The Stainless Monthly Metals Index (MMI) followed last month’s six-point increase with a 16-point jump this month.

Once again, the index surge came as a result of strong nickel price gains, even though a slim majority of global prices in the index declined (albeit mildly compared to nickel price increases).

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LME nickel prices increased 28.5%, based on supply disruption news. Nickel prices in China and India also reacted strongly, increasing by 25.9% and 24.1%, respectively.

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

SHFE Nickel Prices Surged

Source: MetalMiner analysis of FastMarkets

The Indonesia nickel ore export ban will now take effect two years earlier than planned, on Jan. 1, 2020. SHFE prices surged just prior to, and during the day or so around, the actual approval of the ban date by the Indonesian government.

Higher Nickel Prices Look Set to Stick for the Near Term

Opinions appear mixed as to whether prices will drop back down anytime soon, with some analysts foreseeing further price increases.

Indonesia produced around 26% of global mine supply last year, according to the International Nickel Study Group.

It is possible ramped-up production of nickel pig iron in Indonesia will stave off further price increases from supply shortages. According to Reuters, large mining companies reportedly welcomed the ban and plan to increase smelting output.

Also, higher ingot prices higher, incentivizes mine production; as such, increases could also come from other sources.

According to a recent Reuters report, Dante Bravo, president of the Philippine Nickel Industry Association indicated mine production looks set to ramp up in 2020, but constraints, such as government-imposed mining curbs, will limit growth. Bravo added mining volume most likely peaked with 2014’s record-setting high of 50 million tons.

The Philippines produced 11.31 million tons of nickel during the first half of 2019, up by 3% compared with the first half of 2018, Reuters reported.

Domestic Stainless Steel Market

Source: MetalMiner data from MetalMiner IndX(™)

Stainless 304 and 316 NAS surcharges increased in August due to sizable nickel price increases. Next month’s MMI looks set to show a greater impact from surcharges than they showed in August.

What This Means for Industrial Buyers

MetalMiner’s stainless steel price index hit near a five-year high, rising to a value not seen since November 2014’s value of 92. As indicated last month, prices appear speculatively high; premium prices also surged.

Therefore, industrial buyers need to stay alert for the right opportunity to buy.

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

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

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Actual Stainless Steel Prices and Trends

Once again, nickel prices registered double-digit increases for the monthly index reading.

The LME primary three-month nickel price increased by 28.5% to $18,475/mt. China’s primary nickel price increased by 25.9% to $20,601/mt. India’s primary nickel price increased by 24.1% to $17.99/kilogram.

The U.S. 316 and 304 Allegheny Ludlum stainless surcharges increased by 14.1% and 16.6%, respectively, to $1.00/pound and $0.69/pound.

More than half of the prices in the index dropped, albeit mildly compared with the price increases.

Chinese Ferro Alloys FeMo lumps dropped by 4.7% this month, while FeCr lumps dropped by 4%.

Chinese 316 and 304 stainless steel scrap prices both dropped 4%, down to $1,827/mt and $1,401/mt, respectively.

Chinese 304 CR stainless steel coil increased 4.4% to $2,259/mt, while 316 CR coil dropped by 0.8% to $3,081/mt.

Korean prices for 430 CR 2B stainless steel coil and 304 CR 2B stainless coil both decreased by 2.2%, down to $1,195/mt and $2,101/mt, respectively.

Lacking a Trumpian figure in overall charge of such measures, import controls take time to be worked out in Europe, as they require consensus among E.U. members that often have conflicting priorities.

One issue they do seem to agree on, though, is the need to protect Europe from rising imports of cheap steel products.

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The E.U. has had in place temporary measures for a year now, according to a Reuters report. The bloc has had in place for a year a system of “safeguard” measures to control the incoming steel following Washington’s imposition of 25% steel import tariffs.

The measures set quotas for 26 grades of steel, including stainless, and were set at the average level of imports in 2015-2017, plus 5%. They allowed for a further 5% hike due in July and the same again in July 2020.

Following complaints that Europe’s steel market is too weak to absorb the planned increase in quotas, the European Commission has proposed that this year’s hike should be 3% effective from Oct. 1.

