Copper Conundrum

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With energy transition being the focus globally, the pressure on copper supply doubles down setting the stage to fall short in supply by 2035. Know what lies ahead for the copper industry in this special report by S&P Global Commodity Insights.

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Interactive: The Platts Benchmark Heatmap

The price wall visualizes 258 of the most important price benchmarks assessed by Platts across various commodities from crude through to chemicals, LNG and carbon. The wall shows the price performance of these benchmarks over 2023 based on their indexed value from the first day of trading. Click on the commodity button to isolate different groups of resources to see which performed best in 2023, a year that saw dramatic changes in trade flows and demand because of sanctions and price caps on Russian commodities and a recovering post-COVID global economy. Isolate individual benchmarks by clicking on the tile to reveal a unique QR code to navigate to specific Platts methodology pages and average price data for 2022 and 2023. Click to start exploring

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China boosts quota for first batch of rare earth production in 2024

China has set quotas for the first batch of rare earth mining and smelting in 2024 at 135,000 mt and 127,000 mt, respectively, raising the quota volume for both the operations from the last year's first-batch quotas, according to a Feb. 6 statement from the Ministry of Industry and Information Technology and the Ministry of Natural Resources. Rare earth metals are about a group of 17 elements that are considered highly critical for energy transition. China leads the global rare earth sector in terms of production and refining technologies. With China's dominance, it controls its rare earth supply through the closely watched quota system. The quotas for rare earth mining and smelting for 2024 are 12.5% and 10.4% higher, respectively, from the first batch quota released in March 2023. But despite a sharp year-on-year rise in 2024 quota, the increase was still below than the 19% and 18.3% year-on-year increase witnessed for the first batch quota for mining and smelting, respectively, for 2023, S&P Global Commodity Insights calculations showed. The quota for medium to heavy rare earths saw a decline of 7.3% year on year, which highlighted its scarcity and strategic position, China's ministries said in the statement. Meanwhile, the quota of light rare earths saw an increase of 14.5% from the previous year. The total mining and smelting output quota in 2023 reached 255,000 mt and 243,850 mt, up 21.4% and 20.7%, respectively, from a year earlier, according to ministry data. Rare earth is a product subject to total production control and management by the state, and no enterprise or individual can produce it without or beyond the quota, according to the statement. Rare earth metals like neodymium, praseodymium, dysprosium and terbium are key to the production of permanent magnets used in electric vehicles (EVs) and wind turbines. China is also the world's largest consumer and importer of rare earth metals. China imported 175,853 mt of rare earth metals in 2023, up 45% from a year earlier, according to China's latest customs data. At the same time, China exported 52,307 mt of rare earth metals, up 7.3% from a year ago.

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Commodities 2024: Global crude supplies seen giving Biden wiggle room on oil sanctions

