Author Archives: Irene Martinez Canorea

The Stainless Steel Monthly Metals Index (MMI) skyrocketed this month, increasing by seven points. The current reading stands at 84.

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The index inched higher driven by the increase in stainless steel surcharges and a sharp increase in LME nickel prices in May. Other related metals in the stainless steel basket also increased.

LME Nickel

Nickel price momentum seems to have recovered again.

LME nickel prices increased at a quicker pace in May. The increases continued through the beginning of June, driving prices to 2014 highs. 

Source: MetalMiner analysis of FastMarkets

LME nickel prices keep moving away from 2017 lows.

MetalMiner previously recommended buying some volume forward. Given the current uncertainty in the steel and stainless industries, nickel prices remain supported for the short term.

In addition, a fundamental tightness in the nickel market has added support to the latest nickel price increases.

Domestic Stainless Steel Market

Following the recovery in stainless steel momentum, domestic stainless steel surcharges increased again this month. The 316/316L-coil NAS surcharge reached $1.02/pound.

Source: MetalMiner data from MetalMiner IndX(™)

The pace of stainless steel surcharge increases, however, appears to have slowed again this month. Yet stainless steel surcharges remain in a clear uptrend and rest well above 2015-2017 lows.

What This Means for Industrial Buyers

Stainless steel momentum appears stronger this month, as steel prices are skyrocketing. As both steel and nickel remain in a bull market, 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, take a free trial of our Monthly Outlook now.

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

Actual Stainless Steel Prices and Trends

Chinese 304 stainless steel coil prices increased again this month by 2.02%, while Chinese 316 stainless steel coil prices rose further by 6.61%. Chinese Ferrochrome prices increased this month by 2.9%, to $1,990/mt.

Nickel prices increased by 10.5% to $15,210/mt.

The June Aluminum Monthly Metals Index (MMI) increased one point. The current Aluminum MMI index now stands at 101 points.

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

LME aluminum prices showed strength in May, and are continuing to increase this month.

Aluminum has led the base metals complex due to U.S. tariffs and sanctions. These actions, in turn, create all sorts of ripple effects that impact global supply.

Source: MetalMiner analysis of FastMarkets

LME aluminum prices have reached 2012 levels. The base metal began its long-term uptrend in early 2016. Buying organizations need to identify buying dips to avoid costs and mitigate aluminum price risk.

Global Aluminum Industry

U.S. sanctions on some Russian aluminum companies raised concerns regarding global aluminum supply.

The sanctions increased volatility and moved LME aluminum prices to $2,716/mt (maximum value reached during a trading day). Sanctions eased, as the time frame moved out to October. Prices retraced, but remain high.

Other countries suspended aluminum buys from Russian companies, to supply aluminum products to the U.S. As an example, Japan’s UACJ Corporation, a major manufacturer of rolled aluminum products, suspended all of its aluminum purchases from Russia’s Rusal. The company claimed it found alternative supplies, but has not declared the sources.

Aluminum smelters have scheduled restarts, taking advantage of higher LME aluminum prices and supply concerns.

A Rio Tinto aluminum smelter in New Zealand will expand output this year after securing a new energy deal. The restart will take around six months, and will add 85 tons of daily production. This results in a 9% increase of annual output. Aluminum products will include aluminum ingot, billet and rolling block. Alumina comes from Australian refineries, and around 90% of the production in this region goes toward exports.

SHFE Aluminum

Last month, MetalMiner reported a possible increase in aluminum and aluminum product Chinese exports due to the shortages outside China.

Semi-finished Chinese aluminum exports increased by 20.5% in Q1 2018 and, if they maintain this pace, could hit a record. Therefore, SHFE aluminum prices may see some price increases in the short term.

Source: MetalMiner data from MetalMiner IndX(™)

Chinese SHFE prices rose by 4.8% in May. The increase appears higher than LME aluminum prices, but still follows the main long-term uptrend. SHFE aluminum prices have also increased this month.

