Articles in Category: Metal Pricing

Chinese copper bar saw the biggest price decline of the day, dropping 4.9 percent ton on Monday on the MetalMiner IndX℠.

Much of the copper stored in China, the world’s biggest consumer of the metal, is used by companies and investors as collateral for loans from banks and other lenders. They then invest the money in higher-yielding assets, the Wall Street Journal reported. Some investors are concerned that the recent sharp drop in copper prices could lead to a downward spiral in the market.

Chinese primary cash copper saw its price drop 4.9 percent to a 30-day low. Chinese copper wire held its value on Monday. The price of Chinese bright copper scrap continues hovering in a short range for the fifth straight day.

* Get the complete prices every day on the MetalMiner IndX℠

As prices fall, borrowers could come under pressure to post more collateral, forcing them to sell copper to raise money. Banks could also become less willing to accept copper as collateral.

Copper’s recent price drop demonstrates the challenges ahead for China’s government as it attempts to reduce risks in the financial system and curb speculation. Among the measures taken by Beijing are restrictions on conventional lending.

More Copper Prices

The price of US copper producer grade 122 fell 3 percent. The price of US copper producer grade 110 was off by 3 percent on Monday. The price of US copper producer grade 102 saw a 2.9 percent decline. The cash price of primary Japanese copper gained 0.7 percent.

On the LME, the primary copper cash price declined 1.8 percent to $6,930 per metric ton. The copper 3-month price weakened by 1.7 percent on the LME, settling at $6,915 per metric ton.

FREE Download: The Monthly MMI® Report – covering the Copper market.

Japanese palladium bar saw the largest upwards shift on the weekly Global Precious Metals MMI®, rising 7 percent. The price of US palladium bar rose 4.6 percent after falling 0.1 percent during the previous week. tThe price of Chinese palladium bar finished the week 4.2 percent higher.

* Get the complete prices every day on the MetalMiner IndX℠

The price of Japanese platinum bar rose 3.3 percent this week. Closing out the third week of rising prices, the price of US platinum bar increased by 1.6 percent. The price of Chinese platinum bar rose 1.0 percent. This was the third week in a row of increasing prices.

Tensions in Ukraine seemed to bolster the price of all precious metals as hard currencies. “Stock market weakness and gold strength this afternoon seem to stem back to the news from Crimea about shots being fired,” Saxo Bank’s head of commodity strategy Ole Hansen told Reuters. “It highlights the nervousness about what can happen.”

Investor sentiment towards gold continues to be positive this year after a 28 percent drop in prices in 2013.

FREE Download: The Monthly MMI® Report – covering the Precious markets.

The price of Japanese gold bullion finished the week 2.4 percent higher. The price of Indian gold bullion fell 1.5 percent after rising 0.4 percent the week before. Following a 2.3 percent increase in the week prior, the price of Chinese gold bullion fell 1.1 percent last week. The price of US gold bullion fell 0.8 percent.

Following a 0.8 percent increase in the week prior, the price of Indian silver fell 3.9 percent last week. The past week saw US silver post a 3.2 percent decline. Chinese silver prices were off slightly from a week ago. The price of Japanese silver rose 1.9 percent after falling 0.6 percent during the previous week.

The Global Precious Metals MMI® collects and weights 14 global precious metal price points to provide a unique view into precious metal price trends. For more information on the Global Precious Metals 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 European Union lodged a complaint at the World Trade Organization on Thursday against China’s imposition of anti-dumping duties on imports of stainless steel tubes, six months after Japan filed a similar case, the WTO said.

The complaint centers on high-quality steel products that China needs to build new power plants, crucial for its plans to upgrade and clean up its electricity infrastructure, Reuters reported.

FREE Download: The Monthly MMI® Report – covering the Stainless/Nickel markets.

China’s steel industry, by far the biggest in the world, found it could not produce the same products as cheaply as its Japanese and European rivals. Beijing suspected the imports were being priced unfairly and imposed the anti-dumping tariffs.

