MetalMiner Prices

Aluminum Prices

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Carbon Steel Prices

View quotes and charts of the North American Carbon Steel Index and current pricing for Hot-Rolled Coil, Cold-Rolled Coil, and Plate

Stainless Steel Prices

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Articles on: Metal Prices

The Global Precious Metals MMI (Monthly MetalMiner Index) fell a modest 0.10% this past month. As a whole, global precious metal prices continue to trade sideways. That said, there are still plenty of investors looking to turn paper currency into precious metals over fears of a recession. Indeed, this could prove to be the very reason why precious metals aren’t dropping in price as significantly as other metal types. But as the US dollar has strengthened over the recent weeks, this trend is in danger of coming to an end.

Source: Insights

Precious Metal Prices: Silver Trapped Between Support and Resistance

Silver managed to make some noticeable strides over the past couple of months. In fact, in August alone, silver came very close to breaking through the roof of resistance. Some experts even wonder if the silver index might soon catch up with gold. Despite these surges, silver remains in a downward macro trend. For the moment, the precious metal seems stuck between support and resistance.

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Precious Metal Prices

Gold Short-Term Reversal

Over the past month, gold started showing signs of a short-term reversal. Indeed, between July and August, fears of a recession caused investors to buy in on precious metals again, leading to a notable uptick in demand. However, an obvious path for gold prices still remains to be seen. As a whole, gold remains in a downward trend alongside most of its fellow commodities.

Globally, gold numbers are just as unpredictable. For instance, in China alone, gold experienced an 8% decrease in production. This was the case with many metals in China after Q2, owing to the large-scale slowdown. Meanwhile, back in the US, gold appeared weaker in August when compared with July.

Platinum Price Analysis

Platinum prices didn’t perform with the same strength as gold and silver this the past month. In fact, between July and August, platinum came quite close to breaking support. But while platinum prices did not end up wandering outside the trading range, much like gold, the overall price direction remains unclear. In general, prices appear bearish. That said, platinum could still bounce back from support levels, providing conditions favor such a move.

Global Precious Metals Biggest Price Moves:

  • US gold bullion saw a 2.2% decrease in price. Prices at the beginning of August sat at $1,766.50 per ounce.
  • Japanese gold bullion dropped in price by 3.4%. Price per gram was at $56.5 at the beginning of August.
  • Indian silver ingot/bars fell in price, but not dramatically. Prices fell 0.4%. Prices hit $734.62 per gram at the beginning of August.

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The Raw Steels Monthly Metals Index (MMI) fell by 8.73% from July to August. All in all, U.S. steel prices continued their descent, leaving cold rolled coil and hot dipped galvanized prices at their lowest point since January 2021. Meanwhile, hot rolled coil prices fell well beneath the $1,000/st mark, reaching their lowest point since December 2020. However, plate prices managed to disrupt two consecutive months of decline, by rising in July.

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Correlation Declines: Record Spread Between HRC and Plate Steel Prices

Source: Chart & Correlation Analysis Tool, Insights

The spread between hot rolled coil and plate prices continues to expand. In fact, plate prices are now double that of HRC, a historic record for the two steels. Prior to October 2020, plate prices sat an average of roughly $150/st above HRC prices. Then, due to the relatively steep rise of HRC prices, the delta inverted through November 2021. Now, as plate prices continue to hold near record levels and HRC prices remain if free-fall, the delta has expanded to $931/st.

Over the last few years, diverging price trends caused a major decline in the correlation between the two steels. After all, since 2012, HRC and plate prices enjoyed an 86.61% correlation. In fact, by the end of 2020, that correlation had grown to 87.17%. Since 2020, however, the price correlation has plummeted to 55.93%.

Nucor Drops Plate Prices $120/St, Attempts to Raise HRC Prices $50/St

The growing spread triggered frustration from buyers. It even caused Nucor to lower plate prices by $120/st in late July. Then, following a month-over-month increase in July, prices began to decline again in August. They now sit at their lowest point since November of 2021. That said, they appear to have largely consolidated since last fall amid variable month-to-month price movements. It’s worth noting that the current high prices do not come alongside historically elevated mill lead times. Traditionally, this is a leading indicator of availability and demand.

Nucos also stated that additional plate capacity should come online in late 2022, which could add further downward pressure to prices. Once operating at full capacity, Nucor Brandenburg will add an additional 1 million short tons per year of steel plate.

Steel Prices: Steel Sheets Nosedive

Meanwhile, on August 8, Nucor announced a $50/st increase in sheet steel prices. Many experts feel the move was an effort to pause the uninterrupted price descent for HRC, CRC, and HDG. The three had been in a downtrend since late April, and it’s possible Nucor was hoping to shore up the bottom end of the spread between HRC and plate steel prices.

HRC

That said, even the efforts of North America’s largest steelmaker seem incapable of stopping the current declines. Indeed, HRC prices continue to deteriorate at the time of this writing. It’s also unlikely that Nucor found any buyers at their elevated rate. Rather than accepting the increase, it’s likely buyers simply leaned on inventories amid the growing weakness of the global economy.

Hot rolled coil prices now sit almost 57% beneath their all-time high and nearly 44% beneath their late-April peak. Prior to the historic ascent that began in August 2020, the average HRC price since 2012 has sat at roughly $615/st. This could indicate that prices have further to fall, as they are technically still at the top end of their historical trading range.

Ignore the noise. Spot the trend. Related article: The Art of Timing Your Buy

Higher Input Costs Eat Away at Steelmaker Margins

On top of the descending price trends and deteriorating demand outlook, North American flat rolled steel producers now face the pressure of increased input costs. In a recent conference call, Stelco CEO Alan Kestenbaum referred to the combination of factors as a “double whammy” for production margins.

