Author Archives: Irene Martinez Canorea

The Stainless Steel Monthly Metals Index (MMI) dropped two points, bringing the index value to 66 points.

The drop came as a result of lower LME nickel prices, while U.S. stainless steel surcharges held steady this month.

Need buying strategies for steel in 2019? MetalMiner’s Annual Outlook has what you need

LME Nickel

LME nickel prices traded lower in November, continuing the six-month downtrend that started back in June 2018.

LME nickel prices started to rise slightly at the end of November, and have risen so far this month. Current trading volumes appear weaker, which usually supports a downtrend.

Source: MetalMiner analysis of FastMarkets

Nickel Global Tightness

Forecasts suggest nickel will see increased availability in 2019.

Indonesia plans to increase capacity further, adding to nickel supply. Moreover, U.S.-China trade tensions over steel and stainless steel have driven LME nickel prices lower.

Despite the expectation of a nickel supply increase, current stock numbers do not indicate that yet. Nickel stocks at LME warehouses sit at 215,000 tons, 40% lower than at the beginning of 2018.

In December, Indonesia granted permission for two commodity companies to restart exports of nickel ore. In August, the mining ministry revoked export permits for around 4,222,119 tons of nickel ore shipments from PT Surya Saga Utama, PT Modern Cahaya Makmur and PT Integra Mining Nusantara, as they were not showing any smelter development.

Brazilian miner Vale SA, the world’s top nickel producer, plans to invest $500 million in its New Caledonia nickel mine, reflecting the recent boost in electric vehicle (EV) sales.

Miner BHP received approval from the Australian government to develop a nickel mine that would primarily feed its Nickel West battery chemicals business. The Venus deposit is one of the most relevant nickel deposits for the company, as it is looking to produce nickel sulphate (primarily used for electric vehicle batteries).

Domestic Stainless Steel Market

Domestic stainless steel surcharges fell again. This is the fifth consecutive drop in stainless steel surcharges this year.

The 316/316L-coil NAS surcharge fell to $0.87/pound, while the 304/304L surcharge fell to $0.60/pound.

Source: MetalMiner data from MetalMiner IndX(™)

The stainless steel surcharge has started a short-term downtrend, driven by the general slowdown in the steel and stainless steel markets.

However, stainless steel surcharges still remain well above 2015/2016 lows.

What This Means for Industrial Buyers

Stainless steel price momentum slowed down again this month, similar to carbon steel.

Nickel prices also appear weaker, following slower momentum in commodities markets.

Buying organizations may want to follow the market closely for opportunities to buy on the dips.

To understand how to adapt buying strategies to your specific needs on a monthly basis, request a free trial of our Monthly Outlook now.

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

Actual Stainless Steel Prices and Trends

Chinese 304 stainless steel coil decreased by 2.07%, while Chinese 316 stainless steel coil prices fell this month by 3.34%.

Meanwhile, Chinese Ferrochrome prices fell by 0.25%, down to $1,852/mt. FerroMolybdenum lumps prices fell 8.6%, moving to  $18,739/mt.

Nickel prices fell by 3.38% to $11,280/mt.

The Raw Steels Monthly Metals Index (MMI) fell again this month, dropping to 83 points. The Raw Steels MMI held at 89 points since August for four consecutive months, but started decreasing in November.

 

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The recent slowdown in domestic steel price momentum led to the decline. Domestic steel prices recently decreased sharply on the back of slower demand and softer Chinese prices.

Domestic steel prices have showed slowing momentum since June 2018. Domestic steel prices increased sharply at the beginning of the year, driven by a bullish market in commodities and industrial metals and Section 232 tariffs. During most of 2018, domestic steel prices have remained at seven-year highs.

Source: MetalMiner data from MetalMiner IndX(™)

All forms of steel decreased in November except plate, which increased (driven by tight supply). Domestic plate has longer lead times than other forms of steel.

Hot-rolled coil (HRC), and hot-dip galvanized (HDG) prices also fell in December, while cold-rolled coil (CRC) prices increased slightly.

However, domestic steel prices remain in a downtrend that may last until the Chinese steel sector shows some strength again.

