The Renewable Monthly Metals Index (MMI) picked up a point for our January reading, rising from 78 to 79 (a 1.3% jump).
Need buying strategies for steel in 2018? MetalMiner’s Annual Outlook has what you need
Several of the heavier hitters in this basket of metals posted price increases this past month.
U.S. steel plate rose 4.0% and U.S. grain-oriented electrical steel (GOES) coil rose 3.8%. Korean steel plate also increased, rising by a whopping 8.9% for the recent monthly window.
Chinese silicon and cobalt cathodes also posted notable price jumps. Meanwhile, Chinese steel plate fell slightly, while Japanese steel plate posted a small price jump.
Continuation of Steel Plate Tariffs on the Table
U.S. Rep. Pete Visclosky (D-Merrillville, Indiana) testified before the International Trade Commission recently on the subject of extending 18-year-old duties on cut-to-length carbon-quality steel plate from India, Indonesia and South Korea, the Northwest Indiana Times reported.
Northwest Indiana, where Merrillville sits, is home to significant domestic steel industry activity, including by ArcelorMittal, which produces steel plate at its Burns Harbor Plate Mill — located in Gary, Indiana — the paper reported.
“As a representative and resident of Northwest Indiana, I am acutely aware of the challenges facing the American steel industry due to the onslaught of illegal steel imports,” the Times quoted Visclosky as saying during testimony at a hearing in Washington, D.C. “The ArcelorMittal facility at Burns Harbor in Northwest Indiana makes cut-to-length carbon-quality steel plate, and every one of those dedicated workers deserve to be able to continue to fairly compete and make the best steel to the best of their ability in our global economy.”
Of course, the issue is one of many metals-related trade issues before U.S. trade bodies (the most headline-grabbing being the Section 232 probes into steel and aluminum imports, for which a ruling is expected this month).
Like the Section 232 probes, which seek to determine whether those imports negatively impact the country’s national security, Visclosky also cited national security concerns vis-a-vis steel plate imports.
GOES Gets a Boost
As reported by our Lisa Reisman yesterday, grain-oriented electrical steel (GOES) got a boost this past month.
GOES prices, as Reisman noted, usually don’t move in tandem with other forms of steel — but it didn’t play out that way in December.
Import levels, however, are something to monitor going forward.
“In addition to prices moving in a similar direction, import levels also followed similar patterns, although GOES imports showed a dramatically higher increase whereas finished steel imports grew by 14.5% on an annualized basis according to the American Iron and Steel Institute (AISI),” Reisman added.
While China is often the subject of much discussion regarding a flood of imports into the U.S., when it comes to GOES, Japan is actually the leader in exports to the U.S.
[caption id="attachment_89715" align="aligncenter" width="580"]
Source: International Trade Administration and MetalMiner analysis[/caption]
Japan owns about two-thirds of the U.S. GOES import market share, rising significantly despite a drop in overall finished steel sent to the U.S.
The explanation for that disparity?
“Increased domestic efficiency standards have led to the development of higher performance electrical steels (HB), which have taken share away from the more conventional grades produced by the sole U.S. producer,” Reisman wrote. “With no U.S. producer of these grades, the market has become more reliant on exports from Japan.”
Actual Metal Prices and Trends
Rare Earths MMI: Global Market Projected to Hit $20 Billion by 2024
The Rare Earths Monthly Metals Index (MMI) held flat for the month, posting a value of 18 for our January reading. 
Reflecting the lack of movement in the MMI value, the basket of metals posted modest price fluctuations.
Two-Month Trial: Metal Buying Outlook
Chinese yttrium rose 1.9%, while terbium oxide dropped 0.8%. Neodymium oxide fell 1.3% on the month.
Australian Miner Receives State’s EPA Approval
A $900 million Australian miner received approval from the state’s Environmental Protection Authority (EPA), mining.com reported.
According to the report, Arafura Resources received approval on Friday after a two-year process. The EPA had been considering the environmental impacts of the Nolans rare earths project, the website reported, concluding that those risks at the site could be managed.
According to the report, Arafura estimates the project would create an investment of about $900 million in central Australia.
Global Market to Reach $20 Billion by 2024
The global rare earths market is projected to hit a value of $20 billion by 2024, according to a research report by Global Market Insights, Inc.
