Articles in Category: Commodities

In a graphic example of how ripples from the stone that was the Volkswagen emissions cheating scandal are spreading across the rest of the automotive pond.

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Johnson Matthey’s share price dropped further during September when the scandal first brook, but has since recovered as it dawned on investors that the result of VW’s emissions scandal is likely to be tougher controls… even if there is a marked swing to gasoline engines.

JM-share price

Source: Thomson Reuters

Johnson Matthey was already in trouble due to a combination of falling platinum group metals prices and slowing demand, notably in key automotive markets such as China, for jewelry and in the oil industry as investment has been cut back. Read more

The World Platinum Investment Council issued a recent report on the state of the market which makes interesting reading in the wake of two major issues in the PGM market.

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First, on the supply side the resolution of last year’s five-month miners strike led to a surge of metal supply this year, up 20% for the comparable period. That growth should level off in 2016 with only a 2% increase predicted on the back of growing supply from Zimbabwe. Read more

Steel imports into the US were up in October and Saudi Arabia is under pressure to turn off its spigots from fellow OPEC nations.

Steel Imports Up

Based on preliminary Census Bureau data, the American Iron and Steel Institute reported today that the US imported a total of 2,987,000 net tons (nt) of steel in October 2015, including 2,258,000 nt of finished steel, up 5.4% and 1.4%, respectively, vs. September final data.

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On the year-to-date, through ten months of 2015, total and finished steel imports are 33,889,000 and 27,438,000 nt, respectively, down 8% and 2% respectively, vs. the same period in 2014. Annualized total and finished steel imports in 2015 would be 40.7 and 32.9 million nt, down 8% and 2% respectively vs. 2014 if the same levels persisted in November and December.

Saudi Arabia Under Oil Pressure

OPEC members including Iran have decided Saudi Arabia’s effort to force out smaller US shale producers by overproducing and lowering global oil prices was a failure and are preparing to press the Saudis directly to pull back on production at the group’s meeting this week.

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The Wall Street Journal reports that discontent is even building inside Saudi Arabia over the strategy.

Welded carbon steel pipe

Source: Adobe Stock/Sasint

With commodities as a whole experiencing a bearish 2015, many have turned to steel as the obvious scapegoat for the price declines. But despite overcapacity and slumping prices, don’t expect miners and producers to cut supply just yet.

According to a report this week from Bloomberg Business, a Macquarie commodities analyst traveled to China to better gauge the steel industry and the steps it has taken or will take to offset slumping prices, and the results were underwhelming.

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“The bank has previously highlighted the steel industry as a poster child for commodities woes, with particular emphasis on overcapacity in China,” wrote Tracy Alloway for the news source. “In the face of slumping metals prices, the pressure is on miners and producers to cut supply. Unfortunately for global commodities prices, a chunk of the world’s metals producers seem reluctant to do so—even in the face of losses.”

The reason for this? Leveraging alternative solutions to offset losses, including encouraging traders to prepay for their buys and attempting “VAT evasion among small and private mills,” the news source states.

The Outlook for Steel, Long-Term

We recently reported that most steel buyers look at short-term steel cycles to gauge where the market is. However, it can be beneficial to look at long-term cycles, and to do that we have to study history. Based on previous cycles, we could be facing 15-20 years of stagnation and decline centered around mill closures, low prices and job losses. Judging from the same history, however, the light at the end of the tunnel shines on new and improved steelmakers and minimills.

How will steel and base metals fare for the remainder of 2015 and into 2016? You can find a more in-depth steel 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:


This Thanksgiving Holiday, all of us here at MetalMiner would like to share what we’re thankful for this year.

(Mostly) Transparent Markets for the Metals You Buy

While it’s been a great year for buyers, with low commodity prices across the board, we are constantly reminded that prices are only as correct as the information behind them.

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This is the first full year for the new LBMA gold and silver prices. More open and transparent processes for precious metal prices can only help purchasers in the long run by giving them more information about what goes into the prices they are quoted. We are thankful for market transparency in all its forms.

Happy Thanksgiving from MetalMiner!

Happy Thanksgiving from everyone here at MetalMiner!

That’s why our own MetalMiner IndX is updated daily with over 600 price points from domestic and multiple international markets. We’re always happy to add more open and transparent price points. Read more

The London Metal Exchange (LME) launched three new contracts this week — LME Aluminium Premiums, LME Steel Rebar and LME Steel Scrap, the first new contracts to be offered by the Exchange in more than five years.

You can now hedge aluminum physical delivery premiums using an LME contract. Source: iStock.

You can now hedge aluminum physical delivery premiums using an LME contract. Source: iStock.

The two steel contracts are cash-settled against physical Turkish scrap and rebar price indexes as opposed to the current steel billet contracts that are settled by physical delivery and have largely proved to be  a failure since launch.

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Why, we might ask, would these new contracts prove anymore successful? Well acknowledging the failure with billet, the LME has worked assiduously to garner industry support both in the shaping and specification of the new contracts. Goldman Sachs, for example, is on the LME’s steel committee and major trading firms like Stemcor have publicly stated they intend to be actively involved from day one, although they still add the caveat “subject to market conditions and liquidity.”

Liquidity was always a major issue for the billet contract. It never secured anywhere near enough interest from the trade to generate sufficient volume and, hence, a fair market price.

Rebar and Scrap

The steel scrap and rebar contracts will be traded on LME Select in small lots of just 10 metric tons making them more accessible for smaller market players, while, at the same time, the LME is offering discounts for volume trades to encourage liquidity. Read more

Typically steel buyers look at short-term steel cycles — inventory cycles. These are what drive short-term pricing trends. Let’s face it. Most buyers think in terms of what their next purchase will be or, maybe at this time of year, the next year’s requirements.

