Author Archives: Fouad Egbaria

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Our Aluminum MMI sub-index has steadily climbed since a score of 79 to start the year. For our June reading, this sub-index checked in at 88, holding steady after an 88 reading in May.

Prior to May, the Aluminum MMI last hit or exceeded 88 in May 2015, when it checked in at 90.

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The major players in this sub-index, primary 3-month aluminum on the London Metal Exchange (LME) and Chinese primary aluminum, posted price drops, by 1% and 1.6%, respectively. Chinese scrap also fell by a similar margin, dropping in price by 1.3%.

On the other hand, solid price jumps in other aluminum products leveled the balance for the month.

Chinese billet, for example, rose by 1.1%. On the LME, 5083 aluminum plate prices rose by a robust 6.3%.

Aluminum Around the World

In light of several Arab nations’ decision to sever diplomatic ties with Qatar — alleging that Qatar is financing terrorism in the region — aluminum exports from the small nation have been disrupted. According to Reuters, an aluminum plant partly owned by Norsk Hydro will have to seek alternate routes for aluminum exports from the country, due to air space restrictions imposed by Qatar’s neighbors.

Meanwhile, as Raul de Frutos wrote, there were high expectations for aluminum to start the year.

Goldman Sachs added to the hype by being particularly bullish about the metal, predicting LME primary three-month aluminum will hit $2,000/metric ton this year. For now, the market stepped back from that prediction after the 1% drop from the May to June readings.

Chinese supply-side reforms, namely cutting aluminum (among other metal) production to curb pollution, could have positive effects on prices — if they are implemented. Aluminum prices got a boost early this year when the Chinese government announced a proposal to curtail its output of aluminum and other metals.

On top of all that, President Donald Trump’s administration’s national security probe into metal imports continues to loom. The probe is ongoing; it is still unclear when it might conclude or what practical policy effects it might have.

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Actual Metal Prices

It was an up-and-down month across the board for the aluminum products in this index, as gains balanced drops. This is evidenced by the index holding fast at 88 for the second straight month.

Primary three-month aluminum on the LME dropped to $1,918/metric ton. The cash price for Chinese primary aluminum also dropped, falling to $2,003.26/metric ton. Chinese scrap fell to $1,1819.81/per metric ton.

On the other side of the ledger, Chinese billet prices rose to $2,108.92/metric ton. European aluminum plates, boasting a big gain, rose to $3,582.70/metric ton.

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This morning in metals news, mining company Rio Tinto PLC is planning on digging deeper underground for copper, a metals trader who pleaded guilty to fraud charges last week is cooperating with U.S. prosecutors in an investigation of trading practices at the the world’s biggest banks and the Justice Department is seeking to dismiss a lawsuit filed by mining company Twin Metals Minnesota, which is seeking the reinstatement of federal leases so it can operate on land in northeastern Minnesota.

Rio Tinto PLC Eyes Mid-2020s for $6-8B Mining Operation

As readily mineable copper supplies dwindle, one company has decided to simply dig deeper.

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Mining company Rio Tinto PLC is preparing for a new mining operation, estimated to cost $6 billion to $8 billion, which will seek to dig about a mile underground, the Wall Street Journal reported. According to the article, the Arizona mine — which is pending regulatory approval — could meet the demand of approximately one-fourth of U.S. demand.

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Our Raw Steels sub-index score dropped by 10% from March to April, partially a result of slumping prices in China.

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That score experienced a bit of a comeback for our June reading, rising to 68 from the May reading of 66.

This time around, Chinese steels posted price increases, providing a boost after a tepid April. Chinese slab steel prices rose by 20.1% and billet steel also experienced a major bump, rising by 15.2%.

In the U.S., shredded scrap steel prices stabilized after a 7.1% drop the previous month. Shredded scrap’s June price point is the metal’s second-highest of 2017.

U.S. Steel Prices: Going Up or Down?

As we’ve previously reported, Chinese and U.S. steel price divergences usually mean one will have to move to close the gap.

So, what does that mean for U.S. steel prices?

As we noted previously, U.S. steel prices rose as Chinese prices dropped by 20%, leaving a widening price spread. Ultimately, the former may have to pull back price momentum.

And, given data in 2017 to date, a price drop for U.S. hot-rolled coil (HRC) and shredded scrap would not be surprising. The former has posted price drops every month this year, while the latter has shifted back and forth on either side of a $300/short ton baseline.

President Donald Trump and his administration’s ongoing national security probe into U.S. steel imports will continue to be something to monitor. The administration’s actions with respect to the investigation, if any, would have effects on steel prices and the interplay between U.S. and Chinese prices, in particular.

Actual Metal Prices

In the U.S., HRC three-month futures dropped to $571/short ton. The 2% drop marked the third straight month of price drops for HRC steel.

Shredded scrap surpassed the $300/short ton mark once again, hitting $301. Scrap has been swinging around the $300 mark, finishing under that mark in odd-numbered months this year and over in even-numbered months.

