MARKET DYNAMICS

In 2025, China State Grid will increase its investment.  The annual power grid investment is expected to exceed 650 billion yuan for the first time.  Although the growth rate of UHV (Ultra - High Voltage) construction does not increase significantly, there will be a concentrated start of projects in 2025, which will play a specific role in stimulating the demand for aluminum.

At present, the new energy vehicle market is developing rapidly.  New energy vehicles' production and sales growth rate should exceed 20% in 2025.  Under the trend of automotive light-weighting, the application of aluminum in the battery systems and body structural parts of new energy vehicles is constantly expanding, all of which will become essential parts of the growth in aluminum consumption.

North America is a significant global automotive production base in the automotive manufacturing sector, where traditional fuel-powered vehicles and new energy vehicles continuously evolve.  The rise of new energy vehicles has driven the growth in the application of aluminum in battery components, body structural parts, etc. At the same time, the aerospace industry has a relatively stable demand for high-end aluminum materials.  The continuous production of aircraft manufacturers such as Boeing ensures the demand for aluminum used in aviation.

Energy Sector: Under the trend of renewable energy development, the number of solar and wind power generation projects in North America is increasing continuously.  Aluminum is widely used in components such as solar panel frames, brackets, and wind turbine blades.  For instance, the construction of large-scale solar power plants in the US, and offshore wind power projects in the coastal areas of Canada have generated demand for aluminum.

The CEO of Greece's Metlen Energy & Metals said that aluminum demand in Europe remains weak due to the sluggish activities in key aluminum-consuming industries, such as automotive and construction.  However, there are bright spots in sectors like beverage packaging.  The Chief Strategy and Sustainability Officer of Novelis is optimistic about the growth opportunities in aluminum demand in the beverage packaging industry in 2025.  As summer approaches and beverage consumption enters the peak season, the demand for aluminum in beverage packaging will likely increase.

PROCESS OVERVIEW

SHEETS

Smelting: Aluminum oxide (alumina) is extracted from bauxite ore and then smelted using an electrolytic process to produce pure aluminum. 

Casting: The molten aluminum is cast into large ingots or slabs.  Continuous casting is often used for sheet production. 

Rolling: The ingots are heated and passed through a series of rolling mills, reducing their thickness and increasing length. Hot rolling is used for initial thickness reduction, followed by cold rolling for the final gauge and surface finish. 

Annealing (Optional): a heat treatment process that may soften the aluminum and improve its formability. 

Slitting/Shearing: The rolled aluminum sheet is then slit into narrower widths or sheared into individual sheets of the desired size. 

CABLES

Drawing: Aluminum rods (produced from ingots) are drawn through a series of dies to reduce their diameter and form wires of the desired gauge. 

Stranding: Multiple aluminum wires are twisted together to form a stranded conductor, which provides flexibility and strength. 

Insulation (if needed): The aluminum conductor may be coated with an insulating material (such as polyethylene or PVC) through extrusion. 

Jacketing (if needed): A protective outer jacket is applied over the insulation for some cables. 

MECHANICAL ASSEMBLIES

Component Manufacturing: This involves producing the individual parts that will be assembled.  Common processes include:  

• Casting (Die Casting, Sand Casting): Molten aluminum is poured into a mold to create complex shapes. 
• Extrusion: Aluminum is forced through a die to create profiles with a specific cross-section. 
• Forging: Aluminum is shaped by compressive forces applied by hammers or presses. 
• Machining: Aluminum parts are shaped by removing material using cutting tools (milling, turning, drilling, etc.). 
• Sheet Metal Fabrication: Aluminum sheets are cut, bent, and joined to form parts. 

Joining: The individual aluminum components are joined together using various methods:  

• Welding (TIG, MIG): Fusing the aluminum parts using heat and filler metal. 
• Riveting: Using rivets to fasten the parts. 
• Bolting/Screwing: Using bolts and screws to join the parts. 
• Adhesive Bonding: Using glues to connect the parts. 

Finishing (Optional): The assembled part may undergo finishing processes:  

• Painting/Powder Coating: Applying a protective or decorative coating. 
• Anodizing: Creating a protective oxide layer on the aluminum surface. 

MACHINED PARTS

Material Selection: Aluminum stock (bars, rods, plates) of the appropriate alloy and dimensions is chosen. 

Machining: Material is removed from the aluminum stock using cutting tools on machine tools such as:  

• Lathes: For creating cylindrical parts. 

Milling Machines: Machines that create complex shapes with flat surfaces, slots, and holes. 

• Drilling Machines: For creating holes. 

CNC Machines: Computer numerically controlled machines perform automated machining operations based on pre-programmed instructions. 

Finishing (Optional): Machined parts may undergo finishing processes:  

Deburring: Removing sharp edges or burrs. 

• Surface Finishing (Polishing, Grinding): Improving the surface finish. 
• Anodizing/Painting: Applying a protective or decorative finish. 

