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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.

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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.

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This morning in metal news, the European Union urges the United States to focus the scope of its national security probe — launched by President Donald Trump’s administration in April — into steel imports; nickel prices continue to tumble amid concern about global oversupply; and China’s attempt to tackle its debt could impact metal markets throughout the second half of 2017.

EU Officials Express Concern About US Steel Import Probe

On the heels of President Donald Trump’s first round of overseas visits, there remains uncertainty about the president’s stance on several issues, including whether or not Trump will pull the U.S. out of the 195-member Paris climate accord (the president is expected to make an announcement on that subject this afternoon). In addition, EU officials are concerned about the scope of the Trump administration’s national security probe into U.S. steel imports, Reuters reported.

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The probe would have negative effects on both U.S. steel producers and manufacturers which use steel, a written statement from the European Commission to the U.S. Department of Commerce argued. The EU is also hoping the probe will zero in on issues of national security and won’t broadly impact exporters around the world, should the Trump administration decide to adjust steel import policy.

Nickel Continues to Roll Downhill

The price of nickel continues to fall, this time to an 11-month low on Thursday, Reuters reported.

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There are certain models that economists use to explain markets or to illustrate market behaviour. Cyclical commodity markets are one such model, and the principle of swing producers is another.

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Among metals, nickel has been a wonderful example of both in recent years, and a Financial Times article written by a team from consultancy Woods Mackenzie ably illustrates how the metal’s current poor price performance is a result of both.

Cyclical commodity markets are invariably caused by violent swings in supply and demand. In times of rising prices, miners invest in new mines. As they take time to come to fruition, they often unhelpfully come in at the end of a commodity bull run, flooding the market with oversupply just as demand falls. Prices then collapse.

In the case of nickel, as the article reported, five years of surpluses meant nickel prices have more than halved between 2011 and 2015. Having just invested in new capacity, the miners tend to be slow to adjust. But in the end, mine closures ensue, and in the case of nickel, this resulted in the loss of about 6% of global mine supply. Supply, however, has remained more than adequate with many countries competing for market share. Read more

Our Stainless MMI took another dip in April, amid a broad sell-off in industrial metals. In addition, at the beginning of May, the Philippine parliament rejected Regina Lopez’s bid to be appointedas environmental minister. In a matter of weeks, nickel’s story has shifted from a clear supply shortfall to a rather complex narrative, ruining nickel bulls’ party.

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Nickel prices on the LME fell by 5% in the next two days after the news.

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Nickel prices reached a 10-month low this week due in part to concern over demand from China, a top consumer of the metal.

According to a report from Reuters, these concerns were supported by Chinese trade data, indicating falling imports on the alloying material used to make stainless steel.

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Nickel traded on the London Metal Exchange ended Wednesday at $9,225 per metric ton, its lowest mark since June of last year.

John Meyer, SP Angel analyst, told the news source he anticipates nickel to be supported by concern over supplies of ore from the Philippines, which recently announced the ordered closure of more than half its mines in order to protect water sources.

“There is still a lot of stock for the market to burn,” Meyer told Reuters.

Nickel Trailing Other Industrial Metals

Our own Raul de Frutos wrote earlier this month of the downward pressure seen on nickel prices during Q1, which is in stark contrast to other industrial metals that have rallied during that same time.

Wrote de Frutos: “Nickel prices are struggling to make headway this year. Nickel’s supply narrative is rather complex and it’s exposed to significant changes depending on what policy makers in Indonesia and The Philippines do next. On the other hand, stainless buyers should continue to monitor their price risk exposure. Investors’ sentiment on industrial metals remains bullish and that could still trigger unexpected prices swings on the upside.”

How will nickel 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:

A lighted underground tunnel in a nickel mine.

Nickel prices remained steady last week due to a lack of new fundamentals that would drive the commodity either up or down.

According to a recent report from the Economic Calendar, nickel traded on the London Metal Exchange at $10,210 to $10,115 a metric ton with support at $9,860/mt and resistance at $10,735/mt.

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!

Leia Toovey, writing for the Economic Calendar, said “Nickel futures experienced upside earlier in the month when Philippine President Rodrigo Duterte threatened to stop all mining in the world’s biggest exporter of nickel. This comes after the Philippines suspended mining activities at numerous nickel mines found to be in violation of environmental regulations.”

Nickel Prices Break Even in Q1

Our own Raul de Frutos recently wrote extensively on the current state of the nickel market, and found that while most industrial metals will finish Q1 2017 on the upside, nickel is one exception.

de Frutos wrote: “The metal has traded up and down to finish the first quarter close to flat. Nickel prices are significantly higher than they were one year ago and traders are now finding little reason to be any more bullish than bearish due to a mix of news that helps both positions.”

