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Key Events In The “Massive Week Ahead”

Key Events In The "Massive Week Ahead"

After a relatively quiet start to the year on the economic event front, if not in markets where last week’s FOMC Minutes sparked the worst bond rout since 2020 triggering the worst first week for the…

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Key Events In The "Massive Week Ahead"

After a relatively quiet start to the year on the economic event front, if not in markets where last week's FOMC Minutes sparked the worst bond rout since 2020 triggering the worst first week for the Nasdaq since the dot com bubble burst...

... we have a "simply a massive week ahead for markets" according to Nomura's Charlie McElligott, with Powell testimony and bunches of Fed speakers, along with US economic releases headlined by the market’s most important datapoint in the CPI release Wednesday, in addition to PPI, Retail Sales and Consumer Sentiment over the course of the week, plus two Duration-heavy auctions ($36B of 10Y and $22B 30Y, on top of tomorrow’s $52B 3Y) and finally, US corporate earnings season kickoff (highlighted by JPM, C and WFC this upcoming Friday)

Picking up the weekly preview baton, Rabobank writes that there will be little opportunity not to think about the Fed in the week ahead.  The Bloomberg market consensus for Wednesday’s US December CPI inflation release stands at an astounding 7% y/y.  This blows out of the water the 5.6% y/y cyclical high recorded in July 2008, and would be just a hair below the 7.1% y/y high of June 1982. The Fed goes into pre-FOMC blackout at the weekend and all this week’s Fedspeak will therefore be very closely watched as the committee are moving very rapidly at the moment towards an ever tightening bias in their commentary. Even the doves are coming over to the other side.

US December PPI inflation data due on Thursday will likely turn the inflation thermostat up another notch or two.   Later in the week, the University of Michigan inflation expectations survey will be watched closely and used to judge to what degree to Fed may have fallen behind the curve.  That said, US retail sales data are expected to soften in December on the back of supply shortages and possibly as a result of Omicron.  Several G10 central banks have suggested that the impact of this variant of Covid is unlikely to throw their respective economic recoveries off-course.  However, it remains a threat and, in the US, fears about the impact of the fiscal cliff are also in the background. In addition to a slew of data releases, the coming week will bring another new earnings season and a rich line up of Fed speakers. Among them will be Mester, George and Bullard; all hawks and all voting members of the FOMC this year.  The Senate confirmation hearings for Fed Chair Powell and Vice-Chair Brainard will enhance the focus on the Fed this week.  

Eurozone CPI inflation unexpectedly hit 5% y/y in December last week.  ECB Chief economist Lane issued fresh reassurances on Friday that this current level of prices is part of the pandemic inflation cycle and that inflation will come down this year.  Friday also saw the Bundesbank formally appointing Nagel as its new head.  According to Germany’s Finance Minister Lindner, Nagel will ensure “continuity”.  This suggests that it may not be long before Nagel issues a few hawkish remarks in an attempt to reconcile Germany’s historic fear of price pressures with the ECB’s continued dovish stance.  Eurozone economic data releases this week include November industrial production and trade.  Given the subsequent wave of Omicron both may be little outdated to provide much market fresh impetus.

Better news on Omicron continues to come from the UK.  As the number of new cases continues to slip, Education Minister Zahawi has suggested that the UK could set an example of how to move from a pandemic to an endemic by cutting the isolation period to five days to ease pressures in the workforce.  Given signs that the symptoms of Omicron may be less deadly than those of Delta, PM Johnson may have got away with his light touch restrictions for England over the holiday period.  That said, his appeasement of his backbenchers may not have gone far enough.  Yesterday, the PM was urged by MP Harper, Chair of the lockdown-sceptic Tory Recovery Group, to end all Covid related restrictions by the end of this month, or face a massive revolt within the party and the prospect of a leadership challenge later this year.

UK PM Johnson’s insistence that Brexit is ‘done’ has always been controversial.  UK officials continue to grapple to put together new free trade deals and the full impact of Brexit is unlikely to be known for a generation.  For Northern Ireland in particular Brexit appears to be far from ‘done’.  Following the shock resignation last month of former Brexit Secretary Frost, Foreign Secretary Truss has taken over the role of negotiator with Brussels.  Ahead of her first meeting with the EU’s Sefcovic, Truss has reignited the threat that the UK would be prepared to trigger Article 16 and find a unilateral solution for Northern Ireland if a negotiated compromise cannot be found.   Northern Ireland’s membership of the EU’s single market has made trade difficult between the region and the British mainland.  2022 is a key election year for Northern Ireland with polls showing unionist parties on course to lose their majority for the first time since the partition of the island.  By triggering Article 16, the UK could find itself on a path towards a trade war with the EU.  UK economic data releases this week include November monthly GDP and production figures.