Like a pendulum, Chinese slab steel rose 20.1% to $485.77/metric ton, a month after a 19.5% price drop. Iron ore rose to $65.31/dry metric ton, a 1.1% increase. Chinese HRC steel also got a boost, rising 4.6% to $479.90/metric ton.

Free Download: The May 2017 MMI Report

Not all of the Chinese metals, however, experienced price hikes.

Chinese coking coal dropped 11.2% to $208.84/metric ton. Coking coal has posted price drops three months in a row since its year-to-date high of $264.99/metric ton for the March reading.

The Construction MMI, tracking metals and raw materials used within the construction industry, bounced back up to 81 for our June reading after notching a 79 for May.

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Construction continues to trend positively, as evidenced by the latest U.S. Census Bureau data.

For the most recently available statistics for the month of April, total construction spending dipped from March to April, but April spending exceeded the April 2016 total by 6.7%. The Census Bureau estimates approximately $1,218.5 billion in April spending, a 1.4% decline from $1,235.5 billion in March.

Total spending (public and private) through the first four months of 2017 outpaced that of the same time frame in 2016, with $359.5 billion in spending this year, a 5.8% increase from last year. Spending on residential construction in April 2017 was up by 15.6% from April 2016. Spending on commercial and office spaces was up by 12.4%, in each case, from April 2016.

The Architecture Billings Index (ABI), put out by the American Institute of Architects, painted a similar picture. The most recent ABI report for April notes that architecture firm billings increased for the third month in a row.

With a score of 50 as a midpoint (meaning no decrease or increase), the South and Midwest regions of the U.S. came in strongest, with scores of 55.3 and 53.3, respectively. The West and Northeast regions also posted increases, with scores of 50.9 and 50.7, respectively.

U.S. Scrap Fights Way Over $300 Mark

In the United States, shredded scrap steel again surpassed $300/short ton after dipping under last month. The price for scrap saw a 1% increase. (For the exact prices in this story, log in or sign up below.)

On the bright side for buyers, steel bar fuel surcharges decreased across the U.S.

In the Gulf Coast, fuel surcharges dropped 2.8%. Midwest prices fell by 1.3%. Over in the Rocky Mountain region, prices settled in after a .07% drop on the month.

President Donald Trump’s administration’s investigation into U.S. steel imports — and any resulting policy effects of that investigation — will be something to monitor through the rest of the year and possibly into next year.

Chinese Steel Prices Get a Jolt

While many expect growth to slow in China in the second half of 2017, prices for rebar and H-beam steel increased significantly, bouncing back after a sharp drop in April.

The rebar price spiked by about 9.5%. H-beam steel had a similarly large boost, rising by 7.6%.

Chinese aluminum bars dropped by 1.1%. Iron ore prices also rose by 1.1%.

European Aluminum Sheets in Neutral

In Europe, commercial 1050 aluminum sheets held steady, with prices ticking up by .02%.

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Here are the Exact Prices of Those Movers and Shakers

  • China Rebar rose to $556.22/metric ton, by about 9.5%.
  • China H-beam steel had a similarly large boost, rising by 7.6% to $451.34/metric ton.
  • In the United States, shredded scrap steel again surpassed $300/short ton after dipping under last month. The price for scrap rose to $301/short ton, via a 1% increase.
  • In the Gulf Coast, fuel surcharges dropped to $0.2426/mile via a 2.8% decline. Midwest prices fell by 1.3% to 0.2604/mile. Over in the Rocky Mountain region, prices settled in at $0.2902/mile, after a .07% drop.
  • Chinese aluminum bars dropped by 1.1% to $2,719.37/metric ton. Iron ore prices also rose by 1.1% to $77.05/dry metric ton.
  • In Europe, commercial 1050 aluminum sheets held steady, with prices ticking up by .02% to $2,723.75/metric ton.

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This morning in metals news, a new firm is looking to challenge the London Metal Exchange (LME), copper prices took a fall and sluggish demand also knocked down other base metals.

NFEx Eyes Early 2018 For Launch of New Trading Platform

The LME, founded 140 years ago, might have some competition in the near future.

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NFEx Markets announced Monday it plans to open its own trading platform for base metals in the first quarter of 2018, according to a Reuters report.

NFEx has offices in London’s financial district — the new company, incorporated in March, aims to attract physical trade.

“Contracts and trade dates will match established physical industry practice,” the company said in a release. “This new trading platform will not replace or disturb current trading models but will be complementary to them.”

Copper Prices Dip

Like other metals, copper prices fell on Monday, according to a Reuters report.

Copper inventories monitored by the Shanghai Futures Exchange grew for a third consecutive week, as demand seems to have declined. Many expect China to have slower growth in the second half of 2017.

Nickel, Lead, Zinc Also Down

Similarly, nickel, lead and zinc futures were down in India, the Economic Times reported.

The declines were the result of low demand, according to the report.

Lead futures were down by 0.40%, while nickel and zinc futures were each down by 0.24%.

Free Download: The May 2017 MMI Report

The Automotive MMI, our sub-index of industrial metals and materials used by the automotive sector, dropped by one point for a June reading of 86. The Automotive MMI has not seen an increase since early this year, when the figure accelerated from a January reading of 82 to 92 in February.