Historically, prices tend to drift lower during the beginning of Q4 and then rise. Last year, HRC domestic prices started to increase in December, then skyrocketed during the first quarter of 2018. However, MetalMiner does not see this increase happening during this year’s Q4 cycle.

Chinese Steel Prices

So far in December, prices of all forms of Chinese steel have decreased.

Chinese domestic steel prices started to decrease at the end of October, driven by the start of the winter season.

Source: MetalMiner data from MetalMiner IndX(™)

Chinese steel domestic demand appears weaker; fears around the Chinese economy and manufacturing growth have sent prices down.

HRC prices have declined by 5% in December already, while CRC prices have fallen by 7%.

Lower prices in China come as a result of weaker demand and increasing production. October Chinese steel output increased for a third straight month, as mills boosted output ahead of production cuts.

Chinese stock market (FXI Shares). Source: MetalMiner analysis from SeekingAlpha

The yuan continues to weaken, and the yuan/USD exchange rate is falling. U.S. importing organizations might want to remember that a weaker yuan makes Chinese goods more appealing, despite the tariffs.

Meanwhile, the Chinese stock market (FXI Shares) has fallen during most of 2018 after reaching a peak at the beginning of the year. The new downtrend comes as a result of a slowdown in China.

What This Means for Industrial Buyers

Current domestic steel prices seem to have started a downtrend.

Adapting the right buying strategy becomes crucial to reducing risks.

Only the MetalMiner monthly outlooks provide a continually updated snapshot of the market from which buying organizations can determine when and how much to buy of the underlying metal.

For more information on how to mitigate price risk year-round, request a free trial to our Monthly Metal Buying Outlook.

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

Actual Raw Steel Prices and Trends

The U.S. Midwest HRC 3-month futures price fell this month by 6.86%, moving to $760/st.

Chinese steel billet prices fell this month by 12.81%, while Chinese slab prices fell by 10.78% to $536/mt. The U.S. shredded scrap price closed the month at $358/st, increasing by 4.6% month over month.

In December, the Copper Monthly Metals Index (MMI) rose three points, returning to October 2018 levels. Higher LME copper prices drove the index. The current Copper MMI stands at 77 points.

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Contrary to other base metals, LME copper prices increased in November.

LME copper prices have maintained momentum that started back in September. LME copper prices still trade over the $6,000/mt level, which served as a stiff resistance level for most of 2017. Prices over this level indicate a bullish copper market, while prices below that level signal a more bearish trend. Trading volume remains heavier on the buys, which also supports prices.

LME Copper prices. Source: MetalMiner analysis of Fastmarkets

LME copper prices, however, have fallen so far in December. However, this slight decrease does not seem to be relevant.

Buying organizations can expect LME copper price momentum to remain strong in the short term.

Global Copper Outlook

Chile, the world’s top copper producer, reported a 7.3% increase in copper output in the January- September time frame compared with the same period in 2017, boosted by a sharp increase from BHP’s Escondida copper mine.

The Escondida mine reached 950,000 tons of copper output, 57.8% higher from the same period in 2017 (due to the 40-day strike last year).

Meanwhile, Codelco’s production came in at  1.29 million tons, down 2% from last year. The Collahuasi mine, owned by Anglo American Plc and Glencore Plc, currently the second-largest mine in the country, reached 401,8000 tons of copper output during this period, 5.8% higher than last year.

Delegates at the Asia Copper Conference in Shanghai forecasted a strong and healthy outlook for copper demand in the mid- to long term. According to Jerry Jiao, vice president of China Minmetals Corp., the renewable energy revolution will boost copper demand in the future, with an expected increase of 2.4 million tons by 2030. That demand, together with the increase of the Chinese car fleet replaced by 20% electric vehicles by 2030 will result in 2.8 million tons of incremental copper demand (based on 60 kilogram per car and 47 million cars in the country, as reported by Reuters).

Current copper Chinese demand goes toward air conditioning, automobiles (for which demand has weakened) and infrastructure investment. In fact, copper used for infrastructure investment will serve as the biggest contributor to Chinese copper demand in 2019.