RECENT DEVELOPMENTS

Date	Aluminium Supplier	End User (Company 2)	Development Type	Description	Deal Value
Jan-25	Rio Tinto (Australia)	Hydro (Norway)	Partnership	Rio Tinto and Hydro will join forces to identify and evaluate available carbon capture technologies for future implementation in the aluminum electrolysis process.  The companies have signed a partnership agreement that provides for sharing certain information, results, and costs covering specific R&D activities, from lab tests with external suppliers to larger, on-site pilots, to create improved offerings of commercially viable carbon capture technologies from relevant suppliers.	-
Dec-24	Emirates Global Aluminum (UAE)	-	Innovation	Emirates Global Aluminum (EGA) has officially launched the construction of a groundbreaking pilot reduction cell project for its innovative EX smelting technology at its Al Taweelah site in Abu Dhabi.  The development of 10 pilot reduction cells marks a significant step toward the full-scale industrialization of this next-generation smelting technology, which is poised to transform the aluminumnext-generation smelting technology, which is poised to transform the aluminum production industry significantly.  EX technology is designed to dramatically improve the efficiency of aluminum smelting, reducing energy consumption and emissions.  The technology uses Internet of Things (IoT) sensors, real-time data gathering, and enhanced connectivity.  These features will enable EGA to optimize its smelting processes and push the boundaries of digital transformation within the aluminum sector.	-
Nov-24	Rio Tinto (Australia)		Acquisition	Rio Tinto announced the completion of the acquisition of Sumitomo Chemical Company's (SCC's) 20.64% interest in New Zealand Aluminum Smelters (NZAS) on November 1, 2024.  After the transaction's completion, NZAS will be wholly owned by Rio Tinto.	-
Aug-24	Hindalco Industries (India)	-	Expansion	Hindalco Industries, part of the Aditya Birla Group, is planning a significant expansion with investments totaling $10 billion.	$10 Billion
Jul-24	Vedanta Aluminum (India)	-	Expansion	Vedanta Aluminum, India's top aluminum producer, has expanded its fleet of electric lithium-ion forklifts to 66 units, making it the biggest user of these forklifts in India. To further its sustainable operations, the company added 22 more electric forklifts at its smelter in Jharsuguda, Odisha.	-
Jun-24	Emirates Global Aluminum (UAE)	Aluminum Corporation of China (Chinalco)	Framework Agreement	Emirates Global Aluminum, the largest industrial company in the United Arab Emirates, and Aluminum Corporation of China (Chinalco) have signed a framework agreement to progress their cooperation on developing an alumina refinery in the Republic of Guinea.	-
May-24	Glencore (Switzerland)	Rusal (Russia)	Contract	Swiss-based trading house Glencore and aluminum producer Rusal have extended their long-term supply contract into next year.	-
May-24	Hydro Aluminum (US)	-	Expansion	Aluminum and renewable energy company Hydro has decided to invest USD 85 million in a new casting line to strengthen its aluminum recycling plant in Henderson, Kentucky.  The new line will be operational in 2026 and supply the US automotive market with high-quality components.	$85 Million

Source: Press releases & company websites

DEMAND/SUPPLY OVERVIEW

• According to Baichuan Yingfu's forecast, by December 31, 2025, the operating capacity of China's electrolytic aluminum industry will reach 44.123 million tons, an increase of 0.737 million tons or 1.7% compared with the end of 2024.  The growth rate is slowing down.  The second quarter is in the middle of the year, and the overall production capacity should show a steady growth trend.
• China's limited potential for smelter expansion, coupled with uncertainties in bauxite supply, such as the slow resumption of domestic bauxite production and the fragile bauxite supply from Guinea, will restrict the growth of the aluminum supply.
• Trump's tariff policy may prompt domestic aluminum producers in the United States to expand their production capacity.  As the cost of imported aluminum increases, the market share of domestic aluminum products is likely to develop.  Enterprises may increase investment to expand their production scale to meet market demand.  At the same time, for aluminum producers in Canada, Mexico, and other countries with close trade relations with the United States, the tariff policy may impede their exports, thus affecting their capacity utilization and production plans.
• Europe has aluminum-producing countries, such as France and Greece.  The production capacity of their existing aluminum producers will not see large-scale changes in the short term.  Greece's Metlen company plans to invest 295.5 million euros to increase the alumina production capacity of its aluminum plant in Greece from 865,000 tons per year to 1,265,000 tons per year.  However, this program's bauxite project is scheduled to be completed and put into production in 2026, and production of alumina and gallium will gradually start in 2027.  Therefore, it will contribute limitedly to Europe's overall aluminum production capacity in the second quarter of 2025.

