Articles in Category: Non-ferrous Metals

Wondering why aluminum prices have pulled back from highs of $2,200 per metric ton on the LME?

After all the hype about environmentally driven smelter closures in China this year and the additional curtailments to be forced on the market in certain provinces during the winter heating seasons, most were expecting the run up in prices to hold steady (at least during the winter period).

Two-Month Trial: Metal Buying Outlook

In practice, although prices have made impressive gains from lows of $1,700 per ton earlier this year to five-year highs of over $2,200 per metric ton, it was largely on the pretext of constrained primary metal supply that it is beginning to become apparent is not happening.

According to China’s National Bureau of Statistics (admittedly not the most reliable of sources) Reuters reports China’s aluminum smelters churned out 2.35 million metric tons of the metal in November, down 7.8% from 2.55 million tons in October and down 16.8% from a year ago.

In reality, while headline smelter capacity has been closed, new planned capacity has continued to quietly come onstream.

Read more

gui yong nian/Adobe Stock

This morning in metals news, global steel output rose last month, Chinese aluminum smelter cuts have fallen short, and a Trump administration official said the president’s new security strategy backs the case for potential tariffs on steel and aluminum.

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

Global Steel Output Up

Although Chinese capacity cuts are on the horizon, global crude steel output rose by 3.7% in November, Reuters reported.

China’s goal of cutting capacity, in an effort to reduce pollution in the country, is expected to eat into that global output total.

November crude steel output in China hit a nine-month low, according to the report.

Meanwhile, in Aluminum Cuts…

How about Chinese efforts with respect to aluminum smelter closures?

According to Reuters, that has fallen short, as China has failed to implement closures for the winter season. As a result, the aluminum price has struggled in the face of record inventories in China.

New Security Plan Boosts Case for Steel, Aluminum Tariffs

As the metals industry waits for a resolution to the Trump administration’s Section 232 probes of steel and aluminum imports, a Trump administration official on Tuesday said the president’s new security strategy supports the case for steel and aluminum tariffs, Reuters reported.

Free Sample Report: Our Annual Metal Buying Outlook

The Section 232 probes, launched in April, “are being discussed in the context of national security,” the official told Reuters. “The strategy highlights the importance of industrial strength, and that is also an element of the 232 analysis.”

gui yong nian/Adobe Stock

This morning in metals news, U.S. raw steel production for the week ending Dec. 16 was up from the same week in 2016, Tata Steel is working on technology that cuts emissions and potential copper strikes in 2018 could significantly impact supply going forward.

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

U.S. Raw Steel Production Rises 5.7%

For the week ending Dec. 16, raw steel production in the U.S. was up 5.7% compared with the same week in 2016, according to weekly data from the American Iron and Steel Institute (AISI).

Production for the week was 1,698,000 net tons (NT), which was also up 1.6% from the week ending Dec. 9.

Tata Steel Eyes Emissions Cuts

According to a report in the Financial Times, Tata Steel’s work on technology that can curb emissions has reached its final stage at the firm’s Netherlands facility.

The method, dubbed HIsarna, being tested by Tata aims to potentially replace traditional blast furnaces for making liquid iron.

According to Tata, the process cuts out several steps in the traditional process, resulting in an approximately 20% reduction in emissions.

Copper Strikes on the Horizon?

For copper watchers, labor negotiations in Chile and elsewhere could result in further strikes and, consequently, a tightening of global supply.

Reuters’ Andy Home touched on the possibility of strikes affecting copper miners’ operations next year.

Free Sample Report: Our Annual Metal Buying Outlook

In fact, three strikes have already taken place at South American operations in recent weeks, Home reported, including one last week at the Quebrada Blanca mine in Chile.

The labor strife has yet to have a significant impact on the copper price, Home reported, but with a significant number of contracts up for renewal in Chile, a failure to find common ground could lead to a rising copper price next year.

