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Articles on: Metal Prices

This morning in metals news: the U.S. consumed a record amount of renewable energy in 2020; U.S. housing starts jumped in May; and the copper price has been on the decline since peaking last month.

Each month, MetalMiner hosts a webinar on a specific metals topic. Explore the upcoming webinars and sign up for each on the MetalMiner Events page.

US hits renewable energy consumption record

renewables

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The U.S. consumed a record amount of renewable energy in 2020, the Energy Information Administration (EIA) reported.

“In 2020, consumption of renewable energy in the United States grew for the fifth year in a row, reaching a record high of 11.6 quadrillion British thermal units (Btu), or 12% of total U.S. energy consumption,” the EIA said. “Renewable energy was the only source of U.S. energy consumption that increased in 2020 from 2019; fossil fuel and nuclear consumption declined.”

Housing starts gain in May

Meanwhile, U.S. housing starts picked up in May from the previous month, the Census Bureau reported.

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The Stainless Monthly Metals Index (MMI) increased by 4.3% for this month’s reading, as stainless steel demand is likely to continue to grow in the years ahead.

June 2021 Stainless MMI chart

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Increasing stainless steel production, demand

According to International Stainless Steel Forum (ISSF) data, stainless steel melt shop production increased by 24.7% year over year to 14.5 million metric tons through the first quarter of 2021.

Most of the production increase came from Europe and the U.S., where production jumped by 11.0% and 9.7%, respectively. The only region that saw a production contraction was China. China’s production fell by 0.5% to 8,198,000 metric tons.

This coincides with a report by Precedence Research, in which it estimates the stainless steel market size to increase to U.S. $168.24 billion by 2027 from U.S. $106.84 billion in 2019.

Precedence anticipates a 57.5% increase over the eight-year period due to the growing preference for stainless steel over ordinary steel and its increasing application in pre-engineered buildings. Additionally, demand for steel from construction and automotive and transportation sectors is expected to keep growing.

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The Copper Monthly Metals Index (MMI) increased by 7.8% for this month’s reading, as the copper price remains high but dipped below the $10,000/mt level.

June 2021 Copper MMI chart

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Copper prices retrace

On May 10, the LME three-month copper price closed at $10,720 per metric ton, hitting record highs last month.

Since then, prices declined below $10,000/mt.

SHFE prices followed the same trend.

The price retrace might be due partially to the stern warnings issued by Beijing about market discipline and excessive speculation in an effort to cool off prices.

Moreover, on June 7, trade data from China showed that copper imports fell 8% in May compared to the previous month. This might have scared some investors, as lower imports could mean lower demand, which decreases buying interest.

This could also signal that the pace of economic growth might be slowing. Along with less market speculation, that could mean the price will correct and consolidate.

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The Raw Steels Monthly Metals Index (MMI) rose by 0.8% as U.S. steel prices continued to pick up but Chinese prices corrected.

June 2021 Raw Steels MMI chart

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Chinese steel prices drop

China steel plant

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Since April 2020, Chinese steel prices have traded up consistently with a short decline period around December 2020. Around mid-May, all forms of Chinese steel prices peaked, as demand continued to soar in China.

Steel demand in China increased in the past few months as the government implemented its economic recovery plan, which includes infrastructure spending. Increasing steel prices continue to bring up infrastructure costs.

On May 26, steel prices saw a price drop of approximately 20% for all forms of steel. The sudden price decline in China could have been triggered by the severe punishment the Chinese government threatened to impose on any excessive speculation and fake news that might inflate critical raw material prices, such as steel.

After Chinese prices corrected, they continued to go up but at a slower rate, closing May at CNY 6,060/mt from CNY 6,100/mt at the end of April. Since, they continued to increase the first week of June but remain below the CNY 6,250/mt level.

However, volumes do not suggest speculation. Rather, the Chinese government wishes to control the rising price situation. After all, a lower domestic price can help boost the competitive advantage for Chinese firms exporting value-added products.

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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, including steel sector news, the Biden administration’s release of a 250-page supply chain report and much more:

steelmaking in an EAF

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The MetalMiner Best Practice Library offers a wealth of knowledge and tips to help buyers stay on top of metals markets and buying strategies.

Week of June 7-11 (steel sector news, Biden administration’s supply chain review and more)

Each month, MetalMiner hosts a webinar on a specific metals topic. Explore the upcoming webinars and sign up for each on the MetalMiner Events page.

The Global Precious Monthly Metals Index (MMI) rose by 1.3% for this month’s reading, as the gold price rose to around $1,900 per ounce.

June 2021 Global Precious MMI

Each month, MetalMiner hosts a webinar on a specific metals topic. Explore the upcoming webinars and sign up for each on the MetalMiner Events page.

Gold price picks up to close May

gold price

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The gold price made steady gains in May, rising to around $1,900 per ounce to close the month.

