Copper prices fell below $9,000 a ton for the first time since early April due to a global stock market selloff and rising pessimism about demand in China and elsewhere. The industrial metal has dropped by about 20% since its mid-May record high, driven by concerns over increasing inventories and weak conditions in the Chinese spot market.

What Causes the Market Downturn?

Copper is hailed as the economic bellwether because it rises and falls in tandem with industrial production. The metal is also popular as “Doctor Copper”, a slang word for copper’s price to foresee the economy’s overall health.

As seen below, copper price at London Metal Exchange (LME) has been dropping since it hit record high in May.

The falling copper prices is further worsened by a significant selloff in global technology stocks and doubts about the growth of the artificial intelligence industry. The AI industry had previously boosted copper prices due to anticipated surges in data center use and power infrastructure.

Gong Ming, an analyst at Jinrui Futures Co., noted that global growth concerns could drive copper prices lower, although prices might find support around $8,900 due to potential supply risks. Copper dropped 2.2% to $8,900 a ton and was trading at $9,010 at the time of writing. Nearly all metals were lower on the LME, with tin declining 2.6% and zinc losing 1.5%.

Iron ore also declined by 0.9% to trade below $100 a ton in Singapore, with signs of robust supply continuing. According to Liz Gao, a senior iron ore analyst at CRU, weak steel demand and negative steel margins in China are causing mills to reduce production and avoid building raw material stocks.

Despite recent rate cuts by China’s central bank to revive the economy, copper price continued to fall. It marks the worst weekly slump in almost two years, as a modest rate cut in China failed to alleviate concerns about demand in the world’s largest commodities consumer. 

• SEE MORE: Copper and the Need to Meet the World’s Rewiring Demand for Energy Transition

China’s Copper Exports Hit Record High

The red metal dropped for the 6th consecutive day despite China’s efforts to support its economy through unexpected interest-rate cuts. The lack of short-term stimulus from a recent major Communist Party meeting added to investor disappointment.

Ewa Manthey, commodities strategist at ING Bank NV, noted:

“We expect copper and other industrial metals to decline further in the near term. That trend would reflect “a softer demand outlook in China.

China’s refined copper exports reached a record high in June, driven by weak domestic demand, prompting smelters to seek overseas markets. Exports more than doubled to 157,751 tons from May, surpassing the previous all-time high of 102,000 tons set in 2012, according to customs data.

Asia’s largest economy experienced its slowest growth in five quarters in the three months through June. This leads to a 14% drop in global copper prices since mid-May. 

The surge in exports is also reflected in the increased copper inventories at LME warehouses, which have more than doubled since mid-May, reaching their highest levels since September 2021. This increase is largely due to the lack of domestic demand. 

Benchmark Minerals Intelligence believes that despite spot treatment and refining charges (TC/RCs) at record lows, Chinese smelters are maintaining strong output. Benchmark estimates most smelters in China are loss-making, despite improved by-product credits. 

Interestingly, copper prices peaking in May increases scrap copper supply by 20% year-on-year. Most incremental supply went to Chinese smelters, boosting refined copper production. 

Copper Demand for Clean Energy is Positive

With prices now below the $9,000 threshold, scrap merchants are less willing to supply, and inventories are low. As scrap supply fades in Q3, raw material supply will tighten. Benchmark projects a refined copper production growth rate of 2.3% in H2.

Moreover, though China’s refined copper supply was strong in Q2, consumption growth was weak. High copper prices led to reduced restocking and plant utilization, causing a counter-seasonal stock-build and record exports in May. 

Despite short-term pressures, end-use demand indicators are positive: electric vehicle sales are up 32%, and solar installations and grid investments increased 29% and 22%, respectively. 

• READ MORE: The World Needs 194 New Large Copper Mines to Reach Net Zero

The post Copper Prices Slump Below $9,000: What Does It Mean for Global Growth? appeared first on Carbon Credits.

In a groundbreaking move, India’s Finance Minister Nirmala Sitharaman has given utmost significance to critical minerals in the Union Budget for 2024-25. The Critical Minerals Mission aims to bolster India globally by ramping up domestic production of critical minerals for electric vehicles (EVs) and renewable energy technologies.

What is India’s Critical Mineral Mission?

Critical and rare earth elements (REE) are crucial for advancing clean energy and electric mobility, as the Economic Survey 2023-24 emphasized. The survey highlighted issues at mineral deposit sites and trade policies that are affecting India’s renewable energy and EV targets.

