Articles on: Metal Prices

Before we head into the weekend, let’s take a look back at a few of this week’s stories:

Benchmark Your Current Metal Price by Grade, Shape and Alloy: See How it Stacks Up

A Surprise in the U.K.

Iakov Kalinin/Adobe Stock

Our Stuart Burns wrote about the U.K. parliamentary elections, which surprised many and saw Labour outperform expectations against Prime Minister Theresa May’s Conservative Party.

What does the election result mean for business? Well, that will partially be determined by which path to Brexit the U.K. ultimately takes. Burns writes there is likely to be compromise and a search for alternate solutions — that is, a softer Brexit.

The 411 on 232

White House spokesman Sean Spicer announced Monday the findings of the administration’s Section 232 investigation into steel imports could be released as early this week.

Although the findings have yet to be released, our Lisa Reisman laid out the potential outcomes and impacts of the investigation on Wednesday.

How will the recommendations affect steel prices domestically? No one knows for sure, of course, but Reisman wrote we shouldn’t jump to conclusions about potential price increases.

“Some have speculated that the forthcoming recommendations would force prices higher, however, we would not necessarily rush to that same conclusion,” Reisman wrote.

Markets showing pessimistic side

Burns also wrote this week about commodities markets — and not just metals, but oil, too — which have seen a drop in optimism of late.

What’s the downtrend all about? Many reasons, Burns argues, including: oversupply, the Chinese government “squeezing investors by increasing shadow banking borrowing costs,” and waning optimism with respect to the Trump administration delivering on campaign promises regarding massive infrastructure projects.

But not to send you into your weekend on a down note — it’s not all cloudy skies.

“With that said, that doesn’t mean the U.S. or global economies are about to tank,” Burns writes. “European growth has been much better this year and Japan is expected to improve further, while the World Bank is predicting an unchanged 2.7% global growth this year in its latest report.”

June MMI Report Released This Week

In case you missed it, our monthly MMI Report was released this week; as always, it’s jam-packed with information.

The report covers markets trends in our 10 sub-indexes: Automotive, Aluminum, Construction, Copper, Global Precious, GOES (grain-oriented electrical steel), Rare Earths, Raw Steel, Renewables and Stainless Steel.

Want to know what’s happening in any of these categories? Get yourself up to speed by checking out the June report, which you can access by visiting the link below.

Free Download: The June 2017 MMI Report

Tin prices continue to suffer with Chinese competition and Shanghai trading counteracting limited supply on the London Metal Exchange (LME).

Generally speaking, limited supply of a commodity should translate to a rise in price — this has not been the case for tin.

In a recent opinion piece for Bloomberg, Shelley Goldberg, founder and principal at Invest-with-Purpose, writes that despite tin inventory at LME warehouses reaching 20-year lows, prices are also down, to the tune of more than 5% since the start of the year.

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 reason? Goldberg writes that exchange trading competition from China is to blame.

Goldberg writes: “Low inventory levels have also historically resulted in an increase in both volume and open interest; however, for LME tin they have been falling, too. Average LME daily tin volumes this year slipped by 14 percent from January to April, compared with the same period a year earlier. On an annual basis they fell 7 percent in 2016 and 31 percent in 2015. Open interest has also been declining, totaling 16,152 lots at the end of April, compared with 22,563 lots a year earlier.”

Reconciling the SFE and LME

She added that LME is no longer the exclusive exchange for data and information on the metals markets, as the Shanghai Futures Exchange is now challenging its monopoly.

Goldberg concludes: “The bottom line is that attempting to arbitrage LME and Shanghai tin is not as easy as it may seem (different currencies, contract sizes, terms, and so on). But suffice it to say, assessing the tin markets from a more global perspective will undoubtedly provide a better perspective not only on the tin market, but on the world’s economy.”

How will tin fare in 2017? 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:

Cobalt and lithium have big roles in the burgeoning electric-vehicle market, but they’re still subject to price volatility. scharfsinn86/Adobe Stock

This morning in metals news, demand for cobalt and lithium will only grow with the electric car industry, but price ups and downs are likely in the offing, too; London copper took a dip after the U.S. Federal Reserve’s interest rate hike announcement Wednesday; and the U.S. coal industry, in a world with less demand for coal as an energy product, might have to get creative. One writer suggests mining for coal — not for coal itself, but for rare-earth metals contained within it.

Cobalt, lithium markets growing with EVs, but could see fluctuation

One thing is certain: the electric-car industry is growing rapidly.

