Articles in Category: Metal Prices

Monthly Metal Buying Outlook for Sept 2015MetalMiner’s Monthly Buying Outlook report for October is now available. Sharpen your sourcing strategies for buying aluminum, copper, nickel, lead, zinc, tin and multiple forms of steel, complete with our coverage of drivers, market commentary, polished charts and more!

If you’re a manufacturer in North America that’s buying multiple metals, this is the ideal one-stop-shop report for you.

This month, you’ll learn:

  • Whether the Federal Reserve’s decision not to raise interest rates matters for metal prices
  • To what degree the China Dragon drives the Global Bear(ish commodity markets)
  • What the steel plate price tumble means for ferrous markets

Plus a short- and medium-term industrial buying strategy for the rest of the metals that you buy.

Individuals, small- and mid-sized manufacturers are encouraged to subscribe to our annual buying outlook reports. You can sign up at any time and receive the next 12 monthly reports emailed directly to you. Learn more and subscribe today!

Although physical demand in China and India have picked up, gold prices remain at low levels and are unable to make substantial upside moves.

Free Sample Report: Our Monthly Metal Buying Outlook

We really don’t pay that much attention to gold’s demand because gold is the only commodity where physical annual demand is only a tiny fraction of total supply available. Unlike base metals, where physical demand plays a big role because of their industrial uses, shortages of gold caused by physical demand never happen.

For this reason, the price of gold is almost entirely dependent on the factors that drive traders’ psychology, such as inflation and the dollar. Despite all that, we still see analysts writing lengthy reports analyzing factors with zero predictability, such as jewelry usage and annual gold production.

Gold since 2014

Gold struggling to overcome resistance at $1,160 per ounce. Source: MetalMiner analysis of data.

Since August, gold prices haven’t moved much. They have traded between $1,160 per ounce and $1,080 an ounce. As we pointed out in July,  gold broke a key support level and now prices have some resistance to overcome before they can attempt to advance.

Free Download: Latest Metal Price Trends in the MMI Report

Gold is considered a safe-heaven asset and certainly equity markets are not in their best shape at the moment. However, it’s hard to imagine gold prices rising while commodities markets, overall, fall and the dollar is strong. The same applies to silver, which is showing the exact same behavior.

SIlver struggling to break above resistance at $15.6/oz

Silver struggling to overcome resistance at $15.6 an ounce. Source: MetalMiner analysis of data.

What This Mean For Metal Buyers

Gold and silver prices remain weak and it’s difficult to see them increasing while commodities keep falling and the dollar remains strong. Buyers should keep an eye on $1,160 per ounce and $15.6 an ounce levels. A break above these levels would signal a change in the direction of the short-term trend.

You read right, dear readers – MetalMiner unveiled its forecast of average 2016 prices for aluminum, copper, nickel, lead, zinc, tin and hot-rolled and cold-rolled steel yesterday, and you may be surprised that we’re more bearish than the big banks (the Standards, Macquaries, Goldman Sachses and the like) and their 2016 average price forecasts.

And all of these average price forecasts can be yours…as soon as our Annual Metal Buying Outlook is published and ready for download. (Hint: it could drop as early as the end of this week. We’ll update this post with the link to the report, so bookmark us!)

As far as MetalMiner’s departure from the banks’ forecasts, co-founder and editor-at-large Stuart Burns had this to say recently: “It’s definitely a bullish tone that bank and senior research analysts have taken…in our view, there’s still plenty of excess capacity out there, demand is weak, and the dollar is strengthening,” and those factors, ultimately, may make many of the banks’ forecasts turn from bullish to bearish sooner rather than later.

We’re not the only ones on the block with a bearish outlook – just yesterday, the WTO released updates on its 2015 and 2016 global trade outlook. According to their full release, WTO economists have lowered their forecast for world trade growth in 2015 to 2.8%, from the 3.3% forecast made in April, and reduced their estimate for 2016 to 3.9% from 4.0%.

