Glencore Revises Down its Nickel Production Forecast for 2023

Glencore, a prominent commodity trader and miner, has recently adjusted its nickel production forecast for the year 2023 due to various factors such as maintenance activities and labor strikes. Despite these alterations, the company has reiterated its expectation of achieving profits ranging from $3.5 to $4.0 billion within its trading division, surpassing its long-term guidance range.

Glencore has maintained its overall 2023 guidance for the production of copper, zinc, coal, and cobalt. The trading division encompasses various commodities, including coal, oil, liquefied natural gas, related products, and metals. Notably, the division achieved a record profit of $6.4 billion in 2022, representing a substantial increase of 73% compared to the previous year.

Within the long-term annual trading guidance, Glencore typically aims for earnings within the range of $2.2 billion to $3.2 billion.

In a significant development, Glencore had previously expressed its interest in acquiring Teck's steelmaking coal business as an independent unit. This followed two unsuccessful attempts to merge the two companies through a $22.5 billion bid. As part of its recent announcement, Glencore has revised its guidance for full-year nickel production, reducing it by 9% to approximately 102,000 metric tons.

In reference to this modification, Glencore provided an explanation, stating that the reduction in nickel production is attributed to factors including maintenance outages at the Sudbury smelter, a more extended recovery period than initially anticipated from the 2022 strike action, and a downward revision for the full-year outlook for Koniambo.

In terms of production performance, Glencore's self-sourced nickel output witnessed a 16% decline, totaling 68,400 tons during the first three quarters of the year. Additionally, self-sourced copper production reached 735,800 metric tons, marking a 5% decrease.

Copper, nickel, and cobalt are essential materials for electric vehicles, which play a pivotal role in the ongoing energy transition.

In the realm of cobalt production, Glencore's self-sourced output year-to-date stood at 32,500 tons, indicating a 2% decrease from the corresponding period the previous year. Zinc output amounted to 672,100 tons, reflecting a 4% decline, and ferrochrome production reached 873,000 tons, dropping by 21%.

Glencore offered insights into the reduction in ferrochrome production, stating, "Ferrochrome production has also been marked lower, due to additional smelter off-line days on account of electricity pricing and load curtailments in South Africa."

These adjustments in production forecasts and performances underscore the dynamic nature of the commodities market and the various challenges faced by companies operating within it. Despite the changes in nickel production expectations, Glencore remains confident in its trading division's profitability and its ability to meet its long-term trading guidance.