Articles on: Metal Prices

The Raw Steels Monthly Metals Index (MMI) fell two points this month, dropping to 90 from the previous 92 reading.

Domestic steel price momentum continued, as domestic steel prices increased again. Chinese steel prices also increased in June, adding support to domestic steel prices.

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Domestic steel prices remain at a more than seven-year high.

Source: MetalMiner data from MetalMiner IndX(™)

Steel prices also increased at the beginning of July (except for HDG, which dropped slightly). The pace of the increases seems to have slowed, but prices remain in an uptrend. Therefore, buying organizations can expect high steel prices.

However, the historical cyclicality may move prices lower at some point.

Domestic steel prices have stayed in a sharp uptrend since January 2018. Current prices have started to trade more sideways. Despite the increase in prices, prices may begin to come off slightly at some point this year. Buying organizations may want to identify that moment to commit to purchases and reduce risks.

The Spread

The CRC-HRC domestic spread appears to be back at its historical level.

The domestic spread should be around $100/st. However, in 2016 the spread started to increase, reaching more than $200/st. The spread currently stands at $111/st.

Source: MetalMiner data from MetalMiner IndX(™)

Chinese Steel Prices

Chinese steel prices recovered from a previous downtrend and increased again in June.

Early July price indications show slightly lower prices. However, Chinese steel prices appear to be in a recovery uptrend.

All Chinese forms of steel have dropped slightly so far in July (except HDG prices, which inched higher).

Source: MetalMiner data from MetalMiner IndX(™)

Chinese steel output increased again in May, despite steel product exports dropping around 20% during the first four months of the year. Strong Chinese domestic demand has kept mills running at full capacity.

However, Chinese steelmakers are currently seeking alternative markets, such as Africa and South America.

What This Means for Industrial Buyers

Since steel prices remain high, buying organizations may want to closely follow price movements to decide when to commit to mid- and long-term purchases.

Buying organizations looking for more clarity on when to buy and how much to buy may want to take a free trial now to our Monthly Metal Buying Outlook.

MetalMiner’s Annual Outlook provides 2018 buying strategies for carbon steel

Actual Raw Steel Prices and Trends

The U.S. Midwest HRC 3-month futures price fell this month by 5.86%, falling to $852/st.

Chinese steel billet prices decreased again this month by 0.17%, while Chinese slab prices fell further by 3.72%, moving to $640/mt.

The U.S. shredded scrap price closed the month at $371/st, trading flat from last month’s reading.

Chris Titze Imaging/Adobe Stock

This morning in metals news, the cobalt craze intensifies, Switzerland goes to the World Trade Organization (WTO) over the U.S. steel and aluminum tariffs, and U.S. raw steel production for the week ending July 7 was up 3.4%.

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Demand for Cobalt Rises

Cobalt prices recently eased away from long-term highs, but the market quickly changed — as it often does — as increasing demand has sent the price up, CNBC reported.

The rare material is coveted by automakers and tech companies, particularly in electric vehicle batteries. Demand for cobalt to be used in electric battery materials is projected to rise 40% this year, according to Darton Commodities, CNBC reported.

Switzerland Files WTO Complaint

Switzerland joined the growing list of countries to file a WTO complaint over the U.S. steel and aluminum tariffs, Reuters reported.

Switzerland is the eighth WTO member to file such a complaint.

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Raw Steel Production Up 3.4%

U.S. raw steel production for the week ending July 7 was up 3.4% compared with the same week in 2017, according to an American Iron and Steel Association (AISI) report this week.

Production hit 1,792,000 net tons at a capacity rate of 76.4%, according to AISI.

The GOES Monthly Metals Index (MMI) jumped by 14 points, marking the second consecutive monthly increase. The increase came as a result of tightness globally for thin gauge material, Section 232 import tariffs and healthy global demand.

