News like this doesn’t help the renewable energy sector, nor the industrial metals used therein.
Crude oil prices are at their lowest since 2012, with Brent crude falling 2% to hit $92 a barrel, while the West Texas Intermediate (WTI) price coming in under the $90-per-barrel benchmark at $88.60. With Chinese demand slowing down, the additional global supply is doing its part to harm benchmark oil prices – with the US shale oil boom not helping matters.
Which leads to the question: what effect will this have on metals pricing? With OCTG and other metal-based products comprising a significant portion of the US-based oil and gas infrastructure, their pricing may hinge upon what is happening in the broader global marketplace – or will it? With US manufacturing advocating for increased production to sustain its energy needs domestically, perhaps concerns over the international energy market (supply/demand and pricing) don’t apply as they once did.
In fact, it’s the other way around – “while the United States remains a modest oil exporter, its surging output pushes other oil, particularly from West Africa, out of the American market, helping to lower prices,” according to the New York Times. According to a recent Citigroup report cited by the Times, “oil imports to the United States have fallen since 2007 by 8.7 million barrels a day, ‘roughly equivalent to total Saudi and Nigerian exports.'”
Effect on Renewables Sector
All that is to say, this fossil fuel – in the same way as coal – remains economical for US producers and manufacturers. Which, in turn, may make the case for producers of wind and solar energy a bit tougher, at least in the near-to-medium term.
But as long as the US and Chinese governments keep offering breaks and subsidies for solar investment, why not ride the “Uneconomical Express” train just a bit longer? (Ok, that was a bit harsh – but until we see an irrefutably strong economic argument emerge from the renewables side, artificial support will continue.)
Particularly interesting to us is the progressive weakening of steel plate prices across global regions, as well as that of neodymium, within our monthly Renewables MMI®, which overall registered a value of 66 in October, unmoved from September’s value. Compare with last month’s report.
Plate prices dropped in all 4 markets tracked by the MetalMiner IndX℠ this month – and indeed, Chinese, Japanese and Korean markets have been in a long-term decline. However, as a sign of continued US economic improvement, our US steel plate price is on its way up:
This Month’s Metal Price Movements
After falling 3.8%, neodymium finished the month at $61,089 per metric ton. Chinese steel plate prices fell 3.1% to $566.90 per metric ton. After rising the previous month, US steel plate prices dropped 1.4% to $869.00 per short ton.
Prices for Chinese cobalt cathodes remained constant this past month, holding at around $37,631 per metric ton. The price of silicon held steady around $2,264 per metric ton last month.
The Renewables MMI® collects and weights 8 metal price points used extensively within the renewable energy industry to provide a unique view into renewable energy metal price trends over a 30-day period. For more information on the Renewables MMI®, how it’s calculated or how your company can use the index, please drop us a note at: info (at) agmetalminer (dot) com.