Articles on: Metal Prices

The Renewables Monthly Metals Index (MMI) fell 2.1% this month. (Editor’s Note: This report also includes coverage of grain-oriented electrical steel.) 

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vit/Adobe Stock

Let’s take a look back at the week that was and some of the metals storylines here on MetalMiner:

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The Raw Steels Monthly Metals Index (MMI) increased by nearly 4.7% this month.

High expectations for steel demand recovery

In late March, steel demand was hit hard by the decline in automotive sales amid the COVID-19 pandemic.

As automakers began to restart their operations in early May, steel prices have seen some slight improvement, as we reported last month.

Nevertheless, the industry is confident in the recovery of steel prices.

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On June 4, the World Steel Association released its Short Range Outlook (SRO) for 2020 and 2021, forecasting steel demand will contract by 6.4%, dropping to 1,654 million metric tons due to the COVID-19 crisis. However, the forecast says 2021 steel demand will recover to 1,717 million metric tons, an increase of 3.8% over 2020.

The SRO suggests Chinese steel demand recovery will be “more visible in the second half of 2020. It will be driven by construction, especially infrastructure investment, as the government has put forward several new infrastructure initiatives.”

Within the steel market, the automotive industry will feel the greatest impact or consequences of the COVID-19 crisis. The steel industry is expected to lose sales of 20% in 2020 alone, on top of the losses of the past two years. Moreover, recovery might take several years due to slow income growth and remote working. The only silver lining is that safety concerns with respect to public transportation might boost demand for passenger cars in the short term.

Reactivation signals in the steel sector

After a 10-day stoppage in mid-May, ArcelorMittal resumed its operations at its Bosnia steel plant. The plant was forced to shut down due to low steel demand. The Bosnian government imposed a countrywide lockdown in response to the coronavirus outbreak.

The plant employs about 1,400 employees. It was only able to open after cost-cutting measures were implemented, such as renegotiating gas and power prices with suppliers, particularly after union employees declined a proposed 10-20% pay cut for managerial positions.

Other positive signals have been seen at Cleveland-Cliffs, as the company plans to restart its Tilden iron ore mine in Michigan at the end of June and resume the construction of its hot-briquetted iron plant in Toledo, Ohio.

The mine operation was suspended in April while construction of the plant was halted in March due to the decline in steel demand.

Will Chinese steelmakers have a post-pandemic competitive advantage?

There are some concerns about the competitive advantage Chinese steelmakers might gain from the pandemic crisis. Nippon Steel executive vice president Katsuhiro Miyamoto said, “China has managed to bring back economic activity quickly while countering the infection, which will give a relative advantage for Chinese mills in boosting competitiveness and financial health.”

“Given the high volume of steel output, China continues to import iron ore when supply is tight due to the pandemic, which will keep prices of the raw material at high levels,”he added.

Miyamoto might not be wrong. iron ore supply is getting tighter.

The world’s largest iron ore producer, Vale, revised its iron ore production guidance for the third time this year. The current production guidance for 2020 is between 310 million metric tons and 330 million metric tons of fine and undetermined for pellets from their initial reported production guidance of 355 million metric tons and 340 million metric tons of fines and 44 million metric tons of pellets.

The revision comes as Vale’s operations have been impacted by the COVID-19 crisis. The Itabira complex, which provides pellet feed for the pelletizers of the Tubarão Complex was ordered to shut down by the local government..

Nevertheless, Vale is expected to supply more iron ore to China in 2020 than in 2019, according to  the China Iron and Steel Association.

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Actual metals prices and trends

The Chinese slab price rose 3.1% month over month to $512.82/mt as of June 1 and the Chinese billet price rose 6.9% to $427.35/mt, both reversing last month’s trend.

Chinese coking coal rose 10.7% to $265.62/mt.

U.S. three-month HRC rose 7.4% to $535/st. U.S. shredded scrap steel fell 4.6% to $268/st.

Aaron Kohr/Adobe Stock

This morning in metals news, the Federal Reserve on Wednesday opted to maintain the federal fund interest rate at 0-0.25%, the Producer Price Index for final demand rose 0.4% in May and Chinese rebar futures fell Thursday.

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The Aluminum Monthly Metals Index (MMI) increased by nearly 1.4% this month.

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Various agencies have pegged the contraction of Indian steel demand to come in anywhere between 14-18%.

A new report by the World Steel Association has said India’s steel demand would fall by 18% in 2020, even as global steel demand was expected to drop to 6.4% because of the COVID-19 pandemic, the Financial Express reported.

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Andrey Kuzmin/Adobe Stack

President Donald Trump had scant regard, nor interest, in the impact his decision in 2018 to impose 25% import duties on steel products would have on other markets around the world — his focus was, reasonably enough, purely on the U.S.

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Dmitry/Adobe Stock

This morning in metals news, the Aluminum Extruders Council has released a statement calling for the U.S. to rescind its aluminum import tariffs, U.S. raw steel production came in at a capacity utilization rate of 53.3% for the week ending June 6 and Thyssenkrupp plans to partners with RWE on technology aimed at curbing emissions from steel production.

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The Global Precious Monthly Metals Index (MMI) gained 1.7% this month.

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leszekglasner/Adobe Stock

As much of the rest of the base metals were lifted this week, nickel remained subdued.

This comes despite an announcement by the Indonesian government that it would relax exports of many minerals but keep in place a ban on nickel ores.

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