More bad news for the Cuban economy: prices of two export products have plummeted

Presenting the Cuban government’s new economic package to the National Assembly of People’s Power, Prime Minister Manuel Marrero assured that “the potential we have is enormous.”an example of which is the negotiations on the tours conducted. “We have requests for nickel, tobacco, rum.”.

But these aspirations contradict reality. Of the three goods that the official mentioned that are traditional for the Cuban economy, there is one whose price will not stop falling in 2023. After reaching a peak of $20,272 per ton on the world market on July 25, 2024, nickel was trading at $16,272 per ton, the site reports. Trade economy.

Not only is nickel going down, its annual decline was 47.23%, but also The island also produces cobalt, which lost 42.23% of its market value in 2023.

Why is this situation? Didn’t we expect a metals boom associated with the energy transition, driven by increased demand for electric vehicles?

The reality is that such omens have triggered the supply of minerals such as lithium, nickel and cobalt used in the production of batteries for these vehicles. According to an analysis of the electric vehicle market published by Wall Street Magazine, Prices for these three minerals fell in 2023“As rising supply and weak demand have pushed lithium to its cheapest level in two years, cobalt to its lowest level in four years and nickel to its lowest level in the pandemic era. “Next year will likely bring more of the same.”

A factor influencing this panorama is that in the year just ended, China and the world did not experience the expected economic growth. This, coupled with rising interest rates, has slowed growth expectations.

“Industry-wide expectations may have been too high,” energy market research firm Bloomberg NEF acknowledged in a study.

More than 20 lithium mines opened worldwide in 2023, with mining companies focusing on long-term production. “Before Covid-19, there were supply problems. “Manufacturers in China and Australia have increased production as economies reopen, but demand has not kept pace.”said Wall Street Magazine Kwasi Ampofo is head of metals and mining at Bloomberg NEF.

Supply of all three battery metals is expected to exceed demand again in 2024. “Manufacturers will consider further production cuts to balance the market and stop further losses,” warned Jordan Roberts, battery raw materials analyst at Fastmarkets.

For its part, Benchmark Mineral Intelligence forecasts a global lithium market surplus of 30,000 metric tons next year, and Jack Bedder, founder and director of critical minerals consultancy Project Blue, warned that The cobalt market is currently oversupplied due to low demand and high inventories.

“This is all bad news for cobalt prices,” Bedder said, adding that he expects more in 2024 as producers deplete supplies.

Although Benchmark Mineral Intelligence predicts that Global cobalt supply will exceed demand by 20,000 tonnes in 2024. And nickel is the same.“There hasn’t been much positive movement, and we don’t expect this oversupply to change,” said Benchmark analyst Spencer Ingall.

Several producers in Indonesia, a country that supplies nearly half of the world’s nickel ore, have stopped production due to low prices. So Global nickel surplus expected to far exceed lithium and cobalt reserves next yearAccording to Benchmark, reserves are estimated at 200,000 tons.

And while low prices are bad news for miners, they could instead prompt cell manufacturers to lower the cost of electric battery packs, which would lower the price of electric vehicles.

So the 2024 forecast calls for battery prices to fall to $133/kWh after closing 2023 at $139/kWh, down from $161/kWh in 2022. To put today’s trend into perspective, the above prices can be compared to $780. per kWh in 2013.

So, What hope for economic prosperity do the proposed nickel orders give Havana? What did Marrero mention in an attempt to present Cubans with a less bleak economic outlook than the current one?

Well, not enough. The previous summary shows that The Cuban treasury has not benefited from the electric vehicle boom and does not appear to benefit. Just look at Sherritt International’s Q3 2023 earnings report.

According to the Canadian company’s report, “Sherritt’s share of finished nickel and cobalt production at the Moa joint venture was 3,841 tonnes and 410 tonnes, compared to 4,443 and 419 tonnes in the third quarter of 2022, respectively.”

Except, “Sales volumes of finished nickel were lower than in the same period last year and completed production volumes in the current quarter were primarily driven by lower nickel demand from steel mills following summer shutdowns and delayed sales to customers. “Increased availability of mixed hydroxide precipitate (MHP) and matte intermediate has also led to lower metal procurement in Asia.”

Marrero will definitely have to give new explanations in the near future. No one should forget this Sherritt forced Havana to sign a contract committing 80% of nickel production in the next five years. starting January 1, 2023, to collect the amount owed by the government in the amount of C$361.9 million. At current prices in the world mineral market, this debt (another of the regime’s many debts) is annoying and spreading.