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Japan excels at the production of thin gauge material used to improve transformer efficiency. Last month, MetalMiner reported Japanese mills sought to raise prices for the second half of this year by $100+/ton. A recent TEX report suggests European mills will seek similar increases for the second half of this year for middle-grade materials.

That leaves the sole domestic producer, AK Steel, in a strong position to ask for price increases for 2019 as buying organizations come back into the market for contract pricing. Meanwhile, Big River Steel earlier this year announced plans to produce grain-oriented steels, including H1B. The company, according to its website, wanted to first produce all of the nine grades of motor lamination steels and will now turn its focus toward grain-oriented electrical steel (GOES) and non-oriented electrical steel (NOES) – a welcome development to buying organizations.

Meanwhile, in early July, Nachi American Incorporated filed five additional exclusion requests for M2 materials. All of the materials within those exclusion requests appear within the standard product range for AK Steel. Nachi American a cited lack of sufficient availability as the reason for requesting the exclusion. The company currently imports its material from Japan.

South Korea, by way of negotiated agreement, remains exempt from the tariffs, though subject to quotas. However, according to International Trade Administration import data and MetalMiner analysis, South Korean imports make up only a paltry 26.3 tons. In other words, more imports from South Korea could come into the U.S. without the tariff.

GOES imports dropped dramatically since the Section 232 proclamation but Japan still represents the lion’s share: 

Source: ITA

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Exact GOES Coil Price This Month

The U.S. grain-oriented electrical steel (GOES) coil jumped for the second straight month from $2,712/mt to $2,914/mt. The GOES MMI increased 14 points from 197 to 211.

The GOES MMI® collects and weights 1 global grain-oriented electrical steel price point to provide a unique view into price trends over a 30-day period. For more information on the GOES MMI®, how it’s calculated or how your company can use the index, please drop us a note at: info (at) agmetalminer (dot) com.

The July Aluminum Monthly Metals Index (MMI) fell six points, falling to April 2018 levels. The Aluminum MMI now stands at 95 points.

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LME aluminum prices fell in June and have continued to slide so far in July.

However, the rate of the declines has slowed.

Price changes do not appear sharp and selling trading volume remains weak. The price decrease looks like a retracement after the peak in April due to Russian sanctions.

Source: MetalMiner analysis of FastMarkets

LME aluminum prices have fallen toward December 2017 and April 2018 lows. These levels served  as a support to aluminum prices both times, and could cause aluminum prices to bounce back after reaching support.

Global Aluminum

At least for the short term, it appears as though trade policies will impact the global aluminum market.

After the U.S. tariffs on steel and aluminum in March, plus additional sanctions on Russia, aluminum now waits for its next cue.

Canada announced punitive measures on C$16.6 billion ($12.63 billion) worth of American goods in response to U.S. tariffs. The measures will stand until Washington changes the current aluminum and steel tariffs on Canada. Europe also responded to the U.S., approving provisional measures.

Russia became the seventh complainant to ask for a consultation with WTO members against the U.S. duties on steel and aluminum. China, India, the E.U., Canada, Mexico and Norway previously filed similar complaints.

SHFE Aluminum

Chinese SHFE aluminum prices decreased slightly in June, following the LME aluminum trend.

The slide appears less sharp than for LME aluminum prices, but still follows the main short-term downtrend.

Source: MetalMiner analysis of FastMarkets

U.S. Domestic Aluminum

As a result of ongoing uncertainty in the aluminum market, U.S. Midwest aluminum premiums have skyrocketed this year.

July’s premiums, however, have held flat since last month at $0.20/pound. Current levels remain  at more than four-year highs.

Source: MetalMiner data from MetalMiner IndX(™)

What This Means for Industrial Buyers

Despite the recent downtrend, the LME aluminum price trend suggests a continuation of the bull market that started last year.

Tariffs, sanctions and the latest tariff non-exemptions to Canada, Mexico and the E.U. may add support to rising prices, both for LME aluminum and the U.S. Midwest premium. Adapting the right buying strategy becomes crucial to reducing risks.