Benchmark Your Current Metal Price by Grade, Shape and Alloy: See How it Stacks Up

According to a Reuters story Thursday by Andy Home, the number of electric cars on roads worldwide doubled last year to 2 million — but only accounted for 0.2% of the global total. However, estimates indicate that number will grow to 3% as soon as 2021 and 14% in 2025.

With that growth comes a need for certain kinds of metals, like cobalt and lithium.

But with a still relatively young electric-vehicle industry, what will demand for these metals look like in the near future?

Cobalt and lithium, for example, are on the “front-line” of the “green transport revolution, Home writes. But that means, to an extent, being subject to the whims of an industry in its early stages.

Large price hikes in lithium late last year and early this year have leveled off. Home added there could be further price volatility, as producers, analysts and traders try to construct consensus demand models.

Copper falls to one-week low

Copper on the London Metal Exchange (LME) dropped to a one-week low Thursday, on the heels of the U.S. Federal Reserve’s decision to hike interest rates for the second time this year, Reuters reported.

Copper fell to $5,462 per ton, according to the report.

Financial uncertainty in the U.S. and a slowing of the Chinese economy will put selling pressure on metals, according to a Kingdom Futures report quoted by Reuters.

Coal industry mining for … rare earths

Global coal production has declined each of the last three years. With a decline in demand, coal-mining operations have to adapt to a world increasingly powered by green energy.

The solution for some might be mining for coal, not for coal’s energy-producing properties, but for the rare-earth metals found within them, according to an article Thursday in Quartz. Per the article, China currently produces 90% of the world’s rare-earth metals.

It’s an interesting idea, even if author Akshat Rathi writes that his three ideas for extraction of rare-earth metals from coal are currently not economically feasible.

Free Download: The June 2017 MMI Report

But, as mentioned in yesterday’s This Morning in Metals post, producers have to adapt with the times. Whether we’re talking about copper producers looking for new markets for their copper or coal-mining operations mining for rare-earth metals found within coal, producers have to adjust or risk being left behind.

What’s up — or should we say, down — with zinc?

Source: Fast Markets

Together with other base metals, zinc has experienced a downtrend during this past week, reaching a seven-month low on Wednesday. Since then, it has recovered slightly up to $2,540/metric ton.

Benchmark Your Current Metal Price by Grade, Shape and Alloy: See How it Stacks Up

Zinc is moving together with commodities and industrial metals, both of which have experienced a weaker start to June. These weaknesses began in the beginning of 2017, as zinc prices failed to reach new highs, turning into a sideways market.

Other metals, such as tin and lead, have also experienced lower prices during the first week of June, which could be a signal of a general trend reversal. We do not believe zinc will succeed in surpassing its previous $3,000/mt upper limit.   

In fact, zinc could be at the start of a downtrend.

Read more

It won’t have escaped your notice that the shine has gone off the metals market.

Benchmark Your Current Metal Price by Grade, Shape and Alloy: See How it Stacks Up

Prices have been softening across not just metals but other commodities, like oil, too.

Consumers, of course, will not be complaining, but are nevertheless keen to understand what is going on and whether we are seeing a temporary dip or a move into a prolonged bear period.

Commodities in general are facing multiple headwinds.

While demand for iron ore and oil is steady, both markets are in oversupply. Oil prices have received short-term support from favorable comments around output cuts. Prices have subsequently continued to soften as long positions have been unwound and investors have concluded prospects of a supply balance are receding.

In China, the authorities have been squeezing investors by increasing shadow banking borrowing costs, resulting in positions being unwound and prices softening.

In the U.S., markets surged after President Donald Trump’s election victory with the expectation his campaign promises of trillion dollar infrastructure investment would create a building and consumption boom.

Since those heady days, the realization has set in that the desperately needed investment may not be quite as significant as first thought.

Read more

The market for biomedical metals — like the ones used in orthopedic implants — is expected to reach $34.9 billion by 2025, according to a recent market research report. Sandor Kacso/Adobe Stock

This morning in metals news, a recent report predicts the global biomedical metal market will reach $34.9 billion by 2025, palladium continues to stand strong and metal makers are looking for new markets for their products.

Benchmark Your Current Metal Price by Grade, Shape and Alloy: See How it Stacks Up

Market for Biomedical Metals to Only Get Bigger

The market for biomedical metals is large — to put a number on it, it is expected to be valued at $34.9 million by 2025, according to a recent report from Accuray Research LLP.

According to the report, the biomedical metal market is expected to grow by a compound annual growth rate of 7.8% over the next decade.

