This is an annual phenomenon. While many metal fabricators take downtime over the holiday period, most smelters keep operating, leading to a jump in visible inventory.

Copper has experienced the sharpest seasonal stocks build this year, leaving exchange inventory at the highest levels since 2020.

The rise in ShFE zinc inventories has closely matched last year’s pattern, while aluminum has seen a highly muted rebuild by historical standards.

Nickel stocks were increasing before the holiday break and are now at four-year highs. Those of tin are the highest since ShFE launched its tin contract in 2015.

Copper surge

ShFE copper stocks have mushroomed from just 30,905 metric tons at the end of December to 285,090 tons.

The scale of this year’s seasonal surge has been the strongest since 2020, when registered inventory peaked at 380,085 tons. The New Year holiday period that year coincided with the first wave of COVID-19 lockdowns and the resulting slump in Chinese manufacturing activity.

This year the jump in exchange stocks likely reflects the combination of fast domestic production growth and higher imports.

The country’s output of refined copper rose by 9.0% year-on-year in January-February, equivalent to an extra 159,000 tons, according to local data provider Shanghai Metal Market. Imports rose by 2.6% over the same period.

Stocks registered with Shanghai’s International Energy Exchange have also jumped from 9,760 tons at the end of last year to a current 40,511 tons. However, this year’s mid-March peak of 45,298 tons fell short of last year’s peak of 82,575 tons.

Muted rise in aluminum stocks

ShFE stocks of aluminum fell to 199,757 tons this week from last week’s year-to-date high of 206,417 tons.

If that turns out to be this year’s seasonal peak, it means the rebuild has been extremely muted relative to the last four years.

Stocks are up by just 100,728 tons on the start of January. By this time last year they had risen by 229,000 tons. The seasonal effect was even stronger over the 2020-2022 period.

Visible inventory remains remarkably low after last year’s high imports of over 1.5 million tons and the bullish optics reinforce the narrative of a tight domestic market.

Seasonal norm for zinc and lead

Exchange stocks of zinc in Shanghai crept a little higher this week to 121,873 tons and are now up by 100,658 tons on the start of January.

This is very close to last year’s seasonal build of 103,441 tons and to that seen in 2021.

Shanghai lead stocks stand at 53,631 tons and are up by just 747 tons since the start of 2024, which is comparable to the 333-ton rise seen over the first three months of last year.

Lead is less exposed to the new year holiday effect, having its own seasonality in the form of car battery kill rates over the northern hemisphere winter months.

China is also exporting ever more refined lead. Shipments rose by 62% year-on-year to 188,000 tons in 2023, the highest annual volume since 2007.

The steady outbound flow has served to keep Shanghai inventory below the 100,000-ton level for the last two years.

Nickel stocks at four-year high

Shanghai nickel stocks dwindled to just 560 tons in May last year, reflecting a shift in domestic production from the refined nickel that trades on the ShFE to nickel sulphate used in electric vehicle batteries.

The dynamic has changed dramatically over the last year. A new generation of Chinese nickel refineries has started up to capitalise on the burgeoning import flow of Indonesian raw materials.

ShFE stocks have grown to 20,713 tons, the highest tally since December 2020. The build has been mirrored on the London market, where the London Metal Exchange (LME) has been fast-tracking Chinese companies wanting to list their brands. LME stocks have risen by 21% so far this year.

Tin stocks hit record high

Global exchange stocks of tin, by contrast, are showing divergent trends.

Those in London have fallen by a third this year to below 5,000 tons as supply is constrained by export delays in Indonesia.

Shanghai tin stocks have been rising steadily since the start of December and now total 12,021 tons, which is the highest inventory in the contract’s nine years of trading history.

The country has been stocking up on refined tin in recent months, imports hitting a record high of 33,470 tons last year.

(The opinions expressed here are those of the author, Andy Home, a columnist for Reuters.)

(Editing by David Evans)

Graphic: Congo overtakes Peru on copper output, still behind on exports

Newmont is working with Citigroup Inc. on the disposal and they have started sounding out prospective suitors, according to the people. Shandong Gold Mining Co. and Zijin Mining Group Co. are among companies showing early interest in the asset, the people said, asking not to be identified because the information is private.

Chifeng Jilong Gold Mining Co. is also studying Akyem, said the people. Australian miner Perseus Mining Ltd. said last month it would consider the asset as well.

Deliberations are at an early stage and suitors could decide not to proceed with bids, the people said. Representatives for Newmont, Citigroup, Shandong Gold and Zijin declined to comment. A spokesperson for Chifeng Jilong didn’t reply to a request for comment.

The sale of Akyem is part of Denver-based Newmont’s effort to raise $2 billion in cash through divestitures in the wake of its acquisition of Newcrest Mining Ltd. in November. On top of Akyem, Newmont wants to sell four gold mines in North America and one in Australia.

Akyem produced 420,000 ounces of gold a year at the end of 2022, the company’s website shows. The precious metal surged above $2,200 an ounce this week for the first time and it has rallied about 10% in a month.

(By Vinicy Chan)

The scale of these challenges are massive, but they are far from insurmountable, and there are an array of options that Australia’s iron ore miners can pursue.

The trick is choosing a path that maximizes profits, or at least minimizes costs, while ensuring that the industry continues to prosper.

Australia is the world’s largest exporter of iron ore, the key raw material used to make steel, and it shipped out about 930 million metric tons last year, which at current prices would be worth about $93 billion.

Australia is also the world’s largest exporter of metallurgical coal, used to make steel, ranks second in thermal coal and in liquefied natural gas, while also being the biggest exporter of lithium and the largest net exporter of gold.

But the exports of all these commodities together barely exceed the value of iron ore shipments, underscoring the outsized role of the ore, which is mainly produced in the state of Western Australia.

Just over 80% of iron ore exports head to China, which buys about 70% of the total global seaborne volumes and produces about half of the world’s total steel.

Putting these numbers together gives a picture of a dominant producer and a dominant buyer in the iron ore market.

The rise of China since the late nineties allowed Australia’s iron ore miners to massively ramp up output, reap economies of scale and become hugely profitable.

But the nature of both China’s demand and the process of making steel are likely to change in the next few years, threatening the current model whereby Australia produces vast quantities of iron ore that is turned into steel in blast furnaces and basic oxygen furnaces, processes that require the use of coking coal.

China’s steel output has flatlined for the past five years around the 1 billion ton per annum level, and most analysts presenting at this week’s Global Iron Ore and Steel Outlook Conference in Perth predicted that production will gradually decline in the next few years.

This is partly because China’s infrastructure and housing construction will ease, but also because China will increasingly use scrap steel in electric arc furnaces to produce new steel products.

While Australia’s iron ore miners may be able to offset the loss of some of China’s demand by selling to newer steel producers in Southeast Asia, it’s likely that the overall market for iron ore will soon decline.

It’s also likely to change in composition, with higher grades of iron ore preferred as these can be more easily used as a feedstock along with scrap in electric arc furnaces.

Higher grades of iron ore can also more easily be upgraded into direct reduction iron (DRI), which in turn can be turned into steel without using coal as a fuel.

Making steel using DRI produced with green hydrogen and renewable energy is one of the ways the industry is thinking of reducing carbon emissions.

Even using natural gas to make DRI can reduce emissions by up to 75%.

The problem is that DRI is tricky to export given it can be volatile, so it tends to be made at the same location as the steel furnaces.

Value chains

So, if Australia’s iron ore miners are thinking of moving up the steel value chain, they would have to find ways of producing DRI and turning it into steel in Australia, using renewable energy.

Another path is upgrading the iron ore into hot briquetted iron (HBI), which is an upgraded form of DRI, whereby the DRI is converted into a compact form using heat.

HBI can be shipped, and can be used in either an electric arc furnace or a basic oxygen unit.

Should Australia’s iron ore miners move to upgrade their product, they will need significant investment, and there is no certainty that the upgraded products will deliver sufficiently higher margins.

For example, if an iron ore miner agreed with its customers in China, Japan and South Korea to supply HBI instead of iron ore fines, this would require significant investment in a clean energy system.

The iron ore miners have been successful in running complex operations at low costs, but setting up a wind/solar power plants, a green hydrogen electrolyser and possibly battery storage as well would be a totally different challenge.

There is also the possibility of exporting iron ore to a third country for processing into HBI, with Gulf countries such as Saudi Arabia a potential destination.

These countries have large quantities of natural gas which could be used to turn iron ore into HBI in a process that would still be more environmentally friendly than using coking coal.

The HBI could then be shipped from the Middle East to customers in Asia.

However, there are several other factors that would come into play, such as steel nationalism.

Many countries see steel as a key commodity and want to retain their own industries. It’s unlikely Japan would want to buy green steel from Australia, but it might be prepared to buy HBI and keep the final process of making steel inside its borders.

The problem for Australia’s iron ore sector is that it has a plethora of options in adjusting to decarbonization and peak steel in China.

But all involve risks and costs, and this is trouble for an industry that has spent the last decade de-risking itself and concentrating on improving shareholder returns.

(The opinions expressed here are those of the author, Clyde Russell, a columnist for Reuters.)

