Author Archives: Belinda Fuller

The Aluminum Monthly Metals Index (MMI) reversed last month’s three-point increase with a three-point decline back to 83.

LME aluminum price dynamics switched late in January, with a precipitous drop setting prices down to a new short-term low.

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The Copper Monthly Metals Index (MMI) dropped six points this month to 70, a new long-term low, although close in value to October 2019’s reading of 71.

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LME copper prices rallied as January progressed then dropped precipitously later in the month due to demand uncertainty stemming from the coronavirus outbreak in China.

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The Stainless Steel Monthly Metals Index (MMI) gave up five points this month, setting the value back to 70.

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LME nickel prices dropped slightly below the $13,000/mt price level in late January when industrial metals prices, generally speaking, declined as markets reacted to China’s coronavirus situation.

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The Raw Steels Monthly Metals Index (MMI) gave up some of last month’s gains with a one-point drop to 71 (following a three-point increase to 72 last month).

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Recent U.S. steel price increases flattened out in January, while plate prices dropped back somewhat from recent price highs.

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The Raw Steels Monthly Metals Index (MMI) showed some strength again this month with another three-point increase, rising to 72.

U.S. HRC and scrap prices increased quite a bit, while LME billet prices also registered double-digit increases.

Key forms of steel increased across the board in the first half of December 2019. Plate prices increased the most, with prices spiking a couple of times during the month.

Source: MetalMiner data from MetalMiner IndX(™)

However, HRC, CRC and HDG increases lost some steam later in December.

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Following from the long-running case recently won by the U.S. over whether the European Union (E.U.) provided Airbus with subsidies, on Dec. 2 the World Trade Organization (WTO) rejected the E.U.’s claim that subsidies were no longer provided to Airbus.

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This ruling gave the U.S. scope to execute an additional Review of New Tariffs on E.U. imports.

On Dec. 12, the U.S. Trade Representative (USTR) issued a notice additional products may see tariff rates of up to 100%, as listed in Annex II, posted at Regulations.gov.

This annex includes only products not currently affected by Airbus-related Section 301 tariffs issued during late 2019.

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The Stainless Steel Monthly Metals Index (MMI) gained one point for a January reading of 75.

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Just a few months back, in September 2019, the index hit a five-year high of 91.

LME nickel prices increased again in the second half of December after finding support just above the $13,000/mt price level:

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The Copper Monthly Metals Index (MMI) increased by three points this month to 76, the highest value seen since hitting 78 in May. Individual price increases in the Copper MMI basket fell in the range of roughly 1-6%.

LME copper prices managed to regain the $6,200 level but proceeded to move sideways from there due to a lack of further indications regarding a pickup in demand.

Source: MetalMiner analysis of London Metal Exchange (LME) and FastMarkets

From a longer-term perspective, copper prices do not appear particularly strong, but they have not dropped all the way back to 2016 price levels — indicating some level of supply dynamics is still at work and supporting prices.

Source: MetalMiner analysis of FastMarkets

Overall, recent weekly trading volumes looked positive overall but muted from a volume perspective, indicating limited support at this time for the recent uptrend (reflected in the sideways turn in the second half of December).

SHFE copper prices finally break six-month sideways trading band

Like LME prices, SHFE copper prices broke out of a short-term sideways trading band that formed in June and are now trading higher.

Source: MetalMiner analysis of FastMarkets

Breaking the next critical resistance level of CNY 50,000/mt will provide a clearer signal that higher prices will hold throughout Q1 2020.

Source: MetalMiner analysis of FastMarkets

Positive reports regarding a pickup in manufacturing demand late in the year supported prices.

Additionally, recent government measures — particularly monetary easing — appeared to support construction demand, a positive development for copper prices.

Demand for copper, a critical industrial, automotive, and construction metal, will remain high.

Current prices remain supported from a long-term perspective, even in the weaker demand environment seen since last year.

Source: U.S. FRED

Chinese construction demand corresponded with noticeable price increases beginning in 2004. That was followed by a drastic decline in prices and trading volumes in 2008-2009, corresponding to the timing of the global recession, which stalled out property growth in China.

While copper presently trades with lower volumes than during the peak years of China’s construction activity, overall copper trading volumes remain higher than during past decades. Baseline demand should continue to support the somewhat higher copper price level. Falling mining output also matters but may exert less immediate impact on prices.

Looking at the long-term chart of price values provides some sense of the metal’s price downside,  upside risk and potential volatility.

Assuming that supply moves toward surplus, as projected for the year by the International Copper Study Group (ICSG) according to its October annual forecast for 2020, it may be difficult for copper prices to increase this year unless demand improves, despite the long-term downtrend in mine supply.

What this means for industrial buyers

Copper prices increased but then stalled out and have not yet regained momentum.

With prices already somewhat higher, industrial buying organizations will need to watch the prices carefully from here for further increases.

Need a platform to view all of your metals and forecasts together in one place? Request a demo of the MetalMiner Insights platform.

Buying organizations seeking more monthly insight into copper price trends can learn more about our MetalMiner Monthly Buying Outlook.

Free Partial Sample Report: 2020 MetalMiner Annual Metals Outlook

Actual copper prices and trends

Copper prices increased across the board this month, with the LME primary three-month price showing the largest gain at 5.8%, to $6,215/mt. Japan’s primary cash price increased by 5.4% to $6,421/mt.

China’s primary cash and copper wire prices both increased by 4.6%, up to $7,045/mt and $7,040/mt, respectively. China’s copper bar price increased by 4.5% to $7,034/mt. China’s copper #2 scrap price increased by 1.0% — the weakest increase in the index this month — to $5,514/mt.

