This morning in metals news, Constellium has inked a long-term contract with plane manufacturer Airbus, the U.S. Department of Commerce has launched a Section 232 investigation related to imports of vanadium and Chinese rebar prices have reached a nine-year high.
Aluminum prices have been on an upward trend the last week or two, currently holding comfortably above $1,500 per ton for spot cash after months in the $1,400s.
The market, though, is undergoing convulsions.
This morning in metals news, aluminum maker Norsk Hydro recently announced the formation of a joint venture that will aim to recycle electric vehicle batteries, the Aluminum Association reiterated its stance on the need for an aluminum import monitoring system and a Dutch bank says gold prices are expected to drop.
This morning in metals news, General Motors is planning to increase production of its popular pickups and SUVs, U.S. Steel announced a long-term iron ore supply deal, and copper prices have made some gains today.
This morning in metals news, U.S. imports of steel were down 20% through the first four months of the year, a primary aluminum production plant in Brazil part-owned by Norsk Hydro is restarting after an earlier power outage and China is importing U.S. copper concentrate after Chinese companies won tariff relief.
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:
This morning in metals news, U.S. steel production levels were down significantly last week, the Census Bureau released April steel import totals and copper prices dipped Wednesday.
MetalMiner’s Don Hauser on the falling steel market: don’t get comfortable, because prices will rise
Steel prices have been caught in a long-term downtrend since the summer of 2018 and, more recently, have faced a decline in demand related to the COVID-19 pandemic.
Steel mills have suspended production at furnaces around the country amid the drop in demand, particularly from users like the automotive sector. After suspending production in March, Detroit’s Big 3 is only just this week restarting production at its North American facilities.
What does this all mean for steel prices?
In short, steel prices could spike — and industrial buying organizations will want to have plans in place before this happens to avoid losing some serious cash.
This week, MetalMiner released a two-page guide for anybody buying steel. The quick-hit guide features two likely market scenarios and five tips on how to prepare for a steel price spike before it happens.
“The most successful strategies will take the peaks off the price spikes,” said Don Hauser, vice president of business solutions for MetalMiner and former steel buyer for John Deere. “It’s not as important to get the best price as it is to make sure you never get the worst price.”
Amid the COVID-19 pandemic, steel mills across the U.S. have idled production amid declining demand.
With those supply sources taken offline and a projected demand recovery — particularly from the restarting automotive sector — the elements are there for some upward movement in steel prices.
“Mills have taken out an unprecedented amount of capacity in an effort to stabilize pricing,” Hauser continued. “Then they announced increases lately and have been diligent in not undercutting price for the sake of volume. Some of those increases have stuck. Finally, as demand picks up, prices will gain some legitimate upward pressure that will be accelerated by panic buying. This won’t be corrected until more capacity is turned back on but not until after the price spike.”