(Editing by Miral Fahmy)

The most-traded May iron ore contract on China’s Dalian Commodity Exchange (DCE) ended daytime trade 1.50% higher at 844 yuan ($116.79) a metric ton, for a week-on-week rise of 6.1%.

Average daily hot metal output inched up 0.3% from last week to 2.21 million tons as of March 22, a survey of Chinese steelmakers showed, reversing a four-week downtrend, while profitability climbed to 22.94% from 21.21%, according to data from consultancy Mysteel.

“More mills under equipment maintenance may resume production in April,” analysts at First Futures said in a note.

However, benchmark April iron ore on the Singapore Exchange fell 1.07% to $108.6 a ton as of 0722 GMT, partly pressured by a stronger US dollar, recording a week-on-week increase of 8.7% so far.

“The iron ore market should be relatively balanced and keep prices from falling much below current levels amid low supply growth and demand from other sectors offseting a fall in the residential real estate sector,” analysts at ANZ said in a note.

Other steelmaking ingredients on the DCE gained ground, with coking coal and coke up 2.37% and 0.6%, respectively.

Steel benchmarks on the Shanghai Futures Exchange were largely rangebound. Rebar ticked up 0.7% and hot-rolled coil added 0.53%, while wire rod was little changed and stainless steel lost 0.18%.

“Despite some positive signs, the steel market is still facing certain downside risk as the current steel consumption is still weaker than the same period in the past years and steel stocks remained high,” analysts at Huatai Futures said in a note.

($1 = 7.2267 Chinese yuan)

(By Amy Lv and Zsastee Ia Villanueva; Editing by Varun H K and Shounak Dasgupta)

Column: Iron ore faces China fundamentals and sentiment hurdles

International Resources Holding recently told EMR Capital that it is interested in bidding for the private equity manager’s 80% stake in the Lubambe copper project, which is up for sale, a development that may complicate a sale process that’s already underway, two of the sources said.

The IHC unit’s interest in Lubambe, with potential to be among Zambia’s largest copper mines, comes after Shanghai-listed JCHX, a mine servicing and contracting firm, entered into a deal to buy EMR’s 80% stake in Lubambe in January.

The sale process requires approval from the Zambian government, which is pending and unclear at the moment, one of the sources said.

The Zambian government owns a 20% stake in Lubambe through state-firm ZCCM-IH.

The IHC unit’s interest is spurred by an aggressive push by cash-rich oil majors United Arab Emirates and Saudi Arabia to secure critical metal supply in Africa, as they bid to diversify their economies and engage with energy transition.

Middle East investors are pitted against Chinese companies in Africa, including state backed firms, also aggressively pursuing deals in Africa to strengthen China’s grip on minerals required to power a rapidly expanding domestic electric vehicle manufacturing sector.

EMR Capital’s binding deal agreed directly with JCHX technically precludes it from entertaining any new offers, one of the sources said. Still, EMR is aware that IRH is interested in buying the assets and that the UAE firm has officially informed the Zambian government and ZCCM-IH of its interest, two sources said.

While its interest is now widely known within the Zambian government circles, the UAE firm hasn’t presented a formal offer to EMR on the Lubambe stake, one source said.

EMR declined to comment. IRH and IHC didn’t immediately respond to emailed questions.

IRH has gatecrashed once before. It staged a last minute buyout of a 51% stake in Zambia’s Mopani Copper Mines last month, its first mining deal in Africa’s second-largest producer of the metal that is key to products from power lines and industrial machinery to electric vehicles.

The Abu Dhabi firm became the Zambian government’s preferred investor for Mopani mines ahead of Sibanye Stillwater and China’s Zijin Mining Group, which had been short listed for the assets after a protracted selection process.

Cashing out

EMR, which has owned the Lubambe mine since 2017, wants to exit the project as its funds mature, after Covid delayed its development, the sources said. It also sold a 51% stake in adjacent Mingomba copper project for a sizeable amount to California-based start up KoBold Metals.

EMR still holds a 28% stake Mingomba, alongside Zambia’s ZCCM.

Lubambe, previously owned by African Rainbow Minerals and Vale SA, produced about 15,000 tons of copper last year but needs to raise output to about 2,500 tons a month to become sustainable, it says on its website.

JCHX in January said it proposed to pay $1 for EMR’s 80% stake, and another $1 to take over the project’s $857 million debt.

JCHX did not respond to emailed questions.

Zambia’s ministry of mines did not immediately respond to emailed questions.

(By Felix Njini, Julian Luk, Clara Denina, Melanie Burton, Chris Mfula and Hadeel Al Sayegh; Editing by Veronica Brown and David Evans)

During a two-week meeting of the ISA’s policymaking Council that kicked off on Monday, Brazil’s delegate — speaking on behalf of 29 Latin American and Caribbean member nations — announced the candidacy of Brazilian oceanographer Leticia Carvalho for the position of secretary-general of the organization’s administrative arm, known as the Secretariat. The ISA’s 168 member nations and the European Union will decide on the next secretary-general at what is expected to be a pivotal meeting in July.

“I do believe that this is the most important year for the Authority,” said Olav Myklebust of Norway upon his election Thursday as the president of the ISA Council for 2024.

If elected, Carvalho would likely represent a marked change from the administration of current Secretary-General Michael Lodge, whose second four-year term ends in December. A UK lawyer, Lodge has disparaged environmental opposition to mining deep ocean ecosystems for valuable minerals and drawn criticism for his closeness to mining contractors the ISA regulates.

The choice of the next secretary-general could have significant economic and environmental consequences for deep sea mining, if regulations are ultimately approved. The ISA’s charter gives the person in that role authority over the Secretariat’s operations and its dealings with mining companies. Since member states usually only meet twice a year, the secretary-general would handle day-to-day decisions about how to respond to a mining accident, for example. The secretary-general also personally negotiates the terms of confidential contracts with mining companies.

Pressure is mounting on the ISA to finish its decade-long effort to enact regulations amid growing opposition to mining fragile and biodiverse deep sea habitats for cobalt, nickel and other metals. Lodge, who has worked at the ISA since its establishment in 1994, has not yet indicated whether he’ll seek re-election.

Carvalho runs the marine and freshwater branch of the UN Environment Programme in Nairobi and previously served as a Brazilian federal environmental official.

Greenpeace and other accredited ISA observers haven’t taken a position on Carvalho’s candidacy. “As the regulator of deep sea mining, the head of the ISA — as well as all its members — need to focus on what is threatening the oceans and take action to stop these threats,” Louisa Casson, a Greenpeace deep sea mining campaigner, said from ISA headquarters in Kingston, Jamaica.

The 36-member-state Council is meeting this month amid a flurry of recent developments around seabed mining. On the first day of the gathering, Denmark became the 25th ISA member nation to call for a pause or moratorium on mining due to a lack of scientific knowledge about seafloor ecosystems.

While the US only attends ISA meetings as an observer — it declined to ratify the 1982 UN treaty that gives the ISA jurisdiction over the seabed in international waters — US interest in deep sea mining is growing. The Metals Company (TMC), an ISA mining contractor, has been lobbying US politicians, some of whom are in turn framing deep sea mining as necessary to reduce reliance on China for critical minerals. China controls five ISA exploration contracts that allow it to prospect for minerals, the most of any nation.

There are already signs that the US may be keen to follow in the footsteps of countries like Norway, which in January approved seabed mining exploration in its territorial waters to lessen dependence on China, contravening the advice of government scientists. In the US, Congress included a provision in its most recent defense budget that requires the Pentagon to issue a report on the nation’s capacity to process seabed minerals.

In November, seven Republican congressmen from Texas wrote a letter to Assistant Secretary of Defense Laura Taylor-Kale expressing support for TMC’s proposal to build a seabed minerals facility in the state. A month later, 31 Republican representatives sent a letter urging Defense Secretary Lloyd Austin “to develop a plan to address the national security ramifications of the Chinese Communist Party’s (CCP) interest and investment in seabed mining.”

On March 11, more than 300 former political and military leaders, including Hillary Clinton and three former chairmen of the joint chiefs of staff, signed a letter to the Senate Committee on Foreign Relations urging ratification of the UN treaty that established the ISA so that “American businesses can harvest the strategic critical minerals of the deep ocean floor.” A day after that, two Republican congresspeople introduced the Responsible Use of Seafloor Resources Act of 2024, which would require the federal government to support domestic seabed minerals processing.

At the ISA’s meeting this month, tensions may flare with another accredited observer: Greenpeace, whose activists last year boarded and occupied a ship conducting scientific research for a TMC subsidiary in the Pacific Ocean. After that subsidiary sued Greenpeace, a Dutch judge ultimately ordered the activists to leave the vessel, but preserved their right to protest alongside it.

The incident underscores the role of the secretary-general in handling disputes. Lodge responded to the protest by ordering Greenpeace to stay 500 meters (1,640 feet) from the TMC vessel, but the Dutch judge ruled that the ISA lacked jurisdiction over Greenpeace. Lodge nonetheless doubled down on his claim of authority over protesters in the Pacific in a report to the Council ahead of this month’s meeting.

