Author Archives: Belinda Fuller

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The Raw Steels Monthly Metals Index (MMI) showed mixed price movements in October, with declines outweighing increases for a one-point index drop to 66.

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U.S. steel prices continued to weaken during October, possibly reaching a new bottom.

Prices appeared to bottom out back in July (with the exception of plate), especially with price gains seen during August and early September.

Then, weakness set in again throughout September.

Source: MetalMiner data from MetalMiner IndX(™)

Plate prices dropped by another 14% since late August’s high price of $799/st down to $684/st, with prices near those for CRC. While plate prices are closer in line with historical pricing norms, plate prices tend to fall below CRC prices, despite being equal at this time.

HRC prices also looked particularly weak recently, dropping 18% to $483/st from the late August  price of $590/st.

While CRC and HDG also dropped below July values to reach new 2019 lows, recent declines were milder (but still significant). CRC and HDG prices dropped 10% and 11%, respectively, over the past couple of months, since reaching higher prices in early September/late August.

U.S. capacity utilization continues to hold above the critical 80% mark, at 80.3%, based on year-to-date production through Nov. 2. Production of 81.6 million tons during that period is up 2.5% year over year, according to statistics from the American Iron and Steel Institute (AISI).

Chinese Prices Fail to Gain Momentum

Chinese steel prices looked flat overall but were down slightly of late.

Source: MetalMiner data from MetalMiner IndX(™)

While prices failed to gain any upward momentum, price declines during the past month or two were mild.

Comparing average August prices to early November prices, cumulative declines ranged between 3.3%-5.4% over the period, with HDG and HRC dropping most (at 5.4% and 5.3%, respectively). CRC dropped 4.6% and plate by 3.3%.

U.S.-China CRC Spread Narrows Again, Nears Long-Term Low

With U.S. prices dropping more steeply than Chinese prices during the past few months, the spread between prices on key commodity forms narrowed once more.

Source: MetalMiner data from MetalMiner IndX(™)

Looking at the above chart showing the spread, valued in U.S. dollars per standard ton, we can see the spread dropped to an absolute value of $29/st — its lowest since December 2017’s value of $22/st.

The red line represents average costs associated with imports, indicating at this time U.S. prices should discourage imports by virtue of being relatively affordable.

The purple line represents the theoretical impact of tariff costs (to be adjusted based on actual tariff rates), which render an additional price buffer for domestic producers (in terms of increasing the price that can be charged before imports look more attractive).

Source: MetalMiner data from MetalMiner IndX(™)

In contrast to HRC, the CRC spread continues to exceed levels expected to discourage imports (pre-tariffs), with the spread remaining above $90/st — our theoretical average per standard ton cost associated with importing.

However, prices dropped below the purple line, indicating the tariff creates an import buffer for CRC at a tariff rate of 25% (based on current price differentials).

U.S. Commodity Steel Imports Decline

According to U.S. Census Bureau data, imports of hot roll sheets totaled 151,330 metric tons in September, compared to 157,636 tons in August. September imports of HRC decreased by 15.5%, from 179,105 metric tons in September 2018.

Imports of cold roll sheets totaled 124,286 metric tons in September, compared to 126,704 in August. Compared to September 2018, imports of CRC dropped by around 19.2%, down from 153,728 metric tons the year prior.

On a monthly basis, increased imports came primarily from Mexico, Canada and Turkey. Imports from Korea, Japan and Spain decreased last month.

In terms of year-to-date figures through August, steel imports totaled 18.8 million metric tons compared with 21.7 million metric tons during the first eight months of 2018.

HRC imports decreased the most, while black plate, line pipe and tin-free steel imports increased the most.

On a year-to-date basis through August, imports from Canada declined, while increases occurred from Brazil, Spain and Ukraine.

Chinese Steel Production Increases

Based on data from the World Steel Association (WSA), global production increases slowed in September.

Production from January through September of this year reached 1,391.2 million tons, up by 3.9% compared to the same period of last year. However, last month, the year-to-date increase measured 4.6% for the January-August period.

Year-to-date increases in Asia totaled 6.3% over the period, while E.U. production contracted by 2.8%. North American production of 90.6 million tons translated into a small increase of 0.3%.

September crude steel production declined in most major producer countries compared with September 2018, with the exception of China, India and Italy.

Crude production in China decreased to 82.8 million tons in September, compared with August production levels of 87.251 million tons, but increased by 2.2% compared with September 2018. India’s production increased by 1.6% to 9 million tons in September compared with last year, while Italy produced 2.2 million tons, a 1.1% increase compared with September 2018.

Japan’s September production dropped by 4.5% compared with September 2018, falling to 8 million tons. South Korea saw a drop of 2.7% during the same monthly comparison period, to 5.7 million tons. A decline of 4% hit German production, with 3.4 million tons produced, while France’s production dropped by 10.2% to 1.2 million tons.

What This Means for Industrial Buyers

Global production levels remain higher, primarily driven by high Chinese production, while demand still looks weaker.

If manufacturing gains continue in China, we could see some pricing momentum return. Some signs point in that direction; as of yet, demand has not yet pushed prices higher.

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

Steel prices showed mixed movements in October.

Korean scrap prices registered another large drop this month — following last month’s 16.9% decrease — falling another 30.2% to $81/mt. However, Korean pig iron prices increased by 2.8% to $368/mt.

U.S. shredded scrap prices also decreased again this month, falling 11.4% to $225/st.

