October 2020

Jeremy Weir
on the priorities
of Trafigura

Challenges and
opportunities
at the LME
Tube & pipe
market dynamics
Industrial mineral
market trends
October
Features
20 Industrial minerals Spotlights
October 2020

18
Cover story
Trafigura CEO Jeremy
Jeremy Weir
on the priorities
of Trafigura
49 56
Titanium dioxide Market spotlight:
Weir discusses strategic makers aim for a Large-diameter linepipe
priorities at the major Challenges and
opportunities
at the LME steady course Global large-diameter
international trading Tube & pipe
market dynamics
Industrial mineral Price stabilization and linepipe producers are
house
market trends

inventory control are competing in a weaker

bearing fruit for titanium world market
London Metal dioxide and mineral
Exchange 2020 sand producers 61
27 52
Technology spotlight:
Data analytics
Opportunities and Rare earths Business information and
challenges at the LME rejuvenated analytics systems share
Matthew Chamberlain Covid-19 and trade wars the goal of achieving
discusses the challenges are stimulating rare earth bottom-line returns from
and opportunities of a markets wide sources of data
unique year for metal
markets 55 65
36 China’s magnesia hit by
fall in global demand
End-user spotlight:
Automotive
An LME Week Global demand for Growth in the
unlike any other magnesia has dropped electrification of vehicles
How will negotiations with most magnesia in the US is beginning to
and deals usually done prices falling accordingly accelerate
in London during LME
Week fare in a year of
business conducted
digitally?

39 36 27
LME lists for 2020
LME member companies,
approved warehouse
companies, and listed
samplers and assayers
LME

20
GETTY IMAGES

TRAFIGURA

October 2020 | Metal Market Magazine | 3

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October
News and analysis Regulars 10
10 7
Non-ferrous Comment
news review Moody markets
A summary of recent
key developments in
the international non- 69

GETTY IMAGES
ferrous industries Innovations
New developments
in steel and metals 12
12 technology, processes
Steel news review and products
A round-up of important
recent developments
in the global iron and 70
steel sectors End-user
Advances and market
developments in
16
GETTY IMAGES

applications
Base metals and
steel analysis
Fastmarkets MB research
analysts study the drivers
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and steel raw materials
markets
69
VALE

70
HYDRO

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Moody markets
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n the long term, market fundamentals will always Published by Fastmarkets. US reporters: Rijuta Dey Bera, Bill
prevail. Scarce commodities in high demand attract a 8 Bouverie Street,London EC4Y 8AX.
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output or invest in the production of other commodities. Metal Market Magazine:

Fastmarkets IM
Industrial Minerals Editor Europe:
In the meantime, the sentiment of market players Editor: Richard Barrett
Associate editor: Seema Chaudhary
Davide Ghilotti
about the direction and pace at which supply and Advertising Sales:
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Companies that can navigate successfully through the “Companies East/Africa, Asia, UK: Quincy Takyi
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Offices:
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opportunities, will prosper.

navigate North America: George Reeves
Tel: 212 224 3938
New York: Fastmarkets, 1120 Avenue
of the Americas, 6th floor, New York,

Major international trading company Trafigura, successfully E-mail: George.reeves@

fastmarkets.com
NY 10036, USA. Tel: +1 (212) 213 6202.
Toll free: 1 800 METAL 25, Fax: +1

which has group businesses in metals, oil, power & through the Events and client services marketing
manager: Adelaida Montilla
(212) 213 6617
Pittsburgh: 707 Grant Street, Suite 1340,
renewables and shipping, has annual revenue exceeding noise and Tel: 212 224 3937
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$170-billion. In an exclusive interview, CEO Jeremy stay focused fastmarkets.com
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19 Cecil Street, Singapore, 049704
Weir outlines priorities and strategy for the business. on long-term Eva Cichon
Tel: +44 (0)20 7827 5263
Shanghai: Fastmarkets, Room 305,
As a consequence of the Covid-19 pandemic, the trends will E-mail: ecichon@fastmarkets.com
3/F, Azia Center, 1233 Lujiazui Ring
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Production design: Tony Herman,
London Metal Exchange has been obliged to juggle its Tel: +86 21 5877 0857. Fax: +86 21

priorities in 2020 and to make LME Week digital. In a

prosper” Dany Pena and Raveendra Karanth
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Global ores, alloys, minor metals
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and opportunities at the exchange this year. Europe ores, alloys and minor Tel: +44 (0)20 7779 7390
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handy list of LME members, approved warehouse Juliet Walsh
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Tel: UK: +44 (0)20 7779 8260.
USA: (877) 638 2856/(412) 765 3581
companies and listed samplers and assayers, while a Archie Hunter Email: sales@fastmarkets.com
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separate article from the Fastmarkets base metals team EMEA, CIS, Turkey steel editor: RossYeo Global Limited: 8 Bouverie Street,
asks how negotiations on long-term contracts and deals Special correspondents:
Andrea Hotter, Janie Davies
London EC4Y 8AX.
Directors: Leslie Van de Walle
will be done this year when visitors to London will be few. UK and Europe correspondents
and reporters: Cristina Belda,
(chairman), Andrew Rashbass (ceo),
Wendy Pallot, Colin Day, Tristan
Our regular market analysis pages on base metals, Julia Bolotova, Carrie Bone, Hillgarth, Imogen Joss, Tim Collier,
Marina Vertemburg Bozkurt,
steel and steelmaking raw materials, from the Hassan Butt, Declan Conway, Serife
Kevin Beatty, Jan Babiak, Lorna Tilbian

Fastmarkets research team, have been extended this Durmus, Amy Hinton, Julian Luk,
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All rights reserved. No part of this
innovations and end-user pages provide current Justin Yang
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Latin America reporters: Felipe
examples of recent developments. Peroni, Renato Rostás retrieval system, or transmitted,
in any form whatsoever or by any
The energy pipe sector has been far from immune Asia ores, alloys and minor metals
editor: Susan Zou means (electronic, mechanical,

from major market forces this year, as a feature from Asia steel editor: Paul Lim
Senior correspondents (Asia):
Fastmarkets’ expert tube & pipe team illustrates. Our Lee Allen, Alex Theo, Karen Ng
Analysts (Asia): Hui Li, Min Li, Ruby
end-user and technology spotlight sections focus on Liu, Siyi Liu, Amy Lv, Sybil Pan, Carrie
long-term trends in electric vehicle sales and the Shi, Miranda Song, Anna Xu, Sally
Zhang, Jessica Zong
commercial value being distilled from data analytics. Prices manager: Mary Higgins
And the extensive Industrial Minerals section in this Fastmarkets AMM
Managing editor, Americas:
month’s issue illustrates plenty of moody markets for Thorsten Schier
North America non-ferrous editor:
titanium dioxide, mineral sands, rare earth elements and Chris Kavanagh
magnesia as they grapple with market sentiment. North American steel editor:
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October 2020 | Metal Market Magazine | 7

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News review: non-ferrous
Markets cautious on
Tesla move into Si metal
The global graphite market and
the European silicon market
have reacted with caution to
news that US electric vehicle
maker Tesla plans to pursue the
use of silicon rather than
graphite in its battery anode
material.
Tesla plans to use silicon
metal, rather than graphite or
costlier engineered silicon
materials, to make battery
anodes, and announced on
September 22 that it had
overcome the problem of
silicon expanding.
“Silicon stores as much as
nine times more energy than
graphite,” chief executive
officer Elon Musk said during
GETTY IMAGES

Battery Day, a socially

distanced event held outside
the company’s vehicle factory Tesla plans to use silicon metal to make battery anodes
in Fremont, in the US state of
California. Huasheng’s alumina expects to start a project in Alcoa’s direct emissions from
The scale of Tesla’s plans to refinery begins 2021 to bring 45,000-55,000 the bauxite and alumina
ramp-up its battery production tonnes per year (tpy) of new refining process and indirect
means that there will still be a production capacity online to minimize emissions from the energy
strong role for graphite, Huasheng alumina refinery in the effects of mineral resource consumers in the process. The
according to one graphite flake Guangxi province of southern depletion. industry average is said to be
producer. China started trial production around 1.2 tonnes of CO2e.
“We are excited by the pace on September 10, having come Alcoa launches first low-
of growth here, and still see a online in August, several Vedanta plans to sell
place for graphite in the mix,” sources told Fastmarkets on carbon alumina brand
he said. September 14. Aluminium and alumina Australian copper mine
The alumina refinery has a producer Alcoa has launched Vedanta Resources will divest
total production capacity of the first low-carbon, smelter- its Mount Lyell copper mine in
Ford to be Canada’s 2 million tonnes per year grade alumina brand, chief Tasmania, Australia, after
first all-electric vehicle across two production lines executive officer Roy Harvey aborting a plan to restart the
maker and began construction in announced at the Fastmarkets mine due to restrictions
Ford Motor Co of Canada October 2018. International Aluminium related to Covid-19,
will become the country’s The refinery will reach an Conference. Australian media reported.
first manufacturer of estimated 40,000-50,000 Speaking on September 23, The original plan to bring
all-electric vehicles, starting tonnes of alumina output Harvey said the low-carbon the Queenstown mine back on
in 2024, the company said on within this month, sources alumina brand, EcoSource, line from February 2020 has
September 28. added. will help its customers meet been shelved, with the
Ford will commit Canadian their sustainability goals. company deciding last week to
$1.8 billion ($1.35 billion) to Brazil’s Vale plans to “It is the first [low-carbon put the mine up for sale,
repurpose part of its biggest alumina brand] and a very Australian Broadcasting Corp
car plant in Canada, the expand Ni, Cu capacity unique product offering for (ABC) reported on September
Oakville Assembly Complex, Brazilian miner Vale plans to alumina. It allows our 14, citing West Coast Mayor
and will introduce a new invest in nickel and copper alumina customers to be Phil Vickers.
engine program at another capacity expansions and really thoughtful of the value The Mount Lyell mine was
plant, in Windsor. Both are in mineral resource chain,” he told conference shut in 2014. Prior to closure,
the Canadian province of replenishment in the coming delegates. it produced 73,341 tonnes per
Ontario. years, the company disclosed in EcoSource is produced with year of copper concentrates
The upgrades are part a presentation to analysts and no more than 0.6 tonnes of and was a key source of raw
of a three-year deal ratified investors on September 16. CO2 equivalents (CO2e) per materials for Vedanta’s
with Canada’s Unifor labor At its nickel operations in tonne of alumina. This 400,000-tonne-per-year
union. Canada, the mining company measurement includes copper smelter in India.

10 | Metal Market Magazine | October 2020


Wanbao Mining’s Pumpi
project produces first
copper cathode
Wanbao Mining’s Pumpi copper
and cobalt project in the
Democratic Republic of Congo
(DRC) produced its first batch of
copper cathode on September
13, the company said.
The Pumpi copper and
cobalt project aims to produce
40,000 tonnes per year of
copper and 5,000 tpy of cobalt,
Wanbao Mining said. “While
[copper] production this year is
estimated to be 6,000-10,000
tonnes,” a source at the
company told Fastmarkets.
The project is located in the
Kolwezi territory of DRC’s
Katanga province and contains
five deposits of Pumpi Nord,
Pumpi Gare, Pumpi GareSud,
Kamassami Simba, and
Kamassani Est, with total
copper and cobalt resource
reserves estimated to be around
666,000 tonnes and 117,000
tonnes, respectively.
Covid exacerbates BHP’s
Escondida grade battle
The world’s top producing
copper mine is still in the midst
of a grade problem, and
Covid-19 is making that harder
to counteract.
Output at Chile’s Escondida,
which contributes almost 6% of
global copper supply annually,
will fall for the coming two
years, primarily due to lower
grades of ore being processed
there, majority owner and
operator BHP said in its annual
results this week.
The mine will produce
between 940,000 tonnes and
1.03 million tonnes of copper in
the September 2020-21
financial year, a minimum of
155,000 tonnes lower than this
year and the lowest since the
mine endured the world’s
longest strike in 2017.
“Lower volumes reflect the
need to continue to balance
mine development and
production requirements with
processing capacity at
concentrators and leaching
plants, as a result of a reduced
operational workforce due to
Covid-19,” BHP said in the
results, adding that annual
guidance of 1.2 million tonnes
over the next five years was
unchanged.
First Solar, Toshiba ESS to
build two solar plants
First Solar Japan and Toshiba
Energy Systems & Solutions
Corp (Toshiba ESS) have
agreed to construct two mega
solar projects in eastern Japan’s
Tochigi Prefecture, Toshiba
ESS said in a release on
September 16.
The two plants, with an
integrated capacity of nearly
60 MW, will start operating in
April 2023 and will use First
Solar’s photovoltaic modules.
The electricity will be sold to
Japan’s Tepco Power Grid
under a 20-year feed-in-tariff,
which is a policy designed to
promote renewable energy
sources by providing a
guaranteed, above-market
price for producers.
Terrafame to run world’s
largest nickel sulfate plant
Finnish nickel producer
Terrafame continues to lead the
charge in the quest for
responsible battery chemical
production, announcing on
September 18 that its
BHP’s Escondida copper mine balances mine development
and production requirements with processing capacity at
concentrators and leaching plants, as a result of a reduced
operational workforce due to Covid-19
long-awaited European battery
plant will be operational in
early 2021.
Upon completion, the plant
will be the largest global nickel
sulfate producing facility in the
world with a production
capacity of 170,000 tonnes per
year, equivalent to 1 million
electric vehicle (EV) batteries.
The nickel sulfate hexahydrate
produced there will carry a
carbon footprint 60% lower
than that of current industry-
standard processes, the
company said.
Dutch UTB Industry
acquires LDM’s Drunen
foundry
Netherlands-based machinery
specialist UTB Industry has
acquired Dutch brass
manufacturer LDM’s
processing facility in Drunen,
southern Netherlands, with the
company taking full control of
LDM’s 50,000-tonne capacity
foundry, extrusion facility and
wider real estate.
UTB will assume full control
of LDM’s Drunen assets and
has plans to redevelop the
terrain and buildings and sell
all the remaining equipment.
The takeover includes the
purchase of melting furnaces,
continuous casting plants,
extrusion machinery and a
laboratory, UTB Industry’s sales
manager, Daniel Baris, said.
BHP
Chinese battery
materials maker CNGR
gets IPO approval
The initial public offering
(IPO) by Chinese battery
materials producer CNGR
Advanced Materials Co Ltd
has been approved, according
to a document filed to the
Shenzhen Stock Exchange on
September 23.
CNGR has been given the
green light to be listed on the
second-board market and the
company plans to sell up to
56.97 million shares to
domestic investors.
The battery materials
producer expects to raise
approximately 1.6 billion yuan
($234 million) through the
initial offering, with about 75%
of the capital raised to be used in
a project for a high-performing
lithium-ion ternary precursor
materials production base, the
company said in its prospectus
in April this year.
The official listing will take
place in one to two months, a
source close to the matter told
Fastmarkets.
Rio Tinto to provide
closed-loop recycling
Rio Tinto is to launch its first
closed-loop recycling program,
offering customers in North
America a new scrap take-back
solution and the production of
high-quality alloys made with
recycled content.
The service, which will be
available from next year,
complements the company’s
production of low-carbon
aluminium and is designed to
give its customers greater
choice while they look to meet
increasing consumer demand
for sustainable products.
Rio Tinto will partner with
Shawinigan Aluminium Inc
(SAI) for its recycling services,
through a $7-million melting
facility being constructed
adjacent to SAI’s billet
casthouse in Quebec, Canada.
The facility will have the
capacity to recycle 30,000
tonnes of aluminium per year.
October 2020 | Metal Market Magazine | 11
Newsreview:steel
those countries would likely
NW Pipe to supply “lead to continuation or
Oregon, NC projects recurrence of material injury
Northwest Pipe Co has been within a reasonably
tapped to supply pipe for an foreseeable time,” the
infrastructure project in Commission said.
Oregon and a water The US domestic rebar
transmission line in North industry applauded the
Carolina. decision.
The company will
manufacture more than 3,215
tons of pipe for the Smith
Argentinian crude
Rock-King Way steel output down
Infrastructure Modernization in August
project in Oregon, which will Argentinian crude steel
convert 7.9 miles of production decreased by
NORTHWEST PIPE CO

open-ditch irrigation canals 22.80% year-on-year in

into an underground, closed- August, according to figures
piped system. from the national steel
The project will require Northwest Pipe Co’s conversion to a closed-piped steel system association Acero Argentino.
15,176 feet of 102- and set to reduce water loss and improve safety for Oregon Output totaled 336,300
108-inch diameter tonnes for the month,
polyurethane lined and coated companies announced on compared with 435,500
engineered steel pipe, which September 15.
EU new car sales tonnes in August 2019.
will be used to transport Terms of the merger were stall in August “Because of the Covid-19,
irrigation water in Deschutes not disclosed. A new name for Sales of passenger cars in Argentinian steel-producing
County, Oregon. the consolidated company has Europe slumped again in plants continue to operate
Construction is expected to yet to be announced; Premier August after brief signs of a with safety protocols,” Acero
start October 1 and run Pipe and Pyramid Tubular will revival in July, according to Argentino said.
through April 2022. continue to operate under the latest data from the
their respective brand names European Automotive
in the short term. Manufacturers Association
Nucor forging ahead
Stelco to complete BF The new company will (ACEA). with expansions
reline in early October focus on service and In July, there were signs of a Nucor Corp president and
Stelco plans to ramp up hot technology offerings that pick-up in demand with only a chief executive officer Leon
metal production at the improve efficiency and relatively small overall decline Topalian laid out the timeline
relined and revamped blast environmental footprints for of 5.66% year on year following for upcoming projects,
furnace at its Lake Erie Works its customers, according to six consecutive months of representing investments of
in Nanticoke, Ontario, in early the announcement. double-digit decline. nearly $4 billion, during the
October, the company said. In August, however, the Association for Iron & Steel
The repairs and upgrades trend turned to negative Technology’s AISTech
under way are expected to
JSW plans to resume again and demand for cars Steelmaker of the Year Award
increase hot metal production steelmaking at fell by 18.91% year on year presentations.
by 300,000 tons per year, ex-Aferpi mill in the EU, ACEA said on “Our largest project, our new
decrease the cost to produce JSW Steel Italia, part of Indian September 17. state-of-the-art plate mill in
coils by Canadian $30 per ton steelmaker JSW Steel, plans to Brandenburg, Kentucky, is on
($22.76 per ton) and improve resume liquid steel production track to be operational by the
quality, the Canadian at the former Aferpi mill in
US ITC maintains end of 2022,” he said during the
flat-rolled steelmaker said on Italy by 2025 via construction duties on Turkish, virtual award presentations on
September 14. of an electric-arc furnace Mexican rebar September 16.
(EAF) with financial support The US International Trade
from the Italian government, Commission (ITC) ruled in
Premier Pipe, Pyramid Fastmarkets has learned. favor of maintaining existing
Nucor Nebraska
Tubular to merge Representatives of JSW Steel duties on reinforcing bar steel slates planned
in October Italia presented an industrial from Turkey and Mexico in a outage in October
Oil country tubular goods plan for the Piombino, five-year sunset review, the Nucor has scheduled a
(OCTG) distributors Premier Italy-based mill to the Italian Commission announced on planned maintenance outage
Pipe and Pyramid Tubular – ministry of economic September 16. at its wire rod mill in Norfolk,
both wholly owned development, MISE. The main The ITC determined that Nebraska, to take place in
subsidiaries of Sumitomo focus of the plan is to resume revoking the existing October, a spokesperson for
Corp of Americas – will crude steelmaking operations anti-dumping and the Charlotte, North
merge to form a new company at the site by 2025, Italian steel countervailing duty orders Carolina-based steelmaker
effective October 1, the trade union Uilm said. against rebar imports from confirmed to Fastmarkets.

12 | Metal Market Magazine | October 2020

 “We are taking a planned,
routine maintenance outage
in October,” the spokesperson
said via email on September
16. The spokesperson did not
specify the outage dates, but
another source indicated the
shutdown would last roughly
one week.
The Norfolk facility
produces special bar quality,
merchant bar quality and wire
rod steel products, according
to an employee at the mill.
Schmolz & Bickenbach
to change name
represented.
The company will
immediately apply for
registration of the renaming,
while the stock listing and
valor number at the Swiss
stock exchange will remain
unchanged. The company
became known as Schmolz +
Bickenbach in 1922.
Voestalpine starts
continuous caster
in Austria
Voestalpine has started up a
new bloom continuous caster

Swiss stainless steelmaker
Schmolz + Bickenbach has
had its proposal to change the
company name approved by
shareholders, it said in a press
release on September 21.
The change of name from
Schmolz + Bickenbach AG to
Swiss Steel Holding AG was
accepted by the shareholders,
with 97.92% of the votes
VOESTALPINE
to manufacture highly
advanced end products, the
Austrian steelmaker said on
September 22.
The new continuous
machine for bloom, CC4, at
Voestalpine Stahl Donawitz,
will have capacity of 1 million
tonnes per year and will
replace the existing CC2
machine, which has capacity
of 750,000 tpy and has been in
Voestalpine opens state-of-the-art advanced continuous caster
at the Donawitz, Austria, site
service for 40 years, the manufacture of special rails
company said. for railway infrastructure,
The new €90 million premium wire for the
($106.2 million) CC4 facility automotive industry,
will allow the company to and high-quality seamless
increase the quality of steel tubes for oil and gas
grades used in the exploration.

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October 2020 | Metal Market Magazine | 13