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However, from time-to-time, it’s worth sitting back and looking at the big picture; the long-term; over-the-horizon. It’s a useful thing to do. It provides some perspective.

The chart highlights global steel output since 1950. Very simply, we can look at 3 cycles.

  • 1950-73 – steady growth. Post-war investment in North American infrastructure; the development of the automobile; reconstruction in Europe and the emergence of Japan. All drove steel production and consumption higher.
  • 1973-98 – stagnation. The oil shock; light-weighting in cars, packaging, construction and increased efficiency. The end of investment in Europe and North America led to demand falling and only partially offset by the growth in emerging Asia.
  • 1998-2014 – the emergence of China. A country of 1.4bn people industrialised and moved from the country to the city; a development model specifically based on steel-intensive capital investment.

Global Crude Steel Production ( 000 metric tons)


Steel prices since 1950. Source: Steel-Insight.

….and now?

The first two cycles lasted 25 years; the last one has been 15 years.

Europe, North America and Japan (25% of global steel consumption) are mature consumers where steel consumption will perhaps grow 1% over the longer-term, and even that is under threat from aluminum in the automotive industry and lightweighting and efficiency elsewhere.

China (50%) has peaked. Construction is 70-80% of demand and that is a one-off use of steel. Once cities and roads are built, they don’t need to be renewed for a while. Steel consumption has peaked and could fall by 20% from here over the next decade.

Emerging economies (25%) were expanding, but in many cases, they were investing the super-profits of commodity gains from oil, metals and agriculture — from China. Without that bulwark, capital expenditure may plummet.

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That means we could be in for a long period of stagnation and decline — 15-20 years based on previous cycles. It will be marked by mill closures, job losses and low prices. Yet the last period of stagnation gave birth to the minimills and a whole new dynamic group of steelmakers. It is not all doom and gloom.

Steel-Insight is a steel industry price-forecasting publishing company, based in Toronto. James May, the firm’s managing director, has been a steel industry analyst for 15 years and advises some of the major global steel trading companies, steel producers and steel consumers on the outlook for steel pricing and industry trends. For more information, visit

The Midwest aluminum premium has risen as fears about costs set in after Alcoa’s announcement that it is shuttering much of its North American smelting capacity. Despite cuts in China, zinc is still massively oversupplied.

Midwest Premium Rises on Alcoa Shutdowns Announcement

The US Midwest aluminum premium has risen to its highest level in six months, traders told Reuters on Tuesday, but the current forward curve and Alcoa‘s plans to save a US smelter from curtailment were seen pressuring prices in the near-term.

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The premium, paid on top of London Metal Exchange (LME) futures prices for physical delivery in the US, has risen to around 8.75 cents a lb., the traders said, citing the continued impact of Alcoa’s plans to shutter the bulk of its US smelting capacity, announced Nov. 2.

Chinese Cuts Fail to Balance Zinc Market

Output cuts announced by Chinese zinc smelters last week will do little to tighten next year’s global supply-demand balance in refined metal because already-known mining cutbacks would have forced smelters to reduce production anyway, Reuters reported.

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On top of that, hard-hit prices will fail to get much of a lasting boost in coming months due to a glut of world inventories, although there may be spikes of short-covering, analysts and investors said.

In early October I received a phone call from a well-known consultant/advisor within the domestic steel industry. He wanted to know if we were urging our readers to begin to hedge steel (meaning immediately hedge, as opposed to creating a hedging program).

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My gut reaction to the question was to dodge it because I wanted to understand why he asked it. Our conversation went along the lines of this:

Him: Hi, Lisa. I heard you speak at the recent Steel Market Update event. I was just wondering if you were urging your readers to hedge steel.

lisa reisman

MetalMiner Executive Editor Lisa Reisman

Me: Why do you ask?

Him: I think there is a lot more steel price upside risk than downside risk.

Me: I don’t disagree with you, in that prices are on the low end of the range relatively speaking, but in answer to your question, no, we are not telling our readers to hedge right now.

Him: Why not?

Me: Because we don’t see signs of a market bottom. Prices would have to stop falling and begin rising, crossing certain levels before we’d suggest companies hedge.

Him: So you don’t see upside risk?

Me: We don’t try and time the absolute lowest point of the market and then lock-in. We try to identify when the trend has shifted (from bear to bull) and take cover, then buy forward or hedge. Until we see evidence of a trend shift — and the market still looks negative to us —we don’t pay much attention to upside/downside risk, per se. It’s not relative in driving industrial buying behavior.

Source: Adobe Stock/Yury Zap

Source: Adobe Stock/Yury Zap

Is This Analyst Wrong?

That’s probably somewhat of an irrelevant question. He can be both right and wrong. Right in that, yes, there is likely more upside risk (e.g. steel can likely go a lot higher vs. a lot lower) but from an industrial metal buying perspective — I give it the big SO WHAT? Read more

Three-month Nickel on the London Metal Exchange fell on Monday to a new 12-year low, falling as low as $8,175 per metric ton. The metal is the biggest loser on the LME this year, losing around 45% of its value on the year-to-date.

3M LME Nickel hits 12-year low

Three-month London Metal Exchange nickel has now hit a 12-year low. Source:

This year, we heard many times that since more than 50% of producers were underwater, prices were due for a recovery. But once again, the market has proven that production costs don’t determine the price of a metal, it’s what people are willing to pay that determines it.

Why is Nickel Still Falling?

Nickel has fallen on a poor outlook for its struggling steel sector as well as a strong dollar and China’s slowing growth. These two have also driven the entire metals complex down this year.

Nickel is the first metal falling below its 2009 low. With this, we believe the chances of other metals suffering the same fate have increased. Some base metals like copper are still trading well above their recession’s lows. Aluminum however, could be next.