Articles in Category: Commodities

2016-annual-buyers-guideWe are proud to announce the release of our 2016 Annual Metals Outlook report! This report contains the unique insight, analysis and tools you need as a metal buyer or manufacturer to lock in prices for the year ahead.

This free, downloadable PDF is one of the most popular pieces of content we offer and includes coverage of commodities markets, industrial metals market and key price drivers for aluminum, copper, nickel, lead, zinc, tin and steel (HRC, CRC, HDG, Plate).

From this report, you will learn the drivers that purchasing organizations will want to keep their eye on throughout 2016 in order to pinpoint exact price levels that should signal buyers to make the appropriate changes to their sourcing strategy for that particular metal.

By understanding these price drivers, any buyer will be able to react when the market gives clear signs that a new trend is developing, and stay hedged as long as that trend lasts. We wanted to make this report available to you earlier this year than we did last year, as we realize that now (fall 2015) is when our readers are budgeting their metal spend for the year ahead.

While the 2016 Annual Metals Outlook report is free of charge, we do recommend you pair it with a subscription to our Monthly Metal Buying Outlook report in order to get the most valuable, up-to-date information and analysis of market conditions.

Download your report today!

This week, our metals, along with the rest of the commodities, fought a bear market and the bear won. Commodities are getting beaten up by a strong dollar and falling demand. This bear has paws like dinner plates.

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How did commodities fight back? Other than not very well? Details emerged this week from China about how, exactly, Beijing will attempt to stimulate its sputtering economy.


The battle between the bears and the bulls has been lopsided lately.

China will spend at least 2 trillion yuan ($315 billion) to improve its power grid infrastructure over the 2015-2020 Five Year Plan period, according to another Reuters article that cites government sources. Read more

coppermineSouth Crofty, a once prolific tin mine located near Redruth in the UK, has been shut down for nearly 20 years but that soon may change.

Full-pocketed foreign investors recently met with local councillors to discuss reopening the tin mine there after it closed in the late ’90s due to plummeting tin prices and despite an abundance of natural mineral resources valued in the billions.

“There is a fortune down there underground,” Councillor Malcolm Moyle told the Western Morning News. “The question is about getting it out as cheaply and efficiently as possible and that is the issue at the moment.”

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!

Moyle stands apart as the most optimistic booster of tin mining returning to the region in the near future. It has been one hurdle after another for South Crofty since it closed in 1998 with Western United Mines currently owning the site.

Kevin Williams, mine manager of WUM at South Crofty, told the news source that a reopening of the mine will make a positive impact on both the local and national economies.

What About Tin Prices, Though?

The Wall Street Journal reported this week that tin prices are flat following the return of China-based traders following a national holiday. This situation weighed on copper prices, however, as they dipped due to this recent activity.

What does 2016 have in store for tin? We think it might be a good year for the metal as the planets could be currently aligning for a return to higher prices. Stay tuned to MetalMiner™ for the latest developments on tin as well as the other metals you source.

You can find a more in-depth tin 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:



Zinc prices surged overnight as Glencore cut output. Federal Reserve governors are still averse to raising interest rates over inflation fears.

Glencore Cut Causes Zinc Price Spike

Glencore PLC said on Friday it will cut 500,000 metric tons of zinc production, or around 4% of global supply, in its latest move to withstand weak commodities prices.

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Zinc prices have fallen 30% since May to 5-year lows. They rallied 12% on the news, which follows recent cuts in copper output and could signal metal prices are nearing the bottom of this bearish cycle, analysts told Reuters.

Inflation Fears Kept Fed From Increasing Interest Rates

Federal Reserve officials held off on raising short-term interest rates at their September policy meeting because of worries that inflation could remain stuck at exceptionally low levels, according to minutes released Thursday.

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The Wall Street Journal reported that the Fed has 2 goals of a robust labor market and low, stable inflation and policy makers concluded at the meeting that they were near their goal of “full employment,” but they weren’t convinced inflation is on its way back to their 2% target after undershooting it for more than 3 years.

While our Renewables MMI is the only major index that showed positive growth this month, essentially erasing last month’s loss and increasing 1.8% to 55 from a score of 54 in September, it’s still mired in the low price trend it’s been stuck in for the last 5 months.