US and Russian officials are set to meet today for talks aimed as de-escalating tensions around Ukraine.  Secretary of State Blinken commented over the weekend that he does not expect any breakthroughs this week but is hoping to find grounds for moving forward.
On Sunday evening Kazak officials retracted a statement alleging that more than 164 people had died during the recent wave of violence and instead confirmed ‘only’ 22 deaths.  Blinken criticised President Kassym-Jomart Tokayev’s shoot-to-kill order remarking that it  “is wrong and should be rescinded."  The violence was triggered by  the removal of a price cap that resulted in a surge in fuel prices.  However, the uprising comes against the backdrop of general discontent with how the country is governed.  As such global financial markets may be eying the developments in Kazakhstan as many other countries, notably also in the developing world, are currently grappling with rising energy and food prices, which have the potential to trigger unrest across the globe.

Elsewhere we start US earnings season, albeit slowly and late in the week with some important financials reporting: the highlights include Delta Air Lines on Thursday, before we hear from Citigroup, JPMorgan Chase, Wells Fargo and BlackRock on Friday.

Here is a quick look at key evens this week:

Monday January 10

  • Data: Euro Area November unemployment rate, Italy November unemployment rate

Tuesday January 11

  • Data: Japan preliminary November leading index, Italy November retail sales, US December NFIB small business optimism index
  • Central Banks: Nomination hearing for Fed Chair Powell’s second term at Senate Banking Committee, Fed’s Mester, George and Bullard speak

Wednesday January 12

  • Data: China December CPI, PPI, Euro Area November industrial production, US December CPI, monthly budget statement
  • Central Banks: Federal Reserve releases Beige Book, BoJ Governor Kuroda speaks

Thursday January 13

  • Data: Japan preliminary December machine tool orders, Italy November industrial production, US December PPI, weekly initial jobless claims, Japan December PPI (23:50 UK time)
  • Central Banks: Nomination hearing for Governor Brainard as Fed Vice Chair at Senate Banking Committee, Fed’s Barkin and Evans speak
  • Earnings: Delta Air Lines

Friday January 14

  • Data: China December trade balance, UK November GDP, US December retail sales, capacity utilisation, industrial production, preliminary January University of Michigan consumer sentiment index
  • Central Banks: Bank of Korea monetary policy decision, Fed’s Williams speaks
  • Earnings: Citigroup, JPMorgan Chase, Wells Fargo, BlackRock

* * *

Finally, courtesy of Goldman, here is a look at just the US, where the key economic data releases this week are the CPI report on Wednesday and the retail sales report on Friday. There are several speaking engagements from Fed officials this week, including Chair Powell and Governor Brainard’s confirmation hearings on Tuesday and Wednesday respectively.

Monday, January 10

  • 10:00 AM Wholesale inventories, November final (consensus +1.2%, last +1.2%)

Tuesday, January 11

  • 06:00 AM NFIB small business optimism, December (consensus 98.5, last 98.4)
  • 09:12 AM Cleveland Fed President Mester (FOMC voter) speaks: Cleveland Fed President Loretta Mester will speak in an interview on Bloomberg Television. In her last public appearance, on December 1st, President Mester emphasized her view that “with the inflation data the way it is and with the job market as strong as it is”, the Fed should be in a position to “raise rates a couple of times next year.” Since President Mester’s remarks, labor market data has pointed to further tightening in the labor market, and inflation data has surprised to the upside.
  • 09:30 AM Kansas City Fed President George (FOMC voter) speaks: Kansas City Fed President Esther George will discuss her outlook for the economy and monetary policy. Audience Q&A is expected. President George has not made public remarks since November 5th, when she stressed that “the argument for patience in the face of these inflation pressures has diminished.”
  • 10:00 AM Fed Chair Powell’s confirmation hearing (FOMC voter): Fed Chair Jerome Powell will appear before the U.S. Senate Committee on Banking, Housing, and Urban Affairs for his confirmation hearing for his re-nomination to the role of Chair. Chair Powell’s re-appointment will preserve continuity at the Fed. As inflationary pressures continue and the labor market continues to tighten, we will be looking for indications of incremental changes to Chair Powell’s outlook in his testimony.
  • 04:00 PM St. Louis Fed President Bullard (FOMC voter) speaks: St. Louis Fed President James Bullard will discuss the economy and monetary policy in a virtual event with the Mid-Sized Bank Coalition of America. President Bullard made public remarks earlier this week, in which he argued that the FOMC “could begin increasing the policy rate as early as the March meeting in order to be in a better position to control inflation” and start balance sheet runoff “shortly after lifting off the policy rate.”

