Latest news with #WoodMac
News.com.au
09-05-2025
- Business
- News.com.au
Monsters of Rock: We have a tightening copper market … but it's all a little knotty
Copper prices remain strong amid tightness in physical markets US could rely on copper imports even if it encourages new mine builds Lithium surplus to run longer without curtailments: WoodMac It was once a paint by numbers exercise to read the copper market, an economic bellwether known as Dr Copper for its ability to project and diagnose shifts in the wider global economy. That comes down to its fairly obvious industrial uses. Poles and wires carry copper for its conductivity. Cabling is used in housing, infrastructure, cars – EVs especially, train lines, power plants. You get the gist. Growth is good for the commodity, recession is bad. But the current copper market has become mosaic-like in its complexity. The A-to-B plot line of a Home and Away episode has been replaced with the density of Infinite Jest. Copper prices are broadly stable and at historically strong levels amid threats to global economic growth, Benchmark Mineral Intelligence tells us in their weekly note. Three month LME copper is clocking in at US$9431/t at the moment. But prices are uneven, driven by stockpile purchases in the US where tariffs on copper imports are being feared, while stockpile draws in China also point to market tightness, curious given the broader economic environment generally and in China specifically. A 3.7% collapse on Wednesday last week from US$9440/t on the LME rebounded from US$9093/t to US$9395/t by Friday, indicating the fragility of any particular market theme right now. COMEX purchasing by US buyers has not helped the volatility. "Copper prices continue to be elevated by severe market tightness resultant from tariff induced front-loading at the COMEX, leading to backwardation at both the SHFE and LME," Benchmark says. Chinese and US economic indicators have been pointing down, normally a negative for copper. But the rush to move material to the States and strong demand for concentrate and metal in physical markets has kept a floor under prices. "As stock draw-downs in China have begun to spread to LME warehouse systems, the extent to which this supply crunch continues will be closely watched," Benchmark noted. "Although the Fed's decision on interest rates would normally be in-focus, a projected high probability (>95%) of holding rates stable mean markets will likely look more closely at alternative signals this week - such as firm commitments on US-China de-escalation." US mining Copper buyers in the United States are reliant on imports from overseas, which has led to a rush in copper demand and a major push from the US Government under Donald Trump to refire domestic production, which has slid over the past 27 years from ~1.9Mt to ~1.1Mt. This could be great news, especially with regards to permitting, for US based miners and explorers like New World Resources (ASX:NWC), Rio Tinto (ASX:RIO) and Golden Mile Resources (ASX:G88). But Benchmark warns tariffs and Executive Orders won't be able to bring the whole supply chain to the States in the near term, even if the development of large mines like Rio's Resolution and Teck's NewRange go ahead. "This could go a long way to lower the net imports of copper to US, which last year totaled well over 700,000t," Benchmark said. "Yet, an important bottleneck isn't mining or refining—it's smelting. The US currently has just 590,000tpa of smelting capacity, with only one potential project in development: the Hayden Restart, which could add 200,000tpa. In 2024, exports of copper contained in concentrate reached 325,000t, accounting for 48% of the year's total concentrate production of 674,000t. "Currently, even if the US chose to process all of its copper concentrate domestically, the existing smelting capacity would be insufficient. Without a rapid expansion of smelting infrastructure, accelerating copper concentrate projects alone won't address the gap. As a result, the US will continue exporting concentrate—only to reimport it later as finished cathode." Lithium recovery As investors continue to wait for the lithium market to rebound, one of its most bearish forecasters says curtailments will be needed to bring the market into balance. The issue is the high cost mines that need to come out of the supply chain are in China, also the market's biggest customer. That means any mine or refinery closure would be a delicate manoeuvre to pull off. WoodMac continues to see the lithium market surplus holding into the early 2030s, according to a deck prepared by its lithium research director Allan Pedersen for a forum in late April. "In our view, curtailments should predominantly come from China, which is the largest producer and where most production is suffering from low or negative margins in the current price environment," Pedersen said in a note. "However, China is also the world's biggest consumer, which presents a challenge to curtailments. What's more, increasing production can lead to lower unit costs, which incentivises producing higher volumes rather than cutting supply. "The big question for the sector is, will sufficient capital be available to survive the downturn until demand growth catches up?" It should be noted, other analysts see small deficits returning as soon as next year, including Argonaut and Fastmarkets. They think demand is growing quicker than the market realises, with EV sales growth especially in China remaining strong and battery energy storage systems grabbing a rising market share for lithium. This week, WA's newest lithium producer Liontown Resources (ASX:LTR) picked up a $15m interest free loan from the WA State Government along with a waiver of port fees and mining tenement rental rebates related to its Kathleen Valley mine until the spodumene spot price hits US$1100/t for two consecutive quarters. Miners and explorers keep on waiting. The ASX 300 Metals and Mining index rose 0.96% over the past week. Which ASX 300 Resources stocks have impressed and depressed? Making gains Resolute Mining (ASX:RSG) (gold) +18% Liontown Resources (ASX:LTR) (lithium) +16% Pantoro (ASX:PNR) (gold) +13.2% Emerald Resources (ASX:EMR) (gold) +12.6% Eating losses Patriot Battery Metals (ASX:PMT) (lithium) -7.6% Lynas (ASX:LYC) (rare earths) -6.9% Coronado Global Resources (ASX:CRN) (coal) -5.7% Adriatic Metals (ASX:ADT) (silver) -5.4% At Stockhead, we tell it like it is. While New World Resources and Golden Mile Resources are Stockhead advertisers, they did not sponsor this article.