PRICING SITUATION

• In 2025, the tight alumina supply is expected to persist, providing strong support for aluminum prices from the cost side.  Electricity shortages have become the norm, which will also increase the production cost of aluminum and drive up aluminum prices.
• The supply and demand of aluminum are in a tight-balance state.  On the demand side, there is solid support from sectors such as new energy, power, and construction. Although production capacity is growing, the increase is limited. This supply-demand pattern clearly defines the support level for aluminum prices, leaving room for price increases. However, the increase may be relatively moderate due to the global economy's uncertainties and the slow production capacity release.  
• While the traditional Chinese holidays typically impart a more subdued atmosphere to the first quarter of the year, the announcements of tariffs - specifically, a 10% tariff on Chinese imports and a 25% tariff on aluminum and steel - are introducing significant volatility into the overall market complex.  The market landscape will likely transform as we draw near to early March.  A pivotal factor at that juncture could be enhanced clarity regarding Trump's trade policies, which may reignite market momentum.
• Currently, the premium of P1020 aluminum in Rotterdam, Europe, over the spot aluminum on the London Metal Exchange (LME) is relatively high.  Still, it is affected by geopolitical issues, supply constraints, and weak demand.  If the Russia - Ukraine conflict ends, Russian metals may re-enter the European market, easing the premium pressure.  However, if the situation in the Red Sea remains tense and affects transportation, it may continue to push up the premium.

MARKET DYNAMICS

China continues to promote the expansion of production capacity by enterprises in emerging industries such as new infrastructure construction, new energy vehicles, photovoltaics, and wind power. For example, battery enterprises like Contemporary Amperex Technology Co., Limited (CATL) are expanding their production, leading to a strong demand for copper strips and rods. At the same time, policies such as "trade-in for new" and the renewal of large-scale production equipment will increase copper materials' consumption.

The United States' GDP growth rate is stable. Under the economic recovery trend, there is a foundation for the growth of demand for copper materials in industries such as construction and electricity. If the government increases its investment in infrastructure construction, it will further boost the demand for copper materials. The expansion of electric vehicle enterprises like Tesla in North America and the upgrading of electronic products by technology companies such as Apple will increase the demand for high-end copper materials.

The advancement of green energy transformation and digital construction in Europe will increase the demand for copper materials. For example, the construction of offshore wind power projects requires a large amount of copper materials, such as copper cables. Aerospace enterprises like Airbus and electrical enterprises like Siemens have a stable demand for high-end copper materials. Some emerging electric vehicle enterprises will also become new growth points for the demand for copper materials.

PROCESS OVERVIEW

SHEETS

Mining & Concentrating: Copper ore is mined and processed to produce copper concentrate. 

Smelting: The concentrate produces impure "blister" copper. 

Refining: Blister copper is refined electrolytically to achieve high purity. 

Casting: Molten copper is cast into large slabs or billets. 

Rolling: The slabs are hot rolled to reduce thickness, followed by cold rolling for the final gauge and surface finish. 

Annealing (Optional): Annealing may be used to soften the copper and improve its workability. 

Slitting/Shearing: The rolled copper sheet is slit or sheared into desired widths and lengths. 

CABLES

Drawing: Copper rods are drawn through dies to reduce their diameter into wires. 

Stranding: Multiple wires are twisted together to form a stranded conductor. 

Insulation (if needed): Insulation (e.g., PVC, polyethylene) is extruded over the conductor. 

Jacketing (if needed): A protective jacket is applied over the insulation. 

MECHANICAL ASSEMBLIES

Component Manufacturing:  

• Casting (Sand, Investment): Molten copper is cast into moulds. 
• Extrusion: Copper is forced through a die to create profiles. 
• Forging: Copper is shaped by hammering or pressing. 
• Machining: Copper parts are shaped by material removal (milling, turning, drilling). 
• Sheet Metal Fabrication: Copper sheets are cut, bent, and joined. 

Joining:  

• Soldering/Brazing: Joining with a filler metal at lower temperatures. 
• Welding (TIG, MIG): Fusion welding. 
• Riveting/Bolting: Mechanical fastening. 

Finishing (Optional):  

• Plating: Applying a metallic coating (e.g., nickel, tin). 
• Painting/Powder Coating: Applying a protective or decorative finish. 

MACHINED PARTS

Material Selection: Copper stock (bars, rods, plates) is selected. 

Machining: Material is removed using:  

• Lathes: Cylindrical parts. 
• Milling Machines: Complex shapes. 
• Drilling Machines: Holes. 
• CNC Machines: Automated machining. 

Finishing (Optional):  

• Deburring: Removing sharp edges. 
• Surface Finishing: Polishing, grinding. 
• Plating/Painting: Applying a finish. 

