Second Half Metals Outlook Suggests Rising Metal Prices

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Based on our content of this week, one might conclude we only cover aluminum. However, regular readers know we endeavor to cover the entire spectrum of industrial metals. Late last week, MetalMiner sponsor Supply Dynamics released its metals outlook (scroll halfway down the page to see it) for June December 2011. What makes the report interesting has less to do with the specific price direction per se (though we’ll get to that in a minute) but the fact that the company sits in the enviable position of supporting “16 of the world’s largest OEM and thousands of their affiliated part manufacturers¦ according to the report, and that makes their take on the markets interesting.

Metal Forecast for H1 2011

More important to metal buying organizations forecast accuracy. Here Supply Dynamics published its own track record. The record looks pretty strong they called for nickel alloy, aluminum alloy price increases, increased stainless bar pricing, (flat pricing on stainless sheet), big increases for carbon steels as well as increases for copper alloys. The carbon steels increased the most, particularly flats. Going forward, the firm predicts nickel alloys to flatten, aluminum alloys to increase, stainless steels to remain flat (including both long and flat products), carbon steels somewhat mixed (flat products increasing but longs and structurals remaining flat) and copper alloys prices to increase.

Metal Price Drivers

The firm points to six factors impacting metal prices for the second half of this year. The first factor, global economic health and risks, contains many key elements, among them all indicators we regularly track and comment on as well the sovereign debt crisis, US debt, oil prices, China and slowing emerging market demand, the end of QE2 and consumer sentiment. Supply Dynamics provides a lengthy explanation of QE2 in context of the threat of rising interest rates. Of course, interest rates play a huge role in various metals markets, particularly aluminum and copper. The forecast also touches upon many other macroeconomic indicators, particularly around consumer sentiment and energy prices.

Readers will appreciate the “insiders insight on mill capacities and lead times. In particular, “highperformance alloy and stainless steel mills are beginning to fill and lead times are extending over the first six months of 2011. The lead times for nickel alloy bar products have extended from 27 weeks to 30 weeks and stainless steel bar lead times have extended from 17 weeks to 20 weeks. The report contains additional specific lead-time information for other key materials.

Aerospace Demand Drives Certain Markets

Titanium may see additional price increases as the metal has already increased by 45 percent from January through June of this year, according to Supply Dynamics. Moly, though, used by the aerospace industry, among others, will likely remain stable for the balance of the year.

–Lisa Reisman

Join us for a FREE upcoming webinar: “High Performance Metals & Alloys Market Outlook and Primer,” featuring speakers Scott Fasse of United Performance Metals and Jorge Vazquez of Harbor Aluminum. Click here for additional details and to register.

Disclosure: Supply Dynamics is a Sponsor of MetalMiner

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