Articles in Category: Ferrous Metals

The Stainless Steel Monthly Metals Index (MMI) fell again this month. The slide of four points moved the index to 78 from the previous 82 reading. The index fell back to May 2018 levels.

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The index dropped due to a slight fall in LME nickel prices in July. However, LME nickel prices seem to have recovered again. Stainless steel surcharges also fell this month.

However, stainless steel surcharges remain in a strong uptrend.

LME Nickel

In July, nickel price momentum slowed slightly.

However, LME nickel prices — and the base metals complex, in general — are showing strength so far again this month.

Despite the two-month downtrend, nickel prices have remained in an uptrend since last summer (June-July), when prices started to increase sharply.

Source: MetalMiner analysis of FastMarkets

Prices fell starting in June 2018 from the $15,895/mt level toward the current $13,825/mt level. Buying volume appears stronger than selling volume and, therefore, supports the uptrend.

A fundamental tightness in the nickel market could also add more support to nickel prices.

The Philippines government confirmed that just 23 out of the 27 mines that operate in the world’s second-largest nickel-producing country will continue to operate. The remaining four will likely close. The decision comes from a previous report (released in July).

Domestic Stainless Steel Market

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

The 316/316L-coil NAS surcharge fell to $1/pound, while the 304/304L decreased to 0.73/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 remain in a clear uptrend and are well above 2015-2017 lows.

What This Means for Industrial Buyers

Stainless steel price momentum slowed down slightly this month. However, both steel and nickel remain in a bull market.

Therefore, 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.

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Actual Stainless Steel Prices and Trends

Both Chinese 304 stainless steel coil and Chinese 316 stainless steel coil prices fell this month by 2.78%.

Chinese Ferrochrome prices decreased this month by 2.04%, to $1,930/mt.

Nickel prices fell 7.33% to $13,900/mt.

The Renewables Monthly Metals Index (MMI) dropped three points for an August MMI reading of 105.

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BHP Getting Into Cobalt

Miner BHP Billiton has plans to ramp up its production of a cobalt product used in electric vehicle (EV) batteries, Bloomberg reported.

Per the report, the miner has had success in producing cobalt sulphate alongside its nickel product at its Western Australia operation, according to an interview with Asset President Eduard Haegel.

Questions about cobalt supply and price volatility persist, but a miner of the size of BHP looking to expand its presence in the sphere is an indicator of the metal’s importance and, thus, the level to which the EV market is coveted.

Speaking of Cobalt Prices…

The price of the coveted metal has come off a bit of late, but that might just be a short-term blip.

According to the Toronto-based Sherritt International Corp — a miner with operations in Cuba, Madagascar and Canada — the softening of cobalt prices should reverse as demand continues to pick up, particularly vis-a-vis the growing EV sector, Reuters reported.

Plate Prices

According to a report in the Hellenic Shipping News, shipbuilders in South Korea are asking steelmakers to freeze shipbuilding plate prices.

According to the report, the Korea Offshore & Shipbuilding Association is asking for the freeze because price hikes threaten their survival, as declining orders and increased competition from China have weighed on the Korean shipbuilding sector.

Thick steel plate prices jumped $44/ton in the first half of the year, according to the report.

Actual Metals Prices and Trends

Japanese steel plate fell 1.0% month over month to $715.62/mt. Korean steel plate rose 1.6% to $682.89/mt. Chinese steel plate fell 4.4% to $707.51/mt.

U.S. steel plate jumped 5.2% to $986/st.

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Chinese neodymium fell 4.0% to $60,182/mt. Chinese silicon fell 2.8% to $1,511.89/mt. Chinese cobalt cathodes fell 2.8% to $97,612.20/mt.

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This morning in metals news, the Office of the United States Trade Representative announced it will move forward with $16 billion in tariffs on Chinese imports (out of an initially announced total of $50 billion in tariffs), Chile posted solid copper exports in July and U.S. raw steel production data is in for the week ending Aug. 4.

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Trump Administration Enacts $16B in Tariffs

The Office of the United States Trade Representative (USTR) announced Tuesday afternoon that it will move forward with $16 billion in tariffs on Chinese imports (in addition to the $34 billion that went into effect July 6).

The USTR finalized the previously announced list of products. From the original list, which included 284 tariff lines, 279 made it into the final list.

Duties will be collected on the list of 279 products beginning Aug. 23.

Chile Posts Strong July in Exports, Particularly Copper

Chile boasted a trade surplus of $375 million in July, according to a Reuters report, powered in part by strong copper exports.

July copper exports were up 9.47% year over year, according to the report.

Steel Production Up 4.3% Year Over Year Last Week

According to American Iron and Steel Institute (AISI) data released this week, U.S. steel production for the week ending Aug. 4 was up 4.3% compared with the same period in 2017.