RECENT DEVELOPMENTS

Date	Copper Supplier	End User (Company 2)	Development Type	Description	Deal Value
Feb-25	BHP (Australia)	Fluor Australia Pty Ltd, Hatch Pty Ltd. (Australia)	Contract	BHP has awarded a significant engineering, procurement, and construction management (EPCM) contract to a joint venture between Fluor Australia Pty Ltd and Hatch Pty Ltd. The contract supports the proposed expansion of BHP's copper smelter and refinery facilities in South Australia, a step towards the company's ambitious plan to boost copper production. The contract, valued at over AUD 40 million for its initial phase, will be executed in stages. It will align with BHP's progress towards a final investment decision (FID) on the smelter and refinery expansion, currently anticipated in the first half of FY27. The initial stage focuses on strategic planning and development during the project's study phases. Subsequent stages will cover detailed engineering, procurement, and construction management as the project advances.	$ 25.11 Mn (AUD 40 Mn)
Dec-24	Glencore (Switzerland)	Canadian rare earth and metals recycler Cyclic Materials Inc.	Agreement	Canadian rare earth and metals recycler Cyclic Materials Inc. will supply at least 10,000 metric tons of recycled copper to Glencore, opens new tab, as the Swiss miner looks to secure copper that is expected to soar in demand in the coming years, Cyclic Materials' CEO said.	-
Sep-24	Eurasian Resources Group (ERG) (Luxembourg)	Bank of China Limited, Glencore International AG (Switzerland)	Agreement	Eurasian Resources Group announces a pre-export finance agreement with Bank of China Limited, London Branch, and Glencore International AG (“Glencore”). Under the terms of the agreement, the Group can borrow up to US$150m for working capital or other general corporate purposes.  A supply agreement for copper cathodes produced by ERG’s Metalkol supports the pre-export finance facility.	$ 150 Million
Aug-24	BHP (Australia)	-	Expansion	A new incentive regime for mining in Argentina is attracting major players such as BHP, who are starting to eye the South American country as the world's next frontier for copper, more than half a dozen mining industry officials told Reuters. BHP's investment last month marked the company's first foray into mining in Argentina in two decades.	-
Jul-24	Glencore (Switzerland)	Cyprium Metals (Australia)	Partnership	Cyprium Metals announced a commercial strategic partnership with global commodities giant Glencore on July 26. In a press release, Cyprium said the deal aims to accelerate the resumption of production from its Nifty copper complex in Western Australia's Pilbara region.	-
Jun-24	Freeport-McMoRan (US)	-	Expansion	Freeport-McMoRan Inc. unlocks a large mine’s worth of copper from vast waste rock stockpiles in an “aggressive” push to boost metal supply as global demand climbs.	-

Source: Press releases & company websites

DEMAND/SUPPLY OVERVIEW 

• There are few new or expansion projects for global copper mines. The 2025 production guidance of 17 leading mining enterprises shows that the supply growth rate is only 2.2%, and the supply and demand of copper concentrates are in a tight situation. However, if Trump revokes pro-mining policies such as mining bans, it may promote the development of domestic mining projects in the United States and increase the supply of copper. However, there is uncertainty in the policy.
• Copper mine output in North America (especially in the United States and Canada) is likely to experience a slight increase. However, due to the long development cycle of new projects, Supply growth will be limited. Recycling copper will become an essential source of supply, but it will be challenging to fully meet the increase in demand.
• Copper mine resources in Europe are limited, and the region mainly relies on imports from regions and areas such as South America and Africa. The smelting capacity in Europe is likely to remain stable, but energy costs and environmental protection regulations restrict it.

PRICING SITUATION

• The continuous advancement of infrastructure construction in China, such as the power grid construction, and the stimulation of the home appliance market with the implementation of the "national subsidy" policy, support the demand for copper. In emerging industries, the demand for copper is constantly increasing in renewable energy industries, such as new energy vehicles, solar energy, and wind energy, providing strong support for copper prices.
• The Federal Reserve is expected to slow down the pace of interest rate cuts in the first half of 2025, but the overall interest rate cut cycle will continue, which may lead to a decline in the US dollar and be conducive to the rise in copper prices. However, copper prices may face downward pressure if global trade deteriorates and the US dollar strengthens.
• The European Central Bank's monetary policy and the euro's exchange rate trend will impact copper prices. Meanwhile, the green energy transition and the popularization of electric vehicles will increase copper prices.

 

MARKET DYNAMICS

In the field of stainless steel, there is a continuous demand in industries such as construction, home appliances, and machinery manufacturing in the Asian region. For instance, in populous countries like China and India, with the continuous advancement of infrastructure construction and urbanization, the construction industry has seen a steady growth in the demand for stainless steel pipes, plates, and other products. In the electroplating industry, nickel enhances metal products' corrosion resistance and aesthetic appeal. There is a sustained demand for nickel in the electroplating processing of products such as electronic devices and automotive components.

The new energy vehicle industry is an essential driving force for the growth of nickel demand. In China, Japan, and South Korea, the production of new energy vehicles is constantly rising, leading to a substantial increase in the demand for nickel in batteries. In addition, the rapid development of the energy storage sector has also provided a new growth point for nickel demand. For example, the demand for nickel-based batteries in large-scale energy storage power stations and distributed energy storage systems is gradually increasing.