The Week’s Stainless and Nickel Prices on the IndX…

The week’s biggest mover on the weekly Stainless MMI® was the spot price of nickel, which saw a 9.0 percent increase on the LME to $15,450 per metric ton. This comes on the heels of a 0.6 percent decline the week prior. The 3-month price of nickel rose 8.9 percent on the LME to $15,480 per metric ton after falling 0.6 percent during the previous week. The cash price of primary Indian nickel rose more than 5 percent over the past week. This was the third week in a row of increasing prices.

* Get the complete prices every day on the MetalMiner IndX℠

Chinese stainless steel prices were mixed for the week. Chinese ferro-chrome remained unchanged for the week. Chinese ferro-moly traded sideways last week.

The price of Chinese primary nickel rose 1.7 percent after falling close to the same amount the previous week. Following a steady week, prices for Chinese 304 stainless steel scrap closed flat. The price of Chinese 316 stainless steel scrap did not change since the previous week. Chinese 304 stainless coil prices held steady . The week finished with no movement for Chinese 316 stainless coil.

Korean 430 stainless steel coil remained essentially flat. Prices for Korean 304 stainless coil remained constant.

The Stainless MMI® collects and weights 14 global stainless steel and raw material price points to provide a unique view into stainless steel price trends. For more information on the Stainless MMI®, how it’s calculated or how your company can use the index, please drop us a note at: info (at) agmetalminer (dot) com.

A judge overseeing litigation accusing Goldman Sachs Group, JPMorgan Chase & Co., their warehousing businesses and the London Metal Exchange of conspiring to reduce the supply and increase the price of aluminum will allow, for now, three groups of plaintiffs to pursue separate lawsuits, Reuters reported.

In an order dated March 6, US District Judge Katherine Forrest said she will let direct purchaser plaintiffs, commercial end-user plaintiffs and consumer end-user plaintiffs file their own complaints seeking class-action status, while giving defendants the right to object to those filings.

FREE Download: The Monthly MMI® Report – covering the Aluminum market.

The cash price of primary Indian aluminum moved up 0.6 percent on Friday, March 7, making it the day’s biggest mover. The 3-month price of aluminum changed direction with a 0.6 percent drop. After two days of improving prices, the metal finished at $1,774 per metric ton on the LME. The cash price of primary aluminum declined 0.5 percent on the LME to $1,732 per metric ton, after two days of improvement.

* Get the complete prices every day on the MetalMiner IndX℠

Chinese aluminum prices were mixed Friday. Chinese aluminum primary saw its price drop 0.2 percent to a 30-day low. The price of Chinese aluminum scrap was unchanged. The price of Chinese aluminum billet continues hovering in a short range. For the fifth day in a row, the price of Chinese aluminum bar remained essentially flat.

A recent article in the Economist explores the issue of commodity price benchmarks, those oft-quoted numbers that we take as gospel and, indeed, trillions of dollars of derivatives and contracts are priced against every year.

Numbers such as Dated Brent and Light Louisiana Sweet in the oil industry are matched by dozens of others in the metals markets. The Economist explains that rather than hard numbers, these are often the best estimation of price-reporting agencies (PRAs), businesses that make money by gathering market information and selling it to subscribers.

These are often not the standardized commodity contracts that trade transparently on busy exchanges such as Comex or the LME, exchanges that do not always cater to the many different specifications required by industry, the magazine explains. So PRAs, of which Platts is the largest, essentially estimate what the market price is based on information fed to them by buyers, sellers and brokers in the market.

FREE Download: The Monthly MMI® Report – price trends for 10 metal markets.

For most people, most of the time, this seems to work well enough, but the point of the article is that the European Union fears such unregulated benchmarking is open to abuse and needs more oversight.

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A minority of analysts are stimulating a debate predicting the aluminum market is, if not already in deficit, then in imminent threat of going into deficit.

A recent Reuters article entitled “Is this the year the world stops making too much aluminium?” details the issue. While we take issue with some of the article’s arguments, the subject is one that is causing concern among aluminum consumers as comments reported in the FT by Novelis underline.

Novelis says the rises in physical delivery premiums are indefensible and suggest the market is, rather than responding to reduced supply, being artificially squeezed. The US Midwest premium has risen to 20-21 cents per pound last week, according to CRU; that translates to about $450 per metric ton, or more than a quarter of the LME cash price.