He concluded that nickel is in dire need of new fundamental price drivers, positive or negative.

“With all of this uncertainty, industrial buyers might want to wait for new clues before making purchasing decisions,” he wrote.

How will nickel 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:

Last week, the Philippines’ mining industry “expressed its confidence that the Commission on Appointments (CA) will reject Gina Lopez as the Environment secretary,” according to Philstar.com, since she was unable to win the committee members over. Lopez is among “just a few of President Rodrigo Duterte’s appointees yet to be confirmed by lawmakers,” according to a Reuters article. Nickel prices fell 10% as bears believe there will be a rejection.

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Nickel’s bull market started when Duterte became president of the Philippines in June. Prices gained throughout the year as Lopez led an environmental crackdown on the Philippine mining industry.

Developments in the nickel industry. Source: Raul De Frutos/MetalMiner analysis of LME data.

“The Philippines is the top nickel ore exporter and Lopez’s approval would probably sustain worries over supply disruptions that could lift global prices” this year, according to Reuters. On the other hand, a rejection would give miners a key win in the battle against environmentalists, adding pressure to nickel prices.

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President Duterte continues to throw support to Lopez, but at the same time he is hoping for a happy compromise between environmentalists and the mining industry, amid rising concerns over job and revenue losses. Read more

CME Group and Thomson Reuters will step down from providing the LBMA silver price benchmark auction, the London Bullion Market Association said on Friday, less than three years after they successfully bid to provide the process.

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“In consultation with the LBMA, CME Group and Thomson Reuters have decided to step down from their respective roles in relation to the LBMA Silver Price auction,” the LBMA said in a members update seen by Reuters.

The two will continue to operate and administer the silver auction until a new provider is appointed, the LBMA said. It will launch a new tender to appoint an alternative provider to operate the process “shortly”, it said.

“We would be looking to identify a new provider in the summer, and have the new platform up and running in the autumn,” an LBMA spokesman said.

The two companies launched the LBMA silver price in August 2014 to replace the telephone-based London silver “fix,” which had been in operation for more than a century, with an electronic, auction-based and auditable alternative.

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CME Group provides the electronic auction platform for the benchmark, while Thomson Reuters is responsible for administration and governance. The LBMA owns the intellectual property rights.

Philippines Might Consider Indonesia-Style Ore Export Ban

The Philippines may consider banning exports of raw minerals to encourage domestic processing and boost the value of shipments, an environment official said on Friday, as the government looks to extract more from its mining sector after a crackdown.

A lighted underground tunnel in a nickel mine

Nickel prices increased early in February with hedge funds and speculators hurrying to close bets against the metal with the Philippines moving ahead with regulations on its mining industry.

According to a recent report from the Financial Times, nickel’s climb was directly attributed to the closure of 21 mines along with the suspension of another six pits, including the nation’s largest gold mine.

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 Philippines is the world’s most significant source of unprocessed nickel ore, along with being a major supplier to China, the news source stated. A renewed emphasis on environmentalism led to Philippines’ President Rodrigo Duterte appointing a like-minded resource minister to investigate the nation’s mining industry.

“My issue here is not about mining, my issue here is about social justice,” Regina Lopez, natural resources secretary, said during a recent briefing. “Why is mining more important than people’s lives?”

Nickel Price Outlook for 2017

Lopez pointed at the mine closures, which account for nearly half of the nation’s nickel output.

“We are very pleased to see the Philippines taking this action while allowing proper mining companies which adhere to better environmental practice to continue,” analysts at SP Angel told the Financial Times, adding the whole nickel supply chain was an “environmental disaster”.

“The huge growth of ore exports into China for the production of nickel pig iron disrupted the nickel industry in recent years while causing massive environmental disruption in the mining areas and at the nickel pig-iron furnaces.”

How will nickel 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:

 

A Washington, D.C. federal judge refused Monday to halt construction and drilling on the recently approved, eight-mile final stage of the Dakota Access pipeline, rejecting the Cheyenne River Sioux Tribe’s plea for a temporary restraining order to ostensibly protect a religiously and culturally significant lake.

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A similar challenge was rejected by another federal judge last year.

Philippines Environment Czar Cancels 75 Mining Contracts

The Philippines’  Environment Ministry, under the direction of Environment and Natural Resources Secretary Regina Lopez, on Tuesday ordered the cancellation of 75 mining contracts, stepping up a campaign to stop extraction of resources in sensitive areas after earlier shutting more than half of the country’s operating mines, Reuters reported. The contracts are all in watershed zones, with many in the exploration stage.

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They cover projects not yet in production and the latest action by Lopez suggests she will not allow them to be developed further. The move turns up the heat in her battle with the mining sector after she ordered the closure of 23 of the country’s 41 mines earlier this month on environmental grounds.