Articles in Category: Non-ferrous Metals

MetalMiner experts recently joined ROTH Capital Partners for a webinar that covered a wide range of metals topics, including oil prices, macroeconomic trends, and insights into the aluminum, steel and copper markets.

bull market

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The webinar, which took place July 14, followed up on a previous MetalMiner-Roth webinar on May 20, 10 days after metals surged to record highs. Copper, for example, reached an all-time on May 10. MetalMiner CEO Lisa Reisman and Vice President of Business Solutions Don Hauser joined to share their insights on various markets, recapping metals movements in the two months since that peak.

If you missed it live, register here to receive a copy of the webinar recording to hear all of Reisman and Hauser’s insights from the hourlong webinar.

On July 28, get a sneak peek of the MetalMiner annual budgeting and forecasting workshop (a three-hour virtual event that will take place in August 2021). Get ready to plan for 2022. 

Bull market

While prices have come off of the record highs seen in May, they remain elevated. In short, we remain in a bull market.

“We are still in a bull market,” Reisman said. “The nonferrous metals are taking a pause but unless we see them start to fall off toward support levels … they’re still in a bull market.”

However, in terms of the “supercycle” narrative — which we have covered in this space previously — MetalMiner remains skeptical.

“The reason we’re struggling with the big supercycle narrative is that we would expect to see a decade, 1o years, of sustained, upward demand,” she said. “We don’t quite see that.”

With that said, metals demand currently is strong across a range of industries.

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This morning in metals news: global aluminum production rose in June compared to last year, the International Aluminum Institute reported; Ford of Europe reported its Q2 sales; and, lastly, June electricity demand surged amid a heat wave in the Pacific Northwest.

Each month, MetalMiner hosts a webinar on a specific metals topic. Explore the upcoming webinars and sign up for each on the MetalMiner Events page.

Global aluminum production rises in June

aluminum ingot

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Global aluminum production reached 5.55 million tons in June, the International Aluminum Institute reported Tuesday.

The June total marked an increase from 5.31 million tons in June 2020. However, output declined from the 5.75 million tons tallied in May 2021.

Furthermore, China’s output reached an estimated 3.25 million tons in June 2021, up from 3.03 million tons in June 2020. However, its output declined from May’s 3.35 million tons.

Ford reports Q2 Europe sales

Meanwhile, Ford of Europe touted sales of 242,618 vehicles in Q2 2021, up 43.7% year over year.

For the year to date (through June), Ford of Europe reported sales jumped 22.6% year over year.

According to the automaker, 46% of its passenger vehicle sales in Euro 20 countries in the second quarter were electric vehicles.

Electricity demand jumps in PNW

Amid a historic heat wave for the Pacific Northwest in June, electricity demand surged, the Energy Information Administration reported.

“A heat wave in the Northwest United States in late June led to more regional demand for electricity. During periods of high temperatures, electricity demand increases as people turn up their air conditioners, dehumidifiers, fans, and other cooling equipment,” the EIA reported. “Very high temperature events, like the one in June in the Northwest, tend to push electricity demand to very high levels.”

The MetalMiner Best Practice Library offers a wealth of knowledge and tips to help buyers stay on top of metals markets and buying strategies.

Government interference, even for the best of reasons, can have market-distorting effects.

Take, for example, calls by European aluminum producers to be excluded from the European Union’s Carbon Border Adjustment Mechanism (CBAM) carbon border tax proposal.

Do you know the five best practices of sourcing metals, including aluminum?

European aluminum producers want out of CBAM

E.U. flag

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According to a Financial Times report this week, European aluminum producers are calling for exclusion from the first phase of the E.U.’s CBAM. They claim the plan will put the industry at a competitive disadvantage to foreign rivals. The argue it will encourage firms to direct their low-carbon production to Europe and simply sell their high-carbon production elsewhere.

As such, the net effect will be little global reduction in carbon emissions but significant competitive damage to domestic European producers, whose own carbon footprint may not be as low as those foreign competitors.