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Production for the week, however, was down 0.4% compared with the previous week.

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This morning in metals news, a recent poll indicates broad support within the U.S. business community for new tariffs on China, Novelis reported its quarterly earnings and Alcoa seeks an exemption from the Trump administration’s aluminum tariff.

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Support for Tariffs

Much has been said about the Trump administration’s program of tariffs, but what do U.S. business owners think about the strategy?

According to a recent UBS poll, 71% of respondents said they supported additional tariffs on China. That percentage fell to 66% for Mexico, 64% for Europe and 60% for Canada.

In addition, 88% of respondents said they believed China is engaging in unfair trade practices.

Novelis Posts 10% Increase in Net Income Year Over Year

Novelis reported net income (excluding special assets) increased by 10% year over year in the most recent quarter.

“Outstanding operational performance with increased asset optimization and favorable market conditions contributed to another strong quarter,” President and CEO Steve Fisher said. “Our recent investment announcements in North America and Asia, along with the pending acquisition of Aleris, will diversify our product portfolio and increase our participation in high-demand, high-value markets to meet growing customer demand.”

Alcoa Seeks Tariff Exemption

Alcoa is among the long list of U.S. companies that have applied for an exemption from the Trump administration’s metals tariffs (in this case, the aluminum tariff), The New York Times reported.

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According to the report, Alcoa is asking for the exemption because it imports much of its aluminum from Canada, which is one of the countries affected by the tariffs.

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In August, the Copper Monthly Metals Index (MMI) fell by four points. The Copper MMI has continued to slide, mainly driven by weaker LME copper prices in July. The current Copper MMI stands at 77 points.

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The recent slide in copper prices has been driven by concerns over Chinese growth. Analysts commonly call the base metal “Dr. Copper” because of its strong correlation with the Chinese stock markets. Therefore, Dr. Copper serves as a reflection of the Chinese economy.

However, copper prices appear to have begun to stabilize and are currently trading more sideways. Prices appear to be in a buying dip.

Source: MetalMiner analysis of Fastmarkets

However, fundamental supply issues may add support to copper prices.

The world’s largest copper mine, the Chilean Escondida mine, may get shut down due to a strike. The strike comes as a result of failed negotiations between BHP Billiton and the labor union representing the workers at the mine. The labor union gave the company an ultimatum with a deadline to go on strike. The company could improve the contract offer before Aug. 6.

According to a Reuters report, BHP requested government mediation in the talks with the union, temporarily delaying a potential strike.

Last year, the Escondida mine workers went on a 44-day strike that reduced copper output by 200,000 tons.

Supply disruptions remain a concern elsewhere, as well.

Other mines, such as the Chilean Caserones mine, failed to conclude contract negotiations. Codelco’s Chuquicamata copper mine, the state-owned miner’s second-largest in the country, blocked access to the mine in early August.

Chinese Scrap Copper

LME copper prices and Chinese copper scrap prices tend to follow the same trend. Both appear in a long-term uptrend. However, both LME copper and scrap copper prices fell again this month. In July,copper scrap prices fell  less than LME copper prices.

Despite both following the same short-term downtrend, the spread has widened. The wider the spread, the higher the copper scrap consumption — and, therefore, the price.

Source: MetalMiner data from MetalMiner IndX(™)

The spread seems to have tightened again.

What This Means for Industrial Buyers

Despite the recent dip, LME copper prices remain in a long-term uptrend.

Buying organizations will want to be prepared to understand how to react to the latest copper price movements. For those who want to understand how to reduce risks, take a free trial now to the MetalMiner Monthly Outlook.

Actual Copper Prices and Trends

In August, most of the prices comprising the Copper MMI basket decreased.

LME copper fell by 6% this month. Indian copper prices decreased by 5%, while Chinese primary copper prices also fell by 5%.

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Prices of U.S. copper producer grades 110 and 122 decreased by 3.76%. Meanwhile, the price of U.S. copper producer grade 102 fell by 3.58%, down to $3.77/pound.

The Raw Steels Monthly Metals Index (MMI) fell one point further this month, dropping to 89 from the previous 90 reading.

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The Raw Steel MMI has returned to May 2018 levels. The slight drop came as a result of slower domestic steel price momentum.

Domestic steel prices still remain at a more than seven-year high. However, the pace of the increases seems to have slowed recently. Domestic steel prices — with some exceptions — are mostly trading sideways, and some steel forms have started to drop slightly.

Source: MetalMiner data from MetalMiner IndX(™)

Plate and HRC ended higher last month, while CRC and HDG prices dropped. Long lead times in Q2 and Q3 combined with supply shortages have supported domestic steel prices. However, lead times seem to be shortening now, which may causes prices to drift lower.

