Takeaways and insights – Argus Metals Week NiCoMo event London 2019

Arnoud Willems, SIDLEY – Analysing the trade war: Current and projected impact

• Based on “national security concerns” the US has introduced 25% additional import duties on steel imports. Since August 2018, Turkish steel imports even are subject to 50% duty.
• This has triggered a domino effect: The Rest of the World has responded with measures against the US.
• China introduced 15-25% duties on a range of US products such as seamless tubes and pipes. The EU has prepared additional duties of 15-25% on a range of US products as of 2021 or 5 days after WTO ruling (whichever is earlier). Canada, Mexico, India, Russia, and Turkey have taken similar measures against US imports.
• What can companies do?
  1. Change always has winners and losers
  2. Trade war can be seen as an opportunity to improve the domestic market position or position in certain countries
• Looking into the future
  1. It is likely that the US and China reach an agreement in trade
  2. The role of the World Trade Organisation (WTO) as a global legal framework is weakening

Yosihihiro Kojima, JOGMEC – China’s Influence on Global Metal Market

• China’s metal consumption has a significant impact on global commodity markets, its market shares by commodity are: Aluminium (54%), Refined Copper (50%), Zinc (49%), Cobalt Chemicals (45%), Lead (41%), Nickel (40%)
• China’s investment in infrastructure sharply shrunk starting from November 2017 as China’s Policy shifted from “Fiscal Stimulus” to “Deleverage”
• The bottom of investment in infrastructure was reached in September 2018 but with rising trade friction investment has slightly increased again
• Chinese investment in manufacturing has increased steadily since Q2 2018 due to “Made in China 2025” policy
• Since 2011 the Chinese “Total Debt / GDP” ratio has been rising steadily – in Q2 2018 it reached 260% of GDP; the majority of debt is non-financial corporation debt (which includes debt from State-Owned Enterprises)
• China has a socio-economic challenge: population peak will be reached in 2030 with 1.4 billion people but the working age population peak was already reached in 2010  population bonus ended, population onus has started
• China’s income inequality is one of the highest in the world (Gini index >50%)  the society could become unstable

Antti Saarela, Outokumpu – Market Trends & Outlook

• In 2018, due to increased duties on steel, US stainless steel imports (cold rolled coil) dropped while European imports increased as a consequence
• European base prices for stainless steel are under pressure and have dropped significantly while US base prices have increased
• Raw materials account for 60% of the total operating costs of Outokumpu. Thus, raw material purchasing volume of Outokumpu in 2018 was around €3.7 billion

John Eastwood, Anglo American – Nickel: Enabling a sustainable future

• Stainless steel continues to be a long-term success story: CAGR +5.5% since the 1960s
• According to SMR figures, stainless steel production will grow from 52.9 Mtpa in 2018 to 54.8 Mtpa in 2019
• Low nickel prices have helped to push up the ratio of (nickel-containing) austenitic stainless steels
• Nickel consumption in batteries is expected to grow strongly due to 1) growing share of nickel-containing lithium-ion batteries and 2) growing share of nickel in the batteries
• Ni consumption in batteries expected to more than sevenfold from 2017 to 2027 – but the uncertainty on these forecasts is still significant
• Visible nickel stocks have been declining from a peak of 650kt to less than 300kt – the International Nickel Study Group estimates that nickel demand outstripped nickel supply by 124kt in 2018 (Jan-Nov)

Anne Oxley, Brazilian Nickel – Nickel & the battery market

• Nickel demand for Li-ion batteries by 2030 could be 1.2 Mtpa
• Probable new supply by 2030 according to WoodMac of 1.3 Mt. Where will it come from Indonesia (23%), Australia (18%), Canada (15%) and Brazil (12.5%)
• Brazilian Nickel’s Project PNP is projected to produce 25ktpa nickel and 900tpa cobalt
• C1 Cash cost of the project is estimated at 2.78 $/lb (6130 $/mt); the base case nickel price used for calculating the NPV of the project is 7 $/lb (15,400 $/mt)

Dmitry Pastour, Unichrome AG – Ferroalloys and ferrochrome market: transforming today from past to future

• Chrome and ferrochrome (FeCr) show similar price volatility as other ferroalloys, which is the new normal
• Domestic China FeCr prices are on average more than 20% lower than global FeCr prices
• So far there is no pricing mechanism for the FeCr market to improve liquidity
• Digital platforms for physical metals will be able to provide pricing mechanisms which will allow participants to measure future expectations with more financial responsibility and accuracy than today.

Sebastian Kreft, Metalshub – 3D Printing and the world of metal powders

• EIT Raw Materials and Metalshub have started a cooperation with the goal of creating an efficient materials platform for 3D printing raw materials
• Digital platforms will orchestrate the supply chain of 3D printing, from alloy producers till part manufacturers
• The most popular input materials for 3D printing are powders and filaments alloys of the five most common metals: Titanium, Nickel, Iron, Aluminium, and Cobalt
• The demand for metal powder will grow significantly and demand will mainly come from the Aerospace and Medical industry in North America, Asia Pacific, and Europe

Dr. Filipe Manjolinho, Cronimet Envirotec – Innovative recycling of metal sludges and powder

• 200ktpa of sludges and 950ktpa of powder containing NiCoMo available for recycling in Germany alone
• Cronimet offers innovative and efficient recycling via vacuum distillation

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