Articles in Category: Best of MetalMiner

It was on one of those weeks when a non-metal commodity dominated metals coverage. We mean the one that factors into just about every metal price through either production or transportation costs. The black gold that sluices across prairie and canyon in tanker cars, pipelines and trucks. The input whose value and production fluctuates at the whim of both Sheikh and wildcatter.

So, honey, then, right?

Saudi Arabia and Russia promised to work together on a “task force” to try to right-size the oil overproduction we’ve become accustomed to over the past two years. MetalMiner Co-Founder Stuart Burns warns that the days of $100 per barrel are, indeed, long gone but something could still come of this latest effort to rein in production. Naturally, the markets ebbed and flowed on speculation of what, exactly, that might be like a small ocean of the stuff filling to the brim a tanker bound for China.

Negative on that Manufacturing Growth

The Institute of Supply Management‘s manufacturing index turned negative in July for the first time since February. And the services gauge fell last month to the lowest level since early 2010. Perhaps the economy’s not doing as great as we thought it was?

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The manufacturing index dropped to 49.4% from 52.6% in August and the ISM services gauge retreated to 51.4% from 55.5%. The combined reading of two indexes was also the weakest in six years.

Transshipment Trouble

Last week, we wrote about China Zhongwang and its billionaire owner, Chinese Communist Party member Liu Zhongtian, buying U.S-based extruder Aleris. Well, more trouble this week for Zhongwang as the Commerce Department launched a new investigation into transshipments related to nearly 1 million metric tons of aluminum stored in rural Mexico.

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Zhongtian says he and his company have nothing to do with it. The Wall Street Journal? Well, it says shipping documents and sales receipts related to the massive stockpile all lead back to Zhongwang.

Less Titanium Production in Utah

Instead of forming titanium sponge by passing titanium tetrachloride in a gaseous phase over molten magnesium or sodium at its Rowley, Utah, facility, Allegheny Technologies, Inc., is cutting out the middle man. The specialty metals producer will now buy its titanium sponge on the open market. By idling the Rowley titanium facility indefinitely, ATI is also cutting 140 jobs. Read more

This week, the Car Wars got hot again as General Motors, on behalf of its Chevy Silverado truck line, started running ads about how weak the rival Ford F-150’s aluminum bed really is.

Free Download: The May 2016 MMI Report

GM literally poked holes into the idea that aluminum could be a strong as steel.  They even had Howie Long rub it in.

GM-youtube_Ford_F150_550_060716

The advantage Ford holds, and the reason the automaker pursued aluminum for truck beds in the first place, is that their F-150 is still much lighter and conforms more easily to federal corporate average fuel economy (CAFE) standards. Perhaps Ford should break out the scales and do a fuel economy comparison to strike back at GM? Or should it just keep repeating “military grade aluminum?”

While the automakers were duking it out about who’s truck is tougher, actual steelmakers turned their attention to Beijing where the U.S.-China Strategic and Economic Dialogue took place. U.S. Treasury Secretary Jack Lew called on China to, again, cut excess steel production capacity. China said they would. Again.

The steelmakers gave that a hearty “put or show up.” Well, the American Iron and Steel Institute used more words but that was, essentially, the gist. Our own Stuart Burns also noted that steel is just one of many things that China overproduces and there really might not be much that Beijing can actually do to rein in the wealth of tiny producers of steel and refiners of diesel fuel in its far-flung provinces.

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So, trade wars, car wars and tariffs. Just another week in steel.

MonthlyMetalBuyingOutlook_March2016_210Our Metal Price Outlook for the month of March is now available to subscribers.

The MPO offers medium- and short-term trend analysis covering: aluminum, copper, nickel, lead, zinc, tin, and several steel forms – HRC, CRC, HDG, and plate.

It also features commentary and graphs identifying all the technical and fundamental factors driving price movements and includes monthly industrial buying strategies tailored for the US manufacturer.

Visit MetalMiner Forecasting to learn how to subscribe or for more information.

As you well know, the main cause of the commodities meltdown has been China’s slowdown. Since China makes up half of the world’s demand for commodities, the economic slowdown means lower demand which has led to a situation where a glut of materials can’t find a home.

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The role that China plays in commodity prices is so big that the future of metal prices is totally dependent on China. The longer it takes China to clean up its mess, the later metal prices will hit bottom. Currently, some key Chinese indicators we are tracking are giving us no reason to expect higher metal prices in 2016.

Trade Surplus

Imports to China dropped 8.7% to $143.14 billion in November from a year earlier, extending a slump in imports to a record 13 months, suggesting that government stimulus measures are failing to boost growth.

China Imports (millions $) Source: trading economics.com

China Imports (millions $) Source: TradingEconomics.com from Customs Administration Data.

