Author Archives: Belinda Fuller

The Stainless Steel Monthly Metals Index (MMI) bounced back this month, rising two points to 69 after last month’s two-point drop.

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Movements of individual prices within the index were mixed.

LME nickel prices increased the most among price points in the index, up by 6.8% month over month. After June’s trend toward higher prices, the price dropped around July 1, then surged again and is essentially moving sideways at this time.

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

In June, rainy weather brought widespread flooding to Indonesia’s nickel hub on Sulawesi island. Estimates indicate a production shortfall of between 50,000-100,000 tons of nickel ore as a result, according to Indonesia’s Nickel Miners Association in press reports.

According to the latest numbers published by the International Nickel Study Group (INSG), as reported by Reuters, the supply deficit for the refined nickel market came in at 27,000 tons for the first four months of the year, down from 59,000 tons during the same period in 2018. The most recent INSG projections indicate the supply gap will close during the second half of 2019.

Domestic Stainless Steel Market

Source: MetalMiner data from MetalMiner IndX(™)

Stainless 304 and 316 NAS surcharges fell again this month, now similar to surcharge rates at the start of the year. Surcharges are still above 2016 lows and are still moving within the sideways band that formed in December 2016. Should the supply gap close as projected, this may cause surcharges to fall even further.

What This Means for Industrial Buyers

Stainless price performance was mixed this month, as primary nickel prices rose while stainless surcharges dropped once again.

For buying guidance, including resistance and support pricing levels by metal, industrial buying organizations can try a free two-month trial of our Monthly Metal Buying Outlook report.

Buying organizations will want to read more about our longer-term steel price trends with our Annual Outlook.

Actual Stainless Steel Prices and Trends

The U.S. 316 and 304 Allegheny Ludlum stainless surcharges dropped again this month — by 6% and 9%, respectively, to $0.83/pound and $0.56/pound.

Meanwhile, nickel prices were up quite a bit. The LME primary 3-month price increased by 6.8% to $12,710/mt. China’s primary nickel price increased by 4.27% to $14,658/mt. India’s primary nickel price increased by 4.3% to $13/kilogram.

Chinese nonferrous FeCr lumps decreased by 3% to $1,595/mt and FeMo lumps dropped by 2.3% to $17,548/mt.

MetalMiner’s Annual Outlook provides 2019 buying strategies for carbon steel

The remaining prices in the index generally increased mildly, between 0.6% and 1.9% (with the exception of Chinese 316 stainless scrap, which declined by 0.4% to $1,908/mt).

buhanovskiy/AdobeStock

The Raw Steels Monthly Metals Index (MMI) fell slightly this month, following last month’s more significant decline. The index came in at 75 this month, down one point from the previous month.

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U.S. steel prices continued their clear drop this month, with prices dropping for HRC, CRC, HDG and plate.

Source: MetalMiner data from MetalMiner IndX(™)

HRC prices dropped by around 12% over the course of June, the steepest price decline in the Raw Steels basket of metals. HDG dropped by around 7%. CRC and plate prices dropped by 5% and 4%, respectively.

Recently, the American Iron and Steel Institute (AISI) reported that U.S. steel production capacity utilization reached 79.4% during the week ending on July 6, up from 77.4% one year ago. Capacity utilization decreased from the prior week by 0.2%.

Production totaled 1.85 million tons for the week, with year-to-date production at 50.46 million net tons based on a capacity utilization of 81.2%. So far this year, production numbers increased by 5.3% compared to the same period last year.

According to the most recently published U.S Census Bureau numbers, May steel imports dropped to a value of $1.9 billion, compared with $2.5 billion in April. In May, imports totaled 1.9 million metric tons compared to 3 million metric tons in April. Imports of blooms, billets and slabs dropped during May, while imports of reinforcing bars, sheets and strip, and heavy structural shapes increased.

Through the first four months of the year, imports totaled 10.4 million metric tons, down from 11.3 million metric tons during the same period of 2018. While imports of hot-rolled and cold-rolled sheets fell, imports of blooms, billets and slabs increased compared with the same period last year.

The U.S. Department of Commerce ruled July 8 in favor of duties on structural steel imports from China and Mexico based on the argument that the imports benefited from state subsidies. Meanwhile, the Department of Commerce made a negative determination with respect to imports of fabricated structural steel from Canada, finding Canadian exporters benefited from countervailable subsidies ranging from 0.12-0.45%.