Global risk factors could shift administration's focus Russian price cap could be major target Little Venezuela action expected in near term US gasoline prices in 2024 will be a factor in any Biden administration decision to tighten oil-related sanctions in an election year when prices at the pump could sway voters, but there are enough global oil supplies to give the US some leeway to take action regarding Russia, Iran and Venezuela, experts say. Increased US oil production has boosted global supplies, which has reduced -- but not eliminated -- the risk from tighter sanctions, said Rachel Ziemba, an adjunct fellow at the Center for a New American Security. "If easy oil conditions persist, in line with sluggish growth, I do think they may make it easier to continue with enforcement," she said. Oil prices have come down quite a bit and most analysts seem to be concerned with further macro risks, so Washington can risk some sanctions-related disruptions without worrying too much about a price spike, said Fernando Ferreira, director of geopolitical risk service at Rapidan Energy Group. "Current market conditions give the administration more wiggle room to act," Ferreira said. NYMEX WTI crude prices are ending 2023 down around 5% from year-ago levels as markets eye a global supply overhang in early 2024. Non-OPEC supply growth is set to outpace slowing global demand growth next year, S&P Global Commodity Insights data shows. Even with OPEC+ extending voluntary production cuts into the new year, data shows there still be an implied liquids surplus of 2.2 million b/d in the first quarter. Global inventories have climbed in the final months of 2023 and builds are expected to accelerate in early 2024, peaking around May with the addition of around 150 million barrels before draws resume, S&P Global data shows. This budding supply overhang has contributed to the formation of a deep contango structure in crude forward curves. The sixth-month NYMEX WTI contract premium to the front-month widened to around $1.20/b in mid-December, an S&P Global analysis showed, marking the widest contango in that part of the curve since November 2020. Other factors For global oil supplies, other factors like regional conflicts, OPEC+ decisions, the scale of US and Chinese demand, and disruptions of major shipping routes are expected to be more important than sanctions decisions. While some experts still see leeway for Washington on sanctions, others say risks from these factors will indeed limit the administration's options. Disruptions in the world's major waterways are affecting shipping prices and insurance prices and have built in a new premium in oil and LNG prices, said Brenda Shaffer, an energy expert at the US Naval Postgraduate School. Addressing waterway security more directly could add jitters to the global oil price, Shaffer said. "With this in the background and in an election year, it is not likely that the Biden administration will enforce sanctions and undertake policies that will take oil barrels off the market," she said. S&P Global Commodities at Sea data shows around 8.25 million b/d of crude and refined products flowed through the Suez Canal from January through November 2023. Of that total, 4.72 million b/d were southbound , including of 2.7 million b/d of crude, and 3.531 million b/d of flows were northbound, including 1.275 million b/d of crude. Focus on Russia Washington's immediate oil sanctions focus is on Russia, said Ferreira. "We expect a significant ramp-up in sanctions enforcement next year," he said. More enforcement will increase the costs and risks associated with the shadow fleet and funnel more exports through price cap-compliant services, he said. Ziemba expects enforcement of the price cap to be more targeted, with some additional tankers listed and perhaps some spot checks. Insulating the global economy from shocks will argue against more extensive enforcement, she said. The US may see lower crude prices as a tailwind for a tighter squeeze on the Russian shadow fleet, according to a Dec. 20 note from Clearview Energy Partners. "Once Urals moved below the $60/b threshold, cap-compliant trade could offer an outlet for barrels that might otherwise have moved via shadow fleet capacity and Russian middlemen," Clearview said. Platts assessed FOB Urals Primorsk below $60/b from Dec. 6 to Dec. 12, according to S&P Global Commodity Insights data. Limited action on Iran Most experts expect little change in the US enforcement of Iranian oil sanctions. "I don't think Biden will enforce the sanctions on Iran any more strictly than he has now, unless there is some sort of escalation in the Gaza/Israel conflict in which getting tougher on Iran might make a difference," said Ellen Wald, president of Transversal Consulting. Ferreira was also skeptical that anything would change. "No one seriously believes this administration is willing to take the type of enforcement actions against Chinese traders, shippers and buyers that would crimp Chinese imports of Iranian oil," he said. Iran's ties to the Houthis are also complicating matters, said Shaffer. "Iran knows that it has the Biden administration over a barrel in an election year and is using its proxy – the Houthis – against international shipping in the Red Sea, and its proxies in Syria and Iraq against US forces there, with no fear of American response," she said. Venezuelan situation In Venezuela, where the US eased oil and mining sanctions for six months in exchange for progress toward fair elections in 2024, the Biden administration will likely defer to the Venezuelan opposition's assessment of whether Venezuelan President Nicolas Maduro is delivering on his promises, Ferreira said. "Neither the Biden administration nor the opposition want to undermine the process by prematurely reimposing sanctions, so any changes before April will be symbolic, if they happen at all," Ferreira said. "I suspect we'll roll over the licenses again in April and wait until after the Venezuelan elections to make any adjustments." The US will likely be flexible in negotiations and wary of reimposing sanctions that could undermine humanitarian issues, Ziemba said. The sanctions pause will likely remain in effect at least until the six months expire, but some areas of sanctions may be reinstated, including potentially those on the gold trade, she said.

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Rio Tinto to supply low-carbon aluminum to cablemaker Prysmian for grid greening

Rio Tinto has signed a five-year agreement to supply global cable manufacturer Prysmian with low-carbon aluminum produced using renewable hydropower from Rio Tinto’s Canadian operations, the company said Oct. 30. The partnership aims to help build a more sustainable North American supply chain for materials to expand power grids for the energy transition, Rio Tinto said in a statement. Power generation from renewables in the US is expected to increase from 21% in 2021 to 44% in 2050, according to the US Energy Information Administration’s 2022 Annual Energy Outlook, requiring significant investments in power grids and boosting demand for innovative materials used in electrification projects. The low-carbon aluminum supplied by Rio Tinto will be used for advanced power cables, seen critical for grid expansion for the transition to renewable energy sources. Aluminum is seen by some analysts as increasingly suitable and cost-effective for filling gaps that may be left by an expected market deficit of copper in the global electrification drive over coming years. This agreement will support Prysmian’s aim to be carbon neutral by 2050, the cables maker said. The companies have also signed a development agreement to leverage technologies, research and development capabilities, and expertise to develop multimaterial solutions in support of North America’s growing electrification demand, according to the statement. Learn more at the Aluminum Symposium | Scottsdale, AZ | January 28-30, 2024