Meanwhile, Chinese exports declined 6.8% to $197.24 billion in November from a year earlier, marking the fifth straight falling month. The fact that China is struggling to increase its exports demonstrates that global demand is weak and that China will have to find a more painful solution to balance its surplus. The trade surplus and the inability to find a home for the excess of materials flow will continue to keep a lid on China’s growth, depressing commodity prices.

China Exports (millions $). Source: tradingeconomics.com

China Exports (millions of dollars). Source: TradingEconomics.com

 Yuan Falls To Four-Year Low Against The Dollar

Chinese authorities want to see a smooth depreciation of the yuan/renminbi as China faces external pressure not to devalue its currency too quickly. A sharp depreciation would probably hurt the country’s credibility at the same time China wants to attract more foreign capital. In addition, it would raise criticisms that China is keeping its currency artificially low to encourage more exports.

Yuan versus dollar. Source: yahoo finance

Yuan versus dollar. Source: Yahoo Finance.

Recently, China’s central bank cut its reference rate to the lowest level since 2011. The yuan fell against the dollar to the lowest level since 2011. Although China has said that it has not allowed the yuan to slide to boost the economy or increase exports, it seems that the market is taking these developments as desperate actions from China’s government to help the economy, raising concerns among investors that the country’s slowdown might worsen.

China’s Equity Markets’ Slump Continues

We believe that equity markets are the best benchmark for the performance of China’s economy, or at least investors’ sentiment about China. We’ve analyzed before the link between China’s stock market and commodity prices. Currently, this link is even more noticeable.

China FXI ishares

China FXI shares continue to fall. Source: @StockCharts.com.

After the huge slump this summer, equity prices mildly recovered, but since October we see that equities are heading south again. The poor performance of Chinese stocks demonstrates that investors are still worried about the future of the country and not lured by its government actions.

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Contrary to what others are saying, we suspect that the slump in China’s stock market could continue, resulting in more fears and more sell-offs in commodities/metals markets.

Spot iron ore prices hit a fresh 10-year low after falling below $40 per metric last week.

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Weakening steel demand is causing a slump in finished products and raw materials prices. Our Raw Steel MMI didn’t take a break in December, falling 4.2% to 46 points, yet another all-time low.

Raw-Steels_Chart_December-2015_FNL

Early this year, many believed that the steel industry would recover during the second half of the year, even steel companies’ 2Q15 better-than-expected-earnings results raised optimism of a possible recovery. We didn’t subscribe to this view. The slump in steel prices continues and the fiscal 3Q15 financial results of most steel companies failed to cheer up investors.

The market has seriously underestimated the demand erosion that the economic rebalancing in China has created.

Overcapacity Still an Issue

Steel producers are still waiting for demand to meet the overcapacity built over the past few years. In addition, almost a decade with borrowing costs near zero has lead to a situation where there is still new capacity yet to be built and also existing capacity that doesn’t close. Low-cost credit has permitted even unprofitable production to be maintained, and while production levels are well off their peaks, there have been few permanent capacity closures.

Chinese Producers

The excess of production is still a concern in China, given the high levels of debt that producers there are dealing with. While many steel companies are able to cover debt costs out of operating profits, other companies are still borrowing from one bank to pay the older debt to another.

In November, Chinese steelmaker Tangshan Songting Iron and Steel, with an annual capacity of 5 million metric tons, said it would cut output due to debt pressures. Despite China cutting interest rates, as demand and prices collapse, banks are starting to tighten lending to the steel sector and losses are stacking up. Many mills are having a hard time extending their loans while they lower steel prices in competition to get contracts. The plunge in Chinese steel profits and and prolonged worries over weak demand might force more and more Chinese producers to close, removing exports from the global market before we see a recovery in prices.

Free Download: The November MMI Report

Steel prices, like the rest of base metals, were impacted in November by a strong dollar and the bearish sentiment that this adds to commodity markets. There are few to no indicators pointing to a recovery in steel prices anytime soon.

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With the Federal Reserve hinting at an increase in interest rates soon and a few metals gaining at least a little bit of their lost values back, the search for a market bottom is on.

MM-IndX_TRENDS_Chart_November-2015_FNL-TOPVALUE100This month we saw some encouraging signs that the metals undergirding our MMIs, such as Copper and Stainless, were posting gains but the overall trend still pointed to historically low prices. The underlying prices comprising our steel, aluminum, construction and renewables indexes all fell again.

Even the strong performers in this bear market, such as copper and stainless, come with a caveat: that their gain — for copper, a 1.5% increase and a 1.4% increase for automotive — or simply steady performance could very well be mere pauses in a year of losses, rather than true market bottoms. The Stainless and Rare Earths MMIs managed to hold their low price levels from October. Certainly good news for producers in this market, but not indicative, yet, of any real potential for future increases.