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That mini-trend, itself, was a drop from the renewable materials’ previous price range when it fluctuated in the 60s, itself a low-price trend. That string of monthly prices lasted all the way back to 2012.

As we have noted before, the renewables MMI is a bit of an outlier index. Its supply and demand picture hasn’t changed that much since we began tracking it, with demand for wind turbine metals, electrical transmission raw materials and solar silicon still operating as fairly niche markets.

Renewables_Chart_October-2015_FNLHow the Lockout GOES

A lot of the component metals of the index continue to suffer price problems due to market gluts that have nothing to do with end user adoption, particularly steel plate. We also can’t discount the fact that supplies may be a bit more constrained this month, at least for US grain-oriented electrical steel, due to the now 7-week-long worker lockout by Allegheny Technologies, Inc., 1 of only 2 US GOES producers. ATI claims that production is carrying on as usual, but work stoppages such as these rarely happen without some in production. Even a perceived lack of supply of GOES could cause buyers who need it to stockpile the metal.

On the demand side, another application of silicon solar photovoltaic panels is being attempted in California, using the solar power generated from them to heat, desalinate and clean used farm water for irrigation in the Golden State’s water-deprived central valley, the source of much of the produce enjoyed by the rest of the nation. It’s another of many promising applications that we don’t see affecting prices anytime soon. We’ve been there before.

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We expect renewables to continue to trade in this range for the rest of the year and likely for much of the next until commodities, as a class of investments, experience a wider market recovery. If you are a buyer of silicon, GOES or other renewables we would caution against buying forward as prices have shown no sign that this is a bottom and another shoe could drop at anytime, even in this low range.

TThe Renewables MMI® collects and weights 8 metal price points used extensively within the renewable energy industry to provide a unique view into renewable energy metal price trends over a 30-day period. For more information on the Renewables MMI®, how it’s calculated or how your company can use the index, please drop us a note at: info (at) agmetalminer (dot) com.

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The monthly Stainless MMI® registered a value of 59 in October, flat from last month.

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Most base metal prices stabilized this month and nickel was exception. The metal is finding support just above its 2008 lows. Nickel is the metal closest to its recession level. This level could act as a psychological support level for traders, helping support prices in the coming months. However, we suspect this won’t be enough to hold prices longer-term if bad news keeps coming out of China.

China is still producing more than it can absorb. Weak Chinese demand and the fear that the worst has yet to come remains the overriding theme for nickel. Price-related closures in the nickel industry have been frequent over the past few months. However, as we’ve been pointing out, it’s hard to determine how many more mine closures we will need to see before prices find that elusive floor.

Stainless_Chart_October-2015_FNLBesides weak demand, investors remain worried about the high level of visible inventories. Not that inventory levels are a good price indicator but, for what it’s worth, inventories today are way higher than what they were when nickel bottomed out after the recession. Today’s LME nickel inventory levels appear closer to 450,000 metric tons, still near their all-time high of last June, while in 2008 nickel stocks fell below 60,000 mt.

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The inventory picture looks similar in the stainless market. Domestic and import mill inventories remain high, with domestic mill lead times remaining short. With inventory well-stocked and the end of the year approaching, service centers will keep trying to reduce inventories, hesitant to order more than what’s absolutely necessary.

What This Means For Metal Buyers

We’ll have to wait and see if prices are able to bounce off their record lows. So far, we only see a lack of upside momentum. Nickel prices might need more than that before making a significant rally.

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The Rare Earths MMI held steady with its September number, 18, as the bearish commodities environment continued to keep prices of the magnetic and specialty metals low.

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The index has trended in its low range for more than a year, now, as substitution and outright low demand have plagued the once high-flying trace elements used by cell phone producers and in military and industrial uses.

New Extraction Processes

Domestic producer Texas Rare Earth Resources Corp. was recently awarded a Broad Agency Announcement (BAA) research contract by the US Defense Logistics Agency’s Strategic Materials Division.

The Defense Logistics Agency is the Department of Defense’s largest logistics combat support agency, providing worldwide logistics support in both peacetime and wartime to the military services as well as several civilian agencies and foreign countries.

