US critical mineral imports slump in Q4'22 as demand from steel industry falls

U.S. imports of critical minerals decreased 30% year over year in the fourth quarter of 2022, in line with lagging production from the iron and steel industry, according to an S&P Global Market Intelligence analysis of import data from Panjiva.

Fourth-quarter 2022 imports were 51% lower than the five-year high seen in the third quarter of 2022 and came mainly from Gabon, the world’s third-largest producer of manganese. Total 2022 imports were 918,579 tonnes, compared to 789,382 tonnes in 2021. The ramp-up of the energy transition has boosted the consumption of manganese and graphite for electric vehicle batteries and rare earth elements for magnets for EVs and wind turbines.

While consumption from the energy sector is up, a majority of manganese, graphite and other critical minerals are used within the iron- and steelmaking process. The U.S. logged an 11% year-over-year slump in iron and steel production in the fourth quarter of 2022 and a 6% decrease for the full year, according to data from the American Iron and Steel Institute, an industry association.

"The price environment was very favorable in the first half, before a strong slowdown in the second, in a context of inflation and significantly rising energy prices," Christel Bories, CEO of Eramet SA, Gabon's largest manganese producer, said in the company's 2022 earnings release. Eramet's CFO said on a Feb. 23 earnings call that the company does not expect the carbon steel market to grow in 2023.

U.S. fourth-quarter 2022 imports of refined lithium compounds, an electrolyte solution in EV batteries, were largely in line with imports during the same period in 2021, totaling 6,859 tonnes compared to 6,927 tonnes in 2021. Imports mainly came from China, which accounted for 31.9% of the total, as the U.S. struggles to lessen its dependence on the Asian country for the processing and refinement of EV battery metals.

Total imports of refined lithium compounds grew slightly in 2022 compared to 2021, increasing to 31,076 tonnes from 27,642 tonnes, as lithium demand maintains a growth outlook thanks to its role in EV batteries. EV battery demand in the U.S. is expected to increase sixfold from 2021 to 2027, according to S&P Global Market Intelligence forecasts.

"Every single scenario, [global] supply divided by demand will be in excess of 90%. It means I'm very confident that it's a very good market," Sociedad Química y Minera de Chile SA CEO Ricardo Ramos Rodríguez said during the lithium producer's investor day call in September 2022.

U.S. imports of processed lithium materials, used in battery cathodes, in the fourth quarter of 2022 experienced a 7.8% year-over-year decrease to about 3,800 tonnes, with 95.9% of imports from two countries, Chile and Argentina. Overall imports of processed lithium in 2022 totaled almost 18,000 tonnes, a 23% increase from 2021.

The U.S. has only one active lithium mine but is incentivizing industry growth through the Inflation Reduction Act, which requires battery manufacturers to source a certain percentage of metals domestically.

"Long term [in our strategy], product in China would serve the Chinese market and product outside of China would serve the rest of the world. And a lot of that demand will be in North America and Europe," Jerry Masters, Chairman, President and CEO of lithium producer Albemarle Corp., said during a strategic update call in January.

Panjiva is the supply chain research unit of S&P Global Market Intelligence, a division of S&P Global Inc.

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