The Global Precious MMI showed a genuine increase of 4.1% with strong price performance from all its individual metal components. This includes increases in gold and silver as hedges against what some investors perceive as a future move to weaken the US dollar’s continuing strength against commodities and other currencies, an increase in interest rates.

It’s still too early to tell but maybe, just maybe, some of these metals are poised to bottom out.

This is part two of a series on how 3D model-based design and materials quantity take-off enabled the restoration of Wrigley Field in Chicago. See part one if you missed it.

Steel Fabrication and Erection

The structural design of Wrigley Field’s bleachers maintains the historic nature of the ballpark and presents some unique challenges for fabrication and erection. The design’s connections, column sizes and thicknesses required a complex fabrication, welding and installation plan.

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Lenex Steel of Indianapolis developed a 3D model for the fabrication, which took between 16,000 and 17,000 man-hours to complete the project. It required three different production foundries to supply the volume.

structural_wrigley_550

The historic restoration of Wrigley Field’s bleachers meant structural steel with many difficult installation angles and a veritable collision maze of supports, piping and electrical fixtures. Image: Jeff Yoders

Most of the steel came from supplier Steel Dynamics, Inc., which shipped its rough beams and long products from its facility in Jeffersonville, Ind., directly to Lenex for fabrication or to the site. Read more

Welcome to crazy MetalMiner’s low, low price week of falling metal prices, oil prices and devalued currency.

EVERYTHING MUST GO! Or Not…

…maybe prices will be lower next week? Who can tell in this crazy market? Check out our Metal Price Outlook for MetalMiner’s expert opinion. Free sample in the link.

Bears Everywhere

Our August MMI Report shows that nine of the 10 metals we track have hit an all-time low since we started tracking them in January 2012. It’s been a gradual fall for sub-indexes such as raw steels and renewables, whereas aluminum and copper suffered big drops this month that coincided with historic London Metal Exchange lows.

Three Best Practices for Buying Commodities

The strong dollar continues to drag down all commodities, shunting investment dollars elsewhere and depressing prices of investment metals such as gold, which hit a six-year low last quarter, according to the World Gold Council. Guess what else hit a six-year low? Oil, of course! Read more

MM-IndX_TRENDS_Chart_July-2015_FNL

There’s no reprieve from the bearish metals environment in this month’s MMI Report.

More Analysis: The July Metal Price Forecast

With the exception of the very specialized grain-oriented electrical steel (GOES) market and the Renewables MMI®, all of our indexes lost ground in June and could not gain traction amid falling commodity prices and a strong US dollar.

The one index that was steady from last month, which tracks raw material inputs of the renewable energy sector, has been stagnant for two years and, until trends show otherwise, its steadiness is more a measure of a lack of market activity than anything close to a turnaround or a new trend toward increasing prices.

The Stainless MMI is flirting with two-year lows and our Raw Steels index is up against lows not seen in years as well. Weakness in the Chinese stock market has put additional pressure on metals that were already reeling from the effect of the strong dollar. This is bad news for steelmakers, miners, refiners and smelters by itself, but coupled with increased supply in most of the metals we track, it’s become a real deterrent to profitability.

Moreover, both Europe and the US have higher-than-normal inventories of semi-finished products at service centers. Mill lead times remain short suggesting weak demand. Weak demand will continue to place downward pressure on prices.















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Screen Shot 2015-07-01 at 11.56.49 AMIt’s been a wild ride, but after three months of adding, subtracting, nip/tucking and perfecting, we are finally at the July metal buying outlook – the third and final complimentary MetalMiner™ Monthly Metal Buying Outlook – the only July metal price forecast and market commentary you will ever need.

Lisa Reisman, CEO, Azul Partners and executive editor, MetalMiner, is back with her tool kit and expert insight into the industrial metals aluminum, copper, nickel, lead, zinc, tin and steel (HRC, CRC, HDG, Plate) so you can formulate your short- and long-term buying strategy.

While this is the last complimentary Monthly Metal Buying Outlook, we are excited to announce the launch of the commercial product on Aug. 1.

Beginning in August, we will offer the Monthly Metal Buying Outlook for $1,299.00/year for individuals or $2,499.00/year for a multi seat license.

Check out the complimentary July report!

More About Lisa

A third-generation metals enthusiast, Lisa Reisman founded MetalMiner in 2007 – 13 years after she began trading semi-finished aluminum metals and 3 years after she was tasked by the CEO of a Tier 1 automotive company to save his company some money on their direct material spend. Lisa is an ex-big 5 consultant who built MetalMiner into the largest online publication for metal-buying organizations, and has the experience and depth of insight to produce this one-of-a-kind invaluable monthly report to impact your industrial metals purchasing strategy.