Newsreview:steel
Italy’s crude steel
output was up
in August
Crude steel output in Italy
increased by 9.69% year on
year in August 2020 due to
local steelmakers taking
shorter summer stoppages
because of the Covid-19
lockdown measures in
March-April, Italian steel
association Federacciai said
on September 22.
The country’s crude steel
production amounted to
939,000 tonnes in August, up
from 856,000 tonnes in the
corresponding month of
2019.
It marked the first time so
far this year that Italy’s steel
output has shown positive
dynamics.
NLMK resumes iron
ore concentrate
output
Novolipetsk Steel (NLMK),
the largest steel producer in
Russia, has resumed iron ore
concentrate output at its
Stoilensky mining and
processing plant after two
weeks of downtime due
to an accident, the company
said.
Stoilensky GOK resumed
operations on September 22
in a hot trials mode after
output at the asset was
stopped on September 7
following the accident,
NLMK said.
Restoration work lasted 12
days and was finished two
days ahead of plan, while
repair cost about 250 million
roubles ($3.4 million), the
company said.
Section 232 tariffs
likely to stay:
ArcelorMittal
Section 232 tariffs on steel
and aluminium imports into
the United States will be
difficult to unwind no matter
who wins the presidential
election in November,
following domestic
14 | Metal Market Magazine | October 2020
steelmakers’ plans for new
capacity that seeks to displace
imports, according to a top
executive at ArcelorMittal.
“From the American
perspective, [Section 232]
has been successful because
it has spurred a lot of
investment in the US steel
industry, so to backtrack so
quickly... would be difficult
for either candidate in the
White House,” president and
CFO Aditya Mittal said
during the company’s
second-quarter earnings call
on July 30. “In terms of our
business, clearly we believe
we’re very cost
competitive… and our focus
remains to retain market
share.”
The extra capacity built by
the US steel industry could
pressure the Luxembourg-
based steelmaker’s margins,
Mittal conceded.
USS expects Q3 Ebitda
loss, but beats
forecast
U.S. Steel Corp expects to
report adjusted earnings
before interest, taxes,
depreciation and
amortization (Ebitda) of
negative $100 million for
the third quarter of this year,
the company said on
September 18.
On a diluted per share
basis, the loss was put at
$1.45 for the quarter. This
beats Wall Street’s average
forecast loss of $1.53 per
diluted share, according to
equity analyst estimates
tracked by MarketWatch.
Despite the anticipated
loss, U.S. Steel president and
chief executive officer David
B Burritt expressed optimism
about future earnings.
Klöckner upgrades Q3,
full-year outlook
German metals distributor
Klöckner & Co has upgraded
its third-quarter and full-year
earnings forecasts due to
the steel market’s recovery
from the effects of Covid-19,
the company said on
September 24.
A gradual recovery in steel
demand in the company’s
core markets in Europe and
the United States – along
with improving prices,
especially in September – is
expected to have a positive
effect on Klöckner’s earnings
in the July-September
quarter.
“In the course of the third
quarter, the negative effects
of the Covid-19 pandemic on
Klöckner & Co’s operating
business were further
mitigated,” the company said.
CSN to launch mining
unit IPO
Brazilian steel and iron ore
producer Companhia
Siderúrgica Nacional (CSN)
will launch an initial public
offering (IPO) of its mining
division stock to fund a
$6-billion expansion plan
that will increase capacity to
108 million tonnes per year
(tpy) by 2033, the company
said on September 21.
In addition to expanding
the capacity of its CSN
Mineração subsidiary from
33 million tpy, mostly
through brownfield projects,
the company also expects to
improve iron ore grades in
the coming decade to 67% Fe
content from 62% Fe
in 2019.
ArcelorMittal set to
restart BF No. 3 at
Brazil’s Tubarão
ArcelorMittal will restart
the No. 3 blast furnace at its
Tubarão mill in Brazil’s
southeastern Espírito Santo
state in mid-October after
six months of inactivity,
the company said on
September 22.
By doing so, the steelmaker
will have full nominal
production capacity available
at the site, but the company
will remain operating with
lower utilization rates while
steel consumption is still
gradually recovering in the
country.
Restrictions to curb the
spread of Covid-19 in Brazil
reduced steel demand and led
mills to halt some of their
blast furnaces from late
March. At the peak of
Covid-19-related shutdowns,
the industry had 13 idle blast
furnaces, according to
national association Instituto
Aço Brasil.
Cliffs takes
consolidating role
in US steel
The world’s largest
steelmaker, ArcelorMittal, is
largely decamping from its
assets in the United States
more than a decade after
consolidating a domestic
steel industry decimated by
bankruptcies.
Stepping into the role of
consolidator now is
Cleveland-Cliffs Inc, which a
year ago did not have
steelmaking operations and
this year is slated to spend
billions of dollars to scoop up
mostly integrated mills
across the US Midwest.
Cliffs is now poised to be
the largest flat-rolled
steelmaker in the US and a
top supplier to the domestic
automotive industry
following its $1.4-billion deal
to acquire ArcelorMittal
USA.
DJJ subsidiary buys
Mansbach shredder
David J Joseph Co (DJJ) has
become more self-sufficient
for raw materials in the
Cincinnati region, with one of
its subsidiaries purchasing
metals recycling assets that
include a Kentucky auto
shredder.
River Metals Recycling
(RMR), a wholly owned
subsidiary of DJJ, has
purchased Columbus
Recycling’s metal recycling
assets in Ashland, Kentucky;
Charleston, West Virginia;
and Coeburn, Virginia, the
company announced on
September 28.
Columbus, Mississippi-
based Columbus Recycling
will continue to own and
operate its nine other
facilities in Mississippi,
Tennessee and Kentucky.
Construction solid
for steel, but for
how long?
Construction has remained
strong for the US steel
industry, with
non-residential construction
in particular maintaining its
strength, partially due to the
rise of e-commerce and the
need for distribution centers
and warehouses. But leading
indicators show that this
strength might not continue
through 2021.
“Ahead of the pandemic
there was a very healthy
Marking and
Coding Solutions
for Metals
backlog of projects, and now
what you’ll see is that
backlog winding down over
the next several months and
you’ll have a hard time
replenishing that backlog in
2021,” KeyBanc analyst
Philip Gibbs told
Fastmarkets.
For Reliance Steel &
Aluminum, quoting activity
during the second quarter
remained robust for the
company’s “sweet spot” of
construction projects of four
stories and below, such as
assisted-living facilities,
schools, data centers and
warehouse distribution. “We
have also seen an increase in
certain infrastructure
projects, such as bridges. As
such, we remain cautiously
optimistic,” president, chief
executive officer and director
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the company’s second-
quarter earnings call. US construction industry stays resilient for now
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October 2020 | Metal Market Magazine | 15
Market analysis
Aluminium
The base metal most disconnected with its fundamental reality
As major economies recovered
from Covid-19 lockdowns and as
markets were flooded with
liquidity from unprecedented
government stimulus efforts, the
base metals have enjoyed strong
rallies. Aluminium was one of the
last base metals to begin its
recovery, but after a double-
bottom around $1,450 per tonne
in April and May, the weight of
money lifted even this bloated
market – by 26% to a September
peak of $1,824 per tonne. Now
metals are facing a reality check.
Equity market corrections, a
rebounding US dollar and
geopolitical tensions are
compounding resurgent
Covid-19 infection rates in key
metal-consuming regions like
Europe, which is an ominous sign
for the northern hemisphere
Copper
Price outlook remains bullish as deficit is likely to re-emerge in 2021
Copper has been the
top-performing base metal this
year, rallying 57% from its March
low of $4,371 per tonne to its
September high of $6,875 per
tonne. But bullish momentum has
given way to consolidation in late
Q3, a theme that could dominate
for months if sentiment remains
cautious over the winter due to
Covid-19 concerns. Until now,
while the reflationary macro
forces lifted all metals out of the
pandemic trough in Q1, the
fundamentals have been the
differentiator. Copper’s
fundamentals are the most bullish
with an essentially balanced
market this year and a return to a
global deficit likely in 2021. On
the demand side, China’s appetite
has been strong, as we calculate
apparent consumption growth of
15.5% year-on-year in January-
16 | Metal Market Magazine | October 2020
winter. Aluminium’s LME cash price, $/t
fundamentals were arguably the 2,200
hardest hit in H1 2020 by the
pandemic, which leaves it
2,000
vulnerable. Global aluminium
demand contracted 7.2%
year-on-year in H1 compared 1,800
with an average 4.4% decline for
the other metals – a symptom of 1,600
aluminium’s larger exposure to
LME/Fastmarkets
the automotive sector. The 1,400
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demand destruction is paving the
way for an enormous 4.153
million-tonne surplus in 2020. even in a benign base-case scenario 3.4% recovery in supply, even after
That is equivalent to 6.9% of global that sees the global economy three years of almost no net
consumption – the biggest ratio of avoiding another major virus- growth, but we cannot avoid
all the base metals. At least the related downturn this winter – a another significant 2.202
excess has effectively been situation that has started to look million-tonne surplus next year.
absorbed by the financial increasingly optimistic lately as Such a fundamental background
community through cash-and- infections soar again in Europe. makes it hard to be bullish for
carry deals facilitated by a steady For now, we still model a generous aluminium, which is reflected in
contango. But the outlook is only 6.8% rebound in global aluminium our 2021 annual average base-case
for more oversupply next year, demand in 2021, and a modest forecast of $1,710 per tonne.
August, albeit boosted by LME cash price, $/t
consumer restocking, regional 8,000
government stockpiling, periods
of attractive arbitrage, a
government-driven pick-up in
7,000
infrastructure investment and
scrap shortages. On the supply
side, 2020 has been an exceptional
year of unplanned disruptions, 6,000
with 1.823 million tonnes of mine
production lost due to all causes,
including Covid-19, according to LME/Fastmarkets
5,000
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our estimates. That is twice the
amount of lost production of the
previous two years and equivalent Covid-19 can be avoided, the vulnerable. We think that means
to 9.1% of global supply, well indirect effect of preventative pressure for lower TC/RCs,
above the 10-year average of measures are likely to impact including another reduction in the
6.3%. With major copper mining negatively on productivity in annual benchmark from this
countries, the US, Chile, Peru, 2021. Factors such as revised year’s $62 per tonne/6.2 cents
Mexico and Russia, the worst mine sequencing, postponed per lb. It also means solid support
affected by the Covid-19 maintenance, delayed for LME prices, which we forecast
pandemic, supply disruption risks expansions, reduced workforces, averaging $6,408 per tonne in
are still heightened. Even if capital preservation and 2021, 7.1% higher than the 2020
further disruptions directly from destocking will leave the industry average.
In this regular section, Fastmarkets MB’s base metals research team summarize
their in-depth reports to highlight key factors driving the markets and their
short-term price forecasts. The weekly service, Base Metals Market Tracker,
provides independent analysis and forecasts for base metal markets and prices.

Lead
Potential for a bullish surprise
Alongside aluminium, lead is the
only base metal for which the
liquidity-fuelled Q2-Q3 rally did
not return prices to their start-of-
the-year highs. And the 29% rally
from the March low to the
September high of $2,025 per
tonne was relatively paltry, like
aluminium’s. This is little surprise
in the context of both these laggard
metals being the most exposed to
the automotive market, which was
hardest hit by the Covid-19
pandemic. At the global level, the
motor vehicles and parts
component of industrial
production contracted 25.8%
year-on-year in H1 2020
compared with construction and
electrical/electronic-dominated
indicators, for example, that
declined by 3-7%. As a result,
global refined lead demand fell by
Nickel
Market to rebalance in 2021 after surplus year in 2020
LME nickel had rallied by 46% to
its 2020 high of $15,810 per
tonne in early September, before
retreating to see out the
remainder of Q3 in consolidation
mode in the mid-$14,000s. One
of the main fundamental
standouts of the year has been the
scale of Indonesian NPI
production growth. Output will
reach 547,000 tonnes of
contained nickel, no less than
42% higher than last year.
Production in 2021 could
comfortably rise by a further 35%
to 738,000 tonnes according to
our forecasts. However, there are
more bullish fundamentals in the
nickel market helping to offset
this bearish narrative. First,
Indonesia’s NPI growth is in part
replacing declining output in
China, which is down 15% in the
year-to-date amid ore shortages.
Request your free sample at www.fastmarkets.com
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www.fastmarkets.com
around 6% in H1, outstripping the LME cash price, $/t
fall in refined supply (around 1.5%) 2,300
to lay the foundation of a 309,000-
tonne annual surplus this year.
Demand has been recovering 2,100
incrementally for replacement
batteries as lockdowns ended, for
original equipment batteries as 1,900
carmakers resumed production,
and for stationary batteries for 1,700
back-up power applications as
stimulus spending on LME/Fastmarkets
1,500
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infrastructure projects has come
through, especially in China. We
are forecasting quarterly surpluses LME commitment of traders’ metals have more speculative
narrowing going forward, with data has regularly shown lead to be froth to be blown off, it also means
deficits potentially reappearing at the base metal most overlooked by there is relatively more room in
times in 2021. The annual surplus investment funds this year; lead than in the other base metals
will shrink to 32,000 tonnes next relatively, it has accumulated the for length to be built if fund
year, essentially a balanced market. smallest net speculative long managers warm to this metal’s
If this fundamental outlook comes position of the complex. While this fundamentals. Our base case
to fruition, then there is potentially may insulate it to some extent forecast for 2021 is $1,940 per
significant upside in lead prices. from sell-offs when the other tonne.
China’s NPI imports from LME cash price, $/t
Indonesia have risen 66%. 18,000
Second, Chinese demand from
stainless steelmakers is strong, as 16,000
evidenced by Fastmarkets’
weekly-assessed NPI price rising
14,000
steeply in August and early
September to 11-month highs,
despite the NPI supply surge. 12,000
Stainless production recently hit
LME/Fastmarkets
a record monthly high in August 10,000
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and may well continue to surprise
on the upside if we have
underestimated the strength of outlook still calls for strong shrunk, with growth of -3.6% per
demand created by Beijing’s double-digit growth. Recently, quarter. Finally, it has been a big
infrastructure stimulus. A third Tesla’s chief executive officer year with supply disruptions,
factor offsetting Indonesia’s NPI Elon Musk drew attention to the with 223,000 tonnes of lost
growth surge is the bullish battery need for more battery- production. All told, we think an
narrative. Although the share of appropriate nickel production to oversupplied global nickel
nickel demand accounted for by drive the EV revolution. After all, market this year can swing back
batteries is still only 5-6% (around while year-on-year growth in to near balanced in 2021 and this
143,000 tonnes this year) versus class 2 production since 2016 has should see price gains resume.
around two-thirds for stainless averaged 11.9% per quarter, Our 2021 forecast is $15,750 per
(1.66 million tonnes), the battery battery-suitable class 1 has tonne.
October 2020 | Metal Market Magazine | 17
Market analysis
Tin
Supported by tight fundamentals
The LME three-month tin price
gained 45% from its decade low
in March to its August high
around $18,500 per tonne. A key
bullish theme for tin has been
that global refined production
has contracted more than in any
other base metal so far in 2020;
we estimate a decline of 8.8%
year-on-year across the first three
quarters. While some production
cuts have been due to tighter
concentrate availability (such as
in China), others have been the
result of Covid-19 restrictions
(such as in Peru and Brazil) or
driven by a commitment to
stabilize prices (notably a 30%
cutback by PT Timah in
Indonesia). On the demand side,
global semiconductor sales – a
proxy for solder demand for tin,
Zinc
Mid-table performance
After a slower start than most to
its price recovery from the lows in
March, LME zinc accelerated
higher in July and August to peak
at $2,583 per tonne in early
September. Its gain was 47%,
remarkably similar to the
middle-of-the-road performers
nickel and tin, lagging behind top
performer copper, but
comfortably beating laggards
aluminium and lead. We are
forecasting modest annual
surpluses in the global refined zinc
market both in 2020 and 2021 of
around 170,000-200,000 tonnes
each year. That is equivalent to
1.3-1.5% of global consumption,
which is essentially a balanced
market given its 13-14 million-
tonne-per-year size. Zinc’s
fundamental position is
somewhat mid-table in the base
Analysis by Fastmarkets MB’s research team
18 | Metal Market Magazine | October 2020
which accounts for more than LME cash price, $/t
50% of tin use – have been 23,000
resilient in the face of the
Covid-19 crisis so far this year.
21,000
According to the latest data from
the Semiconductor Industry
Association, sales in the January- 19,000
July period rose roughly 5% year
on year, including by a similar 17,000
rate in the month of July alone.
The World Semiconductor LME/Fastmarkets
15,000
Trade Statistics forecasts an
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increase of 3.3% in 2020 (which is
likely to be revised higher) and
6.2% in 2021. Demand has been 25% so far, and in tin being the or at least remains close to
particularly strong in China only base metal on course to balanced. We think it will
where imports in the year to date register an annual deficit this because demand should remain
are 11 times higher than during year. We think that could mean supported by recovering
the same period last year. And tin prices potentially economic growth. Our base-case
weak supply combined with outperforming in the remainder annual average LME cash price
resilient demand has resulted in of the year and in 2021 if the forecast for 2021 is $17,811 per
exchange inventories declining global market deficit continues tonne.
metals’ bullish/bearish hierarchy, LME cash price, $/t
not dissimilar to its relative price 3,000
performance. Importantly for
zinc demand, while China was the
first country to be significantly hit 2,500
by the Covid-19 pandemic, its
economy is leading the global
rebound, boosted by monetary
2,000
stimulus and investment in
traditional and ‘new’
LME/Fastmarkets
infrastructure. In fact, the outlook 1,500
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for China’s recovery has been
upgraded recently, with Oxford
Economics, for example, now
forecasting China’s economy the base metals. Zinc’s or 6.8% of global supply, and this
expanding by 2.5% in 2020, fundamentals have been boosted figure could edge closer to 1
compared with a growth forecast from a supply-side perspective million tonnes should the 225,000
of only 0.8% in June. We see zinc too this year, with disruptions tonne-per-year San Cristóbal
as a major beneficiary given that being prominent in this market as mine in Bolivia, suspended since
building, construction and they have been in copper, nickel late August due to high local
infrastructure accounts for as and tin. Our tally of unplanned Covid-19 infection rates, remain
much as two-thirds of zinc zinc mine production losses closed. Our 2021 price forecast
demand – the highest ratio of all stands at around 885,000 tonnes stands at $2,200 per tonne.
In this regular section, Fastmarkets MB’s base metals research team summarize their in-depth reports to
highlight key factors driving the markets and their short-term price forecasts.
Request your free sample at www.fastmarkets.com
Market analysis
Steel Steel raw materials
Rising supply puts pressure on Chinese steel prices Iron ore and coking coal prices are diverging
An uptrend in Chinese domestic Fastmarkets steel indices Iron ore prices into China slid Fastmarkets MB steelmaking raw
120 materials indices
prices came to a halt in September, Jan 2012 = 100
amid falling downstream steel
110 140 Jan 2012 = 100
with both hot-rolled coil (HRC) 100 values, while iron ore Fastmarkets
and rebar prices moving down 90 consumers may also be trying 100
after peaking in the first half of the 80 to offset rising costs related to
70 60
month. 60
complementary raw material,
Chinese producers have been 50 coking coal. Iron ore levels had 20

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Sep 20
struggling with low profitability hit a six and a half year high
Global long products index Asian import HMS No1 cfr
amid rising raw materials prices Steel price index Global flat products index
early in September, but Fines 63.5% cfr main China ports ($/tonne)
and declines in finished steel prices Fastmarkets MB Fastmarkets’ 62% Fe fines Australian hard coking spot fob price (metric)

in September made the situation
even more challenging. Although
iron ore prices started to ease in the
second half of the month after the
62% Fe fines iron ore index briefly
ticked over $130 per tonne, coking
coal prices have been steadily
increasing. Rebar producers’
margins via the blast furnace route
averaged at a $20 per tonne loss
since mid-August up to
September 18, the most
prolonged period of losses since
2016, Fastmarkets estimates
suggest. Eastern China HRC has
been priced at a premium to rebar
since July, but with real-time costs
of hot metal in China over $400
per tonne in September, the
highest level since December
2013, HRC producers’ margins
also slid into negative territory.
The latest demand indicators
have been mixed. New residential
floor space starts, one of the main
indicators of rebar demand,
slowed to a year-on-year increase
of 2.4% in August, compared to an
11.3% rise in July. Flat steel users
largely maintained strong output
growth rates observed in recent
months, although production of
motor vehicles and refrigerators
also declined on a month-on-
month basis in August.
At the same time, steel output
rates outperformed those at end
users, creating supply-side
pressures on prices. Rebar
production continued to
accelerate, moving to a 9.2%
year-on-year rise in August, up
from a 5.3% increase in July, while benchmark dropped at the time
HRC output was up by 9.1% year of writing to the lowest level in
on year in the January-August seven weeks, as it dipped to
period. Increased production led $113.81 per tonne cfr Qingdao
to a rise in inventories, and data on September 23. Similarly,
from the information provider 65% Fe fines of Brazilian origin
Steelhome showed that rebar fell to $127.20 per tonne cfr
stock levels at mills and Qingdao, marking its lowest
warehouses have risen steadily level since early August.
from June onwards and were up by Iron ore prices started to fall
61.1% year on year by following drops in Chinese
mid-September. Flat steel domestic steel values. For
inventories have also been rising example, rebar on an Eastern
since the end of August, with a China ex-warehouse basis shed
small uptick in HRC stocks at $18 per tonne since
producers in mid-September. September 16, to hit $532 per
Fastmarkets expects that the tonne ex-warehouse on
price downtrend in China will be September 23, while
short-lived as demand hot-rolled coil fell to its lowest
fundamentals remain strong and level since late July. Steel
after a seasonal decline prices will prices have been dampened by
start moving up towards the end of climbing inventory levels in
2020. The deceleration in new China, with rebar stock levels
floor starts is not likely to continue rising steadily from June
gathering pace given the onwards, while they were up
supportive monetary by 61% year on year in the
environment for the construction week ending September 11.
sector in China as the recent data Meanwhile, the high steel
showed that new bank loans stocks and recent high iron ore
continued to grow, with a strong prices had seen producer
rise in mortgages issued in August. margins via the blast furnace
Declining iron ore prices might (BF) route average at a $20 per
create bearish sentiment in the tonne loss since mid-August,
market, but given weak margins at the longest period of sustained
Chinese steel producers mills losses since 2016, based on
would try to recoup earlier made Fastmarkets’ estimates.
losses and steel price decreases are In contrast, premium hard
not expected to mirror anticipated coking coal levels have firmed
falls in iron ore. into China, reaching $141.69
per tonne cfr Jingtang on
Analysis by Marina Maliushkina, September 23. This comes as
Fastmarkets MB coal appetite, we understand, is
now gradually picking up in the
rest of the world; particularly in
major destinations for seaborne
coking coal from Australia and
the United States, such as the
European Union, Japan and
India. Moreover, it comes after
a sustained period of low prices
from late May to early
September, which started
when the cfr Jingtang level
dropped by $57 per tonne from
March 20 to May 6, driven by a
reduction in demand from the
regions outside of China amid
the Covid-19 pandemic.
The recent rise in coal prices
have likely further placed
pressure on Chinese steel
producers and encouraged
them to attempt to pressure
down iron ore levels to offset
rising coal levels, with both
raw materials forming a major
part of steel production costs.
China is able to exercise a
greater degree of price
direction on iron ore relative to
coking coal, as it is by far the
leading destination for iron ore
shipments globally, accounting
for 83% and 61% of major
producers Australia and
Brazil’s exports last year,
respectively. While in
contrast, China accounted for
a more modest 28% of
Australian coking coal exports
in 2019.
Analysis by Alexander Kershaw,
Fastmarkets MB

In this section, Fastmarkets MB’s steel and steel raw materials team summarize their in-depth reports to highlight key
factors driving the markets and their short-term price forecasts. We provide several regular services dedicated to the
ferrous markets, providing independent analysis, price forecasts, and supply and demand forecasts.
Request your free sample of these services – www.fastmarkets.com