Some European mills, like Norsk Hydro, have extensive hydroelectric-powered smelter capacity. However, smelters in Europe (including Norway) currently incur a carbon cost, which is part of their electricity prices, the Financial Times reports.

Even producers using hydro and nuclear power pay because of Europe’s marginal pricing system for electricity, which is usually set by coal-fired power stations.

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This morning in metals news: General Motors reported strong Q2 sales in China; miner Anglo American said it had completed its first maritime biofuel trial; and, lastly, the copper price has trended sideways so far in July.

Receive the latest short-term and long-term outlook for the full range of industrial metals (base and ferrous) at the annual MetalMiner Forecasting Workshop on Aug. 25

General Motors reports strong China sales in Q2

General Motors headquarters

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General Motors reported its Q2 sales with its joint ventures in China rose by 5.2%.

The automaker said vehicle deliveries totaled more than 750,000.

“The growth was driven by luxury and premium vehicles, midsize/large SUVs and MPVs, including the Cadillac CT5 and XT6, and Buick LaCrosse, Enclave and GL8 family,” GM said. “Sales of new energy vehicles (NEVs) across GM’s brands also posted a strong performance.”

GM also touted the expansion of its Ultium platform to China.

“In addition to offering popular EVs underpinned by SAIC-GM-Wuling’s locally developed GSEV platform, GM is bringing to China its advanced global EV platform – Ultium – which will empower a range of multi-brand and multi-segment EVs,” GM said. “The first Ultium-based model for China, the Cadillac LYRIQ all-electric SUV, made its global public debut at Auto Shanghai 2021, before it goes on sale early next year.”

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The Copper Monthly Metals Index (MMI) decreased by 7.3% for this month’s reading, as copper prices declined.

July 2021 Copper MMI chart

The MetalMiner Best Practice Library offers a wealth of knowledge and tips to help buyers stay on top of metals markets and buying strategies.

Copper stock

Since the beginning of the year, there have been concerns over copper production levels and stock availability.

LME on-warrant tonnages were at the 100,000/mt level, averaging 84,654 metric tons between January and June. However, throughout June, stock tonnage nearly doubled. Stock tonnage started the month at 97,975 tons and closed at 198,275 tons.

This could be a signal that speculative demand has adjusted. This is particularly true after China attempted to remove excessive speculation by issuing stern warnings to the domestic market, along with the recent release of state stock.

China’s efforts had a strong effect on the copper market. The country represents approximately 50% of global copper consumption.

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The Aluminum Monthly Metals Index (MMI) increased by 0.9% this month, as aluminum prices traded mostly sideways but remained historically high.

July 2021 Aluminum MMI chart

Are you under pressure to generate aluminum cost savings? Make sure you are following these five best practices.

Aluminum prices

Throughout June, LME aluminum prices cooled off. However, in the last week of the month, prices picked up and surpassed the $2,550/mt mark by the first week of July.

Trading volumes during the first week of July were lower than the June average of 14,426 metric tons. Volumes were heavier on days when the price went down, meaning there is no strong market signal.

Chinese prices trended differently from their LME counterpart. Chinese aluminum prices traded sideways throughout June and the first week of July. In June, trading volumes approximately tripled as the price went up but immediately declined, along with the price which could signal a bullish market.

Russia to impose export tax on metals

The economy minister of Russia, Maxim Reshetnikov, announced that the government was contemplating adding an export duty of at least 15% for steel, nickel, aluminum and copper, effective Aug. 1 through the end of the year.

The measure comes as an effort to protect its defense and construction industries as metal prices continue to rise globally.

However, these tariffs could have a particularly negative global implication for the aluminum market. Rusal controls about 10% of the global aluminum sector.

Moreover, Russia is the second-largest exporter of primary aluminum to the U.S. As such, the U.S. domestic aluminum market would feel an even bigger squeeze, causing further increases in the Midwest premium.

