Articles in Category: Precious Metals

After a scorching six-month uptrend, the Global Precious Monthly Metals Index (MMI) couldn’t get any hotter even as spring officially came around the corner, finally succumbing to a cooldown in April.

Need buying strategies for steel? Request your two-month free trial of MetalMiner’s Outlook

The subindex tracking a basket of gold, silver, platinum and palladium prices from four different geographies dropped three points to 95 for the April reading — a 3.1% decrease — driven by a drop in palladium and platinum prices.

Even though the U.S. palladium price has cooled off a bit to begin the month of April, this marks the third month in a row it has traded higher than the gold price (even though the spread is a bit tighter).

As tracked by the MetalMiner IndX, the U.S. palladium bar price stood at $1,401 per ounce on April 1, an 8% drop from March 1.

In fact, every single constituent metal price comprising the Global Precious MMI basket — 14 in all — fell this month.

The Latest Palladium Price Outlook

According to a recent Kitco News report, BMO Capital Markets has “hiked their forecast for palladium sharply, looking for it to remain underpinned by a tight supply-demand picture and maintain a large price premium over sister metal platinum for the foreseeable future.”

The report states BMO “upped its average price forecast for palladium by 45% to $1,612.50 an ounce this year and upped its 2020 outlook by 11.3% to $1,112.50.

“As the premium over platinum continues to hit new records, there can be no doubt palladium is in a heavy market deficit at present amid stagnant supply and higher catalyst loadings for gasoline vehicles,” said BMO, as quoted by Allen Sykora of Kitco News. “And with substitution being a slow burn rather than an immediate fix, there remains decent potential for further upside. Qualifying a new catalyst is an expensive and time-consuming process, and we would expect this to occur only when the next range of vehicle models emerges.”

Sykora goes on to report “the bank figures that substitution to platinum will eventually occur, thus 2019 will be the peak for palladium prices.”

How tight is the supply market for palladium? Still as tight as we reported last month.

“‘The market is still fundamentally tight,” said Philip Newman, of the Metals Focus consultancy, as quoted by Reuters. In addition, the consultancy forecasts a 789,000-ounce shortfall this year in the 10 million ounce-a-year palladium market — and deficits of a similar size for several years after that, Reuters reported.

“Once the dust settles [on this latest downward blip for palladium], prices will start to recover,” he is quoted as saying.

MetalMiner’s Annual Outlook provides 2019 buying strategies for carbon steel

What This Means for Metal Buyers

Expect palladium prices to be relatively well-supported in the long term (over the next 6-12 months or so), if this supply strain continues.

According to a recent report from the U.S. Geological Survey (USGS), U.S. mines churned out $82.8 billion worth of minerals in 2018.

Need buying strategies for steel? Request your two-month free trial of MetalMiner’s Outlook

The 2018 total marked a 3% year-over-year increase from $79.7 billion in 2017, according to the report from the USGS National Minerals Information Center.

“The Mineral Commodity Summaries provide crucial, unbiased statistics that decision-makers and policy-makers in both the private and public sectors rely on to make business decisions and national policy,” said Steven M. Fortier, director of the National Mineral Information Center, in a prepared statement. “Industries – such as steel, aerospace and electronics – processed nonfuel mineral materials and created an estimated $3.02 trillion in value-added products in 2018, which is a 6 percent increase over 2017.”

The report highlights the U.S.’s dependence on foreign sources for a number of minerals. According to the report, “imports made up more than half of U.S apparent consumption for 48 nonfuel mineral commodities, and the U.S. was 100 percent net import reliant for 18 of those.”

Of the 18 commodities for which the U.S. is totally reliant on imports, 14 were named on a critical minerals list designated in May 2018 by the U.S. Department of the Interior.

The full list of critical minerals included: aluminum (bauxite), antimony, arsenic, barite, beryllium, bismuth, cesium, chromium, cobalt, fluorspar, gallium, germanium, graphite (natural), hafnium, helium, indium, lithium, magnesium, manganese, niobium, platinum group metals, potash, the rare earth elements group, rhenium, rubidium, scandium, strontium, tantalum, tellurium, tin, titanium, tungsten, uranium, vanadium, and zirconium.