The U.S. Midwest HRC futures spot price dropped 5.2% to $495/st, while the Midwest HRC futures three-month price increased by 3.6% to $549/st.

LME billet three-month prices dropped 2.3% to $239/st.

Once again this month, Chinese prices in the index showed mixed, generally mild movements.

China billet prices increased by 1.6%, to $496/mt, while HRC prices decreased by 1.2% to $499/mt. Coking coal prices dropped by 5.4% to $248/mt, the largest Chinese price decline this month, while iron ore prices increased by 1.6% to around $63 per dry metric ton.

The Stainless Steel Monthly Metals Index (MMI) dropped again this month, by one point to 87.

The drop follows last month’s three-point decline to 88 on the heels of August’s five-year high of 91.

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LME nickel prices continued to move sideways overall, while slowly dropping from price surges that hit the metal recently due to future supply concerns.

Since hitting a peak closing price of $18,100 in early September, prices dropped by around 10% during the past two months.

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

Based on a longer-term look at price data, prices exceed an eight-year average price of $13,572/mt (corresponding to the graph’s timeline) which is represented by the blue line:

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

Trading volumes tapered off during recent weeks, indicating sideways movement could continue.

Prices still remain high compared to the longer-term average; therefore, prices could also continue to drift lower, although some analysts expect prices to remain high.

In fact, over the long term, prices keep rising, with price bottoms progressively rising since 2016.

SHFE Nickel Prices Drop Slightly from September High Prices

Like LME prices, SHFE nickel prices remained higher but drifted back down from recent high prices.

Source: MetalMiner analysis of FastMarkets

Since hitting a peak high of CNY 146,850/mt in early September, SHFE nickel prices dropped back by around 11% over the course of roughly two months.

The SHFE nickel price dropped to CNY 130,320/mt in early November.

Global Supply Chains React to High Nickel Prices

China’s Jinchuan Group recently commented that its mine in Qinghai would help supply the company this year. Therefore, the export ban on Indonesian mined nickel will not impact the company’s operations significantly, according to Reuters.

The company’s joint venture laterite project in Indonesia ramped up this year, with the first ferronickel output in sight. However, an official launch date for the project, which is expected to have an annual capacity of 10,000 tons, has not yet been announced.

Mining output from the Philippines looks set to pick up, helped by higher prices. Higher prices make compliance more affordable as the country seeks to transition away from open pit mining. The government continues to regulate the industry stringently, constraining expectations of large output gains.

Forecasts call for modest growth in output, by around 2.5% per year annually through 2028, as reported by Reuters.

Tsingshan Holding Group Co., a top Chinese stainless steel producer, faced scrutiny recently for making large purchases of nickel from LME warehouses.

Chinese stainless competitors accused the company of manipulating the market, while the company could have made the advanced purchases to shore up future stocks ahead of the 2020 Indonesian export ban.

At any rate, large rounds of nickel purchases by the company appeared to impact prices; the situation is under examination by the LME.

China’s Stainless Sector Expected to See the Biggest Impact of 2020 Nickel Shortage

Given that most nickel ends up in stainless steel production, and since the majority of stainless steel gets produced in China, stainless steel production will be a key area impacted by a nickel shortage. The uptick in production in the Philippines is not expected to fully compensate for a drop in Indonesian supply.

According to data from the International Stainless Steel Forum (ISSF), stainless crude output increased in H1 2019 by 1.9% compared to H1 2018. That increase came entirely from China, with an 8.5% production expansion to 14.4 million tons for the first half of the year.

China’s gains offset output declines reported in all other global regions, which fell in the range of 3.4% to 6.4%.

Domestic Stainless Steel Market

Source: MetalMiner data from MetalMiner IndX(™)

Stainless 304 and 316 NAS surcharges stayed higher recently after rising during the past few months due to nickel price increases.

However, 316 surcharges dropped back slightly to $1.06/pound in November (compared to $1.08/pound during October). Surcharges for 304 held at $0.74/pound.

What This Means for Industrial Buyers

Nickel prices remained higher this month; therefore, industrial buying organizations need to stay alert for the right opportunity to purchase.

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

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

Download your free Partial Sample Report: 2020 MetalMiner Annual Metals Outlook now.

Keep up to date on everything going on in the world of trade and tariffs via MetalMiner’s Trade Resource Center.

Actual Stainless Steel Prices and Trends

The LME primary three-month nickel price dropped only mildly this month — following last month’s 6.8% correction — by 2.4% to $16,800/mt.

India’s primary nickel price dropped by 4.5% to $16.90/kilogram.

China’s primary nickel price increased by 1% to $19,356/mt. Other Chinese prices in the index generally increased in the range of 1.6% to 2.8%, with the exception of FeMo lumps, which dropped by 12.9% this month to $16,201/mt, and FeCr lumps, which increased 6.6% to $1,649/mt.

Indexed Korean prices increased 2.8% with stainless steel coil 430 CR 2B and 304 CR 2B at $1,539/mt and $2,480/mt, respectively.

The U.S. 316 and 304 Allegheny Ludlum stainless surcharges fell slightly — by 1.4% and 0.8%, respectively — to $1.10/pound and $0.77/pound.

The Copper Monthly Metals Index (MMI) increased slightly this month to 73, compared to last month’s value of 71, with all copper prices in the index increasing mildly.