Buying organizations that want to start doing so now may want to take a free trial now to our Monthly Metal Buying Outlook.

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Actual Aluminum Prices and Trends

The Aluminum MMI basket generally fell this month. LME aluminum prices decreased this month by 5.51%, with a closing price in June of $2,160/mt.

Meanwhile, Korean Commercial 1050 sheet fell by 1.38%. Chinese aluminum primary cash prices decreased by 7.21%, while Chinese aluminum bar just fell 5.22%. Chinese aluminum billet prices also decreased 5.30% this month, down to $2,323/mt.

The Indian primary cash price fell by 7.36% to $2.14/kilogram.

In July, the Copper Monthly Metals Index (MMI) fell by three points, falling to its lowest value since October 2017. The Copper MMI currently stands at 81 points. The decrease came as a result of falling LME copper prices as well as other elements that make up the Copper MMI.

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Source: MetalMiner analysis of FastMarkets

So far, LME copper prices have followed last month’s downtrend.

LME copper prices have remained in a short-term downtrend since prices peaked in June at $7,316/mt. Since then, LME copper prices have fallen by more than 12%.

The downtrend appears sharp, as copper prices have fallen to October 2017 levels. However, trading volumes do not appear in the same sharp downtrend, instead looking flat. Therefore, copper prices may just be seeing a bigger buying dip, caused by weaker summer demand and trade tensions.

Trade Tensions Also Affecting Copper

Copper prices have also struggled this month due to trade tensions between China and the U.S.

China accounts for almost half of global copper consumption, estimated at around 24 million tons. Fewer Chinese exports also affect copper prices.

Copper investors seek to reduce risk until the trade tension abates. This, together with weaker demand in China, have supported the downtrend.

Chinese Scrap Copper

Since the announcement of the ban on copper scrap in China last summer, MetalMiner has followed Chinese copper scrap prices closely.

Source: MetalMiner data from MetalMiner IndX(™)

LME copper prices and Chinese copper scrap prices tend to follow the same trend. Both appear to be in a long-term uptrend. However, both LME copper and scrap copper prices fell again this month. Despite both following the same short-term downtrend, the spread has widened. The wider the spread, the higher the copper scrap consumption, and therefore, the price.

However, Chinese the copper scrap ban has boosted copper production in other forms.

In May, Chinese copper imports reached their highest levels in 17 months, with imports totaling 475,000 tons of unwrought copper and copper products. Strong manufacturing and construction sectors have led Chinese demand.

What This Means for Industrial Buyers

Despite the recent dip, LME copper prices remain in a long-term uptrend.

Buying organizations reading the Metal Monthly Outlook had the opportunity to identify a buying signal at the beginning of April and reduce price risk by purchasing some volume. For those who want to understand how to reduce risks, take a free trial now to the MetalMiner Monthly Outlook.

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Actual Copper Prices and Trends

In July, most of the prices comprising the Copper MMI basket decreased.

LME copper fell by 2.77% this month. Indian copper prices decreased by 2.81%, while Chinese primary copper prices fell further by 3.40%.

Prices of U.S. copper producer grades 110 and 122 decreased by 2.62%. Meanwhile, the price of U.S. copper producer grade 102 fell by 2.49%, to $3.91/pound.

The Rare Earths Monthly Metals Index (MMI) stood pat this month, holding for a reading of 19. 

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The Search for Rare Earths

As we noted in an MMI post earlier this year, the discovery of a large deposit of undersea rare earths approximately just over 1,000 miles off the shores of Japan generated much excitement in the world of rare earths. Rare earths are coveted for their application in a wide range of modern technology, ranging from cellphones to laptops.

China overwhelmingly dominates the rare earths market, so the discovery of a new major source of rare earths elsewhere could pose a challenge to China’s dominance — that is, if the discovered deposit were accessible.