Chinese HRC, CRC Prices Moving Sideways

Source: MetalMiner data from MetalMiner IndX(™)

Rather than continuing to drop, prices of HRC and CRC increased slightly this month; however, they did not fully recover from the previous month’s price drops. HDG and plate prices, meanwhile, continued to drop into early July.

The Chinese government’s stimulus measures, combined with additional capacity closures, appear to be supporting some prices at this time.

Reuters recently reported Hebei, China’s top steelmaking province, moved up its December 2019 capacity cut targets by two months to the end of this October, according to provincial authorities.

Coal and coke will also see planned reductions of 10 million tons and 3 million tons, respectively. as authorities continue to work on improving air quality. Last year, around 12 million tons of steel capacity, along with some coal and coke capacity, were eliminated in the region and some cities closed steel production.

Regardless, Chinese steel output in aggregate continues to rise in 2019, as demonstrated by the production volume statistics published by TradingEconomics.com. Figures indicate steel production hit a new monthly high in May of around 89.1 million tons, up from the then-monthly high in April of 85 million tons.

With iron ore prices still high and representing around 30% of the price of steel, this may also provide some support to Chinese steel prices.

What This Means for Industrial Buyers

The global steel prices tracked by the index showed mixed performance this month, with U.S. prices showing the greatest weakness.

The U.S. Midwest HRC futures spot price dropped significantly, while the U.S. Midwest HRC futures 3-month price increased, showing some bullishness despite currently falling prices.

With prices giving mixed signals, industrial buying organizations seeking more pricing guidance should request a free two-month trial of our Monthly Metal Buying Outlook report.

Buying organizations will also want to read more about longer-term steel price trends can do so with MetalMiner’s Annual Outlook.

Actual Raw Steel Prices and Trends

Once again, U.S. prices registered the largest price decrease this month.

The U.S. Midwest HRC futures spot price dropped by 7.6% on a month-over-month basis to $536/st, while the U.S. shredded scrap price dropped by 7.1% to $274/st.

In contrast, the U.S. Midwest HRC futures 3-month price increased by 2.4% to $600/st.

Korean standard scrap steel prices increased by 5% to $133/st. Korean pig iron prices increased by 1.9% to $341/st.

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China’s HRC price fell by 3.5% to $497/st and steel slab dropped by 1.5% to 490/st, while other Chinese prices in the index increased. Steel billet increased by 2% to $493/mt, while the remaining Chinese prices increased in the range of 0.5% to 1%.

Bombardho/Adobe Stock

The Copper Monthly Metals Index (MMI) rebounded to 74 following last month’s fairly sizable drop from 78 to 73 (hitting a 2019 index  low).

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LME copper prices dropped by nearly $100/mt around the first of July after gaining strength in June, then traded sideways during the first week of the month.

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

Meanwhile, LME warehouse stocks increased.

Source: MetalMiner analysis of FastMarkets

However, copper mining disruptions continue to impact mine output. According to Reuters, Chile’s exports of copper declined by 14% in June compared with June of 2018, coming on the heels of extremely rainy weather early in 2019. Additionally, falling ore grades continue to hurt Chilean mining production.

The Congo army recently evicted illegal miners working at Kamoto Copper Company (KCC), a Glencore subsidiary in the Kolwezi area. According to the company, around 2,000 illegal, small-scale miners intruded illegally daily, on average. The move followed a landslide that killed 43 people at the KCC concession.

Zambia announced plans for a law that will compel miners to procure locally, according to the country’s mine minister, as reported by Reuters. Zambia continues to take a greater role in the mining sector. Zambia ranks second in Africa in copper export volume, with the metal dominating the country’s exports.

Chinese Copper Scrap vs. LME Copper

The price gap between Chinese copper scrap and LME copper narrowed last month considerably due to the steep LME price drop. This month, however, the slight LME price increase exceeded the slight increase in Chinese copper scrap prices.

Notably, China’s refined copper output in May dropped by 5.2% compared with May 2018. Output totaled 711,000 tons, marking a 3.9% decrease compared with the previous month.

The recent crackdown on scrap imports has likely caused the production decline. Further restrictions impacting high-grade copper scrap came down in early July as the Chinese government continues to ramp up its crackdown on scrap.

Given that scrap imports fueled about 10% of production last year, producers need to find alternative sources of raw material. According to China Minmetals Corporation in press reports, copper imports made by the company from a preferred Chilean trading partner look set to increase this year to a value of $900 million.

