Sodel Vladyslav/Adobe Stock

The oil price’s stabilization, copper mine production and more — before we head into the weekend, let’s take a look back at the week that was.

This week, Stuart Burns analyzed the oil market, which has seen price stabilization over the last three-plus months.

However, less-than-uniform adherence to OPEC’s previously agreed upon oil output cuts have combined to depress additional upward momentum.

“Elements of game theory have long plagued OPEC’s attempts to control oil prices,” MetalMiner’s Stuart Burns wrote this week.

“The incentive to cheat is huge. The sense by many smaller players that they suffer from output agreements more than the “big boys” breeds a sense of resentment at times.

“That is particularly true among parties that have little else in common other than a desire to maximize oil revenues.”

The Brent crude oil price ticked up Thursday, reaching just under $42 per barrel.

In case you missed them, here were the metals storylines on MetalMiner this week:

Week of Sept. 20-24 (oil price stabilizes, copper mine production and much more)

• MetalMiner’s Stuart Burns on India’s efforts to increase surveillance of aluminum and copper import levels.
• Oil prices have stabilized over the last few months around $40 per barrel, but some OPEC countries have not stuck to previously agreed upon output reduction targets.
• U.S. steel capacity utilization dipped slightly last week, falling to 64.5%.
• MetalMiner’s “should-cost” models shed light on how much metals buyers should expect to spend on their aluminum, carbon steel and stainless steel.
• India became a net exporter of steel to China during the April-August period.
• Copper mine production fell 1% during the first half of 2020, per the International Copper Study Group.
• Increasing costs and general uncertainty are giving importers fits. Meanwhile, the pandemic has actually proved to be a profitable time for shipping lines.

The MetalMiner 2021 Annual Outlook consolidates our 12-month view and provides buying organizations with a complete understanding of the fundamental factors driving prices and a detailed forecast that can be used when sourcing metals for 2021 — including expected average prices, support and resistance levels.

gui yong nian/Adobe Stock

This morning in metals news: Steel Dynamics recently released its financial guidance for Q3; miner Ivanhoe Mines announced plans to double annual capacity at the Kakula copper mine; and lead prices have lost steam.

The MetalMiner 2021 Annual Outlook consolidates our 12-month view and provides buying organizations with a complete understanding of the fundamental factors driving prices.

Steel Dynamics releases Q3 guidance

Steel Dynamics reported it expects third-quarter earnings to fall between $0.42 and $0.46 per diluted share.

Meanwhile, the firm’s second-quarter earnings came in at $0.36 per diluted share.

“Third quarter 2020 earnings from the company’s steel operations are expected to be lower than sequential second quarter results, due to metal spread compression more than offsetting increased shipments driven by improved automotive and strong construction demand,” the company said.

Ivanhoe to double capacity at Kakula copper mine

This week, Ivanhoe Mines announced plans to double capacity at the Kakula copper mine.

Ivanhoe said the Kamoa-Kakula joint venture agreed to move forward with acquisition of a second 3.8 million-ton-per-annum concentrator module for the mine. As such, the additional module would double the mine’s capacity, bringing it to 7.6 million tonnes per annum.

“There are many smart people in the mining industry who strongly believe that copper is quickly approaching a supply and demand divergence; where the amount of copper being produced globally will be far outstripped by demand,” said Robert Friedland, co-chairman of Ivanhoe Mines.

Read more

As copper prices have continued to rise over the last six months, copper mine production has fallen.

According to the International Copper Study Group (ICSG), copper mine production fell 1% during the first half of the year.

Furthermore, the global copper market posted a deficit of 235,000 tons during the first half of 2020, according to the ICSG.

Stay up to date on MetalMiner with weekly, monthly, or quarterly updates – without the sales pitch. 

Mine production drops 4% in April-May

The most significant slowdown in mine production came in April and May. The ICSG estimated mine production fell 4% during the two-month period, when coronavirus-related lockdown measures affected output.

Peru, the second-largest copper producer, saw its copper output impacted by the pandemic.

“In Peru, stoppages resulting from the COVID-19 pandemic combined with operational issues/adverse weather that affected a few major mines, led to a 20% decline in mine output over the first half of 2020 including a significant decline of 38% in April-May compared to the same period of 2019,” the ICSG reported.

Mine production also fell in Australia, Canada, Mexico, Mongolia and the U.S.

Meanwhile, Chile, the top copper producer, increased its mine production by 2.6%.

Refined copper production up 1%

However, global refined copper production in the first half of the year increased by 1%.

Primary production rose 2.3%, while secondary production fell 5.2%.

“Globally, constrained scrap supply due to the COVID-19 lockdown and lower copper prices have negatively impacted world secondary refined production,” the ICSG reported.

