Articles in Category: Metal Pricing

The Raw Steels MMI decreased again this month, falling two points down to 77. Steel prices seem to have lost momentum and fell this month both domestically and internationally. However, mills have announced price hikes for November.

Benchmark Your Current Metal Price by Grade, Shape and Alloy: See How it Stacks Up

Prices in October fell for all forms of steel, although HRC and plate prices increased slightly at the end of the month.

Source: MetalMiner data from MetalMiner IndX(™)

However, historical Q4 price trends generally suggest rising  prices and increasing demand. In addition, industrial metals remain solidly in a bull market.

Will steel prices see a bump too? Let’s take a look at the market indicators.

Domestic Steel Market

Domestic steel prices fell this month after trading flat (sideways) for the last few months. Steel price momentum has declined but Q4 increases often come in November and later. Service centers still report steady demand, despite significant steel price drops in October.

Lead times increased for all forms of steel. Increasing lead times generally support rising steel prices.

Let’s Not Forget About China

Curtailed Chinese capacity has supported steel prices during most of the year (particularly during Q3).

However, no real shortage exists, as China increased production in the summer to meet heavier winter demand.

In October, the  Chinese Steel PMI fell to a 6-month low, though it remains above 50, which still signals growth.

Source: MetalMiner data from MetalMiner IndX(™)

During the first few days of November, Chinese CRC prices held steady while HRC prices fell slightly. As HRC and CRC prices commonly move in tandem, prices will likely adjust during the month. Buying organizations should watch Chinese prices for signals of a price rebound.

Raw Materials and Scrap

Scrap prices fell together with steel prices this month. Scrap prices held somewhat steady during 2017 (as have steel prices).

Source: MetalMiner data from MetalMiner IndX(™)

Raw material price dynamics tend to correlate with steel prices. Steel prices decreased in October, following iron ore’s September price falls. Coal prices traded sideways in October, despite the short-term uptrend that began in April. Early November iron ore prices appear flat, while coal prices increased to the $100 level. Increasing raw material prices may create some upward movement for steel prices.

What This Means for Industrial Buyers

Steel price dynamics continued to lose momentum this month.

However, buying organizations will want to pay close attention to Chinese price trends, lead times and whether domestic mill price hikes stick.

To read more about our longer term steel price trends download our free Annual Outlook.

To understand how to adapt your buying strategy this season, take a free trial now or subscribe to  the Monthly Outlook for a short-term analysis.

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Actual Raw Steel Prices and Trends

The U.S. Midwest HRC futures 3-month price increased this month by 1%, reaching $605/st. Chinese steel billet increased by 0.9%, while Chinese slab prices increased by 2.4% reaching $603/mt. The U.S. shredded scrap price decreased by 6.33%, falling to $281/st.

The Renewables MMI rose seven points in August, reaching a reading of 84.

Benchmark Your Current Metal Price by Grade, Shape and Alloy: See How it Stacks Up

The basket of metals in this sub-index posted a strong month. Steel plate from Japan, Korea and China rose in the month. U.S. steel plate, however, fell 4.6%.

Meanwhile, in the topsy-turvy world of grain-oriented electrical steel (GOES), the U.S. GOES price jumped 7.3%.

Of the nine metals in the sub-index, only one (U.S. steel plate) posted a drop in price as of Sept. 1. Chinese silicon, cobalt and neodymium all also posted price gains.

Charged Up for Cobalt

Last month, we wrote about cobalt, which is in high demand for its application in electric vehicle batteries. Cobalt is mined predominantly in the Democratic Republic of Congo, which has been shaken by violence and political instability this year.

The instability there has seen production in the DRC decrease this year, yielding significant price increases in the metal. As we wrote last month, the instability of cobalt (not to mention growing ethical concerns vis-a-vis child labor at mines) has some battery makers looking to adjust their metal formulas, in some cases suggesting the use of more nickel, instead.

According to a Reuters report, however, cobalt has been boosted by projections touting a rise in purchases of electric vehicles. According to the report, UBS forecasted electric vehicles will account for 3.1% of global car sales in 2021 and 13.7% in 2025, up from 1% this year.