In a video message shown Tuesday at an ISA side event organized by Greenpeace, UN Rapporteur for Environmental Defenders Michel Forst said international law protects the right to protest seabed mining. “The ISA Secretary General seeking to prevent Greenpeace activists from protesting at sea is yet again another example of the ongoing crackdown on environmental defenders,” he said. “But what is even more shocking is that this happens in an international organization.”

The March Council meeting is the last ISA gathering before the organization’s annual meeting in July, at which the next secretary-general will be elected. At that gathering, all eyes will be on TMC, which has aggressively pushed for the completion of regulations and mounted a global campaign to gain support for deep sea mining.

If regulations are greenlit, TMC would likely be the first company to mine the seabed. One of the company’s ISA contracts is sponsored by the tiny Pacific island nation of Nauru, which in 2021 triggered a provision requiring the ISA to enact mining regulations by 2023. The ISA missed that deadline, and so must start accepting applications.

TMC has said it reserves the right to apply for a mining license after the July meeting, even in the absence of regulations. But any application will require analyzing enormous volumes of scientific data on potential environmental impacts. TMC only recently completed its latest scientific expedition to the area targeted for mining; processing all that data will take time.

“The real goal is to ensure that the mining code and final rules, regulations and procedures are in place before mining would begin,” Craig Shesky, TMC’s chief financial officer, said Tuesday during a company presentation.

(By Todd Woody)

Spot gold set a new record of $2,222.39 during the early hours of trading, before retreating to $2,206.10 by 9:05 a.m. EDT for a 1.0% gain. US gold futures soared 2.4% to $2,208.20.

[Click here for an interactive chart of gold prices]

Gold’s latest rally, which started mid-February, is underpinned by longstanding tailwinds including heightened geopolitical risks and increased central bank buying. This month alone, the safe-haven metal hit new highs on five occasions.

Its rapid ascent, according to Bloomberg columnists, has surprised many seasoned market observers, as there hasn’t been a clear catalyst. What has been partially driving bullion are expectations for looser monetary policy in the US, and that has now been reaffirmed by the Fed.

On Wednesday, Fed chair Jerome Powell continued to highlight officials would like to see more evidence that prices are coming down, but “it’s still likely in most people’s view that we will achieve that confidence and there will be rate cuts,” he said.

“What we saw last night was the green light really for gold traders to come back in,” said Chris Weston, head of research for Pepperstone Group.

“The Fed have said that right now they’re tolerant of the inflation that we’ve seen, they’re tolerant that the labor market strength is not going to be the impediment,” Weston told Bloomberg.

Speculation around the timing of the Fed’s long-anticipated pivot may have provided the trigger for recent gains, with data showing that traders boosted their net long positions on gold in the week through March 5 by the most since 2019.

The metal stands to benefit even more when US interest rates actually do come down, as bullion-backed exchange traded funds look likely to increase their holdings, according to UBS Group.

On the geopolitical front, there are a number of risks boosting gold’s allure as a haven asset: Russia appears to be gaining the upper hand in its war in Ukraine, the Israel-Hamas conflict continues unabated and has led to a re-routing of global shipping, while the US presidential election at later this year could prove massively consequential for markets.

Chinese buying has also underpinned prices. As well as the central bank, people have been stocking up on coins, gold bars and jewelry to safeguard their wealth from a years long property downturn and losses in the country’s stock market.

(With files from Bloomberg)

While China’s total coal imports over January and February surged 23% year-on-year to 74.5 million tons, Russia’s sales fell 22% to 11.5 million tons, according to the latest customs data. Import levies were restored at the start of the year, although other major suppliers like Indonesia and Australia aren’t affected due to free-trade agreements with Beijing.

The tariffs were removed in May 2022 to guard against supply risks after Moscow’s invasion of Ukraine roiled global energy markets. That helped pave the way for record imports last year, which included an increased portion of Russian coal shunned by other buyers. Now, policy has shifted to protecting China’s mining companies from the consequences of a glut after domestic output also rose to an all-time high.

Russia is still China’s No. 2 supplier after Indonesia, but the threat of trade actions could start to affect its eastward flows.

The US put sanctions on Russian coal exporters including Suek JSC, the nation’s biggest producer of the fuel, and Mechel PJSC in February. That’s curbing interest from buyers in China, worried about being hit by punishments that could involved restricting their access to shipping or banking services.

“Russian imports may stay at current levels, given the political uncertainties,” Feng Huamin, an analyst at the China Coal Transportation and Distribution Association, said at a media briefing on Wednesday.

Smelters including Jiangxi Copper Co. and Tongling Nonferrous Metals Group Co. will meet in Shanghai next Thursday, according to people with knowledge of the matter. The agenda includes the outlook for the concentrate market, and setting guidance for spot processing fees in the second quarter, said the people, who asked not to be named discussing a private matter. Attendees may also discuss output plans.

Smelters in China, the world’s largest refined copper producer and consumer, are at a critical juncture after so-called treatment and refining charges — the amount they are paid to convert concentrate into metal — collapsed. The plunge has been driven by a slew of supply setbacks at global mines, coupled with a relentless expansion in Chinese capacity that’s boosted competition.

The meetings convened by the Copper Smelters Purchasing Team are held each quarter for smelters to set so-called floor prices to guide them in their separate negotiations for concentrate supplies from miners. The upcoming one follows talks between companies and the government about possible production cuts and capacity controls, news of which helped to boost refined prices.

Read More: China’s copper smelters vow capacity controls after fees plunge

China’s refined copper production, which accounts for about half of the world’s total, has eased from the record levels posted toward the end of last year. Output was at 2.215 million tons in the first two months of 2024, or nearly 37,000 tons a day, lower than the 38,000 tons recorded in November. Still, that represents an 11% increase from a year ago.

Output may fall further in the second quarter as maintenance work peaks and some smelters bring forward their annual repairs, according to analysts.

Benchmark copper futures traded 0.6% lower at $8,925 a ton on the London Metal Exchange at 3:55 p.m. local time. Prices touched $9,164.50 earlier this week, the highest since April, with gains also supported by expectations that the US Federal Reserve will soon cut interest rates.

Representatives from Jiangxi Copper and Tongling Nonferrous declined to comment.

The projection comes on the back of record output in 2023, when the world’s largest coal consumer mined 4.66 billion tons of the polluting fossil fuel.

The China Coal Transportation and Distribution Association (CCTD) expects domestic coal prices to decline at an accelerated pace, partly due to weakness in its real estate markets, said Feng Huamin, senior analyst at CCTD’s research department.

Feng pointed to government orders to suspend infrastructure projects in some heavily indebted provinces as one of the key reasons for the pressure on prices.

Declines in property investment and sales in China have slowed amid government efforts to arrest a protracted downturn in the sector, but analysts were wary of calling an end to the pain in the fragile housing markets just yet.

Output from non-fossil sources will add to pressure on thermal output this year, with power output expected to grow in line with its 5% economic growth forecast, Feng said.

“A large portion of forecasting institutions believe that hydropower generation will see clear improvement this year,” Feng said, adding that higher solar and wind installations could help address about 70% of the expected growth in power demand.

Drought-like conditions in key generating regions resulted in China headlining an alarming decline in hydroelectricity output in Asia last year, as its output plunged at the steepest pace in decades.

Some miners have paused production for longer after the Lunar New Year break, sources familiar with the matter said. Feng said a few mines are already at risk of hitting their storage limits due to high inventory levels.

Separately, the top coal producing hub of Shanxi is expected to cut output by 40 million tons this year, partly due to a slew of accidents in the recent past, Feng said.

Shanxi saw mine accident-related deaths surge over 50% in 2023, pushing the mining safety regulator to issue a notice last month asking mines to curb overproduction to prevent accidents.

However, power use by industries during the first two months of 2024 grew at a surprisingly high 9.7%, Feng said, a trend which could push stockpiles lower if it continues.

(By Colleen Howe and Sudarshan Varadhan; Editing by Jacqueline Wong and Miral Fahmy)

The most-traded May nickel contract on the Shanghai Futures Exchange (SHFE) closed day-time trade 2% lower to a nearly two-week low at 136,450 yuan ($18,953.23) per metric ton.

The most-traded April tin contract fell 2.6% to 224,430 yuan per ton, after dropping as much as 3% – the biggest loss in three months – earlier in the session.

Prices of the metals in London fell on Tuesday after a senior Indonesian mining ministry official said the country had issued production quotas of 152.62 million tons of nickel ore and 44,481.63 tons of tin so far this year, and was working to accelerate the approval process.

The delayed issuance had sparked fears of supply tightness, supporting prices over the past few months.

“Signs of faster approval and better supply offset recently improved demand supported by better stainless steel production,” Hongyuan Futures analysts noted.

Nickel, a key metal for stainless steel and battery production, is plagued by a global supply glut. An executive at Vale said on Tuesday the market would swing to a deficit by 2028.

Three-month nickel on the London Metal Exchange rebounded 0.4% to $17,465 per ton by 0821 GMT, while LME tin was down 0.3% at $27,365 per ton.

Overseas sales rose to 6,275 tons in January and 10,722 tons in February, according to the latest Chinese customs data. Volumes in December had plunged to 3,973 tons. China’s exports averaged about 17,000 tons a month in the year through October, suggesting that the government’s drawn out approvals process continues to impede trade flows.