Keep up to date on everything going on in the world of trade and tariffs via MetalMiner’s Trade Resource Center.

Overall, the LME copper price moved up in October but did not quite make it back to the $6,000/mt price level.

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

Even with the recent increase in prices, levels remain constrained, still hitting resistance around $6,000/mt.

SHFE Copper Prices Fail to Gain Value Once Again in October

SHFE copper prices continued to move sideways, with the trading range becoming more limited recently; prices still look slightly stronger, as lows increased in October.

Source: MetalMiner analysis of FastMarkets

Still, a lack of stronger upward momentum for prices indicates a lack of copper demand.

China’s Copper Smelters Plan to Increase Treatment Charges

Insiders indicated China’s top copper smelters plan to increase Q4 treatment and refining charges (TC/RCs) by 20% over Q3 rates, from $55 per ton to $66 per ton, according to Reuters. Rates have hit seven-year lows recently. Last year, during Q4 2018, charges were higher at $90 per ton.

The TC/RC rate gets set on an annual basis during November by the China Smelters Purchase Team (CSPT), which includes representation from most of China’s top smelters. The agreed-upon rates act as a spot processing price floor for CSPT members.

Some question whether the rate increase will stick at this time due to recent concentrate shortages, combined with some recent copper capacity expansion, leaving smelters to compete for concentrate through lower TC/RCs.

For instance, China’s Zijin Mining, recently increased capacity by 150,000 tons per year (a sizable increase). However, in early November, Zijin announced an expansion in its copper mine holdings through the acquisition of Freeport-McMoRan’s share of a copper-gold mine based in Serbia for $390 million, according to press reports.

The acquisition increases the company’s copper resources by 7.72 million tons, a boost of 15.6%, to a total of 57.24 million tons.

Weak Demand in China

Additionally, growth in China looks set to slow further — down to 5.8% in 2020, according to the most recent IMF estimate.

China’s Official NBS Manufacturing PMI fell to 49.3 in October, compared to 49.8 in September, marking a sixth consecutive month of contraction.

In contrast, China’s Caixin PMI registered a solid increase in October, falling clearly in expansionary territory.

Long-term Supplies Abundant, Despite Short-term Supply Disruptions

Due to the nature of mining, supply disruptions from weather in any given year tend to be normal, rather than unusual.

Additionally, labor issues can result in mining disruptions on a fairly frequent basis.

This year proved no exception, as recent supply disruptions broadened the global deficit situation this year.

For example, Antofagasta PLC released a statement indicating copper production this year will range from 750,000-770,000 tons, compared to the previous estimate of 750,000-790,000 tons. The downward revision accounts for labor-related mining disruptions, mainly around the Los Pelambres mine, which reduced production by around 10,000 tons total.

However, new sources of supply will help alleviate concerns of longer-term deficits, particularly as demand for copper will continue to increase due to copper’s role as a battery metal for electric vehicles.

MetalMiner’s Stuart Burns recently pointed out Anglo American’s $5 billion copper project,  based in Quellaveco, Peru, likely holds a tremendous supply of the red metal (with the mine thought to have a 100-year life span).

While the exploration phase is not yet complete, ore grades look promising so far.

The company aims to start mining operations at this new location in 2022, with output of 330,000 tons per year expected during the first five years.

The Kamoa-Kakula mine, located in the Democratic Republic of the Congo, may result in as much as 700,000 tons per year  (mining there is slated to start in 2021).

With these new, large resources on the horizon, copper looks set to shift to surplus in the coming years.

As pointed out in this month’s MetalMiner Monthly Outlook for November, the International Copper Study Group (ICSG) expects this year’s deficit of 320,000 tons to shift to a surplus of around 280,000 in 2020.

What This Means for Industrial Buyers

While copper prices increased recently, overall, the uptrend lacked strong momentum.

Industrial buying organizations need to stay alert for a rise in prices, in case mixed growth signals turn solid.

Want an easier solution to tracking industrial metals prices and trade news? Request a demo of the MetalMiner Insights platform.

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

Looking for metal price forecasting and data analysis in one easy-to-use platform? Inquire about MetalMiner Insights today!

Actual Copper Prices and Trends

Copper prices increased across all index values this month, with Japan’s primary cash price increasing the most (by 4% to $6,148/mt).

The LME primary three-month price increased by 3.7% to $5,850/mt.

Korean copper strip increased by 2.8% to $8.07 per kilogram.

U.S. producer copper grades 110 and 122 increased by 2.4% (both now at $3.42 per pound), while grade 102 increased 2.2% to $3.64 per pound.

China’s copper #2 price increased by 1.6% to $5,457/mt. China’s copper bar price increased by 0.9% to $6,665/mt. China’s primary cash and copper wire prices both increased 0.8%, rising to $6,679/mt and $6,672/mt, respectively.

The Indian copper cash price increased by 0.7% to $6.17 per kilogram.

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The Aluminum Monthly Metals Index (MMI) remained flat this month at 82, with the majority of prices in the index increasing mildly, offset by a few declining values.

The current index value remains near a three-year low.

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LME aluminum prices generally moved sideways in October but demonstrated strength late in the month, just as prices look set to drop through yet another support level of $1,700/mt. Prices hit as low as $1,713/mt during the month.

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

That movement appears halted for now, due to supply disruptions and future supply concerns.