Wednesday, January 12

  • 08:30 AM CPI (mom), December (GS +0.53%, consensus +0.4%, last +0.8%); Core CPI (mom), December (GS +0.58%, consensus +0.5%, last +0.5%); CPI (yoy), December (GS +7.12%, consensus +7.0%, last +6.8%); Core CPI (yoy), December (GS +5.49%, consensus +5.4%, last +4.9%): We estimate a 0.58% increase in December core CPI (mom sa), which would boost the year-on-year rate by 0.6pp to 5.5%. Our forecast reflects a further rise in used car auction prices and related upward pressure on new car prices. We also assume upward pressure on other core goods categories due to supply chain bottlenecks and low promotionality during the holiday season. While Omicron likely weighed on travel prices late in the month, we expect a more visible impact in the January report. We estimate rent +0.43% and OER +0.40% in December, reflecting the strength in our shelter tracker but an OER drag from imputed utilities. Health insurance prices also likely rose again, reflecting the gradual flow-through of the annual source data. We estimate a 0.53% increase in headline CPI (mom sa), reflecting rising food costs but a pullback in energy prices.
  • 01:00 PM Minneapolis Fed President Kashkari (FOMC non-voter) speaks: Minneapolis Fed President Neel Kashkari will speak on interest rates, labor force participation, and bringing the labor market back to pre-pandemic strength at a St. Paul Area Chamber townhall event. Audience Q&A is expected. Earlier this week, President Kashkari argued that “using core inflation to indicate when we have reached maximum employment may be simpler than the more judgmental estimations of short-run vs. long-run maximum employment,” and that, while he believed inflationary pressures would eventually subside, “the costs of ending up in the high-inflation regime are likely larger than the costs of ending up back in the low-inflation regime.”
  • 02:00 PM Beige Book: The Fed’s Beige Book is a summary of regional economic anecdotes from the 12 Federal Reserve districts. In this Beige Book, we look for anecdotes related to wage growth, price inflation, and supply chain disruptions. Earlier this week, Minneapolis Fed President Neel Kashkari noted that business contacts in his region continued to warn of labor shortages. Since President Kashkari’s comments, Friday’s employment report surprised to the upside on average hourly earnings and to the downside on payrolls.

Thursday, January 13

  • 08:30 AM PPI final demand, December (GS +0.4%, consensus +0.4%, last +0.8%); PPI ex-food and energy, December (GS +0.5%, consensus +0.5%, last +0.7%); PPI ex-food, energy, and trade, December (GS +0.5%, consensus +0.5%, last +0.7%): We estimate a 0.5% increase for PPI ex-food and energy and PPI ex-food, energy and trade services, which would bring the year-on-year rates to +9.4% and +7.0% respectively. Our forecast reflects a continued boost from supply chain bottlenecks, labor shortages, and commodity prices. We estimate that headline PPI increased by 0.4% in December, which would bring the year-on-year rate to +9.8%, reflecting firm core inflation but a sequential decline in energy prices. Continued increases in input costs, along with strong profit margins, are one reason why we expect price pressures to remain elevated through the first half of 2022.
  • 08:30 AM Initial jobless claims, week ended January 8 (GS 195k, consensus 200k, last 207k); Continuing jobless claims, week ended January 1 (consensus 1,760k, last 1,754k): We estimate initial jobless claims declined to 195k in the week ended January 8.
  • 10:00 AM Fed Governor Brainard’s confirmation hearing (FOMC voter): Fed Governor Lael Brainard will appear before the U.S. Senate Committee on Banking, Housing, and Urban Affairs for her confirmation hearing for her nomination to the role of Vice Chair. Governor Brainard, one of the more dovish members on the FOMC, has not given a public speech since October 13th, so in her confirmation hearing we will be looking for further insight into her current stance and expectations for policy normalization.
  • 12:00 PM Richmond Fed President Barkin (FOMC non-voter) speaks: Richmond Fed President Thomas Barkin will discuss the economic outlook at an event hosted by the Richmond Chamber of Commerce. In his last public appearance, on December 2nd, President Barkin said he expected “the readings for inflation over the next year … to be messy,” and that he supported normalizing monetary policy as the FOMC was doing.
  • 01:00 PM Chicago Fed President Evans (FOMC non-voter) speaks: Chicago Fed President Charles Evans will discuss the economy and monetary policy at an event hosted by the Milwaukee Business Journal. Audience and moderated Q&A are expected. President Evans noted on November 18th that he still thought “the relative price increases coming from supply shocks will be diminishing, and … that the inflation data by the end of 2022 is going to be a lot closer to 2% than so many people think.”
  • 06:00 PM Dallas Fed holds townhall on search for next President: The Dallas Fed will host a virtual townhall discussion on the ongoing search to choose its next President.