Tight supply

According to Bloomberg, buyers in Japan agreed to pay a premium of $185 per ton above LME prices for the coming quarter, the highest in six years.

This is a sign of a tight aluminum market. As the World Bureau of Metal Statistics reported this month, the aluminum market from January to April 2021 posted a deficit of 588,000 tons.

The deficit is due to a rapid turnaround in the economy. Demand slowed as travel declined early on during the pandemic but has since snapped back strongly.

The price rally has triggered several countries to take measures to help put a cap on price increases. Russia appears poised to implement export tax changes. Furthermore, China plans to release strategic reserves of the metal for the rest of the year.

New aluminum recycling plant

Norwegian industrial company Hydro Aluminum Metal signed a letter of intent to purchase a property in Cassopolis, Michigan, with the objective of building an aluminum recycling plant. The plant will produce aluminum extrusion ingot for use in critical automotive applications, in addition to other transportation and building systems.

The plant is estimated to cost a total of $120 million with a 120,000-metric ton capacity. The final product will be Hydro’s signature “Hydro CIRCAL® extrusion ingots, which contain at least 75% post-consumer scrap certified by third party auditors DNV GL.” The ingots have a CO2 footprint of 2.3 kg CO2e/kg aluminum, Hydro said.

Actual metals prices and trends

LME three-month aluminum increased by 4.1% month over month to $2,535 per metric ton as of July 1.

Chinese primary cash aluminum decreased by 2.0% to $2,901 per metric ton. Chinese aluminum scrap declined by 1.3% to $2,060 per metric ton. Meanwhile, Chinese aluminum billet went down by 1.3% to $2,380 per metric ton.

European 1050 aluminum sheet increased by 2.0% to $3,649 per metric ton.

Indian primary cash declined by 2.2% to $2.266 per kilogram.

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Russia’s plan to introduce from Aug. 1 a temporary export duty on metal exports has brought varied reactions from European industry watchers and market participants.

“It’s about showing the strength of the Russian metals industry,” one analyst told MetalMiner.

Russia’s planned tariff may also be a retaliatory measure against Europe and its proposed carbon tax on metals imports from high-carbon producers, of which Russia is one, the analyst added.

“It feels like it is a broadside shot,” the analyst said.

The MetalMiner Best Practice Library offers a wealth of knowledge and tips to help buyers stay on top of metals markets and buying strategies.

Russia export duty to cover steel, base metals

tariff

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The Russian Federal Government’s Decree No. 988 of June 25 stipulates a 15% export duty from Aug. 1 to Dec. 31 on all steel – semi-finished and finished – as well as on copper nickel, and low-grade aluminum leaving the country and the wider Eurasian Economic Union (EAEU).

Member states of the EAEU include Armenia, Belarus, Kazakhstan, Kyrgyzstan and Russia. In addition, Cuba, Moldova and Uzbekistan are observer states.

One of the more likely beneficiaries in Europe from the duty is the steel sector, sources told MetalMiner.

“Everybody loves this,” one analyst said about Russia’s tentative export duty, as it could further push up already-high prices for steel products in Europe.

Domestically produced hot rolled coil for Q4 production within Western Europe is now €1,170-€1,200 ($1,390-1,420) per ton exw, traders said. That marks an increase from the €1,120-1,130 ($1,370-1,385) reported earlier in June.

Planned shutdowns of rolling equipment or banking of hot ends for maintenance over Europe’s summer months could also further push up prices in the face of high demand throughout Western Europe, the analyst stated.

One steel trader voiced a similar opinion.

“This is great for everybody” the trader noted, as the decree will push up steel prices on both the domestic and import markets.

“Who’s gonna wait until the end of the year to acquire steel if Russia is out of the market?” the trader rhetorically asked.

Ukraine’s Metinvest is likely to also benefit from this. The group is a major supplier of long products into the E.U. Resulting higher prices will also mean more revenue.