Total refined copper output in Chile increased 12.5%.

Copper price gains

As readers of the MetalMiner Monthly Metal Outlook know, copper prices have been on the rise this year, supported by both Chinese demand and supply concerns.

The average LME cash price in August jumped 2.3% from the previous month’s average, up to $6,497 per metric ton.

The average for the year, however, remains down 4.4% compared with the 2019 annual average.

The MetalMiner 2021 Annual Outlook consolidates our 12-month view and provides buying organizations with a complete understanding of the fundamental factors driving prices.

MetalMiner’s metals price landing pages (aluminum, steel and stainless steel) now feature the LME three-month prices set against MetalMiner’s track record, in addition to “should-cost” prices.

How much should your metals buy cost?

It’s a simple question that doesn’t always have a simple answer — or, at the very least, an answer that’s easy to get.

MetalMiner’s “should-cost” models aim to cut through the confusion and give buyers concrete ideas of what the products they’re buying should be costing them.

The MetalMiner should-cost models cover aluminum, steel and stainless steel.

So, what exactly do the models offer?

Aluminum should-cost model

With respect to aluminum:

• Comprehensive price breakdowns, including conversion cost for specific grade, thickness and width.
• In addition, the model is global; buyers can use from multiple regions.
• Lastly, buying organizations can more effectively “lock” conversion costs.

“Many competitors publish the LME three-month price along with the MW premium,” MetalMiner CEO and Executive Editor Lisa Reisman recently noted. “Few, if any, publish the conversion adder based upon grade, gauge, width etc. The MetalMiner aluminum should-cost model provides a level of granularity not previously available in the marketplace.”

Carbon steel

As for carbon steel, there is currently no North American price index for finished steel inclusive of adders and extras.

In addition, the carbon steel should-cost model includes:

• Most steel contracts are agreed on the basis of base price, which provides little to no flexibility to negotiate on total price. The steel should-cost model provides a price breakdown for adders/extras, which can generate additional cost savings for steel buyers.
• The model includes a price breakdown comparison of major U.S. steel mills. Buyers can use the information to negotiate annual sourcing contracts.
• Furthermore, the model contains a high level of granularity for specific types of steel (examples of specificity can be found on our carbon steel price landing page).

Stainless steel

What about stainless?

Similarly, there is currently no North American price index for stainless. In addition, the MetalMiner stainless should-cost model:

• Contains a high level of granularity for specific types of stainless. Examples of specificity can be found on our stainless price landing page.
• Second, the model features comprehensive price breakdowns (base price + gauge/width + finish + surcharge + vinyl + CTL).
• Lastly, it provides better means of negotiating effectively with suppliers.

For more information about the MetalMiner Insights platform and should-cost models, visit the MetalMiner Insights landing page. 

Bombardho/Adobe Stock

This morning in metals news: the copper price bounced back Tuesday after a down Monday session; ArcelorMittal issued a statement on the European Commission’s policy proposals aimed at reducing emissions; and U.S. oil exports have fallen in each month since February.

The MetalMiner 2021 Annual Outlook consolidates our 12-month view and provides buying organizations with a complete understanding of the fundamental factors driving prices and a detailed forecast that can be used when sourcing metals for 2021.

Copper price recovers Tuesday

The copper price continued to move up after a down Monday session, Reuters reported.

LME copper fell 1.8% Monday but bounced back 1.4% on Tuesday.

Europe strives toward emissions targets

In other news beyond the copper price, the European Commission recently outlined its 2030 Climate Target Plan, to which steelmaker ArcelorMittal responded positively.

However, the firm also listed several factors that will make it easier for it to achieve the emissions targets.

Read more

gui yong nian/Adobe Stock

This week’s coverage included coverage ranging from the announced update to SIMA, iron ore price movements and the U.S.’s decision to rescind the recently reimposed 10% Canadian aluminum tariff.

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

Stay up to date on MetalMiner with weekly, monthly, or quarterly updates – without the sales pitch. Sign up now.

Week in Review, Sept. 14-18 (SIMA, steel prices and more)

• The Department of Commerce will release an updated, modernized Steel Import Monitoring and Analysis (SIMA) system.
• MetalMiner’s Stuart Burns on the Tata Group’s struggles in the U.K. and talks over a potential bailout.
• Maria Rosa Gobitz on the last month in aluminum market movements.
• Supply fears and strong Chinese demand have supported the copper price.
• The U.S. steel sector’s capacity utilization rose to 65.1% last week.
• The Renminbi has gained strength against the U.S. dollar.
• China is looking to strengthen its cobalt stockpile.
• U.S. steel prices ticked upward this past month.
• Just over a month after reimposing it, the U.S. this week removed the 10% tariff on some non-alloyed, unwrought Canadian aluminum.
• The silver price posted gains this summer but started to flatten out in the second half of August.
• Stainless steel surcharges moved up for the fourth month in a row.
• The United States International Trade Commission opted to maintain existing duties on steel rebar imported from Mexico and Turkey.
• The iron ore price has skyrocketed this year, but its ascent has slowed of late.

