Articles in Category: Precious Metals

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This morning in metals news, global aluminum associations are calling for action on market-distorting activity, China’s semi-finished steel imports skyrocketed in September and Freeport-McMoRan reported its 3Q 2019 results.

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Aluminum Associations Demand Reforms

Yesterday, we noted steel associations around the world are asking governments to tackle the challenge of steel excess supply.

Now, aluminum associations are asking for reforms of their own, particularly in an effort to tackle activities that distort markets.

Jean Simard, president and CEO of the Aluminium Association of Canada; Gerd Götz, director general of European Aluminium, and Ryan Olsen, vice president of business information and statistics for the Aluminum Association, released a joint statement asking for action on the matter.

“Given the extent and duration of the harm suffered by the aluminium industry, we are calling for swift, focused and decisive action on market-distorting behavior and excess capacity in both the upstream and downstream sectors,” they said. “On behalf of our respective member companies, we stand ready to support Governments and international organizations with our knowledge, data and commitment to articulate improved trade rules and to restore normal market functions so that all producers throughout the aluminum value chain can compete under conditions of fairness and transparency.”

China’s Semi-Finished Steel Imports Jump in September

China’s imports of semi-finished steel increased in September amid new restrictions earlier this year on scrap imports, Reuters reported.

According to the report, China imported 370,000 tons of semi-finished steel in September, which marked a 418% year-over-year increase.

Freeport’s Copper Sales Fall in 3Q

Miner Freeport McMoRan reported its third-quarter financial results Wednesday, reporting an adjusted net loss of $8 million.

Sales of copper and gold in the third quarter were down on a year-over-year basis “reflecting anticipated lower mill rates and ore grades as PT Freeport Indonesia (PT-FI) transitions mining from the open pit to underground,” according to the firm.

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Third-quarter copper sales reached 795 million pounds, down from 1.0 billion pounds in 3Q 2018. Gold sales totaled 243,000 ounces, down from 837,000 ounces in 3Q 2018.

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The Global Precious Monthly Metals Index (MMI), which tracks a basket of precious metals and precious metals prices, picked up one point for an MMI reading of 107 this month.

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Palladium Surges, Widens Spread with Platinum

Last month, we noted the narrowing of the platinum-palladium spread in platinum’s favor, down to $539 per ounce as of Sept. 1.

This past month, however, that narrowing proved short-lived, as the spread ballooned to $763 per ounce.

The palladium price has been a steady riser this year.

“The price has risen a third this year alone and hit $1,700/ounce this week on the back of a limited supply market facing off rising demand from tighter emission standards in China and a switch from diesel to petrol in Europe, both favoring palladium demand,” MetalMiner’s Stuart Burns explains. “This is despite a generally weak global automotive market, with production down everywhere. Think what it would be like with production at 2017-18 levels — probably over $2,000/ounce. It may still hit that next year.”

China’s massive automotive market has contracted this year.

Through the first eight months of the year, automotive production in China reached 15.93 million units, down 12.1% on a year-over-year basis, according to the China Association of Automobile Manufacturers. Meanwhile, Chinese automotive sales through the first eight months were down 11% compared with the first eight months of 2018.

Meanwhile, U.S. automotive production in August reached 213,000 units, approximately flat compared with August 2018, according to Federal Reserve Bank of St. Louis data.

Gold, Silver and Fed Rates

Meanwhile, in the safe-havens, market watchers should keep an eye on the Federal Reserve.

“Gold and silver are being driven more by safe-haven status and expectations the Fed will reduce rates,” Burns explained. “Lower interest rates are a boost for gold and, to a lesser extent, silver. The investment community is taking an interest in gold this year, with ETF holdings near three-year highs and heavy buying by the Chinese central bank adding almost 100 tons in the last 10 months as it seeks to diversify away for the dollar. For the time being, Fed expectations will be the prime mover for prices.”

In September, the Federal Reserve announced it would lower the range for its benchmark interest rate by 25 basis points, to a range of 1.75-2.0%, marking the Fed’s second cut this year.

However, Fed Chairman Jerome Powell indicated the possibility of another rate cut this month, USA Today reported.