Yahoo
18-04-2025
- Business
- Yahoo
Soaring U.S. Power Demand Will Need All Energy Sources
AI data centers and the reshoring of some manufacturing will drive U.S. electricity demand growth over the coming decade. The world's biggest economy will need all energy sources to ensure power demand is met. Natural gas is the biggest near-term winner of AI advancements, but renewables will also play a key role in powering the data centers of next-generation computing, analysts say. The U.S. has seen a surge in proposed data centers over the past year. As of July 2024, Wood Mackenzie had identified about 50 gigawatts (GW) of proposed data centers in America. This figure had doubled in a few months, and the proposed data centers were nearly 100 GW by January 1, 2025, according to WoodMac's estimates. Policy and regulation 'will need to reflect the reality that there is a need for all generation technologies,' according to Wood Mackenzie's analysts, as the natural gas boom alone cannot meet the soaring electricity data centers are set to account for almost half of U.S. power demand growth by the end of the decade, the International Energy Agency (IEA) said in its Energy and AI report last week. Driven by AI use, America will consume more electricity for data centers than for the production of aluminum, steel, cement, chemicals, and all other energy-intensive goods combined, according to the agency. The U.S. and other key power markets will tap a diverse range of energy sources to meet rising electricity needs from data centers. But renewables and natural gas are set to take the lead due to their cost-competitiveness and availability in key markets, including the U.S., the IEA said. By 2035, data centers are set to account for 8.6% of all U.S. electricity demand, more than double their 3.5% share today, BloombergNEF said in a new report this week. U.S. data-center power demand will more than double over the next decade, rising to 78 GW in 2035 from nearly 35 GW in Sachs, for its part, sees U.S. electrical power demand rising by 2.4% each year through the end of the decade, with AI-related demand accounting for about two-thirds of the incremental power demand in the country. 'The US is reaching a power demand inflection point due to the rise of energy-intensive artificial intelligence (AI), the need for more AI-ready data center capacity, and the reshoring of manufacturing,' Goldman Sachs analysts wrote in a report earlier this year. The higher power demand will be met by a diverse mix of energy sources. While renewable energy is growing in the mix of power generation sources, natural gas is best positioned to capture the majority of incremental capacity growth, while nuclear energy's impact is unlikely to be felt this decade, according to Goldman gas is set to provide 60% of the incremental generation capacity related to data center demand, while renewables are expected to provide the remaining 40%, the investment bank's analysts said. Renewable investments could drop by 30% or more in the coming years if the Trump Administration axes key incentive provisions in the Inflation Reduction Act (IRA), WoodMac says. 'But despite these concerns, buyers are showing a willingness to pay a premium for renewable energy,' WoodMac's analysts noted. Natural gas is winning big from the Trump pro-fossil fuel policies and the U.S. power demand surge, and gas is leading the efforts to power a large part of the extra electricity demand. Gas capacity orders jumped by 146% in North America last year—the most in nearly a decade, and gas turbine orders increased by 36% year-on-year in 2024, said WoodMac. 'But gas alone cannot meet the rising electricity demand,' it added. Demand is rising, but there are uncertainties about how high the growth would be and how fast the data centers will be built. BloombergNEF (BNEF) has a relatively conservative forecast about U.S. data center buildout. This is not due to skepticism about AI's market potential 'but acknowledges real-world deployment challenges such as securing key elements (land, power, permits) and navigating the complex construction process,' said BNEF's Helen Kou, Head of US Power, and Nathalie Limandibhratha, Senior Associate US Power. The research firm has estimated that the development of a data center in the United States would typically take about 7 years—from initial planning to full operation. This timeframe includes 4.8 years in pre-construction and 2.4 years for construction. Still, the U.S. will be the world's most important market in power demand growth for data centers, BNEF said in a separate report this week. 'Over the next five years, demand from US data centers could outpace even electric vehicles' incremental demand, driven by the surge in AI training workloads that require significant compute capacity and highly energy-dense infrastructure,' according to BNEF. Amid surging power demand, natural gas will play a crucial role in meeting incremental U.S. electricity consumption. Renewables and potentially nuclear in the longer term will also provide the additional power needs. By Tsvetana Paraskova for More Top Reads From this article on
Yahoo
27-01-2025
- Business
- Yahoo