Indian copper demand will likely double by 2026, due to increasing demand in power, auto and consumer sectors. Demand in the country could reach 1.433 million tons by 2026 from 650,000 tons in 2018. Different projects have boosted investments, but this projection does not include copper usage in electric vehicles, which would increase demand up to 2.5 million tons.

Indian smelter capability utilization came in at 80%, or 843,000 tons of refined copper versus the projected 642,000 tons of projected demand. However, the recent shutdown of Vedanta (400,000 tons per year) may lower the refined copper number in 2018.

Chinese Scrap Copper

LME copper prices and Chinese copper scrap prices tend to follow the same trend. Both increased this month.

However, the pace of the increases seems to differ.

Chinese scrap prices increased softly, while LME copper prices showed stronger momentum.

Source: MetalMiner data from MetalMiner IndX(™)

The spread has become wider again. The wider the spread, the higher the copper scrap consumption, and therefore, the price.

What This Means for Industrial Buyers

LME copper prices increased this month, following a two-month uptrend. Buying organizations will want to understand how to react to the latest copper price movements.

Adapting the right buying strategy is crucial to reducing risks. Only the MetalMiner monthly outlooks provide a continually updated snapshot of the market from which buying organizations can determine when and how much to buy of the underlying metal.

For more information on how to mitigate price risk year-round, request a free trial to our Monthly Metal Buying Outlook.

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

Actual Copper Prices and Trends

In November, most of the prices comprising the Copper MMI basket rose.

LME copper increased by 4.48% this month. Indian copper prices rose by 6.82%, while Chinese primary copper prices jumped 3.92%.

Prices of U.S. copper producer grades 110 and 122 increased by 4.08%. Meanwhile, the price of U.S. copper producer grade 102 rose 3.86%, up to $3.76/pound.

The December Aluminum Monthly Metals Index (MMI) held steady this month at 88.

Buying Aluminum in 2019? Download MetalMiner’s free annual price outlook

LME aluminum prices also fell in November. Aluminum prices appear weaker this month. However, prices have increased so far in December.

Source: MetalMiner analysis of FastMarkets

From last July until November, LME aluminum prices traded in the $1,970-$2,170/mt level. However, prices moved slightly below the $1,970/mt floor in November.

The politics of trade and financial uncertainty in China, rather than supply and demand in the aluminum market, have moved LME price levels.

Rusal Aluminum Market

Russian aluminum giant Rusal’s aluminum profits continue to rise while sanctions continue to get postponed, this time from Dec. 12 to Jan. 7.

Rusal primary aluminum production reached 940,000 tons in Q3, 1% higher year on year. Primary aluminum and alloys sales increased by 8.1% year on year to 1.05 million tons. Rusal aluminum exports increased by 4% in October compared to September.

China Alumina Market

According to the president of Aluminum Corp of China Ltd, alumina exports held steady in October. Chinese aluminum makers have exported unusually high alumina volumes in 2018 due to supply constraints.

Alumina tightness came as a result of the strike at Alcoa’s operations in Western Australia, the outage at the Norsk Hydro Alunorte alumina refinery and U.S. sanctions on Russia’s United Company Rusal.

September alumina exports were five time higher than August, rising to over 165,000 tons. The higher numbers come on the heels of advanced production in September-October before the winter cuts (Nov. 15-March 15).

However, unlike last year, Chinese production in 2018 will not have blanket requirements for 30% output cuts.

SHFE aluminum prices also fell this month, hitting their lowest level since October 2016. Current prices have fallen 13% from the beginning of 2018. SHFE trading volumes fell 37% from this time last year, which means buyer sentiment — and, therefore, prices — have fallen.

Source: MetalMiner analysis of FastMarkets

However, SHFE aluminum prices traded similarly to LME aluminum prices and increased so far in December.

U.S. Domestic Aluminum

The U.S. aluminum Midwest Premium has traded sideways in December.

The current price stands at $0.18/pound, the same level as November, and lower than the $0.20/pound level in April-May 2018. Despite the sideways trend, the current premium remains high.

