Commodities Roundup: US electricity consumption; Green steel; EU carbon tax

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Here’s a quick rundown of news and thoughts from particular commodity markets, including US electricity consumption, green steel and graphite anodes.

MetalMiner, a sister site of ours, scours the landscape for what matters. This week:

US electricity consumption forecast to bounce back

Unsurprisingly, after a drop in 2020, US electricity consumption is forecast to rise in 2021.

The Energy Information Administration forecast electricity consumption to rise by 2.1% this year. Last year, US electricity consumption fell by 3.8%.

Meanwhile, the EIA forecast US electricity generation from natural gas to decline this year and in 2022.

However, the EIA forecast the share of power generation from coal to rise from 20% to 22% in 2021.

Green steel

Elsewhere, MetalMiner's Stuart Burns delved into developments in so-called "green," or lower-carbon, steel. In particular, he took a look at the EU's effort to promote greener production.

"Plenty will decry the use of state funds to support such moves," he wrote. "Some will suggest it’s a lot of hot air that will result in wasted investment that is not being demanded by the market.

"However, there is plenty of evidence that industrial consumers are under investor pressure to report and reduce the carbon footprint of their supply chain. In addition, they are also looking to use measures of low-carbon intensity as a sales and marketing tool to a public increasingly willing to make purchase decisions on the basis, at least in part, of their perceptions of a company’s impact on the environment."

Among other partnerships, Volvo and SSAB are teaming up to produce a "fossil-free" car. Volvo will use "fossil-free" steel from the Swedish steelmaker.

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At least in the near term, such a transition to "fossil-free" steel will be more expensive.

"Fundamentally, though, the blast furnace production route can only be made carbon neutral by using hydrogen as the fuel or heat source," Burns continued. "For that hydrogen to be fossil-free (i.e., "green hydrogen") from renewable electricity would require a massive ramp-up in renewable capacity.

"In Germany, this comes to 20% of the whole country’s current electricity consumption. It would only be economically viable at a carbon tax of $220 per ton, the Financial Times says.

"SSAB agrees. The steelmaker says its own endeavors will result in steel that is at least 20-30% more expensive than current production routes."

ATI strike continues

As we noted previously, the United Steelworkers union went on strike at stainless steel producer Allegheny Technologies Inc. at the end of last month.

The strike continued into its third week this week.

The ongoing labor stoppage puts the squeeze on stainless steel buyers in an already tight market.

European aluminum expresses opposition to carbon border tax

Europe's efforts to engender greener steel and aluminum output via a Carbon Border Adjustment Mechanism have produced mixed reactions.

The aluminum sector, for example, has expressed its opposition to the move.

"The European Aluminium Association and its members are worried there will be multiple and profound consequences, implications and distortions to the supply chain if certain countries are penalized with a carbon tax," Burns wrote.

"The industry prefers more targeted action. For example, the EU Commission’s action against Chinese flat rolled product producers for subsidized and unfair pricing has resulted in tariffs added to those imports this week."

Indian plant to produce graphite anodes

An Indian lithium-battery plant will also produce graphite anodes, production of which China dominates.

"Epsilon Advanced Materials, the company behind the new plant, is a subsidiary of Epsilon Carbon," MetalMiner's Sohrab Darabshaw wrote. "Epsilon Carbon is India’s leading coal carbon company that recently diversified into the battery material business. Specifically, it has moved to develop and manufacture high-performance carbon products for anode components for lithium-ion batteries. Industries in China currently produce over 80% of the world’s supply of these anodes."

Copper stabilizes

After surging to a peak around $9,600 per metric ton in late February, the LME copper price came back down to earth.

LME copper fell as low as $8,757 per metric ton in early March.

After that, however, the price stabilized and traded sideways through the rest of the month. The copper price has showed some upward momentum in April, as the US dollar — with which commodities prices generally correlate inversely — has lost ground. The US dollar index closed March at 93.44 before sliding to 91.69 as of April 14.

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