The export restrictions are generally viewed as Beijing’s response to trade barriers raised on Chinese products by Western nations. The curbs were announced just days after the US stepped up efforts to keep advanced semiconductor chips out of China.

And tensions are ratcheting up. The Biden administration is considering blacklisting a number of Chinese semiconductor firms linked to Huawei Technologies Co., after the telecom giant notched a significant technological breakthrough last year, according to people familiar with the matter.

The most-traded May iron ore contract on China’s Dalian Commodity Exchange (DCE) ended daytime trade 5.35% higher at 827 yuan ($114.87) a metric ton, the highest since March 13.

The benchmark April iron ore on the Singapore Exchange rose 2.91% to $106.9 a ton, as of 0743 GMT, also the highest since March 13.

“The rise in fixed asset investment should help support steel demand,” analysts at ANZ said in a note.

Fixed asset investment expanded 4.2% in the January-February period from the same period a year earlier, official data showed on Monday, versus expectations for a 3.2% rise.

Also, signs of stabilizing futures prices the day before encouraged some mills to re-enter the market to procure portside cargoes, with the increasing liquidity in the spot market, in turn, boosting sentiment, analysts said.

Transaction volumes of iron ore at major Chinese ports climbed by 66% from the previous session to 1.06 million tons, data from consultancy Mysteel showed.

“We expect hot metal output to touch the bottom this week,” analysts at Galaxy Futures said in a note.

“Steel demand from the infrastructure sector will likely see an obvious increase in either late March or early April, so we do not think we should be so bearish about the construction steel market,” they added.

Other steelmaking ingredients on the DCE also registered gains, with coking coal and coke up 3.59% and 2.49%, respectively.

Steel benchmarks on the Shanghai Futures Exchange were higher. Rebar gained 2.85%, hot-rolled coil climbed 2.99%, wire rod rose 2.14% while stainless steel was little changed.

($1 = 7.1993 Chinese yuan)

(By Zsastee Ia Villanueva and Amy Lv; Editing by Mrigank Dhaniwala and Sohini Goswami)

In a paper published in the journal Nature Communications, the UB scientists present a global atlas of unburnable oil. This map was designed with environmental and social criteria that warn which oil resources should not be exploited to meet the commitments of the Paris Agreement signed in 2015 to mitigate the effects of climate change.

The atlas reveals that to limit global warming to 1.5°C, it is essential to avoid the exploitation of oil resources in the most socio-environmentally sensitive areas of the planet, such as natural protected areas, priority areas for biodiversity conservation, areas of high endemic species richness, urban areas and the territories of Indigenous peoples in voluntary isolation.

It also warns that not extracting oil/coal resources in these vulnerable places would not be enough to keep global warming below 1.5°C as indicated in the Paris Agreement.

New roadmap

In this context, the unburnable oil atlas provides a new roadmap to complement the demands of international climate policy—based primarily on demand for fossil fuels—and to enhance socio-environmental safeguards in the exploitation of energy resources.

“Our study reveals which oil resources should be kept underground and not commercially exploited, with special attention to those deposits that overlap with areas of high endemic richness or coincide with outstanding socio-environmental values in different regions of the planet,” lead researcher Martí Orta-Martínez said in a media statement. “The results show that the exploitation of the selected resources and reserves is totally incompatible with the achievement of the Paris Agreement commitments.”

Orta-Martínez pointed out that there is now a broad consensus among the scientific community to limit global warming to 1.5°C to avoid reaching the tipping points of the earth’s climate system, such as melting permafrost, loss of Arctic sea ice and the Antarctic and Greenland ice sheets, and forest fires in boreal forests.

“If these thresholds are exceeded, this could lead to an abrupt release of carbon into the atmosphere – climate feedback – and amplify the effects of climate change and trigger a cascade of effects that commit the world to large-scale, irreversible changes,” he said.

Carbon budget nearly exhausted

To limit average global warming to 1.5°C, the total amount of CO2 emissions that must not be exceeded is known as the remaining carbon budget. In January 2023, the remaining carbon budget for the 50% chance of keeping warming to 1.5°C was about 250 gigatonnes of CO2 (GtCO2).

“This budget is steadily decreasing at current rates of human-induced emissions—about 42 GtCO2 per year—and will be completely used up by 2028,” Lorenzo Pellegrini, first author of the article, said.

Pellegrini noted that the combustion of the world’s known fossil fuel resources would result in the emission of about 10,000 GtCO2, 40 times more than the carbon budget of 1.5°C.

“In addition, the combustion of developed fossil fuel reserves – that is, those reserves of oil and gas fields and coal mines currently in production or under construction – will emit 936 GtCO2, four times more than the remaining carbon budget for a global warming of 1.5°C,” co-author Gorka Muñoa said. “The goal of no more than 1.5°C global warming requires a complete halt to exploration for new fossil fuel deposits, a halt to the licensing of new fossil fuel extraction, and the premature closure of a very significant share (75%) of oil, gas and coal extraction projects currently in production or already developed.”

With this prospect, the authors call for urgent action by governments, corporations, citizens and large investors such as pension funds to immediately halt any investment in the fossil fuel industry and infrastructure if socio-environmental criteria are not applied.

”Massive investment in clean energy sources is needed to secure global energy demand, enact and support suspensions and bans on fossil fuel exploration and extraction, and adhere to the fossil fuel non-proliferation treaty,” the team concluded.

That represents a fall 1.6% from 63,000 tons of the first batch of such quota in 2023, which was issued last April.

China issued a total of 111,000 tons of mining quotas for tungsten concentrate in 2023, a year-on-year rise of 1.8%.

The tungsten quota came after Beijing set early in February its first batch of rare earths mining quota for the year at 135,000 tons, 12.5% higher than a year earlier.

(By Amy Lv and Andrew Hayley; Editing by Muralikumar Anantharaman and Christian Schmollinger)

Coal production dropped 4.2% from a year earlier to 705 million tons for January and February combined, according to data from the National Bureau of Statistics. That’s the first year-on-year decline since September 2021.

Authorities in China put renewed emphasis on coal after a 2021 energy crisis — and the aftermath of Russia’s invasion of Ukraine — made energy security a top priority for President Xi Jinping. Coal output soared to record levels late last year.

Mine safety has become a bigger issue in recent months, with a rising death toll triggering more government scrutiny and forcing a slowdown in output in some key coal hubs.

Still, falling mine output doesn’t yet mean less reliance on coal-fired power, which expanded by 9.7% in the first two months by relying on a burst of imports to offset declining domestic coal supplies. That outpaced overall power generation, and offset softness in renewable power.

The coal numbers were part of China’s broader dump of data on Monday that showed a mixed picture for the economy and for commodities activity.

Oil processing reached record levels for the first two months of the year as refiners cranked up plants to feed a travel boom around the lunar holiday. Steel output edged up, while aluminum production was close to all-time highs.

China combines output data for January and February to smooth out the impact of the Lunar New Year holiday, which this year fell in the middle of last month. The leap year also included an extra day in February.

The most-traded May iron ore contract on China’s Dalian Commodity Exchange (DCE) recouped lost ground and ended daytime trade 0.9% higher at 803 yuan ($111.56) a metric ton, following an 11% week-on-week drop on Friday.

The benchmark April iron ore on the Singapore Exchange was up 3.7% at $103.65 a ton, as of 0835 GMT.

Investment in the property sector, the largest steel consumer in China, slid 9% year-on-year in January-February, compared with a 24% fall in December, official data showed, although it’s still far from levels of reaching stability.

This boosted sentiment to some extent especially after data showed that new bank lending in China fell more than expected in February from a record high the previous month and China’s policy bank left a key policy rate unchanged while withdrawing cash from a medium-term policy loan operation on Friday.

Lifting sentiment, total shipments from Australia and Brazil – two major iron ore suppliers – dropped 12.5% week-on-week to 22.08 million tons in the week ended March 18, data from consultancy Mysteel showed.

Tepid near-term ore demand posed as headwinds to market sentiment and prices, said analysts.

Average daily hot metal output among Chinese steelmakers surveyed fell for a fourth straight week in the week ended March 15, down by 0.6% on-week to 2.21 million tons, according to Mysteel data.

Other steelmaking ingredients on the DCE were mixed, with coking coal up 1.1% while coke was flat.

Steel benchmarks on the Shanghai Futures Exchange were mostly higher on rising raw materials prices.

Rebar ticked 0.3% higher, hot-rolled coil gained 0.7%, stainless steel climbed 1.4%, while wire rod declined 0.3%.

China’s crude steel output climbed 1.6% in the first two months of 2024 from a year earlier, confounding market expectations that production would decline in the low-demand period when many steelmakers carried out maintenance work.

($1 = 7.1981 Chinese yuan)

(By Amy Lv and Andrew Hayley; Editing by Subhranshu Sahu and Sherry Jacob-Phillips)

Weighing as little as one gram, the beans — and other forms of gold jewelry — are increasingly viewed as the safest investment bet for young Chinese in an era of economic uncertainty. It’s part of a larger consumer trend for all things gold — from bullion to beans and bracelets — that has gripped the mainland.

