Articles in Category: Macroeconomics

The lead price grew this week following a Chinese-issued ban on North Korean exports.

According to a report from Reuters, lead’s sister metals also rebounded, in response to once-rising geopolitical tension easing up a bit and Chinese data, a top metals consumer, coming in higher than expected.

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“Those Chinese numbers (on Monday) were quite soft … I suppose the only glimmer of light came in the new yuan loans, which beat consensus, and maybe that suggests that things will remain stable as we go forwards,” Robin Bhar, head of metals research at Societe Generale in London, told Reuters.

“The metals seem well poised. After a period of consolidation this week perhaps we’ll have another push towards those (recent) highs going forward,” Bhar added.

Lead Price Movement in August

Earlier this month, our own Fouad Egbaria reported that Chinese primary lead posted a price increase, growing 3.3% to $2,694.90/metric ton.

How will lead and base metals fare in 2017? You can find a more in-depth lead price forecast and outlook in our brand-new Monthly Metal Buying Outlook report.

For a short- and long-term buying strategy with specific price thresholds:

The bullish trend has become even stronger.

Copper and zinc prices have joined the bullish trend led by aluminum in the latest rally, which started at the beginning of August.

This new uptrend in these three metals is accompanied by heavy buying volume — signaling a a bull market.

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

As suggested in our article published Tuesday, aluminum prices have outperformed and broke out from their sideways trend.

Source: MetalMiner analysis of FastMarkets

Copper prices have decided to join in on the fun, and are also trending up again.

After the breathtaking rise that copper prices demonstrated at the end of July, prices are up again. A bullish sentiment has returned for copper.

Source: MetalMiner analysis of FastMarkets

Zinc prices have also hit their highest levels recorded since 2007, according to FastMarkets historical data, and point to a possible continuing uptrend. A rally in zinc prices occurred just after the sharp increase in aluminum prices. Buying trading volumes remain heavy, therefore the uptrend is underpinned by strong buying sentiment.

Overall Outlook

Although MetalMiner considers a variety of variables, indexes and data to analyze market sentiment, the most important variable is how metal prices behave.

Commodities have re-started a short-term uptrend after they lost steam at the beginning of the year. Meanwhile, industrial metals have moved from bullish (to nearly sideways/top, as we had even considered switching our industrial metal outlook to bearish but did not) to absolutely bullish again (mainly caused by these three metals rallies). The U.S. dollar has fallen relentlessly since the beginning of the year.

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What This means for Buying Organizations

Buying organizations should watch metal prices closely to determine the best strategy to commit long- and short-term purchases.

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Popular wisdom suggests a currency devaluation results in a boost to exports and the economy. The devaluation of the currency allows manufacturers, in particular, to sell their products at lower prices in export markets and therefore achieve growth at the expense of their competitors.

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

Many countries have been trying to quietly engineer just such a devaluation.

Some have done it overtly, like Japan, and others simply by being part of a bloc, such as Germany – it being widely accepted that the Deutschmark, if it still existed, would have Germany at an exchange rate like Switzerland or Norway, rather than the more competitive Euro.

So when Britain inexplicably voted to leave the European Union and the Pound sterling dropped in minutes on the news, many held the near 17% devaluation as a panacea for Britain’s economic ills, as the onset of a renaissance for manufacturing companies able to aggressively export to the world while simultaneously undercutting competitors.

The reality has proved somewhat otherwise.

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A once abandoned U.K. mine with a rich tin mining history may get another shot at resurrection thanks to a Canadian company.

The South Crofty tin mine in Cornwall has been shut down for nearly two decades, but Canada-based Strongbow Exploration is well on its way to reopening the mine still rich in tin.

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According to a report from The Telegraph, the South Crofty mine didn’t shut down because its tin bounty depleted — in fact, it shut down because of falling tin prices.

The news source states that if all things go according to plan, the mine could be reopened by 2020. The hope is that the continual recovery of tin prices will buoy the mine’s resurgence.

“It’s going to be a modern mine in the location of an old mine,” Richard Williams, Strongbow Exploration’s chief executive officer, told The Telegraph.

Once operational, the mine could employ as many as 300 individuals, not counting suppliers.

“We know there’s a resource there, we can identify it with new technology and make the project economic,” Peter Wale, its director, told the The Telegraph.