Source: MetalMiner data from MetalMiner IndX(™)

What This Means for Industrial Buyers

LME aluminum prices appear weaker at this point. Tariffs, sanctions and supply concerns may act as a support to aluminum prices, both for LME aluminum and the U.S. Midwest Premium.

Adapting the right buying strategy becomes crucial to reducing risks.

Only the MetalMiner monthly outlooks provide a continually updated snapshot of the market from which buying organizations can determine when and how much to buy of the underlying metal.

For more information on how to mitigate price risk year-round, request a free trial to our Monthly Metal Buying Outlook.

Want to see an Aluminum Price forecast? Take a free trial!

Actual Aluminum Prices and Trends

Aluminum prices fell this month, with a closing price in November of $1,950/mt.

Meanwhile, Korean commercial grade 1050 sheet increased by 3.96% to $3.41/kilogram after last month’s downtrend.

Chinese aluminum primary cash prices increased by just 0.28%, while Chinese aluminum bar fell by 1.63%. Chinese aluminum billet prices also decreased, down 3.13% this month to $2,042/mt.

The Indian primary cash price rose by 1.02% to $1.98/kilogram.

The Stainless Steel Monthly Metals Index (MMI) fell in November. The index moved back towards September 2017 levels (when it hit 67 points).  The current index stands at 68 points.

The drop came as a result of lower LME nickel prices and lower U.S. stainless steel surcharges.

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LME Nickel

LME nickel prices traded lower in October.

Nickel prices decreased sharply at the end of the month, showing greater volatility than in the past couple of months. However, nickel prices still appear to be strong and trading volumes seem supportive of the uptrend.

Source: MetalMiner analysis of FastMarkets

Nickel Global Tightness

The global nickel deficit continued to widen this year.

During the beginning of the year, the deficit widened to 106,000 tons from 60,800 tons during the same period in 2017.

However, the latest monthly data show a narrower deficit.

The latest data, published in October, signaled a deficit at 7,100 tons in August versus the previous 16,500-ton deficit in July.

Chinese nickel production dropped 8% due to a fire at the Kalgoorlie smelter in Australia. Full production should return later this month.

Japan’s Sumitomo Corp lowered its forecast for nickel output at its Ambatovy project in Madagascar to 40,000 tons. The initial projection called for 48,000 tons.

The decrease in nickel production came as a result of bad weather and a slow ramp-up after maintenance.

Domestic Stainless Steel Market

Domestic stainless steel surcharges fell again. This is the fourth consecutive drop in stainless steel surcharges this year.

The 316/316L-coil NAS surcharge fell to $0.91/pound, while the 304/304L decreased to $0.63/pound.

Source: MetalMiner data from MetalMiner IndX(™)

The stainless steel surcharge has started a short-term downtrend, driven by the general slowdown in the steel and stainless steel markets.

However, stainless steel surcharges still remain well above 2015 lows.

What This Means for Industrial Buyers

Stainless steel price momentum slowed down again this month, similar to carbon steel. However, nickel prices still remain strong.

Buying organizations may want to follow the market closely for opportunities to buy on the dips. To understand how to adapt buying strategies to your specific needs on a monthly basis, request a free trial of our Monthly Outlook now.

For more efficient carbon steel buying strategies, take a free trial of MetalMiner’s Monthly Outlook!

Actual Stainless Steel Prices and Trends

Both Chinese 304 stainless steel coil decreased by 1.78%, while Chinese 316 stainless steel coil prices dropped 1.48% this month.

Meanwhile, Chinese Ferrochrome prices increased this month by 0.85%, up to $1,857/mt. Ferro Molybdenum lump prices jumped 7.5%, reaching $20,505/mt. Nickel prices also fell this month, dropping by 7.34% to $11,675/mt.

The November Aluminum Monthly Metals Index (MMI) fell this month back to June 2017 levels, before MetalMiner called a bull market for aluminum.

The current Aluminum MMI index stands at 88 points, three points lower than last month’s reading.

Buying Aluminum in 2019? Download MetalMiner’s free annual price outlook

LME aluminum prices fell in October. Aluminum prices increased sharply at the beginning of the month, driven by a potential disruption to alumina supply. However, after supply concerns eased, prices fell sharply.