With the increasing global emphasis on environmental protection and sustainable development, North America's new energy vehicle industry continues to expand. Major automobile manufacturers continuously increase their investment in producing, researching, and developing electric vehicles. For example, Tesla's factories in North America keep expanding their production scale, and traditional automakers such as Ford and General Motors are also accelerating their electrification transformation. Nickel is an essential raw material for manufacturing electric vehicle batteries, which has led to continuous growth in the demand for nickel.

The demand for stainless steel products from industries such as construction, machinery manufacturing, and the chemical industry has maintained a certain level of stability in nickel market dynamics in the traditional industrial sector. Meanwhile, Europe is rapidly developing new energy vehicles and renewable energy storage. Volkswagen and BMW are vigorously promoting their production plans for electric vehicles. In addition to the increase in the installed capacity of renewable energy power generation, the demand for energy storage batteries is also expected to rise.

PROCESS OVERVIEW

SHEETS

Mining & Concentrating: Nickel ore is mined and processed to produce nickel concentrate. 

Smelting: The concentrate is smelted to produce impure nickel matte. 

Refining: Nickel matte is refined to achieve high purity, often using electrolytic or pressure carbonyl processes. 

Casting: Molten nickel is cast into slabs, billets, or other shapes. 

Rolling: The cast nickel is hot-rolled and then cold-rolled to reduce thickness and achieve the desired gauge and surface finish. 

Annealing (Optional): Annealing can soften the nickel and improve its workability. 

Slitting/Shearing: Rolled nickel sheet is slit or sheared into specific widths and lengths. 

MECHANICAL ASSEMBLIES

Component Manufacturing:  

• Casting (Sand, Investment, Centrifugal): Molten nickel or nickel alloys are cast into molds. 
• Extrusion: Nickel alloys can be extruded into profiles. 
• Forging: Nickel alloys are shaped by hammering or pressing. 
• Machining: Nickel parts are shaped by material removal processes (milling, turning, drilling, grinding). 
• Sheet Metal Fabrication: Nickel sheets are cut, bent, and joined. 

Joining:  

• Soldering/Brazing: Joining with a filler metal. Specialized brazing alloys are often required for nickel. 
• Welding (TIG, MIG, Plasma): Fusion welding techniques are commonly used. 
• Riveting/Bolting: Mechanical fastening. 

Finishing (Optional):  

• Plating: Applying a metallic coating (e.g., chromium, other nickel alloys). 
• Painting/Powder Coating: Applying a protective or decorative finish. 

MACHINED PARTS

Material Selection: Nickel or nickel alloy stock (bars, rods, plates) is selected. 

Machining: Material is removed using:  

• Lathes: For cylindrical parts. 
• Milling Machines: For complex shapes. 
• Drilling Machines: For holes. 
• Grinding Machines: For precision finishing. 
• CNC Machines: For automated and complex machining operations. 

Finishing (Optional):  

• Deburring: Removing sharp edges. 
• Surface Finishing: Polishing, grinding, lapping. 
• Plating/Painting: Applying a finish. 