October 2020 | Metal Market Magazine | 19

Profile

TRAFIGURA

20 | Metal Market Magazine | October 2020

Jeremy Weir
‘First and foremost, we’re a
commercial trading company –
that is the engine room’
Trafigura’s revenue was $171.5-billion in 2019, with group businesses
in metals, oil, power & renewables and shipping. Andrea Hotter
talks strategy with the man at the helm, CEO Jeremy Weir
Jeremy Weir’s career at
Trafigura almost stumbled
before it began. The
Melbourne, Australia-born
geologist-turned-derivatives-
trader was heading to meet one
of the commodities trading
house’s founding partners,
Claude Dauphin, for dinner.
Weir already had an idea in
advance that the dinner was
effectively an interview, on both
sides, for a role at the company.
But a rail strike meant Weir
was delayed, arriving 45
minutes late to the meeting at
Wiltons, a restaurant in Jermyn
Street, London. “I was pretty
embarrassed!” recalled Weir,
now Trafigura’s chief executive
officer. Fortunately, French-
born Dauphin – who had
approached Weir through a
contact – brushed it off, and the
pair had a “great conversation,”
Weir said. Former Trafigura
CEO Dauphin was, Weir
recalled, an “extremely
persuasive, flamboyant and
interesting character.”
The upshot of the meeting
was that Weir took a job at
Trafigura, becoming its head of
metal derivatives trading,
structured products and risk
management. “It [the role] was
probably a little bit different to
what I thought it was going to
be,” he told Metal Market
Magazine. “I had views on what
we could do in asset
management and other things; I
think Claude had wanted me for
another role, but he let me set
up an asset management
business.”
It was 2001, just before
Enron became the largest
corporate bankruptcy in US
history to date and ahead of the
commodities super-cycle that
would lift metals, energy and
agricultural products prices in a
multi-year bull run. For Weir, it
was about time commodities
were in the spotlight.
“I remember being in the City
after the Big Bang of 1986
deregulated the financial
markets, and watching the
boom in equities, bonds, foreign
exchange – everybody had their
go and we were sitting there as
commodity traders wondering
when it would be our time,”
Weir said. “And then the
industry took off. The
companies that were part of
that business, including the
trading houses, really excelled,”
he added.
Weir’s background is in
mining. Born in Melbourne,
Australia in 1964, he has a
Bachelor of Science degree in
Geology from the University of
Melbourne. “I worked [in]
student geology for a while in
central western Australia. Then
commercial roles came up in
the mining sector which I
thought fitted my skills. That
was interesting,” Weir said.
This included a stint as a
marketing executive at
Australian mining company
North Limited, owner of
Electrolyic Zinc Company of
Australasia, which eventually
became Pasminco. It was here
that Weir learnt a lot about
non-ferrous metals and
minerals, including zinc, and
‘We know what became passionate about the
we want to be sector.
When the global producer
in and want to price for zinc came to an end,
be specialists in “nobody knew about hedging”
those areas’ at Pasminco, Weir said; so he
October 2020 | Metal Market Magazine | 21
Profile
Jeremy Weir, appearing at far left here on a visit to one of Nyrstar’s zinc smelters, is bullish on
the prospects for metals
stepped in, assuming a risk
management role. Weir wanted
to travel. He moved to London,
where he worked in derivatives
and ran the company’s hedging
book.
In 1992, as banks started to
expand into base metals and
other minerals, Weir joined
N M Rothschild. Initially, he
was a derivatives trader at the
bank. He later became global
head of metals derivatives and a
director.
“There was an explosion in
what was happening [in metals],
and I moved across to
Rothschild in Australia,
working in risk management,
running books, structured
finance, and doing a bit of
advisory work too,” Weir said.
“I then moved to London,
expanding the role as a main
board director,” he added. It
was while working at
Rothschild that Trafigura
22 | Metal Market Magazine | October 2020
some decisions at Trafigura and
set about establishing a
transition while remaining
active in the business. He
named Weir – nicknamed
‘Kangaroo’ by Dauphin because
the Australian could not speak
French – his successor that
same month.
Weir never expected to be a
future Trafigura CEO – “I
probably nearly got sacked
three or four times!” – but said
he and Dauphin “got along very
well and towards the end
became very close personally.”
“It was a bit of an ‘Oh my
goodness’ moment. I went
home to my wife and I said,
‘Houston we have a problem!’”
he laughed. “The thing is it’s a
big organization and a big
responsibility. People often say,
‘How do you sleep at night?’,
but I have no problem sleeping
at all. You just have to take
everything in your stride.”
The appointment was signed
off by the partners – a group of
individuals Weir works closely
with and has very high praise
TRAFIGURA
for. “Ultimately these
transitions are not easy, but
what I enjoy so much is the fact
that I’ve got some great
partners and it’s a very active
became a client, opening the environment,” he said. “We can
path to the fateful dinner with have all kinds of debates and
Dauphin. sometimes you don’t agree with
a decision, but once there is
The path to CEO consensus, it’s quick and you
Working with Dauphin was, get on with the job and move on
Weir said, “a great run.” Weir to the next thing. From that
became an all-rounder, working point of view, it’s such a
throughout the company’s pleasure, it really is,” he added.
business units, including That approach is part of a
mining, mineral concentrates, DNA instilled by Dauphin
risk management, finance, within Trafigura, Weir said,
mergers and acquisitions, and which is “very critical for the
asset management. success of our organization.”
Having always been on the “When things go wrong, you
metals side, including iron ore need people to sit around a
and coal, Weir expanded his table and talk, and intelligent
role into Trafigura’s oil people will find a way out. What
businesses at a corporate level. you don’t want is having people
“That was probably him ostracized in a corner,
[Dauphin] grooming me, a little victimized and taking three
bit unbeknown to me, to take months to make a decision,”
over his role,” Weir Weir told Metal Market
acknowledged. Magazine.
Diagnosed in March 2014 “The company has grown,
with lung cancer, Dauphin and it’s changed a lot. It’s not an
understood that he had to make organization with a single figure
in charge – it’s a real
partnership, and what I try and
do is guide that partnership and
be a steward of it, amongst
some very intelligent and
driven people. The governance
structure has probably changed
too as it has adapted; the
company has grown up too,” he
added.
Weir said he could “fill a
page” with lessons learnt from
Dauphin, but highlighted
several, including fast decision-
making processes, not being
frightened to make mistakes but
always correcting them
properly, getting out to speak to
people, and remembering that
while the company operates
across different cultures and
continents, it is not a political
or religious organization.
“Wherever it may be, it’s
business. And work hard is the
other thing!” Weir added.
While the work ethic – and
the dinner parties at home – are
common to both men, Weir’s
style is at the same time
different from Dauphin.
“Claude was very much a
hands-on guy; I like to think I’m
hands on and understand the
business in detail, but you’ve
got to give people the autonomy
to make decisions, and delegate
authority so they can get on and
run the business,” he said.
“It is a different style of
management but in today’s
world, adapting is important. It
doesn’t make us [Trafigura] less
efficient – we’re very, very
efficient. I think we [Claude and
I] just worked differently,” Weir
added. Dauphin died in
September 2015.
Trafigura’s evolution
Just as Weir’s career evolved, so
too did the Trafigura that he
joined. The company, founded
in 1993 by several former Marc
Rich top executives, had
struggled in some areas in the
early years as it battled for
business in a fiercely
competitive, over-supplied
commodities environment.
When Weir joined in 2001,
Trafigura reported revenues of
under $10 billion; last year, that
figure was $171.5 billion. The
‘Never fall company now has 80 offices in
in love with 41 countries, with business
assets – if they units in metals, oil, power &
don’t work, get renewables and shipping.
While oil buoyed the business
rid of them’ initially, Trafigura eventually
found a winning formula for its
activities in metals. As the
company evolved, Trafigura
launched private investment
arm Galena Asset Management
in 2003, boosted its trade
financing activities and began
investing in companies and
infrastructure that streamline
and simplify supply chains,
including mining projects,
terminals, storage, production
and processing facilities.
These now include logistics
provider Impala Terminals,
major zinc and lead smelter
Nyrstar, and Trafigura Mining
Group, which operates the
Catalina Huanca lead and zinc
mine in Peru and is active in
Brazil and Cuba.
But Weir told Metal Market
Magazine this evolution should
not be mistaken for a shift
towards a combined trading-
asset ownership model; nor is
the company, which is
exclusively owned by its
management and active
employees, gearing for an initial
public offering.
“First and foremost, we’re a
commercial trading company
– that is the engine room. The
businesses around that are
supplementary to the
commercial businesses. The
fact is, if you really want to go
big time into mining, it’s a
pretty heavy load from a capital
structure point of view, with all
sorts of complexities around it,”
he said.
“Quite frankly, to be big in
mining we’d have to have a
publicly listed vehicle like
Glencore, but we would never
IPO the mothership. We have
no problem with assets being in
a PLC and having partnerships
– but the mothership should be
private. The market does not
understand trading companies’
balance sheets. But the banks
do – they totally get it,” Weir
noted.
“Therefore, the people that
are really deep in and
understand the industry get it.
Those that aren’t don’t get it, so
therefore when the chips are
down and you’re having a bit of
a bumpy period, all of a sudden
you’re facing incoming
[criticism and challenges]
everywhere. I don’t want to be
in that position,” he added.
Instead, the company pursues
what Weir called “almost
commando-style mining” –
that is, it sees an opportunity,
follows it, and once it has
realised the value, exits or part
exits, rotating the capital.
“Never fall in love with assets
– if they don’t work, get rid of
them. If you’ve got a problem
child, you either cut your losses,
or nurse them through and
build them up to what they can
be, which could take years to
implement,” he said. “But the
main driver is we have a certain
amount of capital to allocate to
things and are also happy to
bring in partners; aligned
interests is a very important
part of that process. That
model, to me, works,” he added.
The company’s decision to
invest $2.9 billion in Nyrstar
and become its majority owner
was something of an anomaly
for Trafigura and followed
requests by the smelter’s
creditors, including
bondholders and banks.
Trafigura is now working to
turn Nyrstar around from close
to bankruptcy after a series of
mine acquisitions starting in
2009.
The Nyrstar move was
“opportunistic, defensive, crisis
management,” but ultimately
Trafigura had a position in the
smelter, which was at risk of
going under, Weir noted. “We
had to put a lot of capital into
that company and a lot of effort
to right that ship, and it’s still
taking place. What happens in
the longer term is yet to be
decided, but that’s no different
to any other form of asset we
have over time,” he said, adding
that Trafigura may look to bring
in partners eventually, provided
the framework is correct.
October 2020 | Metal Market Magazine | 23
Profile
“We’re not trying to rule the
world and own or operate
everything. We’re looking
where we can add and create
value, and it’s got to be sticking
to core competencies around
what we do commercially,”
Weir said.
Oil, meanwhile, is a core
pillar for the group, accounting
for two-thirds of Trafigura’s
revenue in the six-month period
ended March 31, 2020. With
daily trade of over six million
barrels of oil and petroleum
products, it is, Weir
acknowledged, “a massive
business” which he finds
fascinating, and includes a
49.3% stake in oil and
petroleum products
distribution company Puma
Energy. The group’s shipping
and chartering business,
Trafigura Maritime Logistics,
meanwhile services its various
commodity trading teams and
third-party clients.
A newer area for the company
is power and renewables, in
which Trafigura is positioning
ahead of an ongoing transition
away from conventional fossil
fuels to gas. It includes a power
and renewables trading desk;
the launch by investment arm
Galena of a Renewables Fund to
be active in solar photovoltaic,
onshore wind, and energy
storage; investment in early-
stage disruptive renewable
technologies including
hydrogen power and alternative
fuels; as well as strategic stakes
in the hydrogen sector. “It’s
very early days, but power and
renewables will be a strong
third pillar over time – it’s a
five-year vision,” Weir said.
Trafigura is not active in
agricultural commodities and
does not plan to be. According
to Weir, “The products
degrade, and with genetics you
see a very different productivity
set; you need a huge amount of
infrastructure. Agricultural
commodities have had a tough
time, quite frankly.”
“Our [product] mix is very
decorrelated, a very good mix,
and if I look across our peer
group, I like our model very
24 | Metal Market Magazine | October 2020
much. I think it’s the right
‘When things model for us and, relatively
go wrong, you speaking, asset light, and
need people private, but with transparency
to sit around a – we’re as transparent as many
PLCs,” he added.
table and talk’
Greater transparency
Shining a light on Trafigura’s
activities is not something that
came naturally, but the
traditionally discreet company
has made a conscious effort over
the past decade to boost its
transparency. It marks a
somewhat unusual move among
its peers, and was, in part,
triggered by what Weir
described as a “very difficult
period” for the company – the
2006 waste-dumping incident
in Ivory Coast.
It began when a contractor
working for Trafigura illegally
dumped residual waste from a
time-chartered tanker, the
Probo Koala, at a series of
landfill sites around the port of
Abidjan, causing residents to
complain of flu-like symptoms
and others to allege more
harmful effects. Dauphin and
two colleagues arrived in Ivory
Coast to help with the
investigation, but were held in
prison for five months in a cell
with locks on the inside to
protect them from attacks.
It took protracted
negotiations and a $198 million
settlement payment to secure
their release. The resulting
international outcry and legal
cases continued for years and
led the company to embark on a
period of self-reflection.
While the issues in the Ivory
Coast were the catalyst for a
change in culture and a
corporate face-lift, Weir said
the increased transparency was
also the desire to look to the
future and ensure the company
was on the right path. “It was a
very difficult period. It was also
an opportunity for a lot of our
competitors to lob ‘bombs’ –
this is not a friendly, let’s sit
around a table and love one
another, type of industry. It’s
pretty hard-nose,” Weir
recalled.
“In the process of reflection
we looked at where we were and
weren’t prepared, and what we
needed to do. We still had to
repair the damage and keep the
business moving forward. But it
wasn’t a case of, after the Ivory
Coast we need to change the
image. It was more about
saying, what went wrong, how
can we address it, and you start
a process and debate things,” he
said.
“That period is in the past,
it’s part of Trafigura’s history
– even with some positives,
because it changed the
organization. We’ve adapted,
moved forward and done things
differently. It was part of a
turning point,” he added.
Trafigura started publishing
company results in 2013 and
took the step of producing its
first annual sustainability
report in 2015. Starting in
April 2015, Weir was also the
first head of Trafigura to speak
in public.
The global nature of the
commodities trading business
has also driven transparency. In
November 2014, Trafigura
became the first privately held
commodities trading company
formally to declare its support
for the Extractive Industries
Transparency Initiative (EITI),
a global standard to promote
the open and accountable
management of oil, gas and
mineral resources.
“When we started to
participate in the EITI in 2014,
one of our peers said, ‘What are
you doing?’ My response is, the
world has changed – and just
because we’re a private
company, it doesn’t mean we
have to stay below the radar
screen either,” Weir said.
“Effectively, we have a role to
play in business, in society and
in the industries we’re
developing. Ultimately what we
should be doing is having best
practices in that.”
According to Weir, this
extends to staff. “People want
to work for a company that is
doing things that are fun,
exciting and pushing the limits
but also at the forefront of
being a responsible business. I
Responding to Covid-19
The Covid-19 pandemic has proven a challenging backdrop for
global markets, which were already roiled by increased volatility
amid trade wars and heightened geopolitics. Trafigura had seen
how the world experienced Severe Acute Respiratory Syndrome
(SARS) in 2002-2003, but early signs from China showed that
Covid-19 looked “very different,” Weir said.
“Trading companies are typically pretty good at managing crises
– it’s in our DNA. Having a very significant Chinese operation, we
saw some very worrying signs and requests for help, which we dealt
with by sending equipment across and doing whatever we could to
help,” he said. “That was a pretty good, clear indication for us of
what to do and of what may happen. You could feel from the
organization, our colleagues and customers, that there was a real
problem,” he added.
Trafigura set up an internal Covid working group during the
second half of January; it started precautionary measures such as
ordering home working equipment, with a key focus on ensuring
employees felt supported at all times. Its work put the company,
Weir estimated, some three or four weeks ahead of the game.
“The company was, unbeknown to what would happen, in
pretty good shape in terms of what was going to eventuate. This is
because what we saw in China was a concern, and we looked at
how we were going to deal with the situation if it rolled out across
the globe,” he said.
“As we saw the whole situation rolling out, and with our analysts,
commercial and finance teams extremely well plugged into what
was happening around the globe, I think we were able to position
the company for what would happen. By being very deep in each
individual commodity and each individual country and being on the
ground, we were then able to see the impacts,” Weir added.
Those impacts did not show a uniform collapse across the
commodities complex, but rather a differentiation within the asset
class as the supply-demand fundamentals for each product varied.
In compliance with local health and safety laws, Weir has
continued working from the Geneva office every day since the
pandemic started. “I’d appear on video calls in April with people
and I remember being asked why I was in a shirt and tie, and I joked
that I was very formal at home,” he said. That month, the company
had its highest traded-volume month in its history.
Planning for a post-Covid-19 environment is impossible, Weir
said, because “our business is about adapting all the time.”
“Yes, we will be different post-Covid, there’s no doubt about that
– but the world will be different too, with different ways of doing
get a lot of feedback from the “Trafigura will continue on this
banks we deal with that say programme, we will continue
we’re leading amongst our to evolve; we’ll make mistakes,
peers in terms of what we do,” but we’ll also improve. At the
he said. end of the day, we’ll be a much,
“Now, there’s a pride factor much better organization for
in that, but also at the end of the it,” he added.
day, for me, it’s good for Weir – who drives a hybrid
business,” Weir added. vehicle during the year and a
fully-electric Mini Moke
Sustainable investing Nosmoke on holiday, “an
The group’s sustainability absolute hoot!” – said the
report is “warts and all,” and the company does not plan to set
programme has buy-in from unrealistic targets for the
partners throughout the future that would be difficult
organization, Weir said. for next-generation
business… We react, but we understand that the situation that we
react to will always change,” he noted.
“I think as an organization we’re coming out very strong, very
focused, and pursuing new opportunities. Actually, I’ve come out of
Covid-19 thinking I’ve never seen more opportunities in a business,
and I think the company is very well positioned in the direction
we’re going,” he added.
These prospects include expanding and developing the existing
business, along with building in new areas such as renewables,
energy-transition materials and power trading. “I don’t think
recovery will come across the board. Effectively you’ve seen central
banks and governments around the world throw all sorts of capital
at this problem and therefore you have a lot of liquidity in the
systems and markets have reacted in a certain, probably
unexpected way,” he said.
Barring a significant geopolitical problem related to trade wars,
Weir remains optimistic that infrastructure development with a
focus on electrification and sustainability will help lead a recovery.
He noted that this will be more likely in Europe and the United
States than in emerging markets, however, which will remain
reliant on fossil fuels.
“I am worried about the fourth quarter of 2020 and the first
quarter of 2021: I just don’t think it’s [the economy] going to snap
back, it’s going to take a lot of hard work to really see a bounce. I
think it’s going to be a very, very tough fourth quarter and probably
first half of 2021,” he said.
What concerns him the most? Impacts on society aside, the
economic recovery, Weir said. “I think Trafigura is well positioned
because, relatively speaking, we’re asset light and we can move our
commercial platform, so that’s a good thing. The other issue
[concerning me] is energy transition, which is critical, along with
climate change: how people adapt to it, and what their expectations
are,” he added.
According to Weir, China has seen its economy spring back, with
the government once again confounding expectations and pulling
levers to revive markets. “You are seeing infrastructure spend, oil
demand, strong copper imports, ultimately there is consumption,
there is very strong demand there. I see China doing remarkably
well, given the current status of the rest of the world,” he said.
Similarly, India – where Trafigura has an almost 700-person office
in Mumbai – remains a key focus for Trafigura, particularly given the
nation’s infrastructure spend, while the company is also focusing on
Africa, where it is active across the company’s business pillars.
management to achieve, but has
and will set “sensible and
achievable targets around the
business we run today.”
Around 80% of the
company’s carbon footprint is
in marine fuels, and the
company is working to
significantly reduce this.
“We’re leading certain
initiatives targeting where we
want to be. If we can accelerate
that, great, we’ll change our
reporting. But we’ll be clear
about what we can and can’t do
and what our objectives are
October 2020 | Metal Market Magazine | 25
Profile
going to be, because it’s what
we should do as an
organization,” he said.
The drive to decarbonization
and the rise of environmental,
social and governance issues to
the top of consumers’ and
investors’ criteria has led Weir
to be bullish on the prospects
for metals like copper, zinc and
aluminium, as well as battery
raw materials like nickel.
The company, which set up a
low-carbon aluminium trading
desk last year, also recently
established a financing platform
of up to $500 million for the
metal, designed to enable
Trafigura to access financing at
a preferential interest rate and,
in turn, to pay a premium to
‘green aluminium’ producers.
Weir also favours power
driven by renewables and
carbon pricing, and said that
while thermal coal is currently
“in the cross hairs” because of
its environmental impact, it still
provides base-load power in
certain areas, particularly
emerging markets.
“Rather than demonize coal,
we have to find a way to say,
‘How we can transition out of it
without killing certain
economies while at the same
time reducing the carbon
footprint?’ This has to be done
in a sensible, logical manner,”
he said.
While there will be a
transition away from oil into
other commodities such as
hydrogen, gas and LNG, Weir
forecasts that demand for oil
will remain, even if capital to
develop new fields is lacking. “It
will require a price to
incentivize the development of
oil fields – you can argue the
same with gas and LNG prices.
Once we eventually get rid of
the supply overhang, oil prices
will start to pick up. But the
availability of capital for certain
industries is not necessarily
there,” he said.
“Private equity and the debt
capital markets have been
severely bruised – to some
degree – by what happened this
year. It’s going to take a bit
longer for money and capital to
26 | Metal Market Magazine | October 2020
come back into the system, even
with low interest rates,” Weir
noted. The resultant supply
crunch could push oil prices up
into the mid-$60s per barrel
area in a couple of years, he
added.
Shaping the future
Weir has worked at Trafigura
for almost 20 years, although he
joked that he does not expect to
receive a special
commemoration gift in January
2021.
“After a decade with
Trafigura, I got a phone call
from Claude and [former
management board member]
Chris Cox, and they said,
‘Congratulations, you’ve made
ten years in the organization!’”
Weir said. “And I said, ‘What
do I get for that?’ and they said,
‘Penalty, you get another ten
years because you’ve got to pay
us out of our shareholder
agreement!’ That’s how
partnerships work!” he
laughed.
Looking at the next ten years
for Trafigura, Weir predicted
the way data is viewed will be
different, with the result that
the trading function will also
change. “What we’re doing in
advanced analytics and artificial
intelligence is changing things,
meaning the trader will be
different and need different
skills,” he said.
Similarly, Trafigura will likely
have a reorganized structure
with a different product mix. “I
like to think we’d still have a
large number of people working
for us because it should still be a
people business and I hope
we’re not sitting behind
screens,” he said. “We do have a
diversified business model and
will continue to diversify; we
know what we want to be in and
want to be specialists in those
areas.”
Weir, who spends time
meeting with graduates to
discover what they think
Trafigura ought to be doing,
said commodities trading is a
great career.
His advice to young starters
in the business? “Be honest, be
true to yourself, and try and
travel as much as you can and
experience as much as you can.
Don’t overstretch, utilise the
people and resources around
you because people are very
forthcoming in this
organization,” he said. “Unlike
me, speak as many languages as
you can, learn cultures and what
people need, because when you
can understand people like that
you can often do business more
and more.”
Weir himself had several
mentors, including Dauphin, “a
great mentor and friend and
almost like family,” he said. He
had other great teachers in
different parts of the business,
he noted, helping to guide and
explain aspects of the roles.
“My father always said, treat
people how you expect to be
treated,” he added. His father
– now aged 89 – was an
identical twin; Weir himself has
27-year-old boy and girl twins.
Neither are in the commodities
business – “No nepotism!” he
laughed. Married at 26, thirty
years later the couple also have
a 13-year-old daughter. “It’s a
big gap, but when you have
twins it takes a long time to
recover!” he said.
Sport features heavily in his
spare time. Weir said that
although work can get in the
way, he tries to keep as fit as
possible. “My wife is extremely
fit, and I try to keep up with her.
We ski, wakesurf and play
tennis,” he added.
Weir, who now lives in
Geneva, Switzerland, brings a
love for BBQs from his native
Australia – in all weathers.
“Even in the ski chalet, people
often comment that when it was
snowing, they’d see a guy
outside cooking a BBQ,” he
‘We’re not said.
trying to rule Weir is, he admitted, a
the world and “pretty private” individual on a
personal level. “I like to party,
own or operate but no one knows about that
everything. because I keep my private life
We’re looking very much out of the limelight
– no Instagram, no Facebook,
where we can nothing like that!” he joked.
add and create “Friends and family know the
value’ rules of engagement.”
LME Week 2020
Opportunities and
challenges at the LME
Alongside every other international business based in London, the
Covid-19 pandemic has obliged the LME to reshuffle its priorities
in 2020. CEO Matthew Chamberlain discussed the challenges and
opportunities of a unique year with Richard Barrett
When Metal Market Magazine
caught up online with LME
CEO Matthew Chamberlain on
Wednesday September 16, he
had returned to his office just a
few days beforehand for the
first time since the UK
government introduced a
widespread lockdown on
people’s movement in March to
try to contain the spread of
Covid-19.
The measures taken to limit
the numbers infected by the
novel coronavirus have
impacted every London-based
financial institution. For the
LME, it has warranted
acceleration of some plans
while others have been delayed
to reprioritise elements of the
LME’s development in line
with members’ and the markets’
needs and their available
resources in extraordinary
times.
“The Covid-19 situation has
clearly impacted us in two ways.
The first is as an employer and
the second is as a market
operator,” Chamberlain said.
“Like any other business, our
primary consideration has
always been about the wellbeing
of our staff and their families. I
think it is in times like this that
you really rediscover that bond
with your staff. You realise that
companies do have a strong
community, almost family,
element to them.”
He has been deeply
impressed by that from the
early days, where “it was about
planning and people working
hard to put contingency plans
in place,” through early March
when it became obvious that
this was going to become “quite
impactful for the UK,” he
recalled.
“Our colleagues in Asia had
seen an earlier wave, so we had
a little bit of a pre-warning
there, but in early March it
became obvious that things
would have to change.” He
noted the ability of LME staff to
adapt and to help each other as
increasing numbers of them
began working outside the
office. “Pretty much everybody
went home except for essential
personnel coming in, who have
really done a fantastic job,” he
said. “But whether people were
in the office, or were at home, I
have been really impressed by
that sense of mission, that sense
of purpose and of mutual
support amongst the staff, and
also between the staff and the
organization,” he stressed.
The second element has been
around the stewardship of the
market. “Clearly, the big
element there was the closure of
the Ring on the 23rd of March.
It was one of the more intense
periods of my professional life
in the week preceding it, where
it became clear that we were
going to have to change and a
great deal of work was done
with staff here, with Category 1
members and the market more
generally to get ready for that,”
said Chamberlain.
“The 23rd of March was my
last day in the office until last
Monday [September 14]. It was
extremely pleasing to see that
liquidity go on to the screens,
and to see the cash price
settlement happen on screen,
which never really happened
before, was a huge testament to
the ingenuity and adaptability
of our market.”
“So, it has obviously been a
very difficult time in all of our
lives. It has been a sad time for
those of us who like meeting
people, who like travelling and
like the interaction of business,
but I think that out of that
sadness, there has been a huge
number of positives,” he
summarized.
Opportunities arising
Having adapted as quickly as
possible to new global
circumstances, many businesses
‘Our primary have then looked at what
opportunities they might offer.
consideration Have some emerged for the
has always LME? “Yes, of course, there is
been about the absolutely an understanding
that there will have to be some
wellbeing of changes to all of our working
our staff and lives and practices,”
their families’ Chamberlain answered. “All
October 2020 | Metal Market Magazine | 27
LME Week 2020
businesses should and can look
for those opportunities
because: (a) it helps markets
keep growing; and (b) because it
offers a potentially interesting
commercial angle.”
He provided the example of
something that the exchange
had already been looking at, but
that he said the crisis has really
accelerated – the
dematerialisation of the LME’s
warrant depository. “At the
moment, all the LME metal on
warrant is represented by paper
warrants that sit in a depository
here in London, and the process
of withdrawing them is a
physical process. You send
someone on a motorcycle to go
and pick them up for
processing,” he reminded.
“Although the Ring is one of
the most obvious
manifestations of concerns
around remote working,
actually there was an equally
pressing concern about
whether, if London went into a
full lockdown and nobody could
get into the City, warrants
would still be able to move,” he
recalled.
“We had been looking for
some time at the
dematerialisation of warrants.
Effectively removing that paper
in the vault and representing
them purely by an electronic
record. That obviously already
happens with things like shares,
but they are much simpler
because they exist under one
country’s law. LME warrants
exist under many countries’
laws because they sit in London,
but they reflect metal that could
be in Malaysia or UAE or
wherever it might be. So it’s a
much more complex challenge,”
he explained.
“So that is a good example of
an area in which we had already
done work, the crisis
accelerated the demand,
because people said that it is not
a great idea to be exposed to
this need for a manual, physical
process, and we managed to
pick up the pace on that. We
will have a fully electronic,
dematerialised depository early
next year. We have already had
28 | Metal Market Magazine | October 2020
a discussion paper out on it and
‘We will have a there was huge support from
fully electronic, the market. So that is a good
dematerialised example of opportunity,” he
depository said.
early next year’ Volatile volumes
Trading volumes have always
been a natural focus of attention
for every LME CEO as one
fundamental measure of the
success of the exchange’s
strategy, services and contracts.
When reviewing progress at the
exchange last year,
Chamberlain highlighted the
stability of the volumes of trade
on the LME – particularly in
copper, which reflected
on-going hedging business –
but what is his view on the
impacts of the Covid-19 crisis
on volumes in 2020?
“Throughout this, and
whatever the volumes are, we
are very confident that the price
risk management function has
continued to operate exactly in
the way that we would expect,”
he stressed first. “And that is
doubly impressive given that we
moved the pricing basis from
the Ring to electronic. I have
genuinely not had a single
concern expressed from a client
about the pricing that we are
producing. And given the
volatility of the market and,
given the change in
methodology, I think that is
quite incredible and a testament
to everybody in the ecosystem,”
he added.
“In terms of volumes more
generally, it has very much been
a tale of two quarters. The first
quarter was significantly
elevated in terms of activity, as
it always is in a volatile market,
and in March in particular.
Since then, volumes have been
slower. Everybody had a very
busy first quarter but,
particularly over the summer, I
think a lot of the physical
traders have been sitting on the
side-lines while working out
where the market is going, so
that of course has caused a bit of
a slowdown in volume,”
Chamberlain summarized.
He thinks that the overall net
effect in 2020 should be in line
with 2019, but he added that it
is a slightly more complex story
because of the difference
between the first quarter and
the rest of the year. “We’ll
obviously see whether trade
business picks up in September-
October as we get into
year-end,” he added.
Chamberlain also pointed to a
more complex story amongst
the different base metal
markets. “You’re seeing almost
an individual story per metal,”
he said. “For example,
aluminium volumes peaked
quite early because there was all
that metal being put into
warehouse for financing.
Copper very much dropped off
into the second quarter, but is
now coming back as the price
rallies, whereas zinc came back
a bit later and then the others
are probably still a little bit in
the doldrums. So there has also
been a metal-by-metal story.
It’s a complex set of effects, as
you would expect in a complex
time in the business cycle.
“All that said, we’ve got that
great base of stable business
and that will continue to power
us through with no real
concerns in that regard,” he
concluded.
Moving along the pathway
In a major initiative launched
three years ago, in consultation
with its members and market
participants, the LME set out a
long-term vision for the future
of the exchange. In 2020, has
the LME travelled as far along
that Strategic Pathway as
hoped?
“In the 2017 document, we
identified some things that we
were going to do, and to a very
large extent we have achieved
those; and some things where
we said we would watch the
market and see if they were
desired,” Chamberlain recalled.
One example of an item
delivered, “I guess the most
obvious, and probably the most
fortuitous,” was the electronic
pricing trial. “We were very
lucky that we did that back in
2019, because clearly even
though we decided not to
LME Week 2020

maintain electronic pricing –

we went back to Ring pricing
for nickel – it very much
smoothed the transition with
Covid-19,” Chamberlain noted.
“That is an example of
somewhere where it acted
perhaps in an unexpected way,
but it was still good to do,” he
added.
Another example of
something enacted in a more
expected way is implied pricing,
where LMEselect now adds
together the 3-month and the
carry to produce outright third
Wednesday prices. “We now
have those prices on screen. We
haven’t seen any fundamental
wholesale change, but I think
there was a concern from the
market that if we went too far
we would disrupt the date
system etc. But we have some
more activity on those,” said
Chamberlain. “So that is an
example of something we felt
could be helpful under our
user-choice model – not forcing
people to do it – but where
people wanted to trade that
way, it has worked quite well,”
he noted.
Chamberlain picked out new
contracts as a third element.
“Particularly with the steel
contracts, we have always said
that some will work and some
won’t. Clearly the ones that are
working are the steel ones, and
LME

we are excited to keep building

those, and of course excited to
get the Fastmarkets lithium
contract launched, which is a
great example of market
engagement, with the
formation of our lithium
committee, and I think we are
now reaching the right time for
getting that out.”
He added, “In general, I feel
the things that we said we were
going to do back in 2017 we
have done. Their actual market
impact has been of varying
significance, and, as with the
electronic pricing, has in some
cases gone in the way we didn’t
expect, but is still positive.
Overall, I’m happy that we took
those forward.”
On items in the Strategic
Pathway yet to be addressed, he
"I am now 100% convinced that we can do everything electronically.
That doesn’t mean that we should do everything electronically,"
said LME CEO Matthew Chamberlain
said: “Clearly there are some
things back in 2017 where we
said, ‘Look, we will continue to
monitor the market, and see if
they make more sense.’ We
haven’t put those into place yet
– perhaps some of the more
standard electronic elements
‘We have a that you see on other markets
bucket of but you don’t necessarily see on
ours. I don’t think we can make
contracts ready any decisions right now because
to launch. I I think we are still very much
would love to grappling with the Covid-19
situation.”
get them out by “Clearly, the fact that we have
the end of this been doing electronic pricing for
year’ 6 months now gives us more
data, and I’m sure that will
inform a reconsideration of
some of the other initiatives that
we didn’t progress in SP17 to
enhance the electronic market. I
see it very much as a dynamic,
living, breathing thing. I’m glad
that we got done most of the
things that we said we’d get
done, and done before Covid-19.
As and when the market
normalizes, we can revisit and
see what has changed and what
has stayed the same.”
One of the long-debated
topics likely to be revisited is
the future of the Ring (see box
panel).

