LME WEEK: Stakeholders to weigh challenges and opportunities facing global metals markets

The annual LME Week kicks off in London on Sept. 30, bringing together leading stakeholders from the metals and mining industry, including company executives, government officials, traders, and financiers. Over the course of the week, delegates will discuss the complex myriad of challenges and opportunities facing global metals markets. In particular, the following topics are expected to feature heavily at this year's conference.

EU CBAM set to alter global metals trade

The introduction of the EU Carbon Border Adjustment Mechanism is being closely monitored by metals producers amid concerns that the regulation could disrupt metal trade flows and delay investments in projects and adjacent infrastructure. CBAM charges a tax on imports of selected carbon intensive materials and products -- including aluminum, cement, electricity, fertilizers, hydrogen, iron and steel -- into the EU, removing the gap between the EU Emissions Trading System carbon price and the carbon price of the country of origin of the imports. The CBAM started a transitional phase on Oct. 1, with quarterly reporting required by importers, but no charges, with the permanent system scheduled to come into force on Jan. 1, 2026. Many companies in the iron, steel, aluminum and metals sector, which export a significant amount of their products to the EU, are concerned that CBAM might hamper their businesses. Platts, part of S&P Global Commodity Insights, recently launched low-carbon and zero-carbon aluminum price assessments which you can read more about here.

Copper prices remain well-supported by macroeconomic fundamentals

Copper prices increased significantly on Sept. 25 after the Chinese government announced a series of financial policy measures aimed at stabilizing the economy and boosting growth. The upward pressure was fueled by positive sentiment from an interest rate reduction by the US Federal Reserve on Sept. 18, alongside positive supply-demand fundamentals. In China, low scrap availability continues to buoy refined copper demand, with some cathode-fed wire rod manufacturers reporting a 5% year-over-year increase in their August production. In addition, August data from the National Bureau of Statistics of China showed an increase of 3.4 percentage points in the new order index for the construction industry, indicating a better performance ahead. Click on the following links to learn more about Platts standardized and transparent copper cathode and copper concentrate price assessments.

Mining exploration activity plummets

Industry stakeholders continue to express concern at the pace and scale of the global development of mineral resources as weak fundamentals contributing to the withholding of capital and significant project delays. The S&P Global Market Intelligence Pipeline Activity Index fell steeply in August, decreasing 21% to just 61 from 78 in July. This is the lowest reading since March. The Pipeline Activity Index, or PAI, is now nearing pre-COVID-19-era levels and is barely above the lows recorded during the height of pandemic lockdowns in 2020. All drilling metrics declined month over month in August. Total drillholes fell to 2,410 -- the lowest since March 2020 -- with gold decreasing 39% and specialty metals decreasing 60%. Total drilled projects fell 14% to a five-month low of 185, while total companies reporting came in at 171, the lowest since June 2020.

Glut of global inventories causes lithium prices to spiral downwards

Global lithium prices have fallen to new multiyear lows in recent months due to ongoing demand headwinds and a persistent market surplus, underpinned by ongoing project ramp-ups in countries such as Zimbabwe, Argentina, and Brazil. The weak market fundamentals have also contributed to widespread cutbacks in lithium expansion and capital expenditure amid falling profitability among lithium producers. On the demand side, the global plug-in electric vehicle market is under pressure from macroeconomic headwinds, including lingering concerns about the US economy entering a recession and ongoing sluggishness in the Chinese economy. Rising tariffs have further hampered the cooling appetite for PEVs in the EU and the US with the slowdown in PEV uptake leading to a string of battery project cancellations in the US and Europe. Chinese lithium industry watchers are subsequently looking for cues on production cuts to gauge near-term market conditions as oversupply concerns cloud the long-term outlook. China's largest battery maker Contemporary Amperex Technology, or CATL, was subsequently heard scaling back its lithium operations in Jiangxi -- a development sources said was due to higher production costs and soft prices. Platts recently launched the world's first daily, spot market recycled lithium carbonate price assessments, complementing its established suite of battery metals assessments

Europe's steel industry continues its path to decarbonization

Europe's steel industry aims to cut carbon emissions by 55% by 2030 compared to 1990 levels (equivalent to over minus 30% compared to 2018 levels), and to achieve climate neutrality by 2050. With around its 200 million metric tons per year of CO2 emissions, the steel industry is responsible for 5% of global emissions and is working towards a target of zero emissions. To achieve this, European steelmakers are switching technologies; there are around 60 projects that have the potential to reducing CO2 emissions by 81.5 million metric tons per year by 2030, according to Eurofer, the European steel association. Most of these projects are expected to be completed between 2030-2045, with some more advanced than others. A number of companies have managed to secure funds and some have started to order direct reduction modules. Many companies in different industries across the steel value chain are buying increasing volumes of low-carbon "green" steel to reduce their Scope 2 and 3 emissions, closing offtake supply agreements to secure low-carbon raw materials. European buyers have started to show greater interest in carbon-accounted steel, although demand for green steel remains significantly below that of traditional steel. Click here to learn more about Platts' European carbon-accounted steel assessments.