“Growing demand for magnets in automobiles, and energy generation will majorly contribute to the growth of global rare earth metals market over the forecast period,” the Globe Newswire release states. “The demand for rare earth magnets is majorly increasing by their consumption in electric and hybrid vehicles, and wind turbines. Increasing focus on utilizing clean and renewable energy is giving a substantial pressure on the electricity providers, to generate energy through renewable sources, which in turn will show a positive impact on the growth of this market.”
Not surprisingly given China’s overwhelming dominance of the rare earths markets, prices will continue to fluctuate somewhat wildly based on Chinese supply.
As for individual metals, neodymium will continue on in its place at or near the top of the rare-earths heap.
“By revenue, neodymium had the highest market share in 2016, with a market share of over 30%,” the release states. “It will dominate the global rare earth metals market till the end of projected period. Neodymium market will grow at a CAGR of 8.2% from 2017 to 2024.”
Free Sample Report: Our Annual Metal Buying Outlook
Actual Metal Prices and Trends
GOES MMI: GOES M3 Prices Rise with Other Forms of Steel
Grain-oriented electrical steel (GOES) prices do not often follow the pattern of price increases for other forms of steel. However, December’s data suggests otherwise. GOES prices increased along with HRC, CRC, plate and HDG. In addition to prices moving in a similar direction, import levels also followed similar patterns, although GOES imports showed a dramatically […]
Stainless Steel MMI: LME Nickel Price Approaches $13K/MT
The Stainless Steel MMI (Monthly Metals Index) jumped six points this month, with a reading of 71. This reading ran higher than November’s (70), which then dropped to 65 for December before bouncing back for our January reading.
Benchmark Your Current Metal Price by Grade, Shape and Alloy: See How it Stacks Up
Skyrocketing LME nickel prices drove the Stainless Steel MMI. However, 304 and 316 Allegheny Ludlum surcharges fell slightly this month.
LME Nickel Makes Big Jump
As reported previously by MetalMiner, nickel price volatility has increased over the past few months.
Nickel prices jumped from the $10,600/metric ton level in October to almost breaching MetalMiner’s current $13,000/mt ceiling.
[caption id="attachment_89668" align="aligncenter" width="580"]
Source: MetalMiner analysis of FastMarkets[/caption]
Trading volume remains strong, aligned with the recent popularity of nickel in the base metals complex. Besides stainless steel, nickel’s popularity has increased due to usage in batteries and electric cars. Q4 brought more activity for metals that have a direct impact on electric cars.
Nickel macro-indicators may support this latest rally.
The nickel deficit will continue this year. The International Nickel Study Group (INSG) reported a wider nickel deficit again in 2017, now up to 9,700 tons. A nickel supply deficit may add support to the nickel bullish rally and could create additional upward movements this year.
Buying organizations may want to be aware of these movements to identify opportunities to buy on the dips.
Chinese Stainless Steel
As reported by the International Stainless Steel Forum (ISSF), global stainless steel production increased by 7.4% during the first nine months of 2017. China drove the gains, with an increase in production of 8.8%. Stainless steel prices decreased around 7% in East Asian ports.
[caption id="attachment_89669" align="aligncenter" width="580"]
Source: MetalMiner data from MetalMiner IndX(™)[/caption]
Chinese stainless steel coil prices increased slightly this month. Chinese prices remain higher than they were in Q2. However, there has not yet been a clear uptrend that signals prices may increase soon.
Domestic Stainless Steel Market
Despite the recovery in momentum of the Stainless MMI, NAS domestic stainless steel surcharges traded sideways this month. Despite trading flat, stainless steel surcharges remain well above last year’s lows (under $0.4/pound).
[caption id="attachment_89670" align="aligncenter" width="580"]
Source: MetalMiner data from MetalMiner IndX(™)[/caption]
What This Means for Industrial Buyers
Stainless steel momentum appears in recovery, similar to all the other forms of steel.
However, due to nickel’s high price volatility, buying organizations may want to follow the market closely for opportunities to buy on the dips.
To understand how to adapt buying strategies to your specific needs on a monthly basis, take a look at our Monthly Metal Buying Outlook or you can take a free trial now.
Free Sample Report: Our Annual Metal Buying Outlook
Actual Stainless Steel Prices and Trends
This Morning in Metals: China Issues Stricter Rules on New Capacity
This morning in metals news, China has issued stricter rules on building new steel capacity, Chinese steel production is expected to slow down in 2018 and LME copper rises as the dollar loses ground. New Rules to Put the Squeeze on New Capacity in China China has new, stricter rules on building new steel capacity, […]
Aluminum MMI: Prices Rise and Trading Volumes Have Strong Showing
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
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.
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 […]