RECENT DEVELOPMENTS

Date	Nickel Supplier	End User (Company 2)	Development Type	Description	Deal Value
25-Feb	Jinchuan Group Nickel and Cobalt Co., Ltd. (China)	-	Innovation	The Materials Plant II of Jinchuan Nickel Cobalt New Materials Company has been innovative, actively promoting upgrading and transforming its carbonate production line. They are optimizing processes and strengthening comprehensive control throughout the entire process, achieving the production of products with multiple specifications. The team is fully committed to aligning the production line closely with market trends and meeting customer demands for small-batch, multi-variety products.	-
25-Jan	Vale (Brazil)	-	Potential Sale Agreement	Vale informs that its subsidiary, Vale Base Metals, has launched a strategic review to examine and evaluate other options, including the possible sale of its mining and exploration assets in Thompson, Manitoba. The Thompson review is part of a process to optimize Vale Base Metals’ asset base, ensuring the competitiveness of its vertically integrated nickel portfolio, and is expected to conclude in 2H 2025. The Thompson Nickel Belt is a proven nickel deposit with significant resource upside, and the operations have been producing nickel since 1956. The assets include two operating underground mines, an adjacent mill, and considerable exploration opportunities on the 135-km-long Thompson Nickel Belt. Thompson produced 10.5 thousand metric tons of Vale Base Metals’ finished nickel production for ,the 12 months ending Q3 2024.	-
25-Jan	Vale (Brazil)	Petrosea (Indonesia)	Contract	According to a company disclosure form, Indonesian miner Vale Indonesia said it had awarded Petrosea a $1 billion contract to mine for nickel ore in the Central Sulawesi region of Bahodopi. Vale said that the contract will be signed in March and will be effective for 10 years.	$ 1 Bn
24-Dec	Jinchuan Group Nickel and Cobalt Co., Ltd. (China)	-	Company Inauguration	Jinchuan Group Nickel and Cobalt Co., Ltd.'s unveiling ceremony marked the company’s formal establ on December 26. Ruan Ying, chairman of Jinchuan Group, attended the event. At the same time, Yu Haibo, a senior inspector from the State-owned Assets Supervision and Administration Commission (SASAC) of the Gansu Provincial Government, delivered a congratulatory letter on behalf of the Gansu SASAC, expressing best wishes to all cadres and employees. The pair unveiled the company's new branding.	-
24-Dec	Sumitomo Metal Mining Co. Ltd. (Japan)	-	Business Expansion	Sumitomo Metal Mining Co., Ltd. and its subsidiary Hyuga Smelting Co., Ltd. have decided to introduce and invest in a new production facility at Hyuga Smelting to produce nickel matte with ferronickel and other sources. Construction of the facility will begin in 2025 and is expected to be completed in the fiscal year 2027. Upon completion, Hyuga Smelting will produce nickel matte and ferronickel, and Sumitomo Metal Mining will be able to purchase the nickel matte created by the company as a new raw material to support its long-term goal of annual nickel production of 150,000 tons.	-
24-Sep	Jinchuan Group Nickel and Cobalt Co., Ltd. (China)	-	Innovation	Jinchuan Group's Deputy General Manager Zheng Yueqiang has cut the ribbon at the unveiling ceremony for the group's first new energy unmanned underground mining truck. Zheng said  of the new energy unmanned underground mining truck embodies the wisdom and hard work of researchers and the diligent efforts of the past and will serve as an incentive for the group's continuous innovation in the future.	-
24-Apr	Sumitomo Metal Mining Co. Ltd. (Japan)	Mitsubishi Corporation (Japan)	Joint Venture	Sumitomo Metal Mining Co., Ltd. (TSE: 5713, SMM) and Mitsubishi Corporation (TSE: 8058, MC) have entered into a binding agreement with Ardea Resources Limited (ASX: ARL, Ardea) to participate in the development of the Kalgoorlie Nickel Project (KNP) - Goongarrie Hub. SMM and MC will establish an incorporated joint venture to fund the KNP – Goongarrie Hub Definitive Feasibility Study (DFS) up to the agreed budget of 98.5 million AUD. The SMM-MC joint venture will acquire an ultimate 50% interest in Kalgoorlie Nickel Pty Ltd (KNPL), the owner of the project and currently 100% held by Ardea.	-

Source: Press releases & company websites

DEMAND/SUPPLY OVERVIEW 

• Indonesia is the largest nickel producer in Asia. With the development of new mines and the improvement of the production capacity of existing mines, Indonesia's nickel ore production and nickel pig iron production are expected to increase. Other Asian countries, such as the Philippines, have specific nickel ore resources and production capacity, but their output is relatively small.
• The enduring global surplus of nickel, mainly propelled by Indonesia's continuous expansion of production capacity, continues to impose a ceiling on potential price hikes. Specifically, the Indonesian government is contemplating significant reductions in mining quotas to bolster nickel prices.
• In terms of demand: In the stainless-steel sector, macro policies may specifically stimulate demand. However, there are still uncertainties in the real estate market, so the extent of demand improvement is limited. In the field of nickel-rich ternary batteries, due to the competition from lithium iron phosphate batteries and the destocking process in the industrial chain, it is difficult for demand to experience significant growth. The demand in the electroplating and alloy sectors is stable but accounts for a relatively small proportion.
• The Trump administration's policy of imposing tariffs on steel and aluminum could influence the nickel market. The steel and aluminum industries are major consumers of nickel. Tariff adjustments may lead to changes in production costs and output, affecting the demand for nickel. If the steel and aluminum industries face higher costs or production restrictions due to tariffs, their demand for nickel may decline.
• Europe mainly imports nickel from countries such as Russia and Indonesia. If there are changes in these countries' export policies and trade relations, the nickel supply in Europe may be affected. If the global trade environment remains stable, the nickel supply in Europe is expected to remain stable and sufficient in the second quarter of 2025.

PRICING SITUATION

• In the early stage of 2025, nickel prices persistently confronted downward pressure, predominantly attributable to the substantial supply emanating from Indonesia and the lackluster growth in demand.
• Indonesia's potential mining quota cuts could provide temporary price support, but any gains will likely be short-lived given ongoing oversupply and weak demand recovery.
• LME inventories have risen to 173,000 tonnes, reflecting a continued surplus.
• If the global oversupply situation of nickel does not fundamentally improve, the price in the North American market may face certain downward pressure. However, if the demand in sectors such as new energy vehicles grows beyond expectations, it may drive up the price of nickel. The nickel price in the North American market is expected to fluctuate within a specific range in the second quarter. If the oversupply situation eases, the price may recover to a certain extent based on the current level.