“While not everyone fully shares economic opportunities and the economy faces some risks, overall, it is — as I like to say — in a good place. Our job is to keep it there as long as possible,” Powell said in opening remarks during an event at the Federal Reserve Bank of Kansas City on Oct. 9. “While we believe our strategy and tools have been and remain effective, the U.S. economy, like other advanced economies around the world, is facing some longer-term challenges — from low growth, low inflation, and low interest rates.

“While slow growth is obviously not good, you may be asking, ‘What’s wrong with low inflation and low interest rates?’ Low can be good, but when inflation — and, consequently, interest rates — are too low, the Fed and other central banks have less room to cut rates to support the economy during downturns.”

President Donald Trump has on numerous occasions this year criticized the Fed and Powell for not doing enough to cut interest rates.

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Actual Metal Prices and Trends

The U.S. silver ingot price fell 5.6% month over month to $17.21/ounce as of Oct. 1.

U.S. platinum bars fell 4.4% to $875/ounce, while U.S. palladium bars rose 12.7% to $1,638/ounce.

Chinese gold bullion fell 2.9% to $47.99/gram. U.S. gold bullion dropped 3.2% to $1,478.60/ounce.

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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:

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Source: World Gold Council

This morning in metals news, the World Gold Council unveiled a set of principles geared toward promotion of responsible mining, Apple’s newest iPhone includes stainless steel and an Indian steel tycoon is critical of the pace of the country’s insolvency proceedings.

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World Gold Council Launches Set of Principles for Responsible Gold Mining

The World Gold Council this week announced the launch of responsible gold mining principles that it says will offer a “new framework that set out clear expectations for consumers, investors and the downstream gold supply chain as to what constitutes responsible gold mining.”

The principles are divided into three categories: governance, social and environment.

“It is our aim that these Principles will become a credible and widely recognised framework through which gold mining companies can provide confidence that their gold has been produced responsibly,” the World Gold Council said. “The Responsible Gold Mining Principles are intended to recognise and consolidate existing standards and instruments under a single framework.”

Newest iPhone Includes Stainless Steel

Apple announced this week that its newest iPhone model, the iPhone 11, will be available in stores Sept. 20.

From a metals perspective, the new phone, which features a a triple-camera system, is made of glass and stainless steel.

“iPhone 11 Pro and iPhone 11 Pro Max have a textured matte glass back and polished stainless steel band, and come in four stunning finishes including a beautiful new midnight green,” Apple said in a release.

Indian Steel Tycoon Critical of Insolvency Proceedings

Indian steel tycoon Sajjan Jindal, head of the JSW Group, panned India’s relatively new bankruptcy and insolvency program on the grounds that it has been slow-moving.

Jindal’s JSW Group put in a $2.7 billion bid for the bankrupt Bhushan Power and Steel in February 2018, but only received approval by an Indian court last week, the Financial Times reported.

Since then, the steel tycoon’s interest in the acquisition has “definitely receded,” he told the Financial Times.

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The country’s Insolvency and Bankruptcy Code, initiated in 2016, aimed to streamline the process by resolving an insolvent business within 270 days; however, as the Financial Times noted, insolvency cases in the country have extended past the mandated 270-day deadline.

The Global Precious Monthly Metals Index (MMI) gained four points this month, rising for a September MMI reading of 106.

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Gold Market Subdued in India

MetalMiner’s Sohrab Darabshaw delved into the Indian gold market ahead of the festival season in the country, which includes Diwali in October.

As Darabshaw explained in late August, the apparent slowdown in demand ahead of the usually busy gold-buying season comes amid surging gold prices. Citing a Yahoo Finance report, Darabshaw noted India’s gold imports in July fell a whopping 55% on a year-over-year basis.

“Almost everyone is waiting for a price correction, which is a far cry from the positive situation at the start of 2019,” Darabshaw wrote.

“Demand grew 9% from January-June this year, sparking hopes that consumption towards the latter half of the year would go up.

“But experts are of the opinion that if things do not improve soon, consumption could slump to a low of over 650 tons (comparable to the 2016 low).”

Gold-buying in India was also sluggish ahead of the holiday season last year.