TRE recently successfully completed the first phase of a new separation process development, using the K-Technologies, Inc. (K-Tech) Continuous Ion Chromatography (CIC) methodology. The process allows TRE to remove light rare earth elements, lanthanum and cerium, from a leach solution in a straightforward, low-cost manner. The resultant aqueous product stream can be processed to make a commercially marketable mid/heavy rare earth mixed concentrate.

The Light and the Heavy of It

The heavy rare earths are the ones that are most desirable for end users and can’t be readily substituted. The light rare earths have become so unprofitable that domestic producer Molycorp, Inc., operating under bankruptcy protection, ended production at its Mountain Pass, Calif., light rare earths mine in late August. It will now only source the heavier minerals from its operations in China and Estonia.

This is certainly an interesting product development, but it won’t impact rare earths prices for some time, if at all. As we have said before, the rare earths market has been oversupplied ever since China removed export quotas on its producers, the bulk of the industry, and it’s difficult to predict a price turnaround without major shutdowns overseas or a shift in the muted demand picture.

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Until there is significant change in the market it’s difficult to predict much change, at all, in rare earths prices. They are holding at an all-time low but the upside isn’t thrilling, either, having charted below 30 on the MMI since June 2014. Without a significant change in the market, perhaps curtailed Chinese supply, it’s difficult to recommend rare earths investment.

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SilverChartoftheWeekSilver prices hit a 3-month high on Tuesday. The move is encouraging and prices could continue to rally in the short-term, but the metal remains in a long-term downtrend. Silver will likely have a hard time reaching $17.50 per ounce. Gold prices are still lagging. Source: MetalMiner analysis of data.

Another major financial institution cut its global growth forecast yesterday and US construction unemployment reached a new milestone.

IMF Cuts Growth Forecast

The International Monetary Fund cut its global growth forecasts for a second time this year on Tuesday, citing weak commodity prices and a slowdown in China and warned that policies aimed at increasing demand were needed.

The IMF, whose annual meeting started in Peru this week, forecast that the world economy would grow at 3.1% this year and by 3.6% in 2016.

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Both new forecasts are 0.2 percentage point below its July forecast and are 0.4 percentage point and 0.2 percentage point below its April outlook, respectively.

AGC: Construction Unemployment Lowest in 15 Years

The number of unemployed workers with construction experience dropped to the lowest total for September since 2000, as hiring continued to slow despite robust demand for construction, according to an analysis by the Associated General Contractors of America.

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Association officials cautioned that the hiring slowdown most likely reflects a lack of available workers that could lead to project delays unless more students and workers join the construction sector.

The monthly Aluminum MMI® registered a value of 76 in October, a decrease of 1.3% from 77 in September.

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Aluminum prices were more stable in September, only falling slightly from the previous month. This price stabilization is normal after 4 consecutive months of declines. Upside momentum is still lacking and it seems like the bears are firmly in control of this market. The aluminum trend keeps pointing down with no sign of a turnaround.

Aluminum_Chart_October-2015_FNLChina is Still Overproducing

The Aluminum Association expressed strong concern when the China Non-Ferrous Metal Industry Association (CNIA) called for the removal of a longstanding 15% tax on exported primary aluminum. This would increase the margins of Chinese exporters, potentially exporting more aluminum to international markets. Even with the tax in place, some in the US believe that aluminum producers in China are illegally mislabeling extruded products as semi-finished to avoid exports on billet.

Aluminum exports are up 22% on the year-to-date. Exports dropped over the past 2 months but production still looks high in China, so the drop in exports likely relates more to weaker global demand. Some analysts are waiting for a rebound in exports when final reports from last month come out.

Another interesting highlight of September was that Alcoa, Inc. will split itself into 2 companies. The firm has found that its legacy smelting business, the company’s vertically integrated structure, is not the advantage it once was.

One half retains the Alcoa name and comprises the legacy business of bauxite mining, alumina production and primary aluminum smelting. The second half of the business, or the “value add” business, is yet to be named, although it’s believed to include much of Alcoa’s specialty aluminum business and recent acquisitions such as titanium fabricator RTI.

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Two months ago we mentioned the slide in Alcoa shares. Even though the company made good acquisitions and investment in downstream value-added activities, its stock couldn’t buck the falling trend in aluminum prices. On top of that, premiums fell in September below $0.07/lb for the first time since January 2012, hurting the margins of Alcoa and the rest of the US aluminum producers.

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