The past year since the last MetalMiner Forecasting Workshop has been a turbulent one for metals markets.
The onset of the COVID-19 pandemic, plummeting demand, plant idlings, fast-recovering demand in certain sectors, bullwhip effects, material shortages, rising prices, rising delivery premiums — on and on and on. For metals buyers, planning out metals spend — let alone getting any material at all — proved to be a challenging proposition.
But now, well over a year into the pandemic, economic conditions are improving, broadly, in the United States.
It’s time to take a look at the year ahead.
As MetalMiner CEO Lisa Reisman and Don Hauser, vice president, business solutions, noted during a recent ROTH Capital Partners webinar that we remain in a bull market for metals, even as some have recently shown signs of consolidation. Copper, for example, has fallen off after reaching an all-time high in May. Steel prices continue to rise, but at a less frenetic pace than previously.
So, what does it all mean for metals buyers planning out their spend for the year ahead?
MetalMiner 2022 Forecasting Workshop
Industrial buying organizations can get a leg up on their budgeting and forecasting for the year ahead during this year’s virtual MetalMiner 2022 Forecasting Workshop, scheduled for 10 a.m.-1 p.m. CST, Aug. 25, 2021.
MetalMiner experts Reisman, Hauser, Editor-at-large Stuart Burns, Senior Forecast Analyst Maria Rosa Gobitz and Principal Data Analyst Marcos Briones Álvarez will lead the three-hour workshop.
Participants will gain insights into, among other things:
- Which steel contracting mechanisms to use this year (they might not match last year’s)
- How to use “should-cost” models
- The MetalMiner 2022 metals forecast, including a short-term forecast briefing for base and ferrous metals
To book your seat for the event, visit the 2022 Forecasting Workshop landing page, where you’ll find more information about the event and registration details.
MetalMiner CEO Lisa Reisman weighed in on some of the market dynamics at play.
“I think we have a couple of dynamics this year that look or appear markedly different,” she said. “First, we still have significant supply chain challenges, disruptions, shortages and delays. These impact material buying and planning as well as from where companies should be seeking materials.
“Second, the short-term, post-pandemic inflation burst now appears to be settling into a longer-term pattern (at least mid-term) and this factor alone plays a great role in how buying organizations should and need to be thinking in terms of their annual contracts. Furthermore, oil prices and the entire energy equation have a number of conflicting narratives. The relationship between oil, commodities and industrial metals is a tight one. Where oil goes, so does metal prices.”
Producers haven’t added capacity, she noted, instead opting to carefully control supply.
“Product substitution, another strategy to mitigate high prices, does not appear as viable as it did in previous markets,” she added.
Steel, aluminum trends
Reisman added carbon steel buying strategies that might have made sense last year won’t work as well this coming year.
In terms of pricing “relief,” a flattening of prices paired with material availability might be all buyers can hope for, as opposed to an outright retrenchment.
“Going into next year, availability is going to be more important than cost, which very few people have ever negotiated on or even thought about,” Hauser explained.
As for aluminum, buyers need to think creatively. This is especially so given plans by Russia to impose export taxes on a number of metals.
“Aluminum has some additional supply pressures recently added pushing up the Midwest premium,” she added. “This means buying organizations need to continue to think much more creatively around the full ‘total cost’ — meaning, ingot+MW premium+conversion premium. Hedging is something companies need to reconsider if they haven’t done that previously.”
Burns emphasized the use of technical analysis tools when surveying the aluminum market.
“Contrary to expectations earlier in the year, some of the drivers of long lead times and high prices have not eased as expected,” Burns said. “Global logistics delays and sky-high rates are as bad now as in Q1 after briefly dipping in the spring. Aluminum mill lead times are in most cases into next year. As mills run at 100% capacity, we are seeing plant breakdowns adding to disruption.
“The fundamentals appear broadly bullish but conflicted with a number of potential (if unlikely) risks to the downside occasionally injecting some pessimism to offset the supercycle stories.”
Workshop sneak peek July 28
Those interested in learning a little more about the workshop can attend the MetalMiner monthly webinar scheduled for 11:30 a.m. CST on Wednesday, July 28.
Visit the registration page for the event for more information and registration details for the free event.