SHFE Aluminum Prices Failed to Gain Steam

SHFE aluminum prices still appear constrained by a sideways pattern capped at around CNY 14,500/mt price band, with upward momentum looking weaker as the year has progressed.

Source: MetalMiner analysis of Fastmarkets

Given recent positive PMI readings and improvements in China’s large-cap FXI, for instance, we should see aluminum prices react — unless excess supply exists in the market, stopping increased price momentum and/or demand remains weak in aluminum-intensive areas.

According to Q3 reporting for the Aluminum Corp of China Ltd, or Chalco, as reported by Reuters, aluminum sales dropped by 13.8% for the quarter, compared to Q3 2018, with sales totaling 940,000 tons. Production dropped 10.4% during the same period (July-September) to 950,000 tons.

The company reported significant raw material, energy and operating cost increases of late, ranging from 17% to 21%, during the quarter.

Chalco reported an average sales price of CNY 13,924/mt for Q3 2019, down by 4.2% compared to Q3 2018, with profits down by 47.7% for the first nine months of 2019.

Recently, prices dropped below CNY 14,000/mt — typically a critical break-even point for producers in China — to CNY 13,800/mt.

Supply Concerns Support LME Aluminum Prices

During the most recent round of corporate financial reporting, a couple of high-profile producers noted higher energy costs hurt profitability and indicated the need to upgrade production methods to more energy-efficient processes. The aforementioned is especially true given the energy-intensive nature of aluminum production, which will necessitate major investment costs.

Rio Tinto commented that closure of its aluminum smelter in New Zealand could be possible due to high energy costs hurting profitability.

Additionally, the price increase could have occurred as a result of speculative activity in that it coincided with a recent uptick in press reports covering aluminum as the green solution in the beverage can industry.

Coca-Cola’s Dasani brand of water will move to aluminum cans from plastic, joining PepsiCo’s move for its Aquafina brand. Ball, the jar company, recently created an aluminum cup to compete with plastic (now in test markets). The company began construction of its first dedicated aluminum cup manufacturing facility, with production expected to ramp up in Q4 2020.

Additionally, total LME warehouse stocks trended down to historical lows earlier this year and remained there, at around 1 million tons. SHFE stocks declined more dramatically this year, now down to under 300,000 tons from around 700,000 tons at the start of the year.

New LME Warehouse Rules Target Improved Data Tracking

The LME announced Nov. 1 it will proceed with a proposed package of measures aimed at the optimization of its warehouse network.

The new rules will require network warehouses to report stocks, even when stored outside of an LME location when that metal will be brought in at a later date.

Also, queue-based rent capping will increase to 80 days — from 50 days at present — over the course of nine months.

What This Means for Industrial Buyers

Aluminum prices found some momentum late in October, but what comes next remains unclear.

Buying organizations interested in tracking industrial metals prices with embedded forecasting should request a demo of the MetalMiner Insights platform.

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

Free Partial Sample Report: 2020 MetalMiner Annual Metals Outlook

Actual Metal Prices and Trends

This month, China aluminum scrap prices increased by 2.4% to $1,805/mt, while Chinese aluminum primary cash prices increased by 1% to $1,975/mt.

Meanwhile, Chinese aluminum billet and bar prices declined by 0.8% and 0.7%, respectively, to $2,041/mt and $2,136/mt.

Korean prices showed strength across the board this month.

Korean commercial 1050 sheet increased by 2.4% to $3.04/kilogram, 5052 coil premium over 1050 increased by 2.2% to 3.21/kilogram, and 3003 coil premium over 1050 increased by 2% to $3.08/kilogram.

The LME primary three-month price increased by 1.6% over the course of the month to $1,747/mt after a couple of months of decline.

European commercial 1050 sheet and 5083 plate both increased again this month, rising by 0.8% and 1.4%, respectively to $2,475/mt and $2,837/mt.

India’s primary cash price dropped by 5.1% to $1.86/kg.

The Raw Steels Monthly Metals Index (MMI) took another hit this month, dropping three points to 67. The index has now dropped for seven consecutive months — following an early 2019 high of 82 in March — on the back of falling steel prices.

U.S. steel prices dropped in September, with plate prices recording the greatest loss. However, historically, plate prices tend to track lower than CRC.

Based on technical analysis, prices for plate could still demonstrate more downside momentum compared to other forms of steel (HRC, CRC and HDG).

Source: MetalMiner data from MetalMiner IndX(™)

U.S. capacity utilization for the year to date remains above the critical 80% mark at 80.4%. During the period, production totaled 74.3 million tons, a 3% increase compared to the same period last year, according to the American Iron and Steel Institute (AISI).

However, weekly data for the week ending Oct. 5 indicated capacity utilization of 78%, with 1.8 million tons produced, a 3.9% decrease compared to the same period last year.

Chinese Prices Weaken

China CRC and plate prices nudged down recently, while HRC prices dropped to a greater extent.

Meanwhile, HDG prices took a clear downward turn in September.

Source: MetalMiner data from MetalMiner IndX(™)

During the course of 2019, Chinese steel prices looked fairly flat overall, with prices now lower than at the start of the year.

HRC, CRC and plate prices looked just slightly weaker compared to January prices. HDG prices dropped more noticeably, priced at CNY 5,690/mt in early October compared to the January price of around CNY 6,040/mt.

China’s Share of Total Global Production Continues to Increase

Based on data from the World Steel Association (WSA), global production of steel during the first eight months of 2019 totaled 1,239 million tons, up 4.6% percent compared to the first eight months of 2018.

