GLOBAL COPPER AND NICKEL DOWN IN JULY
- China copper smelting back at February lows
- Readings show July copper smelting weakest in South America
- Global nickel smelting at all time SAVANT lows, led by Europe & Africa
3 AUGUST 2022 – SAVANT, the unique geo-spatial analytics product launched in October 2019 by Earth-i and Marex, covers global smelting activity for both Copper and Nickel
July 2022 Copper observations include:
Global smelting activity fell again in July to 46.5, registering its sixth consecutive month below the two-year average. Only a rise in the Asia & Oceania region to 51.6 prevented all regions seeing below average activity for the month, while activity in China fell to its lowest since February, when the broader economy was impacted by the New Year holidays as well as COVID-19 related lockdowns. The lower July reading was partly the result of planned maintenance at the Jinchuan and Jinjian-2 smelters. Additionally, Daye’s new 400kt/a Hongsheng smelter is notable for its lack of activity, despite being scheduled to start commissioning last month. Smelting activity was weakest in South America, even though we noted the return of the Las Ventanas plant in the middle of the month following an environmentally mandated halt in June
- Global Dispersion Index fell to 46.5, down from 46.7 in June
- The China Dispersion Index registered its second successive reading below 50 at 48.3
- Asia & Oceania has overtaken China as the region with the highest level of activity and the only one above 50, averaging 51.6 in July
- The Global Inactive Capacity Index has now registered four consecutive months above 20% for the first time in the history of the series
July 2022 Nickel observations include:
The Global Dispersion Index fell by over 11 points to 37.8 in July, a record low for any month in the five-and-a-half-year history of SAVANT data. Ratcheting power prices saw the Europe & Africa index record an average of only 25.6, a record monthly low for any region, as the Pobuzhskiy plant in the Ukraine, Larymna in Greece and Kavardarci in North Macedonia all registered extended periods of inactivity during the period. Meanwhile in China, weak end use markets have seen cutbacks in production at stainless mills since May and with these operations increasingly integrated with NPI output, the transmission up the supply chain is now very quick. As such the country level NPI dispersion series fell by 5 points to 48.9.
- Global Dispersion Index fell back to 37.8 from 49.0 in June, the lowest on record
- Europe & Africa Dispersion Index fell over 12 points to 25.6, again the lowest on record
- NPI Dispersion Index in China fell back to 48.9 from 53.9 in June, so that all regions are now below the 2-year average of 50
- Activity rose across metal grades with those for NPI and class 1 nickel breaching the 50-level denoting the average for the last two years at 53.3 and 52.7 respectively
Dr Guy Wolf, Marex’s Global Head of Analytics, commented: “Now that we have over 5 and a half years of data history, the utility of SAVANT series is becoming ever more apparent. Only in the last week we have seen how the declines observed in copper smelter activity in Chile have proven prescient to Codelco’s first half results, which revealed a fall in output of 7.5% compared to the same period a year ago. Development of the production beta on the platform will further enhance links to traditional data sets, while we are confident that recent investigations have uncovered a strong case to use SAVANT data series as futures – and by extension equities – trading signals.”
Global Copper Inactive Capacity Index, Aug 2020 – Present (weekly average)
Europe & Africa Nickel Dispersion Index, Nov 2021 – Present (weekly average)
* – Index values go back to March 2016
The Activity Dispersion Index is a measure of capacity-weighted activity levels observed at smelter sites where a reading of 50 indicates that current activity levels are at average levels. Readings above or below 50 indicate greater or lesser activity levels than average, respectively. The above chart displays these readings as a weekly rolling average.
The Inactive Capacity Index is derived from binary observations of a smelter’s operational status as being either active or inactive. The capacity weighted global and regional indices show the percentage of smelter capacity that is inactive, with readings displayed in the chart below as a weekly rolling average. A reading of zero would indicate 100% smelting capacity.
The SAVANT platform monitors up to 90% of Copper and 96% of Nickel smelting capacity around the globe. Using daily updated sources, including extensive use of geospatial data collected from satellites, the index reports on the activities at the world’s smelting plants offering subscribers unprecedented levels of coverage, accuracy and reliability. This dataset allows users to make better informed and more timely trading decisions.
Earth-i is a geospatial intelligence company using machine learning, artificial intelligence and Earth Observation data to provide unique and relevant insights, derived from diverse geospatial data, that deliver clear decision advantage for businesses, governments and other organisations.
Earth-i provides advanced analytics using automated interpretation of a range of geospatial Earth Observation data sources including colour imagery, colour video, infra-red and radar from a range of sources including satellite, drone, aerial and ground-based sensors. This data is fused with additional data sources to extract factual understanding and generate predictive insights across a range of markets such as commodities, supply chain, agriculture, infrastructure and defence.
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Marex is a diversified global financial services platform, providing essential liquidity, market access and infrastructure services to clients in the energy, commodities and financial markets.
The Group provides comprehensive breadth and depth of coverage across five core services: Market Making, Execution and Clearing, Hedging and Investment Solutions, Price Discovery and Data & Advisory. It has a leading franchise in many major metals, energy and agricultural products, executing around 38 million trades and clearing over 193 million contracts in 2021. The Group provides access to the world’s major commodity markets, covering a broad range of clients that include some of the largest commodity producers, consumers and traders, banks, hedge funds and asset managers.
Marex was established in 2005 but through its subsidiaries can trace its roots in the commodity markets back almost 100 years. Headquartered in London with 22 offices worldwide, the Group has over 1,100 employees across Europe, Asia and America.
For more information visit www.marex.com.