U.S. producer copper grade 110 and grade 122 increased by 4.3%, both now at $3.62 per pound. U.S. producer copper grade 102 increased by 4.1% to $3.84 per pound.

Korean copper strip increased by 2.8% to $8.14 per kilogram.

The Indian copper cash price increased by 2.3% to $6.20 per kilogram.

The Aluminum Monthly Metals Index (MMI) bounced off last month’s three-year low with a three-point increase to 86. All prices in the index increased by more than 3%.

LME aluminum prices increased in December and surpassed $1,830/mt in early January.

Source: MetalMiner analysis of London Metal Exchange (LME) and FastMarkets

Now analysts are watching to see if lackluster demand will allow recent increases to stick.

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The Raw Steels Monthly Metals Index (MMI) showed some strength this month with a three-point increase, rising to 69 from 66 last month.

U.S. steel prices rebounded in November when recent mill prices increases took effect.

Source: MetalMiner data from MetalMiner IndX(™)

Once again, plate price increases have lagged behind the other forms, (similar to July, when plate prices failed to gain):

Source: MetalMiner data from MetalMiner IndX(™)

However, plate prices now look in line with historical norms, in terms of relative values across key types. Plate prices may now begin to move with other prices, rather than on a unique trajectory.

U.S. capacity utilization slipped below 80% during late November. The rate stayed lower during the week ending Dec. 7, when capacity utilization totaled 78.7% based on production of 1.82 million tons. During the same period last year, production totaled 1.86 million tons based on a capacity utilization of 79.4%.

Year-to-date capacity utilization through Dec. 7 totaled 80.1%, with 90.74 million tons produced. This represents a 1.9% increase compared to last year’s production of 79.06 million tons during the same period (based on a capacity utilization of 78.2%).

Chinese HRC, CRC steel prices show slight gains

Chinese HRC and CRC prices increased during November — by roughly 6% and 4.5%, respectively — bringing prices back to September levels.

Source: MetalMiner data from MetalMiner IndX(™)

HDG and plate prices held flat, however, keeping prices among the four key forms sideways overall.

Nippon Steel to potentially shutter two blast furnaces; Japanese fiscal stimulus package likely to boost demand

In order to better align fixed production costs with domestic demand, Nippon Steel may close two of 15 blast furnaces in operation across the country by March 2024.

Demand for steel slowed for the Japanese producer due to decreasing domestic population, higher export barriers, and trade issues, according to management team discussions with the press.

Typically, the company exports more than 40% of output. Recently, however, export levels suffered due to the desire of other Asian countries to boost domestic steel production, in addition to increased Chinese exports.

The Japanese government recently announced a $122 billion fiscal stimulus package that will likely boost demand levels due to infrastructure development targeting natural disaster mitigation.

Major merger on the horizon for Cleveland-Cliffs, AK Steel

Cleveland-Cliffs Inc. recently announced its intent to purchase AK Steel Holding Corp. for $1.1 billion.

As detailed in a recent MetalMiner article, the deal provides Cleveland-Cliffs with built-in demand for pellet production, while also entering Cleveland-Cliffs into steel production.

Cleveland-Cliffs now derives around 23% of annual income from AK Steel, the company’s largest customer with the exception of ArcelorMittal SA.

The agreement still faces antitrust vetting. Completion of the deal is expected during H1 2020.

U.S. economic indicators remain positive overall

While growth remains somewhat constrained as 2019 comes to a close, the U.S. economy continues to maintain momentum overall.

According to the most recent Beige Book report released by the Board of Governors of the Federal Reserve System, based on data collected through Nov. 18, economic activity in aggregate expanded modestly from October through mid-November, at a similar pace as the previous reporting period.

Most districts reported increases in auto sales. Also, an increasing number showed improved manufacturing activity, but the majority still reported flat activity.

Residential home sales were flat to higher across districts, while residential construction improvements expanded to more areas.

Nonresidential construction continued to increase modestly, while the energy sector showed modest deterioration in activity.

The Federal Reserve Bank of Atlanta’s GDPNow model estimate of GDP growth jumped by 0.5% to 2.0% on Dec. 6 based on recent data inputs.

GDPNow provides a running forecast of the official estimate in advance to its release and is based only on mathematical results of the model.

What this means for industrial buyers

Improved demand appeared to push up prices this month.

So far, however, price increases look fairly mild, with some recent momentum attributed to pushed-forward Q1 2020 demand.

It’s still too soon to tell if price increases will continue from here.

Buying organizations interested in tracking industrial metals prices with ease will want to request a demo of the all-new MetalMiner Insights platform.

Buying organizations seeking more insight into longer-term steel price trends may want to read MetalMiner’s Annual Metal Buying Outlook.

Free Partial Sample Report: 2020 MetalMiner Annual Metals Outlook

Actual raw steel prices and trends

LME billet three-month prices increased the most among index values this month, rising by 9.3% month over month to $262/st as of Dec. 1.

The U.S. Midwest HRC futures spot price dropped 0.4% to $493/st, while the Midwest HRC futures three-month price increased by 7.5% to $590/st.

U.S. shredded scrap prices increased 4.4% to $235/st.

All Chinese prices in the index increased. Coking coal increased the most, by 6.4% to $264/mt, while HRC increased by 6.3% by $530/mt. Steel billet increased by 2.9% to $510/mt, while slab rose by 2% to $519/mt.

Iron ore prices remained essentially flat, with a mild 0.1% increase to around $64 per dry metric ton.

Korean scrap prices registered a third double-digit monthly decrease, down by 11.5% to $72/mt. Korean pig iron prices also dropped this month, falling 1% to $364/mt.