The figures seem to support this complaint.

Reuters reported that the E.U. steel association EUROFER estimates apparent steel consumption, which includes inventory changes, will fall by 0.6% this year and rise by 1.4% in 2020.

Set this weak demand position against last year’s imports — imports of finished steel products rose by 12% in a market that grew by only 3.3%, effectively increasing import penetration and depressing prices for domestic producers.

The revised measures also involve limiting any one country to a 30% share of imports of hot-rolled flat steel during a quarter, a move that may hit Germany before any other (it being the region’s largest consumer by some margin).

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Close neighbor Turkey is cited as one likely casualty of the move as a significant supplier of steel products, along with stainless steel from Indonesia.

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Before we head into the weekend, let’s take a look back at the week that was and some of the metals storylines here on MetalMiner:

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

• MMI week continued with coverage on the following indexes:
  • Rare Earths
  • Global Precious
  • Renewables
  • Raw Steels
  • Aluminum
• The U.S. steel industry’s production for the week ending Sept. 7 dropped 1.7% year over year.
• MetalMiner’s Stuart Burns on China’s aluminum and manufacturing slowdown.
• MetalMiner this week released its 2020 Annual Metals Outlook. The full version is only available to subscribers, but those interested in a free sample copy can request one here.
• MetalMiner’s Sohrab Darabshaw on India’s plans to boost its energy supply.

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The Raw Steels Monthly Metals Index (MMI) dropped more significantly compared to last month’s one-point decline, this month falling by four points to 70. Global prices looked weak overall; however, U.S. futures spot prices increased, along with U.S. shredded scrap prices.

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U.S. steel price increases lost momentum in August, as prices for HRC, CRC, HDG and plate all moved more or less sideways.

Source: MetalMiner data from MetalMiner IndX(™)

U.S. capacity utilization fell below 80% recently. Capacity utilization dropped to 78.8% during the week ending Sept. 7, with 1.835 million net tons produced, compared with 1.866 million net tons the week prior. This represented a 1.7% decline compared with the same period last year, according to the American Iron and Steel Institute (AISI).

U.S. shredded scrap prices increased by 14.4% to $294/st, reflecting the shift of production methods toward electric arc furnace (EAF).

Chinese HRC, CRC Prices Move Sideways Once Again

Chinese HRC and CRC prices continued to move sideways overall in August. CRC prices once again increased, while HRC prices moved lower, although neither moved with much power. The spread between HRC and CRC prices increased once again this month after hitting a two-year low a couple of months ago.

Global Production Increases Mildly; Production Drop in China

According to the most recent data available from the World Steel Association (WSA), global production of steel totaled 156.7 million tons in July, up by 1.7% compared to last year. U.S. production totaled 7.5 million tons during July 2019, up by 1.8% compared to July 2018.

China produced 85.2 million tons of steel in July, up by 5% compared to July 2018. However, production dropped compared with June, marking the second straight month of falling production. China’s output in May — the peak for 2019 thus far — totaled 89.1 million tons.

What This Means for Industrial Buyers

While a few prices in the index increased this month, the majority of prices dropped, pulling the index down. However, key steel prices moved sideways.

Industrial buying organizations will still want to watch the market in September for typical seasonal price increases.

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

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

Free Partial Sample Report: 2020 MetalMiner Annual Metals Outlook

Actual Raw Steel Prices and Trends

Overall, global steel prices weakened during the month of August. However, the U.S. Midwest spot price increased by 8% to $586/st. U.S. shredded scrap prices increased by 14.4% to $294/st.

Chinese prices in the index fell across the board this month. Coking coal prices fell the most — by 14% — to $238/st. Chinese iron ore prices dropped by 4%.

Chinese steel billet decreased by 9.5% to $434/st. Chinese steel slab prices dropped by 8.7% to $462/st, while Chinese HRC prices dropped by 8% to $463/st.

Korean scrap prices increased this month, somewhat reversing last month’s 8.3% decrease, up by 3.9% to $127/st. Korean pig iron fell again this month, dropping by 2.2% to $325/st.

LME billet three-month prices dropped by 9.8% $241/st.

