Articles on: Metal Prices

The Renewables Monthly Metals Index (MMI) dropped two points for a September MMI value of 99.

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First Cobalt Eyes Restart of Canadian Refinery

First Cobalt Corp., a Toronto-based firm, is looking into restarting its idled cobalt refinery in Canada, Reuters reported.

First Cobalt CEO Trent Mell said the company will begin assessing the condition of the plant next week.

Last month, the Canadian firm reached an agreement with Glencore by which the latter would fund a feasibility study for the idled refinery.

“First Cobalt Corp. is pleased to announce that it has entered into a US$5 million loan facility with Glencore AG to complete advanced engineering, metallurgical testing, field work and permitting associated with a recommissioning and expansion of the First Cobalt Refinery in Canada,” First Cobalt said in a prepared statement Aug. 26. “Upon completion of a positive definitive feasibility study for a 55 tonnes per day (“tpd”) refinery expansion in Q1 2020 and subject to certain other terms and conditions and satisfaction of conditions precedent, Glencore is prepared to advance an additional US$40 million to recommission and expand the Refinery.”

As Reuters noted, once operational the refinery would become North America’s lone producer of refined cobalt for the electric vehicle sector.

Cobalt Prices Surge

Speaking of Glencore, its announcement of a planned shutdown of its Mutanda mine this year has seen cobalt prices reach six-month highs, Reuters reported.

Earlier this year, Glencore said it would halt production at the Mutanda cobalt and copper mine in the Democratic Republic of the Congo (where a majority of the world’s cobalt is mined); the site is the world’s largest cobalt mine.

LME cobalt, after reaching $95,000 per ton in March 2018, lost nearly 75% of its value over the next 16 months, falling to $25,000 as of late July. Recently, the price has picked up, rising to $34,750 per ton as of Sept. 6.

GOES Price Surges 7.4%

The MMI for grain-oriented electrical steel (GOES) jumped 14 points for a September reading of 199.

The U.S. GOES coil price rose 7.4% month over month to $2,745/mt as of Sept. 1.

German steelmaker Thyssenkrupp — a prominent producer of electrical steel — is facing a period of significant uncertainty, MetalMiner’s Stuart Burns recently explained.

Faced with financial challenges, the company is mulling its next steps, which include the possible sale of its profitable elevator business.

Evidence of its struggles, the German firm will be booted from the country’s blue-chip stock index, the DAX, later this month. Thyssen, which merged with Krupp in 1999, was a founding member of the DAX.

“For both suppliers and customers of the group, the most worrying development must be the gradual reduction in credit rating,” Burns wrote. “If suppliers cannot insure their debt, they cannot in many instances supply, thus forcing the group to diversify and fragment its supply base.

“The group has survived many trials and tribulations over the decades. It will no doubt survive the current period, but it will be a different, much reduced Thyssenkrupp that emerges in the decade ahead.”

Another giant in the elevator industry, Finland’s Kone, has hired a law firm to advise it during its planned takeover bid of Thyssenkrupp’s elevator business, Reuters reported Monday.

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Actual Metal Prices and Trends

U.S. steel plate rose 2.0% month over month to $797/st as of Sept. 1.

Chinese steel plate fell 5.6% to $577.25/mt. Korean steel plate increased 0.7% to $568.51/mt. Japanese steel plate gained 2.5% to $809.83/mt.

The Global Precious Monthly Metals Index (MMI) gained four points this month, rising for a September MMI reading of 106.

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Gold Market Subdued in India

MetalMiner’s Sohrab Darabshaw delved into the Indian gold market ahead of the festival season in the country, which includes Diwali in October.

As Darabshaw explained in late August, the apparent slowdown in demand ahead of the usually busy gold-buying season comes amid surging gold prices. Citing a Yahoo Finance report, Darabshaw noted India’s gold imports in July fell a whopping 55% on a year-over-year basis.