“It’s basically impossible to lose money from buying gold,” reasoned Hong, a college freshman studying computer science in Fujian province who in January began buying gold beans because of their relatively low cost of about 600 yuan ($83) per gram. She has more than two grams of the beans and will continue buying them as long as costs are lower than international gold prices, she said.

Branded as an investment entry point for young consumers, the beans, which come in glass jars, are the latest hot-selling items in Chinese jewelry stores. Generation Z consumers — buffeted by high youth unemployment and the nation’s slide into deflation — are now among the top consumers of gold accessories in the world’s second-largest economy, according to the 2023 China Jewelry Consumer Trends Report by Chow Tai Fook Jewelery Group Ltd. The attraction of gold comes as people pull back on shopping amid months of disappointing growth.

China gold rush

A lack of faith in traditional investments has fueled this new China gold rush.

The nation’s stock market has seen declines after reopening from the pandemic, with one of its key benchmarks dropping to levels last seen in 2018. The country’s middle class is bearing the brunt of a property downturn — while the central bank has lowered a key interest rate four times since December 2021, eating into the return on wealth management products.

Young people are skipping “pleasurable consumption” and instead purchasing “asset-style jewelry” such as gold beans for adornment and investments, said Nikos Kavalis, managing director at the London-based consultancy Metals Focus Ltd.

However, he cautions that it makes no sense to invest in gold beans — or other gold items — because their price is often 10% to 30% higher than the commodity’s spot price. Investors would be better served by parking money in gold ETFs, he said.

Still, the fascination with gold is sweeping across social media. On Weibo, the Chinese equivalent of X, formerly Twitter, the hashtag “Why Are Young People Getting into Buying Gold” garnered 91 million hits. A lively discussion about the enduring value of gold dominates the social media site, with one popular post stating that “buying gold keeps troubles at bay.”

Three-quarters of gold consumers are now estimated to be between 25 and 35 years old and many believe investing in gold is low-risk, according to a 2021 report from the World Gold Council. That belief is reinforced as gold prices have hit multiple historic highs since December. Gold bullion passed the $2,100 per ounce threshold for the first time this month.

Sales of gold, silver and jewelery reached a six-year high in December, a 29.4% year-on-year jump, according to government data. Precious metals now represent one of the fastest-growing consumer markets in China.

Buying gold beans for gifting and investments also reached a peak during China’s lunar new year, says a spokesperson from Chinese jeweler Luk Fook Holdings International Ltd.

Even banks have joined traditional gold retailers to sell gold beans. China Merchants Bank Co., for example, introduced its line of gold bean sets in July 2023.

“Despite the recent surge in China’s gold price, consumers are still demonstrating a strong preference for gold,” said Cindy Yeung, chairwoman and managing director of Emperor Watch & Jewellery Ltd. Like other major jewelry retailers, Emperor is talking up gold on social media and e-commerce platforms.

Impure beans

There are perils for consumers of gold beans and other gold objects who aren’t knowledgeable about the difference between authentic gold and fakes, experts say.

Lily Chen, a 26-year-old Shanghai office worker, discovered almost all of the gold beans she had purchased were mixed with iron, zinc and copper when she recently tried to exchange them for a gold bracelet.

“I never tried cutting corners by buying gold at ultra-cheap prices, and I made sure to buy from star-rated web stores. But this could still happen,” she said.

Nonetheless, the craze for anything gold continues to play out on social media. College students are posting diary-like entries on gold purchases, couples share how they repaired strained relationships with gold gifts — and metal resellers and collectors offer gold investing advice.

London Metal Exchange (LME) copper surged by 3.1% on Wednesday, breaking out of its long-standing range. The move extended on Thursday morning to an eleven-month high of $8,976.50 per metric ton.

The trigger for the price break-out is news that China’s copper smelters have agreed to curb output in response to a much tighter-than-expected raw materials market.

Spot treatment charges, which are the fees smelters earn for converting mined concentrates into metal, have collapsed in recent weeks as too many buyers chase too little material.

As the world’s largest buyer of concentrates, China is particularly exposed to the resulting squeeze on smelter margins.

China’s collective reaction has turned the market’s attention from weak global demand to copper’s stressed supply dynamics.

But to what extent it translates into less refined metal supply remains to be seen.

Concentrates squeeze

Smelter treatment charges say a lot about what’s happening in the upstream segment of copper’s supply chain and right now they’re flashing red warning lights.

Spot charges in China tumbled to $11.20 per ton last week, a near 76% drop in just two months and the lowest level since 2013, according to price reporting agency Fastmarkets.

The implosion in processing fees speaks to an acute shortfall of concentrates in the spot market.

The unexpected closure of First Quantum’s Cobre Panama mine at the end of last year has blown a 350,000-ton hole in China’s copper supply chain.

Some Chinese producers are insulated by annual supply deals, which were priced at a benchmark treatment charge of $80 per ton for this year’s shipments.

Others, particularly newer operators, are more dependent on spot supply and have evidently been scrambling to buy replacement tonnage, chasing treatment charges down to unprofitable levels.

In January China’s Nonferrous Metals Industry Association (CNIA) advised, opens new tab the country’s copper smelters they needed “to bring maintenance ahead of schedule or extend the maintenance time, to cut production and to postpone the commencement of new projects.”

Which is what they agreed to do this week at a well-flagged meeting to discuss the unfolding crisis. The collective commitment to curb output is intended to safeguard the “healthy development of (the) global copper smelting industry”, according to state research company Antaike.

Too many smelters

There are no quotas for production cuts among the 19 Chinese operators at this week’s rare meeting. Rather, each producer will make their own assessment of what needs to be done.

In some cases the action has already likely been taken with maintenance downtime brought forward and unprofitable lines shuttered.

An average 11.5% of global smelting capacity was off-line in the first two months of this year, according to Earth-i, which uses satellite imagery to monitor plant activity rates. This is up from 8.6% last year and 8.0% in January-February 2022.

Tellingly, inactive capacity in top producer China averaged 8.3% this year, up from 4.8% last year, a much sharper jump than in the rest of the world.

Some Chinese producers, it seems, either voluntarily heeded the CNIA’s January call for sector restraint or were forced to by market reality.

Moreover, any promised curbs to output must be seen in the context of China’s rapid build-out of copper smelting capacity.

Treatment charges reflect not just the state of mine supply but also the volume of smelter demand.

China started up 780,000 tons of annual smelter capacity last year with another net 150,000 tons due this year, according to analysts at Macquarie Bank. (“Commodities Comment,” Jan. 16, 2024)

Macquarie estimates another two million tonnes of new or expanded capacity is also due to ramp up outside of China this year, increasing the pressure on concentrates availability.

Freeport McMoRan’s new Indonesian smelter, for example, will at full capacity soak up 1.7 million tons of concentrates, material that until now has been available for export.

The dramatic collapse in processing fees is as much a function of this new call on raw materials as it is of mine supply problems.

Sentiment shifts

China’s production restraint may slow but is unlikely to reverse the country’s recent rapid output growth.

The country’s production of refined copper jumped by an eye-watering 13.5% year-on-year to 12.99 million tons in 2023, according to the National Bureau of Statistics.

And while analysts have adjusted their market balance estimates to factor in recent mine losses, most still think the refined market will be in supply surplus this year, albeit to a smaller extent than previously thought.

But market sentiment has palpably shifted.

The weak state of global manufacturing activity, not least in China, has kept copper locked in a sideways trading range for much of the last year.

Macro drivers, particularly interest rate expectations, have dominated the choppy price action.

The concentrates squeeze has refocused attention on copper’s micro dynamics of stretched supply and chronic under-investment in new mines.

Copper’s bull narrative has just been reactivated, even if China’s collective commitment to curb output may promise more than it delivers.

(The opinions expressed here are those of the author, Andy Home, a columnist for Reuters.)

(Editing by Sharon Singleton)

The price of Singapore Exchange iron ore contracts dropped to $110.05 a metric ton on Wednesday, the lowest close since Aug. 31 and down 23.4% from the peak so far in 2024 of $143.60, reached on Jan. 3.

The main domestic benchmark in China, the Dalian Commodity Exchange futures contract fell to 819.5 yuan ($114.04) a ton on Wednesday, a five-month low and down 19.2% from the peak so far this year of 1,014 yuan on Jan. 4.

On the fundamental side of the equation, there are signs that China’s strong appetite for imported iron ore the first two months of the year has moderated in March, and port inventories have swelled.

China, which buys more than 70% of global seaborne iron ore, is on track to import 99.62 million tons of the key steel raw material in March, according to data compiled by commodity analysts Kpler.

Imports may be lower than the Kpler estimate, with LSEG data pointing to arrivals of 91.4 million tons in March, which would be the weakest month since April last year.

Official customs data showed imports in the first two months of 2024 coming in at 209.45 million tons, up 8.1% from the same period in 2023, and giving a daily average of 3.49 million tons.

Even assuming the more optimistic Kpler data for March gives an expected daily import figure of 3.21 million tons, which would be 8% below the rate for the first two months.

One factor that is worth noting is that imports are likely dropping in March because of the high prices that prevailed for much of the first two months of the year, when cargoes arriving this month would have been arranged.

Iron ore in Singapore was still above $130 a ton on Feb. 16, and it is only since then that prices have moderated to the current level.

