Articles in Category: Macroeconomics
plant for the production of iron and steel

plant for the production of iron and steel

Earlier this week, Russian steelmaker Evraz dropped with fellow metals producers as the FTSE 100 hit a two-week low.

According to a report from the Financial Times, Evraz stock dipped 4.5% Monday over fears that it could be negatively affected by steel prices trending lower. Since last week, Evraz shares have dropped 17%.

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Analyst Andrey Lobazov told clients Russia’s Federal Antimonopoly Service announced last month it was investigating steel makers throughout the country over their domestic pricing of rebar, which has skyrocketed 80% over the past year. The thought is the investigation will lead to lower rebar prices.

“Miners led the wider market lower as the threat of higher US interest rates put metals prices under pressure,” wrote Bryce Elder for the news source.

US Steel Prices Dip

According to a report this week from MetalMiner, U.S. flat-rolled steel prices have fallen $20-40/ton in August thus far. The reason? James May writes:

“While we don’t expect freefall just yet, we do expect HRC prices to be back in the high $300s/ton at some point next year.”

It’s becoming clear that anti-dumping duties may not be having their desired effect. May added: “While demand is flat, supply is on the increase. The high prices mean strong profitability and therefore domestic mills will maximize output. Meanwhile, the arbitrage is strong enough to justify shipping to the U.S. and there are enough holes in the anti-dumping duties to allow material in.”

You can find a more in-depth steel price forecast and outlook in our brand new Monthly Metal Buying Outlook report. Check it out to receive short- and long-term buying strategies with specific price thresholds.

 

Nickel symbol handheld in front of the periodic tableNickel futures traded down Tuesday this week due in part to a burgeoning overseas trend and subdued demand.

The London Metal Exchange was the source of this weakening trend with sluggish demand attributed to alloy makers in the domestic spot market, according to a report from The Economic Times.

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Nickel wasn’t alone in its LME downward trend as most industrial metals retreated on the heels of commentary from the Federal Reserve, which fueled speculation that U.S. borrowing costs will rise in the coming year. Read more

The month of August has seen the Indian government slap anti-dumping duties on the import of a variety of steel products from six countries including China, South Korea, Brazil and Indonesia.

Two-Month Trial: Metal Buying Outlook

In the first week, the import duty was imposed on hot-rolled steel products, while a few days ago, the duty was enforced on certain cold-rolled flat steel products from different countries to protect the domestic industry from cheap imports.

In the first case, anti-dumping duties $474-557 per metric ton were imposed on hot-rolled flat products of alloy or non-alloy steel from China, Japan, South Korea, Russia, Brazil and Indonesia, according to a government notification.

Coiledsteel_585

Imports of coiled steel will be heavily tariffed in India, too. Source: iStock.

The duty will be in force for six months until February 7.

Hot-Rolled Duties

An anti-dumping duty of $474 per ton was imposed on import of hot-rolled flat products of alloy or non-alloy steel of a width up to 2,100 millimeter with a width up to 25 mm from Korea and Japan.

According to an Indian Express report Korean firms affected by this were Hyundai Steel Co. and POSCO. Three Japanese companies — JFE Steel Corp., Nippon Steel and Sumitomo Metal Corp. are also on the list. A similar anti-dumping duty was slapped on imports of similar products from China. Exporters Angang Steel Company Ltd. and Zhangjiagang were among the hardest hit. Imports of the same from Indonesia, Russia and Brazil attracted the $474 per mt duty. Read more

In a speech in Tampa, Fla., Wednesday afternoon, Republican Presidential Nominee Donald Trump outlined a seven-point plan to bring millions of jobs to the U.S. that involved labeling China a currency manipulator.

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He proposed renegotiating unconfirmed trade agreements such as the Trans-Pacific Partnership and told his audience he would pull the U.S. out of the North American Free Trade Agreement. In a first, Trump challenged China for “illegal activities” and vowed to label the country he did real estate business with a currency manipulator.

“I am going to instruct my Treasury Secretary to label China a currency manipulator,” he said. “Any country that devalues their currency in order to take unfair advantage of the United States — and all of its companies who can’t (then) compete —will face tariffs and to stop the cheating.”

Getting Tough With China

Trump also vowed to instruct the office of the U.S. Trade Representative to bring trade cases against China, both in this country and at the World Trade Organization. Read more

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Source: Reuters.

LME aluminum has found its support level.

The Office of the U.S. Trade Representative recently sent to Congress a draft Statement of Administration Action for the Trans-Pacific Partnership, a procedural step necessary before a draft implementing bill is sent to Congress.

Two-Month Trial: Metal Buying Outlook

According to the fast-track law, the trade rep must send a draft SAA to Congress at least 30 days before it submits a draft implementing bill, but that does not mean it will be submitted in that timeframe, that’s just merely the minimum before a bill can be sent. The trade rep sent notification August 12th. Read more

Construction has been one of the few pockets of strength in the U.S. economy – until recently. Construction payrolls have declined since March and spending in May rose less than 3% from a year earlier, the lowest rate since 2011.

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Coming after strong growth of 10% last year, the question now is whether the sputtering is just a blip or something more lasting that portends a significant drag on the economy.