Since then, however, the price dropped to around $1,860 per ounce to start June. The gold price then bounced back to around $1,890 per ounce Wednesday afternoon.

Meanwhile, the U.S. dollar index, which generally moves inversely to the gold price, dropped in early May. After that, the dollar trended sideways, closing Tuesday at 90.08.

In other economic indicators, the U.S. 30-year treasury yield, which also generally moves inversely to the gold price, fell to 2.21% on Tuesday. The yield curve rate marked its lowest level since March 2.

The 10-year yield fell to 1.53%, its lowest since March 10.

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China’s steel and aluminum market is undergoing a quiet revolution.

It’s not a revolution of investment or innovation.

Each month, MetalMiner hosts a webinar on a specific metals topic. Explore the upcoming webinars and sign up for each on the MetalMiner Events page.

Peak aluminum, steel in China?

China aluminum

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According to Reuters, Beijing’s target of peak coal use by 2030 is asserting a dampening effect on new steel mill and aluminum smelter investment.

As such, the country could be at or near peak production. As Reuters’ Andy Home notes, the country’s rising output over the years as had a dampening effect on prices. That trend has led some Western producers to cease operations.

But a combination of harsher environmental legislation resulting in Beijing dissuading investment in new coal fired power projects, combined with Western markets’ meaningful action — after years of simply complaining — to block out Chinese exports of aluminum and steel products suggests the Chinese impetus to build capacity and the rest of the world’s willingness to buy product are both going through a transformational change.

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The Rare Earths Monthly Metals Index (MMI) fell by 19.6% this month, as China has loosened rare earths production quotas and the Biden administration could possibly launch a Section 232 investigation for neodymium magnets.

June 2021 Rare Earths MMI chart

The MetalMiner Best Practice Library offers a wealth of knowledge and tips to help buyers stay on top of metals markets and buying strategies.

US to consider neodymium Section 232 probe

As noted in yesterday’s morning roundup, the Biden administration released the findings of its 100-day review of critical U.S. supply chains.

Earlier this year, President Joe Biden called for various agency heads to execute 100-day reviews of critical U.S. supply chains. Specifically, the president’s order referenced supply chains for critical minerals, in addition to large-capacity batteries, semiconductors and pharmaceutical products.

The report stemming from that review notes the possibility of launching a Section 232 investigation for neodymium magnets. Former President Donald Trump used Section 232 to impose tariffs on steel and aluminum.

In a section summarizing recommendations, the report called for strengthening international trade rules and trade enforcement mechanisms. The review calls for evaluation of whether or not a Section 232 investigation for neodymium magnets is warranted.

“Neodymium (NdFeB) permanent magnets play a key role in motors and other devices, and are important to both defense and civilian industrial uses,” the report states. “Yet the U.S. is heavily dependent on imports for this critical product. We recommend that the Department of Commerce evaluate whether to initiate an investigation into neodymium permanent magnets under Section 232 of the Trade Expansion Act of 1962.”

NdFeB magnets are used in computer hard disk drives, magnetic resonance imaging (MRI), precision guided munitions, automotive motors and wind turbines.

Prices fall as China relaxes rare earths production quotas

As MetalMiner’s Stuart Burns explained earlier this month, the Chinese government recently relaxed production quotas for rare earths.

Consequently, prices for rare earth oxides took a fall.

“Market prices remain volatile, though,” Burns explained. “A half yearly quota set by government officials is not the optimal system to match supply, demand and prices. As the economy bounced back last year, the rare earths market was caught on the hop and prices rose strongly.

“Some light rare earths, like praseodymium-neodymium (PrNd) oxide, reached multiyear highs.”

However, Beijing relaxed the quota from 66,000 tons to 84,000 tons.

Furthermore, the Rare Earths MMI has fallen for the third straight month.

“This suggests the MIIT’s loosening of production limits has had the desired impact and availability is proving sufficient to meet demand,” Burns added.

Lynas plant in Malaysia continues to operate

Lynas Rare Earths Ltd. offered an update last month on its Malaysian plant.

The Malaysian government issued a movement control order May 12, which is in effect until June 7.

“The MCO, which is in effect for the period from 12 May 2021 until 7 June 2021, permits all economic sectors to continue to operate during the period of the MCO,” Lynas said in a statement. “Consistent with the MCO and previous updates, the Lynas Malaysia plant continues to operate with Standard Operating Procedures (SOPs) in place. Lynas Malaysia has already implemented strict health and hygiene protocols that meet and exceed the Ministry of Health’s requirements. Products produced at the Lynas Malaysia plant are essential to the manufacturing supply chains for critical industries including automotive, medical devices, oil refining and machinery & equipment.”

Actual metals prices and trends

The Chinese yttrium price rose by 1.6% month over month to $33.75 per kilogram as of June 1. The terbium oxide price fell by 17.1% to $1,044 per kilogram.