Stockpiles build

Another reason for the decline in imports is that China’s port inventories have been rising strongly in recent weeks, and are back to what are comfortable levels for this time of year by historic standards.

Stockpiles monitored by consultants SteelHome rose to 138.2 million tons in the week to March 8, up from 134.9 million the prior week.

They are now 31.7% higher than the 7-1/2-year low of 104.9 million tons hit in late October.

The current level of inventories is almost exactly the same as the 138.6 million tons recorded for the same week in March last year.

In addition to softer fundamentals, the iron ore market is being hurt by the worsening sentiment surrounding key parts of China’s economy, including the key residential property sector.

There are fears Beijing isn’t doing enough to stimulate the sector, which has been beset by problems including liquidity issues at major developers and waning interest among buyers.

While senior officials have said they will support the housing sector, it remains to be seen whether any new steps will prove effective.

Outside of construction there are also problems with manufacturing, with the official Purchasing Managers’ Index shrinking for a fifth month in February, coming in at 49.1 points, down from 49.2 in January, and staying below the 50-level that separates growth from contraction.

Overall, the outlook for China’s iron ore demand has darkened after the strong start to 2024, and it will likely take a sustained period of lower prices and improved sentiment to lift the clouds.

(The opinions expressed here are those of the author, Clyde Russell, a columnist for Reuters.)

(Editing by Lincoln Feast)

Copper has surged 5% this week, ending a months-long spell of inertia, as investors hone in on risks to supply at mines and smelters. Tentatively, traders are also warming to the idea that the worst of a global downturn is in the past, particularly for metals like copper that are increasingly used in electric vehicles and renewables.

But signs of the headwinds in traditional industrial sectors are still plain to see in the iron ore market, where futures fell below $100 a ton for the first time in seven months on Friday. Investors are betting that China’s years-long property crisis will run through 2024, keeping a lid on demand.

The steelmaking ingredient has shed more than 30% since early January as hopes of a meaningful revival in construction activity faded. Loss-making steel mills are buying less ore, and stockpiles are piling up at Chinese ports.

[Click here for an interactive chart of copper prices]

Sentiment has soured since the recent National People’s Congress in Beijing, where policymakers set an ambitious 5% goal for economic growth, but offered few new measures that would boost infrastructure or other construction-intensive sectors. The latest drop will embolden those who believe that the effects of President Xi Jinping’s property crackdown still have significant room to run, and that last year’s rally in iron ore may have been a false dawn.

On Friday there were fresh signs that weakness in China’s industrial economy is hitting the copper market too, with stockpiles tracked by the Shanghai Futures Exchange surging to the highest level since the early days of the pandemic. The hope is that headwinds in traditional industrial areas will be offset by an ongoing surge in usage in electric vehicles and renewables.

Further afield, industrial conditions in Europe and the US still look soft, but there’s growing optimism about copper usage in India, where rising investment has helped fuel blowout growth rates of more than 8% — making it the fastest-growing major economy.

For now, the main catalyst fueling copper’s rally is an unexpected tightening in global mine supplies. That’s been driven mainly by last year’s closure of a giant mine in Panama, but there are also growing worries about output in Zambia, which is facing an El Niño-induced power crisis.

Prices spiked on huge volumes on Wednesday after smelters in China held a crisis meeting on how to cope with a sharp drop in processing fees following disruptions to supplies of mined ore. The group stopped short of coordinated production cuts, but pledged to re-arrange maintenance work, reduce runs and delay the startup of new projects.

In the coming weeks investors will be watching Shanghai exchange inventories closely to gauge both the strength of demand and the extent of any capacity curtailments.

“The increase in SHFE stockpiles has been bigger than we’d anticipated, but we expect to see them coming down over the next few weeks,” Colin Hamilton, managing director for commodities research at BMO Capital Markets, said by phone. “If the pace of the inventory builds doesn’t start to slow, investors will start to question whether smelters are actually cutting and whether the impact of weak construction activity is starting to weigh more heavily on the market.”

Copper jumped as much as 2% to $9,066.50 a ton on the London Metal Exchange on Friday, and was trading at $9,030 a ton as of 2:13 p.m. local time. Other metals were mixed, with aluminum gaining 0.6% and lead dropping 1.8%.

Iron ore futures in Singapore held below the key $100 level, trading at $98 a ton.

(By Mark Burton)

President Felix Tshisekedi had sought to re-negotiate the terms of the joint venture to bring more benefits for Congo, the world’s biggest cobalt producer.

Under the revised deal, both parties have agreed that China will invest up to $7 billion in infrastructure projects in the central African country, up from $3 billion in the original agreement.

They have also agreed Chinese partners, including Sinohydro and China Railway group, will pay 1.2% of royalties annually to Congo while maintaining the same shareholding structure.

“Today, at the end of several months of negotiations, we reached this advent,” Minister Muvunyi said at the signing ceremony in the capital Kinshasa

Congo is also the world’s third-largest copper producer and holds significant deposits of lithium, tin, tungsten, tantalum and gold.

(By Benoit Nyemba and Sofia Christensen)

Ambassador Cong Peiwu said the Canadian government is “wrong” to prevent Chinese investors from buying majority stakes in domestic mining companies, like it did in 2022 when it forced three Chinese state-owned firms to divest from a trio of lithium companies.

“Politicizing normal commercial cooperation and using national security as a pretext for political interference is wrong. China has expressed firm opposition to this,” said Cong in an interview with Bloomberg News on Wednesday.

“We’ll continue to do business on the basis of mutual respect and mutual benefit.”

The comments follow remarks by Canada’s Natural Resources Minister Jonathan Wilkinson last week warning miners that Chinese stakes will face strict national security reviews.

Chinese investment has continued to flow through Canada’s mining sector more than a year after Trudeau moved to tighten its foreign ownership rules.

This year alone, Zijin Mining Group Co. initiated plans to buy a 15% stake in Canadian copper company Solaris Resources Inc., Ganfeng Lithium Group Co Ltd. moved to take a 15% stake in Vancouver-based Lithium Americas Argentina Corp. and Yintai Gold agreed to buy gold explorer Osino Resources Corp. for C$368 million ($271 million).

Canadian government officials, speaking on condition they weren’t named, have told Bloomberg they are tracking the issue closely and are considering whether further measures are needed beyond the current national security review regime.

While Wilkinson warned that recent transactions will be subject to rigorous reviews, Cong urged Canada’s government to “respect market laws, rather than shouting slogans against China and waging these wrong-placed accusations against China by over-stretching the concept of national security.”

China has found an ally in Canada’s cash-strapped junior mining firms, some of which have called on Ottawa to relax tougher rules on Chinese investment while the sector struggles to raise capital while commodity prices are low.

China’s investments provide capital to those firms at a time when metals have become an essential ingredient to the global transition away from fossil fuels. Minerals including lithium, copper, nickel and cobalt are key components of electric vehicles, solar panels and wind turbines, though countries like Canada and the US have pushed to build a domestic supply chain to reduce China’s dominance in the global mining industry.

“Critical mining is about those materials to be used in sectors like new-energy vehicles,” said Cong. “That’s good for the whole world. We’re talking about coping with climate change.”

(By Jacob Lorinc and Brian Platt)

CHART: China’s Belt and Road mining investment hits record

The news comes as major Chinese smelters scramble to secure raw material supplies after their profit margins were hit by shortages of copper ore due to mine disruptions and a vast expansion in global smelting capacity.

Top Chinese smelters agreed in a Wednesday meeting to jointly curb production at some loss-making plants as they seek to cope with the supply crunch, sources previously told Reuters.

Shanghai copper prices rallied to a near three-year high on Thursday, buoyed by expectations of lower supply, with North Copper’s share price closing up almost 10%.

(By Ella Cao, Ethan Wang and Ryan Woo; Editing by Mark Potter)

Total options volume spiked to more than 52,000 contracts, according to exchange data. Implied volatility and the call skew jumped, signaling additional bets on higher prices.

Copper jumped the most in more than 16 months on potential supply tightness after news that Chinese smelters discussed potential production cuts aimed at coping with a plunge in processing margins.

With traders sticking to their guns on the Federal Reserve’s rate-cut wagers after a slightly hot February inflation print earlier this week, the outsized move in copper is more of “a bet on the Fed rate action and the dollar weakness. We see aggressive buying on Comex, both outright and options,” said Xiaoyu Zhu, a trader at StoneX Financial Inc

The news of the smelter production cut served as “a catalyst” in the metal’s rally Wednesday and wasn’t surprising after the drop in margins, he said.

Smelters in China, the world’s top refined metal producer and consumer, are facing a crisis after so-called treatment and refining charges — the amount they’re paid to convert concentrate into metal — collapsed. That’s prompted talk of possible output cuts at smelters, which are highly dependent on imported raw materials. The plunge in spot processing fees has been driven by a slew of supply setbacks in the mining industry.

The biggest trade was a $15 million investment in December $4.25/$4.75 call spreads, with futures for that month trading around $4.086 per pound. There was also widespread buying in bullish spreads across April and May options.

(By David Marino and Yvonne Yue Li)

UBS Group AG and Goldman Sachs Group Inc. have trimmed their 2024 supply estimates by 33% and 26%, respectively, while Morgan Stanley warned about the growing risk of lower inventories in China. The revisions come after lithium prices cratered last year as supply ran ahead of demand, with some producers cutting output.