China topped the list of exporters of nonfuel minerals to the U.S., followed by Canada. As noted in our Rare Earths MMI series, the U.S. — the whole world, in fact — is largely dependent on China for rare earths elements, as China controls most of the sector.

Unsurprisingly, when it came time for the Trump administration to roll out a finalized list of tariffs in September — $200 billion worth in tariffs on Chinese goods, in addition to the $50 billion worth of tariffs imposed earlier in 2018 — rare earths were left off the list.

While it certainly is not enough to counterbalance China’s dominance in the sector, the USGS report notes rare earth mining resumed in the U.S. last year for the first time since 2015, when Molycorp, owner of the Mountain Pass rare earths mine, declared bankruptcy. Mountain Pass, the U.S.’s only operating rare earths mine, was eventually sold to MP Mine Operations LLC for $20.5 million in 2017.

Minerals Production Up, Metal Mine Production Down

Breaking down U.S. mine production further, U.S. industrial minerals production came in at a value of $56.3 billion last year (up 7% from 2017), while metal mine production checked in at an estimated $25.9 billion (down 4% from 2017).

Crushed stone, construction sand and gravel accounted for 45% of industrial minerals production, at a value of $25.3 billion. Meanwhile, gold, copper, iron ore and zinc led the way in metal mine production.

MetalMiner’s Annual Outlook provides 2019 buying strategies for carbon steel

Other Highlights

A few other items of note from the USGS report:

  • U.S. imports of aluminum fell by an estimated 11% last year, as the U.S.’s Section 232 tariff on imported aluminum went into effect. Argentina and Australia were exempted from the duty (Argentina was tagged with a quota), while the tariff rate for Turkish aluminum doubled amid diplomatic tensions last year.
  • A New York zinc mine, last operational in 2008, reopened last year.
  • Twelve states produced more than $2 billion worth of nonfuel mineral commodities in 2018, according to the report. The list includes, in descending order: Nevada, Arizona, Texas, California, Minnesota, Florida, Alaska, Utah, Missouri, Wisconsin, Michigan and Wyoming.

Piotr Pawinski/Adobe Stock

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

Need buying strategies for steel? Request your two-month free trial of MetalMiner’s Outlook

  • The palladium price continues to soar, MetalMiner’s Taras Berezowsky explained in this month’s Global Precious MMI.
  • Rare earths miner Lynas Corp. is appealing a condition put forth by the Malaysian government related to the miner’s license renewal.
  • Stainless steel surcharges and LME nickel prices made gains this past month.
  • The copper price also trended upward last month, but it could be entering a sideways trend.
  • MetalMiner’s Stuart Burns writes about recession concerns in the U.S. and elsewhere, and signs pointing in that direction.
  • Several billionaires are backing a new startup that aims to find new sources of cobalt, using “statistical modeling, big data aggregation, and basic science” to improve methods of exploration.
  • ArcelorMittal’s resolution plan for the bankrupt Essar Steel Ltd. received approval from an Indian tribunal — but an additional challenge awaits, MetalMiner’s Sohrab Darabshaw explained.

MetalMiner’s Annual Outlook provides 2019 buying strategies for carbon steel

If you’re in the midwestern U.S., chances are your March has gotten off to a more-frigid-than-normal start.

Need buying strategies for steel? Request your two-month free trial of MetalMiner’s Outlook

Not so for the Global Precious Monthly Metals Index (MMI), which has gotten even hotter.

The subindex tracking a basket of gold, silver, platinum and palladium prices from four different geographies shot up four more points to hit 98 for the March reading — a 4.3% increase — driven by a still-scorching palladium price that began its second month in a row higher than the gold price.

In fact, the U.S. palladium bar price, as tracked by the MetalMiner IndX, hit $1,522 per ounce on March 1. That level has never been seen in the history of the MMI series, which began in January 2012.

Forget your road salt or other de-icer — just throw some palladium on your slippery sidewalk, it should melt the ice in no time!