“Almost everyone is waiting for a price correction, which is a far cry from the positive situation at the start of 2019,” Darabshaw wrote.

“Demand grew 9% from January-June this year, sparking hopes that consumption towards the latter half of the year would go up.

“But experts are of the opinion that if things do not improve soon, consumption could slump to a low of over 650 tons (comparable to the 2016 low).”

Gold-buying in India was also sluggish ahead of the holiday season last year.

A Gold Mine in Pakistan

Meanwhile, in Pakistan, MetalMiner’s Stuart Burns weighed in on the struggle between the Pakistani government and Tethyan Copper Co.

“The dispute is over the legality of Tethyan’s claim and rights to exploit the copper and gold reserve at Reko Diq in Pakistan’s remote southwest Balochistan province, close to the Iran border,” Burns wrote.

“Pakistan’s mining rights and practices, not to mention its infrastructure, are not fit for the purpose, as Tethyan’s story underlines all too well.”

The impasse benefits neither party, Burns opined.

“Tethyan has offered to negotiate a settlement, but with the Chinese on the sidelines bidding to extend their Belt and Road involvement in the region, conflicting loyalties and priorities are in play,” he wrote.

“A solution, though, would be very much in Pakistan’s interests.

“The resource is said to be the largest untouched deposit in the world, containing an estimated 2.2 billion metric tons of mineable ore that could yield 200,000 metric tons of copper and 250,000 troy ounces of gold annually for over half a century, Stratfor reports.”

Platinum-Palladium Spread

While palladium remains at a significant premium to platinum, the spread between the two narrowed this past month.

After a spread of $638 per ounce as of last month’s MMI, palladium fell and platinum increased to produce a spread of $539 per ounce.

According to Kitco News, platinum is possibly riding momentum generated by other precious metals — namely gold and silver — of late. The platinum price recently approached its highest level in 16 months, Kitco News reported.

Actual Metal Prices and Trends

U.S. silver ingot/bars rose 12.3% month over month to $18.23/ounce as of Sept. 1. U.S. platinum rose 6.1% to $915 per ounce, while U.S. palladium fell 3.1% to $1,454 per ounce.

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Chinese gold bullion rose 7.8% to $49.33 per gram, while U.S. gold bullion rose 8.0% to $1,527.10 per ounce.

The Rare Earths Monthly Metals Index (MMI) held flat this month, checking at an MMI value of 22.

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U.S. Looks to Australia for Rare Earths

China’s dominance of the global rare earths market is well-documented, a fact the U.S. defense sector has grappled with in light of the elements’ use in a variety of high-tech capacities (including military applications).

In that vein, the Pentagon announced late last month that it has engaged talks with Australia regarding the possibility of hosting a rare earths processing plant in the country, Reuters reported.

According to the report, China accounts for more than 80% of global processing capacity of rare earths, a list of 17 elements that includes 15 lanthanide series elements (plus yttrium and scandium).

Ellen Lord, the Pentagon’s under secretary of defense for acquisition and sustainment, was quoted as saying that the U.S. is exploring several options to expand its rare earths footprint, of which Australia presented “one of the highest potential avenues,” Reuters reported.

Given the U.S. (and the rest of the world’s) dependence on China for rare earths, the U.S. has held back on imposing tariffs on the elements, even as it has levied hundreds of billions of tariffs on Chinese industrial products and ordinary consumer goods.

Lynas Corp Signs MOU with Western Australia City

Lynas Corp, the Australia firm that holds the title of world’s largest rare earths producer outside of China, last month scored a victory when the Malaysian government opted to extend the miner’s license to operate in the country.

The decision came after many months of uncertainty regarding the prospects of renewal, as the Malaysian government expressed concerns about waste disposal at the firm’s operations.

Although the government extended Lynas’ license, the renewal came in at a term of six months, shorter than the usual renewal period. Lynas reported receipt of the operating license renewal Aug. 22.