October 2020 | Metal Market Magazine | 29

LME Week 2020
Leveraging technology
Under Chamberlain’s watch as
LME CEO, investment in
software and technology
development to secure
commercial advantage for the
exchange has been a recurring
theme. In discussion with Metal
Market Magazine last year, for
example, he pointed out the
advantage of putting the
technology in place to allow the
launch of new cash-settled
contracts swiftly and at
relatively low cost to the LME.
How will the LME be using that
technology now?
“We have a bucket of
contracts ready to launch. I
would love to get them out by
the end of this year, but we will
have to see where members are
in terms of change with that,”
he answered. “That [the
technology] works as we
expected and that has given us
the confidence to push ahead
with, for example, the new
trading platform, which is an
even bigger step forward. That
will launch in 2022 – it is
making good progress and is
due to go into testing next year.
Obviously, changing trading
platform is a huge piece of
work, but that will launch and
we’re already thinking about
what that enables us to do.”
For example, the LME had a
discussion paper out earlier this
year on options contracts,
looking at how the LME could
build its options market and get
more electronic liquidity for
that – something that
Chamberlain said will be
enabled by the trading
platform.
“Get the new trading
platform and then enhance the
options market – so it is that
marriage of technology and
commercial,” he explained. “It’s
worth noting that, even before
our proposals on the options
market, and electronic options,
our options volumes are looking
pretty healthy and I think the
RIBs (registered intermediate
brokers) are partly to thank for
that,” he noted.
“What I like is the fact that
30 | Metal Market Magazine | October 2020
we are doing tech better – it is
always challenging and nobody
gets it perfect – but I think we
are doing tech better. More
importantly, we’re then
thinking about the business
outcomes. So getting new
contracts launched when there
is an opportunity – as there
was, say, with China hot rolled
coil – and seeing good growth,”
he added.
The LME’s major new
trading platform, due to launch
year after next, is a joint project
between the LME in London
and its owner HKEX in Hong
Kong, for which it is taking the
HKEX OTP-C (Orion Trading
Platform Cash) and turning that
into the OTP-M (Orion Trading
Platform Metals).
Chamberlain said that
ambitious project is going well.
“Our colleagues in Hong Kong
have done an incredible job. We
now have a development
capability here as well, so it is a
great example of cooperation
between two parts of the HKEX
organization.”
He noted that coding is at the
front end of such projects and
said that it is pretty much done.
“We have a system and it works,
but there is now a huge amount
of testing, quality assurance,
getting the members plugged
in, connectivity etc., but where
these – particularly converting
a cash equity platform to a
derivatives platform – have
historically gone wrong in the
past, we believe that we are
beyond that point. So I am
increasingly confident that we
have a good product and that
we are on the right track and I
think that it is going to be very
exciting,” he added.
Untapped Chinese potential
When HKEX bought the LME
at the end of 2012, part of the
combined strategy was to
increase access to China’s
rapidly expanding commodity
markets.
Eight years on, Chamberlain
admits that not all of the
potential envisaged back then
has been unlocked. “It is
absolutely fair to say that we
‘There is an probably haven’t delivered on
all of the elements of the China
extent to which
potential as we would have liked
to be China’s to, but that is the nature of a
trusted partner, strategy – that some things
you need have worked out and others
haven’t.” he said.
to have the “Looking at HKEX, clearly
solutions ready they have achieved great things
to go, offered in the equity space, with Stock
and be ready Connect, and in the fixed-
income space, with Bond
for when China Connect, so I think that it’s fair
wants to open to say that, rightly, their focus
these markets has been on some of the other
asset classes, and it has been
up’ easier to forge the co-operation
with the mainland on those.
“In terms of commodities, we
have done some interesting
things that I believe are going to
lay the foundation, but it’s a
long game. So, for example, the
QME (Qianhai Mercantile
Exchange) is a business that
produces very helpful and
credible spot prices for onshore
Chinese commodities. That is
beginning to be an increasingly
valuable asset for the group.”
The HKEX London minis are
intended to provide easier
access for Chinese and Asian
market players. “We have seen
some volume on those, but it
has not been huge,”
Chamberlain acknowledged.
“So we’ve pushed forward all
of the right initiatives, and we
do need to do that because we
believe in the Chinese potential.
But, as I’ve often said in the
past, there is an extent to which
to be China’s trusted partner,
you need to have the solutions
ready to go, offered and be
ready for when China wants to
open these markets up, and
we’re ready to be their partner
when that happens,” he
summarized. “Not forgetting
that there are already very
significant Chinese flows on our
market in any event,” he added.
“China has always been part of
our market, but what can we do
to make that even bigger?”
Latest initiatives explained
Earlier this year, the LME
issued a discussion paper on
sustainability plans. The
exchange intends to launch new
LME Week 2020
contracts to support recycled,
scrap and electric vehicle (EV)
industries in transition to a
sustainable economy. It plans to
introduce LMEpassport – a
digital register that enables a
voluntary market-wide
sustainable aluminium labelling
programme – and plans to
launch a spot trading platform
for price discovery and trading
of low carbon aluminium for
interested buyers and sellers.
The proposed LMEpassport
and spot platform initiatives
– which are subject to market
feedback – are expected to
launch in the first half of 2021.
“What I like about both of
the initiatives – so
LMEpassport, which is the
transparency platform which
allows data about metals to be
made available to the market,
and the spot trading platform
– is that they have applicability
both in our core ‘nuts and bolts’
business and in some of our
growth areas, particularly ESG
(environmental, social and
governance reporting),”
Chamberlain told Metal Market
Magazine.
“Taking LMEpassport first,
where it really started from was
a problem we’ve been posed,
from the warehouse community
in particular, for the past ten
years, which is how can we stop
pushing around reams of paper,
the certificates of analysis, and
why can’t those be digitized.”
Getting those mandatory
documents digitized is the core
use of passport. “I think all
paper-based processes have
come under a bit of scrutiny,” as
a consequence of the Covid-19
pandemic, Chamberlain noted.
But it can then be extended, on
a voluntary basis, to make data
about sustainability, such as
carbon footprint, available too,
such as by producers who want
to highlight their low-carbon
aluminium products. “So it is a
platform that has both a core
use and a stretch case as it
were,” he explained.
“The spot platform is exactly
the same. We often get asked
about launching new contracts,”
said Chamberlain.
Revisiting the future for the Ring
When the electronic nickel closing prices
trial took place to compare that means of
pricing with conventional price discovery
on the Ring, no-one had expected how
significant that experience would be as a
precursor to the enforced closure of the
Ring this year in response to the Covid-19
pandemic.
“We started to get some data with the
nickel closing prices trial last year, but even
with that trial we didn’t go all the way,”
Chamberlain recalled.
“We were doing the three-month close on
LMEselect, but we were doing all the spreads
on the Ring and of course we were still doing
the officials on the Ring. So that was the start
of our data experiment. Covid-19 has been
an unplanned extension of that data
experiment, so now we have data on doing
everything on LMEselect, which we never
intended to do with the trial.
“The way I would characterize it is that I
am now 100% convinced that we can do
everything electronically. That doesn’t
mean that we should do everything
electronically. But it has advanced the
argument, and it now means that the
argument which we have heard in the past
– and we heard it with the closing prices
trial – which is ‘You just can’t do this
because it will break the market,’ no longer
has validity in my mind. We have clearly
shown that we know how to price this
market electronically.”
“But does that mean that the Ring doesn’t
add value?” Chamberlain asked rhetorically.
“No, of course not, because, as I always say,
we have proven that we can price
electronically, but we also proved for 140
years that we can price it on the Ring. So,
we’ve now got an embarrassment of riches
– we’ve now got two great ways of pricing
and we know how to do both of them.”
What does he think is going to
happen?
“Certainly, I think the proponents of
electronic trading will use this to say you
should keep this permanently. To be fair,
nobody is really actively lobbying right now
– and I think that is because everybody
recognizes that we’re in special times. But,
certainly, do I hear people saying this is
good for electronic pricing, yes. Do I hear
people say, ‘If I knew that you were going
to stick with this pricing methodology, I
would put my business on to the market,’
yes, we absolutely do. It is happening in
quite a genteel way, but it is beginning to
happen.”
So what is the way forward?
“Well, we’ve been clear that we want to
reopen the Ring and indeed we have set out
the criteria for reopening the Ring. One of
three things needs to happen: an end to
social distancing; a widely available
vaccine; or some technological innovation
we haven’t thought about, so maybe a mass
testing programme or rapid testing
technology.
“I have to say that as of today, as of the
16th of September, none of those things
have happened. If anything, things are going
the other way on social distancing. So I don’t
think that we are going to be able to open the
Ring any time soon on our criteria.
“I would love to be able to reopen the
Ring this side of the New Year. We reopen
and hopefully we then have a very open and
interactive debate, because there will be a
lot more data, and the pro-electronic
proponents will come and say: ‘Well done,
you’ve reopened the Ring, but now let’s
have a debate on the data for the Ring and
for electronic and you can continue to have
that dialogue just like you always have done
at the LME.’ That is the model that we
would like to see because it feels the fairest
and it means we’ve got back to what we’ve
always stated we were going to do,”
Chamberlain explained.
He thinks that probably the longer this
goes on and with the pandemic-related
problems probably getting more difficult
now [with more favourable weather
conditions for the spread of coronavirus] as
the UK enters the Autumn months, people
will wonder what would happen if January
comes along and the Ring has still been
unable to reopen. “It’s a whole New Year
and [what if ] we’re still in this stasis?,” he
asked. “Then maybe what you have to say is
that there might then be the pressure to
have that discussion about the long term
without having gone back to the Ring.”
While he stresses that situation would
not be his preferred situation, he
acknowledged that there might come a
point in 2021 when people start saying
‘Let’s have the debate even though the
Ring has yet to reopen.’
“My strong preference is that we can get
the Ring reopened in 2020, but I’m sure
there will then be calls to have a longer
discussion about it,” he concluded.
October 2020 | Metal Market Magazine | 31
LME Week 2020
He identified aluminium
billet as an example in the
context of growing stocks of
aluminium in LME warehouses
this year (see box panel). “We got
lots of requests recently asking
whether we could facilitate
billet trading, and launching a
physically settled billet contract
is tough – any physically settled
contract is tough – but a spot
platform could allow new forms
of our core metals to be traded
in parallel quite easily.
“It also has a stretch case
where if people want to buy and
sell low-carbon aluminium or
assurance-supply-chain cobalt,
or whatever it might be – that’s
the beauty of both systems, they
are totally extensible and it is
really just up to what users want
to do –that is the exciting
thing,” said Chamberlain. “I am
really excited about both
because I think we’re bringing
good technological solutions to
some really meaty metals
market challenges,” he added.
Sustainability and responsibility
While there are links between
sustainability and responsible
sourcing, Chamberlain pointed
out that the LME is dealing
with them in different ways.
“Responsible sourcing – i.e.
supply chain assurance,
avoiding conflict financing and
child labour – is something
where there is general
agreement in the market that
those things shouldn’t be in the
supply chain and so there we
have been able to take a much
more rules-based approach. It is
saying that, as of 2022 broadly,
if you cannot demonstrate that
you’re compliant with the
OECD guidance, then we may
need to ask you to leave as an
LME brand. So that is a
compliance-based approach,
using the platform of our rules
and our brand listings to impose
global standards on a global
supply chain,” he explained.
“I am proud that we’ve done
that,” he added. “I’ll be honest, it
was kind of scary at some points
because when we started this in
2016-17, I don’t think the
market had moved to a point
32 | Metal Market Magazine | October 2020
where everybody was in
agreement with this. We did,
absolutely, even as late as last
year, hear some people say, ‘This
will hurt the LME, your
competitors aren’t doing this,
I’m just going to go and list my
brand on other exchanges, and
this will be the end of the LME. ’”
He said that was difficult to
hear when you genuinely
believe that you are doing the
right thing, “but you don’t want
to put your whole franchise on
the line,” he recalled.
“I’m glad that we stuck with
that because I think that,
although the vast majority of the
market has always been aligned
with it, I think this past year has
effectively seen everybody
understand that this is
something we absolutely have to
do as an industry. And the work
that industry bodies and that
trade associations have done has
been fantastic. I couldn’t be
happier with how the industry
has evolved and gone and I think
we’re aligned with that.”
He said that environmental
concerns about carbon
emissions from aluminium
production are not the same
because it is not the case that
everybody agrees that all
aluminium should be low
carbon and, he pointed out,
supply of the metal would not
meet global demand if only low
carbon aluminium was allowed.
“So that is much less about hard
and fast rules, because they
could put people out of business
and they could have a very
significant negative social
impact. It’s about a voluntary
disclosure platform and then, if
the market likes what’s being
disclosed, then they can assign a
premium to that if that is
appropriate, and that sends the
right economic signals.”
“So there are two sides of the
ESG/CSR debate, but we’ve
deliberately taken very different
approaches and I’m glad that
we’ve done that,” he
summarized.
Plans in the pipeline
Several less high-profile, but
nevertheless important, steps
‘We’ll get the are pending.
Use of a virtual trading ring
new trading for alumina in a condensed
platform in and timeframe on a Wednesday
then VAR a few morning to concentrate
years down the liquidity started to gain
traction and was considered a
line’ possible model for other
commodities. “We still very
much like the idea on the
illiquid contracts of focusing
liquidity at a particular time on
LMEselect. It began to work
for alumina: we saw the first
trade and we were looking at
extending that to some of the
other illiquid contracts,”
Chamberlain noted. “But I
think it’s fair to say that one of
the negative effects of the
Covid-19 crisis is that it has
been hard to get mindshare on
new contracts in 2020.
Understandably, people have
not wanted to change their
business processes.”
He thinks it is unfortunate,
since the alumina virtual ring
was not doing huge volumes
but it was at least trading. As of
now, the idea is on pause
because of the pandemic, “but
the general principle is a good
one for the less liquid
contracts,” said Chamberlain.
A year ago, the LME and
LME Clear had thought that it
might be possible to introduce
value at risk (VAR) for clearing
by the end of this year, but it is
now in the pipeline for after the
launch of the LME’s new
trading platform.
“Value at risk for clearing is
very much on the agenda,”
Chamberlain said this year.
“Covid-19 impacts on books of
work has meant that we don’t
want to tax the members too
much in terms of system
changes, so we are very much
prioritising the trading
platform – that will be the first
delivery. What we do on VAR
will be later than the trading
platform – so it will be later
than 2022, which is the earliest
go-live for the trading platform.
It needs a lot of member
engagement and we’ve
modelled members’ portfolios
for them under VAR and shown
them the savings they will
LME Week 2020
make. There has been great
engagement and good buy-in,
but it is a big technical lift for us
and the members and we’re not
rushing in the current
environment,” he explained.
“We’ll get the new trading
platform in and then VAR a few
years down the line,” he added.
Work on creating pre-trade
transparency on the telephone
market, required by MIFID II
financial regulations, was
temporarily delayed earlier this
year as another consequence of
the Covid-19 pandemic, but
work on it has now restarted.
“There was the regulatory
demand that we do something.
Last year was very much about
identifying the right solution
and working with members to
find a solution that met the
requirements, but didn’t cause
difficulties for the members in
our market, and that is how we
came up with the so-called FPA
(fixed-price auction). We were
going to implement that at the
beginning of 2020, but we did
defer that because it would not
have been practical with
member change freezes and
no-one wanted to introduce
operational risk at a time like
this. But we have now decided
to push ahead with that,”
Chamberlain updated.
There is a balance to be
struck. “You don’t want to
cause operational risk, but at
the same time most companies
have got into their ‘new
normal’ and they can make
some IT change, and we don’t
want this hanging over us. If
we’re going to do it let’s get on
with it, and then people can
release project resources to
move on to more profitable
things.”
“So we are now pushing
ahead with that and I think
we’re going to go live with the
testing and it will go live later
this year. It is striking that
balance between respecting the
fact that people have got a lot to
do at the moment, but at some
point we just need to get on
with it,” Chamberlain
concluded.
Warehouse déjà vu?
A year ago the LME was in a consultation
period out about changing the rules for
LME-approved warehouses – a topic that
occupied much exchange-management time
some years ago when they were changed
significantly to deal with the very long queues
for aluminium that built up.
Aluminium stocks on the LME have
climbed again this year and the length of
queues for metal has increased at some
locations, but Chamberlain is emphatic that
the system is coping well with the impacts of
the Covid-19 pandemic driving stock levels
higher.
Two key actions emerging from last year’s
warehouse-rule consultation – the reporting
of off-warrant stocks and the extension of
queue-based rent capping to 80 days – have
contributed to maintaining an orderly
LME-approved warehouse system this time
around, he noted.
“We are beginning to see a situation which,
although it is not quite the same as 2008, has a
number of common features with what
happened in 2008, in particular significant
reported surpluses of aluminium. We always
said that the test of our reforms would be how
they coped in the next crisis. And there is a
good chance that, to some extent at least, this
is the next crisis,” said Chamberlain.
“We have seen more aluminium coming to
the market. Similar to 2008, we have seen it
begin to concentrate in particular locations.
Back then, it was Detroit and Vlissingen,
because a lot of the metal then was coming out
of Canada or St. Petersburg. Now, it’s Port
Klang in Malaysia because a lot of the metal is
coming out of India. So, a different country
and port, but a similar story,” he explained.
“What we have always wanted is to have a
situation where enough metal flows on
warrant to meaningfully reflect what’s
happening out there in the real world, but that
the system doesn’t become swamped like it
did in 2008, and then it impacts price
discovery because of the queues.
“Everything I see so far, I’m comfortable
about what’s happening. Metal is trying to
find homes in Port Klang and a certain
amount is going on warrant, but a large
amount is going off warrant. Of course we
can now see that – we have the transparency
around that, because of the off-warrant stock
reporting.
“You might say, ‘Well, Matt, don’t you want
everything going on warrant and don’t you
want everything to be in the LME system?’
but let’s remember why it all went on warrant
ten years ago. It all went on warrant because
huge incentives were being offered by the
warehouses, which were then funded by the
queues that had been generated. We ended up
in this awful feedback loop that caused so
many problems.”
He obviously wants some metal on warrant
and that has happened as LME stocks have
raced to levels far in excess of a million tonnes
of aluminium. “But clearly that is reflecting
the fact that metal is out there and the system
is able to absorb the capacity,” noted
Chamberlain. “Some people had said that in
the next crisis no warehouse would be willing
to take metal because the LME’s rules are so
restrictive, but that hasn’t happened. We
[LME-approved warehouses] can take metal,
but at the same time we haven’t seen so much
metal go in that it swamped the system,” he
stressed.
He said it makes sense that a lot of the
aluminium is going into Port Klang, while
acknowledging that there is not infinite space
there. “So you would expect that the price of
storage in Port Klang would go up and that
some people would take that metal out and
would take it to lower-cost storage locations,
like Johor or Busan or Gwangyang or
Kaohsiung, and indeed that is what we are
seeing,” he observed.
“So, although there are some queues in Port
Klang, they are very much what we call
operational queues of people who genuinely
are buying metal and then shipping it out
somewhere for cheaper storage, or because
they want to consume it – or, when the China
arb is open, they want to take it to China
– rather than the structural queues we saw ten
years ago, which were about making money
for the warehouses. And that is what the rent
capping has done,” he added.
“Obviously the fact that we’re shifting the
rent capping up from 30 to 80 days, I’m very
pleased about because it’s always about
getting that balance with the warehouses not
having any incentives for queues, but the
warehouses being able to offer terms to bring
enough metal in that the warehousing market
remains representative. And everything I’ve
heard suggests that balance is right because we
obviously have that as a policy lever,” he
stressed.
“Actually there is a pretty vibrant market
for storing metal – some people store it on
warrant and others store it off warrant – but
that is exactly what we want. It should be a
competitive market where everybody does
what’s best for them. So I never expect
everyone to be happy about warehousing, but
from my perspective I don’t really have any
concerns about what’s happening there,” he
concluded.
October 2020 | Metal Market Magazine | 33
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LME Week 2020
An LME Week
unlike any other
Evoking memories of LME Weeks past, Hassan Butt
ponders how negotiations initiated, deals done and
other discussions that usually take place during the
annual gathering of the global metals industry and
trade in London will fare in a year of business
conducted digitally
The annual LME Week gathering
has long been an eagerly anticipated
event in the metals calendar – an
occasion when metal traders and
producers from around the world
descend on London to talk business,
prices and more.
The event has had its fair share of
challenges over the years. The
nationalization of copper companies
in Chile in the 1970s brought
demonstrations to the doorstep of
the LME dinner. The dealings of
Sumitomo Corporation’s Yasuo
Hamanaka in copper overshadowed
proceedings in the mid-1990s. And
the coincidence of last year’s
meeting with a period of Extinction
Rebellion protests in London
generated concerns about a
potential source of disruption for
visitors to the UK’s capital city.
LME Week’s resilience as a
premier forum for networking for
the metals sector has remained
strong for decades, but this year of
course has presented a challenge of a
very different and unforeseen kind.
The global Covid-19 pandemic has
gripped the industry and trade,
rattling supply chains the world
over, with the LME forced to
redefine its flagship event in the
virtual world this year as a
consequence.
With commodity markets now
truly globalized, and the pandemic
showing little sign of disappearing,
36 | Metal Market Magazine | October 2020
constraints on travel are leading to
some strained efforts to co-ordinate
next year's contractual tonnage
negotiations, one of the most
prominent features of the annual
LME Week gathering.
Every year, market participants
flock to London in their thousands,
some striking deals in hotel lobbies,
others hoarding business cards by
the fistful under domed ceilings and
crystal chandeliers in the heart of
Mayfair and across the city at
receptions, dinners and events
organized by leading businesses in
the metals sector.
For brokers in years long gone by,
when the LME boasted dozens of
ring-dealing members with famous
names such as Rudolf Wolff & Co.
and others, the exchange was owned
by its members and the annual
gathering saw financiers revel in the
metal markets for physical and
futures business.
Diverted to digital
Traditionally, copper market
participants kick off annual talks in
London when meeting during LME
Week in October, before finalizing
deals during the Fastmarkets-
CESCO Shanghai Copper Week in
November. But the market will now
have to trade the clinking of
champagne glasses and rushing
between meetings for muted
microphones and bandwidth
latency, with traditional LME Week
events replaced by digital dialogue.
For the LME itself, it will be the
first time since the Second World
War that the exchange's formal
annual dinner, which is Europe's
biggest black tie event, does not take
place. Virtual seminars will replace
traditional physical events that the
LME hosts during the week.
But what does the metals industry
stand to lose without the week’s
established annual footfall? One that
in recent years has seen some
10,000 bankers, miners, brokers,
traders, fund managers,
warehousemen, assayers, analysts,
reporters and head-hunters
participate?
“The annual LME Week
gathering in London is an important
opportunity for the global metals
community to come together to
discuss industry developments and
to negotiate contracts for the year
ahead,” an LME spokesperson told
Fastmarkets via email.
“We expect that despite the
cancellation of many face-to-face
events in London this year, these
meetings will still take place – even if
virtually, and we look forward to
discussing this year’s hot topics in
our virtual seminar,” the
spokesperson added.
With non-essential travel limited
and some countries banning arrivals
from certain nations, digital
conference calls have become the
norm, although time zones are a
‘Our long- hurdle for some. European
term contract executives working for Asia-focused
trading houses spoke of 2am calls
negotiations with colleagues dialling in for the
will survive, early Asia morning to connect with
but new South American miners' working
afternoon.
business is "I don't know how many rounds
difficult in a of discussions we're going to have,
pandemic ’ but if it's two or three rounds with
each producer, you're going to have
a weird week!" said one beleaguered
executive.
In the US, the annual American
Copper Council (ACC) Fall Meeting
was also replaced by a virtual
session. "Rather than having a clear
start and end point, we're all just
booking meetings with each-other
at the same time, we don't know
when exactly benchmarks will be
settled," a trader there told
Fastmarkets.
Out of the money?
While proximity is just one of many
of the forfeitures of this year’s virtual
LME week, some market
participants have expressed deeper
concerns.
The LME has always been a
‘market of last resort,’ and its role as
GETTY IMAGES
arbiter and clearing house has
underpinned the bulk of
developments in metals trade since
its inception 143 years ago.
The Covid-19 pandemic has
seen metal trade diminish
however, with LME open interest
across the base metals complex
showing that market activity has
shrunk as of mid-2020, while the
base metal markets for zinc, lead
and tin continue to suffer from a
lack of investment and mining
incentive.
“For us, the absence of LME
Week this year is unfortunate, but of
course necessary. Our long-term
contract negotiations will survive,
but new business is difficult in a
pandemic,” a European-based zinc
producer told Fastmarkets.
“The biggest problem right now is
the fact that we’re totally unsure of
customer commitment levels,
general demand, as well as the
direction of the market [LME
three-month] price, and our
production is tied to that. With no
LME Week gathering this year, we
have to be more tactful with our
negotiations, but I don’t see that
necessarily as a bad thing,” the
producer added.
For others the trends run deeper,
especially concerning annual
benchmark premiums set by large
producers such as Codelco and
Aurubis in copper, which are
traditionally announced the week
before the LME Week gathering in
London.
Many stakeholders in the metals markets have had to replace their annual LME Week meetings
and negotiations in London by discussions in the virtual world this year
“I think large producers are
going to have to take a rigorous look
at the market when considering
benchmark premium valuation,” a
European-based copper trader told
Fastmarkets. “The economic
conditions even before the
outbreak of Covid-19 were
suggestive of plateauing copper
demand, and it will be interesting to
see the regional discrepancies that
could emerge this year.”
Additionally, the LME’s own
developments – such as the
responsible sourcing initiative
announced in 2018, which was a key
feature in LME Week 2019 – often
hinge on cohesive industry
discussions, for which LME Week
meetings in person mostly will not be
a feature of this year’s proceedings.
For some in the industry however,
LME Week’s standing as an
industry seedbed has been less of a
money-spinner in recent years than
it was in the past. Another
European-based trader lamented
that the evolution of LME Week
over the years has seen large
corporations and banks enter
commodity trade, in addition to
large mining companies, such as Rio
Tinto and BHP, expanding their
operations into trading.
“In recent years I think the [LME
Week] gatherings have lost their
value. Trading companies are pretty
stretched in today’s world, and I
usually fly in for a couple of days, and
have a structured set of targeted
meetings,” the trader added.
“The venue never really
mattered, because the week was
still back-ended with over-the-
phone negotiations for lower-
tonnage contracts. This year I don’t
want to end up with too many
contracts, and whatever I’m buying
is going to be on the low end,” the
trader concluded.
Still, with the first-ever virtual
LME Week set to take place this
month, long-term contract
negotiations could be a boon or
bane for growth in commodity
markets, and in an uncertain
market, could also dictate market
direction.
The keynote speaker at the
LME’s virtual metals seminar is
Sanjeev Gupta, whose leadership as
executive chairman of steel and
aluminium investment company
GFG Alliance continues to be
hallmarked by longer-term
investments – perhaps a good
omen for anyone sceptical of the
value of this year’s virtual LME
Week in a year of challenging
market conditions.
With additional reporting by
Archie Hunter
October 2020 | Metal Market Magazine | 37
 Illustration: ViaNova/Baezeni
hydro leirvik ntnu
statens vegvesen Innovation happens
dr. techn. olav olsen when experts unite

We all share an ambition to make the western coast of Norway more accessible for people who inhabit
the coast, but also for tourists and for transportation of goods. We also know that tomorrow’s infra-
structure must be cost-effective and sustainable. That is why we are exploring the use of the super-
material aluminium for a 1,720-meter suspension bridge spanning the Langenuen strait. Aluminium
is maintenance-free, 100% recyclable, lightweight and strong, making it well suited for the Norwegian
climate. Hydro prides itself on being able to work with the world’s foremost in their field in the develop-
ment of bridges of the future and offering aluminium based on renewable energy with a low CO2 footprint.
Together we can find the solution in the most sustainable and cost-effective way to connect Norway.

