Global economic concerns and rising interest rates put a damper on metals prices during the second quarter, although gold and silver values were up because of investor interest, according to a major smelter operator.
Mining and smelting company Boliden, which says its Rönnskär smelter in northern Sweden is the world’s largest recycler of e-scrap metals, recently issued a report on metals markets and its financial performance during the second quarter. In short, it was a rough quarter for the company.
“The metal markets developed weakly during the second quarter. Growing concern over worsening global economic prospects, especially in China, had a negative effect on demand,” according to the report. “The global inflation rate declined. However, inflation remained at high levels all over the world, leading several major central banks to raise policy rates during the quarter. This suppressed demand for metal.”
In addition, a major smelter fire in June reduced the volume of material Boliden could recover, contributing to a 20% year-over-year drop in the weight of e-scrap processed. The disruptions contributed to decreased revenues and profits.
Metals pricing recap
Average copper prices during the second quarter sat at around $8,464 per metric ton, down about 11% year over year.
“The copper price fell by 5% during the quarter, despite strong data regarding current global demand,” according to Boliden. “The price was held back by worsening economic prospects especially in China, combined with a strong USD.”
Zinc, nickel and lead were also down. A couple of bright spots were gold and silver prices, however. Gold was $1,977 per troy ounce, up 6% year over year and up 5% from the first quarter, and silver was $24.10 per troy ounce, up 7% year over year and up 7% from the first quarter of 2023. Both were buoyed by investors worried about financial markets.
“Concern in the financial market pertaining to the debt ceiling in the USA, in combination with expectations of future policy rate cuts, supported precious metal prices,” Boliden reported.
On the other hand, financial speculation was responsible for driving palladium prices down 8%, according to the company, with investors taking short positions on the metal after it traded at historical highs.
Fire destroys electrolysis plant
For Boliden in particular, it was a rough quarter partly because of a massive fire at Rönnskär that broke out on June 13. The blaze completely destroyed the smelter’s electrolysis plant, a facility the company estimated was worth about $8.5 million and was processing around 10,000 metric tons of copper at the time of the fire.
Boliden estimates second-quarter operating profits fell by about $19 million as a result of canceled deliveries and lost production resulting from the fire.
“Boliden is conducting an investigation and is in discussions with insurance companies regarding compensation for both the destroyed electrolysis plant and the loss of production,” according to the company.
For e-scrap specifically, Rönnskär took in 16,798 metric tons during the second quarter, down 20% year over year and down 12% from the first quarter.
As of the second quarter, electronic scrap made up 34% of the total recovered feedstock for Rönnskär and 9% of the total mined and recovered feedstock entering the smelter.
Boliden operates several smelters and mines around Europe. Overall, the company’s smelter division tallied revenue of $1.75 billion during the second quarter, down 14% year over year and down 7% from the first quarter. The division’s operating profits were $71 million, down 22% from the year-prior period and down 61% from the first quarter of 2023.