Friday, January 14

  • 08:30 AM Retail sales, December (GS -0.5%, consensus -0.1%, last +0.3%); Retail sales ex-auto, December (GS -0.3%, consensus +0.2%, last +0.3%); Retail sales ex-auto & gas, December (GS -0.3%, consensus -0.1%, last +0.2%); Core retail sales, December (GS -0.2%, consensus +0.1%, last -0.1%): We estimate a 0.2% decline in core retail sales (ex-autos, gasoline, and building materials) in December (mom sa). While brick and mortar shopping activity picked up in the final weeks of the holiday season, we estimate a sequential decline in the nonstore category (mom sa). Relatedly, the elevated level of retail sales implies a high hurdle for incremental growth during the holiday season. We estimate a 0.5% decline in headline retail sales, reflecting the decline in auto sales.
  • 08:30 AM Import price index, December (consensus +0.2%, last +0.7%): Export price index, December (consensus +0.3%, last +1.0%)
  • 09:15 AM Industrial production, December (GS -1.0%, consensus +0.2%, last +0.5%); Manufacturing production, December (GS +0.5%, consensus +0.4%, last +0.7%); Capacity utilization, December (GS 76.0%, consensus 77.0%, last 76.8%): We estimate industrial production declined by 1.0% in December, reflecting declines in utilities and oil and gas extraction. We estimate capacity utilization declined by 0.8pp to 76.0%. We estimate a modest seasonally-adjusted increase in motor vehicle production in December, but expect production to remain well below its pre-pandemic level, reflecting continued supply-chain disruptions that may be further exacerbated by the Omicron wave in coming months.
  • 10:00 AM University of Michigan consumer sentiment, January preliminary (GS 68.6, consensus 70.0, last 70.6): We expect the University of Michigan consumer sentiment index declined by 2.0pt to 68.6 in the preliminary January reading, reflecting declines in other confidence measures and increase spread of the Omicron variant.
  • 10:00 AM Business inventories, November (consensus +1.2%, last +1.2%)
  • 11:00 AM New York Fed President Williams (FOMC voter) speaks: New York Fed President John Williams will give a virtual speech to the Council on Foreign Relations. Text, and audience and moderated Q&A are expected. On December 17th, President Williams emphasized that inflation expectations were “a little higher in our projections now, especially for next year,” and noted that “raising interest rates would be a sign of a positive development in terms of where we are in the economic cycle.”

Source: Nomura, Rabobank, BofA, DB, Goldman

Tyler Durden Mon, 01/10/2022 - 09:24

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Dr. Peter McCullough: Official COVID “Narrative Has Crumbled”

Dr. Peter McCullough: Official COVID "Narrative Has Crumbled"

Authored by Art Moore via WND.com,

Dr. Peter McCullough – a renowned cardiologist and highly published medical scientist whose confrontation of the government’s COVID-19 policies.

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Dr. Peter McCullough: Official COVID "Narrative Has Crumbled"

Authored by Art Moore via WND.com,

Dr. Peter McCullough – a renowned cardiologist and highly published medical scientist whose confrontation of the government's COVID-19 policies has drawn more than 40 million views on Joe Rogan's podcast – told WND in a video interview Thursday night the official pandemic narrative that has been fiercely guarded by establishment media and social-media censors is "completely crumbling."

That narrative, he said, included "false statements regarding asymptomatic spread, reliance on lockdown and masks – which obviously didn't work – the suppression of early treatment, the mass promotion of vaccines that failed."

"And now here we are, almost in complete free fall," McCullough said, referring to the record number of COVID-19 cases as officials acknowledge the vaccines don't prevent infection or transmission.

McCullough noted that in California, with the more contagious but much milder omicron variant now dominant, health care workers who tested positive for COVID-19 and had symptoms were told to go back to work.

"With that, I think that's it. I think that's the end. The narrative has crumbled. People don't want these vaccines," McCullough said.

"The vaccines should be pulled off the market. They clearly are not solving the problem."

The focus, he said, should be on "treating high-risk patients who develop symptoms" with some of the early treatments that he and other physicians around the world have found to be effective, including ivermectin and a new drug granted emergency use authorization by the FDA, Paxlovid.

McCullough cited a study from Denmark and data from the U.K.'s health agency showing that the vaccines have zero effectiveness against omicron.

