Articles in Category: Metal Pricing

The head of an Indian zinc company is using the surge in metal prices to the financial benefit of his shareholders in a major way.

According to a recent piece from Bloomberg, Anil Agarwal, the billionaire head of Hindustan Zinc Ltd., is parlaying metal price increases into a $4 billion dividend for shareholders in what is being called a record return for the company.

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The closest beneficiaries include Vedanta Ltd. (65% ownership) and the Indian government (30% ownership), Bloomberg stated. Hindustan Zinc is the largest zinc producer in India.

“Vedanta continues to be in a very good space given all its verticals are doing well and if they can reduce debt that would be a better ploy and would increase the returns for shareholders,” Sanjiv Bhasin, executive vice president at India Infoline Ltd., told the news source by phone. “Metals, as a proxy to global growth and given the stimulus announced in the U.S., have been the best asset class in the past one year, and it will continue to outperform.”

Zinc Price Rally Amps Up

Our own Raul de Frutos wrote earlier this week that zinc prices climbed the week prior and the metal is now trading near the milestone of $3,000 per metric ton, which is the last time prices have been at this point since September 2007.

de Frutos wrote: “Zinc has doubled in price since it hit bottom in January of last year. As prices climbed, many buyers probably made the mistake of thinking prices were too high, missing this spectacular rally. However, buyers that subscribe to our monthly outlook, didn’t miss this rally. We recommended buying forward starting in April of 2016. Ever since, prices have risen without looking back.”

How will zinc 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:

Macro photo of a piece of lead ore

Lead prices grew 0.7% at the beginning of the week, reaching $2,290 per metric ton, while sister metal zinc rose 0.4% to $2,875 per mt.

This data, reported by Reuters, is trending in line with our own Raul de Frutos’ projections that lead prices will trade at $2,800/mt by the end of the year. The metal has fluctuated fairly wildly over the past several months following a significant run throughout most of 2016.

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de Frutos stated: “Prices are now back near new highs as bulls seem to be taking control again.”

He added that lead prices are currently holding well and could be ready for another rally, thus the anticipation for a $2,800/mt by the end of 2017.

Lead Prices Still Have a Ways to Go

“Lead treatment charges have plummeted over the past few months. They are currently below $20 per mt, from $80 just three months ago. In this respect, lead is playing catch-up with its cousin zinc, in which the deficit for refined metal is more obvious.”

How will lead 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:

Tin cans. Cans are used for packing all sorts of goods – conserved food, chemical products such as paint, etc

Tin prices hit $20,459 a metric ton to begin the week, marking its highest point in nearly two months due in part to concern over shortages on the London Metal Exchange following cancelled warrants.

According to a report from Reuters, those shortages grew to nearly 50% of LME stocks.

Tin has been riding a high wave since January 2016 with global prices for the metal surging by nearly 40% since that time.

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!

According to a recent report from The Star Online, Malaysia Smelting Corp is anticipating better performance this year given the continued ascent of tin prices. MSC is the world’s second-biggest tin supplier and is counting on tin price growth, along with a strengthening of the U.S. dollar, to bring substantial improvement to the company’s profit over the course of the coming quarters.

“We will continue to make the necessary strategic decisions and adapt to the ever-changing marketplace,” CEO Datuk Dr. Patrick Yong told the Star.

How will tin 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:

Set of copper pipes of different diameter lying in one heap

The newly opened Cobre Panama mine in Central America could begin copper production as early as 2018 and reach full throttle by the end of 2019, which would be a much needed supply boost for a copper market that is set for its first deficit in six years and could be in shortage through 2020.

According to a recent post from Bloomberg, mine disruptions led to copper prices growing roughly 25% over the past six months. Demand in China and a boost in U.S. infrastructure have made copper the biggest gainer in Bloomberg’s Commodity Index.

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“Good copper projects are scarce at these prices,” First Quantum President Clive Newall told Bloomberg in a phone interview Monday from London. “There is an incentive price to build new greenfield sites, which is significantly above the current price.”

A Citigroup report added that copper prices need to rise another 15% to about $6,700 a ton before mining companies commit to new greenfield projects, which translates to the industry not likely boosting capital spending until 2019.

Copper Prices Drop this Week

Hit by a supply overload, multiple sources are reporting that copper prices fell to a two-month low this week.

