Column: Electric dreams turn into a nightmare for battery metals
A sector that was once racing to build new supply has been closing mines and deferring projects as low prices bite into the cost curve.
Prices of iron ore futures rebounded on Monday after upbeat data in top consumer China renewed hopes for a pick-up in steel demand in coming weeks and as some traders liquidated their short positions.
The most-traded May iron ore contract on China’s Dalian Commodity Exchange (DCE) recouped lost ground and ended daytime trade 0.9% higher at 803 yuan ($111.56) a metric ton, following an 11% week-on-week drop on Friday.
The benchmark April iron ore on the Singapore Exchange was up 3.7% at $103.65 a ton, as of 0835 GMT.
Investment in the property sector, the largest steel consumer in China, slid 9% year-on-year in January-February, compared with a 24% fall in December, official data showed, although it’s still far from levels of reaching stability.
This boosted sentiment to some extent especially after data showed that new bank lending in China fell more than expected in February from a record high the previous month and China’s policy bank left a key policy rate unchanged while withdrawing cash from a medium-term policy loan operation on Friday.
Lifting sentiment, total shipments from Australia and Brazil – two major iron ore suppliers – dropped 12.5% week-on-week to 22.08 million tons in the week ended March 18, data from consultancy Mysteel showed.
Tepid near-term ore demand posed as headwinds to market sentiment and prices, said analysts.
Average daily hot metal output among Chinese steelmakers surveyed fell for a fourth straight week in the week ended March 15, down by 0.6% on-week to 2.21 million tons, according to Mysteel data.
Other steelmaking ingredients on the DCE were mixed, with coking coal up 1.1% while coke was flat.
Steel benchmarks on the Shanghai Futures Exchange were mostly higher on rising raw materials prices.
Rebar ticked 0.3% higher, hot-rolled coil gained 0.7%, stainless steel climbed 1.4%, while wire rod declined 0.3%.
China’s crude steel output climbed 1.6% in the first two months of 2024 from a year earlier, confounding market expectations that production would decline in the low-demand period when many steelmakers carried out maintenance work.
($1 = 7.1981 Chinese yuan)
(By Amy Lv and Andrew Hayley; Editing by Subhranshu Sahu and Sherry Jacob-Phillips)
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