What This Means for Industrial Buyers

With copper prices showing some strength in June, industrial buying organizations will need to pay careful attention to macroeconomic growth, which could continue to support prices.

It’s important for buying organizations to understand how to react to copper price movements. The MetalMiner Monthly Metal Buying Outlook helps buyers understand the copper marketplace.

Actual Copper Prices and Trends

Copper prices strengthened this month across the index with the exception of Korean copper strip, which dropped 0.4% to $8.29 per kilogram.

The Indian copper cash price increased by 10.9%, the largest increase in the index this month, to $6.53 per kilogram.

Chinese prices turned around this month, as all of the Chinese prices in the index increased. China’s primary cash price and copper wire price increased by 2.7% to $6,898/mt and $6,892/mt, respectively. Copper bar increased 2.8% to $6,885/mt.

Chinese scrap copper #2 increased by 0.6% to $5,592/mt.

U.S. prices in the index all increased by 1.7%. U.S. copper producer copper grade 110 increased to $3.49 per pound, grade 102 priced at $3.68 per pound and grade 122 at $3.49 per pound.

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The Japanese primary cash price increased by 2.1% to $6,163/mt. The LME primary 3-month increased by 2.8%, up to $5,982/mt.

The Aluminum Monthly Metals Index (MMI) held steady at 86 this month based on mixed price movements. While prices in China dropped in the 1% to 2% range, all other prices in the Aluminum MMI basket rose slightly.

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LME aluminum prices continued to fall into June, but recovered toward the end of the month. LME prices are currently moving sideways at around $1,800/mt, with the present price slightly higher at $1,807/mt.

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

Due to lower LME prices, a recent forecast for Indian production projects a slowdown in output growth. Domestic production costs increased by around 25% during the past three to five years, putting break-even costs above the current LME price, which was at $1,777/mt in late June.

According to Reuters, Japanese aluminum premiums increased 3% to $108/ton for Q3 due to tighter aluminum supplies in Asia. Japanese producers initially sought increases to the $115-$120 per ton range. Weakness in the semiconductors market and trade worries capped gains.

Chinese Aluminum Prices

SHFE aluminum prices weakened during the past month, reversing the upward trend evident since around February 2019. Demand appears seasonally weaker at this time; therefore, market observers will want to watch prices carefully during the next month or two to see if the downtrend continues.

Source: MetalMiner analysis of Fastmarkets

In a normal cycle, prices might rise again as China moves away from seasonally hot and rainy weather.

According to a recent Reuters report, China’s aluminum production increased by 2.4% in May compared with May 2018 because of smelter restarts in response to higher prices, which could also contribute to the recent weakness.

Price weakness appears to be temporary. If prices do not increase, this will indicate a weaker-than-expected Chinese economy and/or that output continues to increase, with increased supply capping price gains.

Increased Aluminum Use on the Horizon Across Sectors

Aluminum prices may also receive future support from innovations beyond just the automotive sector, based on the metal’s flexibility and lightweight profile.

The Indian government announced that railway coach cars will transition to aluminum, while older conventional stock will begin a phaseout.

Coca-Cola announced its AQUAFINA® water brand will see an aluminum can package in U.S. food service outlets. The announcement comes as part of the company’s greater move to reduce the use of plastic packaging.

U.S. Aluminum Premiums

The U.S. Midwest Premium finally dropped, but only slightly, to $0.18/lb. With aluminum prices rising in most countries, supply tightness may continue to support the premium. The U.S. Midwest Premium still remains stubbornly high since the the U.S. removed its aluminum tariffs on Canadian and Mexican aluminum in May.

What This Means for Industrial Buyers

Price signals were mixed this month, with weaker Chinese prices contrasting with higher prices in the rest of the world. Global production increased, but not enough to offset overall tightness in terms of supply.

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Actual Metal Prices and Trends

Chinese prices dropped again this month, in the range of 1-2%. The Chinese primary cash price dropped 1.6% to $2,013/mt, while Chinese aluminum scrap fell 1.7% to $1,835/mt. Billet and bar prices dropped by 1.6% and 1.5%, respectively, to $2,080/mt and $2,177/mt.

This month, European prices increased. European commercial 1050 sheet increased by 2.3% to $2,553/mt, while the 5083 plate price increased by 2% to $3,011/mt.