Norwegian Public Road Administration (Statens Vegvesen) is the initiator of this R&D project to develop
bridges in aluminium. Partners in the project are development teams from Hydro, Leirvik, the Norwegian
University of Science & Technology (NTNU), NPRA and engineering and marine technology consultancy
Dr. techn. Olav Olsen AS.
London Metal Exchange 2020

LME members 2020

CATEGORY 1 Sucden Financial Limited China Merchants Securities (UK) Limited
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Amalgamated Metal Trading Limited
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Citibank, N.A. London Branch
E: amtinfo@amcgroup.com
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5 Aldermanbury Square, London, EC2V 7HR, Commerzbank AG
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UK
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T: +44 (0)203 192 9150
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GF Financial Markets (UK) Limited T: +44 (0)20 7444 9075
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F: +44 (0)20 7475 1854
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T: +44 (0)20 7330 1688
Limited W: https://www.commerzbank.com/
E: lmeinfo@gffm.com
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StoneX Financial Ltd One Cabot Square, Canary Wharf, London,
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1st Floor, Moor House, 120 London Wall,
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T: +44 (0)203 580 6260
E: metals@intlfcstone.com
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W: www.stonex.com
E14 5RD, UK
F: +44 (0)20 7894 7606 Taunusanlage 12, Frankfurt am Main 60325,
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W: http://www.bgcpartners.com
T: +44 (0)20 7547 5428
Level 5, 155 Bishopsgate, London, EC2M 3TQ,
BNP Paribas F: +44 (0)20 7545 4417
UK
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W: http://www.gs.com
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T: +44 (0)20 7107 4590
F: +44 (0)20 3301 9967
E: LON-MARK-CTY-LMEOffice@sgcib.com 8 Canada Square, London, E14 5HQ, UK
E: infouk@bocigroup.com
W: www.sgcib.com F: +44 (0)20 7992 4983
W: http://www.bocigroup.com
W: http://www.hsbc.com

October 2020 | Metal Market Magazine | 39

London Metal Exchange 2020

ICBC Standard Bank PLC Nanhua Financial (UK) Co Limited Tullett Prebon (Europe) Limited
20 Gresham Street, London, EC2V 7JE, UK 3rd Floor, 1-3 Royal Exchange Buildings, Verde Building, Level 3-10 Bressenden Place,
T: 44 (0)20 7815 3000 London, EC3V 3LF, UK London, SW1E 5DH, UK
F: 44 (0)20 3145 5000 T: +44 (0)203 746 6450 T: +44 (0)20 7200 7340
E: lmegrouplondon@icbcstandard.com W: www.nanhuafinancial.co.uk E: LME@tullettprebon.com
W: http://www.icbcstandardbank.com/ W: http://www.tullettprebon.com
Natixis
J.P. Morgan Securities plc
UBS AG
Cannon Bridge House, 25 Dowgate Hill,
25 Bank Street, Canary Wharf, London, E14 5JP,
London, EC4R 2YA, UK Bahnhofstrasse 45, Zurich, CH-8001
UK
T: +44 (0)20 3216 9000 T: +44 (0)20 7568 7067
T: +44 (0)20 7777 5510
F: +44 (0)20 3216 9201 F: +44 (0)20 7568 2874
F: +44 (0)20 7777 5283
W: http://www.natixis.com W: http://www.ubs.com
E: Lon_Metals_Sales@jpmorgan.com
W: http://www.jpmorgan.com/metals
RBC Europe Limited UniCredit Bank AG
Koch Metals Trading Limited 100 Bishopsgate, London, EC2N 4AA, UK Arabellastrasse 12, 81925 Munich, Germany
T: +44 (0)20 7653 4000 E: ucg-metals.uc@unicredit.eu
20 Gresham Street, Fourth Floor, London,
E: basemetals@rbccm.com W: https://www.unicreditgroup.eu/
EC2V 7JE, UK
W: http://www.rbccm.com/
T: +44 (0)20 7648 6300
F: +44 (0)20 7648 6401
R.J. O'Brien Limited
CATEGORY 3
E: infokochmetals@kochind.com
W: http://www.kochmetals.com/ 100 Cheapside, London, EC2V 6DT, UK Hydro Aluminium AS
E: +44 (0)20 3872 3379
Macquarie Bank Limited F: +44 (0)845 686 2756 Drammensveien 264, Vaekeroe, Oslo, N-0246,
W: https://www.rjobrien.co.uk/ Norway
Ropemaker Place, 28 Ropemaker Street, T: +47 2253 8100
London, EC2Y 9HD, UK F: +47 22537930
Scotiabank Europe Plc
T: +44 (0)20 3037 4303 W: http://www.hydro.com
W: http://www.macquarie.com.au 201 Bishopsgate, 6th Floor, London,
EC2M 3NS, UK J. Aron & Company LLC
Merrill Lynch International T: +44 (0)20 7638 5644
F: +44 (0)20 7638 8488 200 West Street, New York, NY 10282, USA
Merrill Lynch Financial Centre, 2 King Edward
W: www.gbm.scotiabank.com
Street, London, EC1A 1HQ, UK Jump Trading Futures, LLC
T: +44 (0)20 7996 3900
Société Générale 600 West Chicago Avenue, Suite 825, Chicago,
F: +44 (0)20 7996 8020
W: http://www.ml.com IL 60654, USA
SG House, 41 Tower Hill, London, EC3N 4SG, UK
T: +1 312 205 8900
T: +44 (0)20 7867 8721
Mitsui Bussan Commodities Ltd E: exchangecontact@jumptrading.com
F: +44 (0)20 7762 5451
W: https://www.jumptrading.com/
E: base.london@sgcib.com
6th Floor, 1 St. Martin's Le Grand, London,
EC1A 4BB, UK Tower Research Capital Europe Limited
Standard Chartered Bank
T: +44 (0)20 7489 6600
F: +44 (0)20 7489 6662 The Minster Building, 21 Mincing Lane,
1 Basinghall Avenue. London, EC2V 5DD, UK
E: enquiries@mbcl.com London, EC3R 7AG, UK
T: +44 (0)20 7885 3927
W: http://www.mbcl.com W: www.tower-research.com/london
F: +44 (0)20 7885 8927
W: http://www.standardchartered.com
Mizuho Securities USA LLC XTX Markets Limited
TD Bank Europe Limited R7, 14-18 Handyside Street, London, N1C 4DN, UK
311 S. Wacker Driver, Suite700, Chicago, IL,
60606, USA W: http://www.xtxmarkets.com
60 Threadneedle Street, London, EC2R 8AP, UK
T: +1 312-294-8800 T: +44 (0)20 7628 5665
F: +1 312-294-8721 E: gpm.london@tdsecurities.com CATEGORY 4
W: http://www.mizuhoamericas.com
Toyota Tsusho Metals Limited Barclays Bank Plc
Morgan Stanley & Co. International plc
88 Wood Street, London, EC2V 7DA, UK Barclays Capital, 5 The North Colonnade,
25 Cabot Square, Canary Wharf, London, T: +44 (0)20 7776 3100 Canary Wharf, London, E14 4BB, UK
E14 4QA, UK F: +44 (0)20 7776 3101 T: +44 (0)20 7623 2323
T: +44 (0)20 7425 8000 E: info@ttmetals.com F: +44 (0)20 7773 0403
F: +44 (0)20 7425 8990 W: https://www.ttmetals.com/ E: basemetalsales@barcap.com
W: http://www.morganstanley.com W: www.investmentbank.barclays.com/

40 | Metal Market Magazine | October 2020

STS920AMMAdHfPg_1 9/14/20 8:09 AM Page 1
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Britannia Global Markets Limited
Jackson House, 18 Savile Row, London,
W1S 3PW, UK
T: + 44 (0)20 7758 4777
F: + 44 (0)20 7287 5292
W: www.britannia.com/gm
BTIG, LLC
600 Montgomery Street, 6th Floor,
San Francisco, CA 94111, USA
T: +1 212 527 3515
E: futureslmetrading@btig.com
W: www.btig.com
NatWest Markets Plc
250 Bishopsgate, London, EC2M 4AA, UK
T: +44 (0)20 7085 5000
F: +44 (0)20 7085 8865
W: http://www.rbs.com/gbm
PhillipCapital UK Limited
3rd Floor, 12-14 Mason's Avenue, London,
EC2V 5BT, UK
T: +44 (0)20 7398 3123
E: LME@PhillipCapitalUK.com
W: www.phillipcapitaluk.com
TSI Titanium/Sierra Alloys/Sierra Precision Rolled
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STS Metals Companies
Sierra Alloys TSI Titanium Sierra Precision
5467 Ayon Avenue P.O. Box 69 Rolled Products
Irwindale, CA 91706 718 Y Street 15160 Prater Drive
626- 969- 6711 Derry, PA 15627 Covington, GA 30014
800- 423-1897 724- 694-2716 626-969-6711
866-788-7080 800-423-1897
www.stsmetals.com
Antofagasta Minerals SA
CATEGORY 5
Av. Apoquindo 4001, 18th Floor, Las Condes,
A & M Minerals Limited Santiago, 7550162, Chile
T: +56 2600 3938
Apex Yard. 29-35 Long Lange, London, W: http://www.antofagasta.co.uk
SE1 4PL, UK
ASB Group Asia Investment Limited
F: +44 (0)20 7403 3166
W: http://www.amgroup.uk.com Room 1205, 12/F, Tai Sang Bank Building,
130-132 Des Voeux Road Central, Hong Kong
ABans Global Limited T: +(86) 0755-82835365
F: +(86) 0755-82830713
Ground Floor, 208 Uxbridge Road, Shepherds
E: contact@rsdgroup.cn
Bush, London W12 7JD, UK
T: +44 (0)203 290 1909
Ashton Commodities Limited
W: http://www.abansglobal.co.uk
Meridian House, 42, Upper Berkeley St,
Achit-Ikht LLC W1H 5PW, UK
T: +44 (0)20 3290 3987
21 floor, KB Tower, Chinggis Avenue-6,
F: +44 (0)20 7170 4200
Khan-Uul district, Ulaanbaatar 17010,
Mongolia
Aurubis AG
T: +976 7595 1199
W: http://achit-ikht.mn/2016/?lang=en Postfach 10 48 40, Hamburg, D-20033,
Germany
Ambro Limited F: +49 40 7883 2255
W: http://www.aurubis.com
5 Elstree Gate, Elstree Way, Borehamwood,
Hertfordshire, WD6 1JD, UK
Banque de Développement de Guinée S.A
T: +44 (0)203 053 1835
F: +44 (0)203 053 1840 Rue Ka 24, Avenue de Republique, District
W: http://www.ambrometal.co.uk
October 2020 | Metal Market Magazine | 41
London Metal Exchange 2020

of Almamya, Municipality of Kaloum, P.O. Eiger Trading Advisors Limited F: +34 94 471 0398
Box: 3265, Conakry, Republic of Guinea W: http://www.indumetal.com
T: +224 669 191919 Riverbridge House, Guildford Road,
W: http://www.bdg-guinea.com Leatherhead, Surrey, KT22 9AD, UK Intamex SA
T: +44 (0)203 216 2520
BGRIMM Lilan Consulting Corp., Ltd F: +44 (0)137 236 5864 Avenue de Cour 74, 1007 Lausanne – CH,
W: https://www.eigertrading.com/public/ Switzerland
904, Building 23, Zone 18 of ABP, No.188, T: +00 41 21 614 05 00
South 4th Ring Road West, Beijing 100160 Elvahalcor Hellenic Copper and Aluminium E: intamex@intamex.com
T: +86 10 63299746 Industry S.A. http://www.intamex.com/
E: lilan@lilanconsulting.com
W: www.lilanconsulting.com 16 Himaras Street, Maroussi, 15125, Greece Jaypee International Inc
F: +30 1686 1247
BHP Billiton Marketing AG W: http://www.halcor.gr 30 South Wacker Drive, Suite 1700, Chicago,
Illinois, 60606, USA
Joechlerweg 2, P.O. Box 105, Baar, Zug, 6340, Fajr Investment Advisory BSC (c.) T: +1 (312) 655 7606
Switzerland F: +1 (312) 275 7300
T: +31 70 315 6614 6th Floor, Al Rossais Tower, Road 1704, W: http://www.jaypeeusa.com
F: +31 70 315 6721 Diplomatic Area, Manama, Bahrain
W: http://www.bhpbilliton.com T: +973 17 517000 JLY Metals Pte. Ltd.
F: +973 17 540600
Britannia Refined Metals Limited W: http://www.fajr.com.bh 100 Peak Seah Street, #07-20, PS100, 079333,
Singapore
Botany Road, Northfleet, Kent, DA11 9BG, UK Falcon Commodity Services Ltd T: +65-62200012
T: +44 (0)1474 538 200 F: +65-62200013
F: +44 (0)1474 538 203 8-10 South Street, Epsom, Surrey, KT18 7PF, UK E: layyong@jly.com.sg
W: http://falconcommodityservices.co.uk
Chile Copper Limited KME Germany GmbH & Co.KG
Freeport McMoran Copper & Gold Inc
27 Albemarle Street, London, W15 4HZ, UK Klosterstrasse 29, Osnabrueck, D-49074,
T: +44 (0)20 7907 9610 1615 Poydras Street, New Orleans, Louisiana, Germany
70112, USA T: +49 541 321 4900
Condor Trade Limited T: +1 (504) 582 1835 F: +49 541 321 4930
W: http://www.fcx.com W: http://www.kme.com
Ground Floor, Victory Way, Admirals Park,
Crossways, Dartford, Kent, DA2 6QD, UK Gerli Metalli Spa LAGO Resources SA
T: +44 (0)20 7824 8948
Viale Sabotino 19/2, Milano, 20135, Italy 2 Dogana Vecchia, 6900 Lugano, Switzerland
Crown Exports (Singapore) Pte Ltd T: +39 0280 95 11 E: info@lago-resources.com
F: +39 0289 00 714 W: http://www.lago-resources.com
3 Shenton Way, #12-09, Shenton House, E: gerlimetalli@gerlimetalli.it
068805, Singapore W: http://www.gerlimetalli.it Lee Kee Group Limited
F: (+65) 6221-4990
E: crown@crownexports.net GFI Securities Limited No.16, Dai Fat Street, Tai Po Industrial Estate,
W: http://www.crownexports.net/ TAI PO, Hong Kong
1 Snowden Street, London, EC2A 2DQ, UK T: +852-27890282
Darton Commodities Limited F: +44 (0)20 7877 8065 F: +852-27890303
W: http://www.gfigroup.com/ E: marketing@leekeegroup.com
St Thomas Court, 39 Epsom Road, Guildford, W: http://www.leekeegroup.com
Surrey, GU1 3LA, UK Glencore (UK) Ltd
T: +44 (0)1483 514177 Liberty Commodities Limited
W: http://www.dartoncommodities.co.uk 50 Berkeley Street, London, WIJ 8HD, UK
F: +44 (0)20 7499 5555 7 Hertford Street, London, W1J 7RH, UK
DD&Co Limited W: http://www.glencore.ch T: +44 (0)203 205 8550
F: +44 (0)203 205 8599
8-10 Grosvenor Gardens, London, SW1W 0DH, Indometal (London) Limited W: http://www.libertyhouseuk.com/
UK
T: +44 (0)20 7663 5462 3rd Floor, Palladium House, 1-4 Argyll Street,
London, W1F 7LD, UK Metal Registration Limited
W: http://www.ddcap.co.uk
T: +44 (0)20 7837 5344 180 Piccadilly, London, W1J 9HF, UK
Eastern Alloys Inc E: operations@indometal.co.uk T: +44 (0)20 7917 2740
F: +44 (0)20 7917 1740
Henry Henning Dr., PO Box 317, Maybrook, Indumetal Recycling SA W: http://www.metalreg.com
New York, 12543, USA
T: +1 (845) 427 5185 Carretera de la Cantera 11, Asua-Erandio,
W: http://www.eazall.com Vizcaya, 48950, Spain

42 | Metal Market Magazine | October 2020

Metdist Limited Road, Kowloon, Hong Kong E: aluminium@tmt-metals.com
T: +852-5533 4891 W: http://tmt-metals.com/
10-12 Emmanuel Rhoides Street, Ayia Zoni E: info@perfecthexagon.com
3031, Limassol, Cyprus W: http://www.perfecthexagon.com/ Teck Metals Ltd
T: +357 25 55 77 00
F: +357 25 55 77 99 Richmond Commodities Limited Suite 3300, 550 Burrard Street, Vancouver, BC,
V6C 083, Canada
Nexans Deutschland GmbH Runnymede Malthouse, PO Box 234, Egham, T: +1 604 682 0611
Surrey, TW20 9WW, UK F: +1 604 685 3041
Kabelkamp 20, 30179, Hannover, Germany T: +44 203 463 0770 W: http://www.teckcominco.com
T: +49 (0)2166 27 2127 F: +44 203 463 0771
F: +49 (0)2166 27 2673 Traderight Ltd.
Tangent Trading Limited
Outokumpu Oyj Elizabeth House, 28 Baddow Road,
1 Dollis Mews, London, N3 1HH, UK Chelmsford, Essex, CM2 0DG, UK
Salmisaarenranta 11, 00180 Helsinki, Finland T: +44 (0)20 8349 4822 T: +44 (0)203 675 1810
T: +35 89 42 11 F: +44 (0)20 8349 4860 E: info@traderightuk.com
F: +35 89 42 13 888 W: http://www.tangenttrading.co.uk W: http://www.traderightuk.com/
W: http://www.outokumpu.com
Tiberius Group AG Tradition Dubai Limited
Oxford Commodities Limited
Dorfstrasse 13, Baar – 6340, Switzerland Level 2 Unit 3, DIFC, PO BOX 506530, Dubai,
Office 1017 London Barbican, 88 Wood Street, T: +41 (0)41 560 00 81 UAE
London, EC2V 7RS, UK W: www.tiberiusgroup.com T: +971 4 364 1400
T: +44 (0)20 7877 8040 F: +971 4 363 7158
F: +44 (0)20 7877 8041 TMT Metals AG W: http://www.tradition.com
Perfect Hexagon Limited Baarerstrasse 53, Zug 6300, Switzerland TRIMET Aluminium SE
T: +41 41 544 2801
Unit 1601, 16th Floor, Greenfield Tower, F: +41 41 544 2669 Aluminiumallee 1, Essen, D-45356, Germany
Concordia Plaza, No. 1, Science Museum

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London Metal Exchange 2020

T: +49 (0)201 366-501 T: +44 (0)20 7815 3000

F: +49 (0)201 366-21501 F: +44 (0)20 3145 5000 REGISTERED INTERMEDIATING BROKERS
W: http://www.trimet.de E: lmegrouplondon@icbcstandard.com
TIER 1 RIBS
UIL Singapore Pte Ltd StoneX Financial Ltd Currently there are no members in this
category
50 Collyer Quay, 08-05 OUE Bayfront Building, 1st Floor, Moor House, 120 London Wall,
049321, Singapore London, EC2Y 5ET, UK TIER 2 RIBS
T: +65 6922 6422 T: +44 (0)20 7634 4820 Freight Investor Services Limited
F: +65 6226 3641 E: metals@intlfcstone.com
W: http://www.udtrading.com W: http://www.intlfcstone.com 80 Cannon Street, London, EC4N 6HL, UK
T: +44 (0)20 7090 1120
Vale Canada Limited Marex Financial W: www.freightinvestorservices.com/

Royal Bank Plaza, 200 Bay Street, Suite 1500, Level 5, 155 Bishopsgate, London, EC2M 3TQ GFI Brokers Limited
South Tower, PO Box 70, Toronto, Ontario, M5J T: +44 (0)20 7655 6000
2KZ, Canada F: +44 (0)20 7655 6024 1 Snowden Street, London, EC2A 2DQ, UK
T: +1 (416)361 7511 E: enquiries@marexspectron.com T: +44 (0)20 7422 1000
F: +1 (416)361 7781 W: http://www.marexfinancial.com E: ironore@gfigroup.com
W: http://www.vale.com W: http://www.gfigroup.co.uk/
Morgan Stanley & Co. International PLC
Wilhelm Grillo Handelsgesellschaft mbH ICAP Energy Limited
25 Cabot Square, Canary Wharf, London,
Am Grillopark 5, Duisburg, 47169, Germany E14 4QA, UK Verde Building, Level 3-10 Bressenden Place,
T: +49 2034 0660 T: +44 (0)20 7425 8000 London, SW1E 5DH, UK
F: +49 2034 0661 F: +44 (0)20 7425 8990 T: +44 (0)20 7000 5000
W: http://www.grillohandel.de W: http://www.morganstanley.com E: info@icap.com
W: http://www.tpicap.com/
Xinden Trading PTE Ltd Société Générale
JVA Brokers Limited
10 Anson Road, #33-07/08, International SG House, 41 Tower Hill, London, EC3N 4SG, UK
Plaza, Singapore (079903) T: +44 (0)20 7867 8721 1 Manchester Square, London, W1U 3AB, UK
T: +65 9387 6567 F: +44 (0)20 7762 5451 T: +44 (0) 209 219 2690
E: cjh63253951@163.com E: base.london@sgcib.com E: jvabrokers.com
W: https://jvabrokers.com/
LMEPRECIOUS CATEGORY ICM - INDIVIDUAL CLEARING MEMBER
Natixis Marex Spectron International Limited
GCM – GENERAL CLEARING MEMBER
Cannon Bridge House, 25 Dowgate Hill, Level 5, 155 Bishopsgate, London, EC2M 3TQ
BOCI Global Commodities (UK) Limited
London, EC4R 2YA, UK T: +44 (0)20 7655 6000
1 Lothbury, London, EC2R 7DB, UK T: +44 (0)20 3216 9000 W: https://www.marexspectron.com/
T: +44 (0)20 3301 9977 F: +44 (0)20 3216 9201
F: +44 (0)20 3301 9967 W: http://www.natixis.com SCB Brokers SA
E: nfouk@bocigroup.com
W: http://www.bocigroup.com NCM - NON-CLEARING MEMBER 17 Avenue de Perdtemps, 1260 Nyon,
Morgan Stanley Capital Group Inc. Switzerland
Commerzbank AG T: +41-22 365 5505
1585 Broadway, New York, NY 10036, USA E: BatteryMaterials@starcb.com
PO Box 52715, 30 Gresham Street, London, T: +1 212 761 4000 W: https://starcb.com/
EC2P 2XY, UK W: http://www.morganstanley.com
T: +44 (0)20 7444 9075 SSY Futures Limited
F: +44 (0)20 7475 1854 O.S.T.C Limited
E: comdt@commerzbank.com Tower Bridge House, 1 St Katherines Way,
2nd Floor Imperial House, 21-25 North Street, London, E1W 1BQ, UK
W: https://www.commerzbank.com/
Bromley, Kent, BR1 1SD, UK T: +44 (0)20 7977 7504
T: +44 (0)203 326 9050 E: futures@ssy.co.uk
Goldman Sachs International
F: +44 (0)203 514 3025
Peterborough Court, 133 Fleet Street, London, W: http://www.ostc.com Tullett Prebon (Europe) Limited
EC4A 2BB, UK
T: +44 (0)20 7774 2020 XTX Markets Limited Floor 2, 155 Bishopsgate, London, EC2M 3TQ
W: http://www.gs.com T: +44 (0)20 7200 7257
R7, 14-18 Handyside Street, London, N1C 4DN, W: http://www.tpicap.com/
UK
ICBC Standard Bank PLC Member data courtesy of the London Metal
W: http://www.xtxmarkets.com
20 Gresham Street, London, EC2V 7JE, UK Exchange as of September 29, 2020