Now, prices of the key material used to power electric vehicles are showing signs of a revival after the rout last year sent stocks spiraling and attracted short sellers. Bets against top producer Albemarle Corp. and Australian miner Pilbara Minerals Ltd. account for more than a fifth of their outstanding shares, or the equivalent to about $5 billion, according to data compiled by Bloomberg.

“Double-digit capacity has already been taken out of the lithium market and that usually is a sign that the commodity price is bottoming,” said Jun Bei Liu, a hedge fund manager at Tribeca Investment Partners in Sydney, who holds a long position in Pilbara. Shorting the company “is very dangerous” given signals of support for the metal’s price.

Pilbara Minerals said Thursday it accepted an offer for a lithium spodumene concentrate cargo ahead of a scheduled digital auction. This fills the company’s offtake book until December, the company said in a statement to the exchange. The contract “is an early sign of price improvement after the commodity’s recent plunge,” wrote Bloomberg Intelligence analyst Mohsen Crofts in a note.

Some short sellers may already have been caught after the two producers each climbed around 20% in February. The Solactive Global Lithium Index, which tracks the performance of 40 of the largest and most liquid lithium-related companies, jumped 10% in the same period, swinging from an almost 20% decline in January.

Investor bets against Pilbara Minerals are hovering around record levels at about 22% of free float, equivalent to $1.8 billion, making it the most shorted stock on Australia’s benchmark equity index, S&P Global data shows. For Albemarle, short interest stands at a similar proportion and represents $3.2 billion in market value.

“We’re seeing improved sentiment so a lot of those short positions will need to be covered,” said Ron Mitchell, managing director of Australian miner Global Lithium Resources Ltd.

Read More: After massive bust, global lithium market shows signs of life

Not everyone is convinced about the rebound, however. The surge in lithium contracts “should not be interpreted as the end of the bear market,” Goldman Sachs said in a note. The surplus remains sizable, it warned.

Still, other analysts expect prices to stabilize after those of lithium carbonate in China slid more than 80% from record highs in 2022. Capital markets firm Canaccord Genuity Group Inc. said in a note earlier this month that “sustainable” levels would soon return, while UBS doubts there will be further declines.

The broker also said the market is re-balancing after some miners curtailed production. Core Lithium Ltd. halted operations at its flagship lithium mine in January and is turning to uranium after a sharp rally in prices for the nuclear fuel. Meanwhile, Arcadium Lithium Plc said it will reduce output of spodumene, a mineral from which lithium is extracted.

“I suspect we are at or close to the bottom in lithium prices,” said Matt Griffin, a fund manager at Maple-Brown Abbott Ltd. in Sydney. “The sign we are looking for to get bullish on the space is an increase in demand — either through EV demand surprising to the upside, or a restocking cycle in the battery supply chain.”

(By Georgina McKay, Richard Henderson and Paul-Alain Hunt)

Benchmark three-month copper on the London Metal Exchange (LME) touched $8,799 a metric ton, the highest since Aug. 1, 2023. It last traded 1.6% up at $8,790 as at 1055 GMT.

Copper for delivery in May rose on the Comex market in New York, touching $4.06 per pound ($8,932 per tonne), up 3.3% compared to Tuesday’s closing.

[Click here for an interactive chart of copper prices]

The rise started on the Shanghai Futures Exchange (SHFE), where copper reached a two-year high of 70,460 yuan ($9,796) per ton.

China’s biggest copper smelters met in Beijing on Wednesday, agreeing on a symbolic cut in loss-making production, without specifying volumes and timing.

“It’s a knee-jerk response to rush in. Interest spiked on SHFE right after the announcement of China’s production cut,” a trader said. “Who will admit they are the first to turn unprofitable?”

Shortages have led to intensifying competition for mined copper concentrates, causing a sharp fall in income for smelters to decade-low levels.

“But it’s important to note that there are around 1.7 million tons per year new ex-China smelter projects that are expected to come online in the second half, which will put more pressure on global concentrate supply,” said Brian Peng, a copper analyst of consultancy CRU.

More global copper smelters were not operating in the first two months of the year than in the same period last year, mainly because of Chinese inactivity, data from satellite surveillance of metal processing plants showed.

However, higher copper prices could further dampen demand in top consumer China, as can be seen in inventories.

Copper inventory in warehouses monitored by SHFE rose steeply to 239,245 tonnes as at March 8 from 30,905 tonnes in the beginning of the year.

Clarity on demand prospects could be provided by China’s loan data due this week, including total social financing numbers, a gauge of future metals consumption.

(With files from Reuters)

Executives from 19 smelters have agreed to re-arrange maintenance work, reduce runs and delay the startup of new projects, the China Nonferrous Metals Industry Association said in a statement, following a meeting in Beijing on Wednesday. The group stopped short of outright production cuts and the statement didn’t give details on the scope of the adjustments.

Smelters in China, the world’s largest refined copper producer and consumer, are at a critical juncture after so-called treatment and refining charges — the amount they are paid to convert concentrate into metal — collapsed to single figures. That prompted firms to meet to discuss how to manage production given their reliance on imported raw materials.

Copper futures fell in London after hitting the highest since April. The contracts surged 3.1% on Wednesday as investors bet on a drop in global supply.

“The market is tightening up anyway, with Chinese smelter maintenance set to peak in April and May,” after some plants brought forward repair work, said Fan Rui, analyst with Guoyuan Futures Co. “Without details on the production cuts, the impact on refined copper output is something that requires further observation.”

Read More: Traders pile into bullish copper options as output cuts loom

Copper was down 0.6% at $8,870.50 a ton as of 3:57 p.m. local time on the London Metal Exchange. Most metals moved lower, while tin rose 0.8%.

The plunge in spot processing fees has been driven by a slew of supply setbacks at global mines, including a government order to shut down a massive operation in Panama. At the same time, the relentless expansion in Chinese capacity has left individual smelters with less work to do.

Capacity curbs

The Chinese government will take steps to control the expansion, according to the association’s statement. It will limit new capacity, including setting a higher bar on the requirements for building smelters, the association said, without elaborating further.

It’s the first official mention of capacity curbs, which are in place for other industries like aluminum and oil refining. People familiar with the matter said last year that Beijing was discussing such plans and seeking industry opinions on how to rein in growth.

Copper prices have also been helped by the possible end to the Federal Reserve’s rate-hike cycle, with swaps traders expecting the central bank to pivot to monetary easing as early as June. The metal has also benefited from demand linked to the world’s energy transition, and the confluence of bullish factors has finally allowed prices to break free from a months-long spell of range-bound trading.

“The rally has come earlier than the market has expected, and it may still have legs,” Li Xuezhi, head of the Chaos Ternary Research Institute, said in a note.

There were no specific rates or volumes set for the cuts and each smelter will make their own assessment of reductions they want to implement, said the sources who were not authorized to speak on the matter and declined to be identified.

The agreement, made at a meeting in Beijing, comes as fees to process copper concentrate on the spot market have dropped to their lowest in more than a decade.

Chinese top producers Jiangxi Copper, Tongling Nonferrous Metals Group, Jinchuan Group and China Copper did not immediately respond to a request for comment.

Chinese smelters have been rapidly expanding their capacity over the past year to get ahead of an expected surge in copper demand from sectors related to the green energy transition such as electric vehicles or wind and solar energy.

But several mine disruptions globally, including the shutdown of the big Cobre mine in Panama owned by First Quantum, have meant copper concentrate is now in short supply.

Spot copper treatment charges (TCs) in China tumbled to $11.20 per metric ton on Friday, representing a 76% drop in just two months and the lowest level since 2013, when pricing rating agency Fastmarkets started publishing the weekly index.

“I think this is a turning point for the continued sharp decline in spot TC/RCs over the last few months,” said Brian Peng, a copper analyst at research and consultancy firm CRU.

Cutting production and extending maintenance shutdowns would help to ease tightness in concentrate supply over the coming months, he said.

“But it’s important to note that there are around 1.7 million tons per year new ex-China smelter projects that is expected to come online in the second half, which will put more pressure on global concentrate supply,” Peng added.

The sources also said that other measures, including using more copper blister in production to lower consumption of copper ore concentrate, were also discussed during the meeting.

Top smelters, acknowledging the shortages, proposed production cuts in a meeting in January but no action took place, according to people familiar with the matter.

China’s refined copper output in the first two months this year climbed 9.2% to 1.75 million metric tons, according to a survey by research house Antaike of 22 producers covering over 80% of China’s total capacity.

Imports of copper concentrate came in at 4.66 million tons for the first two months of the year, up 0.6% compared to the same period a year earlier, customs data showed.

The most-traded copper contract on the Shanghai Futures Exchange hit a 22-month high on Wednesday following the news.

(By Beijing Newsroom and Mai Nguyen; Editing by Kim Coghill and Edwina Gibbs)

The steelmaking material rose on Tuesday after plunging almost 7% in the previous session to below $110 a ton, the first time it’s been under that level since August. Iron ore has lost about a quarter of its value since early January.

