Global Copper and Nickel Smelting Activities increase in May

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European copper smelting sees sharp drop
China rebounds strongly in copper and nickel smelting activities

01 June 2022 – SAVANT, the unique geo-spatial analytics product launched in October 2019 by Earth-i and Marex, covers global smelting activity for both Copper and Nickel.
Sign-up here for a demonstration of the SAVANT service.

May 2022 Copper observations include:

That headline global smelting activity increased in May to just below the average of the last two years obfuscates differences at the regional level. It was little surprise that activity in Europe fell to a new 12 month low as the two largest smelters in the region, Atlantic Copper’s Huelva and Aurubis’ Hamburg, both commenced extensive shutdowns during the month. And although of a smaller capacity, we continue to see Zijin Mining’s Bor smelter in Serbia as inactive. In China, activity was consistently above average with smelters encouraged to process imported concentrates due to the precipitous falls in the international copper price in late April and into early May that also saw the arbitrage window open for refined imports onto the mainland, despite the weakening Renminbi. In addition, we note that the Xiangguang smelter has been active since 24 May following a more than two month shutdown and change of ownership. Conversely, we have not seen any evidence of test firing at the new Hongsheng smelter in Hubei since early March and believe that commissioning that was due in June will now be delayed.

  • Global Dispersion Index rose to 49.4, up from 48.7 in April
  • The China Dispersion Index increased by 5.0 pts, the largest rise since November 2021, registering its highest reading since January at 55.5
  • The Europe & Africa Dispersion Index fell again to 37.3, a new 12 month low, while the Inactive Capacity Index rose to 50.0 in the last week of the month
  • The Dispersion Indices in all other regions excluding China also fell
  • Global Inactive Capacity rose by 0.2pts to its highest reading since September 2021 at 20.6

May 2022 Nickel observations include:

With a rebound in activity in China, global smelting activity rose above the two year average for the first time since December 2021. Where we previously noted earlier in the year that as many as 13 plants in Northern China were observed offline, this number has fallen to only 6, all of which have capacities of less than 13kt/a. Activity was also strong in Asia and Oceania, where for the latter all operations appeared active for the entire month. With a majority of these producing class II metal, activity here helped propel ferronickel smelting activity back above 50 so that the indices for all three of the metal grades (refined nickel, ferronickel and NPI) are now above the average for the first time since January.
And despite Europe registering a relatively high Inactive Capacity average for May, by the end of the month all operations in the region were seen as active.

  • Global Dispersion Index rose to 53.0, up from 49.1 in April and the highest reading since April 2021
  • NPI Dispersion Index in China rebounded strongly in May to an average of 54.1 having slumped to 40.8 in April
  • The Dispersion Index for Asia & Oceania averaged 76.5, narrowly missing the all-time high of 77.4 recorded in June 2019
  • The Inactive Capacity Indices in both the Americas and Europe & Africa rose by over 13 points to 20.5 and 33.4 respectively

Dr Guy Wolf, Marex’s Global Head of Analytics, commented: “When the copper arbitrage window opened in the first half of the month following falls in the international price, it was notable how quickly physical markets returned to life, despite the lockdown in Shanghai. With RoW smelting activity subdued so far this year and refined markets in the Atlantic already tight and exchange stocks low, we think there is the potential for further support from onshore – if lockdowns do indeed ease. In the nickel market a rebound in activity comes at a time when demand is a little soft and although NPI activity in China increased in May, our analysis indicates that YTD output is probably running at its lowest level in six years. If Indonesia moves ahead with a tax on low-grade nickel products, this could be highly significant”.

RoW ex China Activity Dispersion Index, Dec 2021 – Present (weekly average)
Capacity Weighted Hotspot Index and Annualised Output Bandings, China NPI 2017 – Present (weekly average)

* – Index values go back to March 2016

The Activity Dispersion Index is a measure of capacity-weighted activity levels observed at smelter sites where a reading of 50 indicates that current activity levels are at average levels. Readings above or below 50 indicate greater or lesser activity levels than average, respectively. The above chart displays these readings as a weekly rolling average.

The Inactive Capacity Index is derived from binary observations of a smelter’s operational status as being either active or inactive. The capacity weighted global and regional indices show the percentage of smelter capacity that is inactive, with readings displayed in the chart below as a weekly rolling average. A reading of zero would indicate 100% smelting capacity.
The SAVANT platform monitors up to 90% of Copper and 96% of Nickel smelting capacity around the globe. Using daily updated sources, including extensive use of geospatial data collected from satellites, the index reports on the activities at the world’s smelting plants offering subscribers unprecedented levels of coverage, accuracy and reliability. This dataset allows users to make better informed and more timely trading decisions.

To find out more please visit SAVANT, or sign-up for the Free SAVANT service.

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Marex is a diversified global financial services platform, providing essential liquidity, market access and infrastructure services to clients in the energy, commodities and financial markets.

The Group provides comprehensive breadth and depth of coverage across five core services: Market Making, Execution and Clearing, Hedging and Investment Solutions, Price Discovery and Data & Advisory. It has a leading franchise in many major metals, energy and agricultural products, executing around 38 million trades and clearing over 193 million contracts in 2021. The Group provides access to the world’s major commodity markets, covering a broad range of clients that include some of the largest commodity producers, consumers and traders, banks, hedge funds and asset managers.

Marex was established in 2005 but through its subsidiaries can trace its roots in the commodity markets back almost 100 years. Headquartered in London with 22 offices worldwide, the Group has over 1,100 employees across Europe, Asia and America.

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