U.S. Domestic Aluminum

As a result of the ongoing uncertainty in the aluminum market, U.S. aluminum Midwest Premiums increased again in June to $0.20/pound, climbing to a more than four-year high. Last month, the U.S. Midwest Premium fell for the first time since November 2017.

Source: MetalMiner data from MetalMiner IndX(™)

What This Means for Industrial Buyers

LME aluminum price trends suggest a continuation of the bull market that started last year.

Tariffs, sanctions and the latest tariff non-exemptions to Canada, Mexico and the E.U. add support to increasing prices, both for LME aluminum and the U.S. Midwest Premium.

Adapting the right buying strategy becomes crucial to reducing risks. Buying organizations that want to start doing so now may want to take 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

The Aluminum MMI basket generally increased this month.

LME aluminum prices rose this month by 2.7%, with a closing price in May of $2,286/mt. Meanwhile, Korean Commercial 1050 sheet increased by 3.72%.

Chinese aluminum primary cash prices fell by 0.7%, while China aluminum bar remained flat. Chinese aluminum billet prices also traded flat this month, at $2,453/mt.

The Indian primary cash price rose by 1.76% to $2.31/kilogram.

The Copper Monthly Metals Index (MMI) held steady in May at 84 points.

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The sideways trend came as a result of a combination of some elements of the metal basket increasing, such as LME copper, and others falling (such as scrap copper prices).

Source: MetalMiner analysis from FastMarkets

LME copper prices increased during the first week of June. Copper prices now appear headed toward the $7,000/mt ceiling. Copper prices breached that ceiling several times in 2017-2018.

LME copper prices have traded more sideways since the beginning of 2018, as copper prices took a backseat to aluminum and nickel. The Section 232 tariffs apply to both aluminum and nickel.

Global Copper Market

The global copper industry faces closures and mine disruptions, which could affect copper supply. However, given stronger global copper demand, mines have also tried to increase copper capacity. The supply and demand balance for copper calls for a slight surplus in 2018, but the forecast could change during this quarter.

The Indian Vedanta mine closed permanently in May due to protests, lack of compliance with environmental laws and a shooting incident. Vedanta’s Sterlite Copper smelter is one of only two major copper smelters in India.

Vedanta produces 400,000 tons of cathode copper per year. Plans to double capacity should have started after receipt of renewal consent. Rising capacity comes as a result of increased Indian copper consumption over the past few years. Current local demand growth is 7-8% yearly, positioning the country as a net copper importer at the end of the year.

Meanwhile, to meet profit targets, Chilean copper mines need to run at full capacity.

To achieve these objectives, copper output will likely increase. The Caserones copper mine could  produce around 110,000 tons of copper concentrate this year to the end of March 2019. This equates to a 91,000-ton production increase from last year.

However, current mine production levels suggest the mine is behind schedule due to technical problems. The Sierra Gorda Chilean mine is also suffering from technical challenges and running behind schedule.

Chinese Scrap Copper

Since the announcement of the ban on copper scrap in China last summer, MetalMiner has followed Chinese copper scrap prices closely.

Source: MetalMiner data from MetalMiner IndX(™)

LME copper prices and Chinese copper scrap prices tend to follow the same trend. Both appear to be in a long-term uptrend. However, scrap copper prices fell this month, while LME copper prices increased.

Therefore, the spread between Chinese copper scrap prices and LME copper prices has widened. The wider the spread, the higher the copper scrap consumption and, therefore, the price.

What This Means for Industrial Buyers

LME copper prices continued a recovery this month. Copper prices remain in a long-term uptrend. Therefore, buying organizations could expect further copper price increases.

Buying organizations reading the Metal Monthly Outlook had the opportunity to identify the buying signal at the beginning of April and reduce price risk by purchasing some volume. For those who want to understand how to reduce risks, take a free trial now to the MetalMiner Monthly Outlook.

Benchmark your current cold rolled coil sheet prices and see how it compares to the market

Actual Metal Prices and Trends

LME copper rose 0.2% to $6,834/mt as of June 1. Chinese primary cash copper fell 1.8% to $8,010.95/mt.

Chinese copper scrap fell 1.1% to $5,978.56/mt.

U.S. copper producer Grades 110 and 122 held at $3.82/pound, while Grade 102 held at $4.01/pound.

After the instability in the industrial metals complex in April, May closed with an overall increase in metal prices.

However, the increases are, in general, less sharp and less volatile than last month.

Need buying strategies for steel? Try two free months of MetalMiner’s Outlook

Aluminum, Copper and Nickel

The three main metals have seen slight increases in prices.

The LME aluminum price pace seems to have slowed down after the deadline for U.S. sanctions on  Russian aluminum companies moved to Oct. 23. However, aluminum prices could remain supported given the current turmoil.

Source: MetalMiner analysis of FastMarkets

Zinc and Lead

Meanwhile, the close brothers zinc and lead seem to have gotten into a little disagreement.

Zinc prices fell slightly in May. However, lead prices increased at the beginning of the month. The increase comes after lead prices fell to support levels, the buying dip MetalMiner recommended buying organizations take advantage of. Buying organizations following the Monthly Metal Outlook had the opportunity to lock in lower prices then.

Source: MetalMiner analysis of FastMarkets

The lead price’s upward trend seems strong, as buying volume supports the increase. Therefore, buying organizations can expect lead prices to move higher.

Zinc buyers may want to follow zinc movements closely this month, too.

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

Steel Prices Continue to Rise

Steel prices remain at more than seven-year highs. Steel prices continued the slight increase in May.

Buying organizations who want to read more about steel price trends and the tariff exemption analysis should take a free trial of our Monthly Outlook now.

Domestic steel momentum seems appears to have finally started to slow down.

So far this month, hot-rolled coil, cold-rolled coil, hot-dip galvanized and plate prices have begun to  trade sideways.

Need buying strategies for steel? Try two free months of MetalMiner’s Outlook

Source: MetalMiner data from MetalMiner IndX(™)

The slower pace of the increases should come as no surprise, as domestic steel prices have skyrocketed for the past five months. Also, the trade tensions around steel tariffs weakened a bit as a result of the one-month extension for the exempted countries (Canada, Mexico and the E.U.).

Raw Steel Production

According to the American Iron and Steel Institute (AISI), domestic year-to-date raw steel production increased by 1.7% from the same period last year.

Current capability utilization stands at 75.5%, while capacity utilization in 2017 ran at 74.3%.

The Spread

Tracking the spread between domestic HRC and CRC prices closely gives a sense of how prices could move in one direction or another.

HRC and CRC prices trade in the same direction, despite the price differential ($100-$200/st). The spread has returned to historical levels, and currently stands at $116/st. The spread fell from 2016 highs over $200/st.

Source: MetalMiner data from MetalMiner IndX(™)

Chinese Steel

Chinese steel prices have shown a slight recovery this month.

Historically speaking, April and May sees higher demand in China. Therefore, steel prices tend to increase, driven by this stronger demand.

Source: MetalMiner data from MetalMiner IndX(™)

Meanwhile, investigations around Chinese steel continue in the U.S. The U.S. International Trade Commission recently made a preliminary finding that U.S. producers were harmed by imports of steel automotive wheels from China. The investigation will determine if certain Chinese steel wheels were dumped in the U.S.

What This Means for Industrial Buyers

Since steel prices remain high, buying organizations may want to closely follow price movements to decide when to commit to mid- and long-term purchases. The latest upward movements in Chinese steel prices may also add some support to domestic steel prices.

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

Buying organizations looking for more clarity on when to buy and how much to buy may want to take a free trial now to our Monthly Metal Buying Outlook.

The Raw Steels Monthly Metals Index (MMI) increased one point this month, moving up to 89. Domestic steel price momentum seems slower than at the beginning of 2018, as domestic steel prices traded more sideways.

Need buying strategies for steel? Try two free months of MetalMiner’s Outlook

Domestic steel prices remain at a more than seven-year high.

May 1 served as the most recent steel and aluminum tariff exemption deadline. The government announced that the country-specific exemptions would continue to remain in effect for another 30 days (until June 1). The exemptions will likely turn into quotas for several countries, following a similar trade agreement as the one reached with South Korea.