In addition, cobalt listings have skyrocketed, the report says. As of the end of July, 100 companies that explore or mine for cobalt were listed on the Toronto Stock Exchange and TSX Venture Exchange, up from fewer than 30 in 2015, according to SNL Financial.

In short, despite issues of supply volatility — and, thus, material cost — cobalt’s profile continues to rise in tandem with the rise of electric vehicles.

What About U.S. Steel Plate?

Like the rest of the U.S. steel industry, steel plate producers are anxiously awaiting the Trump administration’s determination in its Section 232 investigation of steel imports.

The investigation, announced in April, has a January deadline. The investigation picked up steam earlier on in the summer, but has seemingly been put on the backburner for the time being. As such, initial optimism from U.S. steel producers regarding potentially imminent trade action stemming from the investigation began to wane.

In a letter to the Trump administration last week, the American Line Pipe Producers Association (ALPPA) urged the president to take action, also mentioning steel plate in the process.

Irina K./Adobe Stock

Steel Market Update’s 2017 Steel Summit kicked off in Atlanta this week and the topic on everyone’s minds was Hurricane Harvey and the far-reaching impact it will have on the Houston region.

The humanitarian impact of Harvey cannot be overstated, but the economic impact on Houston, an industrial hub in the southern United States, will be felt in both the short- and long-term, with freight transportation at a virtual standstill (Port Houston operations resumed today, according to an alert on the Port Houston website).

Want a short- and medium-term buying outlook for aluminum, copper, tin, lead, zinc, nickel and several forms of steel? Subscribe to our monthly buying outlook reports!

According to SMU, FTR Transportation Intelligence reports up to 10% of U.S. truck capacity will be disrupted in the next two weeks.

“Look for spot prices to jump over the next several weeks with very strong effects in Texas and the South Central region, Noel Perry, partner at FTR, told SMU. “Spot pricing was already up strong, in double-digit territory. Market participants could easily add 5 percentage points to those numbers.”

Gas Prices Surge

In response to fuel supply disruptions from Hurricane Harvey, average national gasoline prices grew to $2.37 per gallon earlier this week, and continued to surge to $2.51 Friday morning, according to the AAA website.

“It’s still really early to tell what this is going to mean for long-term supply,” Denton Cinquegrana, chief oil analyst at Oil Price Information Service, told SMU. “If some of these refineries are flooded, it’s going to take weeks to get the water out of there and then get into damage assessment.”

How will steel and base metals fare in 2017? You can find a more in-depth steel price forecast and outlook in our brand-new Monthly Metal Buying Outlook report.

For a short- and long-term buying strategy with specific price thresholds:

Nickel prices maintained near nine-month highs mid-week, due in part to Chinese stainless steel mill demand and decreased supplies from the Philippines, a top exporter of ore.

According to a report from Reuters, nickel prices peaked earlier in the week to $11,885 a ton, its highest point since November 2016. Year-over-year, nickel prices are up more than 15%.

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“Stainless steel demand in China and elsewhere has surprised on the upside and talk about nickel consumption in lithium-ion batteries has helped,” Societe Generale analyst Robin Bhar told the news source.

“Supplies have been under stress,” Bhar added. “The Philippines exported less for various reasons, including monsoon rains, mine inspections and shutdowns. Some NPI (nickel pig iron) capacity has been shut in China because of environmental inspections.”

Nickel Lagging Behind in the Bull Run

Our own Irene Martinez Canorea recently wrote that nickel, along with tin and lead, are more reticent to join the bull rush with aluminum, copper and zinc.

She writes: “Even though the industrial metal outlook remains bullish, lead and tin seem to be behaving on their own terms. Buying organizations will want to pay careful attention to trading volumes in the coming month.”

How will nickel and base metals fare in 2017? You can find a more in-depth nickel price forecast and outlook in our brand-new Monthly Metal Buying Outlook report.

For a short- and long-term buying strategy with specific price thresholds:

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The International Lead and Zinc Study Group (ILZSG) released its August report, which found the global market for refined zinc metal was in deficit during the first half of the year. Total reported inventories declined over that time, as well.