The government aims to launch this mission to eliminate these challenges and establish a smooth policy for domestic mineral exploration. The mission has outlined a comprehensive strategy that includes the recycling of lithium, copper, cobalt, and other REEs.

Furthermore, India will actively collaborate with REE-dominant nations like Australia and engage in initiatives like the Mineral Security Partnership (MSP). This will be a key component of the critical mineral mission. These partnerships are essential for securing overseas mineral resources and advancing India’s strategic objectives in exploration science.

Mrs. Sitharaman in her Budget speech, said,

 “We will set up a Critical Mineral Mission for domestic production, recycling of critical minerals, and overseas acquisition of critical mineral assets. Its mandate will include technology development, a skilled workforce, an extended producer responsibility framework, and a suitable financing mechanism.”

She proposed that,

“25 critical minerals will be exempted from Basic Custom Duties (BCD). This will provide a major fillip to the processing and refining of such minerals and help secure their availability for these strategic and important sectors.”

• READ MORE: India Challenges EU’s Carbon Border Adjustment Mechanism (CBAM)

How will the Budget 2024 Impact EVs and REEs?

Lithium, the key element for manufacturing batteries in EVs, just got a boost from the Budget 2024. The elimination of custom duty on lithium is set to drive down prices, making EV batteries more affordable in India. The same policy applies to ferrous scrap and nickel cathode while offering a concessional rate for copper scrap. These measures are aimed at fostering local manufacturing and recycling capabilities.

Currently, high lithium-ion battery costs are making EVs costlier. The Union Ministry of Mines reported that last year India imported over 2,000 tons of lithium, priced at Rs 700 crore. However, this waiver on customs duties, paired with declining global lithium prices, promises to reduce EV manufacturing costs. Additionally, the discovery of new lithium reserves in India could further slash prices, making EVs more accessible and affordable.

Pratik Kamdar, CEO & co-founder of EV batteries supplier Neuron Energy said,

“This pivotal move will substantially lower the production costs of battery cells, directly translating into more affordable electric vehicles (EVs) for consumers. By reducing manufacturing expenses, the overall cost of EV batteries will decrease, making electric vehicles a more economically viable option.”

Bhavish Aggarwal, Founder of Ola remarked,

 “Exciting to see the Union Budget 2024-25 prioritizing DPI, critical minerals, and job creation. The focus on developing DPI applications in agriculture and other areas lays the data foundation for making India the AI hub of the world.”

He further added that the Critical Mineral Mission could be a game changer for India’s energy transition journey and would create ample job opportunities.

Why Mixed Response from Some EV Enthusiasts?

The EMPS (Electric Mobility Promotion Scheme) 2024 will end on July 31, 2024, and with this, the government needs to roll out a fresh long-term strategy to support the EV ecosystem. However, nothing has been clearly explained on the budget about the renewal of EMPS. Hence the response is mixed! EV makers expect that the new plan should focus on supply-side initiatives to boost domestic manufacturing and innovation.

Many startup founders and industry pandits have assessed the situation differently. They perceive that EV startups need robust support for R&D, easy capital access, and production-linked incentives. These measures will spur rapid innovation, scale operations, and increase contributions to India’s EV manufacturing. They believe that boosting India’s EV charging infrastructure is crucial to winning customer confidence. This demand is directly tied to ramping up the production of Indian EVs, including batteries and other components.

From media reports, we discovered that there’s strong anticipation for a reduction in GST rates on EV components and batteries from 18% to 5%. This tax cut would offset potential price hikes following the end of subsidies, keeping EVs affordable.

source: Grand View Research

After speculation and analysis, we can conclude that the current budget with its focus on critical minerals can position India as a global leader in clean mobility and innovation. We expect significant impacts on EV batteries, nuclear technology, AI, telecommunications, and advanced electronics. However, clear guidelines for EVs are still needed, which we hope to see in the coming months.

• FURTHER READING: Adani Reaches India’s First 10,000 MW Renewable Energy Capacity

The post How India’s Budget 2024 Sets a Global Standard for its Critical Minerals appeared first on Carbon Credits.

As global awareness of environmental degradation and social inequality grows, businesses are increasingly shifting towards sustainable operations. The new Corporate Sustainability Reporting Directive (CSRD) exemplifies this transformation by mandating certain companies to disclose and improve their environmental and social impacts. It represents a strategic initiative that integrates sustainability into core business operations, reducing risks and enhancing competitiveness.