China’s total share of global production totaled 53.6%, based on WSA data through August. Based on an estimated 664.04 million tons through August, production increased by 9.4% compared to the same period of 2018.

Additionally, in terms of monthly data, China’s steel production increased once again. China’s August production reached 87.25 million tons in August after dropping during the two months prior from June’s peak 2019 production of 89.09 million tons.

Meanwhile, production in Japan, the world’s third-largest steel-producing country, fell by 3.7% during the eight-month period, down to 67.589 million tons. The country’s share of global production dropped to 5.5%, compared to 5.9% during the first eight months of 2018.

U.S. production totaled 59.23 million tons through August, an increase of 4% compared to the same period of 2018, according to WSA numbers. Share of global production remained static at 4.8%. Likewise, production in India, the world’s second largest producing country, also remained flat at 6.1%, in terms of total global share of production.

Ongoing GM Strike Continues to Hurt Steel Demand

Given that demand from GM represents around 5-9% of annual steel demand in the U.S. (by various estimates), the ongoing strike continues to place a drag on U.S. steel prices.

As of Oct. 10, the strike had reached its 25th day.

What This Means for Industrial Buyers

Global growth in the production of steel appears to remain in excess of growth in steel demand, exerting downward pressure on prices.

Therefore, industrial buying organizations may benefit from understanding exactly when and how much to buy in this falling market.

Buying organizations interested in tracking industrial metals prices with ease should 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

Steel prices weakened further in September.

Korean scrap prices registered a 16.9% decrease, falling to $116/st. Korean pig iron dropped 0.2% to $358/mt.

U.S. shredded scrap prices dropped 13.6% to $254/st. The U.S. Midwest HRC futures spot price dropped 10.9%, while the Midwest HRC futures three-month price fell by 3.6% to $522/st and $530/st, respectively.

LME billet three-month prices dropped 12% to $234/st.

Chinese prices in the index showed mixed, mild movement. Chinese billet prices increased the most, rising 2.1% to $488/mt. HRC prices decreased the most, dropping 1% to $505/mt.

The Stainless Steel Monthly Metals Index (MMI) dropped back by three points to 88. The drop comes after reaching a five-year high of 91 last month, following strong increases for two consecutive months and culminating in last month’s 16-point surge.

Price increases caught up with additional values in the index, while key prices that initially surged dropped back slightly.

Keep up to date on everything going on in the world of trade and tariffs via MetalMiner’s Trade Resource Center.

LME nickel prices dropped off their early September highs, moving sideways and trading roughly in the $17,000-$18,000 band, averaging around $17,500/mt.

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

Recently, the four-day average (represented by the red line below) dropped toward the nine-day average (represented by the purple line):

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

Coupled with waning trading volume, the movement of the four-day average toward the nine-day average indicates the rally may be over.

However, looking at longer-term prices, we see nickel traded much higher prior to 2016 — a year during which commodity prices dropped:

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

The current price looks comparable to average prices during 2012-2015. Additionally, at times the metal surged higher in price during that period, compared with the current price.

However, with demand conditions looking weaker, the metal may still pull back rather than rise further.

SHFE Nickel Prices Move Sideways

Similar to LME prices, SHFE nickel prices dropped slightly off recent highs, then traded sideways:

Source: MetalMiner analysis of FastMarkets

Since SHFE nickel futures only launched in 2015, it’s trickier to look back at prices in the longer term.

Presumably, however, SHFE nickel shares LME nickel price upside risks, given that international price arbitrage tends to remove price differentials between the exchanges.

Indonesian State Miner PT Inalum Tapped to Purchase Stake in Vale Indonesia

In order to meet new Indonesia regulations that limit foreign ownership of mining resources, the Indonesian government tapped state miner PT Inalum for the purchase of PT Vale’s divestiture of around 20% of value, according to Reuters.

Multiple nickel-focused projects continue to ramp up, with production of nickel pig iron (NPI) set to double by 2020 to 530,000 tons (up from 2018’s total production of 261,000 tons).

As recently as 2014, Indonesia recorded minimal output of NPI, according to press reports.

Domestic Stainless Steel Market

Source: MetalMiner data from MetalMiner IndX(™)

Stainless 304 and 316 NAS surcharges jumped in August, following higher nickel prices.

For 304/304L-coil, the surcharge average $0.66/pound during September, while 316/316L-coil averaged $0.97/pound during September.

As of early October, surcharges continued rising.

What This Means for Industrial Buyers

Nickel prices stopped surging, and then dropped back mildly, taking the index reading back a few points; still, prices remained much higher.

Whether prices correct or rise further will depend on demand conditions moving into the fall season. Therefore, industrial buying organizations need to stay alert for the right opportunity to buy.

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

Buying organizations seeking more insight into longer-term industrial metals price trends should read MetalMiner’s Annual Metal Buying Outlook.

Looking for metal price forecasting and data analysis in one easy-to-use platform? Inquire about MetalMiner Insights today!

Actual Stainless Steel Prices and Trends

The LME primary three-month nickel price corrected by 6.8% to $17,210/mt.

China’s primary nickel price corrected by a similar extent, 7%, to $19,165/mt. All other Chinese prices in the index increased by 0.3%, with the exception of Ferro Alloys FeMo lumps, which dropped by 0.4% this month to $18,606/mt.