Historical steel price cyclicality could cause prices to move lower at some point. Domestic steel prices have stayed in a sharp uptrend since January 2018. Prices may begin to come off slightly at some point this year.

Chinese Steel Prices

So far in August, Chinese steel prices have increased. Chinese steel prices appear to be in recovery and have started an uptrend, after a slight downtrend, since the beginning of the year.

Source: MetalMiner data from MetalMiner IndX(™)

Chinese steel prices tend to drive U.S. domestic steel prices. Therefore, buying organizations may want to keep a close eye on pricing.

Domestic Shredded Scrap

Shredded scrap prices traded sideways this month. Scrap prices commonly follow the same trend of domestic steel prices.

Scrap prices have been in an uptrend since the beginning of the year (along with steel prices). The pace of the increases appears to be less sharp, but scrap price movements this year appear to be less volatile than steel prices.

Source: MetalMiner data from MetalMiner IndX(™)

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 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.

Actual Raw Steel Prices and Trends

The U.S. Midwest HRC 3-month futures price fell this month by 4.34%, falling to $815/st.

Chinese steel billet prices decreased again this month by 4.05%, while Chinese slab prices fell 2.1% moving to $626/mt.

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The U.S. shredded scrap price closed the month at $371/st, trading flat from last month.

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This morning in metals, a Chinese province announced new capacity cut targets as part of the country’s overall environmental plans, copper supply-side issues and Vedanta’s quarterly earnings rise.

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Plans to Cut Steel, Coal Capacity

China’s Shandong province has new targets for cuts on steel and coal production, Reuters reported.

The plans include cuts to pig iron production capacity of 600,000 tons and crude steel of 3.55 million tons by the end of this year, according to the report.

Copper Supply-Side Issues

The copper price has been in a downtrend of late. While it remains to be seen if the downtrend will become a long-term slide, copper watchers are also paying attention to supply-side issues at Freeport-McMoRan’s Grasberg mine in Indonesia.

According to Bloomberg, the mine will see production cut by 300,000 metric tons next year as the miner transitions open pits to underground operations.

Vedanta Earnings Up

Indian miner Vedanta Resources reported a rise in quarterly earnings, Reuters reported.

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For the three-month period ending June 30, the miner reported EBITDA of $983 million, up from $778 million for the same period in 2017, according to the report.

The Automotive Monthly Metals Index (MMI) retraced four points, hitting 99 for our August MMI reading.

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U.S. Auto Sales

July was a down month for Ford, which saw its U.S. sales drop 3.1%. Ford car sales were down 27.7% year over year, and 15.7% in the year to date.

However, truck sales continue to shine, with sales rising 10.2% in July.

“And when you look at the underlying economy, it remains very healthy, and that would be indicative of what we’re seeing in the truck market, with F-Series posting gains and vans posting very big gains for Ford Motor Company,” Ford Sales Analyst Erich Merkle said.

It was a different story for Fiat Chrysler, which reported a 6% sales increase compared with July 2017. According to a company release, its Jeep brand had its best July ever, with retail sales up 16%.

Honda reported an 8.2% year-over-year drop, but touted its growing truck sales.

“For the first time in our company’s history, the Honda brand is on pace this year to sell more light trucks than passenger cars,” said Henio Arcangeli Jr., senior vice president of the American Honda Automobile Division, in a release. “Honda’s unique flexibility within our U.S. manufacturing operations has played a critical role in our ability to adjust our production mix and capitalize on the market’s shift toward light trucks.”

Toyota reported its July sales were down 6.0% year over year, but noted July marked its best month ever for light-truck sales.

General Motors no longer reports sales on a monthly basis, instead opting earlier this year to report on a quarterly basis.

Pumping the Brakes?

Late last month, President Donald Trump and European Commission President Jean-Claude Juncker met at the White House, a meeting that yielded an agreement of sorts to pump the brakes on new tariffs.

However, cars were exempted from the agreement between the two leaders.

A U.S. Section 232 investigation into imports of automobiles and automotive imports is still ongoing. The Department of Commerce launched the investigation using the Section 232 statute — also used to impose steel and aluminum tariffs — in late May and a public hearing was held July 19.

GM Seeks Exemption for Buick Envision SUV

Although the Trump administration has yet to impose new tariffs on imported automobiles, General Motors has asked that its Buick Envision SUV, which is made in China, be exempted from any new tariffs, the Detroit Free Press reported.

Most of GM’s sales of the SUV model come from China, according to the report, and the company argues production in the U.S. would thus not be feasible.