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"That's not misinformation," he said. "I'm just quoting the data. All of this can be looked up. Fact-checkers can look at it. I know I'll never have any problems with allegations of misinformation, because I just quote the data."

President Biden clearly had McCullough in mind when on Thursday he urged social media companies and media outlets to "please deal with the misinformation and disinformation that's on your shows. It has to stop."

McCullough pointed out his work has been relied upon by courts across the nation, including the U.S. Supreme Court, and he has testified to the U.S. Senate and will be back there later this month.

"I think America knows who is giving them the straight story."

In the half-hour video interview with WND (embedded below), McCullough also discussed:

  • The punishment of physicians who counter the official COVID narrative and use clinically indicated, FDA-approved drugs off-label such as ivermectin to treat COVID-19 patients, including a colleague in Maine whose was ordered to undergo a psychological examination after her license was suspended;

  • His participation in a rally in Washington, D.C., on Jan. 23 protesting vaccine mandates;

  • The Supreme Court's rulings Thursday on vaccine mandates;

  • The possibility that omicron could spell the end of the pandemic, serving as a "universal booster";

  • Data showing that vaccination has backfired, making the pandemic worse in nations with high vaccine intake;

  • The lethality of the mRNA vaccines;

  • His view on Biden's mass testing program;

  • His take on new FDA-approved treatments and his simple, inexpensive, over-the-counter protocol for treating omicron;

  • The unwillingness of so many doctors to "come off the sidelines" and treat patients for COVID-19;

  • The "crisis of competence" among top government health officials;

  • Where to find resources and support for physicians and patients, and for employees confronting mandates.

"I think Americans are going to understand that their individual choice is really what's going to matter in the end," he McCullough told WND in conclusion. "If Americans decide that they're not going to take any boosters or any more vaccines, it doesn't matter how many mandates or how many court decisions that happen. The vaccine program is going to crumble. I think it's just a matter of saying no."

He emphasized that the vaccines are still "research."

"No one can be forced into it," he said of vaccination. "And they're not turning out to be safe or effective. So, if  everybody just stands firm and declines the vaccines, I think that will be the quickest way for us to get out of this."

See the WND interview with Dr. Peter McCullough:

McCullough, in a video interview with WND in December, called for a "pivot" from the current policies to early treatment and "compassionate care" for those who have COVID or have suffered vaccine injuries, which have included myocarditis, neurological issues and blood clotting.

"Now is the time for doctors to step up. Now is not a time for rhetoric or harsh statements regarding scientific discourse," he said.

Many of McCullough's 600 peer-reviewed publications have appeared in top-tier journals such as the New England Journal of Medicine, Journal of the American Medical Association and The Lancet. He testified to the U.S. Senate in November 2020 against what he described as the federal government's politicization of health care during the pandemic, curbing or blocking the availability of cheap, effective treatments. In a speech in September, he told of having been stripped of the editorship of a Swiss-based journal after having lost his position with a major health system, "with no explanation and no due process." Baylor University Medical Center fired him in February. And Texas A&M College of Medicine, Texas Christian University and University of North Texas Health Science Center School of Medicine have cut ties with McCullough, accusing him of spreading misinformation.

"I've been stripped of every title that I've ever had in that institution. I've received a threat letter from the American College of Physicians, [and] a threat letter from the American Board," he said in September.

All because of his "lawful" participation "in a topic of public importance."

He said there are "powerful forces at work, far more powerful than we can possibly think of, that are influencing anybody who is in a position of authority."

McCullough is the chief medical adviser for the Truth for Health Foundation, a physician-founded charity that says it is "dedicated to following the Oath of Hippocrates to serve individual patients to the best of our ability and judgement and to uphold the highest standards of medical ethics."

*  *  *

Last year, America's doctors, nurses and paramedics were celebrated as frontline heroes battling a fearsome new pandemic. Today, under Joe Biden, tens of thousands of these same heroes are denounced as rebels, conspiracy theorists, extremists and potential terrorists. Along with massive numbers of police, firemen, Border Patrol agents, Navy SEALs, pilots, air-traffic controllers, and countless other truly essential Americans, they're all considered so dangerous as to merit termination, their professional and personal lives turned upside down due to their decision not to be injected with the experimental COVID vaccines. Biden’s tyrannical mandate threatens to cripple American society – from law enforcement to airlines to commercial supply chains to hospitals. It's already happening. But the good news is that huge numbers of "yesterday’s heroes" are now fighting back – bravely and boldly. The whole epic showdown is laid out as never before in the sensational October issue of WND's monthly Whistleblower magazine, titled "THE GREAT AMERICAN REBELLION: 'We will not comply!' COVID-19 power grab ignites bold new era of national defiance."

