Listen: In a Metal Mood: China's evolving role in global cleantech supply chains (Ep 159)

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Hill Vaden:
Hey, this is Hill Vaden, one of the co-hosts of S&P Global Commodity Insights EnergyCents, here as always with Sam Humphreys. Sam, we've just recorded a nice conversation with Nick Trickett on metals in China. What do you think?

Sam Humphreys:
We have. It was good, really highlighted my lack of knowledge on metals, also just the name of some metals because I haven't talked about them for so long. And my dad will be really disappointed as a material engineer, so it's gone well. But it was really interesting. We obviously probably talked quite a lot about China and how it shapes the market at the moment, and the numbers we're talking about in terms of just percentages of how much it is refining and exporting are huge. I had no idea. Maybe that's very naive, but I think it said something like 80% of copper demand growth is related to China. It's huge. Absolutely baffling. And so we talked a little bit also about what a slowing economy in China may do on a global scale for metal demand. It was fascinating. There was a lot to go into and I think a lot more that we can probably come back to in a few months time, maybe when I've remembered some more metal types.

Hill Vaden:
Names of metals.

Sam Humphreys:
But it was good. Names of metals. But it was brilliant, what did you think?

Hill Vaden:
Yeah, similarly. I was looking yesterday at some of our podcast topic titles or podcast topics over the past year or so. And metals is a fraction but it is ... Well, I suppose everything's a fraction, say a small fraction, but it seems to be a topic that we're coming back to more often. And it's a topic that is increasingly important. And every time we talk about metals, we have to talk about China right now. And that's such a big consumer, it's such a big refiner, it's such a big producer, or such a big manager of supply. There's just so much to talk about and it's the influence right now that the metals is having on energy markets and the strategic intentions of people wanting to greenify, if that's the word, the economy, the global economy.

Sam Humphreys:
Yeah.

Hill Vaden:
It seems a good topic to address, a good topic to come back to. And Nick does a great job helping us out.

Sam Humphreys:
Yeah, he does.

Hill Vaden:
All right, we'll hand off to Nick. All right, welcome back to EnergyCents, an S&P Global podcast, S&P Global Commodity Insights podcast ...

Sam Humphreys:
That's the one.

Hill Vaden:
... covering all topics on the intersection of energy and finance. This is one of your co-hosts, Hill Vaden. And we've already heard the voice of my other co-host, Sam Humphreys. Sam, how are you?

Sam Humphreys:
I'm good, thank you. How are you doing?

Hill Vaden:
I'm doing all right. Guess what I am missing right now for this podcast?

Sam Humphreys:

Is it tickets, the sale of Morrissey tickets that are going live, I think what, 11 minutes ago?

Hill Vaden:
11 minutes ago. I'm holding out in order to record this podcast, that the Morrissey presale will continue to have seats left. My wife tells me I'm stupid, that he's going to cancel the concert anyway. And she doesn't want to ... I would have to buy a ticket for one.

Sam Humphreys:
Is he going to be as popular as Beyonce? Are they going to sell out? It's Morrissey. Because everyone will be thinking he's going to cancel.

Hill Vaden:
Yeah, I don't know. We can ask our guest that first question, Nick Trickett, who is joining us today to talk about metals in China, and is going to briefly indulge us on Morrissey.

Nick Trickett:
Yeah, I think odds are he cancels.

Hill Vaden:
Odds are he cancels?

Nick Trickett:
Yeah.

Hill Vaden:
You want to know something that's super cool, before we get into metals? On October 1st, Johnny Marr is playing in Houston. October 31st, Morrissey is playing. You've almost got a Smiths reunion if they could have just timed it better and liked each other a little bit.

Nick Trickett:

I don't know how far you have to bend backwards to make that work, but hey ...

Sam Humphreys:
Yeah, I was going to ask who that first guy was, because I did not know.

Hill Vaden:
Guitarist for the Smiths.

Sam Humphreys:
Yeah, I got it.

Hill Vaden:
All right. Well, that gets the priorities out of the way. Now, we're talking about metals and China and energy, and there's a whole lot to unpack here. And we've got a little bit of time to do it. Maybe this is the beginnings of several conversations, but Nick has been speaking with us for a couple of weeks about this idea. And Nick, we'll let you set it up. The big picture here, the big anger here, is that China has done a ... Call it a fantastic job leveraging strength within the metal supply chain, that these metals that are going to be core for electric vehicles, for low carbon futures, for the electrification of, 'everything', and understanding the implications of that for China, for consumers, for other countries, that there are of course sanctions being talked about from western countries who'd want to develop their own supply chain. We're going to try to unpack all of that in the next 28 minutes or so, and Nick is going to be our guide in that unpacking. Nick, where's the best place to start here?