Global production from zinc mines grew 5.4% compared to the first half of last year, mostly due to a boost in output from Peru, India and Eritrea.

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Furthermore, zinc production suffered in places like Canada, Thailand, Peru and the Republic of Korea, leading to an overall worldwide increase of just 0.5% after factoring in growth in places like France, Brazil and India.

The ILZSG report stated: “Despite a decrease in Chinese apparent demand for refined zinc metal of 2.1%, global usage rose by a marginal 0.6%. This was mainly due to increases in the United States and Taiwan (China).”

Gauging the Zinc Price Ceiling

Our own Fouad Egbaria wrote just last week that zinc has really hit its stride, recently hitting its highest price point in more than a decade ($3,180.50).

Just how high can the zinc price fly? Reuters’ Andy Home states:

“But right now the LME zinc market is bubbling away with stocks falling and spreads tightening. Volatility seems assured but can zinc return to the heady days of late 2006/early 2007, when the price peaked out at $4,580?”

How will zinc and base metals fare in 2017? You can find a more in-depth zinc price forecast and outlook in our brand-new Monthly Metal Buying Outlook report.

For a short- and long-term buying strategy with specific price thresholds:

The lead price grew this week following a Chinese-issued ban on North Korean exports.

According to a report from Reuters, lead’s sister metals also rebounded, in response to once-rising geopolitical tension easing up a bit and Chinese data, a top metals consumer, coming in higher than expected.

Want a short- and medium-term buying outlook for aluminum, copper, tin, lead, zinc, nickel and several forms of steel? Subscribe to our monthly buying outlook reports!

“Those Chinese numbers (on Monday) were quite soft … I suppose the only glimmer of light came in the new yuan loans, which beat consensus, and maybe that suggests that things will remain stable as we go forwards,” Robin Bhar, head of metals research at Societe Generale in London, told Reuters.

“The metals seem well poised. After a period of consolidation this week perhaps we’ll have another push towards those (recent) highs going forward,” Bhar added.

Lead Price Movement in August

Earlier this month, our own Fouad Egbaria reported that Chinese primary lead posted a price increase, growing 3.3% to $2,694.90/metric ton.

How will lead and base metals fare in 2017? You can find a more in-depth lead price forecast and outlook in our brand-new Monthly Metal Buying Outlook report.

For a short- and long-term buying strategy with specific price thresholds:

A once abandoned U.K. mine with a rich tin mining history may get another shot at resurrection thanks to a Canadian company.

The South Crofty tin mine in Cornwall has been shut down for nearly two decades, but Canada-based Strongbow Exploration is well on its way to reopening the mine still rich in tin.

Want a short- and medium-term buying outlook for aluminum, copper, tin, lead, zinc, nickel and several forms of steel? Subscribe to our monthly buying outlook reports!

According to a report from The Telegraph, the South Crofty mine didn’t shut down because its tin bounty depleted — in fact, it shut down because of falling tin prices.

The news source states that if all things go according to plan, the mine could be reopened by 2020. The hope is that the continual recovery of tin prices will buoy the mine’s resurgence.

“It’s going to be a modern mine in the location of an old mine,” Richard Williams, Strongbow Exploration’s chief executive officer, told The Telegraph.

Once operational, the mine could employ as many as 300 individuals, not counting suppliers.

“We know there’s a resource there, we can identify it with new technology and make the project economic,” Peter Wale, its director, told the The Telegraph.

Once it opens again, the South Crofty mine will be one of just several functioning mines in the U.K., joining Wolf Minerals and ICL, the news source stated.

Tin Price Movement in 2017

How will tin and base metals fare in 2017? You can find a more in-depth tin price forecast and outlook in our brand-new Monthly Metal Buying Outlook report.

For a short- and long-term buying strategy with specific price thresholds:

TTstudio/Adobe Stock

Copper prices are on the ascent, thanks in part to the latest Chinese trade data and genuine excitement among investors over worldwide growth and capacity cuts.

According to a recent report from The Wall Street Journal, China’s debt crackdown earlier this year led to an adverse effect on metal prices and general worry from investors.

