Geospatial analytics: global smelting activity falls in July

Copper and Nickel Global Smelting Activities 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 –

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 South American Dispersion Index fell by over 11 points to 37.7, its lowest level since December 2021
• 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

Dr Guy Wolf, Marex 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.”

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 the smelting capacity for copper and nickel round 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.

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