Author Archives: Kyle Fitzsimmons

Set of copper pipes of different diameter lying in one heap

Copper prices increased last week on the heels of Chinese data indicating inflation growth, reassuring strong demand from the world’s largest consumer of the metal.

According to a report from MarketWatch, copper for March delivery grew 2.9% on the Comex division of the New York Mercantile Exchange last Tuesday, which was the largest one-day increase in nearly two months.

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“The 2017 growth rate was supported (by) much faster than expected project ramp ups in Peru in particular, and much lower than statistically normal rates of production losses through the year,” Citi wrote, according to the news source. “We believe both of these factors will be difficult to replicate in 2017.”

Overall, a weaker dollar was supporting metals and, in the short-term, a reduction in copper stocks in LME warehouses indicates a tighter market, which could further boost prices.

Copper Bounces Back from December

Our own Raul de Frutos wrote recently that copper prices declined some in December, along with other industrial metals, but the bull narrative is still in effect:

“The recent price decline in copper prices wasn’t that dramatic. So far, it seems like the bulls are still in control. A strong dollar and a possible slowdown in Chinese demand are factors that could bring prices down. Up until now, China’s demand looks strong and the dollar hasn’t had a big impact on metal prices. Therefore, we need actual reasons to turn bearish on copper,” he wrote.

How will copper and base metals fare in 2017? You can find a more in-depth copper price forecast and outlook in our brand new Monthly Metal Buying Outlook report. For a short- and long-term buying strategy with specific price thresholds:

To begin 2017, aluminum prices inched higher with the U.S. dollar retreating and traders awaiting clarity on the market.

According to a recent report from the Economic Calendar, downward pressure on aluminum has been the story since December, but over the course of 2016 the metal saw a 13% increase. The reason? falling supply with the closure of capacity while demand grew as the result of China’s infrastructure initiatives.

Want a short- and medium-term buying outlook for aluminum, copper, tin, lead, zinc, nickel and several forms of steel? Subscribe to our monthly buying outlook reports!

Donald Levit, writing for the Economic Calendar, said: “Even though it is typical for aluminum prices to retreat in late fall and winter, prices held steady through mid-December after Donald Trump won the U.S. presidential election in November. Trump made a campaign promise to move to further stimulate the U.S. economy, and that stimulus could potentially include infrastructure spending. That would boost aluminum demand.”

What does 2017 have in store for aluminum prices? Volatility could be the word with traders attempting to assess how the market will evolve as the year progresses.

The Auto Industry and Aluminum

Our own Raul de Frutos echoed the sentiments of aluminum’s struggles in December after a 2016 of growth. But what does the auto industry have to do with it? Raul writes:

“The auto industry is a key driver of aluminum demand. Auto sales in US and China (the world’s biggest car market) finished the year on a strong note. Total vehicle sales in the U.S. hit an 11-year high in December, aided by a fourth-quarter surge in demand that exceeded expectations. In China, car sales hit an all-time record in November, up 17.1% year-on-year.”

How will aluminum and base metals fare in 2017? You can find a more in-depth copper price forecast and outlook in our brand new Monthly Metal Buying Outlook report. For a short- and long-term buying strategy with specific price thresholds:

Ezio Gutzemberg/Adobe Stock

Steel rebar prices in China dropped more than 2% to end 2016, reversing previous gains made earlier in the final week of the year.

According to a report from Reuters, coke and coking coal also remainder under pressure due in part to concerns about slowing demand from volatile trading that typically takes place at the end of the year.

Want a short- and medium-term buying outlook for aluminum, copper, tin, lead, zinc, nickel and several forms of steel? Subscribe to our monthly buying outlook reports!

“The pullback shows traders are not confident about the steel market and future demand during the winter,” Wang Yilin, steel analyst at Sinosteel Futures, told Reuters.

For the week leading up to the New Year, steel prices have been seesawing back and forth due to low turnover from major international exchanges having the ‘Closed’ sign up for the holiday season.

It’s also important to note, cites Reuters, that steel mills usually curb output in a slow construction period, which is typically the case during the winter months ahead of the Chinese Lunar New Year holiday.

2017: the Year of Steel?

Our own Raul de Frutos recently covered the top 3 reasons why steel prices will rise in the next year. He cites a Trump presidency and investors betting on steel companies, as well as rising Chinese steel prices and an overall industry metals boom as those reasons.

“We are witnessing powerful moves across the board. Even copper, a metal whose fundamentals didn’t look appealing, recently rose near 20% in a matter of days. The bullish sentiment across base metals is another reason the expect a rebound in steel prices,” de Frutos wrote.

How will steel and base metals fare for the remainder of 2016 and into 2017? You can find a more in-depth copper price forecast and outlook in our brand new Monthly Metal Buying Outlook report. For a short- and long-term buying strategy with specific price thresholds:

Nickel prices edged up higher to end the year in the futures market following speculators widening their positions.