More recently, Lynas announced Sept. 6 that it had signed a memorandum of understanding with the Western Australia city of Kangoorlie-Boulder for “the review and due diligence of potential sites” for its new cracking and leaching plant.

“We are very pleased to announce this MOU with the City of Kalgoorlie-Boulder,” Lynas CEO Amanda Lacaze said in a prepared statement. “Kalgoorlie has a rich mining history and continues to work with industry to develop the region and its communities. Lynas already employs graduates from the WA School of Mines which is located in Kalgoorlie and we look forward to continuing this partnership.

“Access to infrastructure and a skilled workforce makes it an attractive investment destination and with this MOU we can further assess the suitability of potential sites in Kalgoorlie for our Cracking & Leaching plant.”

In other Lynas news, the company announced Australian conglomerate Wesfarmers would not continue to pursue a potential takeover bid initially announced in 2018.

Wesfarmers issued a proposal to purchase Lynas for $2.25 per share in March, conditional on several factors that included the renewal of the rare earths producer’s Malaysian operating license.

However, Lynas announced Aug. 22 that Wesfarmers did not intend to progress with its proposal.

“Wesfarmers remains focused on delivering value to its shareholders through disciplined capital allocation within our divisions and when considering new investments,” Wesfarmers Managing Director Rob Scott was quoted as saying.

In April, Lynas’ board rejected a $1.1 billion takeover bid from Wesfarmers.

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Actual Metal Prices and Trends

The Chinese yttrium price fell 4.0% month over month to $31.37/kg as of Sept. 1. Terbium oxide fell 3.6% to $547.27/kg.

Neodymium oxide rose 4.6% to $45,036.70/mt.

Europium oxide dipped 4.0% to $30.68/kg. Dysprosium oxide fell 1.4% to $266.32/kg.

The Construction Monthly Metals Index (MMI) dropped one point for a September MMI reading of 77.

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U.S. Construction Spending

According to the U.S. Census Bureau, U.S. construction spending in July totaled $1,288.8 billion, up 0.1% from the revised June estimate of $1,288.1 billion.

The July spending figure, however, marked a 2.7% year-over-year decline, down from $1,324.8 billion in July 2018.

Broken down by type, spending on private construction reached a seasonally adjusted annual rate of $963.1 billion, down 0.1% from June’s $963.7 billion.

Within private construction, residential construction reached $506.7 billion in July, up 0.6% from June’s $503.5 billion. Nonresidential construction came in at $456.4 billion in July, down 0.8% from June’s $460.2 billion.

Meanwhile, in public construction, the estimated seasonally adjusted annual rate of spending was $325.7 billion, up 0.4% from the revised June estimate of $324.3 billion. Within public construction, educational construction reached $73.3 billion, an increase of 1.6% from the revised June estimate of $72.1 billion. Highway construction checked in at $97.0 billion, down 2.7% from the revised June estimate of $99.7 billion.

Architecture Billings Essentially Flat

The Architecture Billings Index, put out by the American Institute of Architects, posted another flat performance in July.

The ABI, which measures billings at architectural firms, checked in at 50.1 in July (anything greater than 50 indicates growth). The reading marked an increase from the previous month’s contractionary reading of 49.1.

Despite the nominal growth this month, the reading marks a growing trend this year.

“Business conditions at architecture firms remained essentially flat for the sixth consecutive month in July,” the ABI report states. “Although the ABI score of 50.1 for the month technically indicates growth, the score is barely above 50, which means that the share of firms that reported increasing firm billings for the month is just slightly higher than the share that reported decreasing billings. Overall, this six-month stretch is one of the longest periods of essentially flat billings since the end of the Great Recession.”

Broken down by region, the West led the way this month with a reading of 51.2, followed by the Midwest (48.9), South (48.3) and Northeast (48.3).

