This Morning in Metals: Chinese Steel Market Slides

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This morning in metals news, Chinese steel prices are dropping, Rio Tinto is leading the copper charge in Australia’s Great Sandy Desert and Asian aluminum prices are coming down.

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Chinese Steel Market

Chinese steel prices are entering a bear market, according to a Reuters report.

Steel prices hit a five-month low Monday, Reuters reported.

MetalMiner’s Take: U.S. steel-buying organizations ought to watch China’s demand very carefully now, as price trends in China lead price trends in the U.S.

Lower oil prices combined with sluggish Chinese demand does not bode well for the industrial metal’s long-term bull market. The dramatic shift in oil prices and lower metal pricing coming out of China represent two significant variables tracked by MetalMiner with respect to calling a bull or bear market.

December forecast subscribers will be the first to learn whether or not MetalMiner will change its long-term outlook. A shift in outlook would also signify a switch in sourcing strategies.

Copper in the Desert

Rio Tinto is leading the way when it comes to copper mining in the remote Great Sandy Desert of Western Australia, Reuters reported.

According to the report, the miner has put in 30 exploration licenses for the area, leading to speculation that Rio has possibly made a significant discovery in the area.

Aluminum Prices Dropping

Asian aluminum prices are on the downswing, including in Japan, according to the Nikkei Asian Review.

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Aluminum ingot prices in Japan in October were approximately 10% lower than in the U.S., according to the report.

MetalMiner’s Take: It is arguable whether the fall in Asian aluminum prices is a result of U.S. tariffs or a slowing of metal demand in Asia.

Prices in Europe have been supported by high prices European mills are achieving in the U.S. market, so the same should have been true for Asian suppliers in general.

Only Chinese mills are facing exceptional tariff barriers; mills in South Korea, Taiwan and Japan do not face the same obstacles. Chinese production is sliding and primary aluminum output has been falling this quarter, which some analysts are chalking up to an early onset of environmental controls for the winter heating season. If the market were being artificially constrained, domestic Chinese prices would rise as a result in the tighter market — but that is not the case.

Domestic prices have remained broadly stable, suggesting the market is slowing due to lower domestic and regional demand.

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