The Associated Builders & Contractors, American Institute of Architects and National Association of Home Builders‘ chief economists recently gathered in Washington, D.C., for a mid-year market forecast, outlining stable to strong residential and commercial project activity through 2017.

Each economist discussed present and future indicators for sector performance, including ABC’s Construction Backlog Indicator (8.6, 1Q2016); AIA’s Architecture Billings Index (52.6 in June) and the Construction Consensus Forecast (5.6% growth in 2017); and, the NAHB/Wells Fargo Housing Market Index (60, August 2016).

While all of the economists predicted growth in 2017, they had varying degrees of optimism.

Anirban Basu, ABC Chief Economist: “Nonresidential construction spending growth will continue into the next year with an estimated increase in the range of 3 to 4%. Growth will continue to be led by privately financed projects, with commercial construction continuing to lead the way. Energy-related construction will become less of a drag in 2017, while public spending will continue to be lackluster.”

Robert Dietz, NAHB Chief Economist: “Our forecast shows single-family production expanding by more than 10% in 2016, and the robust multifamily sector leveling off. Historically low mortgage interest rates and favorable demographics should keep the housing market moving forward at a gradual pace, but residential construction growth will be constrained by shortages of labor and lots and rising regulatory costs.”

Free Download: The August 2016 MMI Report

Kermit Baker, AIA Chief Economist: “Revenue at architecture firms continues to grow, so prospects for the construction industry remain solid over the next 12 to 18 months. Given current demographic trends, the single-family residential and the institutional building sectors have the greatest potential for further expansion at present.”

a handful of granular zinc on a white backgroundPreliminary data from the International Lead and Zing Study Group reveals the global market for refined zinc metal was in deficit from January to May this year with reported total inventories also declining over that same time frame.

Decreases in output from India, Australia, Peru, Ireland and the U.S. led to the significant 7.7% reduction in global zinc mine production in the first half of 2016, compared to the same time period in 2015.

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

“World output of refined zinc metal declined by 3.6% with reductions in India, Japan and the U.S. being partially balanced by increases in the Republic of Korea and Namibia,” the ILZSG report stated.

The report also stated that world demand for refined zinc metal grew 0.6% due to the rise in Chinese apparent usage, to the tune of 8.2%, that offset declines in Japan, Taiwan, the Republic of Korea and the U.S.

Lastly, Chinese imports of zinc contained in zinc concentrates fell substantially, by 26% with the country’s net imports of refined zinc metal growing by 112%.

Metal Prices Bullish on Global Stock Markets

Investors are becoming more positive on the health of the global economy, which could translate to industrial metals demand growth. The reason? Global stock markets continue to rise, and have already made up for their losses following Brexit.

You can find a more in-depth zinc price forecast and outlook in our brand new Monthly Metal Buying Outlook report. Check it out to receive short- and long-term buying strategies with specific price thresholds.

Three-month Aluminum on the London Metal Exchange hit a new 13-month high this week, retaking the $1,700 level.

3M LME Aluminum hits 13-month high

Three-month LME Aluminum hits 13-month high. Source: MetalMiner analysis of Fastmarkets data.

Recently we talked about the decline in aluminum exports this year. China exported 390,000 metric tons of unwrought aluminum in July, down 9.3% from July of last year. Chinese aluminum exports have fallen around 7% for the first seven months of 2016. Lower aluminum exports are supporting aluminum prices this year.

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Despite the fall in exports, the U.S. is considering asking for a reclassification of aluminum products to stop a flood of “fake semi-finished” aluminum products entering the global market. The reason is that Chinese aluminum exporters seem to be avoiding export duties while simultaneously qualifying for Chinese export subsidies for semi-finished products, for products that are being shipped specifically for remelting as unwrought. Read more

Black lead zinc ore closeup rocky textureThe International Lead and Zing Study Group released new findings that reveal refined lead metal supply exceeded demand during the first five months of 2016.

Furthermore, over the same time frame, total reported stock levels grew, as well.

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

“A decrease in global lead mine production of 5% compared to the same period in 2015 was mainly a consequence of reduced output in Australia and the United States,” the ILZSG report stated.

Refined lead metal production decreased by 1.9% despite increases in Kazakhstan and the Republic of Korea. The reason? Lower output from China, whose imports of lead contained in lead concentrates fell 19.9% compared to the same time frame in 2015.

Also in China, demand decreased by 12.4%, which contributed to the global usage decline of 3.3% overall. In Europe, usage climbed by 9.8% but in the U.S. and the Korea, usage fell by 1.2% and 7.5%, respectively.

Metal Prices Bullish?

Our own Raul de Frutos wrote this week that global stock markets continue to rise, indicating a positive outlook for the global economy and, in turn, industrial metals demand growth.

de Frutos wrote: “This is especially true when China’s stock markets rally. China’s stock market is possibly the best benchmark for China’s economy or at least investors’ sentiment about the Chinese economy. The slowdown in the Chinese economy (weak demand with too much capacity) explains why industrial metals peaked in 2011.”

You can find a more in-depth lead price forecast and outlook in our brand new Monthly Metal Buying Outlook report. Check it out to receive short- and long-term buying strategies with specific price thresholds.