WTO Trade Forecast Revised Downward

Some main takeaways:

  • The same exact things we at MetalMiner have been hammering home. Falling import demand in China, Brazil and other emerging economies; falling prices for oil and other primary commodities; and significant exchange rate fluctuations drove the revisions downward. (What’d we tell ya?!) Also, the WTO goes so far as saying, “Risks to the forecast are firmly on the downside, the most prominent being a further slowing of economic activity in developing economies and financial instability stemming from eventual interest rate rises in the United States.”
  • China, China, China. Globally and regionally, China’s lower economic growth rates and falling demand have really upset the apple cart. According to the WTO, Asian export and import growth for 2015 has been revised down as slower growth in Chinese imports has reduced intra-regional trade. Also, China’s struggling import demand plays a big role in world merchandise trade volume, which is expected to rise only 2.8% in 2015 – lower than the previous estimate of 3.3%.
  • Trade took H1 2015 hits – just like the overall commodities and metals sectors. As the WTO puts it, “At the time of our last forecast in April 2015, world trade and output appeared to be strengthening based on available data through 2014 Q4. However, results for the first half of 2015 were below expectations as quarterly growth turned negative, averaging ‑0.7% in Q1 and Q2.” Yep, the first half of 2015 was definitely not great for the metals sector, either.

For more on what US and global construction sector indicators can tell us, make sure you check out my colleague Jeff’s rundown today.

Don’t forget, come back for our annual 2016 outlook!

The Architecture Billings Index slowed down in August after showing mostly healthy business conditions so far this year. An economic indicator of construction activity, the ABI reflects an approximate 9 to 12-month lead time between billings by design firms and construction spending.

Free Sample Report: Our Monthly Metal Buying Outlook

The American Institute of Architects (AIA) reported the August ABI score was 49.1, down from a mark of 54.7 in July. This score reflects a decrease in design services (any score above 50 indicates an increase in billings). The new projects inquiry index was 61.8, down from a reading of 63.7 the previous month.

Employment Up, Billings Down

Construction employment has been generally healthy in the US this year. Employment on construction projects increased in 163 of 358 metro areas in August compared with year-ago levels, but it fell in nearly as many with 153 showing a loss over the previous year, according to the Associated General Contractors of America report. Florida’s metro areas saw an increase of 7%, while 2 Texas metro areas saw steep declines.

The recovery in construction employment looks every bit as fragile as that of the overall economy. Fixed-asset investment growth in China served as the key growth engine across the broader basic materials space for roughly the last 15 years.

Morningstar: US Construction a Safe Haven

With that growth engine sputtering out, pockets of growth in the basic materials sector, including metals, have become scarce. Morningstar‘s outlook for residential and nonresidential construction in the US points to an attractive long-term growth story. Really? Why?

Read more

Zinc continued its downward slide last week as it hit a 5-year low last Monday due to fears about rising stocks and falling demand in, you guessed it: China.

The base metal fell by its maximum daily limit of 5% in trading on the Shanghai Futures Exchange as a result, reported the Financial Times. The rising stocks can be placed at London Metal Exchange warehouses in New Orleans, which climbed nearly 60% over the past month, showcasing just how much zinc could be unloaded in the market.

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 recent increase in LME inventory, particularly in New Orleans, appears to have drawn the market’s attention to just how much zinc is sloshing around,” Leon Westgate, an analyst at ICBC Standard Bank in London, told the news source.

This increase in New Orleans inventory, some believe, can be attributed to Glencore liquidating its stocks after the company announced it will reduce its working capital by $1.5 billion over the next year.

From Bulls to Bears

Zinc had some of the strongest fundamentals to begin 2015, signaling it as one of the strongest performers of any metal. However, the remainder of this year has not been kind to zinc as it is now the second-worst performer behind only nickel.

As we reported earlier, there is simply more zinc out there than we previously thought. The combination of a rise in stocks and drop in prices, plus the Glencore situation, have investors wary that zinc inventory is much more plentiful than originally believed.

You can find a more in-depth zinc 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:

Once in awhile, it is interesting to take a different view. To step back from the day to day and look at situations from a wider or longer-term perspective. This is as true of commodity markets as it is of life, so a recent Financial Times Short View report on commodity prices makes for particularly thought-provoking reading whether you agree with its conclusions or not.

Free Sample Report: Our Monthly Metal Buying Outlook

The report is presented, as most of the FT’s excellent Short View reports, in video format aided for clarity with charts that unfortunately we cannot exactly replicate here but with the assistance of Index Mundi we can provide some good examples.