India’s primary nickel price dropped back by 1.7% to $17.69/kilogram.

The U.S. 316 and 304 Allegheny Ludlum stainless surcharges increased by double-digits again — by 10.7% and 11.9%, respectively — to $1.11/pound and $0.78/pound.

Korean prices jumped this month. Stainless steel coil 430 CR 2B and 304 CR 2B rose by 25.3% and 14.8%, respectively, to $1,497/mt and $2,411/mt.

Bombardho/Adobe Stock

The Copper Monthly Metals Index (MMI) held its value at 71, with around two-thirds of the metal prices in the basket staying essentially flat. Several Chinese prices registered increases of around 2%, but the gains were not enough to move the index upward.

Keep up to date on everything going on in the world of trade and tariffs via MetalMiner’s Trade Resource Center.

The LME copper price rallied until mid-month. Thereafter, the price retraced once more, but didn’t drop back quite as far as in early September.

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

News pertaining to slowing global growth, including slowing Chinese growth, took the metal lower.

SHFE Prices Continue to Move Sideways

SHFE copper prices continue to move in a historically narrow band around the CNY 46,000/mt to CNY 48,000/mt range, with prices just slightly above the midpoint at the end of September.

Source: MetalMiner analysis of FastMarkets

This may indicate fair demand, as prices are lacking momentum in either direction.

Source: MetalMiner analysis of FastMarkets

Copper demand growth in China looks relatively flat for 2019, with mild growth of 0.5% expected by some analysts, as recently pointed out by MetalMiner’s Stuart Burns. This contrasts with the International Copper Study Group’s (ICSG) estimate of 3% demand growth in China during H1 2019; however, the demand outlook continues to deteriorate into 2019.

Copper Supply Issues Continue to Support Prices, In Spite of Negative Demand Growth in ROW

According to the ICSG’s estimates, China’s 3% increase in demand was offset by a 3% decline in the rest of the world (ROW), making for an essentially flat-to-negative growth outlook as 2019 progresses.

Meanwhile, multiple global supply issues led to negative growth in both mined and refined copper output in 2019, with both contracting (as noted in the October MetalMiner Monthly Outlook report).

During a speech in September, World Bank President David Malpass said the nominal global growth rate looks set to slow to less than 3% this year. Further, the growth rate may not even hit the World Bank’s revised June forecast of 2.6%, indicating a much slower growth rate this year — compared with the rate of 6% during the past couple of years.

Given the metal’s price sensitivity to economic factors, prices continue to look weak despite the deficit for the metal this year, which ranges from 190,000 to 220,000 tons, according to ICSG figures for the first half of the year.

U.S. Drops Copper from the E.U. Retaliatory Tariff List

U.S.-based copper product importers received good news early in October that copper products were dropped from the list of imports to be impacted E.U. tariffs, awarded based on the European Union’s subsidization of Airbus, as ruled on by the World Trade Organization (WTO).

Final approval of the U.S. plan looks set to occur mid-month, with implementation of the tariffs still on that list targeted for Oct. 18.

However, the U.S. appears to maintain some bandwidth to impose additional duties at a later date. The case will continue into the foreseeable future, with other factors still in play dragging out a final outcome.

Industrial buying organizations need to continue to track the case.

What This Means for Industrial Buyers

U.S.-based importers of E.U. copper products received news that copper products were dropped from the final list of products to be impacted by the imposition of WTO-granted tariffs on various products from a handful of European countries. Still, importers of the metal need to remain on alert for potential revisions.

Meanwhile, copper prices stayed flat this month. Industrial buying organizations need to be aware that demand conditions could shift and impact prices at any time, as a lack of clarity pervades the market at this time.

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Buying organizations seeking more insight into longer-term copper price trends should read MetalMiner’s Annual Metal Buying Outlook.

Free Partial Sample Report: 2020 MetalMiner Annual Metals Outlook

Actual Copper Prices and Trends

This month, copper prices stopped dropping. The majority of Chinese prices recorded increases of around 2%, stopping the declining price trend that beset the index in July and August. ROW prices stayed essentially flat.

China’s primary cash price increased 2.2% to $6,629/mt, while copper wire price increase by 2.1% to $6,617/mt. Copper bar prices increased by 1.9% to $6,604/mt. China’s copper #2 price increased by 0.3% to $5,372/mt.

Korean copper strip increased by 0.8% to $7.85 per kilogram.

Japan’s primary cash price increased 0.6% to $5,912/mt.

The LME primary three-month price stayed flat with a mild 0.1% increase to $5,640/mt.

U.S. producer copper grades 110 and grade 122 both remained at $3.34 per pound, while grade 102 remained at $3.56 per pound.

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Only Indian copper cash prices dropped, falling by 0.2% to $6.13 per kilogram.

The Aluminum Monthly Metals Index (MMI) dropped by one point again this month, this month down to an MMI reading of 82.

However, rather than universal price weakness like last month, price declines in China pulled the index down (along with a milder drop in LME prices).

All other prices in the index increased, although some of the gains were relatively small (i.e., under 1%).

Keep up to date on everything going on in the world of trade and tariffs via MetalMiner’s Trade Resource Center.

LME aluminum prices weakened in September, despite looking stronger early on in the month. Less robust manufacturing and economic indicators hurt some industrial metal prices this month, including aluminum. The stronger U.S. dollar also resulted in weaker prices.

