4th March 2022Press

Global Copper and Nickel smelting drops in February

GLOBAL COPPER AND NICKEL SMELTING ACTIVITIES DROP IN FEBRUARY

03 March 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.

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February 2022 Copper observations include:

Global smelting activity dropped in February as all regional Dispersion Indices fell, except South America where the index rose by 1.3 points to 49.7. Of course, China has such a large influence that a seasonal lull in activity with the lantern holidays usually sees a drop in the global index. Since reaching a low point of 39.7 on 18 February, the China Dispersion Index has risen sharply to close the month at 59.7 with only one major smelter observed to be on a period of extended downtime for maintenance. With TC/RCs at good levels and sulphuric acid prices expected to rise as seasonal demand for fertiliser picks up, smelter groups should be incentivised to sustain high levels of activity.

  • Global Dispersion Index fell to 46.3, down from 55.1 in January
  • Unsurprisingly, the China Dispersion Index fell back to 47.7 for the month with reduced activity at the beginning of the month for the New Year holiday, then rose sharply at the end of the month
  • The Global Dispersion Index ex-China also fell significantly to 45.6 from 52.8 in January
  • Europe & Africa saw the largest MoM change with the Regional Dispersion Index falling 18.9 points to 42.6 while the Inactivity Index rose to 15.0 from 8.9
  • There was little difference between Captive and Custom smelters as the Activity Dispersion Indices for both fell back below averages to 48.5 and 44.4 respectively

February 2022 Nickel observations include:

Following a period of low activity during Chinese New Year that saw the country level NPI Dispersion Index fall to only 19.2 on 7 February, NPI smelters have quickly ramped back up after the end of the Winter Olympics on 20 February. The China Inactive Capacity Index closed the month at 21.2 from a high of 55.9 on 6 February, even though the majority of operations in North China are still showing as offline. Investment in new stainless steel capacity in China is expected to lift output YoY, helping to support NPI activity in coming months. The latest observation on 26 February from the Pobuzhsky plant in the Ukraine shows that the ferronickel smelter is active.

  • Global Dispersion Index fell back to 41.6, from 49.5 in January
  • NPI Dispersion Index in China fell to 37.8 in February from 43.6. However the Index surged in the last ten days, finishing the month at 55.9
  • Dispersion Indices in all other regions fell except for Europe & Africa where the regional index averaged 46.3, a rise of 3 points from January

* – Index values go back to March 2016

Dr Guy Wolf, Marex’s Global Head of Analytics, commented: “We were interested observers of nickel price action in February as our observations of extended capacity cutbacks at NPI smelters in China foreshadowed the move back above $25,000/t. Since then, although the China Dispersion Index has moved higher with the end of the Winter Olympics and the traditional post-holiday ramp up in industrial output, we are still seeing a number of smaller smelters as inactive, although the largest at Shandong Xinhai is back running while Jiangsu Delong never stopped.”

Copper Captive & Custom Dispersion Indices, September 2021 – Present (weekly average)

China NPI Activity Dispersion Index, December 2021 – Present

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.

About Earth-i

Earth-i is a geospatial intelligence company using machine learning, artificial intelligence and Earth Observation data to provide unique and relevant insights, derived from diverse geospatial data, that deliver clear decision advantage for businesses, governments and other organisations.

Earth-i provides advanced analytics using automated interpretation of a range of geospatial Earth Observation data sources including colour imagery, colour video, infra-red and radar from a range of sources including satellite, drone, aerial and ground-based sensors. This data is fused with additional data sources to extract factual understanding and generate predictive insights across a range of markets such as commodities, supply chain, agriculture, infrastructure and defence.

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About Marex

Marex is a technology-enabled provider of essential liquidity and associated market infrastructure to participants in global energy, metals, agricultural and financial markets.

The Group provides comprehensive breadth and depth of coverage across four core services: Market Making, Commercial Hedging (both on exchange execution and clearing, and OTC derivatives), Price Discovery and Data & Advisory. It has a leading franchise in many major metals, energy and agricultural products, executing around 35 million trades and clearing over 175 million contracts in 2020. 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 traces its roots in the commodity markets back almost 100 years. Headquartered in London with 19 offices worldwide, the Group has approximately 1,000 employees across Europe, Asia and America.

For more information visit www.marex.com.