Nick Trickett:
First off, thank you for having me. I think if China sneezes, everybody catches a cold when it comes to metals, it's so large that to use ... And it's not necessarily an energy transition example but it's relevant, China alone consumes three quarters of the world's seaborne iron ore supplies. And so if you want to make green steel, like the competing for the high quality iron ore you need to launch those projects is going to be an issue. When you look at lithium, at least lithium used for batteries and electric vehicles, China accounts for this year, per our forecast, nearly 60% of demand. Nickel is similar, in a range of almost two-thirds of demand. And it gets even crazier when you look at the refined production, because between China and Indonesia, where lots of Chinese companies are operating, they account for nearly three-quarters of refined nickel primary production.
It's really, really important to wrap your head around it's not just the supply, it's demand, it's both at the same time. And that has a massive swing effect. That's where I would start. And I think also, to your point about doing a great job. If you want to build up these industries, building batteries, building electric vehicles, building solar panels, any of these things, ultimately economies of scale are built on physical inputs and being able to access these inputs and then secure them. And so the way that I think I typically will go about explaining it to people who are interested in what is going on building up a lithium refinery in the US or building a Gigafactory in Europe, is that if you go to an underwriter, if you go to a bank, you go to investors, to raise money you basically have to show them you can get access to the input you need, whether that's a refined nickel, whether that's a lithium carbonate or lithium hydroxide for a battery, copper, cobalt, manganese, you name the metal.
And the point being that China's dominant role in the value chain makes it difficult if you are at all worried about imports. If you're trying to stand up like a lithium refinery in Europe and you're not really sure about how much supply is going to be coming out of China or ... Batteries are super cheap out of China, the costs have fallen dramatically in the last three years as we've seen. It's really, really difficult for you to actually assure banks and investors that you're going to be able to generate returns. And so basically you get this chicken and egg problem where in the US and Europe, Canada to a lesser extent, you're trying to build a battery plant, you're trying to build a carbon plant, you're trying to build a lithium refinery all at the same time, but other parts of the value chain haven't been completed, and they also depend on a mine that might not have been built.
Basically you're stuck and you have to slowly unpick apart every individual component of that value chain to make the financing simpler. And so what China's really, really good at, is pushing miners and its manufacturers to basically keep expanding capacity no matter where the market is in terms of price. And they're not worried about shareholder returns the same way. The strategy is much more trying to smooth out the boom bust cycle that you might otherwise see. But then by implication, that means they typically secure a majority of the new marginal additions of production. It makes it harder to compete over offtake because you need that offtake from a mine or a refinery to build a new battery plant, whatever it is you're trying to build.

Sam Humphreys:
You are really testing my metal knowledge, I've forgotten half of those. Just one thing I want to get clear before we start going into any more detail, you've talked about refining there. We are talking about metal ores going into China, being refined, and then being used for domestic or international purposes. What are we talking about? When we're talking about the imports for example, of the ores, is that international? How much capacity has China got for these metals? Or are they seeking out mines in the DRC or somewhere to import those ores and then refine them?

Nick Trickett:
In general, they're importing ores or intermediate products.

Sam Humphreys:
Okay.

Nick Trickett:
Now, there are exceptions. They have a lot of iron ore domestically, they have a lot of coal domestically, not that we're talking about coal as much, but they do have zinc or lead, these other materials. But typically, the relationship would be that they are a dominant importer of the ore and then they refine it. And in some cases, so take nickel, which has been a bit of a hot topic this year because of prices crashing and a lot of western miners panicking about staying alive frankly ...
Indonesia back in 2019 ... For high level context, Indonesia basically went from producing about a third of the world's nickel to nearly 60% or 55% ish in terms of our forecast for this year, in the span of about four or five years, largely because Chinese companies got really good at applying a refining technique that was very CapEx intensive, very, very expensive to build and expensive to run. But it worked because the quality of the feedstock in Indonesia was low quality and it was cheap, and it became price competitive with higher quality supplies from elsewhere. When you're looking at mine supply, and Australia or Canada's typically higher, what we would typically call battery grade nickel, you don't really have to do a lot to it to chuck it immediately into a battery in terms of the refining process. Anyway, from Indonesia, specifically the point being that they ban the export of the ores. They use their leverage as a large mineral producer to get these Chinese companies to invest into the refining. They will then export an intermediate product that gets converted into what you need for a battery at the end in China. And so that dynamic is also a bit more novel because you don't really have an analog for fossil fuels.