Once it opens again, the South Crofty mine will be one of just several functioning mines in the U.K., joining Wolf Minerals and ICL, the news source stated.

Tin Price Movement in 2017

How will tin and base metals fare in 2017? You can find a more in-depth tin price forecast and outlook in our brand-new Monthly Metal Buying Outlook report.

For a short- and long-term buying strategy with specific price thresholds:

TTstudio/Adobe Stock

Copper prices are on the ascent, thanks in part to the latest Chinese trade data and genuine excitement among investors over worldwide growth and capacity cuts.

According to a recent report from The Wall Street Journal, China’s debt crackdown earlier this year led to an adverse effect on metal prices and general worry from investors.

That worry has turned to elation, with copper prices up 7% due to capacity cuts in China. Meanwhile, iron ore prices are up more than 20% since the end of June.

Want a short- and medium-term buying outlook for aluminum, copper, tin, lead, zinc, nickel and several forms of steel? Subscribe to our monthly buying outlook reports!

The most recent Chinese trade data, representing July, painted a different picture with year-over-year growth of Chinese imports of copper concentrate slowing from June’s growth.

Nathaniel Taplin wrote for the Wall Street Journal: “Overall import and export growth also slowed, hinting that the lift to China from rebounding global trade may be close to its peak.”

The takeaway for copper investors impressed with Q2 Chinese growth? Not to get too excited until the whole story is revealed as China’s demand for metals, specifically copper, is weaker than expected.

Copper Prices Still Experiencing a Stellar 2017

Our own Irene Martinez Canorea wrote earlier this week that copper is outperforming all other base metals this month with copper traded on the London Metal Exchange up 7.8% in July.

She wrote: “The sharp increase in copper prices came after an announcement of a possible ban of copper scrap in China by the end of the year. The increase in copper prices was accompanied by heavy volume, which may signal a stronger uptrend.”

How will copper and base metals fare in 2017? You can find a more in-depth copper price forecast and outlook in our brand-new Monthly Metal Buying Outlook report.

For a short- and long-term buying strategy with specific price thresholds:

China’s continued regulation of its bloated aluminum industry is having a far-reaching impact on the growing share price of its major producers, thus adding to a tighter global market and rising prices.

According to a recent report from Reuters, China represents nearly 60% of worldwide aluminum output with analysts estimating up to 4 million tons of capacity closing this year, accounting for one-tenth of the Far East nation’s total, putting added pressure on the global aluminum market.

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Aluminum Corp of China (Chalco) shares, a state-run entity, increased 47% since the start of last month.

“Chalco is the market leader, so if (competitors) are closing down their capacity, they are able to expand their production,” analyst Helen Lau, of Argonaut Securities in Hong Kong, told Reuters.

Aluminum Prices on the Run

While aluminum prices are on the rise, they may have further to go, analysts tell Reuters. Shanghai aluminum is up around 11% so far this year while benchmark aluminum on the London Metal Exchange is up 14%.

“The trend is definitely towards a much tighter market balance – there is an upshot to prices here definitely,” London-based WoodMackenzie analyst Ami Shivka, told Reuters. “The China market is in a surplus so any closures in China will whittle away the little bit of surplus that we have in China, and put the global market in a deficit.”

How will aluminum and base metals fare in 2017? You can find a more in-depth aluminum price forecast and outlook in our brand-new Monthly Metal Buying Outlook report.

For a short- and long-term buying strategy with specific price thresholds:

gui yong nian/Adobe Stock

The Chinese government announced they have shut 42.39 million tons of crude steel capacity in the first half of this year.

According to a report from Reuters, this amounts to 84% of its target for the whole year, putting it well on track to meet its steel capacity reduction goals for 2017.

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This move also puts China very close to completing its 5-year target in reducing steel capacity, set just last year. That ultimate goal was to cut between 100 million and 150 million tons of excess steel capacity in less than two years.

According to Reuters: “China made the pledge in January 2016 as it bid to put an end to a price-sapping capacity glut that had left the country’s massive steel sector mired in debt and losses. The capacity cuts made this year do not include a nationwide campaign to shut down illegal low-grade steel production, believed to amount to around 100 million tonnes a year, which was completed by the end of June.”

Steel Market Moves Elsewhere in the World

Our own Irene Martinez Canorea wrote recently of the Brazilian steel market and where that is headed. Rising steel prices in the South American nation point toward a general uptrend, but more specific price movements depend on the steel.