FREE Download: The Monthly MMI® Report – covering the Aluminum market.

European and Japanese premiums have also risen to new highs of $330 per ton and $300 per ton, respectively, the FT article quotes CRU as saying.

Back to Reuters: the article compares the consensus position that the aluminum market remains in surplus, generally held to be somewhere around half a million tons a year, to the outlier positions of Barclays and Macquerie, both well-respected commodity players in their own right, who say the market is going to be between 400 and 1,000,000 tons in deficit this year.

Here’s where we take issue: with the article’s (and other articles’) continual references to China in the discussion of oversupply.

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A crystal ball may be a bit much, but an interesting note to investors from Standard Bank recently may be almost as good.

The report suggests metal prices may have further to fall in coming months. (MetalMiner’s December MMI® readings are already showing dropoffs for several sectors; check out our reports starting today.) The gist of the bank’s argument is that leading indicators give a good correlation to future price direction and specifically current conditions of oversupply in many metals makes them correlate even more closely now than at anytime since the early 2000s.

China’s leading economic indicator, as published by the National Bureau of Statistics of China, has been in a slow but steady decline since early 2010. This leading indicator typically leads real economic activity by between 6 and 12 months. At the same time, the US leading indicator, as published by the Conference Board, has been on a steady increase since it bottomed in early 2009. Both countries are due to publish the numbers for October shortly.

What Exactly Is a Leading Economic Indicator?

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ETF Securities (ETFS) recently released their Global Commodity ETP Quarterly Report. The Q3 news appears mixed particularly amongst three base metals – copper, aluminum, and zinc.

Industrial metals saw another quarter of net outflows ($195 million USD). For that, we can blame copper, which contributed $196m in outflows. The movement out likely comes down to the expected increase in supply of copper, keeping investors away. On the other hand, aluminum and zinc compensated with inflows of $59m and $24m, respectively.

Metal ETFs

So how do ETF inflows and outflows impact underlying metal prices?

For those of you less familiar with how ETFs function, we will cover this in a moment. However, whether one likes it or not, the investing and metal buying worlds do indeed work together.

FREE Download: The Monthly MMI® Report – covering the Aluminum markets.

Here’s my very simple explanation of ETFs:

  1. An institutional investor or Authorized Participant (AP) (he almost acts like a broker) puts up capital to buy the metal or group of metals that the ETF will track.
  2. Then, the AP delivers the metals to the ETF, which will physically hold them.
  3. In exchange, the ETF will create an equal value of ETF shares and give them to the AP.
  4. Finally, the AP will sell the shares in the open market and investors will buy them the same way they buy stocks. Read more

We spend quite a bit of time here at MetalMiner analyzing metal price trends to better understand not only what moves markets, but also where anomalies may exist and what that means for metal buying organizations. One trend that continues to trouble us involves the poor price performance of the rare earth metals sector.

It currently stands as our worst performing metal price index.

Exhibit One:

rare earths metals prices chart october 2013

Rare earths prices, October 2013. Source: MetalMiner IndX(SM)

Check it out for yourself. Download the free Monthly MMI® Report – covering the Rare Earths market.

Unfortunately, this price chart doesn’t tell the entire story. It tells the lay reader that, from a price perspective, rare earth metals as a whole have performed horribly since October 2012 (and we’d add they have performed horribly since January of 2012, which is when MetalMiner first launched the Rare Earths MMI).

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We won’t give away all 10 things most likely to happen to upset metal price trends in the 2014 market – that was reserved for you fine folks who made it to our live conference last week in Chicago, Commodity/PROcurement EDGE – but we will give our loyal readers a bit of a taste.

In the next few weeks, of course, a lot on the macroeconomic landscape depends on what the US Congress plans to do with the looming debt ceiling situation, as the less-important government shutdown lurks in the background. (For example, according to Carson Wealth, government funding has expired 10 times since 1981, and the government has closed down each time – to minor effect on overall GDP. However, a debt default could have worse consequences on the manufacturing sector.)

But from a market fundamentals standpoint, here are three events that could certainly shake up industrial metals markets in 2014, and, by extension, how your company should look at its buying approaches.

Gamechanger #1: Iron Ore Prices to Plummet?

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