All of this is to say that the Global Precious MMI is now in a six-month uptrend.

Meanwhile, the U.S. platinum bar price rose slightly, but not nearly enough to eat into the spread with its sister platinum-group metal (PGM). The U.S. gold price faltered a bit, beginning the month at $1,312 per ounce (about $8 per ounce lower than last month). Silver prices also dropped across the four tracked geographies.

Palladium Market News and Notes

Last month, we reported that the global palladium supply shortage is still the top driver, with a shortfall of more than 1 million ounces this year and next as estimated by researchers Refinitiv GFMS, according to Reuters.

It looks as though Norilsk Nickel is getting on that forecast bandwagon as well.

Norilsk (also known as Nornickel), which produces 40% of the world’s nickel, said “in 2019 the global palladium market deficit is forecast at 800,000 ounces compared with 600,000 ounces in 2018, with consumption up by 500,000 ounces to 11.2 million ounces due to strong demand from autocatalyst producers,” according to a recent Reuters report.

“(The) spot palladium market practically dried out” in 2018, Nornickel is quoted as saying. According to the Reuters report, the company said the “supply tightness was partly eased by the release of stocks from palladium ETFs (exchange-traded funds), which fell below 1 million ounces for the first time since 2009, and from Nornickel’s Global Palladium Fund.”

Meanwhile, the World Platinum Investment Council said the global platinum market will see a surplus of 680,000 ounces in 2019 (after a surplus of 645,000 ounces in 2018), resulting from supply growth of 5%, which exceeds demand growth, according to a press release.

MetalMiner’s Annual Outlook provides 2019 buying strategies for carbon steel

All of this conspires to keep the platinum-palladium spread wider than ever.

Zerophoto/Adobe Stock

Gold is back in the news in India, the second-largest consumer market in the world.

Gold prices have been moving upward, buoyed by several conditions, since January.

Need buying strategies for steel? Request your two-month free trial of MetalMiner’s Outlook

On Feb. 6, for example, retail gold prices touched approximately U.S. $461 (Rs 33,000) per 10 grams in Mumbai and over U.S. $474 (Rs 34,000) in Ahmedabad, nearing new all-time record highs. This was in contrast to prices in London, which held flat in U.S. dollar terms.

Gold prices globally on the same day held firm after U.S. President Donald Trump’s State of the Union address, but a firmer dollar stopped the bullion’s gains. Spot gold was steady at $1,314.30 per ounce in intraday trading. U.S. gold futures were also steady at $1,318.20 per ounce.

Any rise in consumption by India is welcome, as it will push up global prices currently near an eight-month high.

Gold analysts anticipate a rise in India’s gold demand this year. The World Gold Council (WGC) recently said prices could go above the 10-year average.

The WGC estimated consumption this year in India would go up to 750-850 tons versus 760.4 tons of last year, according to Somasundaram PR, managing director of WGC’s Indian operations, as quoted in The Economic Times.

If one were to look at the consumption data of the last decade, demand by Indian consumers has averaged 838 tons.

What may push up gold consumption is more purchasing power in the hands of Indians this election year, as the present government unveils policies with an eye on the polls.

Much of this growth is anticipated from the country’s rural sector. Almost all of India’s gold is imported, and this incoming movement has been affected by the Indian government’s efforts to restrain its trade deficit by measures to discourage investors who used gold to evade taxes.

MetalMiner’s Annual Outlook provides 2019 buying strategies for carbon steel

In addition to this being an election year, the wedding season is another reason for the spurt in gold buying.

Last month, we wrote that winter was apparently “just heating up” for the Global Precious Monthly Metals Index (MMI).

Turns out we were right.

 

Need buying strategies for steel? Request your two-month free trial of MetalMiner’s Outlook

The subindex tracking a basket of gold, silver, platinum and palladium prices from four different geographies shot up four points to hit 94 for the February reading — a 4.4% increase — driven by a scorching palladium price that began the month higher than the gold price (both above $1,300 per ounce).

But that wasn’t the only driver.