The undersea cache of rare earths is not accessible via current extraction technology. As a result, companies like Toyota are teaming up with scientists in order to develop the extraction technology needed to get at those valuable materials deep under the sea, according to a report by the Nikkei Asian Review. Per the report, the amount of terbium in Japanese waters is equivalent to about 11,000 years’ worth of domestic consumption (significant amounts of yttrium and dysprosium were also detected).

According to the report, the University of Tokyo’s Rare-Earth Rich Mud Development Promoting Consortium is leading a project that aims to make the discovery a commercial reality. The group is leveraging the abilities of big companies like Toyota, Shin-Etsu Chemical and JGC, and Modec, according to the report.

Ucore, Trump Administration Officials Talk U.S. Dependence on Chinese Rare Earths

Speaking of China’s dominance in the rare earths sphere, officials from Ucore Rare Metals, a Canadian rare earths firm, met with Trump administration officials in late June to discuss the U.S.’s dependence on China for the increasingly coveted metals.

According to a Ucore release, the company officials shared details on the company’s plans for a “domestic Strategic Metals Complex (SMC) in Southeast Alaska,” in addition to “the viability of development of domestic REE supplies in the Appalachian Coal District.”

“Near complete dependence on potentially unreliable foreign sources of rare earth materials remains a major national security vulnerability and one the Trump Administration is publicly committed to ending,” Ucore President and CEO Jim McKenzie said. “This vulnerability is also recognized in the U.S. Congress by the House of Representatives in its version of the 2019 National Defense Authorization Act (NDAA). As an example, Section 873 of the House NDAA prohibits the acquisition of sensitive materials, such as samarium-cobalt and neodymium-iron-boron magnets from non-allied foreign nations. If enacted into law, this requirement for a secure supply of rare earth magnets creates synergy with the forthcoming SMC construction by increasing demand for non-Chinese rare earth products.”

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Actual Metal Prices and Trends

Yttrium dropped 3.3% to $33.97/kilogram. Terbium also fell 3.3%, dropping to $460.53/kilogram.

Neodymium oxide dropped 2.5% to $49,071.90/metric ton.

Europium oxide fell 3.3% to $58.89/kilogram. Dysprosium oxide fell 3.1% to $174.78/kilogram.

The Renewables Monthly Metals Index (MMI) held steady this month, coming in for a reading of 108 for the second straight month.

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Cobalt Prices

Cobalt prices are notorious for being both high and incredibly finicky given the relative scarcity of supply (not to mention the fact that the majority of the world’s cobalt is mined in the Democratic Republic of the Congo, which has been plagued by political instability, violence and concerns regarding supply-chain ethics).

With that in mind, it might be news to some that the cobalt price has drawn back from record highs of late.

According to one Bloomberg report, that is good news for those looking for an in to the market and, subsequently, a chance ride the electric vehicle (EV) demand boom.

Per the report, cobalt sulfate has dropped more than 20% since April.

As China continues its efforts to battle rampant pollution in the country, so, too, continues the EV demand apace. According to the report, the country already is responsible for more than half of global EV sales.

Vale Inks Deal With Canadian Firms to Sell Cobalt

Sticking with the cobalt theme, Reuters reported Brazilian miner Vale has reached a deal with two Canadian companies that will, ultimately, lead to the sale of the coveted metal from the Voisey’s Bay mine in Canada (in the province of Newfoundland and Labrador).

Vale inked separate agreements with Wheaton Precious Metals Corp and Cobalt 27 Capital Corp “to sell an aggregate total of 75% cobalt stream with reference to the cobalt by-product to be delivered from January 1st, 2021, which encompasses the ramp-down from the existing Voisey’s Bay mine (Voisey’s Bay) and from the Voisey’s Bay underground mine expansion project (VBME), for a total upfront payment of US$ 690 million plus additional payments of 20%, on average, of cobalt prices upon delivery.”