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Actual Metal Prices and Trends

Chinese rebar dropped 12.0% on a year-over-year basis, down to $507.53/mt as of Sept. 1. Chinese H-beam steel dropped 3.5% to $538.21/mt.

U.S. shredded scrap steel jumped 14.4% to $294/st.

European commercial 1050 aluminum sheet rose 1.2% to $2,393/mt.

Chinese 62% iron ore PB fines fell 4.0% to $73.20/dmt.

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This morning in metals news, Bank Of America cut its steel price forecast, copper prices dropped and gold lost some of its safe haven luster.

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Gloomy Steel Forecast

Bank of America has cut its steel price forecast and is less than optimistic about steel stocks going forward, Yahoo Finance reported.

According to the report, Bank of America analyst Timna Tanners cut her U.S. HRC price target for the second half of the year from $628 per short ton to $572 per short ton.

Tanners also cut 2019 EPS cuts for U.S. Steel, Nucor, Reliance Steel and Aluminum, Steel Dynamics and Commercial Metals Company, according to Yahoo.

Copper Price Drops

Markets continue to fluctuate on a daily basis based on any sliver of news emerging from the ongoing U.S.-China trade war.

On Friday, despite China’s intention to increase bank lending, LME copper was bid down 0.6% to $5,812 per ton, according to Reuters, after reaching a two-year low earlier this week.

Not so Golden

The gold price posted its largest daily dollar loss in three years, MarketWatch reported, on optimism regarding trade and jobs data impacting its safe haven appeal.

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According to the report, gold on the COMEX for December delivery slipped 2.2% to a two-week low of $1,525.50 per ounce.

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India’s growth rate has slowed, which in turn means sluggishness in the manufacturing sector.

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All of the above means lower consumption of steel.

Riding on these developments comes the news that domestic steel producers are sitting on a “larger than usual” steel inventory.

A report in the Business Standard quoted Sushim Banerjee, director general at the Institute of Steel Development Growth, as saying steel inventories are at “alarming” levels of 35 days rather than the more typical 21 days.

The total steel inventory of all primary producers in India is at 2 million tons, up from the more typical level of 1 million tons, according to the Business Standard. Because of such high inventory, domestic prices have fallen by about 20% since April.

Ratings agency Fitch Solutions has revised its 2019 global steel price forecast downward to an average of U.S. $600 per ton from $650, citing weak investor sentiment, the ongoing U.S.-China trade war and uncertainty surrounding the U.K.’s Brexit effort, the Business Standard reported.

Nikunj Turakhia, director at the Steel Users Federation of India, was quoted as saying domestic steel prices were close to the bottom and hoped they would start rising soon.

There is more bad news for Indian steel companies.

Ratings agency India Ratings and Research has revised its outlook on the steel sector to “stable-to-negative” from “stable” for the remainder of this fiscal year. One of the reasons for the downgrade is sluggish demand. The rating agency has also revised downwards its fiscal year 2020 steel demand growth expectation to around 4% from the previous forecast of 7%.

All of this comes as global crude steel production rose by 1.7% in July, with Indian steel production increasing by the same percentage.

Tata Steel has announced a closure of some of its operations in the U.K., which could lead to a loss of about 400 jobs.

It has not been a good year for many steel companies in India; for example, Tata Steel Ltd’s first-quarter profit slumped to its lowest level in more than two years.

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India’s S&P BSE Metal Index has fallen by about 30% so far this year due to the slowdown in the economy and infrastructure.

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This morning in metals news, the U.S. steel industry’s steel capacity utilization rate for the year through Aug. 31 fell to 80.8%, copper bounced back from a two-year low and China’s vice premier made a call for a “deeper mutual understanding” between the U.S. and China.

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Capacity Utilization Drops

After reporting a year-to-date capacity utilization rate of 81.0% for the year through Aug. 24, the American Iron and Steel Institute (AISI) reported a rate of 80.8% for the year through Aug. 31.

