Articles in Category: Non-ferrous Metals

US Stainless steel producers have filed new anti-dumping actions against Chinese importers. The windfall that U.S. oil refiners have been enjoying from cheap oil prices may be over and surging copper imports in China are just a sign of restocking ahead of the week-long holiday there.

Stainless Anti-Dumping

AK Steel Corporation, ATI Flat-Rolled Products, North American Stainless, and Outokumpu Stainless USA, LLC — the four principal U.S.producers of stainless steel sheet and strip — filed anti-dumping and countervailing duty petitions today charging that unfairly traded imports of stainless steel sheet and strip from the People’s Republic of China are causing material injury to the domestic industry.

The antidumping margins alleged by the domestic industry range from 53.69% to 83.24%
ad valorem. The domestic industry’s countervailing duty petition alleges that the Chinese
government has provided significant subsidies to Chinese producers. The petitions were filed
concurrently with the Department of Commerce and the U.S. International Trade Commission.

U.S. Refiners Cut Oil Output

U.S. refiners’ months-long windfall from cheap and plentiful crude showed further signs of running out of steam on Wednesday as a second refinery, Delta Airlines’ Monroe Energy, prepared to cut output and another dumped unwanted crude.

Free Sample Report: Our February Metal Buying Outlook

With companies taking frantic measures to combat declining profits as inventories rocket to fresh record highs and sluggish winter demand hurts profits, traders speculated that further cuts may be on their way.

Copper Imports

Surging imports of copper into major consumer China should not be seen as a sign of stronger real demand, because higher shipments are pointing more to restocking of the metal before China’s week-long Lunar New Year holiday.

Free Download: The February 2016 MMI Report

Imports of refined copper surged 34.4% in December from a year ago to a record 423,181 metric tons and expectations are that the January numbers will be high too.

MM-IndX_TRENDS_Chart_February2016_FNL-TOPVALUE100

The trends from our February Metal Price Index were more flat than down in February and it still looks like a bearish market for most of the metals we track.

Free Sample Report: Our February Metal Buying Outlook

Only the Renewables and GOES sub-indexes had price increases for the February MetalMiner IndX reading.

Many producers are seeing their profits decline to the point where capacity shutdowns are necessary. Freeport McMoRan’s stock price fell 45% in the first two weeks of January, after it hit a 13-year low in December.

Alcoa, Inc. — already in the process of splitting itself into two companies and curtailing its smelting business — saw its shares reach a seven-year low this month.

Brazilian miner Votorantim Metals announced in January its intention to suspend two nickel operations. In Australia, Clive Palmer’s Queensland Nickel said it would lay off 240 workers near Townsville. These announcements are definitely a sign that mining companies are starting to struggle because of the low prices.

After shuttering its grain-oriented electrical steel operations, Allegheny Technologies, Inc., further signaled it would not supply commodity-grade stainless steel at all this year.

With all of these cutbacks one would think that supply, eventually, would have to be constrained but it’s difficult to measure just how much overcapacity is truly out there.

China’s propensity to dump — and the resultant export market saturation — has still not been curtailed in any significant way. China is producing too much steel, aluminum, copper, solar panels and other goods such as plate glass and chemicals for the domestic market, and usually exports the excess at cut-rate prices. This was reflected in our metal price indexes in this month.

How to purchase at the right time in such an environment? Become a member and follow our metal price index.

Copper prices continued to make new lows in January. Prices fell below $2 per lb. for the first time since May 2009. Our Copper MMI tracking prices globally fell 5% to 58 points.

Free Sample Report: Our February Metal Buying Outlook

Some investors see copper not only as a benchmark for base metal prices, but also as a benchmark for the state of the global economy. Right now, there is not much going in favor of copper. The global economy is having its worst moment since the global recession of 2009, at least from an investor’s perspective. Meanwhile, commodity markets continue to slide driven in part by a slump in oil prices.