Source: MetalMiner analysis of FastMarkets

LME aluminum prices have traded since last July in the $1,970-$2,170/mt level. With the exception of the October two-day peak, aluminum prices have held above the strong support level of $1,970/mt since August 2017.

However, current prices now appear closer to that support level. Buying organizations may want to pay close attention to how aluminum prices react to that level.

Asian Aluminum Market

Chinese imports of U.S. aluminum scrap have dropped, driven by new environmental protection control standards that took effect in March. U.S. aluminum scrap may be rerouted to Europe.

India’s aluminum makers, such as Hindalco Industries and Vedanta Ltd, have boosted sales to Japan, driven by U.S. sanctions against Russia’s Rusal.

Import tariffs have impacted traditional supply routes.

Japanese rollers have historically preferred top-tier producers such as Rio Tinto, Alcoa or South 32.  However, aluminum ingot imports from January-August 2018 have doubled from last year. Both primary imports from India have increased as well as value-added products.

The bulk of the imports come as refined ingots instead of billets and slabs (i.e., value-added products). Japan seeks substitute materials for Rusal’s higher-quality products, and has begun importing from the Middle East and Malaysia.

According to trade data, Japan imported 59,545 tons of aluminum ingot so far this year, 50% more than last year. Material flow from Russia decreased by 21%, down to 175,694 tons. 

U.S. Domestic Aluminum

The current U.S. Midwest aluminum premium has also traded sideways for the third consecutive month.

The current premium stands at $0.19/pound; despite the sideways trend for the premium, the current premium remains high.

Source: MetalMiner data from MetalMiner IndX(™)

 

The Japanese Q4 premium decreased by 22% from Q3, falling to $103/mt. The decrease follows three quarters of rising premiums, caused by ample supply in the Asian markets.

What This Means for Industrial Buyers

Despite the recent slide in aluminum prices, the LME aluminum price trend suggests a continuation of the bull market that started last year.

Tariffs, sanctions and supply concerns will act as a support to aluminum prices, both for LME aluminum and the U.S. Midwest premium. Adapting the right buying strategy becomes crucial to reducing risks.

Only the MetalMiner monthly outlooks provide a continually updated snapshot of the market from which buying organizations can determine when and how much to buy of the underlying metal.

For more information on how to mitigate price risk year-round, request a free trial to our Monthly Metal Buying Outlook.

Want to see an Aluminum Price forecast? Take a free trial!

Actual Aluminum Prices and Trends

Aluminum prices fell this month, with a closing price in October of $1,966/mt.

Meanwhile, Korean commercial grade 1050 sheet fell by 4.37% to $3.28/kilogram following last month’s downtrend.

Chinese aluminum primary cash prices decreased by 5.78%, while Chinese aluminum bar fell by 3.57%. Chinese aluminum billet prices also decreased 3.67% this month, to $2,079/mt.

The Indian primary cash price fell by 2.48% to $1.96/kilogram.

buhanovskiy/AdobeStock

The Raw Steels Monthly Metals Index (MMI) decreased this month, dropping two points for an MMI reading of 87 points. The Raw Steels MMI had held at 89 points since August.

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Domestic steel prices have showed slowing momentum since June 2018. Domestic steel prices increased sharply at the beginning of the year, driven by a bullish market in commodities and industrial metals and the Section 232 tariffs.

Buying organizations may want to remember that domestic steel prices have remained at more than seven-year highs this year.

Source: MetalMiner data from MetalMiner IndX(™)

Hot-rolled coil, cold-rolled coil and hot-dip galvanized prices decreased in October. Meanwhile, plate prices increased this month, supported by lower metal availability.

Source: MetalMiner data from MetalMiner IndX(™)

With budgeting season in full gear, domestic steel prices may start increasing at some point between November and January, according to historical steel price cyclicality analysis. Therefore, companies will need to know when and how much to buy.

Chinese Steel Prices

So far in November, all forms of Chinese steel prices have decreased. Chinese domestic steel prices started to decrease at the end of October, driven by the start of the winter season.

