Join our sister site, Spend Matters, for a deep dive into global supply chain risk: How to uncover, assess, manage, and mitigate it now that IBM’s Business Value Institute has recognized risk as one of six mega trends that have an impact on shaping the global economy today and moving forward. Are You Acting or Reacting? Lessons in Global Supply Chain Risk from IBMwill take place Wednesday, May 4 at 10 a.m. CDT.
Lou Ferretti, project executive, product environmental compliance and supply chain social responsibility at IBM will cover:
Resiliency and responsiveness as a key differentiator to successfully navigate a sea of uncertainty
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The need to view risk management through a holistic lens, including harnessing the power of data/analytics
The Shanghai Futures Exchange (ShFE) is experiencing increased trading of nickel, which is creating a pull on physical units and causing a domino effect on the global refined metal supply chain.
According to a recent column from Andy Home of Reuters, nickel volumes and interest have increased significantly since the metal’s contract launched on the ShFE last March. In fact, volumes have already surpassed those on the London Metal Exchange (LME) which has ruled the wholesale nickel trading market in recent years.
“The take-away is that although Shanghai nickel may be prone to the same day-trading investment crowd flooding other local markets, its success is founded on bigger, more institutional players who are prepared to hold positions for longer,” Home wrote for Reuters.
It’s also important to note that nickel trading on the ShFE rose so quickly that it created issues in the form of a squeeze on shorts for the July contract last year. This led to the delivery of three brands of Russian nickel in order to satisfy short position holders wanting to settle their positions with physical metal. With this development, both flows and stocks of refined nickel around the world were altered.
Non-Ferrous Metal Update
Nickel, itself a non-ferrous metal, along with iron ore and steel are seeing their prices drop following a decision by the Chinese government to increase trading margins and fees futures exchanges in Dalian, Shanghai and Zhengzhou. In response, the most-traded contracts were down up to 4.6%, according to our own Stuart Burns.
You can find a more in-depth nickel price forecast and outlook in our brand new Monthly Metal Buying Outlook report. Check it out to receive short- and long-term buying strategies with specific price thresholds.
Oracle announced Thursday it agreed to acquire Textura, a cloud-based solution for the construction industry with end-to-end capabilities spanning from initial bid estimation and sourcing through to subcontractor management, communication and collaboration, invoicing and payment.
Textura can not only catalog the cost of installation of this structural form, but also log its completion and pay the sub-contractor that put it in. Image: Jeff Yoders/MetalMiner.
“Textura’s mission is to bring workflow automation and transparency to complex construction projects while improving their financial performance and minimizing risks,” Textura CEO David Habiger said in a statement. Read more
Our most popular complimentary research download, the Annual Metals Outlook has recently been updated for Q2. This is an essential tool for your direct material sourcing toolkit as it informs your long-term strategic approach to metals buying. Have you locked in your steel prices yet? They’ve been on the rise since Q1 and we’ve called it every step of the way in our monthly reports. We’ve also been on top of steel price movements since the original 2016 annual outlook was released last October. Now is your chance to claim your copy of our Q2 update as you continue to make forward-thinking industrial buying decisions.
The recent steel rally seen in China is triggering some warning signs. Fitch Ratings recently announced prices for the metal increased, in part, due to rising speculation about an inevitable slump.
According to a report from Bloomberg, the sharp increase in steel prices isn’t sustainable as mills are expected to fall back on idled capacity, thus increasing supply. The steel price rally has been driven, in part, due to a seasonal recovery that was further supported by increased speculation in the futures market.
“The rapid increase in Chinese steel prices so far this year is not sustainable, as it is largely due to a seasonal pick-up in construction and elevated speculation in the steel futures market,” the Fitch report said. “With prices now surging, many of the suspended plants have resumed production.”
Steel prices have risen dramatically in 2016 with rebar up 48% after Chinese policy makers touted growth and added stimulus, boosting property prices, according to Bloomberg. These gains have helped mills’ profitability bounce back.
Meanwhile, aluminum prices have joined the broader metals rally, hitting a nine-month high this week. Our own Raul de Frutos wrote: “The data shows us that many signals suggest that this rally in commodity markets could continue. Aluminum prices are starting to pick up and so are other industrial metals. Watch oil prices, the U.S. dollar, commodities markets and the price performance of other industrial metals. Don’t get caught as prices find momentum. In this period it is extremely important to understand the big picture and have a defined purchasing strategy.
You can find a more in-depth steel price forecast and outlook in our brand new Monthly Metal Buying Outlook report. Check it out to receive short- and long-term buying strategies with specific price thresholds.
The International Lead and Zinc Study Group recently released new data that found the global market for refined zinc recorded a surplus during the first half of 2015, but was in deficit during the second half of the same year.
The London Metal Exchange, Shanghai Futures Exchange and Chinese State Reserve Bureau warehouse inventories — along with those reported by consumers, producers and merchants — decreased in 2015 with 79% of the refined zinc stored in LME warehouses in New Orleans.