The MetalMiner 2021 Annual Outlook consolidates our 12-month view and provides buying organizations with a complete understanding of the fundamental factors driving prices and a detailed forecast that can be used when sourcing metals for 2021 — including expected average prices, support and resistance levels.

Maksym Yemelyanov/Adobe Stock

The Stainless Monthly Metals Index (MMI) increased by 11.3% for this month’s index value, as stainless steel surcharges rose for a fourth consecutive month.

Upcoming negotiation on your stainless steel buy? Make sure you know how your service centers will negotiate with you.

Stainless steel surcharges continue to increase

Stainless alloy surcharges are rising for the fourth month in a row.

Alloy surcharges for 304 in September will be $0.6231/lb, an increase of $0.0361/lb compared to August.

Over the past month, LME nickel prices increased approximately 12%, up to $15,442/mt by the end of August.

Chinese nickel price followed a similar trend, increasing to $17,590/mt (or CNY 120,750/mt).

U.S. demand recovery

Throughout July and August, the U.S. Department of Commerce reported the U.S. imported a total of 93,600 metric tons and 88,700 metric tons of all stainless products, respectively. The totals were twice as high as the year’s bottom of 46,800 metric tons back in May. Furthermore, the totals were much higher than the 2019 average of 64,600 metric tons.

Import levels reported match the expansionary track the U.S. has seen in the past four months.

August ISM PMI data came in at 56%, up 1.8 percentage points from July. Moreover, the ISM Manufacturing New Orders index came in at 67.6% in August compared to 61.5% in July.

Auto industry outlook

Besides consumer goods, the automotive industry is another major consumer of stainless steel.

As the U.S. presidential election approaches, both candidates have expressed their desire to boost the U.S. auto industry to create jobs.

A few particular differences could impact the price of stainless steel.

Read more

The Global Precious Monthly Metals Index (MMI) gained 3.0% for this month’s MMI value, as the silver price steadied in the second half of August.

We’re offering timely emails with exclusive analyst commentary and some best practice advice – and you choose how often you receive it. Sign up today.

Silver surge

Last month, MetalMiner’s Stuart Burns delved into the rise of the silver price and how much further it could go.

After falling to $12.59 per ounce as of March 20, the silver price surged as high as $29.14 in the first half of August.

But, as Burns noted, the price did retrench thereafter, generally hovering around $27 per ounce.

“Both gold and silver retrenched yesterday,” Burns wrote Aug. 12. “Gold fell below $2,000/ounce, while silver dropped toward $27/ounce.

“But whether that will be enough to dampen spirits for a push higher in coming weeks will depend on the course of the dollar, indications on post-pandemic recovery and further action by the Fed regarding longer for lower interest rates.

“You’d be brave to bet against it.”

Since then, silver has continued to trade sideways, starting this week just under $27 per ounce before ticking up to $27.20 per ounce Wednesday.

As Burns notes, how much silver and fellow precious metal gold can continue to gain depends on the aforementioned factors.

From March 20 until the end of July, the U.S. dollar index declined by nearly 10%. Since then, the dollar has trended mostly sideways.

The index stood at 93.20 Wednesday afternoon. By comparison, the index stood at nearly 103 in late March, when the coronavirus pandemic began to significantly impact U.S. health systems and the economy.

Gold, silver could see further gains

In the same vein, the Bank of Montreal adjusted its long-term forecasts for gold and silver, Kitco News reported.

The bank forecast average gold prices of $1,920 per ounce in the fourth quarter. The new forecast marked a 4% increase from its previous forecast, according to the report.

Furthermore, the bank forecast an average Q4 silver price of $27.50 per ounce. The adjusted forecast for silver marked a 47% increase from the bank’s previous forecast, per the report.

Fed targets long-term inflation rate of 2%

As Burns noted, the Federal Reserve’s monetary policy will also have a hand in the strength of gold and silver prices.

On Wednesday, the Fed released a statement announcing its long-term stance on inflation.

“The Committee seeks to achieve maximum employment and inflation at the rate of 2 percent over the longer run,” the Fed said in a statement. “With inflation running persistently below this longer-run goal, the Committee will aim to achieve inflation moderately above 2 percent for some time so that inflation averages 2 percent over time and longer-term inflation expectations remain well anchored at 2 percent. The Committee expects to maintain an accommodative stance of monetary policy until these outcomes are achieved.”