Hill Vaden:
Question on the analog for fossil fuels. You introduced OPEC earlier, and Sam and I have spoken with other metals experts here at S&P about the role of the downstream, the refining within China for the metal size. I think if I'm understanding correctly, the comparison here that OPEC of course has a large market presence because it sits on top of the supply. China on the other hand, sits on top, or holds the refining capacity, not the supply but it has long-term agreements for a lot of the supply. Can you add a little bit of context around that, how to think about these long-term agreements and/or long-term agreements from other countries for supply, putting to the side the refining capacity in the minute?

Nick Trickett:
Typically, if you think about how new mines are built, they're typically built through an offtake financing structure, unless it's a really large mining company that's building it off its own balance sheet, where they can just afford to build it out of pocket or they can take out a corporate loan. And most new mines, at least in the last 10, 12 years, have been developed by junior mining companies that only have an exploration asset that they're building or one asset operating and they're building another one. When you're actually building the mining and the financing in the first place, you typically want to lock in a long-term deal then. And that builds in a relationship, it builds in a pathway dependency to some extent in terms of who you keep signing up with, depending on how that relationship goes and if the financing structure entails taking equity in a mine or something, which is not an uncommon arrangement.
In the case of China, it's because they have the smelting capacity for so many different metals and refining capacity for stages of that production, they'll lock in a multi-year deal wit any given miner, the downside being that they have to keep running the product even when prices and the margins on the refining collapse. And we saw that happen early this year with copper actually, for example. But it means that they're able to sustain that presence down the value chain by re-upping every year, every couple of years. And because they have so much capacity, they can preempt other people building up capacity to compete with them. It makes it easier to force companies to come back to them.
I think to your point about how that feeds through, it's not just the refining and it's also the fact that because they have the manufacturing for so many goods that use these metals and also construction. And I'll use nickel again because it's an interesting case. Despite the mania around batteries, the main use case for nickel is still actually going into stainless steel. Construction has a massive impact on balances for certain segments of the nickel market. But in the case of construction or making batteries, making solar PVs et cetera, because they have the manufacturing, those manufacturers also then sign up these long-term agreements or have these arrangements with the refiners, so it feeds through to both. And you need both to have that steady flow as a way of stabilizing the market, preventing big swings in price. And it's really hard to actually exert the same pull without it. And there's not really a good analogy with oil, in the sense that you might buy the crude, then you refine it relatively close to where it's consumed and then it just gets burned in an engine. It's not quite the same because you have this ongoing dynamic where the manufacturers really have to maintain these longer term supply agreements to make sure that they can actually keep output going.

Sam Humphreys:
One question I wanted to ask ... Now, again, apologies if this is a really stupid question, but we've had a few conversations around China and some of the markets it's in, and I think there is a feeling that the economy is slowing somewhat, and you've spoken just then about a lot of uses in domestic manufacturing, and if that is slowing down somewhat, how is that going to impact the metals market within China, say?

Nick Trickett:
At first, I qualified that by saying that there's no such thing as only within China when it comes to the metal market. I actually brought these down just because it was useful to jog my memory. Since 2020, China's accounted for a little over three quarters of global primary nickel demand growth, in the range of 62, 63% of lithium demand growth, and in the range of about 80% of copper demand growth. You can't separate the Chinese market from the global picture. They're not the same but they're nearly identical in many cases, or at least the Venn diagram is very, very small, the margins. And slowing growth in China basically has a very, very large deflationary effect on prices, because it's relatively easy to store this stuff. You don't have to build a cavern, have salt, et cetera. Refined products go off after a period of time. Lithium is a little bit different because it's consumed as a specialty chemical and not as a traditional metal. It does go off after a period but typically you can just build a warehouse and chuck it in and it'll sit around for a long time. That's a part of it.
We don't have great transparency on how much is in storage because it's relatively easy for a lot of people to just buy cathode, steel, whatever they need and just store it somewhere and it's not going to be in a bonded warehouse that we track. But the net effect is basically to drag prices down, and as we've seen, to push a lot more onto the export market. And we've seen a lot more pressure, particularly with steel but with other metals, you have in the last couple months a really, really large buildup, for example of copper, copper inventory and LME, that's London Metals Exchange, warehouses across Asia in particular after reaching a relatively high point for the last five years within China.
And we're actually seeing that the effect has been that increasingly ... It's not just the countries like the US or EU that are looking at tariffs and trade policy, large emerging markets are anxious about just having this influx of discounted Chinese steel or other products because of its effect on domestic producers. The net effect is really that it's ... It means that lots of things that we would've assumed a couple years ago would be really scarce, are actually in significant oversupply for the foreseeable future. It'll obviously unwind in four or five years, depending on the metal but that's the real effect. Slowing Chinese growth basically has a massive swing effect on the supply-demand balance, and for the most part it means that if you're trying to make a battery or anything else that is really mineral intensive anywhere in the world, it's actually easier to get that mineral on the market than you might've thought maybe two years ago.

