The only certainty is that nothing is certain. The reflection of Pliny the Elder, naturalist of the first years after Jesus Christ, applies perfectly to the situation in which raw materials and metals evolve. ” The economic context [est] hard to read » and there « add a number of elements whose outcome remains difficult to predict “, underlines Benjamin Louvet, raw materials manager at Ofi AM. In these conditions, ” the readability of the short-term metals markets is very limited, but a further decline cannot be ruled out, particularly with the very hawkish tone of the Fed during the Jackson Hole symposium from August 25 to 27. The boss of the American central bank, whom some hoped would be accommodating, turned out to be more offensive than expected, recalling that the fight against inflation will be in the “ pain of rate hikes and a possible recession. Gold, ” a decline in growth would inevitably deal a blow to metal consumption in the short term. It is mainly this element which is now at least partially ‘priced’ by the markets and which explains the drop in recent months. », Analyzes Benjamin Louvet.
Fall from above
Added to this is the crisis in China, caused, on the one hand, by Beijing’s rigidity in its zero-Covid strategy, and on the other hand, by restrictions on electricity consumption in certain provinces due to the drought. ” The poor car sales figures in China published on August 22 thus led to an immediate and violent correction in the price of platinum and palladium, which are widely used in this industry. [pour les pots catalytiques, ndlr] “, points out the expert. On that day, palladium prices slid nearly 7%, platinum prices 2.3%. Since its high of 1,183.16 dollars on March 8, the price of platinum has fallen by 16%, to 874 dollars an ounce, while that of an ounce of palladium has fallen from 3,442.47 dollars on March 7. to 2,178 dollars, a braking of 36.7%. As for rhodium, which is traded over-the-counter, it fell from a peak of $22,000 in March to $14,100 today. Sign of the times, China, which consumes nearly 50% of metals when its economy is operating at cruising speed, has become a net exporter this year, after more than 10 years as a net importer.
“Closures could multiply”
” The energy crisis in Europe has multiple effects adds Benjamin Louvet. If it threatens the economy of the area, and therefore the consumption of base metals, the surge in energy prices also leads to site closures, and in fact pulls metal prices upwards. After Glencore, Nyrstar, owned by the Swiss giant Trafigura, will close on 1er September, its zinc smelter in Budel, the Netherlands, for an indefinite period. In its press release, Nyrstar explained its decision by ” various external factors that have an impact but, very clearly, high energy prices are to blame. ” Alcoa and Norsk Hydro have done the same in the aluminum sector and these closures could multiply, as the producers’ margins are so negative!says the manager of Ofi AM. In the short term, the market mainly sees the negative impact on growth, and little the consequences of foundry closures. However, these decisions are very structuring: the factories thus closed will remain so for at least several months whatever happens. […] When activity picks up or the development of the energy transition accelerates, the lack of resources, noted during the recovery in 2021 and which caused the price of certain metals to soar, could be exacerbated! »
PC