Persistent issues facing China’s steel-intensive real estate sector have weighed on demand. The crisis looks far from over, with state-backed developer China Vanke Co. stripped of its investment-grade credit rating by Moody’s Ratings. The agency said credit metrics and liquidity will weaken because of falling home sales and funding uncertainties.

The annual National People’s Congress in Beijing, which concluded Monday, offered few positive signs for investors, and a hoped for pickup in construction activity following the Lunar New Year holidays hasn’t eventuated. Iron ore stockpiles at Chinese ports have swelled to the highest in a year.

Iron ore rose 1.3% to $108.65 a ton as of 2:43 p.m. in Singapore. Futures in Dalian were little changed, while steel contracts in Shanghai climbed.

Base metals were lower on the London Metal Exchange ahead of the release of US inflation data that could impact the timing of the Federal Reserve’s pivot to monetary easing. Aluminum was down 0.3% and copper slipped 0.1%.

(By Jason Scott)

Read More: Aluminum price nears six-week high on signs of seasonally robust demand

On the London Metal Exchange (LME), three-month aluminum touched $2,270 per metric ton, marking its highest level since February 1st.

According to Tom Price, head of commodities strategy at Liberum, there are concerns about demand stemming from increasing inventory levels in China. However, he suggests that this may be attributed to a seasonal trend in anticipation of heightened consumption in the second quarter of this year.

Inventory data reveals that aluminum stocks have surged by 85% this year to 184,358 metric tons in warehouses monitored by the Shanghai Futures Exchange. Meanwhile, stocks in LME’s registered warehouses have seen a 2% increase since the start of 2024, climbing to 577,675 tons.

China’s record aluminum production in 2023 has tempered the upside potential for prices of the metal, primarily used in auto parts and power cables manufacturing.

The ongoing property crisis in China has cast a shadow on the demand for industrial metals. Moody’s recent downgrade of China’s second-largest property developer, Vanke, to a “junk” rating further underscores the severity of the situation.

Tom Price suggests that demand for base metals linked to China’s distressed property sector is more likely to gradually decline over the next two to three years, rather than experiencing a sudden collapse.

(With files from Reuters)

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The spot price of lithium carbonate in China – the key material used to power electric vehicles – has rebounded to the highest level since December following its 80%-plus collapse in 2023. On the Guangzhou Futures Exchange, meanwhile, the most-active contract has jumped by more than a fifth over the past month.

Lithium is a commodity that’s central to the energy transition given its role in batteries, but a global glut torpedoed prices last year as supply ran ahead of demand. Despite the tumult, major producers are keeping the faith, with No. 1 Albemarle Corp. maintaining that low prices are unsustainable, and No. 2 SQM plowing ahead with expansions as it holds onto a positive outlook.

The rout spurred some producers to cut output. Among them, Core Lithium Ltd. has suspended some mining operations to reduce cash costs, citing the “significant decline” in prices.

“The lithium market is rebalancing, with industry curtailing production and projects,” UBS Group AG said in a recent report, while cautioning that a surplus remains. There’s been progress on the overall balance “but we highlight it could be transitory if price sentiment lifts too far, too fast,” it added.

In China, the industry is focusing on speculation that an environmental crackdown in a supply hub could spur disruptions, adding to Western cuts.

Not everyone is convinced about the rebound, however. The rally in lithium contracts “should not be interpreted as the end of the bear market,” Goldman Sachs Group Inc. said in a note. The surplus remains sizable, it warned.

At BloombergNEF, analyst Allan Ray Restauro was also wary. “The near-term price gains are likely immediate impacts of the environmental crackdown in China,” he said. Nothing explicit points to a sustained rally as, despite supply cuts and project slowdowns, supply will top demand, he said.

(By Annie Lee)

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(By Roshan Thomas; Editing by Shounak Dasgupta)

The National People’s Congress, an annual gathering of China’s parliament in Beijing which concludes Monday, failed to deliver gains in the prices of key commodities like iron ore and copper — evidence of a mismatch between Beijing’s ambitious goal for growth and the market’s lack of conviction in the plan to get there.

Expanding the economy by 5% this year is likely to require fiscal stimulus beyond the measures unveiled by policymakers. On the upside, that could yet spur better returns on commodities if the government is forced to buttress growth with more spending on energy and metals-intensive infrastructure.

“The ultimate question will be the willingness of policymakers to defend China’s economic growth target of ‘around 5%’ this year,” Vivek Dhar, analyst at Commonwealth Bank of Australia, said in a note. “We think the goal will be challenging, but if growth undershoots even downside expectations of policymakers, it will likely open the door to more infrastructure-related stimulus.”

The policy focus on getting firms to upgrade industrial equipment and households to swap out old cars and appliances more regularly should help metals consumption, especially if it can give cooling electric vehicle demand a boost and accelerate the expansion of EVs as a proportion of the total fleet.

But the biggest risk remains the crisis-wracked housing market, which means additional private or state spending may only offset the collapse in demand from property.

Beijing’s longer-term bet is that real estate can be replaced by new drivers of demand: EVs, clean energy and high-tech manufacturing — a change that over time is likely to radically alter its approach to raw materials markets and focus policymaking more squarely on greener ingredients.

“There is likely to be little support for demand of commodities such as oil, steel and iron ore,” ANZ Group Holdings Ltd. said in a note. “Instead, metals and critical minerals and cleaner burning fuels such as gas will be highly sought after.”

But in the short term, fretting over growth entrenches the importance of cheap and reliable power. That means sticking with what you know, and for China that’s fossil fuels, and coal in particular.

Beijing’s target to reduce energy intensity this year was set at a relatively modest 2.5%. And for all of China’s world-leading buildout of renewable energy, the government continues to promote coal’s role in the economy. While the country is rapidly approaching peak consumption of the fuel, the period over which it plateaus is likely to be drawn out, according to an official at the national coal association.

Read More: Iron ore price tumbles on persistently weak fundamentals in China

The most-traded May iron ore contract on China’s Dalian Commodity Exchange (DCE) ended daytime trade 5.41% lower at 831 yuan ($115.68) a metric ton, the lowest since Oct. 23, 2023.

The benchmark April iron ore on the Singapore Exchange slid 6.71% to $107.45 a ton, as of 0808 GMT, the lowest since Aug. 22.

A temporary supply glut as a result of better-than-expected shipments so far in the first quarter of the year and weaker-than-expected demand recovery has put intense downward pressure on prices, analysts said.

“The global ore shipments have climbed to a relatively high level. The recent ore price fall has not triggered a production reduction among non-mainstream suppliers,” analysts at Citic Futures said in a note.

“Some mills postponed again the timing of production resumption, curbing ore demand rise and destocking at ports,” they added.

Poor profitability among steelmakers dented their interest in ramping up output, and the weakness in the steel market permeated into the upstream raw materials market, weighing on ore prices, analysts at Everbright Futures said in a note.

Other steelmaking ingredients on the DCE lost ground, with coking coal and coke down 2.65% and 2.04%, respectively.

Steel benchmarks on the Shanghai Futures Exchange were similarly weaker. Rebar slipped 2.41%, hot-rolled coil shed 1.95%, wire rod fell 1.62% and stainless steel surrendered 1.34%.

The weakness in the ferrous market came despite Chinese regulators asking large banks to step up support for Vanke, a state-backed property developer.

Property market in China, the largest steel consumer, has been hit hard by a debt crisis and not yet shown obvious signs of improvement despite various measures introduced by Beijing to revive the sector.

($1 = 7.1838 Chinese yuan)

(By Amy Lv, Andrew Hayley and Zsastee Ia Villanueva; Editing by Mrigank Dhaniwala and Sohini Goswami)

A lack of rich copper resources at home has driven Chinese companies to hunt elsewhere, with an unexpected supply deficit this year adding to the impetus.

“We hope to cooperate with countries and companies globally to acquire a number of near-production, at-production mineral resources with good quality, large reserves and potential,” Xu Bo wrote in response to Reuters‘ questions.

The company will step up cooperation on risky projects with a low exploration rate and great potential, wrote Xu, a delegate of the National People’s Congress at the annual meeting of parliament in Beijing.

China Copper holds the Toromocho Copper mine in central Peru, via its parent company Aluminum Corporation of China (Chalco), the state-owned metal giant.

Smelters in China, the world’s top refined copper producer, were hit by tightening raw material supplies after the closure of the big Cobre Panama mine late last year.

Xu acknowledged the shortages, saying they were a reflection of the still strong demand for copper in China.

There is fast growing demand from the electric vehicle and renewable energy sectors for the metal, which is also widely used in power, transportation and construction.

A few smelters have taken measures amid the shortage of raw materials, Xu wrote, without elaborating.

A state-backed industry association in January advised Chinese smelters to curb their output, bring forward maintenance and postpone new projects.

Over the longer term, the copper smelting industry needs more collaboration, better technology research and market analysis to ensure sustainable development, Xu wrote.

The rapid expansion of Chinese smelters pushed the country’s refined copper output up 13.5% last year to a record high of 13 million metric tons.

Imports of copper ore and concentrate were 9% higher than a year earlier at 27.5 million tons, also a record high, according to official data.

(By Siyi Liu and Colleen Howe; Editing by Kirsten Donovan)

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