Hill Vaden:
I want to talk a little bit more about energy security priorities I guess, from so many of the players involved, whether it be China, whether it be western countries, whether it be non-western countries. And if we think back about the rise of China from the low-cost manufacturing, a lot of non-Chinese companies built huge business models selling often Americans, cheap things. There's a book company that made a lot of money selling Americans cheap socks and Xboxes, but there's no such thing as Xbox security or sock security. It gets a little bit more contentious when you get involved with the energy sector. It seems there's less interest in other countries building businesses to help move this low-cost Chinese kit into the energy sectors of other countries. Can you put a little of that into context? How much is this energy security from the outside looking at China, versus China saying, "Hey, we don't necessarily want that right now."
Can you add some context on all this?

Nick Trickett:
In the case of China, I typically ... To go back to the crude oil as a starting point, if you have a metals dominated energy complex that's emerging where you're increasingly building up renewables and batteries and so on, it reduces some of the fears about dependence on transit by the Strait of Malacca. It actually rewrites the trade map to some extent. Indonesia for example, being such a big source of nickel, it's much safer from a planning perspective for them. The flip side of it, if you're the west, is I would say that the issue is IP actually, and the fact that because ... Particularly in the battery space, Chinese companies are simply really, really, really good at what they do and they scale much faster than a lot of their competitors. They have IP that is really prized. If you look at what happened with Ford in the plant they were trying to build in, I think it was Michigan, that Congress basically wanted more oversight because they were going to license batteries from CATL for their electric vehicles.
And that's a pressure point because you have the intellectual capability and designs and so on in the west for batteries, but they haven't necessarily scaled. You have the issue, banks have to feel confident. For instance, to date, I mentioned that refining process in Indonesia earlier, it's called a high pressure acid leach, so HPAL for short, only Chinese companies have built those refining plants so far. And so the first attempt at an all western sponsored project fell apart in the last six weeks to two months. The likeliest cause behind that was the banks got skittish basically, because they didn't really trust them to deliver it because they never built it before and they didn't have a Chinese partner.
It's a mix. It's a combination of metals, the geography of metals deposits is very different than oil and gas. The ability to be a dominant refiner or to at least build up a refining capacity to store stuff for longer is a bit different in terms of having a safety of supply. And then on top of that, you have the component of people who are simply making this stuff are really good at innovating in the space in the way that people who are just catching up now aren't. And they might become better. It's not to say that western companies can't compete, but they are playing catch up. And a lot of that also is evidenced by an expansion of interest in using BC style plays to acquire early stage tech in the US or Europe and then see if you can scale it, but it still takes time to do.

Sam Humphreys:
The one thing we've talked a lot about on this podcast, and we did touch on it in an episode we did on metals before, is where, 'clean initiatives', and low carbon initiatives fit into this industry because I know it's been talked about a lot in Europe in particular, that there's going to be full lifestyle tracking of carbon emissions or greenhouse gas emissions from source to end user, and that includes metals. I don't know, has there been much discussion on that in this space at the moment? Because this hasn't arrived yet, this is still being talked about, but is that going to make any significant effect on China's dominance? Or are they still going to price people out almost, not price people out, but still come in at that lower tariff for people to buy it from?