Wrote Leia Toovey for the Economic Calendar:

“Factors adding pressure to copper include a higher U.S. dollar, disappointing import data from China and a pile-up of LME-tracked inventories. Also, on Thursday BHP Billiton said it was considering bringing in temporary workers to bring some copper production back online that has been impacted by the strike at its Escondida copper mine.”

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:

With aluminum premiums on the rise in the U.S. and Europe, and Japanese inventories falling amid growing demand, producers are upping the ante by charging the Pacific Rim a higher premium for the second quarter in a row.

According to a recent report from Reuters, three global aluminum producers offered buyers in Japan a premium of $135 per metric ton for shipments of the metal in Q2. This would mark an increase of 42% quarter-over-quarter.

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“The producers claimed that the rise mainly reflected higher premiums in the U.S. market, but we think $135 is too high as we don’t feel much supply tightness here,” a source at an end-user told the news source, adding that his company would aim for premiums at around $120-125/mt.

Aluminum Leads the Charge in February

Our own Raul de Frutos wrote this week that of all the industrial metals, aluminum performed the best in February with prices on the London Metal Exchange growing above $1,9000 per metric ton. This marks the first time since May 2015 prices have been this high for the metal.

Wrote de Frutos: “In February, China finally approved its Air Pollution Control regulations, which came into effect on the March 1.The world’s largest nation-producer of the metal will force about a third of aluminum capacity in the provinces of Shandong, Henan, Hebei and Shanxi to be shut down over the winter season, which runs from the middle of November through the middle of March.”

How will aluminum 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:

 

February drew to a close with steel prices in the midst of a rally, following a slight reduction the week prior, with traders honing their focus on steel production cuts.

According to a recent piece from the Economic Calendar, Leia Toovey writes that China rebar futures grew 4% earlier in the week due to said cuts, but also due to seasonal demand.

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Citing a recent report from Reuters, Toovey added that steel producers in China have been tasked with scaling back production to reduce pollution in time for the start of the China’s National People’s Congress.

Toovey writes: “The cutback in production ahead of the Congress was anticipated, but it also brings back to the forefront the fact that the country is serious when it comes to reducing pollution. Previously, the country announced that it would crack down on industries that were heavy polluters in order to reduce emissions.”

A Cool February for Steel Prices

Our own Raul de Frutos wrote of the cool down in steel prices for February. He maintains that the slow down was just temporary and that, raw material prices, in addition to other factors are in full support of the ongoing steel price rally.

De Frutos concluded: “Steel prices have increased for three-consecutive months. The right time to buy steel was in November, now prices might need some time to digest last year’s gains. Steel buyers need to keep a close eye on China’s production, President Trump’s new policies and raw material price trends in order to identify new opportunities to buy steel in 2017.”

How will steel 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:

Steel prices have been on a tear since November. However, prices came under pressure in early February.

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

After having lost some ground over the past month, U.S. steel companies now seem to be pushing for another round of price hikes. But, can U.S. steel prices rise from current levels?

Production Rises

In February, new findings by Greenpeace East Asia and Chinese consultancy Custeel stated that despite China’s high-profile efforts to tackle overcapacity, China’s operating steel capacity increased in 2016. The report suggests that 73% of the announced cuts in capacity were already idle — in other words the plants were not operating. Only 23 million metric tons of cut capacity involved shutting down production plants that were operating. For 2016, China saw a net increase of 37 mmt of operating capacity.

Raw Steels MMI

According to the data released by the World Steel Association, China’s January steel production rose 7.4% to 67 mmt while global steel production rose 7% from a year ago.

These numbers give us reason to doubt that China can deliver this year in terms of capacity caps. Given the country’s pollution issues, China is now under pressure to demonstrate progress on capacity cuts, but financial and legal incentives to keep marginal firms running will cause regulators to struggle to enforce capacity cuts. Can the steel price rally continue just on promises of supply cuts?

Will Demand Growth Support Prices?

Despite resilient output, investors have focused on China’s increased appetite for steel. Thanks to the country’s stimulus measures, demand for metals rose there. As a result, Chinese steel exports have fallen double digits for five consecutive months.

