7 million tonnes. Up until now, most Russian grain
exports from the Baltic Sea have been made from the 4 million tonnes/year
Vysotsk terminal which made its first shipment in April 2023.
Ukraine’s
grain exports via the Romanian port of Constanta in the first half of 2024 fell
by 43.5% year-on-year to 4.24 million tonnes, according to the port authority.
However, the fall was also a reflection of Ukraine shipping out more grain from
its own Black Sea ports using the navigational channel hugging the western
Black Sea coast off Romania and Bulgaria.
Agrimin said that their Mackay Potash project in Western Australia is now advancing towards a final investment decision. The company has already signed three binding offtake agreements with Sinochem Fertiliser Macao (150,000 tonnes/year), Nitron Group (115,000 tonnes/year) and MacroSource (50,000 tonnes/year).
The state-run Bangladesh Chemical Industries Corporation reported that four of its five urea production facilities have been closed due to gas shortages. In response, the government is seeking to augment its fertiliser supply through international tenders and government-to-government deals.
BHP announced that its Jansen Potash
Mine Stage 1 project in Saskatchewan has surpassed the 50% completion mark. The
mine is expected to start operations in late 2026 with a production capacity of
4.35 million tonnes/year. BHP also reported that Stage 2 development is now
underway. This will eventually lift output to 8.5 million tonnes/year.
Canpotex announced that it is fully
committed on volumes for potash sales through 30 September. The company is the
offshore marketing arm for Saskatchewan potash producers Nutrien and Mosaic.
China’s exports of urea plunged 67% year-on-year in June to total 70,000 tonnes. Urea exports in the first half of 2024 were down 86% from the same period last year. The government has intervened to limit urea exports to ensure domestic supply and stabilise domestic prices.
Russia’s leading fertiliser producer,
Phosagro, has called on India to drop its 5% import duty on Russian fertiliser
imports during Prime Minister Modi’s recent talks in Moscow. Modi was reported
to have thanked President Putin for supporting Indian farmers with stable
supplies of fertilisers.
Pemex has given a contract to
Mota-Engil to build a $1.2 billion fertiliser plant in Poza Rica, Veracruz,
with a production capacity of over 700,000 tonnes/year. The project envisions a
six -month preliminary study phase followed by a 42-month construction phase.
Mota-Engil will also oversee the plant’s operations for 20 years.
Yara has signed a Heads of Terms
offtake agreement with ATOME for all its green hydrogen-to-fertiliser
production planned in Villeta, Paraguay. The proposed plant is expected to
produce up to 264,000 tonnes/year of calcium ammonium nitrate fertiliser from
2027. ATOME aims to take a final investment decision this year.
SABIC Agri-Nutrients announced that
it has obtained a feedstock allocation from the Ministry of Energy to build a
plant in Jubail to produce 1.2 million tonnes/year of blue ammonia and 1.1
million tonnes/year of urea and associated agri-nutrients.
Exxon Mobil and CF Industries have
signed a carbon capture and storage deal. Exxon will store up to 500,000
tonnes/year of captured CO2 from CF Industries plant in Yazoo City,
Mississippi, which makes nitrogen products for agricultural fertiliser. The project
is expected to start in 2028 and will reduce the site’s CO2 emissions by up to
50%. An earlier deal between the two companies will sequester up to 2 million
tonnes/year of CO2 from CF industries’ Donaldsonville, Louisiana, facility
beginning in 2025.
The US Department of Energy plans to
spend $36 million on technologies to lower emissions from applying synthetic
nitrogen fertiliser to corn and sorghum used in ethanol production. The money
would support projects that reduce the amount of fertiliser needed for farms
while maintaining yields.
The FAO has released updated guidelines for countries outlining how to manage the risks of damaging wildfires. The update noted that, currently, around 340 million to 370 million hectares of the Earth’s surface are burned by wildfires annually.
Rapidly
spreading wildfires in British Colombia are expected to tighten the supply of
wood products and raise prices during the year’s peak building season. Forestry
companies that have suspended production include West Fraser Timber, Tolko and
Norbord.
Statistics
Canada reported that Canadian sawmills produced 4.557 million cubic metres of
lumber in April, up 3.6% from the previous month. Lumber production from
January to April totalled 17,303 million cubic metres, up 3.2% year-on-year. The
capacity utilisation rate in wood products manufacturing was 80.5% in April, up
4.1% year-on-year.
China
imported 32.769 million cubic metres of timber in the first half of 2024, down
5.3% year-on-year, according to the General Administration of Customs.