According to a report from the Economic Times, the spot nickel market is seeing a trend of increased demand from alloy makers and other industries that consume the metal. This has covered up short positions from speculators ahead of monthly figures, influencing nickel futures.

Want a short- and medium-term buying outlook for aluminum, copper, tin, lead, zinc, nickel and several forms of steel? Subscribe to our monthly buying outlook reports!

A report from Economic Calendar last week found nickel prices hovering near year-long highs. Closing this year on a positive note can be attributed to a tightening supply chain for the metal.

Writes Donald Levit for the news source: “While the supply side adjustments was the major price driver, an improvement in demand also contributed to the rally. While nickel has soared, continued potential for further supply cutbacks have continued to push the metal higher, and last week news of a potential, major shutdown added even more upside impetus to nickel’s rally.”

Nickel Mine Suspensions Also in Play

The Economic Calendar report also announced the closure of the second-largest nickel miner in the Philippines, pending an appeal. This suspension (as it stands) would have a significant impact on the supply and demand balance for today’s nickel market.

How will nickel and base metals fare for the remainder of 2016 and into 2017? You can find a more in-depth copper price forecast and outlook in our brand new Monthly Metal Buying Outlook report. For a short- and long-term buying strategy with specific price thresholds:

Black lead zinc ore closeup rocky textureThe International Lead and Zinc Study Group recently released preliminary data for zinc in 2016, which revealed the global market for the refined metal in deficit from January to October  of this year.

Total reported inventories also fell over the same period.

Want a short- and medium-term buying outlook for aluminum, copper, tin, lead, zinc, nickel and several forms of steel? Subscribe to our monthly buying outlook reports!

Global zinc mine production dropped by 1.8% compared to the same 10 months in 2015 with the overall reduction attributed to drop-offs in Australia, Ireland, Peru and India. Of note were Bolivia, China and the Russian Federation which posted increases this year.

China and the Republic of Korea (South Korea) posted increases in refined zinc metal output, but the global output declined slightly due to activity in Mexico, India, Australia and the United States.

The report stated: “A rise in global usage of refined zinc metal of 3.7% was primarily influenced by an increase in Chinese apparent demand of 9.3% that more than offset a 14% reduction in the United States. Usage in Europe rose by 0.9%.”

ILZSG concluded that Chinese imports of zinc fell by nearly half, 44.5% to be exact, but the country’s net imports of the metal grew 26%.

Buying Zinc at the Right Time

Our own Raul de Frutos wrote of the ILZSG report, and added some insightful analysis on what buyers of the metal should consider this time of year:

“During this year’s rally, zinc buyers had several opportunities to buy forward. Buyers now need to pay close attention to the recent price pull back. If you see a rebound in prices near that support level, that would be a good time to buy some volume.”

How will zinc and base metals fare for the remainder of 2016 and into 2017? You can find a more in-depth copper price forecast and outlook in our brand new Monthly Metal Buying Outlook report. For a short- and long-term buying strategy with specific price thresholds:

 

Macro photo of a piece of lead ore

Macro photo of a piece of lead ore

The International Lead and Zinc Study Group released its latest findings recently, which have world refined lead metal supply exceeding demand from January to October with reported stock levels growing over that same period.

A 7.8% reduction in global lead mine production, compared to the first 10 months of 2015, was also of note and attributed mostly to lower output in China, India and Australia.

Want a short- and medium-term buying outlook for aluminum, copper, tin, lead, zinc, nickel and several forms of steel? Subscribe to our monthly buying outlook reports!

The ILZSG report states: “A sharp fall in Chinese refined lead metal output was partially balanced by increases in Australia, Kazakhstan, the Republic of Korea and the United States resulting in an overall global reduction of 1.1%.”

Meanwhile, refined lead metal usage grew 9.8% in Europe due to Germany, Poland, Italy and the U.K. posting increases. However, in China, demand fell by that same number and in the US, demand stayed flat.

The report stated that Chinese lead imports contained in lead concentrates fell 22.4% compared to the first 10 months of 2015.

Industrial Metals on a Bull Run

Although the latest report on lead has supply exceeding demand, the story for industrial metals in 2016 has been one dominated by the bull. Our own Raul de Frutos recently wrote of this market and suggested buying tips for those sourcing metal in this market:

“In a bull market, sometimes prices rally and it’s risky to buy at those levels because prices could pull back simply due to profit taking. A good opportunity to time your purchase is when prices correct or pull back and then momentum picks up again. That signals that buyers are again back in control and prices are likely to move higher.”

How will lead and base metals fare for the remainder of 2016 and into 2017? You can find a more in-depth copper price forecast and outlook in our brand new Monthly Metal Buying Outlook report. For a short- and long-term buying strategy with specific price thresholds:

 

Tin cans. Cans are used for packing all sorts of goods - conserved food, chemical products such as paint, etc

Tin cans. Cans are used for packing all sorts of goods – conserved food, chemical products such as paint, etc

Tin prices, along with nickel, weakened last week on the non-ferrous metals market due in part to reduced demand from alloy industries.