Two-Month Trial: Metal Buying Outlook

China exported 7.4 mmt of steel products in January, down 23.8% from the same period last year. In addition, January steel exports were at their lowest level since June 2014.

Iron Ore Prices Surge

Steelmakers are using the argument of rising iron ore, coal and other raw material prices to press steel buyers to pay more for their steel products. Iron ore is currently trading in the ballpark of $90 per dry mt, the highest since mid-August 2014. After an 85% rise in 2016, the price of iron ore has improved by more than 16% so far this year and has more than doubled in value since hitting near-decade lows at the end of 2015.

What This Means For Metal Buyers

It might not be prudent to draw a conclusion based on January’s steel data alone. But given current trends, China may need to intensify its efforts to curtail excess steel capacity. Demand growth alone might not be a strong argument for U.S. mills to continue to hike prices at the pace the did over the past few months.

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The International Lead and Zinc Study Group released its February 2017 report on zinc, which found the global market for the refined metal was in deficit in 2016.

It’s reported that zinc inventories in warehouses operated by the London Metal Exchange, Shanghai Futures Exchange and Chinese State Reserve Bureau — along with those reported by producers, merchants and consumers — decreased last year.

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The ILZSG report stated: “A substantial 43.1% decline in Australian zinc mine output was primarily a consequence of the closure of MMG’s Century mine at the end of 2015 and a reduction in output at a number of Glencore’s mines. Production was also significantly lower in Ireland, due to the shutdown of Vedanta’s Lisheen operation, India and Peru. However, these reductions were offset by increases in Bolivia, Canada, China and the commissioning of new production in Eritrea. As a consequence overall world production was at a similar level to that in 2015.”

It’s also important to note the global output of refined zinc metal was on par with the total tallied in 2015, with China and the Republic of Korea leading the way.

Zinc Prices on the Rise

Our own Raul de Frutos covered the ILZSG findings earlier this week, and also noted that it is only a matter of time before Chinese zinc producers are forced to reduce their output of the refined metal.

He added: “As a result of this narrative of supply shortfall, zinc is trading at the highest levels in more than eight years. Bulls have been in such a powerful position that prices have barely retraced during this run.”

How will zinc 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:

Macro photo of a piece of lead ore

The International Lead and Zinc Study Group released its initial lead findings for February, and found that in 2016, supply exceeded demand in the global market for the refined metal.

Furthermore, lead inventories reported by the London Metal Exchange, Shanghai Futures Exchange and consumers and producers during that same period of time increased, as well.

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The ILZSG report elaborated: “There was a sharp decrease in Australian lead mine output mainly as a consequence of the closure of the Century mine in 2015 and cutbacks in output at some Glencore operations. Production was also lower in India and Mexico. However, these reductions were partially balanced by a rise in China resulting in an overall global decline of 1.3%.”

However, world refined lead metal production actually increased 2.4% in 2016. This was mostly attributed to the Republic of Korea (South Korea) commissioning a new primary lead plant in 2015.

Lead Price Momentum on High in 2017

According to a recent piece from our own Raul de Frutos, after a strong run in 2016, lead prices pulled back to close the year. However, prices have since recovered and Raul predicts they will trade at $2,800 by the end of this year.

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

“(Lead prices) are currently below $20 per metric ton, from $80 just three months ago. In this respect, lead is playing catch-up with its cousin zinc, in which the deficit for refined metal is more obvious. In 2017 investors will be closely monitoring China’s numbers. The slump in treatment charges and the fact that China must get serious about controlling industrial metals output to solve its pollution problem could result in lower lead refined output this year.”

How will lead and base metals fare this year? 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:

We recently launched a new product, MetalMiner Benchmark, which is a secure, anonymous and reliable way for you, the buyer, to compare industrial metal prices (or quotes) from North American Suppliers to thousands of transactions made by other firms for the same or similar metals.

The MetalMiner℠ Benchmark application is different than other pricing tools. The MMB database contains prices actually paid or quoted, NOT catalog prices. While there are plenty of “transactional polling sites” out there, most of them simply scrape and compile publicly available information. The MMB database contains millions of specific price points allowing for detailed analysis of your metal spend by type, grade, form, and size (e.g. 3003 H14 .050 x 48” x 120” sheets). The goal is simple: promote price transparency in the marketplace and help you source the materials you need more effectively.