Among the factors underpinning the expected growth are: increased demand for orthopedic implants; new developments in titanium-based alloys; and recent technical developments in biomedical metal.

Palladium Defies Analysts’ Expectations on Strong Run

At around $900 per ounce, palladium is trading at 16-year highs, according to a Platts report.

Analysts told Platts they saw no justification for palladium’s strength, especially considering a struggling Chinese automotive market (palladium is an important autocatalyst ingredient in gas-powered engines).

One Japanese analyst told Platts the current state of the palladium market was a “once every decade” situation.

Is a reversal in palladium prices on the way? Only time will tell.

New Markets for Metals

According to an article Wednesday in Bloomberg, makers of metals are looking for new commercial uses for their products, particularly as a boom in Chinese demand for raw materials has tempered. In general, China’s intent to crack down on credit — particularly on the heels of May’s Moody’s downgrade — has led many to believe a negative impact for metals markets will follow.

To make up for the loss of Chinese demand, producers of metals are looking for new markets for their products.

What uses do producers have in mind?

According to Bloomberg, a few uses include fertilizer, salmon cages, electric-car batteries and household cleaning products, among others.

Free Sample Report: Our Annual Metal Buying Outlook

Many expect growth to slow in China through the remainder of the year. As such, producers will have to get creative in finding new uses for their products, from cars to fertilizer and everything in between.

Our June MMI Report is in the books, and there’s a lot to unpack.

Benchmark Your Current Metal Price by Grade, Shape and Alloy: See How it Stacks Up

Out of 10 MMI sub-indexes, four posted no movement from our May MMIs. That wasn’t true for all, though, as the report shows promising signs for construction (compared with last year). Like the Construction MMI, growth in the automotive sector slowed a bit, but still performed better than at the same time last year.

In terms of policy, several things happening around the world will have macroscopic effects on these industries.

Domestically, the Trump administration’s ongoing Section 232 investigation into steel imports will have ripple effects at home and abroad (namely in the Chinese steel market).

In the U.K., the recent shocker of a parliamentary election leaves question marks regarding the way forward — is it going to be a “hard” or “soft” Brexit? Does Theresa May have the political capital to make a hard Brexit happen? It seems unlikely now, but that situation continues to develop. In terms of business and metal markets, whichever iteration of Brexit takes hold will have effects on the ways in which British companies do business with Europe.

In China, many analysts expect growth to slow in the second half of 2017 as the government aims to put the squeeze on credit growth. (Moody’s recently downgraded China’s credit rating for the first time since 1989.)

While several MMI sub-indexes did not go up or down this past month, there was still quite a bit going on in each sector. You can fill yourself in by downloading our June MMI Report, which offers all of the storylines and trends for our 10 MMI sub-indexes, presented in one convenient place.

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TTstudio/Adobe Stock

This morning in metals news, copper slipped from its two-month high on the London Metal Exchange (LME), Canadian researchers have discovered a way to make metals processing greener and nickel hits its lowest price in a year.

Benchmark Your Current Metal Price by Grade, Shape and Alloy: See How it Stacks Up

Copper Falls in Anticipation of Federal Reserve Interest Rate Decision

Copper fell from a two-month high on the LME — and dropped 1.1% on the Shanghai Futures Exchange — ahead of the U.S. Federal Reserve’s decision this week regarding raising the interest rate (which many expect it to do), Reuters reported.

The decision is scheduled to be announced Wednesday afternoon, after the conclusion of a two-day policy meeting.

An uptick in the interest rate is expected to shore up the dollar, making dollar-based commodities more expensive for holders of other currencies and leading to a dip in demand, Reuters reported.

Researchers Announce Environmentally Friendlier Way to Process Metals

A Canadian team of researchers recently announced a new method for processing metals without toxic chemicals or reagents, Science Daily reported.

The team outlined its approach in a recently published article in Science Advances. Through their method, the scientists seek to perfect a process that curbs the negative environmental impacts of processing metals, using easily recyclable compounds instead of toxic materials.

The discovery was the result of a collaboration between Jean-Philip Lumb and Tomislav Friscic at McGill University in Montreal, and Kim Baines of Western University in London, Ont.

As demand for electric vehicles grows and green initiatives become more visible, it’s not surprising to see movement toward making the entire production process going green — for example, from the processing of raw metals all the way to a final product itself (a “green” vehicle).

Nickel Falls to One-Year Low

It isn’t a good time for nickel, which fell to its lowest price in a year Tuesday in a climate of falling Chinese steel prices and a weak forecast for the Chinese economy, Reuters reported.