Nick Trickett:
There are a couple I guess, bits of that to weigh. First off, I think that people tend to exaggerate the cost cutting, not in a sense that they haven't cut costs but rather that if they're entering a new market where they have no actual viable competition, they can move the price up. They will sell at a price point that's closer to what you'd expect on that market. There's still going to be a gap but it's not as insane as it might be in terms of production cost. But to your point, it's going to have an impact but I would say that depending on the company, some companies are relatively introite in navigating these changes. It's not like Chinese companies can't learn or adapt. Since the Inflation Reduction Act passed two years ago I guess, as of now based off when we're recording this, one of the things that had as an effect I think, has been underappreciated by many is the way that the tax credits were structured for the electric vehicles. And they included eligibility requirements for what jurisdictions the minerals were coming from. They actually had a fairly significant impact on where mining companies wanted to invest to be able to make sure that they had a privileged position on the US market to supply it.
And in response, a lot of Chinese companies then started just investing into those markets, because obviously for them the way around this problem if they're going to get priced out was just to have assets in Chile, wherever else. It's always a process of give and take. One thing we've seen also as M&A has gotten more politically contentious, all Chinese companies are actually pretty good at just making direct greenfield investments because the barriers of entry are actually lower than executing an M&A style approach. And so I would actually expect that there'll be a lot of mutual just back and forth. I think that a lot of those processes will be internalized, they'll be adapted.
And historically, the argument has always been that China would not be able to compete if we impose a price on carbon because it's a really dirty economy. But the problem now is they're building the green economy. The scale of green investment in China is simply so massive that that's no longer as much of a compelling competitive protection as it might've been three or four years ago as an argument. I also think that it's important to just remember that by no means is it perfect. There are definitely flaws but the approach typically is to focus on the largest players in any given sector and just do what you have to, throwing it against the wall to decarbonize them as quickly as possible and then you let it trickle out to everybody else. We'll see what happens, I think there are definitely some trouble spots. Steel is going to be complicated and it's going to be a bit more ad hoc. But when it comes to anything that involves minimizing emissions from the actual power sources for a process, I actually think that China's in pretty good position to navigate that problem.

Hill Vaden:
Thinking about the globe's clean green ambition long-term, and there's so much enthusiasm that sometimes waxes and wanes but big picture, a lot of enthusiasm around, 'clean energy', China has staked out a dominant position in there and then there's all this sanction movement that in theory is going to slow some of this down. As we're thinking longer term, how do you see some of the evolution of this tension? And again, I'll use that example, the Amazon example, that Amazon really leveraged low-cost manufacturing in China to build a trillion-dollar company in the US. That's hard to do with sanctions. Do you see this evolving quickly, slowly? How do you balance that?

Nick Trickett:
The way that I tend to think of it, and this is my own biased take to some extent, given I'm talking my book here as a metals person, but I tend to think that the only variation we're going to see in terms of the speed of the transition is it can go faster and can keep going at the same pace it's going now. It's really difficult to picture it going slower, just based on the fundamental changes that are happening. And to your point about sanctions or tariffs and similar measures, I don't really see them as having the slowing effect that we might assume because typically, the response from the companies that are affected, at least coming out of China, has been to then look at ways of getting involved in emerging and frontier markets. And they can't necessarily get the same margins they can get in Europe or the US but they're still going to find new markets they export their product to.
And it's important to remember ... I always go back to cell phones, countries that were really good at skipping landlines because simply they were able to build the infrastructure for the new stuff fast enough and cheap enough that it made sense. And in many of these countries, it's not like the fossil fuel infrastructure for gasoline powered cars is so amazing that it's going to be a massive impediment for them to start adopting maybe not full on battery models but plug ins and so on, especially with how cheap solar panels are. And a good example of that is that the amount of solar imports into Pakistan for example, have been way higher than anybody expected. And we've actually seen it affect demand for diesel because fewer people are running diesel generators at their own home to offset having a weak electricity grid.
It's things like that which are really hard to actually track in terms of the data because it's just not very transparent, but are happening, that suggests that if that's happening in a current scenario where there's ostensibly geopolitical competition, there's not really actually full alignment between the US and Europe on climate policy et cetera, then why wouldn't it just only speed up further?It's possible that competition actually ends up intensifying countries bidding for a better deal to decarbonize their own economies. And the other flip side of that being that if you're a relatively poor country or a developing country and you spend a lot of hard earned foreign currency from your exports on oil, gas or coal, you probably want to reduce that to some extent because it affects your ability to borrow money, and that's important when you're growing.
There are lots of reasons to think that actually it can go a lot faster. And I think the last bit about that from the China angle is that because China's growth is slowing and the rate of demand growth out of China is nudging balances back up, so we have a lot more supply of these metals that we need for various green tech, it also suggests that maybe assumptions we had about resource scarcity aren't necessarily as binding and it'll be a lot cheaper to actually build this stuff out. I think the main constraints are going to be around losing access to IP and what western companies do to replace stuff that they were licensing or importing. That is a constraint, it's going to increase cost in the short term but also most of these things, the costs fall relatively quickly once we start making them somewhere else and we learn how to do it and we scale it and etc. I don't see a scenario which is a massive slowdown in the transition.