 

MARKET DYNAMICS

Construction: China remains the primary country for steel consumption. However, influenced by the real estate market regulation and the slowdown in infrastructure investment, the demand for steel in construction will likely decline in 2025.  The country's emphasis on constructing affordable housing and advancing projects such as renovating residential communities may partly alleviate the decline in demand.  In Q2-2025, steel demand in the construction industry should experience a year-on-year decline, but the rate of decline may be narrower compared to Q1.

Some European countries may increase their investment in infrastructure to stimulate the economy. However, overall, the recovery of the European real estate market is slow, so it is a limited driving force for steel demand.

With the expansion of the national policies of large-scale equipment renewal and trade-in of consumer goods, steel demand is growing in manufacturing industries such as automobiles, home appliances, energy, and machinery.  This drives the consumption of high-quality specialty steel products such as stainless-steel plates, non-oriented electrical steel, and automotive sheets. In the second quarter, the demand for steel in the manufacturing industry is expected to maintain steady growth and essential and necessary support for steel demand.

USA policy: Trump once proposed a large-scale infrastructure investment plan.  If it is implemented in 2025, projects such as constructing roads, bridges, and airports will drive a substantial demand for steel.

Trump's imposition of tariffs on imported steel aims to protect and promote the development of the domestic manufacturing industry.  The increase in domestic steel supply and relatively stable prices will encourage manufacturing in sectors like automobiles and machinery, thus driving the steel market.

Manufacturing: Manufacturing industries such as automobiles and machinery account for a sizable proportion of the European economy. If these industries recover or maintain steady growth, steel demand will increase. However, currently, they are faced with issues such as high energy costs and trade frictions, and there is a certain degree of uncertainty in their growth.

PROCESS OVERVIEW

STEEL SHEETS

Ironmaking: Iron ore is reduced in a blast furnace to produce pig iron. 

Steelmaking: Pig iron is converted into steel using various processes (basic oxygen furnace, electric arc furnace). Alloying elements are added to achieve the desired steel grades. 

Casting: Molten steel is cast into slabs or billets. 

Rolling: Slabs are hot rolled to reduce thickness, followed by cold rolling for the final gauge and surface finish. 

Annealing (Optional): Annealing may soften the steel. 

Slitting/Shearing: Rolled steel is slit or sheared into desired sizes. 

MECHANICAL ASSEMBLIES

Component Manufacturing:  

• Casting (Sand, Investment, Die): Molten steel is cast into moulds
• Forging: Steel is shaped by hammering or pressing. 
• Extrusion: Steel is pushed through a die. 
• Machining: Steel is shaped by material removal. 
• Sheet Metal Fabrication: Steel sheets are cut, bent, and joined. 

Joining:  

• Welding (Arc, MIG, TIG): Fusion welding. 
• Bolting/Riveting: Mechanical fastening. 
• Adhesive Bonding (Less common for structural steel): Using adhesives. 

Finishing (Optional):  

• Painting/Powder Coating: Protective or decorative finish. 
• Galvanizing: Applying a zinc coating for corrosion resistance. 

MACHINED PARTS

Material Selection: Steel stock (bars, rods, plates) is chosen. 

Machining: Material removal using:  

• Lathes: Cylindrical parts. 
• Milling Machines: Complex shapes. 
• Drilling Machines: Holes. 
• CNC Machines: Automated machining. 

Finishing (Optional):  

• Deburring: Removing sharp edges. 
• Surface Finishing: Polishing, grinding. 
• Heat Treatment: Modifying steel's properties (hardening, tempering). 
• Plating/Painting: Applying a finish. 

RECENT DEVELOPMENTS

Date	Steel Supplier	End User (Company 2)	Development Type	Description	Deal Value
Feb-25	ArcelorMittal (Luxembourg)	-	Business Development	ArcelorMittal opened a new tab and said that it would build an advanced steel manufacturing facility in Calvert, Alabama, as it seeks to increase its production capacity to meet demand from the U.S. automotive sector. The world's second-largest steelmaker said the plant would be able to deliver up to 150 kilotons of premium non-grain-oriented electrical steel (NOES) annually, used primarily in the manufacturing of larger vehicles, full-size pickups, and SUVs. ArcelorMittal said that the cost of building the plant is estimated at $0.9 billion, with an expected production start in the latter half of 2027.	$ 0.9 Bn
Oct-24	ArcelorMittal (Luxembourg)	Nippon Steel Corp. (NSC) (Japan)	Agreement	ArcelorMittal entered into a conditional equity purchase agreement with Nippon Steel Corp. (NSC) to see ArcelorMittal purchasing NSC’s 50 percent interest in the two firms’ joint venture (JV) steel mill in Calvert, Alabama.	-
Jun-24	SAIL (India)	-	Business Development	Steel Authority of India (SAIL), the public-sector giant, has announced plans to establish a cutting-edge steel plant in Burnpur, West Bengal, with an investment of Rs 36,000 crore. This initiative is poised to be Bengal's most significant industrial project investment in recent years.	$ 4.3 Bn (₹ 360 Bn)
Jun-24	JSW Steel (India)	-	Business Development	JSW Steel USA, a subsidiary of JSW Steel, plans to invest $110 million to modernize its steel plate mill in Baytown, Texas.	$ 110 Million
May-24	ArcelorMittal (India) (+ Nippon Steel (Japan))	-	Business Development	ArcelorMittal Nippon Steel India, a joint venture between steel giants ArcelorMittal and Nippon Steel, will include a new 2-million-ton cold rolling mill and an upstream hot strip mill, targeting the fast-growing automotive sector with specialty steel grades at its flagship plant in Hazira, Gujarat.	$ 7.15 Bn (₹ 600 Bn)

