After last month’s drop, the Aluminum MMI (Monthly Metals Index) index increased by three points. The current Aluminum MMI index reads 98 points, 3.2% higher than the December reading. 
Benchmark Your Current Metal Price by Grade, Shape and Alloy: See How it Stacks Up
In December, MetalMiner anticipated a rise in aluminum prices … and that is exactly what happened.
Aluminum prices increased by 10.6% in December, reaching a more than two-year high.
[caption id="attachment_89629" align="aligncenter" width="580"]
Source: MetalMiner analysis of FastMarkets[/caption]
Trading volumes appear strong and accompany the current uptrend. Moreover, aluminum’s latest peak has climbed over previous ones, signaling strength in its latest market rally. Other macroeconomic indicators, such as a weaker U.S. dollar and a stronger CRB index driven by higher oil prices, may continue to support aluminum prices.
Moreover, the Department of Commerce’s Section 232 investigation should see a report released mid-January, which will also impact prices. The U.S. Department of Commerce announced a new self-initiated anti-dumping and countervailing duty investigation on imports of Chinese common aluminum alloy sheet at the end of November. The U.S. has launched several anti-dumping campaigns for aluminum products this past year.
Crude Oil
As oil prices serve as a critical part of the CRB index, together with other base metals, buying organizations need to monitor oil price trends.
Moreover, there are some base metals, such as aluminum, that are strongly influenced by oil prices.
[caption id="attachment_89630" align="aligncenter" width="580"]
Crude Oil prices. Source: MetalMiner analysis of Trading Economics[/caption]
Oil prices have increased again this month. Current oil prices remain above our bullish level signal, meaning that we could expect some more upward movement for oil.
Similarly, increasing oil prices will continue to provide support to base metals prices.
Aluminum Scrap
Chinese aluminum scrap prices increased sharply this month and appear in a long-term uptrend since 2016.
The latest rally in both LME and SHFE aluminum prices also results in a jump in aluminum scrap prices. Chinese scrap prices increased by 4.9% this month.
[caption id="attachment_89631" align="aligncenter" width="580"]
Source: MetalMiner data from MetalMiner IndX(™)[/caption]
What This Means for Industrial Buyers
Aluminum prices jumped sharply again this month. After sharp price increases, base metal prices sometimes pull back to digest the previous gains. Aluminum prices may lack some price momentum this month, although that continues signaling bullishness for the light metal.
Therefore, adapting the “right” buying strategy becomes crucial to reduce risks by knowing when to buy.
Free Sample Report: Our Annual Metal Buying Outlook
Actual Aluminum Prices and Trends
Category: Metal Prices
Copper MMI: Dr. Copper is Back on the Bulls
The Copper MMI (Monthly Metals Index) jumped five points to 88, driven by skyrocketing LME copper prices. LME copper prices increased by 6.4% in December.
Benchmark Your Current Metal Price by Grade, Shape and Alloy: See How it Stacks Up
LME copper prices are back again over the $7,000/metric ton level. Moreover, copper prices breached a previous peak, signaling strength in the rally. Trading volume also remains heavy, supporting the uptrend.
[caption id="attachment_89608" align="aligncenter" width="580"]
Source: MetalMiner analysis of Fast Markets[/caption]
Despite skyrocketing in December, copper prices fell slightly during the first few days of January. However, that does not signal any weakness for the rally yet, as prices increased for the entire previous month. Therefore, copper prices may take a little breather this month to digest previous gains.
The U.S. Dollar
Copper and the U.S. dollar have a negative correlation. This means when the the U.S. dollar appears high, copper prices tend to trade lower.
Right now, we see just the opposite.
[caption id="attachment_89609" align="aligncenter" width="580"]
The U.S. dollar. Source: MetalMiner analysis of Trading Economics[/caption]
Some analysts believed that the U.S. dollar had turned the corner and had started to recover. Despite the Fed rate hike in December, the U.S. dollar has continued to fall. The U.S. dollar has also seen heavy selling volume, which suggests more weakness.
Typically, the U.S. dollar trades lower when commodities and base metals trade higher. Copper (Dr. if you will) tells us much about commodities because the dollar has such a great influence on its price (direction).
Therefore, buying organizations will want to follow U.S. dollar price trends closely.
Copper Scrap vs. LME Copper
The price divergence between copper scrap and LME remains wider than historical spreads; though, this month, both moved in tandem.
Chinese copper scrap prices increased by 5.76% this month, compared to the 6.4% jump in LME prices.
Although these two don’t increase by the same amount, they tend to follow a similar trend. Data from both reflects a clear uptrend that appears sustainable, at least for the short term.
[caption id="attachment_89610" align="aligncenter" width="580"]
Source: MetalMiner data from MetalMiner IndX(™)[/caption]
What This Means for Industrial Buyers
During December, buying organizations had opportunities to buy some volume. The relevance of the price jumps increases when the U.S. dollar shows weaknesses and all the base metals show strength.
