Articles in Category: Metal Prices

The Federal Reserve’s No. 2 official said there is “good reason” to think sluggish US inflation will firm up and move back toward the central bank’s 2% annual target, touching on a significant assessment facing the Fed ahead of its September meeting.

Free Sample Report: Our Monthly Metal Buying Outlook

Vice Chairman Stanley Fischer told participants at the Federal Reserve Bank of Kansas City’s annual economic symposium in Jackson Hole, Wyo., that inflation likely will rise to the central bank’s annual target of 2%. This is despite low oil and import prices which are keeping prices of everything else lower.

Market Stability?

“Given the apparent stability of inflation expectations, there is good reason to believe that inflation will move higher as the forces holding inflation down – oil prices and import prices, particularly – dissipate further,” Fischer said.

Many, including my colleague Stuart Burns, wrote that it would be unlikely for the Fed to pursue rate hikes, at least in the short term, after China’s stock market collapse. The head of the Fed’s New York branch, William Dudley, even said that the argument for a rate rise in September had diminished, markets took Fischer’s comments as relatively bullish, especially compared to Dudley’s.

Fischer’s comments seem to indicate that the Fed could raise rates as early as its September meeting.

In an interview last week with CNBC, Fischer said that before the recent turbulence in global financial markets, “there was a pretty strong case” for a rate hike at the September 16-17 meeting, though it wasn’t conclusive. “The Fed’s made it perfectly clear that the first rate hike doesn’t mean there will be a second or a third within three to six months – we just need to get our first one out of the way.”

What This Means for Metal Buyers

If that first rate hike does come in September, then we could expect lower prices for many of the metals we track. Higher interest rates tend to lead to supply increases in storable commodities such as aluminum and copper; they make it more appealing for miners to pull ore out of the ground today instead of tomorrow.

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

They also goad speculators into moving out of spot commodity contracts and into something with a better yield.

 

SMU Steel Summit 2015

Meet us in Atlanta for SMU’s Steel Summit Conference!

The Steel Market Update 2015 Steel Summit Conference invades Atlanta next Tuesday and Wednesday, and the MetalMiner™ team will be there in full force.

Lisa Reisman, CEO, Azul Partners and executive editor, MetalMiner, is presenting our September steel price forecast, as part of our Monthly Buying Outlook report, which is now available with an annual subscription.

Also presenting at the event is Serafino Capoferri, London Commodity Consultant, CRU; Peter Meyers, executive vice president, Metalico; Gaurav Chhibbar, raw material manager, Cargill Metals; Timna Tanners, research analyst, Metals and Mining Bank of America Merrill Lynch; and John Anton, principal economist, Steel IHS Inc., among others.

This is the annual event for steel producers, manufacturing companies, end-users and service centers to come together and discuss the current issues affecting the metals industry.

Learn more and register today!

The China Non-Ferrous Association announced this week that leading Chinese aluminum smelters intend to axe 2.4 million metric tons of capacity in the next couple of months.

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Nearly all the world’s net gain in production capacity has come from China this year and, while estimates vary, a portion of the industry, even in China, is certainly losing money at current prices.

That is the case in the rest of the world, too, with UC Rusal and Alcoa, Inc. both contemplating further closures. Inside China, the growth of new smelter capacity has been in the northwest, often based on captive, low-cost coal deposits for power generation and utilizing the latest smelter technology that, combined with large economies of scale, has made these Chinese smelters some of the lowest cost of production in the world.

aluminumingots_500

The aluminum surplus, and a weak economy at home, have finally forced Chinese smelters to cut production.

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Construction costs fell further in August, according to IHS Inc. and the Procurement Executives Group (PEG).

IHSPegAugust550

The current IHS PEG Engineering and Construction Cost Index (ECCI) registered 45.7 this month, down from 48.8 in July and well below the neutral mark of 50. The headline index has not indicated rising costs since December.

Free Sample Report: Our New Monthly Outlook

The pricing environment appears to be deteriorating with the current materials/equipment index registering its lowest reading since. The underlying detail shows falling prices for nine of the 12 individual components tracked by the survey.