Earlier this summer, GM expressed its opposition to the imposition of new automotive tariffs, saying they would lead to job losses and would impact the automaker’s competitiveness in the global marketplace.

Actual Metal Prices and Trends

It was an overall down month for prices within the automotive basket of metals.

U.S. HDG steel fell 0.7% to $1,103/st. U.S. platinum bars fell 1.8% to $837/ounce, while palladium bars dropped 2.1% to $928/ounce.

Chinese primary lead dropped 14.7% to $2,722.87/mt. LME copper fell 6.1% to $6,236.50.

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U.S. shredded scrap steel held steady at $371/st. Korean aluminum also held steady, sticking at $3.75/kilogram.

The Construction Monthly Metals Index (MMI) lost three points this month, hitting 90 for our August MMI reading.

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U.S. Construction Spending, Employment

According to U.S. Census Bureau data, U.S. construction spending in June fell 1.1% from the previous month.

Spending in June hit $1,317.2 billion, down from $1,332.2 billion in May. However, the June spending time marks a 6.1% increase from the June 2017 spending total of $1,241.3 billion.

For the first six months of the year, spending hit $619.9 billion, marking a 5.1% increase from the same period in 2017.

Broken down further, private construction spending hit a seasonally adjusted annual rate of $1,019.8 billion, or 0.4% below the revised May estimate of $1,023.9 billion. With private construction, residential construction hit $568.3 billion in June, down 0.5% from the revised May estimate of $570.9 billion. In addition, nonresidential construction was down 0.3%, amounting to $451.5 billion in June.

As for public construction, spending in June hit $297.4 billion, 3.5% below the revised May estimate of $308.3 billion. Under the umbrella of public construction, educational construction was  down 11%, amounting to $67.9 billion. Highway construction was down 1.3%, hitting $93.9 billion for the month.

Meanwhile, according to preliminary Bureau of Labor Statistics (BLS) data, construction employment hit 7,222,000 in June, up from 7,209,000 in May.

Billings Growth Slows

Architecture billings growth continued in June, according to the Architecture Billings Index (ABI), but the pace of growth slowed last month. Nonetheless, June marked the ninth straight month of billings growth.

The June ABI hit 51.3, down from the previous month’s 52.8 (any reading above 50 indicates growth).

By region, however, the billings landscape was a mixed bag.

The South region posted a 57.4, while the Northeast posted modest growth with a reading of 50.2. The Midwest and West lagged behind, however, with readings of 49.8 and 46.9, respectively.

In this month’s survey of industry professionals, many indicated rising expenses was a concern.

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“More than nine in 10 firms (92 percent) indicated that they are concerned to some degree about managing the costs of running their firm at the present, with 52 percent reporting that it is a major concern, and 40 percent reporting that it is a minor concern,” the ABI report states. “Small firms tended to be less concerned about firm expenses than large firms, although firms of all sizes were generally concerned.”

Actual Metal Prices and Trends

The U.S. shredded steel scrap price held flat at $371/short ton.

Chinese rebar fell slightly, dropping 0.2% to $623.84/metric ton. Chinese H-Beam steel fell 6.0% to $606.22/mt.

European commercial 1050 sheet aluminum fell 4.4% to $2,867/mt.

Chinese iron ore PB fines fell 2.8% to $77.06/dry metric ton.

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This morning in metals news, a trade association looks to raise money to support its lawsuit against the Section 232 steel tariff, Honda’s quarterly earnings hit a 12-year high and the oil price’s recent dip may just be temporary.

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American Institute for International Steel Seeks Funding for Lawsuit

The American Institute for International Steel is looking for funding from its members to support its lawsuit against the Section 232 tariff on steel, the Times of Northwest Indiana reported.

The trade association filed the lawsuit in late June, arguing the Section 232 statute is unconstitutional.

Honda Avoids Tariff Effect … For Now

Honda reported its quarterly earnings Tuesday, revealing profits soared to a 12-year high, Reuters reported.

In the U.S. market, Honda touted its local sourcing efforts to keep costs down (as others struggle with rising materials costs).

“Roughly 90 percent of our steel and aluminum needs in the United States are procured locally,” Honda Senior Managing Director Kohei Takeuchi was quoted as saying. “Overall we’re not seeing a big impact (from tariffs) so far.”

What’s Going on With the Oil Price?

As MetalMiner Executive Editor Lisa Reisman noted during last week’s MetalMiner Budgeting Workshop, the oil price is one of a few crucial factors in considering future price fluctuations of metals.

According to oilprice.com, WTI crested $70/barrel for the first time in two weeks. The recent slide in oil prices could be temporary, the report argues.

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And as Reisman noted last week, rising oil prices generally correlate with rising metals prices.