Quotas will weaken the impact of Section 232. The details of the trade agreements could come during May.

Source: MetalMiner data from MetalMiner IndX(™)

Meanwhile, Section 301 seems to have gone unnoticed by buying organizations, despite its potentially bigger effect. If applied, Section 301 contains a proposal for 25% tariffs on a list of products from China. These products include not only steel or aluminum, but also secondary products used in many industrial sectors.

The Section 301 Committee will convene a public hearing May 15. May 22 will serve as the due date for submission of post-hearing comments.

Domestic steel prices have found support. Although price momentum has slowed, steel prices have  not yet fallen.

Chinese Steel Pricing

Chinese prices have fallen since the beginning of 2018. In May, Chinese prices increased slightly. It is still too soon to see this slight increase as a change of trend. The latest price movement may have more to do with increased Chinese steel exports in April.

Source: MetalMiner data from MetalMiner IndX(™)

Despite U.S. tariffs, customs data shows higher Chinese steel imports arriving to U.S. ports. The 25% steel tariff on Chinese imports went into effect on March 23. Higher Chinese exports (and incoming imports in U.S. ports) come as a result of the divergence in U.S. and Chinese steel prices. U.S. steel prices skyrocketed, while Chinese prices fell.

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

What This Means for Industrial Buyers

As steel prices remain high, buying organizations may want to closely follow price movements to decide when to commit to mid- and long-term purchases.

Buying organizations looking for more clarity on when to buy and how much to buy may want to take a free trial now to our Monthly Metal Buying Outlook.

In May, the Stainless Steel Monthly Metals Index (MMI) once again inched one point higher. The current reading stands at 77 points.

Need buying strategies for steel? Try two free months of MetalMiner’s Outlook

The subindex inched higher driven by increasing LME nickel prices. Meanwhile, other related metals in the stainless steel basket traded flat. Chinese ferrochrome alloy decreased for the second consecutive month, this month by 3.2%.

LME Nickel

In April, LME nickel prices increased sharply, following some of the other base metals uptrends (such as aluminum and copper).

LME nickel prices went up to $16,685/mt and then corrected. LME nickel prices in May remain in an uptrend, with current prices around $13,900/mt.

Source: MetalMiner analysis of FastMarkets

LME nickel prices remain in a long-term uptrend that started back in June 2017, when LME nickel prices hovered around $8,900/mt.

However, nickel price momentum seems slower now than it was back in 2017.

Since February, LME nickel prices have traded more sideways. Buying trading volume still supports the uptrend, which may result in increasing nickel prices in the coming months.

Domestic Stainless Steel Market

Following the recovery in stainless steel price momentum, domestic stainless steel surcharges increased again this month. The 316/316L-coil NAS surcharge reached $1.01/pound, while the 304/304L-coil NAS surcharge increased to $0.71/pound.

Source: MetalMiner data from MetalMiner IndX(™)

After last month’s sideways trend for NAS stainless steel surcharges, the uptrend has started again. The 316/316L-coil NAS surcharge is currently moving toward the January 2013 peak of $1.12/pound. The surcharge has breached previous high peaks already.

China Stainless Steel Market

An abundance of stainless steel in China came as a result of new production in Indonesia. The Chinese-owned stainless company Tsingshan started production last August in Indonesia, with an annual capacity of around 3 million tons by the end of 2018. This annual capacity equates to 6% of last year’s global stainless steel capacity.

Due to this increased production, China became a net importer of hot-rolled stainless coil already in December 2017 for the first time in more than seven years, according to the International Steel Statistics Bureau. Chinese stainless steel stocks have risen, while Chinese stainless steel prices have not. In fact, Chinese stainless steel price currently trade sideways.

The current divergence between increasing LME nickel prices and Chinese stainless steel prices, plus increasing stainless steel stocks, may drive some mills to cut production. 

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

What This Means for Industrial Buyers

Stainless steel price momentum appears to be strong this month, as stainless steel surcharges increased sharply.