SUPPORT TRUTHFUL JOURNALISM. MAKE A DONATION TO THE NONPROFIT WND NEWS CENTER. THANK YOU!

Tyler Durden Mon, 01/17/2022 - 23:50

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Graphite Outlook 2022: Demand from Battery Segment to Remain High

Click here to read the previous graphite outlook. Graphite is an essential raw material used in electric vehicle (EV) batteries, and as sales of EVs grow, market watchers believe demand for the metal will surge. Despite discussions about battery chemistry

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Click here to read the previous graphite outlook.

Graphite is an essential raw material used in electric vehicle (EV) batteries, and as sales of EVs grow, market watchers believe demand for the metal will surge.

Despite discussions about battery chemistry changes, many experts think graphite will remain a dominant element in EV batteries for at least the next decade. Both synthetic graphite and natural graphite, in the form of the intermediate product spherical graphite, are used in the anodes of lithium-ion batteries.

Here the Investing News Network (INN) looks at the key trends in the graphite market in 2021 and what the graphite outlook is for 2022.


Graphite trends 2021: Shipping and power cost challenges


After a tumultuous 2020 in which supply chains were put to the test as economies shut down due to the coronavirus pandemic, graphite kicked off 2021 on a bright note.

In early 2021, prices for natural flake graphite were slightly higher than expected as a result of unexpectedly strict environmental investigations and closures in China, Suzanne Shaw of Wood Mackenzie told INN back in July.

“There was also considerable shipping disruption early on in the year with containers and vessels not where they should be as routes reopened post-COVID,” she said. “Limited availability was prioritized for higher-value cargos, with lower-value raw materials flows disrupted. This situation subsided through Q2.”

Pricing was relatively flat during the first six months of 2021, according to Benchmark Mineral Intelligence data.

“Prices for +100 mesh flake concentrate, across all purities, have moved upward by around 5 to 10 percent year-to-date, while pricing for all other grades has moved less than 5 percent so far this year due to continued structural oversupply in the graphite market,” Miller told INN at the end of H1. “Moreover, the global shipping situation at the moment is hindering upward price pressure.”

Prices took a turn in August, jumping on the back of the energy crisis, which hit producers and disrupted output. Battery grades were particularly hit by rising power costs as both the manufacture of synthetic graphite and the processing of spherical graphite from natural flake are known for their high levels of energy consumption.

In terms of supply, Chinese production was expected to ramp up to meet rising domestic battery demand, as there is still a lot of overcapacity in China.

“However, the overall trend is that China is showing less appetite on the raw material side and investing in higher-value downstream industries rather than exploration/mining across most mineral sectors,” Shaw said at the end of H1. “It will continue to increase its own imports of flake graphite.”

Meanwhile, on the synthetic graphite front, the market could be driven into a deficit as a result of increasing demand from the lithium-ion battery and downstream EV sectors worldwide, Roskill, which was acquired by Wood Mackenzie, reported back in August.

“From a performance perspective, EV automakers prefer synthetic graphite, citing its superior fast charge turnaround and battery longevity,” a November Fastmarkets report reads. “Synthetic graphite, however, is costly, power intensive and environmentally unfriendly, with supply centered in China at odds with North American and European automakers’ desire for more localized supply.”

Graphite outlook 2022: What’s ahead


At the end of last year, analysts were expecting demand from the battery segment to continue to grow on the back of increased EV sales, with growth opportunities for both synthetic and natural graphite.

According to Benchmark Mineral Intelligence data, demand for natural graphite from the battery segment amounted to 400,000 tonnes in 2021, with that number expected to scale up to 3 million tonnes by 2030. Meanwhile, demand for synthetic graphite reached about 300,000 tonnes in 2021 and it’s expected to increase to 1.5 million tonnes by 2030.

“We do expect recycling to plug some of these gaps, but this isn't really likely to reach the necessary scale until post 2030,” Miller said in a December webinar. “So at the moment, the focus is really on synthesizing and mining this material as quickly as possible to meet the demand that we might see into the future.”

By volume, graphite is one of the most important elements in any electric vehicle battery ― there is between 50 and 100 kilograms of graphite, whether synthetic or natural, present within each vehicle.

“We can really see the sector growing progressively to around 15 times the demand we see today by 2030, outpacing moderate growth and demand from industrial applications,” Miller said.

That said, it's important to note that only certain types of natural graphite supply are relevant to and able to be qualified for the lithium-ion supply chain.