Source: Press releases & company websites

DEMAND/SUPPLY OVERVIEW

• No considerable growth in steel production capacity is anticipated in Q2-2025. Steel enterprises will emphasize optimizing production capacity and improving utilization rates. Technological transformation and management innovation will enhance production efficiency and product quality based on the existing production capacity. Some backward production capacity will continue to be phased out, and the industrial structure will be further optimized.
• Influenced by Trump's tariff policy, changes are expected in USA steel capacity.  The production capacity in the United States is likely to increase, while that in Canada and Mexico may remain stable or decline slightly. The crude steel production capacity of the entire North American region is expected to be around 75 to 78 million tons, and the capacity utilization rate is likely between 75% and 78%. However, factors such as changes in trade policies, international market demand, and the supply of raw materials still need to be closely monitored for their subsequent impacts on production capacity.
• Low-cost and highly subsidized steel products in the international market will likely continue to impact the European market, squeezing the living space of local steel enterprises. This may lead some enterprises to reduce capacity utilization rates or halt production. Fluctuations in the global market for raw materials used in steel production, such as iron ore and coal, may affect the stability of the raw material supply for European steel enterprises, thereby influencing their production capacity.

PRICING SITUATION

• In the early stage of the second quarter, due to the continuous decline in the demand from the construction industry and the growth in demand from the manufacturing industry not being able to make up for the gap entirely, the situation of oversupply in the steel market will likely persist. Prices will still face certain downward pressure.
• However, with the continuous release of demand from the manufacturing industry and the effective control of production capacity, by the middle and late stages of the second quarter, the market supply-demand relationship is expected to improve gradually, and prices will stabilize and rebound.
• Trump announced a 25% tariff on all steel imported into the United States. This caused a significant increase in the cost of imported steel in the U.S. market, reducing the import volume. As a result, the supply-demand balance in the U.S. domestic steel market has been disrupted. Given that it is difficult to increase supply significantly in the short term, domestic steel prices are bound to rise.
• Steel enterprises in Canada and Mexico may reduce prices to offset the increased costs brought about by the tariffs to maintain market share. However, considering production costs and profit margins, there is limited room for price cuts.
• There is a certain degree of uncertainty regarding the price trend of steel in Europe in the second quarter of 2025. Suppose the economic recovery drives a significant increase in demand from industries such as automobiles and infrastructure, and the supply side is effectively controlled due to import restrictions. In that case, the price of steel will likely show an upward trend. However, if the construction industry remains sluggish, the problem of overcapacity cannot be effectively resolved, and the price of steel may continue to decline or stay in a low-level oscillation.

ALUMINUM

• In the second quarter of 2025, the demand in the Chinese aluminum market is expected to maintain growth driven by multiple sectors.  The production capacity will experience a stable and slight increase, and there is room for price growth.  However, the influence of numerous factors needs to be closely monitored.
• Potential supply disruptions in the alumina market originating from Guinea, tariff threats, and the ban on Russian aluminum all underpin the potential for higher aluminum prices.

COPPER

• In the second quarter, the demand for copper materials in the Asian region continues to grow, and if the growth in supply fails to meet the demand, the price of copper is expected to rise. However, if the demand falls short of expectations or the supply experiences unexpected growth, the cost of copper may face the risk of decline. Overall, the price of copper in 2025 is expected to be more volatile.
• Global trade situations, geopolitical factors, and other elements will also impact the prices of copper materials in Europe. Trade frictions may lead to restrictions on the import and export of copper materials, affecting market supply and demand and thus causing price fluctuations.

NICKEL

• The outlook for nickel in early 2025 is cautious, and there are further downside risks if the demand for the stainless-steel market and nickel-based batteries do not recover as expected.
• If Indonesia makes significant production cuts, nickel prices may spike in the short term, but sustained price increases are improbable without overall market rebalancing.

STEEL

• In the second quarter of 2025, the Chinese steel market presents opportunities and challenges. Under the influence of multiple factors, such as changes in the demand structure, production capacity control, and price fluctuations, steel enterprises need to accelerate the transformation and upgrade to adapt to market changes and enhance their competitiveness.
• Influenced by Trump's tariff policy, North America's steel production capacity is expected to change. However, factors such as changes in trade policies, international market demand, and the supply of raw materials still need to be closely monitored for their subsequent impacts on production capacity.