According to the deal, Vale will receive an initial cash payment of $390 million from Wheaton Precious Metals Corp and an additional $300 million from Cobalt 27 Capital Corp.

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Actual Metal Prices and Trends

Japanese steel plate fell 1.7% month over month to $722.52/mt. Korean steel plate rose 3.8% to $672.43/mt. Chinese steel plate dropped 2.5% to $739.87/mt.

U.S. steel plate, meanwhile, traded flat, sticking at $937/st.

U.S. grain-oriented electrical steel (GOES) coil surged 17.8% to $2,915.

Chinese cobalt cathodes fell 3.3% to $100,411/mt.

Andrey Kuzmin/Adobe Stack

This morning in metals news, E.U. states have thrown their support behind measures to curb steel imports, Indian steel demand could double by 2025, and copper and zinc prices continue to drop.

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E.U. Backs Steel Import Curbing Measures

E.U. states voted to approve provisional measures to curb steel imports on the heels of the U.S.’s steel tariff, Reuters reported.

E.U. industry members have warned about the potential for steel, once destined for the U.S. market, to flood the European market after the U.S. imposed a 25% global steel import tariff (which included exemptions for a few countries).

According to the report, 25 E.U. member states voted for the provisional measures, while three abstained from the vote.

Indian Steel Demand on the Rise

Demand for steel could be set to double by 2025, according to a report by the Economic Times.

Per the report, BHP Billiton said demand in the country could hit 170 million tons (MT) by 2025.

Copper, Zinc Prices Continue to Fall

Prices of copper and zinc hit multimonth lows yesterday, Reuters reported.

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Per the report, the zinc price dropped to its lowest since June 2017, while copper fell to an 11-month low.

The Construction Monthly Metals Index (MMI) dropped two points, falling for a reading of 93 this month.

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U.S. Construction Spending

May construction spending rose 0.4% compared with the revised final estimate for April, according to Census Bureau data released this week.

Spending in May hit $1,309.5 billion, up from $1,304.5 billion in April.

The May spending estimate greatly exceeded the May 2017 total, rising 4.5% year over year.

Meanwhile, through the first five months of the year, spending increased 4.3% compared with the January-May period in 2017.

Private construction spending was $1,005.4 billion, or 0.3% above the revised April estimate of $1,002.3 billion. Within private construction, residential construction was $553.8 billion in May, up 0.8% from April. Nonresidential construction, on other hand, was $451.5 billion in May, down 0.3% from the previous month.

As for public construction, spending was $304.1 billion, up 0.7% from April. Within public spending, educational construction was at a seasonally adjusted annual rate of $74.3 billion, up 0.9% from April. Highway construction hit $94.6 billion, down 0.2% from April.

Billings Growth Continues

The Architecture Billings Index (ABI), put out monthly by the American Institute of Architects, once again showed growth in May.

The ABI hit 52.8 (anything above 50 indicates billings growth), up from 52.0 in April.

“Slightly more firms reported an increase in firm billings than in April, and May also marked the eighth consecutive month of billings growth,” the May ABI report states. “Inquiries into new projects and value of new design contracts also continued to grow at a steady pace, indicating ongoing interest from clients in starting new projects.”

This month’s report included survey data from architecture firms that were asked about productivity levels. According to the report, 55% of respondents said firm-wide productivity levels were up by either a little or a lot over the last few years. Meanwhile, only 20% said productivity levels were down in recent years.

In terms of realizing greater productivity, 40% of respondents said staff and/or staff training were the biggest factors in “determining changes in staff productivity.” In addition, 22% said the biggest factors were the economy or project workloads.

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Actual Metal Prices and Trends

Chinese rebar rose 0.9% to $625.11/metric ton, while Chinese H-beam steel jumped 1.0% to $644.74/mt.

U.S. shredded scrap steel picked up a dollar to reach $371/short ton.