The neodymium oxide price fell by 8.5% to $77,706 per metric ton.

The Europium oxide fell by 3.3% to $30.61 per kilogram. Meanwhile, the dysprosium oxide price dropped by 11.7% to $385 per kilogram.

Each month, MetalMiner hosts a webinar on a specific metals topic. Explore the upcoming webinars and sign up for each on the MetalMiner Events page.

The Construction Monthly Metals Index (MMI) held flat for this month’s reading.

June 2021 Construction MMI chart

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US construction spending ticks up in April

housing starts

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U.S. construction spending reached a seasonally adjusted annual rate of $1,524.2 billion in April, the Census Bureau reported.

The estimated April rate marked a 0.2% increase from the previous month and a 9.8% increase on a year-over-year basis.

Construction spending amounted to $452.3 billion during the first four months of the year, or up 5.8% from the same period in 2020.

Meanwhile, private construction spending reached a seasonally adjusted annual rate of $1,180.7 billion, up 0.4% from March. Under the umbrella of private construction, residential construction increased by 1.0% to a rate of $729.2 billion in April. Nonresidential construction fell by 0.5% to $451.4 billion in April.

Public construction spending fell 0.6% to $343.5 billion. Educational construction spending fell 0.5% to $84.8 billion. Highway construction rose 0.6% to $99.8 billion.

Construction employment declines in May

On the labor side, employment in the construction sector fell by 20,000 in May, the Census Bureau reported. Employment in construction is down by 225,000 from February 2020.

The Associated General Contractors of America noted contractors continue to struggle with unpredictability with respect to securing materials.

“Steadily worsening production and delivery delays have exceeded even the record cost increases for numerous materials as the biggest headache for many nonresidential contractors,” said Ken Simonson, the association’s chief economist. “If they can’t get the materials, they can’t put employees to work.”

ABI posts growth for third consecutive month

For the third straight month, the Architecture Billings Index, released monthly by the American Institute of Architects, showed growth (meaning an index value greater than 50).

After the onset of the pandemic, the ABI had contracted each month for a year until the February 2021 reading.

For April, the ABI checked in at 57.9, up from 55.6 the previous month. The design contracts index reached 61.7, up from 55.7 the previous month.

The ABI marked its highest level since before the Great Recession.

“Interest in new projects remained extremely strong as well, with the Inquiries score rising to 70.8, and the value of new signed design contracts reaching 61.7, the highest score in that index since data collection started in late 2010,” the ABI report stated. “This means that not only are clients talking to architecture firms about starting new projects, but that they are also signing contracts to begin that work at a high rate.”

By region, the Midwest led the way with an ABI reading of 60.6. Trailing the Midwest were the South (58.3), Northeast (55.0) and West (52.4).

As we’ve noted in this space on a regular basis, shortages and delays in receiving materials have had a ripple effect. The sudden surge in demand throughout some sectors has produced a bullwhip effect.

The ABI report noted the 0.8% jump in the Consumer Price Index from March to April and the 4.2% jump from April 2020 to April 2021, which marked the largest increases since before the Great Recession.

“In addition, core inflation rose by 0.9% in April, the largest increase in that indicator since 1981,” the ABI report notes. “Rising consumer prices at this time are largely caused by supply constraints due to a shortage of key inputs subsequently leading to production delays, and by rising demands for services, particularly travel and hospitality.”

Pending home sales drop in April

Meanwhile, in the housing market, pending home sales fell by 4.4% in April, the National Association of Realtors (NAR) reported.

“Contract signings are approaching pre-pandemic levels after the big surge due to the lack of sufficient supply of affordable homes,” said Lawrence Yun, NAR’s chief economist. “The upper-end market is still moving sharply as inventory is more plentiful there.”

Actual metals prices and trends

The Chinese rebar price dipped 0.7% month over month to $802 per metric ton. Meanwhile, the Chinese H-beam steel price fell 2.3% to $815 per metric ton.

The U.S. shredded scrap steel price rose by 3.2% to $450 per short ton.

The European 1050 commercial aluminum sheet price rose by 0.4% to $3,577 per metric ton.

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This morning in metals news: as the U.S. economy reopened, job openings hit a record high in April; meanwhile, steel prices continue to rise; and, lastly, emissions from the electric power sector have declined as it has shifted from coal to natural gas.

The MetalMiner Best Practice Library offers a wealth of knowledge and tips to help buyers stay on top of metals markets and buying strategies.

Job openings hit record high in April

job openings

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U.S job openings reached a record high of 9.3 million on the last business day of April, the U.S. Census Bureau reported.

Hires, meanwhile, reached 6.1 million, little changed from the previous month.

“Total separations increased to 5.8 million,” the Census Bureau added. “Within separations, the quits rate reached a series high of 2.7 percent while the layoffs and discharges rate decreased to a series low of 1.0 percent.”

In durable goods manufacturing, separations increased by 7,000.

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