A Tale of Commodity Price Volatility in 3 Industrial Metal Sectors

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We’ll have to ride the metal price volatility roller-coaster a bit longer.

As metals sourcing and procurement firms begin thinking about their 2014 budgets – and the commodity market trends that guide them – think of MetalMiner as a small bug in their ears.

When it comes to metals and other commodities (oil, iron ore, coking coal, electricity, etc.), we look at the trends and try to tell you what to expect. So are commodity prices as volatile as they were this time last year?

Monthly Metal Price Fluctuation

When I chatted with MetalMiner Editor Lisa Reisman for an article not too long ago, she cited quite a salient point when it comes to historical trends in commodity prices.

“Markets slowly drifting downward tend to make folks more comfortable and less concerned about sudden price changes,” she said. “But when one actually looks at the month-to-month price changes for many metals categories that we track (and of course, we now have oil price spikes), the volatility remains significant. If companies lose sight of this fact, they will lose money.”

Just take the latest readings of four core industrial metal sectors we track as an example:

chart of historical steel prices trends september 2013

The trendline of our steel price index says it all. But the story behind the story, so to speak, is that one of the main drivers of steel demand – construction – has been anything but uber-robust. Rising interest rates in terms of the housing market are a factor. So is lower-than-average capacity utilization, not to mention overall manufacturing indexes growing at disappointingly sluggish rates.

graph of historic stainless nickel price trends september 2013

Volatility within the stainless steel sector is nothing new, and our monthly stainless price index proves that out. While the long-term forecast for the nickel market appears weak, short-term effects brought on by market momentum, perceptions and current economic conditions could blow prices in the opposite direction. Sure, our monthly Stainless MMI® rose last month, but US 304/316 stainless surcharges clocked in at their lowest since January 2012 – those are more subject to volatility.

chart of historical copper prices trends september 2013

Looking at the historical record, we can see that our copper price index is pretty restless. According to Lisa, the index increase doesn’t really reflect the copper market’s long-term fundamentals. “With positive ISM data on the US markets and improved manufacturing activity in Europe and China, the markets jumped, so we still see quite a bit of short-term volatility,” she said.

Volatility Problem? We’ve Got a Conference For That

Get a much closer look at these four sectors – along with actual 8-week price forecasts to take home – at our upcoming commodity conference. See the agenda and register:

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