European commercial 1050 sheet aluminum fell 2.4% to $3,000.12/mt.

Chinese iron ore PB fines fell 3.3% to $79.27/dry metric ton.

The Automotive Monthly Metals Index (MMI) fell one point this month for a July reading of 103.

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U.S. Auto Sales

Nonetheless, June was a good month for the top U.S. automakers.

General Motors, which this year announced it would only report sales on a quarterly basis moving forward, reported its Q2 sales were up 5% year over year. Chevrolet and GMC sales were up 6% and 7%, respectively, while Cadillac sales were up 3% year over year.

“Customers are buying with confidence because the economy is strong and they expect it to remain strong,” said Kurt McNeil, U.S. vice president of sales operations. “GM is in a fantastic position with so many new crossovers at all four of our brands, the industry’s only three-truck pickup strategy and clear leadership in large SUVs.”

Ford’s sales were up 1.2% overall, with the breakdown of individual vehicle categories reflecting the transition away from traditional cars. Ford’s sales of trucks and SUVs were up 3.2% and 8.9%, respectively, while car sales were down 14% year over year.
Through the first six months of the year, however, Ford’s sales are down 1.8% compared with the first six months of 2017.

Fiat Chrysler boasted an 8% year-over-year increase in June sales, marking its best June for retail sales since 2004. The automaker’s Jeep and Ram Truck brands led the way, with sales increases of 19% and 6%, respectively.

Section 232 Auto Probe

As readers might recall, the U.S. Department of Commerce once again invoked Section 232 of the Trade Expansion Act of 1962, this time to investigate imports of automobile and automotive parts. The DOC launched the investigation in late May.

During a Senate Finance Committee hearing June 20, Commerce Secretary Wilbur Ross could not offer much in the way of specifics related to the investigation, claiming it was still too early in the process to make statements about what could happen vis-a-vis tariffs.

Hearings on the Section 232 probe are scheduled for later this month. As part of the process, interested parties could submit public comments for consideration; more than 2,300 comments were submitted.

Unsurprisingly, GM and other automakers submitted comments asking the administration to decide against imposing tariffs.

“If import tariffs on automobiles are not tailored to specifically advance the objectives of the economic and national security goals of the United States, increased import tariffs could lead to a smaller GM, a reduced presence at home and abroad for this iconic American company, and risk less—not more—U.S. jobs,” GM’s comment reads. “The threat of steep tariffs on vehicle and auto component imports risks undermining GM’s competitiveness against foreign auto producers by erecting broad brush trade barriers that increase our global costs, remove a key means of competing with manufacturers in lower-wage countries, and promote a trade environment in which we could be retaliated against in other markets.”

In response, the European Union has threatened to impose an additional $300 billion in tariffs on U.S. goods should the Trump administration elect to slap duties on auto imports, calling the potential auto tariffs a “tax on the American people,” The Guardian reported.

MetalMiner’s Stuart Burns earlier this week offered his commentary on the situation and, in his view, the negative impact tariffs would have on the market.

“Automotive manufacturers are not going to rush to build new production facilities in the U.S. in the short term, but if tariffs become a permanent feature then it’s likely to encourage the car industry to accelerate the shift towards regional production,” he wrote. “Those with scale will cope better and as such we could see further consolidation in the sector if tariffs become a permanent feature — not just in the U.S., but internationally, as trading partners retaliate against U.S. action.”

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Actual Metal Prices and Trends

U.S. HDG steel dropped $1 to $1,111/st. U.S. platinum fell 5.9% to $852/ounce (its lowest level since it hit $847/ounce as of July 1, 2017). Palladium bars continue to trade at a premium to platinum, but palladium also fell this month, dropping 3.5% to $948/ounce.

LME three-month copper fell 2.8% to $6,645/mt.

U.S. shredded scrap steel picked up a dollar to reach $371/st.

Chinese primary lead jumped 1.3% to $3,193.51/mt.