“This is really the biggest challenge in using natural graphite as a battery input,” Miller said. “This has the potential to exclude further capacity from projects in development.”

The expert explained that if all planned supply reached the market, it would have the potential to balance out demand up to 2029 to 2030, but with these limitations on which material can be qualified, the story takes a different direction.

“The primary limitation here is the mesh size inputs for the battery supply chain must be fine to medium flake,” Miller said, adding that consistency and high purity, somewhere around 94 to 95 percent carbon, is also key. “Flake graphite for the lithium ion supply chain must have low levels of impurity in order to avoid compromising the quality and longevity of the end product.”

According to Benchmark Mineral Intelligence, today, synthetic graphite anodes make up the majority of market share and approximately 57 percent of the anode market.

“Going forward, we do expect this to shift in the direction of natural graphite anodes to around a 50-50 balance for a multitude of reasons,” Miller said. His reasons include tight graphitization capacity, higher costs for synthetic graphite anode material and also the environmental shortcomings of the synthetic graphite supply chain at the moment.

Graphitization is the process of producing synthetic graphite from carbon-rich, oil-derived feedstock raw materials, and this process is energy intensive.

“In China, graphitization capacity has been mainly located in Inner Mongolia, a province which has some of the lowest energy costs in the country and where other high-energy metal producers, such as ferro-chrome smelters, are based,” Fastmarket reports. “But Inner Mongolia was the first in the firing line when the 2021 energy crisis unfolded.”

This resulted in reduced production and unpredictable cost increases for synthetic graphite, and the reason why many battery manufacturers in China could turn to natural graphite instead.

Looking ahead at how overall demand for graphite will perform, Benchmark Mineral Intelligence expects the battery segment to challenge industrial applications as the leading end-market for graphite demand. Over the next decade, anode demand will grow at an average of 27 percent compound annual growth rate (CAGR).

“Unlike some of the other critical mineral markets, there is still time for both the natural and synthetic graphite market deficits to be redressed — so long as adequate funding is provided for junior miners in the near term,” Miller said.

Commenting on price performance, Fastmarkets maintains the view that both flake and spherical graphite prices will trend stable to higher in the near term.

“The only potential reprieve we see for graphite prices would be if the power constraints diminish EV lithium-ion battery production, and in turn reduce demand for graphite anodes sufficiently to stem the upward pressure on graphite prices,” analysts said.

Another key trend for graphite investors to watch in the new year is how western automakers keep up with China, which has become the dominant player in all steps of the anode supply chain.

Interestingly, before 2021 came to an end, US-based Tesla (NASDAQ:TSLA) made a move to secure graphite supply from top graphite producer Syrah Resources (ASX:SYR).

The ASX-listed company will process graphite from its Balama mine in Mozambique in its Louisiana plant, and will supply the EV maker with anode graphite material for an initial four year period. Tesla also has an option to offtake additional volume subject to Syrah expanding its capacity beyond 10,000 tonnes per year.

Don’t forget to follow us @INN_Resource for real-time updates!

Securities Disclosure: I, Priscila Barrera, hold no direct investment interest in any company mentioned in this article.

Editorial Disclosure: The Investing News Network does not guarantee the accuracy or thoroughness of the information reported in the interviews it conducts. The opinions expressed in these interviews do not reflect the opinions of the Investing News Network and do not constitute investment advice. All readers are encouraged to perform their own due diligence.

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Zinc Outlook 2022: Small Refined Zinc Deficit Ahead

Click here to read the previous zinc outlook. Following an uncertain 2020, zinc prices steadily rose throughout 2021 to hit a 14 year high in the second half of the year.The power crisis and an increasing demand for the base metal as the strict lockdown..

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Click here to read the previous zinc outlook.

Following an uncertain 2020, zinc prices steadily rose throughout 2021 to hit a 14 year high in the second half of the year.

The power crisis and an increasing demand for the base metal as the strict lockdown restrictions were lifted supported prices during the 12 month period.

As the new year begins, the Investing News Network (INN) caught up with analysts to find out what’s ahead for zinc supply, demand and prices.


Zinc outlook 2022: 2021 in review


Prices kicked off the year above the US$2,800 per tonne mark after rallying for most of the second half of 2020. The recovery in the steel sector helped the base metal throughout the first half of 2021 as COVID-19 lockdown measures eased, supporting demand for zinc.

Commenting on the main trends seen in the market in 2021, Helen O’Cleary of CRU Group told INN zinc’s demand recovery was stronger than expected in the US and Europe but lagged in Asia excluding China.

In October, zinc prices hit their highest level in 14 years, hovering around the US$3,800 mark on the back of the power crisis and cost associated with carbon emissions.