Canorea wrote: “Brazil is the largest steel exporter in South America, with increasing production this year. Brazil exports primarily to the U.S. and Mexico, with Mexico serving as the second-largest steel producer in South America. According to preliminary U.S. Census Bureau for June 2017, the U.S. imported 590,473 metric tons of steel from Brazil, up significantly from the 259,285 metric tons imported in June 2016.”

How will steel and base metals fare in 2017? You can find a more in-depth steel price forecast and outlook in our brand-new Monthly Metal Buying Outlook report.

For a short- and long-term buying strategy with specific price thresholds:

Eramet, a prominent French nickel miner, recently announced additional cost cuts following its nickel division suffering more losses in the first half of this year.

According to a report from Reuters, this announcement comes after the mining company said it would alter its strategy to include the lower-grade nickel pig iron market with a new mining project in Indonesia.

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Nickel mining companies from across the globe are suffering the effects of a weakness in market prices, and Eramet is no exception. Pressure on nickel prices can be attributed to top producing nations Indonesia and the Philippines placing restrictions on their mining sectors.

According to Reuters, nickel prices were higher the first half of last year, but still less than production costs of Eramet’s nickel plant in New Caledonia.

“We’re working flat out to reach $4.50 which is still our cost target for the end of the year,” Chief Executive Christel Bories told the news source. “With a market price that languished below $4.50 in the first half and for some time before that, we’re convinced we have to go beyond $4.50 and pretty quickly.”

Nickel Price Outlook for the Remainder of 2017

How will nickel and base metals fare in 2017? You can find a more in-depth nickel price forecast and outlook in our brand-new Monthly Metal Buying Outlook report.

For a short- and long-term buying strategy with specific price thresholds:

AdobeStock/vvoe

The International Lead and Zinc Study Group (ILZSG) released its first half of 2017 findings for zinc, which found the worldwide market for refined zinc metal was in deficit during the first five months of the year while total reported inventories declined over that same time frame.

The ILZSG reported that world zinc mine production grew by 6.3% despite reductions in the United States and Australia.

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“A significant 54.8% rise in Indian refined zinc metal output was largely offset by reductions in Canada, Japan, the Republic of Korea, Peru and Thailand resulting in an overall global increase of 0.4%,” the ILZSG report stated.

Furthermore, after a significant decrease in 2016, apparent demand for refined zinc metal in the United States grew 19%. In China, apparent usage declined by 2.8% and grew 1.8% in Europe. On a global basis, zinc demand grew 1.1%.

The ILZSG report on zinc concluded: “Chinese imports of zinc contained in zinc concentrates amounted to 477kt, a rise of 27.9% compared to the same period of 2016. The country’s net imports of refined zinc metal decreased by 48.4% to 129kt.”

Zinc Price Outlook for the Remainder of 2017

How will zinc and base metals fare in 2017? You can find a more in-depth zinc price forecast and outlook in our brand-new Monthly Metal Buying Outlook report.

For a short- and long-term buying strategy with specific price thresholds:

Macro photo of a piece of lead ore

The International Lead and Zinc Study Group (ILZSG) released its monthly report for July, which found that global refined lead metal demand outgrew supply during the first five months of the year.

Furthermore, total reported stock levels increased over this time, as well.

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The ILZSG report revealed an increase in global lead mine production of 12.7% when compared to the first five months of 2016. This was mostly attributed to increased output in China and India, which counterbalanced decreases in Peru and Australia.

According to the ILZSG: “A rise in world refined lead metal output of 7.2% was primarily influenced by increases in China, India, the Republic of Korea and the United States. An increase in US apparent demand for refined lead metal of 23.3% was principally a consequence of a sharp rise in net imports. Chinese apparent usage rose by 13.7% and in Europe by a more modest 1.7%. Overall global demand rose by 10.3%.”

The ILZSG report concluded that Chinese imports of lead contained in lead concentrates dropped 4.9%. Meanwhile, net imports of refined lead metal grew substantially, from 12kt in 2016 to 41kt this year.

Lead Price Outlook for 2017

How will lead and base metals fare in 2017? You can find a more in-depth lead price forecast and outlook in our brand-new Monthly Metal Buying Outlook report.

For a short- and long-term buying strategy with specific price thresholds: