London — Near-term challenges ranging from tariffs and trade barriers to cyclicality and volatility should be viewed as „manageable concerns“ by the global metals industry, Trafigura CEO Jeremy Weir said Monday. Speaking in a keynote address to the LME Metals Seminar 2018 in London, Weir said market participants „live in a time of rapid and wrenching change“ when it came to geopolitical uncertainty, technological advances and the need for greater sustainability in sourcing feedstocks and other material. However, most fundamental economic drivers were robust and the push for a low-carbon economy was accelerating demand for some key metals. „As a trader, I would characterize these as manageable concerns,“ Weir said of the challenges the metals industry faces. „And if you look around the world, demand looks pretty robust…the foundations for growth remain intact.“ Population growth in key regions, as well as increased urbanization, were factored into the projected 4% annual demand growth expectation for aluminum over the next several years. However, Weir said there was likely to be an aluminum production plateau in 2020 and „it is our belief that prices will need to rise to incentivize the creation of new capacity“. Aluminum will be in demand as new electric automobiles increase in prominence, as will copper and nickel, he said. Electric vehicles will require 4-5 times more copper than current conventional vehicles and 5-10 kilograms of nickel, spurring demand for those metals, as well as cobalt. With about two-thirds of global cobalt supply currently coming from the Democratic Republic of Congo, which has been plagued by violence and humanitarian issues, sustainable and responsible sourcing of the material was a must, Weir said. Trafigura was supporting efforts to ensure that was the case, he said. In a separate panel discussion during Monday’s event, the Deputy Director, UK Trade Policy Observatory and Associate Fellow, Global Economy and Finance at Chatham House, Jim Rollo, said only about 2% of global trade was affected by the ongoing trade war between the US and China. Material that seeks out other markets as a result — so-called „trade deflection“ — was likely to be a bigger issue, but „how much of that is going to go on is a very open question“, Rollo said. James Kynge, emerging markets editor for the Financial Times, said he believed US/China trade tensions were likely to intensify, particularly since a new United States-Mexico-Canada Agreement (USMCA) has been inked on trade. The agreement looks to block Canada and Mexico from agreeing bilateral deals with non-market economies, such as China, Kynge said.

„Now that Mexico and China are squared away, you are going to see increased focus on China,“ he said. However, the „impact will begin to show through“ from the trade tensions, as US consumers will likely see higher prices for goods such as laptops — about 93% come from China — and iPhones, as about 80% are China-sourced. „What [President Donald] Trump is doing is negating the impact to consumers of his own tax cuts,“ Kynge said.