The U.S. silver price, as tracked by our MetalMiner IndX, bumped above $16 per ounce, the first time it reached that level since July 2018.

Gold began the month sitting pretty at $1,320 per ounce. Meanwhile, the U.S. platinum price rebounded for the February reading after its January dip, ending up at $820 per ounce.

Let’s take a moment to take that in: platinum at $820, while palladium broke the $1,300 barrier to start February at $1,325 per ounce. That represents the most massive platinum-palladium spread ($505 separating the two) in favor of palladium in the history of MetalMiner’s Monthly Metals Index, which dates back to January 2012.

It’s also the 16th straight month of palladium holding a premium over platinum.

A palladium price correction? Nowhere to be seen so far.

Latest Palladium Price Outlook

Reuters polled 29 analysts and traders just before the beginning of this month on the palladium and platinum outlook, and while the former’s prices may stagnate in 2020, these next 11 months look to be the metal’s best ever.

“The median forecast was for prices to average $1,200 an ounce this year and $1,150 in 2020 – up from $1,027 last year and only $612 in 2016, but beneath current prices around $1,350 and the record high of $1,434.50 reached earlier this month,” according to the article.

What is Driving PGM Prices?

The global palladium supply shortage is still the top driver, with a shortfall of more than 1 million ounces this year and next estimated by researchers Refinitiv GFMS, according to Reuters.

However — automotive metaphor alert — the driver that could stall the palladium price craze is a marked slowdown in major global car markets.

Automotive sales in China fell last year for the first time in three decades, and the U.S. and E.U. automotive markets are bracing for more potential slowdowns amid economic growth concerns.

Will that happen in 2019? Much remains to be seen.

For now, it seems that if buyers are buying on the spot market and could stand to somehow substitute platinum for palladium in their industrial applications, it wouldn’t hurt to look into it.

MetalMiner’s Annual Outlook provides 2019 buying strategies for carbon steel

Key Price Movers and Shakers

The U.S. silver price bumped up 3.6% to sit above $16 per ounce.

Gold began the month at $1,320 per ounce, a 5.8% increase over its Jan. 1 level.

The U.S. platinum price rebounded for the February reading after its January dip, rising 3.3% and ending up at $820 per ounce.

Gold has been the metal to hold these last few months. While the base metals index has been at best trading sideways — and in many instances, gradually weakening — gold has been making a comeback.

Need buying strategies for steel? Request your two-month free trial of MetalMiner’s Outlook

Even before Fed announcements in January 2019, gold had been rising during the second half of 2018, reaching a peak in January of over USD $1,320 per ounce (its highest level since May 2018).

CNBC quotes an ABN AMRO analyst who says “Supporting gold is the double whammy of lower dollar and the (Fed decision on) U.S. interest rates.”

It’s true to say there is an inverse relationship between the greenback and the price of gold; as the dollar falls, it makes dollar-denominated commodities like gold cheaper for foreign investors and the price tends to firm. In addition, if interest rates weaken, the gold price can firm as lower interest rates reduce the opportunity cost of holding non-interest-earning gold.

The Fed’s decision not to raise rates — with “weakened” economic conditions as the justification for putting rates on hold — is a position the market now sees extended well into 2019 (not only reduced interest rate expectations, but the value of the dollar).

SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, was at the highest price since June, according to Reuters, climbing 4.6% so far this month. That gain marked the biggest monthly gain since September 2017.

But investor interest has not been the only driver of demand.

In an effort to diversify out of dollar holdings, central banks — particularly emerging-market central banks — have been selling U.S. Treasuries and buying physical gold.

According to the Financial Times, central bank buying of gold reached its highest levels for almost half a century last year as Russia, Turkey and Kazakhstan led combined central-bank purchases of a net $27 billion worth of gold after sales by Australia, Germany, Sri Lanka, Indonesia and Ukraine, which sold a combined 15.6 tons are deducted.

Russia was by far the largest buyer, adding 274.3 tons last year, bringing official gold reserves to 2,066 tons, worth some $87 billion. At this level, Russia holds some 18% of its total reserves in gold. But if that sounds like a lot, compare it to Germany at 69% and the U.S. at 74%.