“Decreases in zinc mine output in Canada, China, Ireland and Namibia were partially offset by increases in Australia, India, Peru, the Russian Federation and Sweden resulting in an overall global fall of 0.7%,” according to the report. “A rise in global refined zinc production of 3.3% was primarily a consequence of higher output in Canada, China, India and the Republic of Korea that comfortably exceeded reductions in Iran, Japan and Namibia.”
Furthermore, increased demand for zinc in France, Germany, the Czech Republic, Poland and the Russian Federation was the main source of European usage with other increases noted in China. On the other side of the coin, usage in the United States, India, Japan and the Republic of Korea declined. Global demand overall increased by 0.7% in 2015, according to the ILZSG.
You can find a more in-depth zinc price forecast and outlook in our brand new Monthly Metal Buying Outlook report. Check it out to receive short- and long-term buying strategies with specific price thresholds.
The International Lead and Zinc Study Group released new findings that reveal in 2015, supply exceeded demand by 63kt in the global market for refined lead metal.
Over that same time frame, inventories reported by the London Metal Exchange (LME), Shanghai Futures Exchange (SHFE)and consumers and producers dropped by 83,000 metric tons, hitting 503,000 mt at the end of the year.
Meanwhile, a global lead mine production drop off of 12.1% can be attributed to a significant 25.2% decrease in Chinese production. Elsewhere around the world, output in Ireland, Australia and the U.S. was by and large offset by increases in Sweden, Peru and India.
“As in the case of lead mine production, a 7.8% reduction in world refined lead metal output was almost exclusively due to a reported 18% fall in Chinese output,” according to the report, “to its lowest level since 2009. In Europe, there was a recovery in production in the U.K. after a fall in 2014 due to a disruption in lead bullion supplies. There was no production in Peru in 2015 as a result of the continued suspension of operations at the La Oroya plant.”
Lead Price Movements Since Q1
We’ve been keeping a close eye on steel price movements over the past several weeks, and how those movements relate to other industrial metals, including lead. Metals such as aluminum, copper, nickel and, of course, lead, haven’t moved all that much since hitting multiyear lows back in February. The key factor for their movements is oil, whose recent rally appears to be losing momentum.
You can find a more in-depth lead price forecast and outlook in our brand new Monthly Metal Buying Outlook report. Check it out to receive short- and long-term buying strategies with specific price thresholds.
Steel prices continue to dominate metals news, and, for those readers who are looking to make long-term purchases in this commodities market, the Q2 update to our Annual Metals Outlook offers commentary and data to help you make those decisions. We provide the price points for the metals you source that will help guide your behavior. When a metal breaches long-term resistance levels or comes close (as we see in the present steel market) you’ll need to rethink your long-term strategy in the process. That is where this report comes in.
The gray metal recently hit a 10-month high after closing above $16 per ounce, while gold has traded flat over the past two months.
Silver hits a 10-month high. Source @StockCharts.com.
Silver keeps outshining gold thanks to the same factor we pointed out in March: Oil prices making a comeback have boosted demand for silver’s industrial uses. Gold is not used nearly as much in cars, solar panels and gadgets as silver is.
Oil Holds Near $40 a Barrel
Oil is managing to hold above $40 a barrel. Source: @StockCharts.com.
Oil prices have, so far, successfully fought off bears when they were attacked earlier this month. Oil has a huge role in the world’s economy. Higher oil prices are giving relief to market participants who were worried by its continuous fall. That helped metal prices rise in Q1. Silver’s price strength is clearly coming from its economically-sensitive role as an industrial metal.
Stock Market Rally Remains Intact
The S&P 500 rising non-stop. Will it overcome last year’s levels? Source: @StockCharts.com.
Thanks, in part, to healthier oil prices global markets have been gaining since mid-February and while this rally lasts, money keeps rotating out of safe-haven assets such as gold and bonds. Silver is less impacted than gold in this way, and that also helps silver outperform it.
Stock markets in the U.S. are acting particularly strong and, so far, they have avoided any price pullback. We will keep a close eye on stock markets and see if they can continue to go up from here as sellers could come into the market soon as prices approach last year’s levels.
Is Silver Set to Continue Gaining Against Gold?
The gold-to-silver ratio has been falling since March amid a global stock market and industrial metals recovery. Source: @StockCharts.com.
Not necessarily. But while the factors explained above keep moving in a positive direction, silver will continue to benefit. We’ll see if the rally in the base metals complex and the accompanying one in stock markets extends into Q2.
Perak, one of 13 Malaysian states, recently announced plans to jumpstart its tin mining industry in order to boost its income.
According to a recent report from The Malay Mail, Perak’s local government granted the industry approval for tin ore exploration in the region and, once identified, license to mine the metal-rich areas.
Political opposition to this recent announcement centers around allegations the state government intends to devote significant parcels of land to the tin mining effort. However, government officials denied this claim, stating that often mining companies request far more land than where they actually find tin deposits.
Tin Prices Rally
Just this week, our own Raul de Frutos wrote that tin and zinc are not leading the recent metals rally.
De Frutos wrote: “To believe this bear market is over, we would need to see these metals making significant upside moves. So far we are not seeing that.”
You can find a more in-depth tin price forecast and outlook in our brand new Monthly Metal Buying Outlook report. Check it out to receive short- and long-term buying strategies with specific price thresholds.