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LITHIUM PRICES SOAR ON CHINA’S EV BOOM
Lithium prices in China have risen fivefold in the past 12 months on the strength of the country’s electric vehicle boom, Bloomberg reported.
The price in China of lithium carbonate, the active ingredient in EV batteries, notched a new record on 17 January, according to data from Asian Metal Inc.
EV registrations in the country shot up 35 percent in January from December, with another 400,000 sold, the China Automotive Technology and Research Center said.
The “fast development” of China’s EV industry and market will push up profits for Ganfeng Lithium by more than 400 percent this year, the company said, driven partly by a long-term supply contract it signed with Tesla last November.
The rise in demand, and price, will drive the metal’s price 2 percent higher this year, BloombergNEF predicted, pushing the time that EVs will reach cost parity with gas buggies to 2026, two years later than the most recent forecast.
Despite high demand, and rising profits to be had, developers are finding difficulties bringing new supplies into production.
In mid-January, Serbia blocked a proposal for Europe’s biggest lithium mine after local residents protested. Lithium Americas’ plan to open a mine at Nevada’s Thacker pass has been stymied by opposition from environmental activists and native American groups.
TREND FORECAST: As we have noted elsewhere in this issue, the growing shortage of lithium will hobble EV production for several years.
The shortage will energize a lithium recycling industry, already under development and being financed in part by automakers (see “EV Battery Recycling is Now a Thing,” 26 Oct 2021).
KEY U.S. INFLATION MEASURE REACHES 39-YEAR HIGH
The U.S. Personal Consumption Expenditure Index, the U.S. Federal Reserve’s key gauge of inflation, ran at 5.8 percent year on year in December, beating November’s 5.7-percent rate to mark its fastest rise since 1982, Fox Business reported (see related stories in this issue).
December was the ninth consecutive month that inflation has ranged above the Fed’s 2-percent target rate.
Inflation’s brisk pace was set by energy costs, which shot up 29.9 percent in 2021; food prices added 5.7 percent through the year.
Excluding food and energy, the price index gained 4.9 percent over the 12 months.
The cost of services rose 4.2 percent and prices for goods swelled 8.8 percent.
Also, the labor cost index gained 4 percent last year, adding 1 percent in the final quarter and making a significant contribution to inflation.
“We are attentive to the risks that persistent real wage growth in excess of productivity could put upward pressure on inflation,” Fed chair Jerome Powell said during a 26 January press conference, indicating that rising wages are a factor in the Fed’s accelerated plan to boost interest rates, Fox noted.
“Inflation has persisted longer than we thought and we’re prepared to use our tools to ensure that higher inflation does not become entrenched,” he added.
TRENDPOST: In December, consumers spent 0.6 percent less, especially on cars, clothing, and electronics as inflation ate into household budgets.
Also, the Omicron hysteria inspired politicians to impose and renew government restrictions on social movement and businesses which slowed down spending.
And the fear among the general public that they would catch the virus, has kept them from going out in public and spending freely.
ONWARD AND UPWARD FOR GROCERY PRICES
In a recent letter to retailers, Kraft Heinz announced it will raise prices this spring by 6.6 percent on Velveeta cheese-like products to 30 percent on Oscar Mayer turkey bacon, with a similar range of price hikes across products from cold cuts and hot dogs to Maxwell House coffee and Capri Sun drinks.
For several months, food producers have been raising prices and warning of more hikes ahead, as we reported in “Food Companies Raise Retail Prices” (15 Jun 2021) and “Kraft Heinz Jacks Prices as It Scrambles to Meet Demand” (2 Nov 2021).
In November, the company announced a 9-percent boost in the prices of several products.
Since then, the company has been dealing with “constrained supply, logistic bottlenecks, and weather-driven crop losses,” the letter said, increasing material and shipping costs and forcing yet more price increases on yet more products.
To ease the bite on consumers’ wallets, the company is increasing some package sizes and adding more affordable price points for some products, it said.
In late January, Procter & Gamble announced 8-percent average price boosts on Bounce, Downy, Gain, and Tide laundry products. ConAgra, maker of Slim Jim jerky-like snacks and Marie Callender’s frozen dinners, warned that price hikes will take effect later this year.
As prices have risen, many consumers have altered their habits to buy a smaller range of staple products, switched from national brands to cheaper house-label foods, or begun shopping at discount grocers, CNN Business reported.
TRENDPOST: Consumers can make the most of their grocery budgets by not buying Velveeta, hot dogs, Slim Jims, and other factory creations that grow waistlines as well as prices.
Investing in real, whole foods not only improves nutrition and controls weight but also safeguards health and longevity while giving you the best value for your food dollars.
Again, as we have greatly detailed, according to the Centers for Disease Control and Prevention, some 78 percent of those hospitalized for COVID were overweight. And, among the 1 to 17 year olds hospitalized for the virus, the CDC reports that 61 percent were obese.
In America, 72 percent of the population is overweight, and 40 percent obese.
Yet, there is never a word among the “health experts” for people to get in the best shape they can and strengthen their immune system to fight the virus. Instead, they pump the COVID Jab.
STEEL PRICES FALL BACK TO YEAR-AGO LEVELS
After peaking at $1,960 a ton in late September, spot market prices for rolled steel dropped to $1,270 a ton in January, a level not seen since March 2021.
U.S. steel production increased by 19 percent in 2021 to meet surging demand. That rise in output has now lofted supplies above demand, allowing prices to settle down, analysts told The Wall Street Journal.
“There’s no longer a hunger to restock steel,” CEO James Barnett of Grand Steel Products said to the WSJ.
Price will fall further this year, Barnett said, because new U.S. mills will begin to produce and more steel will be imported.
Nucor, the largest U.S. steel maker, is completing new mills in Kentucky and West Virginia. U.S. Steel is doubling production at an Arkansas plant. American steel output is expected to grow by 10 million tons this year, the WSJ reported.
Meanwhile, another three million tons from Europe will arrive in the U.S. duty-free under a trade deal negotiated by the Biden administration.
Steel has been a major driver of inflation; its high price has been reflected in products from cars to kitchen appliances.
Unquenchable demand during the economic recovery multiplied U.S. Steel’s revenue by 20 times, zooming from $49 million in 2020’s fourth quarter to $1 billion for the same period in 2021.
Nucor booked $2.25 billion in profits during last year’s last quarter, compared to $399 million a year earlier, even though it shipped 6 percent less steel.
However, the current lower prices will not immediately drop the price of other goods.
Manufacturers typically buy steel through long-term contracts at fixed prices. Those contracts will need to run out or be renegotiated, either of which takes time.
Also, the current market’s falling prices and rising supply may be temporary or seasonal conditions that will fade, according to Mark Millett, CEO of Steel Dynamics.
“We don’t see any change in the underlying consumption of steel, nor do we see it happening over the months or quarters ahead,” he told the WSJ.
Some analysts and executives expect steel prices to stabilize this year, but remain permanently higher.
American manufacturers underbuilt and underproduced for years,” Jeremy Flack, CEO of Flack Global Metals, commented to the WSJ. “The price of steel is going to be higher for everything.”