Pavel Ignatov/Adobe Stock

This morning in metals news, the Japanese steel industry’s output is expected to grow next year, lenders have a new plan for Essar Steel, and China’s zinc and copper outputs in November were at their highest since late 2014.

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

Japanese Steel Sector Set to Ramp Up Output

According to the Japan Iron and Steel Federation, the country can expect to see increased crude steel output in 2018 and 2019.

According to Reuters, Kosei Shindo, the chairman of the Japan Iron and Steel Federation, said “I hope that crude steel output (for next business year) would exceed 10.6 million tonnes.”

A New Plan for Essar Steel

In its insolvency proceedings, lenders to Essar Steel have reduced the time allowed to resolve the firm’s default, according to a report by the Economic Times.

The “single stage” process, according to the report, means any interested bidder has to meet both the conditions to be considered by the bankers, according to the report.

China Zinc, Copper Output Up

China’s output of copper and zinc in November was at its highest since December 2014, according to Reuters.

Free Sample Report: Our Annual Metal Buying Outlook

According to the report, China’s refined copper output increased 9.8% to 786,000 tons, while zinc production rose 7.5% to 603,000 tons.

stockquest/Adobe Stock

This morning in metals news, Chinese aluminum output fell to its lowest total since February 2015, Liberty House considers buying a large Rio Tinto smelter in France and copper approaches a two-week high.

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

Chinese Aluminum Output Falls

Chinese primary aluminum production dropped for a fifth straight month, Reuters reported.

In fact, winter smelting restrictions saw output fall to its lowest in the country since February 2015, according to the report.

Liberty House Eyes Rio Tinto Smelter

According to Reuters, Liberty House is considering a bid for Rio Tinto’s aluminum smelter in northern France.

The Dunkirk plant is valued at around 200 million euros, according to Reuters sources familiar with the matter.

Copper Rises Near Two-Week High

A weakening dollar and positive Chinese manufacturing data saw copper rise on Thursday, Reuters reported.

The Chinese industrial sector grew faster in November than markets expected.

Free Sample Report: Our Annual Metal Buying Outlook

London Metal Exchange copper traded at $6,760 a ton in official midday rings, according to the report.

We’re another month closer to the end of the calendar year, and there’s much to recap from the last month in metals.

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

After four MMIs ticked upward for our November reading, five did so for our latest report.

Hitting some of the high points:

  • The biggest winners of the month were the Automotive, Construction and Raw Steels MMIs. Automotive picked up four points, while Construction and Raw Steels picked up five points apiece.
  • The Aluminum MMI tracked back down, losing four points after a five-point rise the previous month. As Irene Martinez Canorea wrote, a dropping LME aluminum price had much to do with the sub-index’s drop.
  • The Stainless MMI, meanwhile, fell five points on the month. In this case, a 10% decline in nickel prices contributed to the MMI’s fall. Trading volume for LME nickel is still strong, Martinez Canorea wrote, and the outlook for nickel remains bullish.

You can read about all of the aforementioned — and much more — by downloading the December MMI report below.

The Copper MMI dropped one point this month, primarily driven by a 0.6% drop in the LME copper price.

This comes as no surprise as base metal price increases have slowed in November, while LME copper prices saw a small pullback.

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

Source: MetalMiner analysis of FastMarkets

During the first week of December, LME copper prices fell sharply. However, we can expect these movements in bullish markets as a mechanism for prices to digest previous gains.

Trading volumes also support the uptrend. LME copper prices remain well above May levels, when MetalMiner provided a “buy signal” to forecast subscribers.

Chinese copper output could increase by 300,000 tons in 2018. Some analysts suggest higher output together with a slowdown in the Chinese real estate market may result in a slight cooldown for copper prices.

However, no signs suggest a cooldown.

According to the International Copper Study Group (ICSG), the market could see a a 50,000-ton deficit for 2017 and a 105,000-ton deficit next year.

Copper Scrap vs. LME Copper

The drop in scrap prices this month appears sharper than the one for LME copper prices. Chinese scrap prices decreased by 2.71% this month. However, both LME copper and Chinese scrap copper do tend to follow a similar trend.