For the week ending Aug. 31, capacity utilization fell below the important 80% mark, checking in at 79.5%. Production in the week totaled 1.85 million tons, down 0.6% compared with production during the same week in 2018.

Copper Rallies

After reaching a two-year low, copper prices bounced back Wednesday, Reuters reported.

Three-month LME copper ticked up 0.5% to $5,637 per ton, according to Reuters.

Liu Asks for ‘Deeper Mutual Understanding’ in U.S.-China Talks

Just days after the latest tariff exchange between the U.S. and China, China’s top trade negotiator looked to ease tensions.

On Sept. 1, new U.S. tariffs covering $110 billion in Chinese goods went into effect, while $75 billion in tariffs in the other direction also went into effect.

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China’s Vice Premier Liu He said the countries must reach a “deeper mutual understanding,” the South China Morning Post reported.

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This morning in metals news, Tata Steel is closing some of its operations in the U.K., copper is down to a two-year low and the Dow Jones dropped on the heels of the latest round of tariffs going into effect Sept. 1.

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Tata Steel Announces U.K Closures

Tata Steel will close several of its U.K. operations, Reuters reported, with approximately 400 job losses on the line.

Among the closures is Tata’s Orb Electrical Steels plant in South Wales, according to the report.

Copper Slides

The copper price has fallen to its lowest level since mid-2017, Bloomberg reported.

LME copper dropped 1.8% to $5,520 per ton on Tuesday, according to Bloomberg.

Stocks Fall as Latest Tariffs Take Hold

Stock markets were down days after the latest round of tariffs between the U.S. and China went into effect.

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The new duties went into effect Sept. 1. The Dow Jones traded down 1.1% on Tuesday, while the S&P 500 was down 0.7% and the Nasdaq Composite retreated 0.5%, according to CNBC.

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India is almost on the cusp of this year’s festival and wedding season, but the domestic bullion market remains subdued, contrary to historical norms.

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The reason? Gold prices in India have rallied 20% this year based on several internal and external factors, Livemint reported.

Over the past week, spot prices touched a high of U.S. $558.45 (Rs 40,000) per 10 grams. The futures market showed a similar trend, though prices later dropped. Gold futures had hit a record high of U.S. $543.44 per 10 grams (Rs 38,666).

The Livemint report said the spread between MCX and international prices narrowed on Tuesday from near $51/ounce to about $42/ounce, sparking some buying interest in the physical market. But even then, the higher domestic price and higher taxes continued to dampen demand.

Bullion experts forward many reasons for the highest-ever spurt in gold prices, including: a hike in import duty, the weaker rupee versus the U.S. dollar, the ongoing U.S.-China trade war, the U.K.’s impending Brexit and buying by global central banks.

India’s gold imports this July fell by 55% from a year ago, down to a three-year low, Yahoo Finance reported.

The gold scene in most of Asia is equally depressing.

News agency Reuters reported steep prices prompted Asian consumers to sell back physical gold for profit this week.

Some amount of buying, even at the current price range, did happen because of gold’s appeal as an instrument to hedge against risk.

In China, the biggest gold consumer in the world, premiums eased slightly to $6-$9 per ounce over the benchmark, down from $9-$10 last week.

The Reuters report quoted Ronald Leung, chief dealer at Lee Cheong Gold Dealers in Hong Kong, as saying interest was mostly from the investment side.

In India, dealer discounts of up to U.S. $33 an ounce over official domestic price saw some amount of buying activity. Most dealers, however, were not in the mood to place new orders, preferring to wait and let the situation unfold, according to the Economic Times.

Almost everyone is waiting for a price correction, which is a far cry from the positive situation at the start of 2019.

Demand grew 9% from January-June this year, sparking hopes that consumption towards the latter half of the year would go up.

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But experts are of the opinion that if things do not improve soon, consumption could slump to a low of over 650 tons (comparable to the 2016 low).