Price drivers, support and resistance, and average prices
This U.S.-centric annual buying guide consolidates MetalMiner’s 12-month view and provides buying organizations with a complete understanding of the fundamental factors driving prices.
The Annual Outlook also offers a detailed forecast that can be used when sourcing metals for 2021 — including expected average prices, and support and resistance levels.
The Annual Outlook report covers 10 key metals in detail: aluminum, copper, zinc, lead, tin, nickel, HRC, CRC, HDG and plate.
Buyers have to know how to time their buys and be aware of a wide variety of factors influencing prices. Among other factors, MetalMiner’s analysis gives specific attention to the Chinese economy, oil prices and the U.S. dollar.
In addition, buyers need to continue to monitor the coronavirus pandemic and its impact on commodity and industrial metal markets.
This morning in metals news: India is looking to curb its imports of copper and aluminum; Rio Tinto and Turquoise Hill reached a financing agreement for the Oyu Tolgoi underground mine project; and Germany’s steel industry needs state aid.
Per the report, India is particularly targeting imports from China and other Asian countries. Among the proposed measures is a requirement for importers to register with the government.
Rio Tinto, Turquoise Hill reach financing deal
Miner Rio Tinto and Turquoise Hill have reached a financing deal toward the completion of the Oyu Tolgoi underground mine in Mongolia.
“The MOU agreed today with TRQ provides a clear funding pathway for the completion of the Oyu Tolgoi Underground Project,” said Arnaud Soirat, Rio Tinto’s chief executive of copper and diamonds. “We will continue working with TRQ and the Government of Mongolia to progress the underground project, which has the potential to unlock the most valuable part of the mine for the benefit of all stakeholders.”
IG Metall head says German steelmakers need state aid
2020 has been a difficult year for Europe’s steelmakers.
Already battling imports, European steelmakers have struggled on the heels of the coronavirus pandemic and its resulting impact on demand.
In Germany, IG Metall head Joerg Hofmann said the country’s steelmakers need state aid, Reuters reported. In addition, German steelmakers need to form alliances in order the facilitate the transition to greener fuels for blast furnaces, Hofmann argued.
After dipping two weeks ago, the U.S. steel sector’s capacity utilization rate for the week ending Sept. 5 bounced back.
Steel mills produced at a rate of 63.7% during the week ending Sept. 5, 2020, according to the American Iron and Steel Institute (AISI). The rate marked an increase from the 61.7% recorded the prior week (when it had fallen from 63.0% the week before that).
This morning in metals news: copper prices gained momentum Wednesday; the rival of German steelmaker Thyssenkrupp rejected the idea of an alliance; and a Pakistani steelmaker is looking to ramp up its output amid a construction spike in the country.
In this month’s Rare Earths Monthly Metals Index (MMI) news: Texas Congressmen introduced the RARE Act; the European Commission unveiled its own raw materials action plan; and Chinese rare earths to the U.S. could plunge this year.
The Rare Earths MMI gained 8.3% for this month’s MMI reading.
“The United States is more dependent than ever on the importation of the resources that drive our economy, enable us to build advanced technology, and ensure our national security,” Gooden’s office said in a release. “Thirty-five of these rare earth minerals are designated by the Department of Interior as ‘critical’, and we source fourteen of them entirely from foreign suppliers. China is a leading supplier for twenty-two of the thirty-five. The RARE Act is specifically designed to change that.”
In late July, Australian rare earths firm Lynas Corporation announced it had signed a contract with the U.S. Department of Defense for Phase 1 work on a heavy rare earths separation facility in the U.S.
Like U.S. RARE Act, Europe presents critical minerals action plan
In a similar vein, the European Commission also recently announced its own action plan related to its raw materials supply security.
The plan also includes an updated list of those materials deemed critical.
The 2020 list includes heavy and light rare earths elements, in addition to raw materials like coking coal. New materials added to the 2020 list that were not on the 2017 list were titanium, lithium, bauxite and strontium.
The list contains 30 materials, up from the 11 materials included on the 2011 list.
“The supply of many critical raw materials is highly concentrated,” the European Commission said in a release. “For example, China provides 98 % of the EU’s supply of rare earth elements (REE), Turkey provides 98% of the EU’s supply of borate, and South Africa provides 71% of the EU’s needs for platinum and an even higher share of the platinum group metals iridium, rhodium, and ruthenium. The EU relies on single EU companies for its supply of hafnium and strontium.”