“Zinc’s price outperformed expectations in 2021 on the back of strong demand and smelter disruption, particularly in Q4 when European smelters started to cut back due to record high energy prices,” O’Cleary said.

One of the world’s top zinc smelters, Nyrstar (EBR:NYR), said in October it was planning to cut production at its European smelter operations. Mining giant Glencore (LSE:GLEN) also said it was adjusting production to reduce exposure to peak power pricing periods during the day.

Speaking with INN about zinc’s performance, Carlos Sanchez of CPM Group said zinc has been in recovery since prices bottomed out in 2020, helped in part by vaccination globally and also by supply disruptions around the world.

“The most recent issue is the concern about high energy input costs into smelters in Europe — that's been pushing prices higher recently,” he said.

Even though prices could not sustain that level until the end of the year, prices remained above US$3,500 on the last trading day of 2021.

Zinc outlook 2022: Supply and demand


As mentioned, demand for base metals saw an upward turn in 2021 as the world economy recovered on the back of stimulus plans and as vaccination rollouts took place in many parts of the world.

Looking at what’s ahead for demand in 2022, CRU is expecting Chinese demand growth to slow to 1.1 percent year-on-year as the effects of stimulus wane.

“In the world ex. China we expect demand to grow by 2.4 percent, with the ongoing auto sector recovery partially offsetting the construction sector slowdown in Europe and the US,” O’Cleary said.

CPM is also expecting demand to remain healthy in 2022, both in China and outside of China, including demand from developing countries.

“One thing that remains uncertain is what will happen with COVID,” Sanchez said.

Moving onto the supply side of the picture, the analyst expects that if everything remains status quo, disruptions are unlikely to happen.

“There are going to be some blips here and there, but there have been some labor issues in Peru, yes, there's been some energy problems in Europe and China, but that's a fact in zinc output and in demand to an extent,” Sanchez said. “But really the catalysts that we don't know, and how it can affect prices is how COVID will impact industries.”

For her part, O’Cleary is expecting most disruptions in Q1, with CRU currently having a disruption allowance of 55,000 tonnes for that period.

“But this may well tip over into Q2,” she said. CRU is expecting mine supply to grow by 5.10 percent year-on-year in 2022 and for the concentrates market to register a 190,000 tonnes surplus.

Meanwhile, smelter output is forecast to grow by less than 1 percent year-on-year in 2022, according to the firm, which is currently forecasting a small refined zinc deficit in 2022.

“Should smelter disruption exceed our 55,000 t allowance the deficit could grow,” O’Cleary said. “But high prices and a tight Chinese market could lead to further releases of refined zinc from the State Reserves Bureau stockpile, which could push the market towards balance or even a small surplus.”

Similarly, CPM Group is also expecting the market to shift into a deficit in 2022.

“That's due to the strong demand, recovering economies of COVID and its financial economic effects,” Sanchez said.

Zinc outlook 2022: What’s ahead


Commenting on how prices might perform next year, O’Cleary said prices are likely to remain high in Q1 due to the threat of further energy-related cutbacks in Europe during the winter heating season.

O’Cleary suggested investors to keep an eye on high prices and inflation, as these factors could hamper zinc demand growth.

Similarly, CPM Group is expecting prices to remain above current levels and to average around US$3,400 for the year.

“I wouldn't be surprised to see zinc top US$4,000,” Sanchez said. “But at the same time, I don't think it holds above there; you'd have to have really strong fundamentals for that to happen, stronger than what's happening now.”

The CPM director suggested zinc investors should keep an eye on COVID developments and be quick movers, taking a position whether it's short or long.

Looking ahead, for FocusEconomics analysts, prices for zinc are seen cooling markedly next year before falling further in 2023, as output gradually improves and new mines come online.

“Moreover, fading logistical disruptions and easing energy prices will exert additional downward pressure, although solid demand for steel will continue to support prices,” they said in their December report, adding that pandemic-related uncertainty clouds the outlook.

Panelists recently polled by the firm see prices averaging US$2,827 per metric tonne in Q4 2022 and US$2,651 per metric tonne in Q4 2023.

Don’t forget to follow us @INN_Resource for real-time news updates.

Securities Disclosure: I, Priscila Barrera, hold no direct investment interest in any company mentioned in this article.

Editorial Disclosure: The Investing News Network does not guarantee the accuracy or thoroughness of the information reported in the interviews it conducts. The opinions expressed in these interviews do not reflect the opinions of the Investing News Network and do not constitute investment advice. All readers are encouraged to perform their own due diligence.

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