Prices for steel products continued to fall and showed particular weakness with the indexes for fabricated structural steel, carbon steel pipe, and shell and tube heat exchangers all indicating that prices are falling and that price declines have become more widespread.

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

“Steel is a buyers’ market and will remain so,” said John Anton, principal economist, IHS Pricing and Purchasing, “Current import prices are far cheaper – up to 40% – than domestic prices, but if you are doing public projects with Buy America requirements, you cannot use them. However, imports can drag down prices your rivals pay, putting pressure on mills to give you similar deals.”

Access the original IHS research here.

Two major materials handling companies merged as equals and the last US rare earths mine has shut down.

Konecranes, Terex Agree To Merge

Konecranes and Terex Corp. have announced a merger of equals.

The combined company, to be called Konecranes Terex Plc. Both companies are global lifting and material handling solutions companies. They have estimated combined 2014 revenues $10.0 billion and EBITDA of $845 million. The combined company will maintain headquarters in Hyvinkää, Finland as well as Westport, Conn.

Molycorp Shuts Down Mountain Pass

Molycorp, Inc. announced today that it will transition its Mountain Pass Rare Earth Facility to a “care and maintenance” mode while it plans to continue serving its rare earth oxide customers via its production facilities in Estonia and China. Customers of the company’s rare earth magnetic materials, as well as its rare earth-based water treatment products, will not be impacted.

Rare earth production at the Mountain Pass facility will be suspended no later than October 20, 2015, and the site, including idled machinery and equipment, will be maintained to ensure it remains in safe and stable condition, and that government regulatory commitments can be met.

Rare earth pricing, which has declined dramatically over the past four years, was a key factor in the decision to suspend rare earth production at Mountain Pass, company officials said.

Coiledsteel

Get your short- and medium-term steel forecast!

China’s economic struggles have claimed a new victim: BHP Billion Ltd., which reported a 52% drop in full-year profit due, in part, to falling commodity prices, and has thus reduced its long-term forecasts for steel production in the Far East nation.

China also happens to be BHP Billion Ltd.’s largest customer and buyer of metals and energy, but with the yuan devalued, economic instability and supply gluts forecasting the slowest growth for the nation in more than 25 years, mining companies are bound to take a hit.

“The changes that we see in China at the moment are things that we’ve foreseen for several years,” Andrew Mackenzie, CEO, BHP, told Bloomberg Business. “China’s rate of growth would slow, but we still think it will be 7 percent this year.”

The company said in a statement that crude steel production in China will fall to between 935 million metric tons and 985 mmt over the next 10 or so years.

Want to know how this will affect future steel prices? Get your 30-day forecasts for steel and 9 other metal forms in our new Monthly Metal Buying Outlook report.

Global steel news: Indian companies affected by Asian imports

Meanwhile, in India, steel companies are asking their government for safeguards to protect domestic organization from the deluge of lower-cost imports from South Korea, Japan and China.

We reported last week that state-owned Steel Authority of India (SAIL) and several private steel makers, including Tata Steel, have jointly filed a petition with the Director General of Safeguards (DGS) requesting to undertake those safeguard duties.

Safeguards are measures implemented specifically to protect local organizations that surpass the measures from anti-dumping and countervailing as designated by the World Trade Organization.

You can find a more in-depth steel price forecast, including HRC, CRC, HDG and plate, in our brand new Monthly Metal Buying Outlook report. For a short- and long-term buying strategy with specific price thresholds:

hand holding binoculars metalminer promo

Get your short- and medium-term buying strategy for industrial metals.

This is your last chance to register for Thursday’s webinar, PREVIEW: MetalMiner Price Forecasts for September at 10 a.m. CDT, featuring Lisa Reisman, executive editor, MetalMiner™ and John Conolly, managing director, Azul Partners.

Can’t make it live? Register anyway and we’ll send a copy of the slides and recording of the webinar for you to review at your convenience.