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

LME prices look close to possibly dropping below yet another critical price level, $1,700/mt, after clearly breaking the $1,800/mt support level since last month.

SHFE Aluminum Prices Lost Ground in September

Over the course of 2019, SHFE aluminum prices continued to show sluggish upward momentum, constrained by the CNY 14,500/mt price level.

Source: MetalMiner analysis of Fastmarkets

However, during the past one month, SHFE prices dropped:

Source: MetalMiner analysis of Fastmarkets

The price drop looks somewhat mild, as it looks to be within the range of normal price fluctuations for the metal over the past year.

Around mid-month, news of slowing economic growth in China led to a stalling of price momentum for some key industrial metals, including aluminum.

However, not all the recent news from China indicated manufacturing is slowing.

The Caixin Purchasing Managers Index (PMI) clearly jumped into the expansionary zone, as reported in this month’s MetalMiner Monthly Outlook.

China’s National Bureau of Statistics’ (NBS) competing PMI also edged up to 49.8 (compared with August’s reading of 49.5). In particular, the production subindex jumped to 52.3, while the new orders index increased to 50.5 — both marking expansionary readings.

Recently, the Chinese government implemented fiscal measures expected to help maintain higher growth rates through improved banking sector liquidity. Expected beneficiaries of the measures include the construction industry and small businesses.

Demand in the automotive sector remains weak, adding to aluminum price weakness (as pointed out by MetalMiner’s Stuart Burns in a recent article). The government implemented measures to help improve traditional car sales; so far, the data do not show an uptick in sales as a result of these measures, which rely on implementation at the local government level.

Strong U.S. Dollar Suppresses LME Prices

One effect of slowed growth in other major countries pertains to the continued upward trend in the dollar’s value, which grew stronger vis-a-vis other major currencies.

This compounds with China’s decision to devalue the yuan in early August, which translates into yet lower prices.

Key raw material input costs have also dropped.

Therefore, producers — particularly producers in China — have a greater buffer against lower prices, allowing them to lower prices while maintaining margins. As such, those producers can then continue to produce, even at lower prices.

Additionally, when Chinese domestic prices stay the same or decline in dollar-denominated prices, increased sales volume may be the result. Chinese producers can therefore benefit without effectively offering any actual price discount. In the worst-case scenario — the case of rising prices — the alteration in the exchange rate slows the rate of increases in dollar-denominated prices.

Vietnam Announces Tariffs on Aluminum Imports from 16 Chinese Companies

Based on the findings of an investigation launched in January, Vietnam announced it would impose anti-dumping duties on some aluminum products from 16 Chinese companies.

The tax will range from 2.49% to 35.58% for five years, starting from Sept. 28, 2019.

U.S. Aluminum Premiums

The U.S. Midwest Premium increased marginally, placing it firmly at $0.18/pound, indicating supply tightness continues in spite of weaker demand.

What This Means for Industrial Buyers

Aluminum price momentum stalled in September.

Recent Chinese currency devaluation and a stronger dollar means lower prices — for now.

Industrial buying organizations need to keep an eye on the bigger picture; should demand firm up in the fall, price momentum may still turn around.

Buying organizations interested in tracking industrial metals prices with embedded forecasting should request a demo of MetalMiner Insights platform.

Buying organizations seeking more insight into longer-term aluminum price trends should read MetalMiner’s Annual Metal Buying Outlook.

Free Partial Sample Report: 2020 MetalMiner Annual Metals Outlook

Actual Metal Prices and Trends

Chinese prices in the index moved lower overall this month.

Chinese aluminum primary cash and scrap prices decreased by 2.9% and 2.8% respectively, to $1,955/mt and $1,762/mt.

Chinese aluminum billet and bar prices posted 0.2% declines, falling to $2,056/mt and $2,150/mt, respectively.

The LME primary three-month price dropped by 1.5% this month to $1,720/mt, adding to the 3.4% drop the month prior.

European commercial 1050 sheet and 5083 plate both increased by 2.6% to $2,456/mt and $2,799/mt, respectively.

India’s primary cash price increased 1% to $1.96 per kilogram.

Korean commercial 1050 sheet, 5052 coil premium over 1050, and 3003 coil premium over 1050 all increased by less than 1% – reversing last month’s mild decrease of less than 1% — down to $2.97, $3.14 and $3.02 per kilogram, respectively.

The primary reason to pay attention to Chinese steel prices pertains to the country’s price leadership in the global marketplace.

However, since currency dynamics shifted recently, now is a good time to take a more tactical look at the U.S.-China steel price spread.

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The price spread between U.S. and Chinese steel increased during the months following the March 2018 implementation of tariffs on steel imports into the U.S.

After peaking around June 2018, the price spread between U.S. and Chinese steel commodity prices then shrank again by July 2019 — to its lowest level since December 2017 — largely due to falling U.S. prices.

Source: MetalMiner data from MetalMiner IndX(™)

The spread for CRC looks similar, but at different dollar amounts.

Source: MetalMiner data from MetalMiner IndX(™)

As shown on the chart of the spread below, for HRC, the spread between prices narrowed significantly several times in recent history, but came closest to approaching zero in December 2017 and then again in January of 2019.

A smaller spread benefits U.S.-based producers, since similar prices disincentivize imports.

Source: MetalMiner data from MetalMiner IndX(™)

Once accounting for additional costs associated with shipping, finance, the cost of carry and margin, any time the spread exceeds around $90/st — meaning U.S. costs exceed Chinese steel costs by a minimum of $90/st — imports start to look attractive, all other things being equal.