With nickel in a bull market, buying organizations may want to follow the market closely for opportunities to buy on the dips. Hedging nickel may result in potential savings opportunities for buying organizations.

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

The May Aluminum Monthly Metals Index (MMI) increased six points. Skyrocketing LME aluminum prices drove the subindex value increase. The current Aluminum MMI subindex stands at 100 points, 6.4% higher than in April.

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

LME aluminum price momentum recovered strongly in April. LME aluminum prices reached a more than seven-year high.

Source: MetalMiner analysis of FastMarkets

LME aluminum prices fell slightly at the end of the month. However, this movement appears as a price correction from previous highs. LME aluminum prices increased again at the beginning of May, showing a strong uptrend.

The Reasons for Aluminum Volatility

LME aluminum price volatility came as a result of U.S. sanctions levied April 6 on Russian companies and their owners.

Russia is the world’s second-largest aluminum producer (accounting for 6% of world production). Therefore, the sanctions created the alarm of supply shortages in the U.S., along with all international markets outside China.

However, the U.S.Treasury Department delayed the first due date for the sanctions until Oct. 23, at which point investors must divest or transfer debt and equity and industrial metal buyers must wind down pre-existing long-term contracts.

The delay in the aluminum sanctions eased LME aluminum prices; however, the market has tightened significantly.

SHFE Aluminum

Given the current alarm bell around aluminum and aluminum product shortages outside China, the country may see increased exports, despite U.S. tariffs. Therefore, market observers will want to follow SHFE aluminum prices closely.

Source: MetalMiner data from MetalMiner IndX(™)

Chinese SHFE prices traded similarly to LME prices. However, the degree of the SHFE price increase appears to be less sharp.

Chinese SHFE stocks fell for the first time in nine months (since June 2017) to 970,233 mt, according to exchange data.

U.S. Domestic Aluminum

As a result of the ongoing uncertainty in the aluminum market, U.S. aluminum Midwest premiums increased again to $0.19/pound, climbing to a more than three-year high.

At the end of April, the country-specific aluminum (and steel) tariff exemptions for the E.U., Canada and Mexico were extended until June 1. The decision came  just hours before the temporary exemptions from the tariffs expired.

The final agreements have not yet been released, but the government suggested that quotas will replace tariffs. This action could ease U.S. Midwest premiums.

What This Means for Industrial Buyers

The LME aluminum price retracement in April presented buying organizations with a good opportunity to buy some volume, as prices increased again later in the month.

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

Adapting the right buying strategy becomes crucial to reduce risks. Given the ongoing uncertainty around aluminum and aluminum products, buying organizations may want to take a free trial now to our Monthly Metal Buying Outlook.

The Copper MMI (Monthly Metals Index) increased one point in May. Stronger LME copper prices led the increase.

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LME copper prices recovered previous price momentum and increased in April. At the beginning of last month, LME copper prices fell. At this point, buying organizations had an opportunity to buy some volume.

LME copper prices then recovered and moved toward the $7,000/mt level. LME copper prices have also risen so far this month.

Source: MetalMiner analysis of FastMarkets

Despite a falling copper short-term trend at the beginning of 2018, LME copper prices remain in a long-term uptrend. Therefore, buying organizations can expect further copper price increases.

In May, most of the prices that comprise the Copper MMI basket increased. LME copper rose by 1.5% this month. Indian copper prices increased by 1.33%, while Chinese primary copper prices increased further by 2.03%. Prices of U.S. copper producer grades 110 and 122 rose by 1.06%. Meanwhile, the price of U.S. copper producer grade 102 increased by 1.01%.

Copper Bullish Narrative

The fundamentals also support LME copper prices. Forecasts suggest copper demand will grow this year, while copper mine supply appears unsecured. Therefore, the balance for demand and supply in 2018 could result in a deficit, as it previously did in 2017.

Mitsubishi Materials Corp., Japan’s third-biggest copper smelter, might increase refined copper production by 7% in the April-September period this year. Production in this period will reach 187,374 tons. The increased production comes as a result of stronger domestic copper demand, mainly in the automobile and semiconductor sectors (where copper is used).