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Just when European aluminum buyers thought the situation could not get any worse, the Russian authorities decided to slap export duties — set at 15% as a base rate or a specific minimum of $254 per ton — on exports of aluminium ingot and billet.

The export tariffs will apply to some 340 nonferrous and steel products, according to the official decree signed last month. For aluminum, it will cover those HS code products starting 760110.

Are you under pressure to generate aluminum cost savings? Make sure you are following these five best practices

European aluminum market

aluminum ingot

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The European aluminum market is already extremely tight for semi-finished aluminum products Many mills are booked out until the end of the year. Those that do have capacity for the fourth quarter are further increasing conversion premiums by up to 30% in just the last couple of weeks.

The rising cost of Russian ingot and billet supplies will add to the already elevated Rotterdam delivery premiums. In time, they will add to US Midwest delivery premiums and Main Japanese Port physical delivery premiums.

In Rotterdam, Fastmarkets reported that the P 1020 premium in warehouse duty paid Rotterdam price increased from $250-$260 per ton in late June to $280-$300 per ton last week.

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Before we head into the weekend, let’s take a look back at the week that was and some of the metals storylines here on MetalMiner.

This week, we touched on the USMCA (which turned 1 on Thursday), Stuart Burns covered the relationship between inventory levels and metals demand, and much more.

On the USMCA — which went into effect July 1, 2020, almost four years after NAFTA talks began — United States Trade Representative Katherine Tai offered some comments this week on the occasion.

“We should also celebrate the USMCA because of what it represents: a renewed commitment by our three countries to pursue negotiations that raise standards and create a race to the top,” she said.

Furthermore, USMCA trade ministers will meet in Mexico City on July 7 to commemorate the one-year anniversary of the trade agreement.

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Week of June 28-July 2 (USMCA, metal stock levels and more)

USMCA

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  • The global lead and zinc markets were in surplus through the first four months of 2021, the International Lead and Zinc Study Group said.
  • Meanwhile, GDP rose in all 50 states in the first quarter, the Bureau of Economic Analysis (BEA) reported.
  • In addition, Stuart Burns covered Russia’s plans to impose export taxes on key metals.
  • U.S. steel capacity utilization for the week ending June 26 reached 82.7%, the American Iron and Steel Institute reported.
  • The U.S. Court of International Trade made a ruling affirming duty levels set by the Department of Commerce with respect to heavy walled rectangular steel pipes and tubes from Korea.
  • Burns on the loss of support for the zinc price.
  • The E.U. voted to extend steel safeguards, originally imposed in 2018, for an additional three years.
  • The USMCA Labor Council convened for the first time, pursuant to the 1-year-old agreement’s chapter on labor.
  • Think stock levels are a reliable indicator of true metals demand? Think again.
  • Norsk Hydro has signed a letter of intent to build an aluminum recycling plant in Michigan.
  • Meanwhile, the United States-Mexico-Canada Agreement, or USMCA, hit the one-year mark this Thursday.
  • The U.S. goods and services deficit rose in May from the previous month.
  • Lastly, for subscribers, the MetalMiner Monthly Outlook for July is now available.

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This morning in metals news: Norsk Hydro today announced it signed a letter of intent to build a new aluminum recycling plant in Cassopolis, Michigan; the Census Bureau released construction spending data; and, lastly, the zinc price posted some gains this week.

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Norsk Hydro to build aluminum recycling plant in Michigan

Norsk Hydro

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Oslo-based Norsk Hydro has signed a letter of intent to build an aluminum recycling plant in Michigan.

The plant will produce aluminum extrusion ingot for automotive applications. Norsk Hydro said it aims to build the plant by 2025.

“The LoI between Hydro Aluminium Metal and landowner Midwest Energy and Communications (MEC) is based on Hydro’s intention to build a facility in Cassopolis producing 120,000 metric tonnes per year from 2023 with around 70 direct employees,” Norsk Hydro said. “The total project investment is currently estimated to be around $120 million, depending on final facility design, market conditions and macroeconomic development.”

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