Whether you cast, form, or machine aluminum, copper, nickel, lead, zinc, tin or the many forms of steel, you need to source it. And when you source can play a significant factor in your bottom line. This webinar will provide a behind-the-scenes look at how we formulate our short- and medium-term price forecasts for these base metals. This is a must-attend for those interested in a September metal price forecast.

Register now!

Well for one thing it means our retirement funds will likely be worth less, at least in the short to medium term. On the plus side, our mortgage will likely stay cheaper for longer and metal prices will remain lower for longer.

Free Sample Report: Our Monthly Metal Price Outlook

Why? well if the Fed was worrying about a China slowdown in July, they must be in full-on panic mode by now. If the Federal Reserve was to raise rates next month, to stave off the possibility of inflation picking up next year, it would strengthen the dollar, making imports more attractive and making life tougher for US exporters.

China’s Deep Slowdown

The collapse of stock markets around the world has been precipitated by fears of a China slowdown becoming far deeper and more prolonged than previously thought – although why this appears to be such a surprise to investors today compared to 2-3 weeks or even 2-3 months ago I fail to see, the writing has been on the wall all year.

Traders in London

The signs that China’s economy could lose steam were there, but it still caused global stock market panic.

However, as the herd mentality sets in all those stop orders get hit and the fancy algorithms cut in selling stocks and becoming self-fulfilling as they drive prices down. Hedge funds have been aggressively shorting the market, not just for stocks but for commodities too. It would be a brave man who bet any pause was the start of a bounce back, markets could have a lot further to fall.

Back to the Fed and China: weaker demand from China will mean lower demand for commodities. For a few commodities, China has become a net exporter but across the board the world’s largest consumer is reversing what was once a one-way bet on demand. Read more

hand holding binoculars metalminer promo

Get your short- and medium-term buying strategy for industrial metals.

Less than one week away! Join us Thursday, August 27 at 10 a.m. CDT for the webinar, PREVIEW: MetalMiner Price Forecasts for September.

Can’t make it live? Register anyway and we’ll send you a copy of the slides and recording of the webinar for you to view at your convenience.

For the second consecutive month, we will be providing a behind-the-scenes look at our metal price forecasts and how we formulate our new Monthly Metal Buying Outlook reports. If you source aluminum, copper, nickel, lead, zinc, tin or steel and are in need of expert insight, market commentary and a medium- and short-term trend analysis for these base metals then this is the webinar for you!

Speakers to include:

lisa reisman metalminer headshotLisa Reisman, CEO, Azul Partners and executive editor, MetalMiner
Lisa has more than two decades’ experience in management consulting and direct materials sourcing. She previously owned and operated her own aluminum trading company, as well as served in past roles at Andersen and Deloitte Consulting.

 

john conolly metalminer headshotJohn Conolly, managing director, Azul Partners
John also has more than two decades’ experience, but in listed derivatives, trading commodities and client advisement on hedging commercial risks. He comes to us from the CME Group where he was director of product marketing, and has been featured on CNBC, Bloomberg and Fox Business News.

Register today!

 

Following our recent article on the seaborne iron ore market, some may assume the landlocked domestic contract supply market for iron ore and pellets is immune from the volatility found in Asia.

Free Sample Report: Our Monthly Metal Price Outlook

To some extent that’s true, there isn’t a spot or futures market in the same way as we see in Asia, but the market is far from immune to global prices and prices have fallen in North America as they have elsewhere.

That makes Essar Steel’s decision to proceed with the massive $1.9 billion development of North America’s richest iron ore deposit across 150 kilometers of Minnesota’s Mesabi Iron Range particularly brave in today’s market.

Source FT

Source: Financial Times

Essar Steel is said by the Financial Times to be ramping up construction on a $1.9 billion mining and processing facility, with a planned completion in the second quarter of 2016. It will be one of the largest construction projects in North America by capital expenditure according to the paper and Essar hopes to produce 7 million metric tons annually of high-grade iron ore pellets for 70-80 years from the resource. Read more