Korean commercial 1050 sheet, 5052 coil premium over 1050, and 1050 all increased by around 2% to $3.1, $3.14 and $3.27 per kilogram, respectively.

India’s primary cash price increased 1% to $2.09 per kilogram.

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The LME primary 3-month aluminum price held essentially flat, increasing 0.28% increase to $1,794/mt.

Several years ago, analysts and mainstream publications once speculated the yuan would eventually replace the U.S. dollar as the world’s reserve currency.

But with most commodities still priced in U.S. dollars, especially oil, the U.S. dollar has remained the world’s reserve currency.

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The U.S. dollar is also a key currency in the precious metals market.

Source: MetalMiner data from MetalMiner IndX(™), Macrotrends.net and Yahoo.com

U.S. and Chinese gold bullion prices, as seen in the chart above, move closely together. Meanwhile, they both tend to move inversely against the dollar.

In other words, as the dollar gains strength, gold prices grow weaker in both countries.

The yuan fluctuates more widely against the dollar, with little apparent impact on gold prices.

Source: MetalMiner data from MetalMiner IndX(™) and Investing.com

Here is a more typical look at the relationship between U.S. values, with gold priced per ounce, which clearly shows the inverse price relationship.

MetalMiner recently caught up with Americas Silver Corporation President and CEO Darren Blasutti regarding underlying gold and silver price trends.

Blasutti explained the transition away from oil supports gold’s bullishness. Once that happens, the rationale for holding U.S. dollars weakens greatly, while currency diversification, including precious metal purchases, will continue to make sense.

Whereas industrial metals have shown more price volatility during certain periods, gold prices have stayed relatively more stable, according to Blasutti, therefore making it more attractive for mining companies.

Source: MetalMiner data from MetalMiner IndX(™)

Gold prices have enjoyed some price support during the past year or so, but still remain lower than in the recent past. Still, prices are trading in a fairly stable sideways band and have done so, more or less, since 2013.

Historical Roots in Silver

Prior to moving into gold mining, as most other major silver companies have done to date, Americas Silver Corporation mined a mixed market basket including silver, zinc and lead.

With prices for silver quite low in the recent past, it’s difficult to justify mining the metal from a cost perspective. As a result of falling silver prices following the acquisition of two key silver projects, Americas Silver Corp. transitioned from predominantly silver mining toward lead and zinc.

Over time, the mining strategy shifted toward higher grades of lead and zinc and lower silver quality. It made more sense to take advantage of higher zinc and lead prices, while silver prices suffered a lengthy slump.

Into the foreseeable future, while silver prices remain lower, the company continues to focus on mining its lower grade silver, leaving the higher grades in the ground because the company remains bullish on long-term silver prices.

“When silver does come back, we can increase ounces quite dramatically on the silver side,” Blasutti said.

The company’s acquisition and startup of the Relief Canyon Mine, located in Pershing County, Nevada, for gold mining will transition the company from a base metals mining company back into a precious metals mining company.

“Part of the impetus to get back to precious metals was to get a commodity that we thought had less volatility,” Blasutti said. “Gold has shown to have less volatility in the last period, much more than the base metals. Base metals traded in a range and gold has traded in a range, but the range hasn’t been severe [for gold].”

Source: MetalMiner data from MetalMiner IndX(™)

So far, even with the trade war at hand, silver prices remain low.

Source: MetalMiner data from MetalMiner IndX(™)

As shown in the chart above, the gold-to-silver price ratio continues to increase toward gold.

But as pointed out by Blasutti, those remaining silver companies stand to win big once prices for the metal turn around. He pointed out the last time prices stood at around this ratio (90.3:1), silver came back.

MetalMiner’s Annual Outlook provides 2019 buying strategies for carbon steel

What This Means for Industrial Metal Buyers

Given projections for the reduction of oil use in the long-term as stricter emissions standards come into effect, demand for the dollar could decline into the future.

As demand for the dollar weakens, we can expect gold prices to rise. Once gold reaches higher prices, silver may finally follow suit, with the gold-to-silver ratio finally dropping back from current highs that strongly favor gold mine production.

(Editor’s note: This is the second of a two-part series. Read Part 1 here.)

The International Monetary Fund (IMF) recently lowered its 2019 growth forecast for China from 6.3% to 6.2%.

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China’s current economic slowdown shows in the FXI, a large-cap market index. After showing unexpected strength early in the year and rising through the first part of April, performance turned around and the index began to fall once more.