According to a report from the Business Standard, owners of metal stocks sold en masse from this lower demand, affecting both tin and nickel with copper prices also softening from a lack of demand.

Want a short- and medium-term buying outlook for aluminum, copper, tin, lead, zinc, nickel and several forms of steel? Subscribe to our monthly buying outlook reports!

To begin December, our own Stuart Burns wrote of tin’s continued bull run even with an abundant supply.

Burns wrote: “(Tin) is also relatively well distributed: the five largest producing countries are China 35%, Russia 12%, Australia 8%, Indonesia 7% and Brazil 6%, according to Platts. These mines are not in unstable or war-torn regimes. Some mines in places such as Myanmar and the Democratic Republic of the Congo are less savory, sure, but as a percentage of the whole they are not mission critical to global ore supply.”

Risk with Tin

There is some inherent risk with tin since both supply and demand are not presently driving prices.

Burns concluded: “That doesn’t mean to say the price hasn’t got further to go. There is no shortage of liquidity in the Chinese investment market and speculators this year have pushed not just tin but copper and other metals to annual highs. Tin’s fundamentals aren’t bad by any means but the FT reports that nearly 30% of Chinese smelter capacity sits idle today, a warning sign that high prices may not be matched by downstream demand.”

How will tin and base metals fare for the remainder of 2016 and into 2017? You can find a more in-depth copper price forecast and outlook in our brand new Monthly Metal Buying Outlook report. For a short- and long-term buying strategy with specific price thresholds:

Set of copper pipes of different diameter lying in one heap

Set of copper pipes of different diameter lying in one heap

Copper prices experienced an increase to close out the week due in part to hope for stronger Chinese demand and a rally in crude oil.

According to a recent report from Dow Jones Business News, China consumes roughly 45% of global copper supplies and economic trends in the Far East suggest a significant effect on prices for the industrial metal.

Want a short- and medium-term buying outlook for aluminum, copper, tin, lead, zinc, nickel and several forms of steel? Subscribe to our monthly buying outlook reports!

“Right now the markets look rosy and there seems to be a reluctance to stand in the way of the move higher,” Matt France of brokerage Marex Spectron told Dow Jones. Also of note, growing crude prices have provided a boost to commodities with copper prices rising alongside oil.

The reason? According to the news source, the majority of investors buy and sell broad bundles of commodities and oil is typically involved, which leads to an effect on other commodities, in this case, copper.

Even Stronger Copper Prices on the Horizon?

This week’s developments for copper is nothing new as the metal has been rising strongly for the past month or more. Writes our own Stuart Burns:

“Copper consumers, of course, would like to know what they can expect for copper prices next year. Will they fall back or continue to be supported? So a letter yesterday to the Financial Times from Simon Hunt, one of the most experienced and respected analysts in the market, is of interest.”

How will copper and base metals fare for the remainder of 2016 and into 2017? You can find a more in-depth copper price forecast and outlook in our brand new Monthly Metal Buying Outlook report. For a short- and long-term buying strategy with specific price thresholds:

Join sister site Spend Matters this Tuesday at 10 a.m. Central as Jason Busch (founder and head of strategy at Spend Matters) and Marco H. de Vries (senior director, product marketing at OpenText Business Network) discuss what the oncoming Trump administration means for global trade, the environment and economic policy. How will the supply chain and risk and visibility be impacted? You’ll have to register today to find out!

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Long row of rolls of aluminum in production shop of plant.

Long row of rolls of aluminum in production shop of plant.

In a year that saw most industrial metals rally to record highs, aluminum has lagged behind. The reason? Oversupply.

According to a recent report from The Wall Street Journal, citing data from the International Aluminum Institute, global aluminum production grew to a record high of close to 5 million metric tons in October. It’s expected aluminum will continue to fall behind other metals in 2017 in terms of price growth as a result of oversupply.

Want a short- and medium-term buying outlook for aluminum, copper, tin, lead, zinc, nickel and several forms of steel? Subscribe to our monthly buying outlook reports!

“As we expect to see further production increases in the next few months, a record-high quantity of aluminum is likely to be produced on a whole year basis,” states a Commerzbank report, according to the WSJ.

Chinese Aluminum Producer Moves Its Supply

Our own Raul de Frutos recently reported on a significant stockpile of 500,000 metric tons of aluminum that’s been shipped from Mexico to Vietnam. What will its impact on price be?

“Although the volume is pretty big, it’s immediate impact on global aluminum prices will likely be none. This is because the metal has already been produced and it’s just moving from one place to another before its final use. The metal is already there and it’s going to be consumed whether it is in the U.S. or in another country. Therefore, it’s all already factored into the price,” de Frutos wrote.

How will aluminum and base metals fare for the remainder of 2016 and into 2017? You can find a more in-depth copper price forecast and outlook in our brand new Monthly Metal Buying Outlook report. For a short- and long-term buying strategy with specific price thresholds: