The price rally we’ve been cautiously documenting continued this week as cold-rolled coil took off and gained separation from its sister steel product, hot-rolled coil.
CRC is feeling the burn from massive 265% import duties on Chinese imports. You think we got our point across with those tariffs? You listening, China?
CRC may have been the big winner in industrial metals this week, but it’s not the only winner. Silver is making strides and catching up to gold. Unlike with gold, it’s not investors buoying it, either, it’s good ol’ industrial usage.
Silver’s in your cell phone, your car and lots of other manufacturing applications. Forget to turn off your plasma television? Just push a button and silver’s there to get that job done for you.
Silver and gold both have strong investor appeal right now and look like they’ll keep rising so long as that sentiment exists.
DUC, DUC Goosing Oil Prices
Okay, sure, higher oil prices helped silver gain some traction this week, too, but that doesn’t make silver any less of a workhorse. Higher oil prices helped all the metals this week. With prices now above the $40 per barrel psychological threshold, U.S. drillers have opened their drilled but uncomplete (DUC) wells and are starting to see profits from these dormant assets.
With DUCs pumping out oil here in the U.S., oil prices likely won’t be able to rise much further, but could still keep their recent gains. As we’ve said before, global oil supply and demand is a complicated game with many levers of power, but U.S. production is a big one.
Chinese Steel Overproduction Continues
Despite the good sentiment from rising prices, the overproduction of steel still looms over suppliers and manufacturers. We visited Steel Markets North America last week, and witnessed a talk by Terance Ko, of Hatch Associates.
There’s not much hope of China decreasing steel overproduction any time soon. The 100-150 million planned reduction, Ko said, likely won’t make enough of a dent in current overproduction to be felt anytime soon. Maybe tariffs will have to work where economics doesn’t.