Prices Through the Centuries

The report is not based on the FT’s own research, but rather on that of BCA Research who have compared a basket of commodities prices against consumer prices since 1680, and found that over time the 2 do not fundamentally diverge. Although demand for commodities do, for a variety or reasons, surge from time to time, the resulting spike in prices stimulates the market to respond in a number of ways such as investing in more mines, driving technological developments to extract metals more efficiently or more cheaply and, of course, to find alternative materials that reduce the original demand. Read more

Glencore shares plunged on Monday as much as 32% during the afternoon. Shares of the company are now down near 80% on the year-to-date.

Free Download: Latest Metal Price Trends in the MMI Report

Shares crashed after one investment bank, Investec, warned of how high risk is for Glencore’s earnings outlook, saying that if commodity prices don’t recover, Glencore could end up solely working to repay its debt obligations.

Glencore stock 1 year out

Glencore stock 1 year out. Source:

Chinese Construction Collapse

After the global financial crisis of 2008, China launched a massive economic stimulus program, investing in housing, public infrastructure and rural development projects. In response, Glencore and other miners, via the cheap debt of the time, raced to increase production to take advantage of China’s expansion program.

But mines take a long time to build, and what miners didn’t know is that soon after these new mines could start producing, China’s economy would start slowing. In particular, this year we are witnessing the consequences of all that excess capacity built over the past 3 years.

Glencore is aware of the problem. The company already announced a series of measures that would, in theory, reduce its nearly $30 billion in debt by a third. One of the measures included selling nearly $2 billion worth of inventory. Unfortunately for Glencore, weak Chinese demand and sinking prices for commodities such as copper and zinc, minerals that are crucial to the company’s earnings, are causing the miner headaches when it comes to boosting investor confidence.

Free Sample Report: Our Monthly Metal Buying Outlook

Further commodity weakness will challenge Glencore’s ability to pay back its debt and the recent crash in the value of its shares is telling us that investors are not very optimistic about a recovery for commodity prices.

lisa reisman metalminer headshot

Lisa Reisman

This is your last chance to register for Wednesday’s webinar and learn price targets and specific sourcing strategies for the metals you buy: aluminum, copper, tin, lead, zinc, nickel and various forms of steel.

Our own Lisa Reisman, executive editor, MetalMiner™ will be presenting her data and research Wednesday at 1 p.m. CDT. We will be answering YOUR questions and hearing YOUR opinions out on where the metals market is headed in October and into 2016.

If you are a North American manufacturer then this webinar is a must-attend. We will equip you with the tools you need to effectively analyze the fundamental drivers of price and macroeconomic factors at play.

Register now!

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

Free Sample Report: Our Monthly Metal Buying Outlook

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.

The DLA Strategic Materials Division is charged with maintaining cognizance of worldwide strategic and critical materials’ supply chains from the source to final assembly and evaluating the capability of these supply chains to support national defense and essential civilian industries, and developing mitigation solutions when access to materials are insufficient to provide support for national defense and emergency response.

In May, Texas Rare Earths successfully completed the first phase of its stage 2 separation process development, using the K-Technologies, Inc. (K-Tech) Continuous Ion Chromatography (CIC) methodology. By doing this, K-Tech removes the light rare earth elements, lanthanum and cerium, from purified pregnant leach solution (PLS) feedstock 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.

Free Download: Latest Metal Price Trends in the September MMI Report

“Removing the low-value lanthanum and cerium at an early stage with minimal separation effort bodes well for the overall efficiency and economy of this process and also provides us the option of making a marketable, praseodymium/neodymium plus mid/heavy rare earth concentrate,” said Dan Gorski, CEO, Texas Rare Earths. “We intend to examine the economic possibilities of producing and marketing such a concentrate. However, our primary objective over the short term is to use the CIC process to further refine the mid/heavy concentrate and to produce individual high purity rare earth element products that meet all commercial specifications.”

China’s manufacturing sector numbers fell to a six-and-a-half-year low of 47 in September, adding worries over the world’s largest consumer and producer of commodities.

Boom Goes Bust

The commodities boom that started in the early 2000s has clearly come to an end, sending metal prices to the floor. The question now is: How low can they go?

Base metals ETF near lows of 2009

The base metals ETF near its lows of 2009. Graph: MetalMiner analysis of data.

Industrial metals have fallen significantly since 2011 and if this continues, they will soon tie the lows of 2009. Many analysts expect to see prices falling only to the the lower levels of the US recession, arguing that prices should find a bottom soon. However, we believe that we are in a completely different market and there is little to compare it to. Read more