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This morning in metals news, China announced some U.S. goods would be exempted from tariffs, steel production is down in the Great Lakes region and copper falls amid declining Chinese auto sales.

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China Announces Tariff Exemptions

The Chinese government announced Wednesday that it will exempt 16 types of U.S. goods from tariffs for one year as of Sept. 17, CNBC reported.

Among the products included in the list of exemptions are food for livestock, lubricants and cancer drugs, CNBC reported.

Steel Production Down in Great Lakes

Steel production in the U.S.’s Great Lakes region in the last week of August declined for the fifth straight week, the Times of Northwest Indiana reported.

Production for the week declined 1.17% from the previous week.

Copper Price Falls

Amid falling Chinese auto sales, the copper price approached a two-year low reached earlier this month, Reuters reported.

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LME copper was bid down 0.6% on Wednesday down to $5,793 per ton, Reuters reported.

The China Association of Automobile Manufacturers reported August automotive sales dropped 6.9% on a year-over-year basis.

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The full report is only available to corporate subscribers. However, the free sample report includes access to:

• Executive summary by the MetalMiner research team
• Analysis of commodity markets
• Industrial metals market review
• Key price drivers assessment
• Tin price history and outlook, plus key influencing factors and buying recommendations

Arriving just in time for budgeting season, this report contains the unique insight, analysis and tools you need as a metal buyer or manufacturer to know when and how to make buying decisions — including expected average prices, plus support and resistance levels.

The Annual Outlook is one of MetalMiner’s most valuable pieces of content and includes coverage of commodities markets, industrial metals markets and key price drivers for aluminum, copper, nickel, lead, zinc, tin and steel (HRC, CRC, HDG and plate).

By understanding these price drivers, you can pinpoint exact price levels and make the appropriate changes to your sourcing strategy for that particular metal. You will be also be able to react when the market gives clear signs that a new trend is developing and stay hedged as long as that trend lasts.

The Annual Outlook Report continues to examine three variables that have underpinned metal markets in recent years:

• Demand from China (and China’s overall economic outlook)
• The strength of the U.S. dollar
• Oil prices and trends
  

We also offer custom research and forecasting for all the metals covered in the Buying Outlook. For more information, contact the MetalMiner team: research@metalminer.com.

The U.S. steel industry’s crude steel production for the week ending Sept. 7 fell 1.7% compared with production for the same week in 2018, according to the American Iron and Steel Institute (AISI).

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Steel production for the week ending Sept. 7 totaled an estimated 1.84 million net tons at a capacity utilization rate of 78.8%. The production total marked a decline compared with the 1.87 million net tons produced during the same week of 2018 at a capacity utilization rate of 79.6%.

Meanwhile, production for the week ending Sept. 7, 2019, was down 0.8% from the previous week, when production reached 1.85 million net tons at a capacity utilization rate of 79.5%.

Production for the year to date (i.e., through Sept. 7, 2019) was 67.15 million net tons at a capacity utilization rate of 80.8%. The year-to-date production total marks a 4.0% increase from production during the same period in 2018, which checked in at 64.59 million net tons (at a capacity utilization rate of 77.5%).

Broken down by region, production totals for the week ending Sept. 7, 2019, checked in at:

• Northeast: 214,000 tons
• Great Lakes: 686,000 tons
• Midwest: 190,000 tons
• Southern: 672,000 tons
• Western: 73,000 tons

Last week, citing the Commerce Department’s most recent Steel Import Monitoring and Analysis (SIMA) data, AISI reported August steel import permit applications totaled 2.13 million net tons, down 40.8% from the 3.61 million permit tons recorded in July.

For the first eight months of 2019, total and finished steel imports were 20.80 million net tons and 15.30 million net tons, which marked declines of 13.0% and 16.0%, respectively, compared with the first eight months of 2018.

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According to the SIMA data, finished steel import market share in August reached an estimated 19%, just under the 20% market share recorded during the year to date. 

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This morning in metals news, Bank Of America cut its steel price forecast, copper prices dropped and gold lost some of its safe haven luster.

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Gloomy Steel Forecast

Bank of America has cut its steel price forecast and is less than optimistic about steel stocks going forward, Yahoo Finance reported.