A Gold Mine in Pakistan

Meanwhile, in Pakistan, MetalMiner’s Stuart Burns weighed in on the struggle between the Pakistani government and Tethyan Copper Co.

“The dispute is over the legality of Tethyan’s claim and rights to exploit the copper and gold reserve at Reko Diq in Pakistan’s remote southwest Balochistan province, close to the Iran border,” Burns wrote.

“Pakistan’s mining rights and practices, not to mention its infrastructure, are not fit for the purpose, as Tethyan’s story underlines all too well.”

The impasse benefits neither party, Burns opined.

“Tethyan has offered to negotiate a settlement, but with the Chinese on the sidelines bidding to extend their Belt and Road involvement in the region, conflicting loyalties and priorities are in play,” he wrote.

“A solution, though, would be very much in Pakistan’s interests.

“The resource is said to be the largest untouched deposit in the world, containing an estimated 2.2 billion metric tons of mineable ore that could yield 200,000 metric tons of copper and 250,000 troy ounces of gold annually for over half a century, Stratfor reports.”

Platinum-Palladium Spread

While palladium remains at a significant premium to platinum, the spread between the two narrowed this past month.

After a spread of $638 per ounce as of last month’s MMI, palladium fell and platinum increased to produce a spread of $539 per ounce.

According to Kitco News, platinum is possibly riding momentum generated by other precious metals — namely gold and silver — of late. The platinum price recently approached its highest level in 16 months, Kitco News reported.

Actual Metal Prices and Trends

U.S. silver ingot/bars rose 12.3% month over month to $18.23/ounce as of Sept. 1. U.S. platinum rose 6.1% to $915 per ounce, while U.S. palladium fell 3.1% to $1,454 per ounce.

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Chinese gold bullion rose 7.8% to $49.33 per gram, while U.S. gold bullion rose 8.0% to $1,527.10 per ounce.

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This morning in metals news, Bank Of America cut its steel price forecast, copper prices dropped and gold lost some of its safe haven luster.

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Gloomy Steel Forecast

Bank of America has cut its steel price forecast and is less than optimistic about steel stocks going forward, Yahoo Finance reported.

According to the report, Bank of America analyst Timna Tanners cut her U.S. HRC price target for the second half of the year from $628 per short ton to $572 per short ton.

Tanners also cut 2019 EPS cuts for U.S. Steel, Nucor, Reliance Steel and Aluminum, Steel Dynamics and Commercial Metals Company, according to Yahoo.

Copper Price Drops

Markets continue to fluctuate on a daily basis based on any sliver of news emerging from the ongoing U.S.-China trade war.

On Friday, despite China’s intention to increase bank lending, LME copper was bid down 0.6% to $5,812 per ton, according to Reuters, after reaching a two-year low earlier this week.

Not so Golden

The gold price posted its largest daily dollar loss in three years, MarketWatch reported, on optimism regarding trade and jobs data impacting its safe haven appeal.

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According to the report, gold on the COMEX for December delivery slipped 2.2% to a two-week low of $1,525.50 per ounce.

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

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India is almost on the cusp of this year’s festival and wedding season, but the domestic bullion market remains subdued, contrary to historical norms.

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The reason? Gold prices in India have rallied 20% this year based on several internal and external factors, Livemint reported.

Over the past week, spot prices touched a high of U.S. $558.45 (Rs 40,000) per 10 grams. The futures market showed a similar trend, though prices later dropped. Gold futures had hit a record high of U.S. $543.44 per 10 grams (Rs 38,666).

The Livemint report said the spread between MCX and international prices narrowed on Tuesday from near $51/ounce to about $42/ounce, sparking some buying interest in the physical market. But even then, the higher domestic price and higher taxes continued to dampen demand.

Bullion experts forward many reasons for the highest-ever spurt in gold prices, including: a hike in import duty, the weaker rupee versus the U.S. dollar, the ongoing U.S.-China trade war, the U.K.’s impending Brexit and buying by global central banks.

India’s gold imports this July fell by 55% from a year ago, down to a three-year low, Yahoo Finance reported.

The gold scene in most of Asia is equally depressing.

News agency Reuters reported steep prices prompted Asian consumers to sell back physical gold for profit this week.