Source: MetalMiner data from MetalMiner IndX(™)

But the real question to ask around Chinese steel prices appears less apparent. Have prices really declined in RMB and has the currency moved (i.e., has the RMB depreciated) such that the steel price from a U.S. buyer’s perspective appears to be dropping?

When looking at the price of Chinese steel (HRC and CRC) in U.S. dollars, prices have in fact decreased.

We can do a simple calculation, looking at the percentage decrease from September 2018 to November 2018 in Chinese steel prices in RMB and USD. Chinese HRC prices in RMB decreased 6% in that period, while CRC prices dropped by 3% in the same time frame (also in RMB).

The same calculation in USD results in a 7% decrease for HRC prices and a 4% decrease for CRC.

Source: MetalMiner data from MetalMiner IndX(™)

The depreciation of the yuan has moved Chinese steel prices lower from a U.S. buyer’s perspective. A weaker currency makes Chinese goods more appealing, despite the tariffs.

Source: MetalMiner data from MetalMiner IndX(™)

The Spread and Cost Calculation

When looking at the historical spread, readers can see that the spread has been increasing for most 2018.

Source: MetalMiner data from MetalMiner IndX(™)

The spread between U.S. CRC prices and CRC Chinese prices has increased sharply since the beginning of 2018. The slope of the increase is even larger over the March-April period, when domestic steel prices skyrocketed.

The larger spread does not come about only due to higher U.S. domestic steel prices, but also by a weaker yuan. The combination of both factors has resulted in a lower Chinese price (and a larger spread).

To answer the question of importing steel from China or not, let’s look at U.S. versus Chinese prices.

Considering November prices in $/st for HRC and CRC in both countries, the freight at $90/st and the 25% steel tariff, the final price still appears to be appealing for U.S. buyers.

Source: MetalMiner analysis from MetalMiner IndX(™) data

Chinese prices could still increase by 8% or U.S. prices could still decrease by 8% (in the event of the other moving flat) without any change in the final price for both.

What This Means for Industrial Buyers

Buying organizations may want to pay close attention to Chinese and U.S. price dynamics to decide when to commit to mid- and long-term purchases. Adapting the right buying strategy becomes crucial to reducing risks.

Only the MetalMiner monthly outlooks provide a continually updated snapshot of the market from which buying organizations can determine when and how much to buy of the underlying metal.

For more information on how to mitigate price risk year-round, request a free trial to our Monthly Metal Buying Outlook.

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

Actual Raw Steel Prices and Trends

The U.S. Midwest HRC 3-month futures price increased this month by 0.37%, moving to $813/st.

Chinese steel billet prices fell this month by 1.71%, while Chinese slab prices fell by 4.66% to $600/mt.

The U.S. shredded scrap price closed the month at $342/st, decreasing from last month.

In November, the Copper Monthly Metals Index (MMI) fell three points. The index fell back to September levels, driven by lower LME copper prices. The current Copper MMI stands at 74 points.

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LME copper prices traded lower in October. LME copper prices held above the $6,000/mt level at the beginning of the month, but then fell at the end of the month. LME copper prices ended up below the $6,000/mt ceiling.

LME copper prices. Source: MetalMiner analysis of Fastmarkets

However, LME copper prices seem to have recovered some momentum and increased sharply at the beginning of November. So far, LME copper prices have increased by 3.2%. LME copper prices breached the $6,000/mt level and buying trading volume remains strong.

Readers may want to remember the $6,000/mt level served as a price ceiling for copper in 2017. Prices climbed toward that ceiling several times during 2017, but failed to breach it.

Copper prices breached the $6,000/mt ceiling back in August 2017; copper has remained in a long-term uptrend since then.

Global Copper Outlook

The copper supply-and-demand balance has run a deficit since the beginning of the year. In fact, the deficit has widened each month.

According to the International Copper Study Group (ICSG), July data showed a 47,000-ton deficit. Global stocks have also dropped, specifically in the Chinese copper market.

Chile currently produces around 25% of annual global copper output, or 23 million tons. Miners in Chile continue to explore new copper markets. Chile’s has set its sights on electric vehicles, where copper consumption is higher than regular vehicles. Electric vehicles contain 50 kilograms of copper versus 23 kilograms in the standard combustion engine equivalent.