44 | Metal Market Magazine | October 2020

London Metal Exchange 2020
LME-approved
warehouse companies
There are hundreds of LME-approved storage facilities in dozens of locations across the USA, Europe and Asia. The LME
authorizes warehouse companies and the warehouses they operate to store LME-registered brands of metal, on
behalf of warrant holders, and issue LME warrants through their London agent for material delivered into their
approved warehouses. Here is a list of warehouse companies that have LME-approved warehouses in their portfolio.
BELGIUM
Access World Vlissingen BV
Monacoweg 2, Port 9310 4455 SZ
Nieuwdorp, The Netherlands
C. Steinweg Belgium N.V.
Haven 73, Ouland 3, B2030, Antwerp
CWT Commodity Logistics Rotterdam B.V.
Nieuwesluisweg 192, 3197 KV, Rotterdam
Erus Metals Ltd
Commodity House, Commodity Centre,
Great Braxted, Essex, CM8 3EW
Henry Bath BV
Albert Plesmanweg 63, 3088 GB,
Rotterdam, The Netherlands
P Global Services NV
Noorderlaan 113, 2030, Antwerp
Vollers Group GmbH
c/o Vollers Belgium NV, Kaaien 218220
2030, Antwerp
Zuidnatie NV
Antwerpsebaan 1, 2040, Antwerp
4STOX NV
Noorderlaan 614 - Haven 380, Antwerp
GERMANY
BLG Cargo Logistics GmbH
Senator Borttscheller Str., Terminal 21
28197, Bremen
C. Steinweg (Sud-West Terminal)
GmbH & Co.
Am Kamerunkai 5 20457, Hamburg
Vollers Group GmbH
Rossweg 20 20457, Hamburg
ITALY
Access World (Italy) S.r.l.
Piazza Unita d'Italia 7 34121, Trieste,
PO Box 1385
C. Steinweg - GMT S.r.l.
Via Scarsellini 119, Torri Gemelle 16149, Genoa
F. lli Bartoli
Via S. Orlando 36/38 (P.O.B. 172) 57123, Leghorn
P Global Services NV
Noorderlaan 113 2030, Antwerp
JAPAN
Hokkai Mitsui Soko Co. Ltd
20-1 Nishi-Shinbashi 3-chome Minatoku,
Tokyo, 105-0003
Mitsubishi Logistics Corp.
1-19-1 Nihonbashi Chuo-Ku, Tokyo,103-8630
The Sumitomo Warehouse Co. Ltd
Tokyo Headquarter 11-1 Shibakoen 2-
Chome Minato-Ku, Tokyo, 105-0011
SOUTH KOREA
Access World Logistics (Singapore) Pte. Ltd.
438B Alexandra Road, Alexandra
Technopark #08-01, Singapore, 119968
C. Steinweg Warehousing (FE) Pte Ltd
28 Jurong Port Road, Singapore, 619113
CWT Commodity Logistics (S) Pte. Ltd.
CWT Logistics Hub 1, 38 Tanjong Penjuru,
Singapore, 609039
H&M Metal Warehousing (S) Pte. Ltd.
60 Paya Lebar Road, #12-32 Paya
Lebar Square, Singapore, 409051
Henry Bath Singapore Pte Ltd
Warehouse SB8 Sembawang, Wharves 21
Deptford Road, Singapore, 759660
ISTIM UK Ltd.
Pennant House, Napier Court, Napier Road,
Reading, RG1 8BW
Metro International Trade Services (UK) Ltd
c/o Metro International Trade Services LLC,
2500 Enterprise Drive Allen Park, MI, 48101
P Global Services NV
Noorderlaan 113, 2030, Antwerp
MALAYSIA
ACE (Asia) Pte. Ltd.
152 Beach Road, # 28 Gateway East,
Singapore, 189721
Access World Logistics (Singapore) Pte. Ltd.
438B Alexandra Road, Alexandra Technopark
#08-01, Singapore, 119968
C. Steinweg Warehousing (FE) Pte Ltd
28 Jurong Port Road, Singapore, 619113
CWT Commodity Logistics (S) Pte. Ltd.
CWT Logistics Hub 1, 38 Tanjong Penjuru,
Singapore, 609039
Edgemere Terminals Ltd
Coopers Studios, 14 Westgate Road,
Newcastle Upon Tyne, NE1 3NN
H&M Metal Warehousing (S) Pte. Ltd.
60 Paya Lebar Road, #12-32 Paya Lebar
Square, Singapore, 409051
October 2020 | Metal Market Magazine | 45
London Metal Exchange 2020

Henry Bath Singapore Pte Ltd Henry Bath BV

Warehouse SB8, Sembawang Wharves,
21 Deptford Road, Singapore, 759660
ISTIM UK Ltd.
Pennant House, Napier Court, Napier Road,
Reading, RG1 8BW
Metro International Trade Services (UK) Ltd
c/o Metro International Trade Services LLC,
2500 Enterprise Drive, Allen Park, MI 48101
P Global Services NV
Noorderlaan 113, 2030, Antwerp
NETHERLANDS
Albert Plesmanweg 63, 3088 GB,
Rotterdam, The Netherlands
Independent Commodities Logistics BV
Plaza 6, 4782 SK Moerdijk, Port No. M010
ISTIM UK Ltd.
Pennant House, Napier Court, Napier Road,
Reading, RG1 8BW
Kloosterboer Vlissingen B.V.
PO Box 66, 4380 AB, Vlissingen
Metaal Transport BV
(Heijplaatweg 16) P.O.B. 54500 3008 KA,
Rotterdam/Heijplaat
SINGAPORE
Access World Logistics (Singapore) Pte. Ltd.
438B Alexandra Road, Alexandra
Technopark #08-01, Singapore, 119968
C. Steinweg Warehousing (FE) Pte Ltd
28 Jurong Port Road, Singapore, 619113
GKE Metal Logistics Pte Ltd
1 North Bridge Road,High Street Centre,
#20-10, Singapore, 179094
H&M Metal Warehousing (S) Pte. Ltd.
60 Paya Lebar Road, #12-32 Paya Lebar
Square, Singapore, 409051

Access World Vlissingen BV P Global Services NV Henry Bath Singapore Pte Ltd
Monacoweg 2, Port 9310 4455 SZ, Nieuwdorp Noorderlaan 113, 2030, Antwerp Warehouse SB8, Sembawang Wharves,
21 Deptford Road, Singapore, 759660
C. Steinweg-Handelsveem BV Verbrugge International B.V.
(Parmentierplein 1) P.O.B. 1068, Finlandweg 8, 4538 BL, Terneuzen ISTIM (Singapore) Pte Ltd
3000 BB, Rotterdam 1 Marina Boulevard #28-00, Singapore, 018989
Vollers Group GmbH
CWT Commodity Logistics Rotterdam B.V. c/o Vollers Holland B.V., Bunschotenweg 141
Nieuwesluisweg 192, 3197 KV, Rotterdam 3089 KB, Rotterdam SPAIN
Access World (Spain) S.A.U.
Avd/Diagonal 579-585, 9ªpl. 08014, Barcelona

Zinc

Copper

Lead

Tin

Nickel

Aluminium

 NF metals  Secondary metals  NF metal scrap  Metal residues

Minor metals

Wilhelm Grillo Grillo Altmetall GmbH Wilhelm Grillo

Handelsgesellschaft mbH
Am Grillopark 5
47169 Duisburg
Germany
Phone +49 (0)203 40 66 0
Fax +49 (0)203 40 66 101
Willy-Brandt-Ring 11
47169 Duisburg
Germany
Phone +49 (0)203 40 66 0
Fax +49 (0)203 40 66 106
Handelsgesellschaft mbH
Metallschmelze Tattendorf GmbH
Grillostraße 1– 5 A Company of the Family
2523 Tattendorf
Austria
Phone +43 (0)2 253 72 000
Fax +43 (0)2 253 81 247

For further information: info@grillohandel.de · www.grillohandel.de

46 | Metal Market Magazine | October 2020

London Metal Exchange 2020

C. Steinweg-Handelsveem BV Independent Commodities Logistics BV Keystore Ltd

(Parmentierplein 1) P.O.B. 1068, 3000 BB,
Rotterdam
Halley Metals Iberica SA
Carretera de La Cantera, 11 (Cantera
Errepidea) 48950 Asua – Erandio (Bizkaia)
P Global Services NV
Noorderlaan 113, 2030, Antwerp
SWEDEN
C. Steinweg (Scandinavia) AB
Kronhusgatan 11, SE-411 05, Gothenburg
TAIWAN
Access World Logistics (Singapore) Pte. Ltd.
438B Alexandra Road, Alexandra
Technopark #08-01, Singapore, 119968
ACE (Asia) Pte. Ltd.
152 Beach Road, # 28 Gateway East,
Singapore, 189721
C. Steinweg Warehousing (FE) Pte Ltd
28 Jurong Port Road, Singapore, 619113
H&M Metal Warehousing (S) Pte. Ltd.
60 Paya Lebar Road, #12-32 Paya Lebar
Square, Singapore, 409051
Henry Bath Singapore Pte Ltd
Warehouse SB8, Sembawang Wharves 21
Deptford Road, Singapore, 759660
Plaza 6, 4782 SK Moerdijk, Port No. M010 Keyhouse Earles Road, Hedon Road,
Hull, HU9 1UD
P Global Services NV
Noorderlaan 113, 2030, Antwerp
USA
UAE Access World (USA) LLC
6301 New Cold Mill Road, Edgemere, MD 21219
Access World Logistics LLC
Office 502, RHS Building, Khalid Bin Walid C. Steinweg (Baltimore) Inc.
Road, Al Rafa, Bur Dubai FTZ No.74, 1201 Wallace Street, Baltimore,
Maryland 21230
C. Steinweg-Handelsveem BV
(Parmentierplein 1) P.O.B. 1068, 3000 BB, Edgemere Metals USA LLC
Rotterdam 8004 Stansbury Road, Baltimore, Maryland,
21222
CWT Commodity Logistics (S) Pte. Ltd.
CWT Logistics Hub 1, 38 Tanjong Penjuru, Henry Bath LLC
Singapore, 609039 2400 Broening Highway, Suite 200,
Baltimore, MD 21224
UK ISTIM Metals LLC
41425 Joy Road, Canton, MI 48187
Erus Metals Ltd
Commodity House, Commodity Centre, Metro International Trade Services LLC
Great Braxted, Essex, CM8 3EW 2500 Enterprise Drive, Allen Park, Michigan,
48101
Henry Bath & Son Ltd
12 Princes Parade, Princes Dock, Liverpool, PGS USA Holding, LLC
L3 1BG 2424 Edenborn Avenue Suite 550, Metairie,
LA 70001
Henry Diaper & Co. Ltd
PO Box 25, Lees Road, Knowsley Industrial S. H. Bell Company
Park, Liverpool, L33 7SD 644 Alpha Drive, PO Box 11495, Pittsburgh,
Pennsylvania, 15238
ISTIM UK Ltd.
Pennant House, Napier Court, Napier Road,
Reading, RG1 8BW

With LME permission, data in this summary list of companies running LME-approved warehouses was extracted from the exchange’s full list of
warehouses as at September 29, 2020. The current full list is available at: https://www.lme.com/Trading/Warehousing/Approved-warehouses

LME-listed samplers and assayers

LME-listed samplers and assayers (LSAs) are independent organizations skilled in the chemical analysis of metals.
From an LME perspective, the organizations play an important role before and after brands are listed. Before brand
listing, LSAs are required to sample and evaluate the chemical quality of metals, which are subject to assessment,
before a brand is approved. Evaluation must comply with the quality requirements outlined in contract specifications.
After brand listing, LSAs will issue certificates of analysis basis agreed sampling procedures for metals to be placed on
LME warrant where original producer documentation may not be available

Alex Stewart International Corporation Ltd Alfred H Knight International Limited ALS Inspection UK Limited
Unit 2b, Sefton Business Park, Liverpool, Pegasus House, Kings Business Park, Prescot, Caddick Road, Knowsley Business Park,
L30 1RD, UK Knowsley, L34 1PJ, UK Liverpool, L34 9HP, UK

October 2020 | Metal Market Magazine | 47

London Metal Exchange 2020

LME-listed samplers and assayers list continued

BGRIMM MTC Technology Co., LTD Promet Metals Testing Laboratory Limited
Room A708, A701, No.1 Building, No.22 16 Dai Fat Street, Tai Po Industrial Estate, Tai
Beixing Road East, Daxing District, Beijing, Po, NT, Hong Kong
China
RC Inspection B.V.
CCIC London Company Limited Gustoweg 66, 3029 AS, Rotterdam,
37-41 Finchley Park, London, NI2 9JY, UK Netherlands

Inspectorate International Limited SGS-CSTC Standards Technical Services

2 Perry Road, Witham, Essex, CM8 3TU, UK (Tianjin) Co., Ltd.
SGS Mansion, No.41, 5th Avenue, Tianjin
Inspectorate (Shanghai) Ltd 300457, China
4/F No. 1288 Waima Road, Huangpu District,
Shanghai, China 200011 SGS Nederland BV
Malledijk 18, 3200 AE Spijkenisse, Netherlands
Laboratory Services International
Rotterdam BV Shanghai Zhongchu Materials Inspection
Pittsburghstraat 9, 3047 BL Rotterdam, Co Ltd
Netherlands NO. 489 Tieshan Road, Boashan District,
Shanghai, China
Mitra S.K. Private Limited
Shrachi Centre (5th Floor) 74B Acharya,
Jagadish Chandra Bose Road, Kolkata – Data is courtesy of the LME as at September 22,
700016, West Bengal, India 2020

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48 | Metal Market Magazine | October 2020

Industrial Minerals

Titanium dioxide makers

aim for a steady course
Producers of titanium dioxide and its
feedstocks had much to fear from the
Covid-19 pandemic. Demand for pigment
has long been particularly sensitive to
fluctuations in the global economy, so a
worldwide pandemic threatened to weigh
heavily on prices. But the sector has proved
resilient so far, aided by factors including
the prolonged stock drawdown of previous
years, an increased industry focus on
tailoring production to demand and steady
demand from China and other markets.
Titanium dioxide pigment
Global economic growth has traditionally
been used as a proxy for titanium dioxide
demand. Construction, renovation and
manufacturing all drive demand for
pigment, and these activities all
accelerate during times of rapid economic
growth and slow when the economy is
stagnant or shrinking.
This means the global effects of the
Covid-19 pandemic should be very
bearish. But paintmakers, one of the major
buyers of titanium dioxide, have drawn a
more sanguine picture of 2020 demand.
Paintmaker PPG in August upgraded
its revenues forecast while reporting
better-than-expected July sales, and
upgraded its expectations for the third
quarter. "Led by improving demand
trends in our Chinese and European
businesses across a variety of coatings
end-use markets, and in global industrial
production, our July sales increased
sequentially from the month of June and
were down by 7% compared with the prior
year," PPG chief executive officer Michael
McGarry said.
Producers also saw demand remaining
more stable than had been initially feared.
Major titanium dioxide producer
Chemours in August reported that the
sharpest drop seen in demand was from
Europe and Asia, with North American
Price stabilization and inventory control are
bearing fruit for titanium dioxide and mineral
sand producers, even as Covid-19 rocks pigment
markets, writes William Clarke
One reason that the market has been
resilient is that stocks of the material
were fairly low at the start of 2020,
meaning buyers are still forced to make
hand-to-mouth purchases. Titanium
dioxide has long been a highly cyclical
market. When prices are on the rise,
buyers rush to fill up their inventories,
and as demand eases they trim purchases
even faster, allowing their reserves to run
down in anticipation of lower prices.
Producers are increasingly keen to
disrupt that trend by varying their output
to reflect changes in demand.
Chemours markets its material at
stable prices in long-term supply
agreements. Customers who want to
obtain material outside these long-term
agreements can make spot purchases
through an online portal which offers
current product prices based on supply
and demand. Chemours reduced
production in 2019, effectively
Titanium dioxide pigment, chloride grade,
DDP Europe, € per tonne
3200
3000
2800
2600
2400
2019-06-20
supporting the market by reducing
supply.
The global titanium dioxide market is
split into two main production methods.
Sulfate titanium dioxide can be produced
from a wide range of feedstocks for a lower
price, but the process has a greater
potential for pollution and the
end-product is of lower quality. Chloride-
route titanium dioxide is more
technologically challenging, and requires
higher-grade feedstock such as rutile,
titanium slag, or high-quality ilmenite, but
the product is brighter. Chemours
produces high-quality titanium dioxide
products through the chloride route with
the use of proprietary technology.
Bruce Griffin, founder of consultancy
Farview Resources and commercial
director at mineral sand junior Sheffield
Resources (see box panel), noted that the
market support provided by supply
constraint was most acute in the United

2019-09-12
2019-07-11

2020-02-06

2020-03-19

2020-04-30
2019-03-28

2019-12-26

2020-09-24
2019-08-01

2020-01-16

2020-05-21

2020-07-23
2019-01-24

2019-04-18

2019-10-24

2019-12-05
2019-02-14
2019-03-07

2019-05-09

2020-09-03
2019-01-03

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2019-10-03

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2020-07-02
2019-08-22

2019-11-14

2020-04-09

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2020-08-13

demand sustained by a strong do-it-

yourself home improvement sector. But
another producer, Venator, struck a
cautious note for demand in the near term,
expecting a "gradual and uneven recovery Low Price High Price
in demand." Source: Fastmarkets

October 2020 | Metal Market Magazine | 49

Industrial Minerals

States. He said that an open question for
him is whether supply discipline in the US
would have been as effective without the
tariff barrier there.
Titanium dioxide has been one of the
materials caught up in the trade war
between the US and China. A series of
tit-for-tat tariffs means that exports of
Chinese titanium dioxide to the US now
attracts an extra 25% tax. This has
supported a decoupling of the US market
from the global market.
“The market has split into three,”
Griffin said. “China is a price-driven
market. All the quality producers export
as much as they can, and Europe, Asia and
Latin America is where those exports end
up as the US market is closed to China
because of tariffs.”
Fastmarkets assessed the price of
titanium dioxide pigment, chloride grade,
ddp Europe at €2,900-3,000 ($3,394-
3,512) per tonne on September 24,
compared with $3,000-3,300 a tonne for
titanium dioxide pigment, chloride grade,
ddp North America.
Griffin also ascribed the relative strength
of US prices compared with European as a
correction to an earlier trend following the
fire at Venator’s 130,000-tonne-per-year
plant in Pori, Finland and their subsequent
decision to close the plant in 2018. “Pori
buyers overbought [in response to the
fire],” he said. But when concerns over that
supply shock eased, “Europe moved from a
premium to discount.”
exports in 2020 were 331,276 tonnes,
compared with 231,815 tonnes in the first
quarter of 2019.
Market sources report strong demand
from many developing markets, including
India, Southeast Asia and South America,
with coatings demand growing strongly
despite the effects of Covid-19 lockdowns
on downstream consumption.
Fastmarkets assessed the price of
titanium dioxide pigment, sulfate grade,
fob China at $2,200-2,400 per tonne on
September 24, up from $2,100-2,200 at
the end of the first half of 2020, but down
from $2,200-2,550 in September 2019.
Mineral sands
The relative stability of titanium dioxide
end markets has also benefited mineral
sand miners. Ilmenite and rutile, the most
important feedstocks for titanium dioxide
production, have been in steady demand.
Ilmenite concentrate, 47-49% TiO2, cif China, $/tonne
260
240
220
200
180
160
2019-08-22
But the market has shifted in one
significant way. For a long time, the fastest
growth in demand and the greatest supply
tightness has been in the higher-grade
feedstocks, but this trend has reversed over
the past year.
Fastmarkets assessed the price of
ilmenite concentrate, 47-49% TiO2, cif
China at $230-250 per tonne on
September 24 compared with $190-210 a
tonne a year earlier. By comparison, the
price of rutile concentrate 95% TiO2 min,
bulk, cif China was $1,200-1,250 per tonne
on September 24, compared with $1,150-
1,250 a year earlier.
Natural rutile is a mineral with a very
high titanium content, and supply of this
feedstock is low. The growth in chloride
route titanium dioxide demand, as well as
demand from other sectors, including the
welding material industry, has kept prices
high. But with Chinese titanium dioxide

2020-05-21

2020-07-23
2019-07-11
2019-05-30

2019-08-01
2019-05-09

2020-07-02
2019-11-14

2019-12-26
2020-01-16

2020-02-27
2019-01-24
2019-02-14

2019-10-24

2019-12-05

2020-03-19
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2019-04-18

2020-02-06

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2019-06-20
2019-01-03

2019-10-03
2019-09-12

2020-04-09
2019-03-07

2020-09-03
2020-08-13
Chinese production grows
While there have been no precipitous
demand shocks triggered by the Covid-19
epidemic in 2020, there has also been no
sharp drop off in supply. A key feature of Low Price High Price
Source: Fastmarkets
the 2020 titanium dioxide market has
been the ability of Chinese titanium
dioxide production to grow Zircon, premium grade, 66.5% ZrO2 min,
uninterrupted, despite the disruption of
the Covid-19 epidemic to logistics and
bulk, cif China, $/tonne
workforces. 1700
China is world’s largest titanium
dioxide producer and dominates the 1600
production of commodity-grade sulfate
pigment. China exported 117,122 tonnes 1500
of titanium dioxide in August, compared
with 87,349 tonnes a year earlier, 1400
according to China customs data. In the
year to August, Chinese exports totaled
1300
777,792 tonnes, compared with 656,425
2019-08-22

2020-05-21

2020-07-23
2019-07-11
2019-05-30

2019-08-01
2019-05-09

2020-07-02
2019-11-14

2019-12-26
2020-01-16

2020-02-27
2019-01-24
2019-02-14

2019-10-24

2019-12-05

2020-03-19
2019-03-28
2019-04-18

2020-02-06

2020-04-30

2020-06-11

2020-09-24
2019-06-20
2019-01-03

2019-10-03
2019-09-12

2020-04-09
2019-03-07

2020-09-03
2020-08-13

tonnes a year earlier.

And the largest export volumes were in
the first three months of the year, despite
the effects of the Covid-19 epidemic on
logistics and production in China being Low Price High Price
heaviest in that period. First-quarter Source: Fastmarkets