Therefore, as copper prices remain bullish, buying organizations may want to “buy on the dips.” For those who want to understand how to reduce risks, take a free trial now to MetalMiner Monthly Outlook.
Free Sample Report: Our Annual Metal Buying Outlook
Actual Copper Prices and Trends
Construction MMI: Architecture Billings Index Hits 2017 High
The Construction Monthly Metals Index (MMI) lost a point for our January reading, falling to 94 from 95.
Two-Month Trial: Metal Buying Outlook
In terms of metals prices, it was a mixed bag for this group. The Chinese rebar price fell 4.8%, while Chinese H-beam steel rose 3.1%. U.S. shredded scrap steel also dropped 3.5%. European commercial 1050 aluminum sheet posted gains of 1.1%, while Chinese aluminum bar fell 6.3%.
U.S. Construction Spending
According to U.S. Census Bureau data for November (the most recently available month), total construction spending amounted to $1,257 billion, up 0.8% from the revised October estimate of $1,247.1 billion.
The November spending figure was 2.4% above the November 2016 estimate of $1,227.0 billion. In addition, through the first 11 months of 2017, construction spending amounted to $1,138.3 billion, or 4.2% above the $1,091.9 billion for the same period in 2016.
Private construction spending in November was at a seasonally adjusted annual rate of $964.3 billion, or 1.0% above the revised October estimate of $955.1 billion. Residential construction was at a seasonally adjusted annual rate of $530.8 billion in November, 1.0% above the revised October estimate of $525.3 billion. Nonresidential construction was at a seasonally adjusted annual rate of $433.5 billion in November, 0.9% above the revised October estimate of $429.7 billion.
Meanwhile, public construction spending, at $964.3 billion, was 1.3% above its October total.
Meanwhile, public construction spending, at $964.3 billion, was 1.3% above its October total.
Strong Growth for Architecture Firms
As tracked by the Architecture Billings Index (ABI), put out monthly by the American Institute of Architects, November proved to be a strong month for architecture billings.
Per the November ABI report, the billings ABI rose to 55 from last month’s 51.7 (a score of 50 indicates no growth).
“New project inquiries, as well as new design contracts coming into architecture firms, also signified healthy growth,” the report states. “As such, indicators broadly point to very solid business conditions at architecture firms as 2017 winds down.”
The uptick in design activity is in large part attributable to the strength of the economy, the monthly ABI report indicates: “GDP has grown at a 3 percent annualized rate through the second and third quarters this year. In the fourth quarter, our economy is likely to grow at about this same pace, and 2018 looks to see overall domestic economic gains in the 2.5 to 3.0 percent range. Strong consumer sentiment scores suggests that households are getting more comfortable with the direction of the economy as well as with their own financial situation.”
The report adds a strengthening labor market as another factor behind the rise in design activity. According to the report, there was a net gain of 228,000 payroll positions nationally in November, and annual 2017 numbers likely will hit at least a 2 million net gain for the sixth straight year. In terms of construction, specifically, there was a net gain of 24,000 construction positions in November, with 2017 gains “potentially as high as 200,000.”
By region, November was a strong month for the West, which led the four regions tracked in the ABI. The West region tallied a score of 54.8, ahead of the South and Northeast (each at 52.8) and the Midwest (50.4).
Free Sample Report: Our Annual Metal Buying Outlook
Actual Metal Prices and Trends
Tata Steel Looks to Build on Solid 2017 Performance
Tata Steel has a couple of things going for it in the new year — but before we get into that, 2017 was a bit kinder to it than the preceding two years. And we are not saying that, but the CEO and MD of Tata Steel, T.V. Narendran himself, told a gathering of employees […]
This Morning in Metals: U.S. Raw Steel Closes 2017 with 1.63M NT Output
This morning in metals news, U.S. raw steel production for the final week of 2017 hit 1.63 million net tons, some Indian steel companies are upset about a hike in iron ore prices and zinc hits a 10-year high Raw Steel Production to Close ’17 Falls From Previous Week According to weekly data from the […]
What Will 2018 Hold? Possibly a Trade War, Political Turmoil and Much More
Everyone loves a forecast, a prediction, even a few ideas on what the future holds, and we become particularly obsessed with such ideas at the start of a new year. So, we thought it would be fun to review a few sources’ suggestions on what 2018 may hold, some as specific predictions like those in […]
Chinese Capacity Cuts Help Push Copper to Highest Point in Nearly Four Years
Copper is on a tear. Benchmark Your Current Metal Price by Grade, Shape and Alloy: See How it Stacks Up Copper rose to its highest point in nearly four years last week following further curbs on domestic production in China, closing at new year-to-date high for 2017. LME and Comex copper continued its longest bull […]