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Overall, consumers seemed to pass on auto purchases in May, continuing the slowdown from January-April. Car and light truck sales — checking in at a total of 1.52 million in May — were down for the third month in a row. Automakers reported a 1% drop in sales from the previous year, according to a Reuters report.

While Ford Motor Company’s sales are down by 3.5% in the calendar year to date compared with the same point in 2016, it had a good May, edging out GM and others, according to data from Autodata Corp.

Ford sold 240,250 vehicles in May, a 2.3% increase from its May 2016 total sales.

GM, meanwhile, sold 237,156 vehicles in May 2017, a 1.4% drop from May 2016.

As for Chinese auto sales, those are down, too, despite a strong first quarter. Reuters reported a 2.2% drop in April sales after a 5% rise in March. The decline was the largest in China since August 2015, according to the report.

So how does that related to the metals side of the story?

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Before we head into the weekend, let’s revisit some of the stories and analysis here at MetalMiner this week.

Moody’s Downgrade of China: Something to Worry About?

Earlier this week, our Stuart Burns wrote about credit rating agency Moody’s and its downgrade of China’s credit status by one level (from Aa3 to A1). Credit downgrades are handed down all the time — but what do they mean, exactly? And, specifically, what does it mean for the Chinese economy and its growth?

Benchmark Your Current Metal Price by Grade, Shape and Alloy: See How it Stacks Up

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This morning in metal news, the European Union urges the United States to focus the scope of its national security probe — launched by President Donald Trump’s administration in April — into steel imports; nickel prices continue to tumble amid concern about global oversupply; and China’s attempt to tackle its debt could impact metal markets throughout the second half of 2017.

EU Officials Express Concern About US Steel Import Probe

On the heels of President Donald Trump’s first round of overseas visits, there remains uncertainty about the president’s stance on several issues, including whether or not Trump will pull the U.S. out of the 195-member Paris climate accord (the president is expected to make an announcement on that subject this afternoon). In addition, EU officials are concerned about the scope of the Trump administration’s national security probe into U.S. steel imports, Reuters reported.

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The probe would have negative effects on both U.S. steel producers and manufacturers which use steel, a written statement from the European Commission to the U.S. Department of Commerce argued. The EU is also hoping the probe will zero in on issues of national security and won’t broadly impact exporters around the world, should the Trump administration decide to adjust steel import policy.

Nickel Continues to Roll Downhill

The price of nickel continues to fall, this time to an 11-month low on Thursday, Reuters reported.

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Gold Prices Going UpThis afternoon in metal news, Chinese imports of scrap metals could be subject to further scrutiny by the government, gold reached a one-month high and GE Additive gives away metal 3-D printers valued at $8 million to more than 400 schools. GE Additive previously committed $10 million to its GE Additive Education Program, which aims to encourage the use of 3-D printing technology in education programs and developing future talent.

China Considers Bans on Scrap Imports

China, the world’s leading buyer of copper scrap, might be reconsidering its import strategy, as Materials Recycling World reported.  Speaking at a Bureau of International Recycling (BIR) convention in Hong Kong, Ma Hongchang, BIR’s adviser on Chinese policy and regulatory developments, said it was possible the government could ban imports of certain grades of mixed metal scrap.

Two-Month Trial: Metal Buying Outlook

While nothing has been set in stone from a regulatory perspective, China will continue to have a need for scrap metals, given the growth of infrastructure projects in the country. However, it will be interesting to note the sources of its import supply — that is, whether there is a shift in imports coming from Europe and the U.S. to other nearby Asian nations.

Amid Political Uncertainty, Investors Go for the Gold

Geopolitical tensions and instabilities have a way of roiling markets and, consequently, making investors uneasy. That hasn’t been the case for gold, which recently hit a one-month high, according to a Reuters report.

As the race for prime minister in the U.K. tightens, and nations like Italy and Germany prepare for elections of their own down the road, many investors have turned to the “safe-haven asset” of gold. Spot gold rose by 0.1 percent, according to the Reuters report, to $1,267.70 per ounce.

“The ongoing political uncertainty in the market is really driving safe-haven buying at the moment,” ANZ analyst Daniel Hynes told Reuters.

GE Additive’s $10M Education Program to Bring 3-D Printers to 400-plus schools

GE Additive recently announced it would be giving metal 3-D printers to more than 400 schools, as part of its education initiative to bring the technology to students, as reported in 3D Printing Industry.

The printers, valued at $8 million, are part of Additive’s effort to give students access to additive technologies and “help accelerate the adoption of advanced manufacturing worldwide,” according to GE Additive’s website.

According to 3D Printing Industry’s report, eight universities will receive a Concept Laser MLAB cusing 100R metal 3-D printer, valued at $250,000 apiece. Although the 2017 application deadline for 3-D printers through the program has passed, educational organizations can apply for 2018 at a later date on the GE Additive website.

Free Download: The May 2017 MMI Report

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