The combination of lower copper and oil prices is specially hurting some copper producers that also have energy assets such as Freeport-McMoRan. The company is the world’s largest copper producer while oil and gas accounts for almost one-sixth of Freeport’s revenues. The company’s stock price fell 45% just in the first two weeks of January, after it hit a 13-year low in December.

Copper_Chart_February-2016_FNL

Copper investors are closely watching Chinese economic data, as China is the world’s largest consumer of copper. The year started on a weak note after the China’s PMI came at 48.4 in January. The index has been in contraction territory (below 50) since March 2015.

The Copper Lining

On the other hand, copper bulls could find some bright spots in January’s data. China is not self-sufficient in its copper requirements, so it imports the metal in large quantities. December’s trade data showed that Chinese copper exports increased sharply, rising hopes among copper bulls that the country’s copper demand might not be as weak as the current price trend depicts.

Copper import data will be something to watch in the months ahead as it will provide insight on whether the spike seen in December imports was something sustainable or more of a one-time blip.

Better than expected copper imports in January could give some support to copper prices although if China’s copper imports start dipping that could spoil investors’ sentiment.

Free Download: The January 2016 MMI Report

Another factor that could have some positive impact on copper prices is the recent dollar weakness. The dollar and dollar denominated commodities are inversely correlated. The Fed not rising rates in March could potentially cause the dollar to weaken in the months ahead. On the other hand, rising rates could trigger more sell-offs in copper and the rest of base metal prices.

What This Means For Metal Buyers

Other than better-than-expected Chinese copper imports in December, there is little going on to expect a turnaround situation in copper markets. While the slump in commodities continues and global markets slide, copper has little upside potential.

Exact Copper Prices and Market Trends

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Although other base metals made new lows in January, aluminum prices held steady. The aluminum MMI fell only one point to 71.

Free Sample Report: Our February Metal Buying Outlook

What didn’t fare well in January was Alcoa‘s stock price, which fell sharply to its lowest level since March 2009.

Alcoa stock plunges in 2016 hitting a 7-year low

Alcoa stock plunges in 2016, hitting a seven-year low. Source: MetalMiner analysis of @StockCharts.com.

Lower aluminum prices were the main cause driving the company’s shares down over the past months. In addition, the recent turmoil in stock markets is not helping matters. A combination of both caused Alcoa’s stock price to plunge in January.

Midwest Premiums

Rising domestic premiums have helped Alcoa improve its margins. Since September, premiums in the U.S. rose from the lows of $0.06 per lb., mainly because of the production cutbacks announced by domestic producers in Q4 2015. However, we haven’t seen falling stockpiles and we’ll probably not see a major bounce-back in premiums. Indeed, over the past couple of months, MW premiums have stabilized at around $0.09 per pound.

Aluminum_Chart_February-2015_FNL

There are a few factors preventing premiums from rising much more. First, some of the proposed cutbacks have been partially rolled back. Alcoa previously announced the closure of its Intalco smelter in Q1, but now the company will keep running until the end of Q2. Century Aluminum is running its Mount Holly smelter at half capacity despite its previous announcement of a complete shutdown.

In addition, domestic aluminum producers will find it hard to succeed in increasing their premiums while global sentiment remains negative. Despite the relative scarcity of material created by domestic producers, there is still a glut of material elsewhere in global markets. Finally, any significant increase in domestic premiums would attract more imports into the country, especially coming from China.

Stockpiles

The main problem with the aluminum industry is that smelters in China keep running and refuse to cut production. The other problem is high inventories. Even though official London Metal Exchange inventories have been trending lower since mid-2013, unofficial stocks have actually increased. According to CRU, global aluminum inventory including unofficial stocks stands at around 15 million metric tons.

Moreover, China wants to keep stockpiling instead of cutting production. In January, top aluminum smelters in China agreed to form a joint venture to stockpile aluminum. These measures will only keep Chinese smelters producing more aluminum while material only goes into financial deals. However, the market knows what China is up to, and investors won’t buy aluminum until shutdowns happen. The stockpiling game will only keep prices low for longer, potentially making the problem even worse once that aluminum enters the supply chain.

