MetalMiner’s Monthly Buying Outlook report for October is now available. Sharpen your sourcing strategies for buying aluminum, copper, nickel, lead, zinc, tin and multiple forms of steel, complete with our coverage of drivers, market commentary, polished charts and more!
If you’re a manufacturer in North America that’s buying multiple metals, this is the ideal one-stop-shop report for you.
This month, you’ll learn:
Whether the Federal Reserve’s decision not to raise interest rates matters for metal prices
To what degree the China Dragon drives the Global Bear(ish commodity markets)
What the steel plate price tumble means for ferrous markets
Plus a short- and medium-term industrial buying strategy for the rest of the metals that you buy.
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During the last few days, sellers were back in control of the stock market, sending shares, once again, to the lowest levels this year. I don’t know about you guys, but I’ve stopped looking at my Rollover IRA. It’d just depress me. Like a bad sequel, stock selloff part deux was better left unseen.
Stocks had their worst quarter since 2011 amid growth worries, particularly about growth in China. The S&P 500 closed down 6.9% for the quarter. The NASDAQ Composite fell 7.4% and the Dow Jones Industrial Average dropped 7.6% amid a commodities selloff. It wasn’t just our beloved metals and other materials (off 17.1%) that were down for the quarter, either. Energy commodities were down 18.1%.
Stocks and Commodities: Both Down
The S&P 500, 1 year out. Source: @StockCharts.com
So we saw a bad quarter end this week. Big deal, right? It’s happened before. The problem, for investors, at least is that no one knows when or if China’s falling economy will hit rock bottom any time soon. In fact, stocks are retreating even more as I write this, based on those same fears.
Making up for metals and other raw materials demand from China that has snowballed for 15 years is no small task. That’s why we were skeptical of reports that US construction demand could be a safe haven for investors looking to put money into basic materials. Lower your expectations, guys.
Shed a Tear for Glencore… Or Don’t
Speaking of investors, we really hope you didn’t invest in Glencore. The miner/trader’s shares fell by 30% this week. My colleague, Stuart Burns, wrote that deal making is in Glencore’s DNA and all the overextended company need do is sell some of its mining assets to erase much of its inverse Scrooge McDuck-level debt pile, a whopping $46.98 billion.
Glencore stock, 1 year out. Source: @StockCharts.com.
We still wouldn’t want to be in Ivan Glasenberg’s shoes right now. Even if they are fancy, gold-plated shoes.
It’s Not Just Metals! Oil Needs a Hug, Too
Remember earlier when we said energy commodities were down this quarter? That’s an understatement for oil. Oil is a special case in that its price impacts so many other commodities due to transportation and production costs for products created from pretty much any raw material.
The really bad news for oil is not only is it falling, it’ll probably keep going down in price next year, too.
The analysts’ consensus is that Iranian production is likely to pick up next year and China’s down economy will likely cause Beijing to overproduce and over-export domestic oil just like they already do with domestic steel.
The theme of the week seemingly was overproduction leading to oversupply leading to even lower prices. With no real end in sight. That’s what we have to look forward to. Overproduction, oversupply and overwork.