Chilean miners have also made an effort to secure long-term copper supply contracts. Codelco, one of the largest copper mines (with around 7% of total global supplies), already locked 60,000 tons of copper per year with China’s Minmetals from 2019-2021.

A deteriorating copper ore grade and a healthy demand seems to drive companies to lock in long-term supplies to avoid shortages.

Codelco will invest in the Chuquicamata mine, converting it into an underground facility. The mine will start operations in July 2019 with around 275,000 tons of copper. The expectations are that the mine will process 350,000 tons of copper by 2025.

Chinese Scrap Copper

LME copper prices and Chinese copper scrap prices tend to follow the same trend. Both decreased this month.

However, the pace of the decrease seems slightly different.

Chinese scrap prices appear to be in a soft short-term downtrend, while LME copper prices showed recovering momentum last month.

Source: MetalMiner data from MetalMiner IndX(™)

The spread has become wider again. The wider the spread, the higher the copper scrap consumption and, therefore, the price.

What This Means for Industrial Buyers

LME copper prices slowed down this month. Buying organizations will want to understand how to react to the latest copper price movements.

Adapting the right buying strategy becomes crucial to reducing risks. Only the MetalMiner monthly outlooks provide a continually updated snapshot of the market from which buying organizations can determine when and how much to buy of the underlying metal.

For more information on how to mitigate price risk year-round, request a free trial to our Monthly Metal Buying Outlook.

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

Actual Copper Prices and Trends

In October, most of the prices comprising the Copper MMI basket fell.

LME copper decreased by 2.7% this month. Indian copper prices fell by 4.71%, while Chinese primary copper prices decreased 4.8%.

Prices of U.S. copper producer grades 110 and 122 fell by 3.38%. Meanwhile, the price of U.S. copper producer grade 102 decreased by 3.20%, down to $3.62/pound.

The October Aluminum Monthly Metals Index (MMI) fell two points for an October MMI subindex value of 91 (its lowest since August 2017).

Buying Aluminum in 2018? Download MetalMiner’s free annual price outlook

 

LME aluminum prices fell slightly in September. However, the mid-term trend has moved mostly sideways, trading between the $1,970-$2,170/mt level. Movements outside this band could  indicate bullish or bearish signals for aluminum.

Source: MetalMiner analysis of FastMarkets

Buying organizations may want to remember that the $1,970/mt level has served as a strong support level (or floor) since August 2017. Aluminum prices fell toward that support level two times during 2017 and 2018, but then rebounded from it.

Aluminum prices decreased in December and April. Therefore, buying organizations may want to closely follow how aluminum prices react to that level.

Alumina Supply Concerns

LME aluminum prices showed an anomaly with the sideways trend driven by supply concerns.

Last Wednesday, Oct. 3, LME aluminum prices rose sharply to over $2,222/mt, on the back of Norsk Hydro’s announcement saying it would cease alumina production at its Alunorte alumina refinery in Brazil due to an environmental dispute.

Aluminum availability remains particularly tight in North America. Therefore, LME aluminum prices responded swiftly to supply concerns and tight supply.

Source: MetalMiner analysis of FastMarkets

However, LME aluminum prices retraced as Brazil granted Hydro the permits it had wanted for new investments at the Alunorte plant in Brazil. Hydro will use new technology to extend the disposal area necessary to continue and expand alumina operations. The refinery will operate at 50% of capacity to start. The decision came late on Friday following difficult negotiations and after the company said it would halt production. The Alunorte alumina refinery has operated at half capacity since March.

The mere news of the alumina shutdown signifies how tight the aluminum market remains. Any indication of a production slowdown, even for raw materials, could send aluminum prices higher.

SHFE Aluminum

Chinese SHFE aluminum prices fell slightly in September and then increased in October.

SHFE aluminum prices followed a similar trend to LME prices; both have moved in a sideways trend.

Source: MetalMiner analysis of FastMarkets

U.S. Domestic Aluminum

As a result of the ongoing uncertainty in the aluminum market, U.S. aluminum Midwest premiums have skyrocketed this year.