What This Means for Industrial Buyers

As copper prices remain bullish, buying organizations may want to “buy on the dips.”

For LME copper prices, buying organizations can also read more about longer-term copper price trends with our free 2018 Annual Outlook, or take a free trial now to the Monthly Outlook.

Free Sample Report: Our Annual Metal Buying Outlook

Actual Copper Prices and Trends

For full access to this MetalMiner membership content:
Log In |

The Renewables MMI dropped 2.5% for the month of December, ending at a value of 78.

Here’s What Happened

  • Since our recalibration of this index back in May 2017 to better take into account cobalt price fluctuations, the Renewables MMI has been slowly but surely gaining ground the latter half of 2017, hitting a high of 84 in September.
  • Within this basket of metals and materials used in the renewable energy industry, the Big Heavy is the U.S. steel plate price. Yet from November to December, that price point only dropped a single dollar per short ton.
  • The China steel plate price, however, did move much more – increasing 4.3% on the month.

What’s Going On in the Background?

  • The biggest news for the renewables industry has been the controversial tax plan put forth by legislators and still awaiting final House/Senate reconciliation – mainly, the fact that the Base Erosion Anti-Abuse Tax (BEAT) has been kept intact in the latest version of the Senate bill.
  • As Sydney Lazarus wrote in MetalMiner last week, currently, “many companies have large multinational corporations finance wind or solar energy projects, and in return, give the latter the renewable energy credit that the government provides.” But the BEAT tax, which is meant to discourage multinationals from moving profits abroad — and which the Senate bill kept intact — would make the crucial solar investment tax credit (ITC) and wind production tax credit (PTC) “unusable for multinational banks and other corporations who have low tax rates,” according to this article.
  • It’s unclear if this move was intentional or not, but regardless, it injects huge uncertainty into the renewable energy industry as the bill hurtles toward law. (Some, such as American Wind Energy Association’s Peter L. Kelley, say it “could put an end to more than half of the country’s wind projects,” as reported by Lazarus.

What Metal Buyers Should Look Out For

  • Keep an eye out on steel plate’s raw material inputs — iron ore prices increased over the past month, as we reported in our December Monthly Buying Outlook, while coal prices decreased. Although steel plate prices appear a bit sluggish at the moment, China’s demand is something worthy of paying attention.

Key Movers and Shakers: Exact Prices

Sign up or log in below to get exact pricing!

For full access to this MetalMiner membership content:
Log In |

The Construction MMI, tracking metals and raw materials used within the construction industry, surged 5.5% to a value of 95 for December.

Here’s What Happened

  • Every single price point comprising the Construction MMI — including ferrous, non-ferrous and scrap components from the U.S., Europe and China — rose as of Dec. 1, with the exception of U.S. steel bar fuel surcharges.
  • The biggest mover appeared to be the Chinese rebar price, spiking 17.7% from November to December.
  • We’ve breached new territory with this month’s reading. Not since May of 2012 has the Construction MMI performed this strongly.

What’s Going On in the Background?

  • Here’s what we wrote back in May: “We’re in the salad days for the U.S. construction sector, at least as far as 2017 is concerned.” According to the Associated General Contractors’ analysis, construction spending was at record levels for the second straight month in March,” as quoted by Well, after a bit of a summer slowdown, it’s looking even better this month to round out 2017 as a pretty great year for the sector.
  • The Commerce Department said last week “that construction spending increased 1.4 percent to a record high $1.24 trillion, the swiftest advance in five months,” according to Reuters, exceeding analysts’ expectations and driven by state, local and especially federal government spending.
  • To boot, the AIA announced mid-last month that “the monthly Architecture Billings Index (ABI) came in at a score of 51.7 in October, up 2.6 points from September’s score of 49.1.” The ABI is a leading economic indicator of U.S. construction activity, and “reflects a nine- to 12-month lead time between architecture billings and construction spending nationally, and regionally, as well as by project type,” according to the article linked above.