With tariffs, this cost should theoretically provide a buffer against import competition for U.S. producers to the extent of the tariff cost, plus the original competitor’s price, shipping and related costs associated with imports.

For example, assume a tariff rate of 25% on a China HRC price of $485/st and a U.S. price of $585/st. With import freight plus costs at an estimated $90/st, the tariff adds an additional cost of $143.75/st, with an end price total of $718.75/st.

In this example, at this price point and tariff rate, we would need to see the price spread exceed $233.75/st (cost of importing, plus costs of tariffs) before imports theoretically make sense, as shown by the purple line in the chart above.

For CRC, the red line in the chart below indicates where a $90/st import charge intersects the spread line.

For a short time during the start of the tariffs, U.S. producer prices surged; therefore, producers may not have actually allowed the tariffs to render protection as intended by their use, per the HRC model shown above.

U.S. producer prices look to have already corrected from the aforementioned price surge.

Source: MetalMiner data from MetalMiner IndX(™)

Looking at the chart above, CRC imports should be more heavily impacted by the imposition of tariffs, since imports make more sense from a price perspective.

Instead of seeing tariffs as providing a buffer allowing higher prices, what seems closer to reality has more to do with China’s need to lower prices. With U.S. prices corrected, we expect to see lower Chinese prices, as producers drop prices to stay competitive.

In fact, recently we did see lower Chinese HRC prices and a fairly weak, but still sideways, domestic CRC price. Weaker demand in China is a key factor underpinning the price weakness.

Source: MetalMiner data from MetalMiner IndX(™)

Since June, as shown in the chart above, the domestic price of HRC steel in China trended lower, but just slightly (note the narrow range shown on the vertical axis).

In early August, the Chinese government allowed the currency to weaken to a 7-to-1 level vis-a-vis the yuan versus the dollar. This effectively dropped the price of Chinese steel for international buyers and the amount of the related percentage-based tariff.

Source: MetalMiner data from MetalMiner IndX(™)

Compared to HRC, China’s domestic CRC price trend has looked more firmly sideways since June 2019.

Source: MetalMiner data from MetalMiner IndX(™)

In the case of CRC, we can see more clearly in the chart below how the adjusted exchange rate impacts the international price of Chinese CRC steel exports, as the domestic price has nudged up overall since June.

Keep up to date on everything going on in the world of trade and tariffs via MetalMiner’s Trade Resource Center.

Source: MetalMiner data from MetalMiner IndX(™)

What This Means for Industrial Buyers

Chinese producer prices looked flat to weak during the summer months and into the fall, as the exchange rate adjustment made steel imports from China look more attractive.

Given the high levels of production from China, generally speaking, we can expect to see the highly competitive price environment to continue, providing industrial buyers with ample options for negotiations.

Bombardho/Adobe Stock

The Copper Monthly Metals Index (MMI) dropped three points in August down to 71, with all prices in the index losing value.

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LME copper prices traded lower in August following the precipitous price drop early in the month.

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

The price dropped again in early September to new lows for 2019, prior to moving back to the $5,800/mt price level during the past week.

SHFE Prices Trade Sideways

Source: MetalMiner analysis of FastMarkets

Since June, SHFE prices have traded in a narrow band in the CNY 46,000/mt to CNY 48,000/mt price range, indicating a lack of demand recovery.

Global Demand Still Looks Weak

Demand concerns continue to weigh on copper prices. Meanwhile, trade issues also continue to impact the metal’s price volatility.

Demand in China, the world’s largest copper consumer, still looks weak as the government continues to implement measures to bolster the economy.

The China Association of Automobile Manufacturers (CAM) released poor automotive sales numbers for August. Like copper, the automotive industry may serve as a good barometer of consumer demand, given its overall weight in total consumer spending.

Total sales dropped by 6.9% in August compared to July. Further, the organization warned the sales outlook looks weak, Reuters reported. Refined copper cathode production dropped by 0.5% compared with July, according to the same report.

What This Means for Industrial Buyers

In last month’s Copper MMI, we provided a list of copper products included on the list to be impacted by the U.S. implementation of 301 WTO tariffs of up to 100% on imports from Europe. As a result of these proposed tariffs, copper product imports, as well as domestically produced copper semis, may face serious price increases.

As of now, copper appears to remain on that list. Industrial buyers will want to continue to track developments in the case.

Want an easier solution for tracking industrial metals prices and trade news? Request a demo to the MetalMiner Insights platform.

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

Looking for metal price forecasting and data analysis in one easy-to-use platform? Inquire about MetalMiner Insights today!

Actual Copper Prices and Trends
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Copper prices dropped more significantly this month, with all prices showing declines.

The LME primary three-month price dropped by 5.3% to $5,637/mt.

Korean copper strip dropped by 4.7% to $7.79/kilogram.

Chinese prices decreased by more than 4%. China’s copper wire price dropped most, by 4.7%, to $6,484/mt. The primary cash and copper bar prices dropped by 4.3% to $6,488/mt and $6,479/mt, respectively.

The Indian copper cash price dropped by 4.4% to $6.14/kilogram.

U.S. prices in the index decreased more mildly. U.S. producer copper grade 110 and grade 122 decreased by 2.6% to $3.34/pound for both grades, while grade 102 dropped by 1.7% to $3.56/pound.