Chinese rare earths exports to the U.S. could be on the decline
The South China Morning Post reported China’s rare earths exports to the U.S. could fall by anywhere between one-fourth and one-third this year.
For instance, Adamas Intelligence forecast global consumption of NdFeB alloys could fall by as much as 9.3% this year. The figure comes on the heels of growth at a CAGR of 6.4% from 2015-2019.
However, Adamas did offer a silver lining.
“However, with the ongoing re-opening of key demand markets through the end of 2020 and into 2021, we expect demand for most end-uses and applications to rebound strongly in 2021 and 2022 and thereafter rise steadily through the end of the decade and beyond,” the research firm said.
Actual metals prices and trends
The Chinese yttrium price rose 1.8% month over month to $32.83 per kilogram as of Sept. 1. Terbium oxide 9.0% to $722.31 per kilogram.
Neodymium oxide surged 16.1% to $52,896.23 per metric ton.
Europium oxide fell 2.7% to $31.37 per kilogram. Dysprosium oxide fell 2.3% to $259.74 per kilogram.
This morning in metals news: General Motors announced a partnership with Nikola Corporation; U.S. manufacturing corporations saw their profits plunge in Q2 2020; and Chile’s copper shipments fell in August.
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GM announces partnership with Nikola
General Motors on Monday announced plans to partner with Nikola Corporation, a partnership that would see the Detroit automaker manufacture the Nikola Badger.
“As part of the agreement, Nikola will utilize General Motors’ Ultium battery system and Hydrotec fuel cell technology, representing a key commercialization milestone for General Motors,” GM said in a release.
After-tax profits for U.S. manufacturing corporations reached $47.2 billion in Q2, according to the U.S. Census Bureau. The quarterly total marked a decline from the $113.0 billion in Q1 2020 and the $136.3 billion in Q2 2019.
The July rate was up 0.1% from the previous month, when it reached $1,362.8 billion. However, the July figure marked a 0.1% decrease from the July 2019 estimate of $1,366.0 billion.
During the first seven months of 2020, construction spending totaled $792.6 billion, or up 4.0% year over year.
As for private construction, spending reached a seasonally adjusted annual rate of $1,013.5 billion, or up 0.6% from the previous month.
Within private construction, residential construction reached $546.6 billion in July, or up 2.1%. Nonresidential construction reached a seasonally adjusted annual rate of $466.9 billion in July, or down 1.0%.
Meanwhile, public construction spending reached an estimated seasonally adjusted annual rate of $351.1 billion, which marked a 1.3% decline. Educational construction fell 3.0% to $82.2 billion. Highway construction reached a seasonally adjusted annual rate of $99.0 billion, or down 3.1%.
The index, put out monthly by the American Institute of Architects, measures billings growth (any reading less than 50 indicates billings contraction).
“Inquiries into new projects continued to show just a modest decline, but more seriously, the value of new signed design contracts slipped from its June level,” the latest ABI report notes. “Unfortunately, with the continued resurgence in COVID-19 cases in many areas of the country, clients may be interested in starting new projects, but remain reluctant to sign on the dotted line.”
By region, the West posted the strongest reading, checking in at 40.9. Trailing the West were the South (40.7), the Midwest (40.1) and the Northeast 36.8).
This month’s ABI survey asked architecture firms about their experience with the federal Payroll Protection Program (PPP).
“Overall, 85% of responding firms reported that they applied for, and received, a PPP loan,” the report states. “Just 1% applied for a loan but did not receive one, while the remaining 14% did not apply for a loan at all. Firms with an institutional specialization were most likely to report receiving a PPP loan (89%), followed by firms with a commercial/industrial specialization (81%), and firms with a multifamily residential specialization (75%).”
Before we head into the long Labor Day weekend, let’s take a look back at the week that was in the world of metals.
Automakers released August sales reports, mostly showing sales remain down compared with 2019 levels.
Meanwhile, for the week ending Aug. 29, U.S. steel mills’ capacity utilization fell compared with the previous week, interrupting an extended stretch of weekly capacity increases.
In other news, President Donald Trump took aim at steel imports from Brazil and Mexico. With respect to Brazil, Trump opted to cut Brazil’s semi-finished steel quota for the remainder of the year down to 60,000 tons from 350,000 tons.
This morning in metals news: steelmaker Nucor will open a new steel plant in Florida by the end of this year; U.S. gasoline prices are low heading into the Labor Day weekend; and Chinese demand continues to power high iron ore prices.