After falling back to nearly start-of-year values, gains managed to hold at around 40 points. This seems to coincide roughly with press reports that stimulus measures from early in the year had begun to wane.

Crude Steel Production Remains High as Prices Weaken

According to the monthly Caixin report numbers, steel production totaled 85 million metric tons, apparently the highest monthly production total on record and about 5 million metric tons higher than the previous month.

Demand from the construction sector remains robust, but Wu Jingjing, a deputy director for the China Iron and Steel Association (CISA), warned demand growth from the sector will wane during the second half of the year. CISA maintains its 2019 forecast for 1-2% demand growth. However, demand from the automobile, household appliances and energy sectors looks weaker.

CISA reported a 1% steel price drop in May and an iron ore price increase of 7%. Higher iron ore prices hurt operational profitability, with CISA’s members reporting a 19.38% year-on-year decrease in profits for the January to April period (despite an 11% increase in sales revenue).

Consolidation of the Steel Industry is Underway

According to Reuters, the Chinese government is seeking to consolidate its steel industry to some extent by 2020 in order to boost the industry’s efficiency.

If government plans to constrain production through consolidation succeed, this would support higher prices for the industry. U.S. prices would also benefit, given that China’s prices tend to lead U.S. prices by about one month.

China Baowu Steel Group, the second-largest steel producer worldwide in 2018, announced its intent to acquire a majority stake in Magang Group Holding Co Ltd, of which Maanshan Iron & Steel Co Ltd, the 16th-largest producer, is a listed entity.

Baowu Steel Group produced 67.43 million metric tons in 2018, according to the World Steel Association, while Maanshan produced 19.71 million tons in 2018.

Raw Material Inputs Continue to Face Supply Issues

Iron ore prices remain high as supplies remain tight. According to customs data, imports recovered to some extent during May, rising by 37% to 83.75 million tons. Overall, shipments dropped by 11% compared with May 2018. Imports for the first five months of the year dropped by 5.2% compared with the same period in 2018.

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According to the Xinhua News Agency, as reported by Reuters, all coke plants that do not meet special emissions standards slated to go into effect on Oct. 1 in Shanxi — China’s top coke-producing region — will be closed.

Additionally, the government is seeking to reduce capacity for 2019 by 10 million tons. The region failed to comply with similar capacity reduction goals in the recent past.

Zerophoto/Adobe Stock

(Editor’s note: This is the first of a two-part series examining Chinese flat-rolled steel prices. The first part examines historical steel price trends. The second part, which will be published Tuesday, will cover the economic outlook for China.)

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Chinese steel prices started to weaken in late May and continued to decline into the second week of June (after generally increasing this year).

A seasonal steel price change typically happens at the start of the summer due to the change in weather, which impacts construction and, therefore, steel demand.

Source: MetalMiner data from MetalMiner IndX(™)

Looking at the longer-term pattern since 2016, prices have dipped around the June time frame and tend to correct or show a clear change of the longer-term direction in July.

Theoretically, demand starts to pick up again as fall seasonal restocking picks up, supporting prices. However, in some years, demand may fail to pick, vis-a-vis available supply (as in 2015, when prices kept falling).

In 2018, the seasonal pickup did not last long. Prices turned down again by October, although they stayed relatively flat overall.

Source: MetalMiner data from MetalMiner IndX(™)

From a longer-term perspective, prices continued to increase overall when considering the period since mid-2015, as shown in the chart above. Considering January 2017 forward only, prices have moved sideways overall.

HRC, CRC and plate prices mildly increased in the first quarter, but the rate of increase looked weaker during 2019 than in previous years. More recently, all three prices have grown weaker; CRC for example, only increased into March and grew weaker by April.

Chinese HRC prices dropped slightly in early June after generally rising since the start of the year and into late May. Government stimulus measures have not provided price support lately, although additional support measures, especially continued fiscal stimulus measures and tax cuts aimed at providing support to the economy during the second half of 2019 and into 2020, could provide support.

CRC prices dropped again between May and early June, by 3%, to CNY 4,111/mt, down by around 5% from the short-term April high of CNY 4,331/mt. With CRC prices dropping more steeply of late, the China HRC-CRC spread narrowed to CNY 191/mt.

MetalMiner’s Annual Outlook provides 2019 buying strategies for carbon steel

As pointed out in MetalMiner’s June Monthly Metal Buying Outlook, CRC prices suffered from a supply glut due to blast furnace restrictions that led producers to invest in downstream production, like CRC and HDG, instead of HRC.