That worry has turned to elation, with copper prices up 7% due to capacity cuts in China. Meanwhile, iron ore prices are up more than 20% since the end of June.

Want a short- and medium-term buying outlook for aluminum, copper, tin, lead, zinc, nickel and several forms of steel? Subscribe to our monthly buying outlook reports!

The most recent Chinese trade data, representing July, painted a different picture with year-over-year growth of Chinese imports of copper concentrate slowing from June’s growth.

Nathaniel Taplin wrote for the Wall Street Journal: “Overall import and export growth also slowed, hinting that the lift to China from rebounding global trade may be close to its peak.”

The takeaway for copper investors impressed with Q2 Chinese growth? Not to get too excited until the whole story is revealed as China’s demand for metals, specifically copper, is weaker than expected.

Copper Prices Still Experiencing a Stellar 2017

Our own Irene Martinez Canorea wrote earlier this week that copper is outperforming all other base metals this month with copper traded on the London Metal Exchange up 7.8% in July.

She wrote: “The sharp increase in copper prices came after an announcement of a possible ban of copper scrap in China by the end of the year. The increase in copper prices was accompanied by heavy volume, which may signal a stronger uptrend.”

How will copper and base metals fare in 2017? You can find a more in-depth copper price forecast and outlook in our brand-new Monthly Metal Buying Outlook report.

For a short- and long-term buying strategy with specific price thresholds:

China’s continued regulation of its bloated aluminum industry is having a far-reaching impact on the growing share price of its major producers, thus adding to a tighter global market and rising prices.

According to a recent report from Reuters, China represents nearly 60% of worldwide aluminum output with analysts estimating up to 4 million tons of capacity closing this year, accounting for one-tenth of the Far East nation’s total, putting added pressure on the global aluminum market.

Want a short- and medium-term buying outlook for aluminum, copper, tin, lead, zinc, nickel and several forms of steel? Subscribe to our monthly buying outlook reports!

Aluminum Corp of China (Chalco) shares, a state-run entity, increased 47% since the start of last month.

“Chalco is the market leader, so if (competitors) are closing down their capacity, they are able to expand their production,” analyst Helen Lau, of Argonaut Securities in Hong Kong, told Reuters.

Aluminum Prices on the Run

While aluminum prices are on the rise, they may have further to go, analysts tell Reuters. Shanghai aluminum is up around 11% so far this year while benchmark aluminum on the London Metal Exchange is up 14%.

“The trend is definitely towards a much tighter market balance – there is an upshot to prices here definitely,” London-based WoodMackenzie analyst Ami Shivka, told Reuters. “The China market is in a surplus so any closures in China will whittle away the little bit of surplus that we have in China, and put the global market in a deficit.”

How will aluminum and base metals fare in 2017? You can find a more in-depth aluminum price forecast and outlook in our brand-new Monthly Metal Buying Outlook report.

For a short- and long-term buying strategy with specific price thresholds:

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For three months, MetalMiner has claimed a sideways trend for aluminum. This sideways trend could both signal a market top or a price consolidation, and a continuation pattern of the bullish market that started last year.

Benchmark Your Current Metal Price by Grade, Shape and Alloy: See How it Stacks Up

The price increase in aluminum has coincided  with heavy trading volume, signaling a breakout of a price consolidation. Thus, we could see a bullish uptrend for aluminum, which means increasing aluminum prices.

Source: MetalMiner analysis of FastMarkets

As previously explained by MetalMiner, buying in a bullish market means buying organizations will want to identify opportunities to buy forward (hedge).

This new price increase, together with other strength in LME base metals (such as copper), may be the start of a new uptrend for aluminum.

The U.S. dollar has also continued to show weaknesses this year, providing a lift to base-metal prices. The CRB index is still in a long-term downtrend, but has shown a slight recovery in the short-term trend. The DBB index is currently in an uptrend, both for the long- and short-term.

Free Sample Report: Our Annual Metal Buying Outlook

Buying organizations may want to buy forward given aluminum price dynamics, together with trading volume.

For more insight into forward buys and hedging, subscribe to our Monthly Metal Buying Outlooks.