The pace of copper demand growth will likely increase and  continue until 2020 due to  construction in anticipation of the Olympic games.

India’s copper consumption has increased over the last few years. Local demand has grown  at a 7-8% rate per year. If the country’s consumption rate increased, India will become a net importer of copper by the end of March 2020.

In April, Vedanta Resources Plc, one of India’s biggest copper smelters, had its renewal of consent to operate its copper smelting plant rejected. The plant remains closed due to scheduled maintenance. The company planned to double capacity at the smelter to 800,000 tons per year. This closure may create more copper imports over the next few months.

Has the EV Boom Lost Its Relevance?

Despite the EV boom that pushed some base metal prices up in 2017, copper demand corresponding to this electric-vehicle sector does not appear strong enough.

Copper demand for the EV sector could reach 1.5% of global copper consumption in 2018. The EV demand for copper will likely increase up to 3% in five years.

Chinese Scrap Copper

Since the announcement of the ban on copper scrap in China last summer, MetalMiner has followed Chinese copper scrap prices closely.

Source: MetalMiner data from MetalMiner IndX(™)

LME copper prices and Chinese copper scrap prices follow the same trend. Both appear to be in a long-term uptrend. However, the latest LME copper price increase appears sharper than Chinese copper scrap prices.

In addition, the spread between Chinese copper scrap prices and LME copper prices appears wider. The wider the spread, the higher the copper scrap consumption — and, therefore, the price. However, this equation may not play out as formulated here, depending on the U.S. Section 301 investigation. The investigation could lead to an additional 25% tariff to copper electric conductors and copper winding wire. Chinese copper products and buying organizations purchasing those could see price increases.

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

What This Means for Industrial Buyers

LME copper prices recovered from their previous lows and increased in April, remaining in a long-term uptrend. Therefore, buying organizations could expect further copper price increases.

Buying organizations reading the Monthly Metal Outlook had the opportunity to identify the buying signal at the beginning of April and reduce price risks by purchasing some volume.

For those who want to understand how to reduce risks, take a free trial now to MetalMiner’s Monthly Outlook.

U.S. domestic steel prices steadily increased after the release of the Section 232 report and President Donald Trump’s formal proclamation. However, the pace of the increases has started to slow down, signaling a possible top.

Need buying strategies for steel? Try two free months of MetalMiner’s Outlook

After what now looks like sluggish steel momentum in 2017, the current steel price rally appears to have no end. Prices climbed to more than seven-year highs. However, MetalMiner previously reported on a possible top for steel prices.

U.S. HRC and CRC prices. Source: MetalMiner data from MetalMiner IndX(™)

So far, steel prices have not dropped. In fact, HRC and CRC prices have moved closer toward the $900/st and $1,000/st, respectively. Also, the approaching date of May 1, when several countries’ tariff exemptions expire, could still add support to domestic steel prices. This expiration date involves the Section 232 country exemptions for the EU, Argentina, Brazil and Australia.

The only exception is South Korea, which is exempted from steel imports under the bilateral trade deal, KORUS. The agreement with South Korea removes steel tariffs permanently but replaces that with a quota. The steel quota is equivalent to 70% of South Korea’s average exports to the U.S. from 2015-2017. In return, South Korea has agreed to improve access for U.S. automakers, who can now export up to 50,000 vehicles per OEM per year. South Korean aluminum tariffs however will go into effect after May 1, similar to the other countries listed above.

Whether the countries remain exempted or not may affect U.S. domestic steel prices. The country exemption could create downward price pressure on steel. However, steel prices could stay well supported if the country exemptions go away.

Global Steel Demand

According to the World Steel Association, global steel demand is forecasted to grow by 1.8% in 2018 and 0.7% in 2019. Despite the steel markets’ risks from current trade tensions (Section 232 tariffs, Section 301), the world’s favorable economic momentum may drive actual demand growth. Global steel demand in 2018 is forecasted to reach 1.616 billion tons, increasing to 1.627 billion tons next year. Read more