The Raw Steels Monthly Metals Index (MMI) came in at 76 this month, a 5% drop, after several months of sideways movement and a May reading of 80.

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U.S. steel prices formed a clear downward price trend. A mix of factors led to the weakness: sluggish demand, companies working off inventory and macroeconomic uncertainty.

Source: MetalMiner data from MetalMiner IndX(™)

Even plate prices dropped this month after stubbornly sticking at around $1,000/st for a lengthy stretch after rising longer term. This month the price dropped by nearly 7%, from $962/st at the start of the month to $902/st in early June.

Similarly, the Chinese economy has shown weakness lately in steel-intensive sectors. However, government stimulus measures still generally kept HRC prices supported, with some weakness in the other form of flat-rolled products.

Recently, the China Caixin Manufacturing PMI held flat for the May reading, but the industrial and manufacturing production readings both declined by several points.

Source: MetalMiner data from MetalMiner IndX(™)

Meanwhile, U.S. steel prices dropped more steeply than Chinese prices, which edged down slightly this month. Looking at a price comparison of U.S. and Chinese HRC prices, the price gap continues to close.

Source: MetalMiner data from MetalMiner IndX(™)

The chart above shows the spread between U.S. and Chinese prices dropped to just over $100/st. In December, the price gap held at over $300/st, so U.S. products look more affordable based on a greater price drop, while Chinese prices stayed relatively flat.

What This Means for Industrial Buyers

Plate prices finally dropped this month, joining HRC, CRC and HDG in a downward price trend.

Given the shifting price dynamic, industrial buying organizations seeking more pricing guidance should try a free two-month trial of our Monthly Metal Buying Outlook report.

Buying organizations will want to read more about our longer-term steel price trends in our free Annual Outlook.

Actual Raw Steel Prices and Trends

This month U.S. prices registered the largest price drops in the index with the U.S. Midwest HRC futures spot price down 11.3% to $580/st and the 3-month price down 10.4% to $586/st. U.S. shredded scrap prices dropped 8.1% to $295/st.

Korean standard scrap steel prices fell by 6.8% to $127/st. Korean pig iron prices fell by 1.2% to $333/st.

Chinese steel slab prices were down by 5.9% to $489/st and steel billet dropped by 3.2% to $482/st.

Chinese iron ore PB fines for both high- and low-priced 58% Indian iron ore dropped by 2.4%, both at $59 per dry short ton.

MetalMiner’s Annual Outlook provides 2019 buying strategies for carbon steel

Chinese coking coal prices increased this month by 1.6% to $278/st, the only price in the index to increase this month.

The Stainless Steel Monthly Metals Index (MMI) dropped two points again this month, now down to 67. The index stayed relatively flat during the past few months since jumping in February from 61 to 68.

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Several prices in the index dropped significantly this month. Most prices declined more moderately, in the 1% to 3% range, with a couple of prices holding steady.

Source: MetalMiner analysis of FastMarkets

The LME nickel price declined 2.5% between May and June. During the first week of June, LME nickel prices dropped further but still managed to hold above $11,600/mt as of press time.

According to the International Stainless Steel Form (ISSF), stainless steel melt shop production increased by 5.4% to 50.7 million metric tons in 2018, up from 48.1 million metric tons in 2017. The organization forecasts continued growth in 2019.

In 2018, China accounted for 52.6% of global stainless steel production, according to ISSF. The U.S., meanwhile, accounted for 5.5% of global production. In absolute terms, the United States produced approximately 2.8 million tons of stainless steel last year, including slab and ingots.

Nickel pig iron production from China and Indonesia will increase in 2019, as it did during 2017 and 2018, which will contribute to lower prices, according to ISSF.

As reported by Reuters, the nickel market deficit narrowed during the first two months of the year, dropping to 5,700 metric tons from 24,400 metric tons during the same period of 2018.

However, LME and SHFE nickel stocks remain at historically low levels.

Domestic Stainless Steel Market

Source: MetalMiner data from MetalMiner IndX(™)

Stainless steel surcharges gave up some of their recent gains but still remain higher than at the start of the year.

Prices also remain higher from a longer-term perspective when compared with 2016 lows of around $0.40 per pound for 316/316L-Coil and $0.32 per pound for 304/304L-Coil. Nickel ore prices remain lower, causing the recent price weakness.