As the Chinese government tackles credit debts — the nation was recently downgraded by rating agency Moody’s for the first time since 1989 — many expect growth to slow in the second half of the year. That prediction has already been borne out by weak April and May Chinese economic data, according to the article.

Caroline Bain, chief commodities economist at Capital Economics in London, told Reuters that China’s efforts to rein in credit growth and curb excessive behavior on the property market is “bad news” for metals.

Free Download: The May 2017 MMI Report

TTstudio/Adobe Stock

Copper prices rallied late last week on the heels of severe weather striking several South American mines, as well as labor issues cropping up in Indonesia.

According to a report from MarketWatch, copper prices climbed 1.12% to $5,688 per metric ton on the London Metal Exchange last Thursday morning.

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!

Copper had previously opened the month on the low end, but unexpected weather and labor issues quickly reversed that trend:

“Those mine disruptions in Chile are the major supply-side news this week,” BOCI Global Commodities’s Xiao Fu told the news source.

In China, import data revealed an 8.5% month-over-month increase in refined copper imports.

“That increase is a fairly substantial one and is helping prices rebound after being beaten up over the past few weeks,” ETF Securities strategist Nitesh Shah told the news source.

Copper Prices Affected by Chinese Demand

The MetalMiner Copper MMI remained steady in June. Writes our own Irene Martinez Canorea:

“Currently, copper prices are directly affected by Chinese demand, as well as by uncertainty in supply. This downtrend in copper prices might be just a brief pause in a dynamic market. Thus, copper-buying organizations should watch the market closely, looking for a possible uptrend that would show a recovery.”

How will copper and base metals fare in 2017? You can find a more in-depth copper 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:

Qatar is a major supplier of liquefied natural gas. donvictori0/Adobe Stock

Editor’s Note: This is the second part of Stuart Burns’ analysis of last week’s decision by several Arab nations to break ties with Qatar. On Friday, Burns covered the political backdrop. 

Qatar may well be asking: why now?

The country has been engaged in such activity (as detailed Friday) for a decade or more, but the young Saudi Deputy Crown Prince Mohammed bin Salman and Abu Dhabi’s Crown prince, Sheikh Mohammed bin Zayed, seem to have found common ground to take Middle East politics into their own hands and mold the region the way they would like to see it.

It would seem they are not above fabricating their own fake news to achieve it, either. For example, Qatar’s Emir Tamim is reported to have said that Hamas is “the legitimate representative of the Palestinian people,” and called Iran “a big power in the stabilization of the region.”

But attendees at the speech reported he said no such thing. Shortly afterward, it was discovered the Qatar News Agency (QNA) website had been hacked into and the stories inserted.

The timing of the diplomatic freeze is also relevant.

Just two weeks after President Donald Trump’s visit, you have to think this was discussed and approval was sought for U.S. backing, at least politically, for such a dramatic move. It should not be forgotten that the U.S. has a major intelligence-gathering military base in Qatar, the Al Udeid Air Base on Qatari soil is a pivotal staging ground for U.S. counterterror operations, the Washington Post states.

In a more recent development, Secretary of State Rex Tillerson on Friday made a call for de-escalation, asking the Saudi-led coalition to ease its blockade of Qatar on the grounds that it is creating food shortages and making the fight against ISIS more difficult, according to Bloomberg.

The alliance is trying to pull Qatar into line with the position taken by the other members of the Gulf Cooperation Council — aligning against Iran and backing away from supporting terrorist sympathizers. In that they are to be applauded, but the risk is the situation gets out of control. One must assume closed-door discussion has not worked and the GCC coalition is taking this more extreme step to shock Qatar into compliance. The danger is it could also drive Qatar further into the arms of the Iranians, further polarizing the region’s political blocs.

Not surprisingly, the move caused a jump in the oil price and jitters in the liquefied natural gas (LNG) market, in which Qatar plays an outsize role as a major supplier to Europe and Asia. Oil prices immediately jumped but then fell back, as it became clear Qatar’s 30,000 barrels a day were unlikely to have any impact of global supply.

Of more concern, however, was LNG.

Qatar supplies a third of the U.K.’s consumption and is the world’s largest exporter of LNG.

Qatari production of aluminum — at 610,000 tons per annum, in a 50:50 joint venture with Norsk Hydro — represents less than 1% of the global market Prices have been unaffected by the news of the GCC blockade.

In the short term, exports may be disrupted because cargoes were transhipped in neighbouring UAE onto larger vessels. However, Qatalum (the joint venture between Qatar Petroleum and Norsk Hydro) says it can ship directly from its own ports, if necessary.