Compare Prices With The January 2016 MMI Report

For as long as China doesn’t change its approach, the best that aluminum producers can hope is for prices to stay at current levels.

Actual Aluminum Prices

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Real gross domestic product expanded by just 0.7% (seasonally adjusted annual rate) during the fourth quarter of 2015. This follows a 2% increase during the year’s third quarter and a 3.9% increase during the second quarter. For the year, GDP expanded by just 2.4%, matching the slow rate of growth seen in 2014. Without any support from real GDP growth, our Construction MMI keeps falling.

Free Download: Compare with January 2016 MMI Report

With no GDP growth it shouldn’t come as a surprise that prices of construction materials are still falling. Low prices are always the solution to low prices… except when they’re not.

Construction_Chart_February_2016_FNL

In the fourth quarter, overall inflation came in at just 0.8% with sharp declines in both import and export prices. The Federal Reserve’s benchmark Personal Consumption Expenditures Price Index (commonly known as the PCE deflator) came in at just 0.1% with both durable and non-durable goods’ prices registering a decline.

“The economy did not end the year well,” said Associated Builders and Contractors Chief Economist Anirban Basu. “Today’s GDP data adds weight to the argument that the US is in a corporate profits recession, an industrial recession, and was experiencing a softening of investments. With the exception of the residential building sector, business capital outlays have declined as corporations deal with a combination of sagging exports, competitive imports, declining energy-related investments, rising wage pressures and healthcare costs.”

All Construction-Sector Metals, Materials Down?

With the exception of scrap, no single product tracked in our Construction MMI showed much of an increase this month, a worrisome trend that’s carried on since the beginning of last year, except for a small increase in June.

New tariffs by the European Union on Chinese rebar might help producers there recover some market share, but won’t likely move prices on international exchanges. Globally, the deflationary environment is worse than it is for US producers.

Free Sample Report: Our January Metal Buying Outlook

Steel and aluminum markets are still not seeing anything close to a bottom and that’s being felt acutely in construction.

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Zinc prices are finally finding some support. After nine consecutive months falling, zinc made a decent comeback over the past few weeks, hitting a 3-month high.

Zinc Hits three-month high

Zinc Hits three-month high. Source: FastMarkets.

Analysts See Upside Potential

Analysts see a lot of upside potential in zinc prices and many of them are calling a bottom and predicting price increases over the next two years. Analysts argue that the zinc market is tightening on a combination of mine closures and capacity cutbacks.

Free Sample Report: Our January Metal Buying Outlook

In October, Glencore announced its plans to slash zinc production by 500,000 metric tons. Just a month after, top zinc smelters in China indicated their intention to slash 500,000 mt of output in 2016.

A Wider View: Not Bullish Yet

If you narrow your view to the specific supply/demand picture of zinc, you might expect higher prices. But investors and traders are what moves prices, and their psychology right now is being driven by other forces.

Free Download: The January 2016 MMI Report

These include China’s slowdown, a strong dollar, the slump in crude oil and falling commodity markets. All these forces are still weighing on investors’ sentiment and while they persist it is hard to imagine any base metal making a sustainable bull move. To us, calling a bottom for metal markets is like calling a bottom for crude oil or China’s stock market, which seems like a risky bet to make.

What This Means for Metal Buyers

It seems too early to call a bottom for this bearish metal market, especially just days after many metals hit multiyear lows. After nine consecutive months of decline, it’s normal to see this kind of price reaction. We see the potential of a short-term rally in zinc prices, sure, but we are skeptical that this rally will last all that long. Buying, long-term, forward seems risky until macro conditions improve, regardless of how tight of a market many analysts think we are in.

You may be an investor in mining shares or you may be an investor in commodities, or you may be both, but your pension fund — if it’s any good — is almost certainly neither.

Free Download: The January 2016 MMI Report

Because, if it holds mining shares, it is nursing some heavy losses after the last 12 months.