What This Means for Industrial Buyers

Like other steel prices, stainless steel prices showed weakness this month, following from weaker global demand combined with lower input prices.

For buying guidance, including resistance and support levels by metal, industrial buying organizations seeking more pricing guidance should try a free two-month trial of our Monthly Metal Buying Outlook report.

Buying organizations will want to read more about our longer-term steel price trends in our free Annual Outlook.

MetalMiner’s Annual Outlook provides 2019 buying strategies for carbon steel

Actual Stainless Steel Prices and Trends

This month, Chinese non-ferrous FeCr lumps decreased by 12.5% to $1,644/mt, the largest drop in the index.

The 316 Allegheny Ludlum stainless surcharge fell from $0.95/pound to $0.89/pound this month, a 6.3% decrease. The 304 Allegheny Ludlum Surcharge dropped back to $0.61/pound from $0.68/pound last month, a 7.8% decrease.

Chinese primary nickel decreased by 4.9% to $14,057/mt.

China 304 CR coil dropped 3.5% to $2,158/mt.

The remaining price declines ranged between 1.0% and 3.0%.

The exceptions were Indian primary nickel, up by 0.9% to $12.52/kilogram, and Chinese non-ferrous FeMo lumps, with flat pricing this month at $17,956/mt.

Bombardho/Adobe Stock

This month’s Copper Monthly Metals Index (MMI) reading for copper dropped to 73 from last month’s reading of 78, the new low for the year.

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LME copper prices continued to trend downward, but technically still remain in a long-term bull market.

In the shorter term, daily chart prices recently came close to dropping back to start-of-the-year lows.

Source: MetalMiner analysis of FastMarkets

On the other hand, the longer-term outlook indicates hints at some upward momentum still, given that pricing bottoms have continued to move progressively higher since 2016.

Source: MetalMiner analysis of FastMarkets

In the second part of 2018, price momentum shifted downward, but support levels held at higher levels than during the 2017 period when copper prices traded around $5,600/mt. Prices remain at a critical point.

Chinese Copper Scrap vs. LME Copper

The price gap between Chinese copper scrap and LME copper narrowed recently due to the steeper LME price drop.

According to press reports, copper smelter treatment charges dropped to a 6 1/2-year low in China. China continues to add capacity, with projected growth of 1 million tons expected for 2019. The increase in supply suppresses treatment charges (TCs) for copper.

Global Copper Supply Deficit Forecast for 2019

The International Copper Study Group (ICSG) recently forecast a copper metal deficit of 190,000/mt in 2019. However, according to a recent Reuters report, the projected forecast refined metal deficit totals 270,000 mt due to ongoing supply issues in Peru and Zambia, with concentrates looking tight. Supply disruptions could total around 1,200,000 mt, or around 5% of typical supply levels.

Industrial metals respond to global economic conditions, given that players tend to be large international entities that trade extensively cross-border.

Therefore, we can generally expect copper prices to respond to macroeconomic factors like the dollar and global GDP growth rates; even a small percentage change in global growth rates can impact the price of copper.

According to a recent presentation by global miner Rio Tinto, macro headwinds have impacted demand this year.

For the longer term, expectations remain positive, with the company projecting global annual growth to average 3.5% over the next 10 years. Ninety percent of Rio Tinto’s total mining output across metals moves cross-border.

What This Means for Industrial Buyers

With macroeconomic uncertainty at hand, industrial buying organizations should watch the copper market carefully for shifting momentum.

It’s important for buying organizations to understand how to react to copper price movements. The MetalMiner Monthly Outlook report helps buyers understand the copper marketplace.

MetalMiner’s Annual Outlook provides 2019 buying strategies for carbon steel

Actual Copper Prices and Trends

Copper prices showed weakness globally this month.

The Japanese primary cash price dropped by 10% to $6,035/mt. The LME primary 3-month dropped by 9.6%, with the price falling to $5,820/mt. India’s copper cash price dropped 8.3% to $5.89/kilogram.

Chinese prices also dropped steeply, with all the Chinese prices in the index down by 7.6%. China’s primary cash price dropped to $6,717/mt.

Chinese scrap copper #2 decreased by 2.4% to $5,560/mt. Korean copper strip declined by 0.4% to $8.32/kilogram.

U.S. prices dropped in the 6-7% range. U.S. copper grade 110 dropped to $3.43/pound, down from $3.87/pound last month, marking the third straight month of price declines.