Week In Review: Metals Prices Keep Falling… Just Like Oil Prices

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This week was stark proof that the metals industrial buyers purchase could see their prices fall a lot further, despite the historic lows many are already at.

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Gold hit a fresh five-year low. The year-long erosion of steel prices continued. Closure after closure is not helping the price of zinc. The President and CEO of the Aluminum Association, while admitting the headwinds the industry faces, is touting its benefits.

It Could Be Worse

In these difficult times it’s important for producers to remember one silver lining: at least they’re not selling oil! Oil fell below $40 a barrel again this week and ahead of an OPEC meeting Saudi Arabia and its allies are expected to double down on production in an attempt to force smaller, North American shale oil drillers out of the market.

With oil prices down this landowner can at least still sell his cattle at a reasonable price. Source: Adobe Stock/ W.Scott

You’d think that with oil prices down this landowner can at least still sell his cattle at a reasonable price, but low oil prices are dragging down all commodities. Source: Adobe Stock/W.Scott.

The joke, though, might be on the Saudis as my colleague Stuart Burns has previously said, the shale oil drillers have simply become so lean and mean that they can’t be undercut. We call it a reshalient industry.

On top of the glut from OPEC, Iran is looking forward to getting back in the game after the UN nuclear deal opens its oil products back up to world markets. So, it’s easy to foresee a bigger glut in the near future. Oil is a key commodity market whose price effects prices of just about all other commodities thanks to its effect on transportation and production costs.

Low, Low Prices… That Could Go Lower

If you’re a buyer it’s all gravy with lower surcharges, production costs and prices coming your way. Black Friday has lasted all year for buyers of industrial metals and it looks like the sale will continue well into 2016. I saw some interesting additive manufacturing techniques this week that could lower production costs even more in the near future, too.

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Of course you could always save more by timing your purchases to keep from buying too early, so check out our forecasting offering — there’s a free trial right now — to know when to buy and when to hold back. Happy buying, readers!

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