What Metal Buyers Should Look Out For

  • Interestingly, a longer-term ABI uptrend appears to be firmly in place — since 2012, the index looks to be achieving “higher highs” each time it peaks.
  • “As we enter the fourth quarter, there is enough design activity occurring that construction conditions should remain healthy moving through 2018,” said AIA chief economist Kermit Baker, Hon. AIA, in a press release, according to Architect Magazine.
  • MetalMiner analysts are generally bullish on both the industrial (especially base) metals complex and commodities overall, which can be seen directly in this month’s surges of our MMI sub-indexes such as Construction and Automotive.
  • Although prime contracting season usually starts in the November period and steel prices historically tend to rise this time of year, steel prices’ behavior has not shown enough strength to spur bullishness. Get more insight on that in our latest Monthly Outlook Report. (Free two-month trial here.)

Key Movers and Shakers: Exact Prices

For full access to this MetalMiner membership content:
Log In |

The Aluminum MMI dropped four points this month, falling to 95. The drop came on the back of lower LME aluminum prices for November. Aluminum prices decreased by 5.6% during this month.

MetalMiner expected this retracement because aluminum prices rallied since August, and broke our own resistance levels (upper price ceiling). When prices pull back, buying organizations can buy on the dips. Despite November’s price declines, the early days of December show price increases.

Source: MetalMiner analysis of FastMarkets

SHFE aluminum spot prices also decreased in November. The SHFE tends to follow LME trends. We could see the SHFE spot prices increase at any time.

Source: MetalMiner analysis of FastMarkets

Both LME and SHFE prices have traded sideways since the rally back in August, holding above the $1,970/mt level. Trading volumes still signal upward momentum, so buying organizations need to consider their longer-term buying strategies.

Macro-economics also support aluminum prices. November saw a higher CRB index (which we will cover in depth in an article tomorrow), driven by skyrocketing oil prices as well as other raw materials such as iron ore and alumina. Aluminum faces significant raw material price pressure. Generally, increasing raw material and gasoline prices result in aluminum price increases.

Gasoline prices. Source: MetalMiner analysis of Stockcharts.

MetalMiner previously reported that the Commerce Department announced a new self-initiated antidumping and countervailing duty investigation on imports of Chinese common aluminum alloy sheet at the end of November. The estimated dumping margin is in the range of 56.54% to 59.72% for Chinese imports.

Low-Carbon-Footprint Aluminum

Low-carbon aluminum is becoming more popular among carmakers. Low-carbon aluminum differs from traditional alloys by the way it is produced — using hydropower instead of high-emission fossil fuels. Low-carbon aluminum can cut emissions by half by changing the way aluminum is produced (averaging around eight tons of carbon dioxide in Europe and the U.S.). But producing and buying low-carbon aluminum is not free. Aluminum smelters will charge “green premiums” for the newest trend in aluminum. Will buying organizations be paying this new premium?

Aluminum Scrap

Another trend aluminum smelters have deployed involves using aluminum scrap instead of raw materials. Recycled aluminum requires only 5% of the energy used for the complete process. Recycled aluminum includes up to 75% of aluminum scrap, but cannot be used in every industry. The auto industry, for example, requires higher-quality aluminum.

Source: MetalMiner data from MetalMiner IndX(™)

Chinese aluminum scrap prices increased and appear in a long-term uptrend since 2016. However, the latest drop in LME and SHFE aluminum prices also results in a drop in aluminum scrap prices. Chinese scrap prices decreased this month by 9.5%.

What This Means for Industrial Buyers

Despite aluminum prices dropping this month, aluminum remains bullish. Therefore, adapting the “right” buying strategy becomes crucial to reduce risks by knowing when to buy. Oil and gasoline prices have breached their sideways trend and have supported aluminum prices.

Actual Aluminum Prices and Trends

For full access to this MetalMiner membership content:
Log In |