June MMI Suffers a Great Correction… Or Did it?

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While nearly all of the metals markets we track were up in May, our June MMI has experienced what’s believed to be a broad market correction that has touched nearly every metal (only the specialized and range-bound Rare Earths MMI saw an increase this month).


The Automotive MMI was our second-biggest “winner,” thanks to holding its value from last month. The biggest loser was our Construction MMI, which fell nearly 10% as construction products such as rebar and copper tubing saw heavy losses.

Correction Drivers

Two factors dragged metal prices down in May: The Chinese government softened expectations of further stimulus while fighting speculation by increasing margins and fees for trading. Second, in the beginning of the month the U.S. dollar strengthened amid new expectations that the Federal Reserve might be more aggressive than previously thought in raising interest rates, but that quickly changed late in the game after a disastrous jobs report and the dollar is now falling again.

Chief Forecasting Analyst Raul de Frutos sees this movement as “a normal reaction as prices zigzag, and we don’t see enough evidence to turn bearish (on metals) yet.”

Two-Month Trial: Metal Buying Outlook

We are now very much back in a wait-and-see period, expecting a bounce back in prices, but also very understanding of the weakness many of the markets we track still face thanks to oversupply and waning stimulus in China.

U.S. Steel prices, however, are separating themselves from what’s happening in world markets as anti-dumping and countervailing duties orders have taken root.

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