However, the current premium has traded sideways for the third consecutive month. The current premium stands at $0.19/lb.

Source: MetalMiner data from MetalMiner IndX(™)

What This Means for Industrial Buyers

Despite the recent change to a sideways trend, the LME aluminum price trend suggests a continuation of the bull market that started last year. Tariffs, sanctions and supply concerns will act as a support to aluminum prices, both for LME aluminum and the U.S. Midwest Premium.

Adapting the right buying strategy is crucial to reducing risks. Only the MetalMiner monthly outlooks provide a continually updated snapshot of the market from which buying organizations can determine when and how much to buy of the underlying metal.

For more information on how to mitigate price risk year-round, request a free trial to our Monthly Metal Buying Outlook.

Want to see an Aluminum Price forecast? Take a free trial!

Actual Aluminum Prices and Trends

LME aluminum prices fell this month, with a closing price in September of $2,054/mt.

Meanwhile, Korean commercial grade 1050 sheet fell by 0.3%, following last month’s downtrend. Chinese aluminum primary cash prices decreased by 1.41%, while China aluminum bar fell sharply by 6.19%. Chinese aluminum billet prices also decreased 6.68% this month, to $2,158/mt. The Indian primary cash price fell by 2.42% to $2.01/kilogram.

The Stainless Steel Monthly Metals Index (MMI) traded sideways in October. The current index stands at 72 points, back at January 2018 levels.

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The sideways trend was created by a less volatile nickel price and lower domestic stainless steel surcharges, while stainless steel prices overseas inched higher.

As MetalMiner highlighted last month, the drop in the index comes as a result of a MetalMiner adjustment to a couple of metals that make up the Stainless MMI. The adjustment is not due to a dramatic fall in nickel or stainless prices.

LME Nickel

LME nickel prices traded lower in September, but then switched to a sideways trend in October.

Nickel prices were more volatile in September, showing two sharp movements (down and up) at the beginning and the end of the month. Despite the recent downtrend, nickel prices have remained in an uptrend since last summer (June-July), when prices started to increase sharply.

Source: MetalMiner analysis of FastMarkets

Global Nickel Tightness

The Philippines, the world’s top supplier of nickel ore, will start limiting the land mines can develop following new environmental rules.

Under these new rules, mines will have a 20-meter “buffer zone” or ban on metal extraction. Nickel miners will see production limits ranging from 50-100 hectares (123-400 acres).

President Rodrigo Duterte has advised miners to reforest areas where they operate to reduce environmental concerns. In addition, all small-scale activities in mountainous regions stopped after the Mangkhut typhoon.

According to government data, nickel ore output decreased by 10% in the first half of 2018 when compared to last year’s 9.43 million tons during the same time frame. The output drop came as a result of the suspension of 11 mines this year, which had zero output during this period.

Domestic Stainless Steel Market

Domestic stainless steel surcharges fell for the third time since the beginning of the year.

The 316/316L-coil NAS surcharge fell to $0.94/pound, while the 304/304L decreased to $0.65/pound.

Source: MetalMiner data from MetalMiner IndX(™)

The pace of stainless steel surcharge increases seems to have slowed this month, along with steel (and stainless steel) price increases.

However, stainless steel surcharges still remain well above 2015-2017 lows.

What This Means for Industrial Buyers

Stainless steel price momentum slowed down slightly this month. Stainless steel’s slower momentum seems to go together with slower domestic steel price momentum. However, nickel prices still remain strong.

Buying organizations may want to follow the market closely for opportunities to buy on the dips. To understand how to adapt buying strategies to your specific needs on a monthly basis, request a free trial to our Monthly Outlook now.

MetalMiner’s Annual Outlook provides 2018 buying strategies for carbon steel

Actual Stainless Steel Prices and Trends

Both Chinese 304 stainless steel coil increased by 0.85%, while the Chinese 316 stainless steel coil price increased this month by 0.88%.

Chinese Ferrochrome prices decreased this month by 0.35%, down to $1,841/mt.

Nickel prices also increased slightly this month, rising 0.23% to $12,600/mt.