50 | Metal Market Magazine | October 2020

Industrial Minerals
proving the most resilient sector,
increasingly the most acute demand is
focused on lower grade ilmenite,
particularly as domestic Chinese supply of
this ore has been hard to come by.
At the same time, the higher-grade
feedstock market has been supplied via the
resilient output of titanium slag from Rio
Tinto. Titanium slag, produced from
ilmenite, can be used as a high-grade
feedstock in chloride production. Rio Tinto
was forced to temporarily shut capacity at
both its South African and Canadian
facilities due to Covid-19 restrictions, with
output in South Africa also affected by
community unrest in late 2019. But in July
2020, Rio Tinto reported that output at
both sites had resumed.
Meanwhile, major titanium dioxide
producer Tronox is increasing its vertical
integration by acquiring a major European
titanium slag producer. Tronox said in May
2020 it would pay "approximately $300
million" for Eramet’s TiZir business.
TiZir’s Titanium & Iron Ilmenite (TTI)
facility in Norway produces around
230,000 tonnes per year of titanium slag, as
well as 90,000 tpy of high-purity pig iron.
Tronox’s existing facilities produced
Finding funding: Thunderbird case study
Mineral sands may be facing short-term
demand disruptions, but in the longer
term the industry is moving toward deficit.
Mineral sand miners focus on the highest
value part of the deposit first, meaning that
ore quality falls over the life of the mine.
These lower quality ores yield less
ilmenite, zircon and rutile per tonne
mined, meaning the rate of their
production declines.
As a number of large projects have been
operational for decades, the output of
heavy minerals is falling, and there is a
shortfall in the number of new projects.
For this reason, the struggle of some
potential major new sites to find funding
has been watched with concern.
One such site is Thunderbird, in
Western Australia, owned by Sheffield
Resources. The resource has an estimated
3.2 billion tonnes of ore, containing 6.9%
heavy minerals including zircon,
leucoxene and ilmenite.
But in early 2020, the project was still
struggling to find funding. In February
2020, Sheffield Resources announced it
cut back development to reduce capital
costs. And in April, the company said it
had suspended care and maintenance
activities in order to preserve cash,
410,000 tonnes of titanium slag in 2019
and this rate of production could rapidly
increase if the company reaches full
capacity at the massive Jizan facility in
Saudi Arabia. Rio Tinto, by comparison,
produced around 1.2 million tonnes of
titanium slag in 2019.
Demand for zircon, meanwhile, has
been slow as a result of a crunch in the
construction industry that hit a market
already in a down cycle. Zircon is not a
titanium ore, but is mined alongside rutile
and ilmenite in heavy mineral sand
deposits. Fastmarkets assessed the price
of zircon, premium grade, 66.5% ZrO2
min, bulk, cif China at $1,400-1,500 per
tonne on September 23. This compares
with a price of $1,500-1,600 per tonne a
year earlier.
Mineral sand miner Iluka, which is the
most zircon-focused of the major mineral
sand miners, in August reported a drop in
revenues for the first half of 2020, driven
primarily by lower zircon sales and pricing.
Iluka reported sales revenues for the first
half of 2020 at A$456.6 million ($324.5
million), compared with A$545.6 million
for the corresponding period of 2019. The
company sold 78,400 tonnes of zircon in
announcing a 25% cut to executive pay and
a reduction in staff at the same time.
The fortunes of the project shifted in
August 2020, when the company secured
an A$130.1 million ($93.3 million)
investment from Chinese steel producer
Yansteel to develop the Thunderbird
mineral sand project to supply ilmenite for
titanium dioxide production.
The agreement means Yansteel will
acquire 50% of the Thunderbird project
via the investment. Yansteel is a wholly-
owned subsidiary of Tangshan Yanshan
Iron & Steel – a privately owned Chinese
steel manufacturer – which recently
started constructing a 500,000-tpy
titanium dioxide processing facility,
including a titanium slag smelter.
The deal also includes a take or pay
offtake agreement for the total ilmenite
output of stage 1 of the project, which is
due to be processed at Tangshan’s Chinese
titanium dioxide facility, subject to an
Australian government review into foreign
investments.
Sheffield has also contracted offtake
agreements for all of the zircon
production during the first stage of
development at Thunderbird, the
producer said, with agreements for all
the first half of 2020, compared with
133,300 tonnes a year earlier, a fall of
41.2%. Its realized price for zircon in the
first half of 2020 was 11% lower than in the
first half of 2019, Iluka said.
A key driver of zircon demand is the
construction sector, particularly in China,
because it is used in ceramic fittings and
tile production. "Ceramic industry
activity in China recovered in April but
remained relatively flat throughout the
second quarter. Chinese tile makers’
operating rates were around 50-60% of
the operating rates in the same period in
2019," Iluka said.
"[Meanwhile], pressure from property
developers for more favorable pricing and
payment conditions resulted in margin
pressure throughout the entire value
chain, and in the closure of some smaller
producers," it added. "Chinese tile exports
were also affected by reduced demand
from key markets, including the US."
“The cycle peaked in mid-2019, it was
already declining before Covid-19,” Griffin
said. “There was weak Chinese demand,
particular ceramic demand.” He added that
in Q2, China bounced back a bit, but also
that demand has weakened in Europe.”
ilmenite production also signed.
Sheffield will begin a full-scale trial-
mining program by the end of the year to
confirm the mining plant design and
contract costs, and to collect bulk ore
samples. Site investigation and design will
take place over the same period.
Commercial director at Sheffield
Resources Bruce Griffin ascribed the rapid
development of the deal to Sheffield’s
ability to be flexible about offering the
ideal product to Yansteel, which is in need
of feedstock for its titanium slag and
titanium dioxide production plans. “We
thought about what the right product was
and were able to be responsive to a
motivated partner.”
“There’s a decent sized market for
ilmenite. The challenge is finding someone
who wants to work with you,” he
explained. “This was a case of the right
party coming at the right time,” he added.
“In this case it was people who were
looking to build a smelter, and they were
looking to manage their feedstock risk.”
Griffin also noted that the Australian
government has an interest in supporting
economic activity in the sparsely
populated region of Western Australia
where the Thunderbird mine is located.
October 2020 | Metal Market Magazine | 51
Industrial Minerals
Rare earths rejuvenated
With government support for rare earths
mining increasing, a growing number of
miners – including mineral sands producers
– now see value in a market that, for a long
time, was effectively closed to non-Chinese
producers due to its high costs and strict
environmental regulations.
For decades, China has been by far the
largest miner of rare earths – a group of 17
elements with unique magnetic and
physical properties and a wide range of
high-tech applications. And, more
significantly perhaps, China also processes
almost all the rare earth ores mined
globally. Processing and refining rare
earths is a complex, expensive and
potentially very polluting business because
of the need for repeated acid reductions to
separate out the elements – hence the
tough environmental controls.
This concentration of the industry in
China is worrying for governments outside
the country, given that rare earths are
essential in a large number of cutting-edge
military and ‘green’ technologies.
In addition, rare earth magnets have
become key elements in a number of new
energy technologies. Made from the rare
earths neodymium and praseodymium –
often alloyed with dysprosium or terbium
– these magnets are used in the power trains
of electric vehicles and in the power-
generation technology used with wind
turbines. The supply of these magnets is,
therefore, critical to the carbon-reduction
plans of most developed economies.
Concerns over Chinese dominance of
rare earth supply chains have been voiced
for decades, but the issue has taken on new
political urgency due to recent events. The
trade tensions between the United States
and China – sparked by tariff policies of the
current US administration – have raised
fears that rare earth exports from China
could be restricted.
Supplies outside China
The impact of the Covid-19 pandemic has
also triggered concerns over the
vulnerability of the global supply chain,
leading to a growing interest in support for
non-Chinese rare earth supplies and
unlocking a slew of government support
programs.
In the US, a series of presidential orders in
2019 called for an increase in domestic rare
earth mining, refining and magnet
52 | Metal Market Magazine | October 2020
Covid-19 and trade wars are stimulating rare
earth markets, reports William Clarke
production capacity; the US Department of
Defense has stepped up its strategic
stockpiling of key rare earths; and two
current bills in the US legislature aim to
provide tax breaks and support for rare earth
miners and processors.
Australia and India, meanwhile,
announced in June 2020 that they had
agreed to co-operate on the supply of key
minerals including lithium, zircon and rare
earths to India’s new energy sector. And in
September, the European Union unveiled a
new strategy to fund critical mineral
projects – including rare earth mining and
processing – through the European
Investment Bank.
The small number of rare earth producers
operating outside China has already begun to
reap the benefits of these programs. In
particular, Lynas Corp, which mines rare
earths in Australia and processes them in
Malaysia, has benefitted after a reversal in
strategy by the Malaysian administration saw
an easing of restrictions on the processing of
rare earths in the country.
In July, Lynas announced that it had
secured funding from the US Department of
Defense to build a heavy rare earth
processing plant, despite opposition from
some members of the US Congress who
argued the contract should go to a US-owned
company.
Also in July, MP Materials, which operates
the only rare earths mine in the US,
announced that it would list on the New York
Stock Exchange – with an estimated value of
around $1.5 billion – to raise money to
develop US-based processing capacity.
Mineral sands too
Another beneficiary of this support could
be the mineral sands industry. Heavy
mineral sands deposits are formed by
hydrological action, which sorts sands of a
similar weight. This means they consist of
seams of sand containing a mixture of
products. The most commercially
important components of these mineral
sands deposits tend to be ilmenite and
rutile, which are ores of titanium, zircon,
and, in some reserves, garnet.
But the deposits also often contain a
significant amount of monazite ore, which is
made up of valuable rare earths, such as
cerium, lanthanum and neodymium,
alongside the radioactive metal thorium,
which can be used as nuclear fuel, in certain
technical alloys and as an industrial catalyst.
The International Atomic Energy
Agency (IAEA) classes thorium-232,
thorium-228 and thorium-230 as
“low-toxicity alpha emitters” when
contained in ores, or in physical and
chemical concentrates. While there are
currently no commercial thorium reactors
in operation, there is considerable interest
in its potential as a nuclear fuel because
reactors using it produce less waste and are
much harder to integrate into a nuclear
weapons program.
Despite the potential value of monazite,
it is usually discarded because its
radioactive thorium content can make it
too costly to mine and process to extract
the different elements it contains. With a
changing political environment, and the
promise of sustained demand from the
mineral sands sector, however, some
miners are showing an increased interest in
the previously unmonetized monazite
fraction of their reserves.
Irish mineral sands miner Kenmare
Resources has already begun exporting a
monazite-rich mineral product from its
Moma mine in Kenya. Kenmare made its first
shipment of 13,300 tonnes of mineral sands
concentrate in the second quarter of 2019.
In April, Iluka resources began production
of rare earths at its Eneabba Project in
Western Australia. Iluka plans to sell 50,000
tonnes per year of a 20% monazite-zircon ore
concentrate for further processing. The
company already has a two-year offtake for
this project and is now working on a Phase 2
development at the Eneabba Project with a
target of refining the monazite to an 80%
concentrate before sale.
The material produced at Iluka is currently
suitable for sale to Chinese processors, but
Fastmarkets understands that the company
is also potentially interested in moving even
further down the value chain, and is
consulting on the possibility of constructing
rare earth processing capacity in Australia.
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October 2020 | Metal Market Magazine | 53
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Industrial Minerals
China’s magnesia hit by
fall in global demand
China’s magnesia prices continued a
downward trend in early 2020, following a
consistent decline in 2019, due to the
restrictions put in place to curb the spread
of Covid-19, which affected both domestic
and overseas demand in an already
low-priced environment.
Halted production and logistics delays in
China had added to the problems by early
February, and while the domestic situation
started to improve slightly from March
onwards, demand from buyers outside
China has remained weak since the
outbreak spread to the rest of the world.
A resurgence of Covid-19 infections in
Dalian in Liaoning province led to some
worries about production and delivery in
China’s magnesia sector, and global buyers
remained in no hurry to purchase and
placed only limited orders.
Most producers have had no choice but
to continue lowering their prices to attract
business and, in August, magnesia prices
– including caustic calcined, fused and
dead burned materials that Fastmarkets
monitors – dropped to their lowest level
since the early 2017 surge in prices.
Magnesia prices had been low for many
years prior to 2017 because of uncontrolled
domestic competition, but the
government’s imposition of mining controls
and a ban on extracting magnesite by using
explosives, created a short-term shortage of
material, leading to a sharp rise in prices,
which then persisted into 2018. Prices then
started to decline again in early 2019 due to
oversupply and falling demand.
Fastmarkets' spot prices for magnesia,
dead burned, 97.5% MgO, lump, fob
China, was at $300-350 per tonne on
August 18, down from $330-380 per tonne
the previous week. That price was
comparable to the low point of $305-335
per tonne of January 12, 2017, and was
down by 74% from the peak of $1,100-
1,400 achieved at the beginning of 2018.
Fastmarkets’ price assessment for
magnesia, fused, 97% MgO, Ca:Si 2:1,
lump, fob China, was $450-550 per tonne
on Tuesday August 18, down from
$480-580 per tonne from the previous
Global demand for magnesia has fallen
significantly due to the impact of the Covid-19
pandemic, with most magnesia prices falling to
their lowest levels since before the market rally
in 2017, reports Carrie Shi
week. That price was almost on a par with
the $440-455-per-tonne low seen at the
beginning of 2017, and represented a
70.6% decline from the $1,600-1,800-per-
tonne peak achieved at the end of 2017.
Similarly, Fastmarkets' price assessment
for magnesia, calcined, 90-92% MgO, fob
China, was $110-150 per tonne on
Tuesday August 18, down from $120-160
per tonne from the previous week, and
down by 35.6% from the late-2017 peak of
$205-230 per tonne.
“Sufficient supply and slow demand in
the Chinese magnesia industry keeps
putting pressure on prices even though
most producers are facing unsustainable
losses. Most magnesia prices have fallen to
the previous lowest levels [seen] before the
surge [of 2017],” a producer told
Fastmarkets.
“The uncertainty [of ] the Covid-19
outbreak has made most downstream
refractory makers and [other] downstream
sectors reduce their output because of the
whole weak supply chain, which has caused
limited demand for materials,” a trader said.
Stricter controls
Since 2017, the local government in
Liaoning province – China’s magnesia
production hub – has continued its efforts
to promote the healthy development of the
industry through stricter environmental
controls. And, in July 2020, a new round of
restrictions on opencast magnesite mining
using explosives began in Anshan, Yingkou
and Liaoyang cities.
The aim is to reduce environmental
pollution and reduce magnesia stocks by
controlling mining supplies, and the
controls are expected to remain in place
until the end of the year. Underground
magnesite mining, meanwhile, can
continue as normal using some explosives.
But market participants said this round
of restrictions will only have a limited
impact on China’s magnesia prices in an
already oversupplied market, with
magnesia prices showing little sign of
stopping sliding so far.
“Open-pit mining for magnesite by
explosives was halted [in July], but limited
support [for prices] has been seen. China’s
magnesia price wars remain [because]
eager sellers would like to boost sales,” a
second producer said.
Outlook
Most market participants do not expect to
see any significant improvement in the
magnesia industry in the short term,
considering the current lack of
downstream buying and more than
sufficient inventories, so the near-term
outlook for magnesia remains negative.
While domestic demand has seen a slight
improvement, international demand
remains disrupted by Covid-19
restrictions, and most producers are
pinning their hopes on an improvement at
the end of 2020 or the start of 2021.
“Downstream buying is still not active,
[and with no signs of an] increase in
demand, I think the market will not see any
recovery until the end of this year at the
earliest,” a buyer said. “It still needs time to
consume existing magnesia stocks and the
whole market remains in chaos. From my
point of view, the whole magnesia market
[is unlikely] to witness any increase this
year and I’m just [hoping for] a better
market in 2021,” a third producer said.
October 2020 | Metal Market Magazine | 55
 Market spotlight: Tube and Pipe
Large-diameter linepipe
suppliers chase sales
Global large-diameter linepipe producers are competing in a weaker world
market in which pipeline projects have been hit by the global Covid-19
pandemic. Kim Leppold surveys the damage and forecasts the outlook
Since the start of the energy
downturn as a result of the
global pandemic and oil price
war, demand for energy
tubulars – linepipe and oil
country tubular goods (OCTG)
– across the regions have taken
a severe hit as projects are
delayed or cancelled. In the
large-diameter linepipe market,
pipeline projects in the major
regions have been pushed back
at least a year as reduced oil and
gas output reduced the need for
capacity increases.
In 2020, global linepipe
consumption is forecasted to
drop from 2019 levels by nearly
2 million tonnes. The hardest
hit regions this year are CIS,
Europe and North America,
although most regions are
noting a year-over-year drop.
China bucks the trend
China, by contrast, is expected
to post a gain in linepipe
consumption this year on the
back of increased infrastructure
spending in the wake of the
economic downturn. In an
effort to spark growth, the
Chinese government brought
forward planned projects,
including pipelines.
Consumption in the country, as
a result, is expected to reach
over 6 million tonnes this year,
up from 5.1 million tonnes in
2019.
The increased domestic
demand has offset the reduced
consumption of Chinese
linepipe exports this year.
56 | Metal Market Magazine | October 2020
Nevertheless, Chinese prices
for API 5L X60 longitudinal
submerged arc welded (LSAW)
linepipe for export increased
this year, reaching over $900
per tonne in the third quarter,
surpassing that threshold for
the first time since May 2019.
Prices are higher mainly on
rising substrate and raw
materials costs during the
period. Indeed, iron ore prices
increased rapidly in the third
quarter, peaking in
mid-September after stepping
back slightly later in the month.
Asia-origin plate for linepipe
production increased by $100
per tonne from March this year
to September.
Looking ahead, however,
China’s impressive
consumption growth this year is
at the expense of consumption
in the coming years since
projects were moved forward
for economic stimulus.
Consumption is forecasted to
drop to 5.6 million tonnes in
2022 and then recover to above
6 million tonnes in 2024.
Project delays in US
In stark comparison to China,
North American linepipe
consumption is expected to
register an annual drop of
nearly 870,000 tons this year
from 2019, mainly as a result of
delayed or cancelled projects in
the US. Since the last downturn
in 2016 until the downturn
related to the pandemic, US oil
and gas transportation capacity
was strained as production rates
exceeded throughput.
Moreover, planned new liquid
natural gas (LNG) export
facilities required associated
pipelines to supply feedstock.
Now, with the reduction in
global natural gas demand,
which could persist in the
medium term, these LNG
projects are in doubt, leaving
the planned pipelines also
questionable. Moreover,
reduced crude oil production in
the shale basins, especially
Permian, has limited the need
for all the planned increase in
capacity. Many cancelled or
delayed projects will not be
revived.
Fastmarkets, which tracks the
major planned projects in the
USA as well as globally, notes
that about 12,400 km in pipeline
projects – adding up to an
estimated 2.8 million tonnes of
new linepipe supply – have been
cancelled or are in doubt since
Shares of linepipe types consumed
in 2020 (%)
100%
90%
80%
70%
60%
50%
40%
30%
20%
10%
0%
Africa China CIS Europe Middle East North Other Asia South
America America
Fastmarkets ERW HSAW LSAW
the energy downturn related to
the global pandemic. For 2020,
US large-diameter linepipe
consumption is expected to drop
by more than 700 kt year-over-
year. Spiral-welded linepipe
(HSAW) and LSAW linepipe are
expected to be affected similarly
at around 250 kt.
Through the five-year
forecast period, consumption is
forecasted to rise modestly per
year but not reach levels set in
2019. Indeed, in 2025, total
linepipe consumption is
expected to be 300 kt short of
2019, owing to the recently
cancelled pipeline projects.
While not all of this planned
capacity was destined to be
completed, the delays and
cancellations mean that
domestic pipe producers are
running at reduced capacity.
We estimate that current US
large-diameter (over-16-inch
OD) capacity utilization is
running at around 30%.
Compared with other energy
tubulars in the USA, these are
‘Through the some of the higher rates.
US five-year A point to note is that even
forecast period, though demand is dropping in
consumption is the US due to less project
activity, domestic producers in
forecasted to the US have the market largely
rise modestly to themselves due to low
per year but not imports. Since 2018 and the
imposition of Section 232
reach levels set tariffs and quotas, as well as
in 2019’ anti-dumping and
countervailing duties, US
imports of over-16-inch OD
linepipe has been on the
decline, dropping from an
average of 84 kt per month in
2018 to 63 kt per month in
2019, down to less than 17kt
per month through the first half
of 2020.
Meanwhile, US prices have
dropped this year, with LSAW
prices dropping to $1,400 per
tonne for LSAW X65 pipe in
September from $1,520 per
tonne at the start of the year.
HSAW prices over the same
period have fallen by just $40
per tonne. The substrate for
HSAW, HR coil, has rebounded
steeply in the third quarter of
2020 to where it is comparable
or higher in price than plate, the
substrate for LSAW. As a result,
pipe margins, especially for
HSAW, have been squeezed.
We expect prices to rebound
slowly in 2021.
Middle East blips
Middle East linepipe
consumption is forecasted to
decline by 545 kt this year from
2019, but then recover back to
2019 levels in 2021. We
recently revised upward our
forecast for Middle East
consumption and production
for 2020. While we still expect a
sharp decline in consumption
on the year in 2020, activities in
Iran, despite being strongly hit
by the pandemic, have
persevered with projects both
upstream and midstream.
Drilling for South Pars phase
11, which will require around
October 2020 | Metal Market Magazine | 57
Price data.
Forecasts & analysis.
Market news.
All in one place.

Commodities intelligence you need.

fastmarkets.com
Market spotlight: Tube and Pipe
130 kt of LSAW, is expected to
start by the end of this year.
And construction of the 1,000
km Goureh-Jask pipeline
started in June.
Beyond 2020 in the Middle
East, the peak year of the
five-year forecast will be 2022
at 2.67 million tonnes for the
year, but no year after 2020 is
expected to drop below 2.2
million tonnes in annual
consumption. Much of the
demand will be in LSAW or
HSAW linepipe, with LSAW
catering to the offshore
projects.
We expect Saudi Arabia to
remain the largest market for
LSAW linepipe in the Middle
East region, but we expect
Qatar to be the second major
market with the North Field
Expansion and North Field
Sustainability projects.
Over the 2023-2025 period,
we continue to forecast strong
market demand in Saudi
Arabia, and we also believe that,
assuming the country remains
politically stable, Iraq will
emerge as a major market for
LSAW in the region as a
number enquiries for pipeline
projects are being made.
For HSAW, we expect the
market to recover, but we have
revised our 2021 apparent
consumption forecast slightly
lower recently. The strong hit
from the pandemic on Middle
Eastern countries' budgets is
expected to slow the pace of
water projects, for which
significant tonnage of
API-quality HSAW is used.
Nevertheless, water projects
will continue to account for a
large part of Saudi Arabia's
HSAW demand. Moreover,
some HSAW may be needed for
the Jafurah gas project or
Master Gas expansion phase
III. Qatar is also moving
forward with its gas projects,
which we believe will require
significant HSAW tonnage as
well as LSAW.
From the start of the year
through the end of the third
quarter, Middle East linepipe
prices – which are mainly based
off import prices – diverged,
with LSAW prices higher in
September than they were in
January and HSAW lower over
the same period. LSAW prices
are up $90 per tonne through
the first three quarters of the
year. HSAW prices, while down
$45 per tonne, recovered
somewhat in the third quarter
from deeper lows in mid-year.
These prices are also driven
by Chinese export prices, which
have been unchanged or higher
through the pandemic. The
outlook for both Chinese and
Middle East pricing is to move
modestly higher in 2021 on the
improving demand. Chinese-
origin prices, however, could be
vulnerable to competition as
producers return to the export
market to raise operating rates
as demand improves.
Poland drives European growth
In 2019, European large-
diameter linepipe consumption
continued the downward trend
that started in 2018, and this
decline deepened through 2020
with a total drop of over 500 kt
for the year. We expect a
rebound in demand beyond
2020 – driven by strong growth
out of Poland – but no single
year in the forecast will exceed
2018’s level.
European LSAW apparent
consumption this year is
expected to decline to below
450 kt as the pandemic delays
maintenance and new projects.
Later in the forecast period we
expect the market to fluctuate
around the 750-850 kt range.
The probability of new
mega-projects emerging within
the region (such as the EastMed
project already planned) is
unlikely, but the market will be
maintained by a large number
of relatively small projects
(such as interconnectors) and
repair or replacement
requirements.
EU linepipe prices slipped
through the year in 2020, while
substrate prices – HR coil and
plate – remained stable or
increased in euro terms, putting
pressure on domestic
producers’ margins.
Improving gas connections in
European linepipe and substrate prices,
€ per tonne
1,200
1,100
1,000
900
800
700
600
500
400
Jan Apr Jul Oct Jan Apr Jul Oct Jan Apr Jul Oct Jan Apr Jul
17 17 17 17 18 18 18 18 19 19 19 19 20 20 20
LSAW linepipe Spiral (HSAW) linepipe
Plate X65 non-sour coil X65
Fastmarkets
the region is part of the
European Union's strategic
objectives, and this will
continue to support HSAW
and LSAW demand in the
coming years regardless of
natural gas prices. A portion of
this demand is set to be met by
HSAW shipments.
For HSAW, consumption is
forecasted to fall sharply in
2020 following strong
apparent consumption in
2019. Demand is expected to
rebound in 2021 as delayed
projects start, but the
European gas market is likely
to remain oversupplied,
curbing appetite for
infrastructure investment in
the near term.
Poland, however, will be a
driving force in the regional
demand picture in the near
term as investment plans come
to fruition. The country has
ambitious plans to build gas
interconnections with other
European countries and
expand capacity at its
‘Improving gas Świnoujście LNG terminal. In
connections addition, Poland’s Gaz-System
is working heavily on
in the region reinforcing its domestic grid to
is part of the make the new
European interconnections viable.
Union's strategic We expect that most of the
upcoming projects in the
objectives, country will use HSAW
and this will material. HSAW demand in
continue to 2020 is expected to reach 140
kt and 120 kt in 2021.
support HSAW
and LSAW Kim Leppold is principal analyst
demand’ at Fastmarkets research
October 2020 | Metal Market Magazine | 59
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Technology spotlight: Data analytics
Optimizing every part
of the enterprise
Business information and analytics systems share the goal of achieving
bottom-line returns from data collected from across an enterprise and
beyond, reports Gregory DL Morris
In their quest to gain advantages
from business intelligence (BI),
steel mills are focusing on better
data selection and aggregation that
enables them to get more useful
information to operators and
executives. Ultimately, those
advantages need to result in better
financial results, whether through
lower production costs, increased
revenue from product sales, or
preferably both.
“Our take on BI is that it is
turning data into value,” said Berk
Birand, chief executive officer of
Fero Labs. “Since the advent of
machine learning [ML] and
artificial intelligence [AI], there has
been so much hype and buzz that it
is easy to lose track of the goal:
generating value. Bottom-line
returns. So BI is not about just
process optimization, it is linking to
the profit-and-loss statement. It is
process and profitability
optimization.”
Since the early days of process
optimization in the late 1980s and
early 1990s, the act of optimizing
any given part of the process, from a
single machine to a line or a plant,
could impose suboptimal
conditions on the rest of the
process. BI can help to optimize a
complete production process, from
raw materials through to finished
products.
Mining historical data
“There is always a trade off in using
historical data,” said Birand. “Sales
data and maintenance logs going
back ten years are not necessarily
that useful. Usually we only need to
go back the last few years.” There
may be more value in older
laboratory- and quality-test results,
he added.
“An important difference has
emerged thanks to advances in
sensors,” said Birand. “It used to be
that optimization was blind to the
outside world. But now the outside
world can be measured. By taking
into account those factors,
optimization can sense outside
things with their cost factors.”
That is an area of expertise for
Fero that has been implemented in
a range of industrial operations.
The company got its start in metals,
hence the name, and has since
branched into other process
sectors: commodity and specialty
chemicals, oil and gas; as well as a
discrete-manufacturing segment,
automotive paint shops.
The same can be said inside the
process. “Parts of the process that
used to be dark are now accessible
to ML and AI,” said Birand. “The
system can also learn from
historical data,” at least as far as that
is actually useful. It can be difficult,
and not necessarily useful to try to
harmonize data across different
plants, or even different lines.
Sometimes different adaptations of
optimization across the different
mills within a single company can
yield the best results.
Steelmakers and other metals
producers are getting past the idea
that ML and AI means eliminating
humans from the process. On the
contrary, a central component of BI
is the collaboration of people and
machines.
Birand gave an example. “The
software aggregated the data for a
process, and indicated that the data
from one sensor in particular was
important. But that sensor was not
trusted by the process engineer.
The company was able to invest
[tactically] in upgrading that
particular sensor.” That was a far
better approach than a blanket
replacement of all sensors, or just
working around one unreliable
sensor.
Diagnostic or descriptive
Generally speaking, BI can be
diagnostic or descriptive, said
Dudon Wai, product manager for
Canvass AI. “You can use BI either
to improve what you are currently
doing, or you can use it to change,
to do something different from
what you are doing today. Even if
you use some other system to
change what you are doing, you
can still use BI for snapshots before
and after.”
There are BI elements to the
Canvass system – a tool for process
control and optimization. “Our
focus is on the process engineer and
the plant manager,” said Venkatesh
Muthusamy, data scientist at
Canvass. “They are at the center of
everything. They know where to
get the data and know what is useful
or not. They can guide the data
scientist in designing the models.
At that point anyone in the
organization can use the data. It can
be integrated with other
dashboards for BI with links to
people at the management and
executive levels.”
‘It is process and Before BI can analyze data, that
profitability data must be aggregated, which can
optimization’ be easier said than done in some
October 2020 | Metal Market Magazine | 61
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Technology spotlight: Data analytics
metals operations. “The start of the
project is identifying sources of
data,” Muthusamy said. “Sources of
data to be integrated could be from
a mix of hardware and software.”
In some older control systems,
data may be sensed and displayed
but not stored. “Software can be
installed to capture that data,” said
Muthusamy. “If the system is very
old and not capable of sensing or
connecting, in any way, then it
would have to be replaced. But that
is not just because of the need for
data. It is to meet the overall
business objective.”
For the most part the steel sector,
and other commodity metals
segments, have shaken off the label
of ‘tech laggards.’ Nevertheless,
many facilities and companies still
struggle with vastly different
process units and control systems.
A rolling mill only a year or two old
may be at the end of a production
chain going back to a blast furnace
that is decades old.
“People are realizing that
artificial intelligence is an
advantage to their business even if
they have to force themselves to
change,” said Muthusamy. “People
at all levels are understanding the
value of digitalization.”
Steel mills are implementing
Canvass systems at their facilities to
reduce waste, improve quality and
optimize asset utilization.
“What does the data support?”
said Muthusamy. “The data can be
used to support improvements in
the current process or it can be used
to develop a model for new grades.
You can develop models to
extrapolate or fill blanks. In general,
when companies want to
implement AI, some have a clear
objective in mind, and some just
know they have issues. Even then
they usually have a fair idea of what
those are. We go in and see what we
can learn from the data. At the very
least AI saves a lot of trial and
error.”
Wai added, “Even if they do
come to us with a specific objective,
we try to help them take a step back
and understand the broader
context. We try to turn it into a
learning opportunity.”
As an illustration, Wai noted that
in most steel processes, raw
materials account for 50% of the
‘Analytics can costs of the operation, labor 20%,
and energy 10-15%. “Is the issue
give the sales something that ML can solve? Even
representative if not, ML can help frame the larger
a 360-degree picture. It’s not just a matter of cost
view of the reduction. It is throughput and
materials and revenue streams.
customer’ There are a lot of different levers.”
Those larger levels of inquiry are
what create BI.
BI and analytics
“We have had a BI system within
SAP for 20 years,” said Stefan Koch,
global lead for the metals industry
at the global systems major. He
quickly added, “We typically don’t
use that term any more. We use
‘analytics’, because you don’t just
pull the data and have a look, you
want the data analysis embedded in
the manufacturing and sales
processes, and compiled in the
digital boardroom.”
An example would be using sales
figures to run simulations for
market predictions. Or to conduct
forensics. “I call it CSI:Steel,” said
Koch, with a wink in his voice.
“You can try to analyze why an
operation was not executed as
planned. What went wrong?” For
all the centuries of metallurgy, he
noted, “in steel, not every step of
the physical process is completely
understood.”
In the present, operators tweak
the process as it runs, seeking the
parameters for the “golden batch,”
said Koch. “The best recipe for the
highest yield.” That is true in
aluminium as well as steel.
ETEM Gestamp Extrusions runs
several aluminium production lines
producing architectural,
automotive and industrial profiles.
The company wanted to improve
efficiency, so a year-and-a-half of
data were loaded into SAP’s HANA
system, with the objective of
identifying the recipe for the best
runs. That information was then
used to simulate operations and can
be used to recommend recipes for
new profiles.
Koch said that many steel
companies want to get rid of
conventional spreadsheets and
slide presentations. “We have
functions that can do those things.
The challenge independent of the
vendor is how to aggregate data.
For example, in trading, there are
no standard codes. Everyone
defines their grades and types
differently.” That is the case in
metals, but also in other
commodities such as paper and
plastics.
BI is advising human decision-
making, not replacing it, Koch
stressed. “The initial pieces were
making the process more reliable.
Now the focus is shifting to process
improvement, but users are still
taking the decisions. They are able
to make those from the possibility
of driving the business.”
In sales, Koch suggested that
analytics could make metals similar
to retail for books. When a
customer logs into an account, the
system says, ‘You liked those books,
so you might also like these.’
“Analytics can use customer data
and sales numbers to make
recommendations about a certain
customer that bought certain
grades or volumes. That becomes
especially important in a time of
high over-capacity globally and
volatile markets. Something may
have one price in the morning and
another by the afternoon. The sales
manager can offer a bundled price
and say, ‘We’ll just throw it on the
truck.’”
“Marketing and sales are a wide
field for analytics,” Koch continued.
“Especially for sales into the
construction segment. Analytics
can give the sales representative a
360-degree view of the customer.”
In a reprise of the idea that BI can
shine light in previously
less-understood areas, Koch noted
that logistics are part of the process.
“You can do a great job in the mill
and fall down on the delivery. There
is a global track and trade to help
ensure that deliveries are on time
and in full. Getting intelligence
outside the plant gate is a new
frontier.”
For all the breadth and depth of
BI, Koch stressed the integrative
aspect across a business. “The mill
will optimize for their equipment,
but what do you do about special
grades? Just run them once a year?
That is good for operations, but not
for sales. In the end it is a business
decision. You have to get everyone
on board. At the end it is one
company and one balance sheet,”
he concluded.
October 2020 | Metal Market Magazine | 63
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End-user spotlight: Automotive
The revolution in EV
production reviewed
While the inroads that electric vehicles have made in the US light-vehicle
market are still small in percentage terms, the direction of travel towards
electrification is clear. Myra Pinkham outlines the present rate of progress
and asks what the consequences are likely to be for future material demand
While the market for all types of
electric vehicles (EVs), especially
battery electric vehicles (BEVs)
dependent entirely on electricity for
propulsion, is still a small niche market
in the US, it is poised to grow in coming
years. It will be driven by additional,
more diverse vehicles coming to
market, their range increasing, more
battery charging infrastructure coming
online, and as the cost of the vehicles
comes more into line with those
powered by internal combustion
engines. That trend is likely to have a
positive impact on demand for such
lighter weight materials as aluminium,
advanced high strength (AHSS) and
ultra-high strength steels (UHSS) and
composites, as well as for various
battery raw materials.
At present, only 0.3% of the light
vehicles on the road in the US – about 1
million vehicles – are battery electric
vehicles (BEVs), according to Zo
Rahim, manager of economic and
industry insights for Cox Automotive.
Jeffrey Osborne, managing director
of equity research for Cowen & Co.,
which recently released its Future of
Mobility Primer, pointed out that the
US ranks third in terms of global EV
demand, running behind China (which
accounts for 50% of demand) and
Western Europe. EV sales currently
account for between 1.0 and 1.75% of
total US light vehicle sales, compared
with 2.0% globally.
“But while the EVs are still a small
share, it is a very fast growing part,”
Rahim said, noting that EVs only
accounted for 0.4% of new US light
vehicle sales in 2016.
Stephanie Brinley, a principal analyst
with IHS Markit, said that US BEVs
have been accounting for 1.5% of total
light vehicle registrations both in 2019
and year to date 2020. “But we are just
in the initial stages of the growth,” she
said, given forecasts that the US BEV
share will grow to 9% by 2025 and to
just under 12% of the US market by
2030.
The US share for other types of
electrified vehicles, including hybrids,
is making even greater gains, which,
according to Matthew Rolfe, focus
manager for the Freedonia Group, is
why total US light-duty hybrid (HEVs)
and electric vehicles reached 4.3% of
total domestic light vehicle sales in
2019, with expectations that on
average its share will grow by 4.9% each
year between 2019 and 2024.
The share for BEVs is even larger
when compared with sales just of
passenger cars, or sedans, which,
according to Christopher Plummer,
managing director of Metal Strategies
Inc., is a logical comparison given that,
at least to date, the lion’s share of
light-vehicle BEVs are passenger cars
(rather than petrol-driven light trucks
including SUVs, CUVs and pickups that
account for nearly 75% of the current
US automotive market), although that
is now starting to change with new EV
models starting to come to market. He
estimates that the BEV share of just the
US passenger car market in 2019 was
9.5%, with the HEV share of that
market being 15.5%.
From a production point of view,
Abey Abraham, managing director of
Ducker’s automotive and materials
practice, said the electrified vehicle
share of total North American light
vehicle production is expected to grow
from 11% in 2020 to about 30% in
2025, with the BEV share increasing
from 3% to 9% and the hybrid share
from 8% to 21% of total light vehicle
output.
Policy influences
“The longer term outlook in the US will
depend on the rulemaking and policy
from the Administration, as well as the
cost evolution for EVs versus ICE
vehicles,” said Shalaj Gupta, director of
marketing and performance
improvement for ArcelorMittal North
America, who added, “The EVs will
grow. It isn’t a question of if, but rather
when.”
John Catterall, vice president of the
American Iron and Steel Institute
(AISI) Automotive Program, agreed,
stating that while BEV demand has not
been taking off as quickly as many had
anticipated, US consumers, especially
those that just drive short distances, are
becoming more comfortable with them,
especially given some of their
advantages, including quicker
acceleration and a quieter, more
comfortable ride.
It is a question of becoming more
familiar with EVs, Brett Smith, director
of technology for the Center of
Automotive Research (CAR), said.
“While the consumer comfort level is
improving, it is uncertain if we are at
the point that people are going to jump
to start buying them,” he said, adding,
“I’m not sure if it is ready for primetime
yet, but I think it is getting a lot
October 2020 | Metal Market Magazine | 65
 End-user spotlight: Automotive
closer.” But Catterall said that even in
2030 he believes that more than half of
the US fleet will have ICEs, or at least
be some kind of a hybrid.
Bertrand Rakoto, Ducker’s senior
engagement manager, said one big
driver of this increase is the US fuel
efficiency regulations, which remain
stringent, albeit less so than those
under the previous administration.
“We also expect to see US demand to
grow as the BEVs’ range increases
further and as more vehicle models
come into the market.”
Cowen’s Osborne said that one
reason the US EV market trails China’s
and Europe’s is that while the US
government does offer a $7,500 tax
credit for EVs, other developed nations
offer more attractive nationwide
subsidies and/or penalties to promote
EVs and discourage the purchase of ICE
vehicles. This, Plummer pointed out,
GETTY IMAGES