Furthermore, the Fed opted to maintain the existing federal funds rate of 0-0.25%. The Fed said it will maintain the target range until “labor market conditions have reached levels consistent with the Committee’s assessments of maximum employment and inflation has risen to 2 percent and is on track to moderately exceed 2 percent for some time.”

According to the most recent Consumer Price Index (CPI) reporting from the U.S. Department of Labor, the all items index increased 1.3% over the previous 12-month period.

Actual metals prices and trends

The U.S. silver price gained 15.0% month over month to $28.14 per ounce as of Sept. 1.

The U.S. platinum bar price rose 2.9% to $926 per ounce. Fellow platinum-group metal palladium  gained 8.1% to $2,133 per ounce.

The U.S. gold bullion price fell 0.4% to $1,967.40 per ounce.

The Chinese gold bullion price, meanwhile, rose 0.7% to $61.81 per gram.

The MetalMiner 2021 Annual Outlook consolidates our 12-month view and provides buying organizations with a complete understanding of the fundamental factors driving prices and a detailed forecast that can be used when sourcing metals for 2021.

ehrlif/Adobe Stock

This morning in metals news: the United States Trade Representative announced it would remove the 10% tariff on some Canadian aluminum products; China’s steel producers foresee growing demand throughout the remainder of the year; and iron ore prices are surging.

Are you under pressure to generate aluminum cost savings? Make sure you are following these five best practices!

USTR reverses course on Canadian aluminum tariff

Add yet another twist to the story of the U.S.’s 10% tariff on Canadian aluminum.

After reimposing the 10% tariff on some Canadian aluminum in early August, the United States Trade Representative announced Tuesday it is once again removing the tariff.

The U.S. originally imposed the tariff via Section 232 in early 2018, albeit initially exempting Canada (and Mexico). However, after the initial exemption period expired, the U.S. began slapping the tariff on imports from Canada.

In May 2019, the U.S. rescinded the tariff as part of ongoing negotiations over the successor to NAFTA. That agreement eventually came to be the United States-Mexico-Canada Agreement (USMCA), which went into effect July 1.

Last month, the U.S. announced it would reimpose the 10% tariff on unwrought, non-alloyed Canadian aluminum — or P1020. The administration cited a rise in imports when announcing the reimposition.

“After consultations with the Canadian government, the United States has determined that trade in non-alloyed, unwrought aluminum is likely to normalize in the last four months of 2020, with imports declining sharply from the surges experienced earlier in the year,” the USTR said in a release Tuesday. “Average monthly imports are expected to decline 50 percent from the monthly average in the period of January through July.”

The U.S.’s Aluminum Association applauded the reversal.

“Removing these disruptive and unnecessary tariffs on Canadian aluminum was the right decision for the U.S. aluminum industry and its 162,000 workers,” said Tom Dobbins, Aluminum Association CEO and president. “The Aluminum Association and its members support tariff and quota free trade within North America consistent with the recently implemented U.S.-Mexico-Canada Agreement (USMCA).”

Read more

zjk/Adobe Stock

The Raw Steels Monthly Metals Index (MMI) increased by 4.3% for this month’s value. 

Does your company have a steel buying strategy based on current steel price trends?

U.S. steel prices start increasing

HRC prices increased by over 5.4% throughout August, closing at $486/st. During the first two weeks of September, the price rallied up to $521/st.

Meanwhile, Chinese HRC prices mostly traded sideways during August and the first two weeks of September.

The recovery of the U.S. auto industry might be driving the steel price increases.

U.S. auto production continued to improve. Producers such as General Motors, Ford and Fiat Chrysler ramped up their assembly plants.

However, supply has not quite caught up with demand. As such, U.S. auto inventory continues to tighten.

By the end of June, vehicle inventory fell to 2.6 million, or 33% fewer units year over year. Pundits suggest U.S. auto sales will reach an annualized 13.5 million unit rate for 2020, with stronger demand coming in 2021.

The aforementioned factors have not only supported the U.S. HRC price; HDG prices also surged.

The U.S. HDG price only increased by 5.6% throughout August, reaching $736/st, but found further support during the first two weeks of September. By the end of the second week of September, HDG broke resistance to $788/st.

Chinese steel market

After record imports in July, China’s iron ore imports in August fell 10.9%.

The General Administration of Customs reported China imported 100.36 million tons of iron ore throughout August, while consumers bought 112.65 million tons in July. However, imports increased 5.8% year over year.

According to Tang Binghua, of Founder CIFCO Futures, imports slowed in August partly due to port congestion from coronavirus-related restrictions. In addition, fewer shipments came from Australia as it closed its financial year.

Read more