China has
rejected the EU’s deforestation regulations on imports set to come into force
at the end of this year, on the grounds that Chinese law restricts sharing of
geographic information to entities authorised by the state. Last month, we
reported on US concerns that their exporters are struggling to be ready for the
new rules. Similar concerns have also been raised by Australia, New Zealand,
Brazil, Indonesia and Malaysia. Twenty European Agriculture Ministers have also
called for delays in implementing deforestation rules.
A report
filed with the USDA Foreign Agricultural Service’s Global Agricultural
Information Network noted that EU wood pellet consumption fell by 1.2% in 2023
due to a mild winter and reduced demand from the commercial power sector. EU
wood pellet production in 2023 totalled 20.8 million tonnes, up from 20.3
million tonnes in the previous year. Production is expected to reach 21.3
million tonnes in 2024 while EU wood pellet production capacity is estimated at
27.5 million tonnes this year.
The
Confederation of European Paper Industries has released its final summary and
statistics report for 2023, noting that paper and board production fell by 13%.
This drop in demand was far more pronounced than even in the pandemic when
production fell by 4.7% in 2020. The 2023 report also recorded an exceptionally
high recycling rate of 79.3% and noted that 91% of fibres were sourced from
within the EU.
The Ghana
Timber Millers Association has warned of a collapse of its timber industry due
to a shortage of raw materials. Climate-change-induced wildfires have depleted
forest reserves leading to the collapse of several companies in the sector. The
association has advised companies to begin cultivating timber plantations to
stay in business.
Japan’s
Ministry of Land and Infrastructure reported that the country’s house
construction starts were down 5.3% year-on-year in May following a jump of
13.9% in April, the strongest rise in almost nine years. New starts in the
first five months of this year were also down year-on-year.
Russia’s
1Q24 roundwood exports grew by 14.6% year-on-year to 673,000 cubic metres of
which 85.5% went to China, according to Roslesinforg. Birch logs accounted for
most of this export trade.
US
manufacturing activity contracted in June for the third consecutive month and
the 19th time in the last 20 months, according to the Institute of
Supply Management. However, furniture manufacturing and paper products both
reported growth in June while wood products reported contraction.
Viet Nam’s
Forestry Department reported that the export value of the country’s timber and
wood products totalled $7.95 billion in the first half of 2024, up 21.2%
year-on-year. The US and China were the main importers, purchasing $4.38
billion and nearly $1.06 billion worth of forestry products respectively.
Cement
demand in Argentina fell 32.8% year-on-year in June to total 725,881 tonnes
according to the country’s cement association AFCP. In the first half of 2024
cement consumption slumped 30.9% year-on-year to 4,247,357 tonnes. Over the
same period, domestic cement production dropped 30.8% to total 4.273,963
tonnes.
Brazil’s
cement association SNIC reported that domestic cement sales in June increased 2.4%
year-on-year to 5.372 million tonnes. In the first six months of 2024, cement
sales totalled 30.56 million tonnes, up 1.5% on the same period last year
Votorantim
Cimentos is to invest US $38.7 million to double the production capacity of its
Edealina plant to 2 million tonnes/year with scheduled completion set for the
second half of 2025.
Cimpor has
inaugurated it new cement plant in Kribi, Cameroon. It has capacity to produce
1.2 million tonnes/year of cement and 0.4 million tonnes/year of calcined clay.
There was a report that the Indian cement sector is expected to add 63-70 million tonnes of new cement production capacity in the fiscal years 2025 and 2026, with 33-35 million tonnes to be added in the current 2025 fiscal year that started in April. Capacity utilisation was expected to rise from 70% to 71% in fiscal 2025 on the back of sustained demand from the infrastructure and housing sectors.
Total cement
deliveries contracted by 29.1% year-on-year in June according to Morocco’s
cement association APC. However, total domestic deliveries in the first half of
2024 edged up 1.1% year-on-year to total 6,276,085 tonnes.
Cement
producers across Pakistan initiated an indefinite nationwide strike in response
to increased withholding and turnover taxes introduced in the 2024/25 federal
budget.
Taiheiyo
Cement Philippines has inaugurated a new production line at its plant in Cebu,
raising capacity to 3 million tonnes/year.
Cement
consumption in Spain in the first half of this year totalled 7.27 million
tonnes according to the cement association Oficemen, a fall of 3.3%
year-on-year. Cement exports saw a far sharper decline of 20.2% over the same
period.
The Ministry
of Construction has proposed resuming cement sector planning given current
surplus capacity. The country’s cement production capacity exceeds 120 million
tonnes/year and the Viet Nam National Cement Association reports that local
cement plants are running at just 70-75% of their design capacity.