includes mandated shifts in some

regions to only sell EVs. California has
taken a step in that direction with its
governor signing an executive order to
ban the sale of new gasoline- and
diesel-powered passenger cars in the
state by 2035.
To date there has not been a similar
nationwide move in that direction in
the US and the recent federal SAFE
Vehicle Act has been a roadblock for
California to enforce their
zero-emissions vehicles regulations,
Kevin Riddell, senior manager of
Americas powertrain forecasts for
LMC Automotive, said. He noted,
however, that the fact that incentives
favoring EVs that were scheduled to be
limited and/or phased out were not
removed suggests that the US
Administration is not completely
against EVs, which is encouraging auto
and battery manufacturers to make EVs
more affordable.
“They are trying to bring a more
appealing product to more people,
partly by lowering the price,” Riddell
said, noting that Tesla, which is said to
have a 75-80% share of the US EV
market, has shown that when you make
something that is desirable it will sell.
“At first that was with the very
expensive Model S and Model X, but
now they have started bringing their
EVs down to a more affordable level
with its Model 3 and Model Y, which
the company recently launched.”
Rolfe noted this is very important. “It
doesn’t matter how cool an EV is if you
can’t afford both the vehicle and to
Investment in charging infrastructure is as vital to growth in EV use as the
development of new vehicle models
install a charging station at your
residence.”
Rakoto predicted that it will be
another 15-20 years before BEV
affordability and efficiency will fully
match ICE vehicles, although he
admitted that some inroads are being
made with BEVs getting slightly less
expensive at the same time as ICE
vehicles are getting slightly more
expensive.
More models on the way
“Also the sheer number of new product
offerings coming to market is also
likely to bolster US EV sales,” IHS
Markit’s Brinley said, noting that there
are expected to be about 130 BEV
models available by 2026, compared
with less than 20 currently. She also
observed that the types of offerings
have been changing in an effort to
switch EVs from being a niche product
to one that the mainstream, mass
market wants.
“Originally the auto OEMs thought
that buyers of such vehicles like the
Toyota Prius would eventually
transition to EVs, but that really didn’t
happen given that the bulk of
consumers want an EV that looks and
functions like a normal car,” Osborne
said, noting that includes vehicles that
are similar to those they currently buy.
In the US that is overwhelmingly light
trucks such as sport utility vehicles,
crossover utility vehicles and pickup
trucks, which, according to Plummer,
are approaching 75% of the market.
Cox’s Rahim said that is why such
long-established automotive OEMs
like Ford and General Motors, as well
as several recent start-up companies,
are planning to offer fully electric truck
models over the next several years. For
example, in mid-September Ford
announced that it will start building an
all-electric version of its F150 pickup
truck in 2022 at an upgraded
production facility in Rouge,
Michigan.
Plummer said that overall traditional
automakers will have a much bigger
share of the US EV market over the
next five to ten years.
Questions of range
A big question that many US
consumers raise about EVs is their
range, but CAR’s Smith maintained
that range anxiety is only experienced
by people who are not used to driving
EVs. Rakoto said that most BEVs have a
range of 200-300 miles, up from
120-150 miles ten years ago, largely
because of increases in battery energy
density. He said that once solid-state
battery technology comes to market in
2026-28, their power density is
expected to be 300-600 kilowatt hours,

66 | Metal Market Magazine October 2020

up from 220-260 kilowatt hours at
present. That, he said, will allow
manufacturers to reduce the size of the
battery, which is expected in turn to
reduce the kerb weight of the vehicles
by 300-400 lbs.
“The reality is that you don’t need a
300 mile range,” Abraham said, noting
that most US households do not drive
more than 30 miles per day. Riddell
agreed, stating drivers only need a lot of
range if they are going on a long trip.
Abraham noted that the way that
automakers are getting the best range
out of their vehicles is by using several
different material solutions, not just in
the battery pack, but throughout the
vehicle.
There is, however, a need for more,
higher density charging infrastructure
even though, according to Osborne,
approximately 80% of US EV charging
is done at home. ArcelorMittal’s Gupta
said that it is estimated that in the US
there is just one charger for every 19
EVs on the road. But that ratio is
improving.
Some of the push has come from the
automotive OEMs themselves,
including Tesla, which has a network of
proprietary charging infrastructure
exclusively for its customers, as well as
other automakers, including
Volkswagen, which shares its charging
stations with non-VW vehicles. “There
are also many third-party groups
(including ChargePoint and Blink) that
are also developing and expanding
charging technology in networks
around the country to support the
growth of EVs, although more work is
needed in that direction,” Rahim
pointed out. Many of the charging
stations are only available on a
subscription basis.
There could be political implications
as to how fast new charging
infrastructure will be installed. For
example, as part of his Build Back
Better plan, former US Vice President,
and 2020 presidential candidate, Joe
Biden is promoting expansion of the US
network to 500,000 EV charging
stations by 2030 from about 28,000
currently. “There are gasoline stations
at every expressway exit. Until that
happens with EV charging stations
there won’t be the same comfort level,”
CAR’s Smith said.
Faster-charging batteries
In addition to the need for more
charging stations, Rakoto said that
there needs to be further
advancements in the charging and
battery technologies themselves. He
said the target is to speed up charging
times from being able to achieve 80%
charge in 30 minutes to 90% charge in
10 minutes within the next five to ten
years. “To do that we need to have
higher kilowatt chargers as well as
vehicles that could receive that rate of
power without burning up the
battery,” he said, which he expects to
be possible with a new generation of
lithium ion batteries.
Rakoto said the two main battery
chemistries being used in the US are
lithium ion batteries with nickel,
manganese and cobalt (NMC) and
those with nickel cobalt and
aluminium (NCA), with the NCA
technology mainly being used by Tesla.
Overall, he said, automakers are
looking to reduce cobalt content due
to cost and sourcing issues, which
could lead to the use of high-purity
aluminium. “US automakers are also
trying to decrease the number of
batteries that they source from China
as multi-sourcing reduces
dependency.”
Lighter vehicles
All this has big implications for the
materials mix for EVs, Gupta said,
given that, on average, electrification
increases vehicle weight by about 20%,
which puts higher demand on the
body-in-white (BIW) and chassis
components for meeting functional and
safety requirements. He acknowledged
that platform architecture and material
strategy for EVs are very dynamic and
evolving, but will continue to involve a
different multi-material mix – one that
will likely be clearer in nature within
the next five years.
One certainty, Plummer said, is that,
given the weight of the battery, there is
more of a need to lightweight EVs, and
therefore to use more lightweight
metals and other materials than are
used in a comparable ICE vehicle.
AISI’s Catterall said that he is not
expecting the gradual switchover to
more EVs to reduce the demand for
steel as a lot of the automotive OEMs,
particularly traditional automakers, are
making EVs with a steel-dominant
structure, given that steel is more cost
effective than most competitive
materials. Also, the batteries and
battery packs cannot tolerate a lot of
compression during crash impacts so
any structure that surrounds them
must be very strong, which he said
could drive more demand for AHSS
and UHSS. “The reason we are able to
lightweight with steel it that it is
getting stronger, with steelmakers
working on steels with a tensile
strength of up to 2 GPa compared with
the best offering now at about 1,700
MPa.”
Abraham said that while overall steel
use in North American light vehicles is
expected to decline from a 52% share in
2020 from 48% in 2026, the share of
AHSS will increase from 10% – 407
pounds per vehicle (PPV) – to 17%
(600 PPV), replacing some mild steels.
Multiple choice of materials
The competition that has been going on
between steel and aluminium for
automotive production will continue,
supported by the electrification trends
and upgrades of charging
infrastructure.
According to a study Ducker recently
conducted for the Aluminum
Association, while the average
aluminium content for the average
North American light vehicle is
currently 459 PPV in 2020 and is
expected to grow to 514 PPV by 2026,
the aluminium content for the average
BEV is higher – 643 PPV – but will fall
slightly by 2026 to 629 PPV. Abraham
noted that slight fall is not through lost
share to other materials but due to the
overall use of smaller, lower cost
options. While some aluminium
components used in ICE vehicles are
not needed for EVs, a substantial gain
in the use of aluminum sheet,
extrusions and castings is expected for
EVs, including in the body-in-white and
closures.
Use of carbon fiber composites has
also been increasing, including in
systems to protect the battery,
Freedonia’s Rolfe said, “But high-price
materials like carbon fiber look less
appealing in the context of already
high-cost BEVs.”
Abraham called the move toward
electrification of the powertrain a new
golden age, stating that there will be
more changes in the next five to seven
years than the industry has seen over
the past few decades. Nevertheless, he
pointed out that automakers need to
keep a careful eye on the overall carbon
footprint of EVs, given that 60% of US
electricity generation is currently based
on the use of coal and natural gas.
October 2020 Metal Market Magazine | 67
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Innovations
Brazil’s Vale installs battery storage John Zink makes
3D printed parts
in Rio in electrification strategy with Desktop
Brazilian miner Vale will install one
of the country’s largest lithium-ion
Metal’s Studio
battery energy storage systems at SystemTM
the Ilha Guaíba terminal (TIG)
port for ore in Rio de Janeiro to US, Oklahoma-based John Zink
reduce electrical energy costs at Hamworthy Combustion (John
the port by 20%, said the company. Zink), a part of Koch Industries,
Vale will cut costs by storing is creating 3D printed bespoke
energy in batteries when electricity parts for emissions control and
from the grid is cheaper and use clean-air combustion by using

this to power their facilities when
the grid is expensive.
The BESS (Battery Energy
Storage Systems) project
venture will be in collaboration
with Siemens and Brazil’s
battery storage company
Micropower Comerc Energia.
The lithium-ion batteries will be
manufactured by Tesla.
The new storage capacity of 10
MWh per hour will lower the
ports costs by substituting for
supply from the electrical grid
system during more expensive
periods of peak demand. The
system will have enough storage
capacity to power 45,000 homes
per hour, stated Vale.
Battery technology will also be
applied to replace diesel energy with
electric in vehicle fleets such as
locomotives and off-road trucks. “As
Vale continues to decarbonize its
operations, the use of batteries will
become an increasingly important Vale will install one of
part of the electrification of our Brazil’s largest battery
fleet,” Ricardo Mendes Vale’s
energy director, said.
“This project allows us to test
new technology in the field and
accelerate Vale’s energy
transformation, which aims to
achieve self-sufficiency by
increasing electric power
generation mainly through solar
and wind sources in addition to
our hydroelectric power
generation,” he added.
Recently, Vale reported an
investment of $2 billion to reduce
direct and indirect absolute
emissions by 33% until 2020 in line
with the Paris Agreement to be
carbon neutral by 2050. The
installation at TIG will mark an
important step in the company
strategy.
VALE
Massachusetts-based Desktop
Metal’s Studio System™ 3D
printing technology.
After months of collaboration
storage systems at TIG in with using Desktop Metal
Rio de Janeiro Studio System’s metal 3D
printer, the companies are
sharing results on a faster
turnaround of producing
replacement parts, quicker
testing of prototypes, and
efficiencies through the
elimination of casting tools.
“Our primary goal at John
Zink is to custom engineer new
systems that eliminate waste so
our customers can operate safely
and efficiently,” Jason Harjo,
design manager, John Zink, said.
John Zink’s energy,
petrochemical and
manufacturing customers
utilize the technologies in
burners for gas recovery and
vapor-control systems. For
example, a new fuel atomizer

Tata Steel launches new live scrap sourcing
app FerroHaat™
Tata Steel has launched a mobile application
(app) called FerroHaat™, which could help the
Indian steel industry source scrap steel from
reliable traders.
Trials of the app will be undertaken at a new
0.5 million tonnes per year steel recycling plant
in Rohtak, Haryana, initially with local
scrapyard traders. Use of the app could help
minimize the country’s dependence on
imports, build transparency in doing business
and serve to organize the market, thus making a
more efficient value chain, said Tata Steel.
Launched by Tata Steel’s Steel Recycling
Business division, FerroHaat offers a live
24-hour, seven-days-a-week marketplace to
help foster an ‘ease of doing business’ among
scrap yards and traders in the country. The app
has different sections. Bazaar is for business
transactions, Khaata for a view of supplier
accounts, Samachaar for market information,
and Abhaar for business initiatives.
“Scrap buying and selling is a tedious affair.
The prices change by the hour, making the
users apprehensive and vulnerable. The
FerroHaat™ app makes the transactions easy
and user friendly. The best part is that it
collaborates with the existing scrapyards and
traders and provides them with a transparent
platform with stability in prices. Large
transactions can now be done with a click of a
few buttons,” Yogesh Bedi, chief, Steel
Recycling Business, Tata Steel, said.
design features fin-like flat
openings for greater burner
safety and efficiency. The new
fuel atomizer can offer 75% cost
savings and 37% time saving,
said John Zink.
“Additive manufacturing
re-writes the book on what is
possible from a design standpoint
and working with Desktop Metal
allows us a very low-cost entry
point into the technology. The
versatility of the Studio System
has enabled our engineers and
designers to find both
applications for the technology as
well as design and performance
benefits we hadn’t even
considered,” Jason Harjo, design
manager at John Zink, said.

October 2020 | Metal Market Magazine | 69

End-user
Sandvik supplies cutting-edge steel for
Craig Lockwood knives
Sandvik has supplied 78% recycled
steel for Chop Knives, a company
that supplies leading professional
kitchens and restaurants with
high-quality, functional knives.
Knifemaker and owner Craig
Lockwood was interested in making
good quality, sustainable products
and chose Swedish-based Sandvik
because of its responsible
steelmaking, the steelmaker reports.
Sandvik’s specific grades of steel
used in the knives are fine-blankable
for efficient production and are
formed into knives by using ‘green’
power supplies.
“Made from 78% recycled steel in
one of the world’s most ecologically
sound steel mills, the steel is then cut,
shaped and ground by hand in my
workshop which is powered by green
energy,” Craig Lockwood said.
Moreover, the knife handles are
crafted from waste material such as
ICA study forecasts rise in copper demand
A global study by market research
company The Martec Group,
discussed at a webinar hosted by
CESCO and Fastmarkets, revealed
that demand for copper will rise to
4.8 million tonnes in 2025 from 2.7
million tonnes in 2019. The study
shows that copper demand in smart
cities will be a large growth area as
the adoption of new copper-based
technologies increases.
Furthermore, the study
highlighted that while Asia and
Europe lead the way in copper usage
in smart cities worldwide at 40% and
35% of copper demand,
respectively, North America will see
a big jump forward from 20% in
2020 to 35% in 2030.
The webinar, entitled Material
Opportunity in Smart Cities and
sponsored by the International
Copper Association (ICA), discusses
the onset of key infrastructure
sectors, including transport mobility,
energy and smart buildings, all
needing copper because of its
high-conductivity properties.
“Our research shows that the
deployment of smart city
70 | Metal Market Magazine | October 2020
yoghurt pots, meat packing trays and
water bottles, which would normally
go to landfill sites.
Sandvik’s steel grade 14C28N™
is good for chef, pocket, hunting and
fishing knife applications because of
the ease in blade re-sharpening and
corrosion resistance, with a
recommended hardness range of
55-62 HRC (Hardness Rockwell C),
according to the company. Its steel
grade 12C27M is suitable for fishing
and butchers’ knives, high-end
scissors and gardening tools because
of its corrosion resistance and
hardness of 53-59 HRC.
“As a responsible maker, I have
been thinking a lot about how I can
make a kitchen knife which has a
positive effect on the planet. I follow
the supply chain of all materials used
and work hard to find suppliers who
are leaving as little of an impact as
possible,” Lockwood said.
technology will lead to a rise in
copper demand. The building and
mobility sectors have the highest
growth potential as we expect to see
significant technological
advancement over the next five
years. The energy sector, which is
more mature, is expected to remain
stable at around 25% of copper
demand over the same time period,”
Emily Bielak, project manager at
The Martec Group, said.
“Copper continues to be the
material of choice for the
development and implementation of
smart cities and the energy transition
thanks to its unique properties. This
research demonstrates the clear
correlation in copper demand with
smart city development, across a
wide spectrum of applications and
geographical regions,” Colin
Bennett, market intelligence
director at International Copper
Association, said.
For more information on the webinar,
visit https://copperalliance.
org/2020/09/24/
copper-demand-predicted-to-grow-
with-smart-cities/
SANDVIK
Sandvik’s steel
grades 14C28N and
12C27M are used in
Chop Knives products
Hydro’s Reduxa ®
selected by baby-
stroller company
Emmaljunga
Hydro’s product Reduxa® was
selected by European baby-stroller
company Emmaljunga, indicating
that use of sustainable aluminium is
gaining momentum in a variety of
industries.
In choosing Reduxa,
Emmaljunga’s new baby-stroller
NXT product portfolio will further
improve on the already sustainable
way that Emmaljunga produces its
products.
The new NXT 2020/2021
product range is made at
Emmaljunga’s site in southern
Sweden, a factory that adheres to its
‘green’ vision of a ‘circular’ system
using recycled or recyclable
materials. The factory also uses
hydropower, solar-panel-
generated energy, technology that
recovers unused heat, and a system
that re-uses water from the
manufacturing process.
“It’s very encouraging to see
Hydro Reduxa gaining traction in
yet another industry.
Emmaljunga’s forward-leaning
approach to material selection and
sustainability is impressive and we
are proud to be selected as their
supplier for this product range,”
Jennie Rutgersson, account
manager, Hydro Extrusion
Sweden, said.
Hydro’s Reduxa has a maximum
carbon footprint of 4 kg of
carbon-dioxide per 1 kg of
aluminium produced and has been
certified with the Aluminium
Stewardship Initiative (ASI)
standards across the complete
value chain from bauxite mining to
finished product.
HYDRO
In choosing Hydro Reduxa,
Emmaljunga’s new NXT baby
stroller range will further enhance
its existing sustainable credentials
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