Some amount of buying, even at the current price range, did happen because of gold’s appeal as an instrument to hedge against risk.

In China, the biggest gold consumer in the world, premiums eased slightly to $6-$9 per ounce over the benchmark, down from $9-$10 last week.

The Reuters report quoted Ronald Leung, chief dealer at Lee Cheong Gold Dealers in Hong Kong, as saying interest was mostly from the investment side.

In India, dealer discounts of up to U.S. $33 an ounce over official domestic price saw some amount of buying activity. Most dealers, however, were not in the mood to place new orders, preferring to wait and let the situation unfold, according to the Economic Times.

Almost everyone is waiting for a price correction, which is a far cry from the positive situation at the start of 2019.

Demand grew 9% from January-June this year, sparking hopes that consumption towards the latter half of the year would go up.

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But experts are of the opinion that if things do not improve soon, consumption could slump to a low of over 650 tons (comparable to the 2016 low).

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This morning in metals news, the copper price ticked up Wednesday, an appeals court is reconsidering an aluminum antitrust suit involving several big-name companies and Rio Tinto is taking over a mining site in British Columbia.

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Copper Price Rises

The copper price picked up Wednesday on optimism stemming from the Chinese government’s stimulus measures, Reuters reported.

LME copper moved up 0.2% while the most-traded ShFE copper contract jumped 0.5%.

Aluminum Antitrust Appeal Moves Forward

An antitrust case involving Goldman Sachs, JPMorgan Chase and miner Glencore has been revived by a U.S. appeals court, Reuters reported.

According to the appeal from aluminum purchasers, the companies allegedly conspired to drive up aluminum prices by reducing supply.

Rio Tinto Agrees to Buy BC Mine

Miner Rio Tinto has agreed to take a 100% stake in Triumph Gold’s Andalusite Peak mine property in British Columbia, Mining Weekly reported.

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According to the report, the property was first staked by Triumph Gold in January 2017; high grade copper, gold and silver mineralization was identified on the site.

The Global Precious Monthly Metals Index (MMI) picked up one point this month for an August MMI reading of 102.

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Time for Safe Havens

Amid the latest jolt of trade uncertainty — namely, President Donald Trump’s intention to impose a 10% tariff on an additional $300 billion in Chinese goods — safe-haven metals prices have increased.

Gold, for example, last week moved over $1,500 per ounce for the first time in six years, Reuters reported, while silver prices have also gained momentum.

Demand for gold in the first half of the year was strong, according to the World Gold Council, rising 8% on a year-over-year basis. The demand was largely powered by central bank buying and a rise in holdings of gold-backed ETFs, according to the World Gold Council.

“June was a big month for gold,” said Alistair Hewitt, head of market intelligence for the World Gold Council. “The price broke out of a multi-year trading range to hit a six-and-a-half year high and gold-backed ETF assets-under-management grew by 15% – the largest monthly increase since 2012. While the Fed’s dovish turn was a key driver for this, it also builds on a strong H1 which saw gold demand hit a three-year high, underpinned by extremely strong central bank buying. But we also saw an uptick in sales at an individual level as investors took advantage of June’s price rally to lock-in profits; jewellery recycling and retail bar and coin liquidations both rose.”

Meanwhile, silver — which had been a bit undervalued — posted its largest daily increase in over three years last week, bringing silver above the $17 per ounce mark.

Platinum-Palladium Spread Narrows

The palladium price retraced this past month while platinum picked up, narrowing the spread that has built up over the last over a year and a half.

However, that narrowing could be a blip on the radar in terms of performance throughout the rest of the year.

According to a Reuters poll, palladium’s premium over platinum is expected to hit an average of $609 per ounce this year and $595 per ounce next year.

Actual Metal Prices and Trends

The U.S. silver ingot/bar price rose 6.2% month over month to $16.23 per ounce as of Aug. 1. U.S. gold bullion rose 0.3% to $1,413.40; however, as noted above, the Trump administration’s tariff announcement sent the gold price past the $1,500 per ounce mark.

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Chinese gold bullion rose 2.1% to $45.88 per gram.

U.S. platinum bars rose 3.4% to $862 per ounce. U.S. palladium bars fell 1.1% to $1,500 per ounce.