According to the report, Bank of America analyst Timna Tanners cut her U.S. HRC price target for the second half of the year from $628 per short ton to $572 per short ton.

Tanners also cut 2019 EPS cuts for U.S. Steel, Nucor, Reliance Steel and Aluminum, Steel Dynamics and Commercial Metals Company, according to Yahoo.

Copper Price Drops

Markets continue to fluctuate on a daily basis based on any sliver of news emerging from the ongoing U.S.-China trade war.

On Friday, despite China’s intention to increase bank lending, LME copper was bid down 0.6% to $5,812 per ton, according to Reuters, after reaching a two-year low earlier this week.

Not so Golden

The gold price posted its largest daily dollar loss in three years, MarketWatch reported, on optimism regarding trade and jobs data impacting its safe haven appeal.

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According to the report, gold on the COMEX for December delivery slipped 2.2% to a two-week low of $1,525.50 per ounce.

Zerophoto/Adobe Stock

India’s growth rate has slowed, which in turn means sluggishness in the manufacturing sector.

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All of the above means lower consumption of steel.

Riding on these developments comes the news that domestic steel producers are sitting on a “larger than usual” steel inventory.

A report in the Business Standard quoted Sushim Banerjee, director general at the Institute of Steel Development Growth, as saying steel inventories are at “alarming” levels of 35 days rather than the more typical 21 days.

The total steel inventory of all primary producers in India is at 2 million tons, up from the more typical level of 1 million tons, according to the Business Standard. Because of such high inventory, domestic prices have fallen by about 20% since April.

Ratings agency Fitch Solutions has revised its 2019 global steel price forecast downward to an average of U.S. $600 per ton from $650, citing weak investor sentiment, the ongoing U.S.-China trade war and uncertainty surrounding the U.K.’s Brexit effort, the Business Standard reported.

Nikunj Turakhia, director at the Steel Users Federation of India, was quoted as saying domestic steel prices were close to the bottom and hoped they would start rising soon.

There is more bad news for Indian steel companies.

Ratings agency India Ratings and Research has revised its outlook on the steel sector to “stable-to-negative” from “stable” for the remainder of this fiscal year. One of the reasons for the downgrade is sluggish demand. The rating agency has also revised downwards its fiscal year 2020 steel demand growth expectation to around 4% from the previous forecast of 7%.

All of this comes as global crude steel production rose by 1.7% in July, with Indian steel production increasing by the same percentage.

Tata Steel has announced a closure of some of its operations in the U.K., which could lead to a loss of about 400 jobs.

It has not been a good year for many steel companies in India; for example, Tata Steel Ltd’s first-quarter profit slumped to its lowest level in more than two years.

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

India’s S&P BSE Metal Index has fallen by about 30% so far this year due to the slowdown in the economy and infrastructure.

gui yong nian/Adobe Stock

This morning in metals news, the U.S. steel industry’s steel capacity utilization rate for the year through Aug. 31 fell to 80.8%, copper bounced back from a two-year low and China’s vice premier made a call for a “deeper mutual understanding” between the U.S. and China.

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Capacity Utilization Drops

After reporting a year-to-date capacity utilization rate of 81.0% for the year through Aug. 24, the American Iron and Steel Institute (AISI) reported a rate of 80.8% for the year through Aug. 31.

For the week ending Aug. 31, capacity utilization fell below the important 80% mark, checking in at 79.5%. Production in the week totaled 1.85 million tons, down 0.6% compared with production during the same week in 2018.

Copper Rallies

After reaching a two-year low, copper prices bounced back Wednesday, Reuters reported.

Three-month LME copper ticked up 0.5% to $5,637 per ton, according to Reuters.

Liu Asks for ‘Deeper Mutual Understanding’ in U.S.-China Talks

Just days after the latest tariff exchange between the U.S. and China, China’s top trade negotiator looked to ease tensions.

On Sept. 1, new U.S. tariffs covering $110 billion in Chinese goods went into effect, while $75 billion in tariffs in the other direction also went into effect.

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China’s Vice Premier Liu He said the countries must reach a “deeper mutual understanding,” the South China Morning Post reported.