Coal Continues to Lead China's Record Levels of Power Generation
China's thermal power generation reached a record high in 2024, primarily due to the country's coal-fired power plants, even as the country continues to add renewable energy resources to its power grid. Data from China's National Bureau of Statistics showed electricity production from the country's coal, oil, natural gas, and nuclear power sectors increased 1.5% year-over-year, the slowest pace of growth in the past decade but still reaching a record 6.34 trillion kilowatt hours. Officials said power demand continues to increase across China, and reliable baseload power is needed despite record additions of wind and solar energy. China and India account for most of the world's new construction of coal-fired power plants. Data from the country's National Energy Administration showed China's solar power generation capacity rose by 45.2% in 2024 compared to 2023, and wind power generation capacity increased by 18% year-over-year. The International Renewable Energy Agency has said China leads the world in deployment of renewable energy. Ember, a global energy think tank, has said coal accounts for about 60% of China's electricity output. Renewable energy, led by hydropower, makes up most of the rest. Some researchers, including from the Centre on Research and Clean Air, and LSEG, a data and analytics shop, have said they expect China's coal-fired generation will decline this year as the country continues to deploy more renewables. A drop in coal-fueled output would mark the first non-Covid yearly decline since 2015. Lauri Myllyvirta, lead analyst at the Centre for Research on Energy and Clean Air and senior fellow at Asia Society Policy Institute, in a post for Carbon Brief wrote that growth in renewable energy installations, along with slower demand for electricity from industry, "would be expected to push China's coal-power output into decline in 2025." China also continues to lead in deployments of power generation in foreign countries. A new report from Wood Mackenzie (WoodMac) released Jan. 27 said Chinese companies last year installed a record 24 GW of capacity as part of its ongoing Belt & Road Initiative, a program designed to strengthen China's economic ties and relationships with other governments. WoodMac said the 2024 deployments were double the amount of capacity installed in 2023, and represents the highest level of investment in the Belt & Road program since it was launched in 2013. The 2024 installations were led by renewable energy, primarily solar and hydropower. The report—"Record Chinese overseas power project completion in 2024: Update on the Belt & Road Initiative"—said 52% of the 2024 projects were for renewable energy, including 8 GW of solar power and 5 GW of hydro. The report said the 48% of the projects were for thermal power generation, including 6 GW of coal plants and 6 GW of natural gas- and oil-fired plants. "The rapid growth in overseas solar projects in 2024 is remarkable," said Alex Whitworth, vice president, head of Asia Pacific power and renewables research at Wood Mackenzie. "Chinese companies are heavily prioritising greener technologies overseas and these make up over two thirds of the project pipeline. As Chinese manufacturers drive down the costs of renewable power technology, Chinese companies are leading its deployment in many developing markets that could not previously afford it." The report noted that China's overseas project pipeline includes 19 GW of coal-fired units, though the status of those projects is uncertain due to China's 2021-announced policy that it would build no new overseas coal-fired plants. The report said 9 GW of gas-fired projects are either under construction or still in the planning stages. WoodMac said Chinese companies have installed 156 GW of power generation capacity in participating countries since the launch of the Belt & Road program. "Chinese companies have installed 156 GW of power projects in participating countries since the launch of the B&R Initiative," said Yanqi Cao, managing consultant, Asia Pacific power research at Wood Mackenzie. "Between 2013 to 2024, these companies completed 369 overseas power projects, representing an investment of approximately $281 billion," Cao added. The report said developing countries remain the focus of the initiative. Asia accounted for about 70% of installed capacity, with Africa next at 15%. The report said five markets—Pakistan, Indonesia, Vietnam, Saudi Arabia, and Malaysia—are expected to experience major growth in solar and wind power over the next 10 years, with a projected 120 GW of capacity additions, representing investment of $73 billion. WoodMac said Saudi Arabia would lead those markets, with plans to install 41 GW of solar power and 13 GW of wind power. "Chinese companies are more and more involved in investing in renewable power in the top five B&R markets. Five years ago, they accounted for only 7% of the wind and solar capacity in these markets. However, this share has risen to over 60% in 2024, and it could reach 80% by 2030 if the current trend continues," Cao said. —Darrell Proctor is a senior editor for POWER.