Source: Telegraph Newspaper

Source: London Telegraph

Pension funds, thankfully, are cautious animals. They like solid dividend payers — as many in the mining sector have been for years — but they hate the combination of falling share price, high debt and low commodity prices that will almost certainly result in a cut in dividend payments this year even if mining companies are to survive the downturn. Read more

Ford Motor Company took the automotive world by storm when it announced it was going to construct the iconic F-150 pickup truck from aluminum in 2015.

Free Download: The January 2016 MMI Report

The very idea that America’s workhorse could be made from something so fragile as aluminum was a complete anathema to some people, but the resulting product on the whole has been well received.

Classic car

An aluminum-bodied Rolls? It’s more likely than you think. Source: Adobe Stock/Dimitri Surkov.

Lighter, more economical and more responsive it can be said in most quarters to have been a success; so much so that Ford has recently announced it will increase the aluminum content in 2017 models.

GM Plays Catch Up

Despite initially trashing the idea, General Motors has now said it would sink $877 million into its Flint, Mich., truck factory this year with the intention of converting many of the bodies for models such as the Chevrolet Silverado and GMC Sierra pickups into aluminum. Read more

Lead prices took a hit this month.

Free Download: New! The January 2016 MMI Report

In December, prices rose while other metal prices fell, but the rally turned out to be short-lived, a typical behavior in this bearish commodity market. Our subscribers knew, though, at the beginning of January that it wasn’t a good time to buy, since lead was destined to fall as it neared resistance levels around $1,800 per metric ton.

Lead prices fall in January

Lead prices fall in January. Source: MetalMiner analysis of FastMarkets data.

In only two weeks lead prices fell 16% from December’s high. Interestingly, the slump came during one of the strongest months in the auto industry. Auto sales in US hit a new high in 2015, with sales topping 17 million units. In Europe, they grew by 9.3% in 2015 to 13.7 million vehicles. Meanwhile, China, with the largest vehicle market in the world, hit record sales in December, up 18.3% from a year earlier.

Although China’s vehicle sales hit a new record in 2015, its car market decelerated in 2015. The annual growth rate in 2014 was almost 10% while annual growth in 2015 was only 4.7%. In addition, the Chinese market grew thanks to a strong last quarter, which came from a 50% tax cut for small cars, serving as a stimulus measure rather than a sustainable longer-term demand increase.

Free Sample Report: Our January Metal Buying Outlook

If it wasn’t because of those inflated numbers, China’s auto market would have probably seen its first down year in 2015.

What This Means For Metal Buyers

It can be argued that, overall, automotive output remains one of the few bright spots in a darkening global manufacturing picture. However, that is not enough to lift this metal up under the current commodity environment. What lead has done in January is just another example of how any metal can struggle when investors don’t put money in commodity markets.

 

Can titanium be used as a cost-effective material to make bicycle frames for the average commuter? The superstrong metal has long been used for decades in the creation of high-end bikes that are used, mostly, by consumers willing to pay a premium for more costly materials and more difficult tooling.

Free Download: New! The January 2016 MMI Report

Could 3D printing technologies replace more costly manufacturing processes and take away tooling costs to create a sweet spot for titanium as a lifestyle bike?

Industry_SOLID_titanium_bike_550_012516

SOLID is a titanium-framed bicycle manufactured using DMLS 3D printing. Its production process could significantly reduce costs for specialty metal bicycle frames. Source: Industry.

Portland-based design consultancy Industry, and Ti Cycles founder, Dave Levy took a big step toward finding out when created they first 3D-printed, titanium-framed bicycle, known as SOLID, for the Oregon Manifesto bike design competition in 2014.

The Competition

The annual contest is an independent innovation platform for building the urban utility bike. In 2014, its organizers partnered high-level design firms with American bicycle craftsmen to collaboratively develop the next-wave urban bike. Five teams from five cycling-centric cities competed to concept, create and champion their unique vision of tomorrow’s bicycle for the everyday rider.

Read more