Sam Humphreys:
Just a really quick one on this exact topic, and you touched on it at the start, we've seen refineries in the UK for example close, as some of these more emergent economies are heading a little bit further towards their climate goals. On just that point, and we've talked about China's ability to scale stuff, do you think that that trend may continue, that we'll see more refineries shutting down and not going ahead, and then China will have that space to pick it back up even with a slightly slowing economy because everywhere else may slow down on what they're opening?

Nick Trickett:
I think that, yeah, that China's slowdown perversely makes that problem worse. Because if China's growth was stronger, there would be more net demand to justify the investments into the refineries elsewhere more easily. But that said, I'm fairly confident that trade measures are going to be adopted to just make sure these things get built. Because at a certain point, people are just going to realize, "Look, we can't reliably build a gigafactory if we don't have our own refinery, so we need to have a refinery."
And then it becomes a political question instead of a technical question. And so I see that as happening. The reason why the US slapped 100% tariffs on Chinese electric vehicle imports was not because there was a massive flood of Chinese electric vehicles into the US because American consumers weren't buying them, it's because the threat of them coming in was making it impossible to get a bank to underwrite a project to build a new gigafactory. That approach I think, is going to be just the norm.

Hill Vaden:
We always finish this podcast talking about things to pay attention to in the next 6 to 12 months, but I'm going to box you in on this. I want to ask you something to pay attention to in the next 6 to 12 months that is not Noah Lyles and the 200 meters in the next three hours, that is not Morrissey or Johnny Marr in the next 100 days, and is not the US election in the next 110 days. Outside of those things, what are some things that we should pay attention to in the next 6 to 12 months, preferably that relate to this conversation?

Nick Trickett:
Got it. Well, yeah, so just to counter slightly, I would actually let you know that I don't think the US election is going to matter very much for policy in the US in terms of these things, despite the fears around it. I think enough Republicans are on board with the IRA at this point for example, that that stuff's not changing. Anyway, I think the main thing I would actually look at that I find really interesting and important is what these large emerging markets that are caught in the middle of these trade tensions are doing in response to the China slow down. There's Indonesia, India, Brazil, Mexico, Columbia actually for steel as well, they all adopted different approaches to trying to get Chinese companies to invest directly into producing domestically across a wide range of metals or metals adjacent industries. I keep an eye on that because those pressures aren't going away. The longer that the China slowdown sustains, the greater the trade pressure on protecting domestic producers or just trying to stand up your own industry.
If you have minerals and you realize that you can use this as a leverage, you'd probably use tariffs. That's one of the biggest things. And I think also, I would probably keep an eye on what's happening in the copper market specifically, and it's an oversupply at the moment. And what's interesting is copper is typically seen as a leading macroeconomic indicator for the state of things. And based off that, it reflects the fact that actually there's a global, not full on recession, but contraction/stagnant period for manufacturing globally. And so I think seeing if that continues in the next six months to 12 months is a big deal because it's going to materially impact the availability of a lot of the critical minerals that we typically worry about for the transition. And so perversely, can ease that constraint but obviously can pose its own problems if the manufacturing that's not happening is for clean tech, whatever else is going into the decarbonizing economies.

Hill Vaden:
All right. Sam, anything from you before we wrap up?

Sam Humphreys:
No, I think this is a great conversation and I think we should probably come back to it in, I don't know, six months time or so, after some key events happen, see if anything does change.

Nick Trickett:
Yeah, maybe. Yeah.

Hill Vaden:
All right. And I think you corrected me, Nick, but I used the word sanction when I was thinking tariff, and you resumed tariff appropriately. There's no sanctions in any of this conversation. I just used the wrong word, correct?

Nick Trickett:
Yeah. It's complicated because you could say that ... The US Congress for example, did the whole thing with solar panels and the use of forced labor in Xinjiang in China. And it's not a sanction in the sense that they're not financially sanctioned, it's more akin to one because it's a total ban on imports of anything of a kind. And you do have similar bans with Russian exports of commodities in some cases that are relevant. I didn't really touch on Russian sanctions because the metals markets just took it in stride and moved on. But I would say that we are probably entering a world where sanction is coming, I would just say that they will be much less effective on metals than they would be on crude oil, and even in crude oil there's lots of holes in the regimes usually.

Hill Vaden:
Well, thank you. And that's maybe another conversation for another day.

Sam Humphreys:
Yeah.

Nick Trickett:
Yeah, for sure.

Hill Vaden:
All right, we'll sign off.