All these central banks have been selling dollars to fund their purchases, a move that has seen the greenback as a share of central bank reserve currencies fall to a five-year low in Q3 last year. Some eastern European countries joined the buying spree, making this year’s net purchases the highest since the U.S. moved off the gold standard in 1971, Reuters noted.

MetalMiner’s Annual Outlook provides 2019 buying strategies for carbon steel

There is nothing to say this has run its course. Heightened trade uncertainty and slowing global growth will continue to create favorable conditions for gold demand, both from investors and central banks, in 2019.

In times of uncertainty, gold has not lost it role of safe haven.

It looks as though the winter is just heating up for the Global Precious Monthly Metals Index (MMI).

The sub-index tracking a basket of gold, silver, platinum and palladium prices from four different geographies rose three points to hit 90 for the January reading — a 3.4% increase — driven by a still-hot palladium price.

Need buying strategies for steel? Request your two-month free trial of MetalMiner’s Outlook

The U.S. palladium bar price broke the 1,200-per-ounce barrier to start the month, ending at $1,252 per ounce to begin 2019. That represents a three-month uptrend. Meanwhile, the gold price reclaimed its premium over palladium, settling at $1,282 per ounce to begin the month.

U.S. silver also rose, while platinum dropped in the U.S. and Japan.

Palladium Outlook Looking Even Better With Hybrid Vehicle Demand

As we wrote last month, while supply from major producers including Russia and South Africa is not growing, global automotive palladium demand is expected to achieve a new record high in 2018 of around 8.5 million ounces, according to precious metals consultancy Metals Focus as reported by Reuters.

That conspires for the high price bubble of the formerly junior PGM of late. However, that may not last.

“This increases the potential for correction,” Commerzbank is quoted as stating in a recent outlook report. “We expect a price correction [for palladium] to begin in the course of the first quarter of 2019.”

After correcting, the bank expects the price should to “resume its upswing,” forecasting a price of $1,100 per troy ounce by the end of 2019, it is quoted as saying.

Other analysts agree with that general take, but that doesn’t mean that the longer-term demand outlook isn’t still strong.

According to Anton Berlin, head of analysis and market development at Norilsk Nickel PJSC, as quoted by Bloomberg, “combined palladium use in hybrid and plug-in hybrid — or rechargeable — vehicles next year will be nearly triple that of 2016.”

Benchmark your current cold rolled coil sheet prices and see how it compares to the market

Analysts at JPMorgan Chase & Co. agree. “Hybrids are forecast to grow from just 3 percent of global market share in 2016 to 23 percent of sales by 2025,” stated a late-2018 report by the bank, according to Bloomberg.

MetalMiner’s precious metals index, tracking a basket of platinum, palladium, gold and silver prices in several geographies across the globe, is now officially in a three-month uptrend this December after several months of declines.

Need buying strategies for ferrous and non-ferrous metals? Try two free months of MetalMiner’s Outlook

The Global Precious Monthly Metals Index (MMI) came in at a value of 87 for its December 2018 reading, up 2.4% from 85 last month, continuing a steady upswing. To wit, this past September’s value — 81 — was the sub-index’s lowest point since January 2017.

The U.S. palladium bar price, as tracked by the MetalMiner IndX, keeps steamrolling higher. Itself in a four-month uptrend, that price clocked in at $1,192 per ounce at the beginning of the month, with reports that during the past 30 days, palladium actually outpriced gold for the first time in 16 years.

Meanwhile, platinum reversed its uptrend from last month, landing lower at $806 per ounce. This widens the platinum-palladium spread even further, forcing many analysts to wonder what will happen in 2019.

2019 PGM Outlook

The World Platinum Investment Council (WPIC)’s latest quarterly report contained some bad news for platinum producers — but potentially good news for buyers.

Read more

alexkich/Adobe Stock

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:

Need buying strategies for steel? Request your two-month free trial of MetalMiner’s Outlook

MetalMiner’s Annual Outlook provides 2019 buying strategies for carbon steel