“On top of deteriorating pricing and demand, our business is being challenged with strong headwinds, including inflationary pressures on some of our key inputs such as natural gas, coal and alloys,” Kestenbaum noted during the call. He also stated that large-scale demand destruction was not a leading driver of the current price downtrend. Indeed, service centers seem wary of buying ahead. Simultaneously, inventories have narrowed amid the prospect of a global economic downturn. Kestenbaum stated that he considered Nucor’s recent price increase a “good sign” for steel producers. Still, he acknowledged that the price trend has yet to bottom out.

Consumer Spending Increase

Meanwhile, consumer spending continues to show growth. While data for July awaits release, previous months reveal a rather steady increase. However, as the Wall Street Journal noted in its recent article, “Consumers Are Still Spending on Fun,” spending has shifted away from goods and towards experiences, an inversion from pandemic-year trends.

However, food and electricity spending remains elevated. So as summer turns to fall, this could lead to more widespread demand destruction. Beyond that, the National Association of Home Builders/Wells Fargo Housing Market Index fell for the eighth consecutive month in August. In fact, the index dropped by 6 points to 49, signaling a contraction.

As a leading driver of steel demand, this recent decline could indicate the beginning of a more meaningful downturn – one that steelmakers like Stelco simply have yet to see.

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Biggest Shift in Raw Material and Steel Prices

  • U.S. three-month HRC futures rose by 1.47% to $895 per short ton as of August 1.
  • Meanwhile, standard Korean steel prices dropped by 28.65% month over month to $221 per metric ton.
  • Chinese slab prices fell by 10.94% to $644 per metric ton.
  • Chinese coking coal prices dropped by 10.44% to $418 per metric ton.
  • Chinese HRC prices fell by 9.78% to $596 per metric ton.

This month, the Construction MMI (Monthly MetalMiner Index) dropped yet again. However, it declined slightly less than those seen in previous months. Altogether, the index is down 4.60%. Industrial metal, in general, continues to struggle due to China’s COVID lockdowns and supply chain issues.

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Industrial Metal and the US’ 2022 Construction Roller Coaster Ride

The US construction industry has had quite a year so far. In fact, a recent report attempted to demonstrate some of the trends, facts, and figures that affected the industry over the course of the pandemic. In general, the trends are up and down. However, despite a slow start to the year, the sector still anticipates 4.5% growth by the end of 2022.

Of course, there’s no shortage of roadblocks standing in the way. Increasing production costs over the past six months, limited industrial metal supplies, and smelter shut-downs in places like China are just some of the obstacles with which the US construction industry continues to grapple. However, this does not mean the projected growth numbers are out of reach.

Construction

In fact, in July alone, the US construction industry recently added nearly 32,000 jobs. Meanwhile, cities like New York City, Los Angeles, and San Francisco continue to expand at a rapid pace. That said, materials and real estate costs remain high. And even though US construction job openings are numerous, they aren’t necessarily filling up quickly. Indeed, a recent article noted that the number of unclaimed jobs could soon hit a breaking point. Last year, some 40% of these construction industry jobs remained unclaimed.

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The US Construction Industry is Hanging its Hat on the ILJA

The passage of the landmark Infrastructure Investment and Jobs Act represents a $1 trillion revenue opportunity for US Construction and engineering firms. In fact, data on global construction initiatives recently predicted that infrastructure will replace residential as the primary focus of US contractors.

For decades, Infrastructure has taken a back seat due to being far less lucrative than private contracts. Now, thanks to the ILJA, companies are lining up for contracts with the highest numbers since the 1950s. Their timing is perfect. According to the American Society of Civil Engineers, the infrastructure investment gap is now $2.5 trillion (spread out over a 10-year period). Specifically,  this number estimates the amount of investment needed to maintain American infrastructure in a good state of repair.

Source: Adobe Stock/SeanPavonePhoto.

Poorly-maintained infrastructure represents a huge threat to everyone in the country and risks costing households thousands of dollars a year. And with the worst of the pandemic (hopefully) behind us, now seems like the perfect time to push for modernization. Moreover, with climate change already rearing its ugly head across the country, many feel we are long overdue for more efficient, less polluting infrastructure initiatives.

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Chinese Construction Continues to Limp Along

We’ve talked before about China’s ongoing construction woes. Still, it’s hard to overestimate its vitality to China’s economy. Recently, it was revealed that Chinese steel demand was closing in on all-time lows. In fact, steelmakers were forced to raise their output cuts due to lack of demand actually pushing their profits into the negative.

According to S&P Global, excavator sales also declined for four months straight, a huge indicator of construction sector weakness. Debt also plagues the industry at large, and the government hasn’t been much help. Back in late July, Beijing announced a real estate fund to help ease developers’ debt-related woes. However, despite the $44 billion cash injection, the sector continues to barely limp forward.

It’s a “tale of two infrastructure policies,” and it will be interesting to see how both the US and Chinese approaches pan out. China’s construction industry grew 2% last year and 4% in 2020. At the moment, it’s predicted that the additional spending may push the sector up to 3% by the end of the year. Ultimately, only time will tell how the sector’s internal struggles will affect the rest of the world.

The MetalMiner Insights platform covers a wide range of industrial metals, including those vital to the global construction market. Get premiums, forecasts, specific monthly buying strategies, and more! Request a 30-minute demo of the MetalMiner Insights platform now.

Industrial Metal / Construction Prices and Trends

  • Bar fuel surcharges saw a ¢10 drop in price month-t0-month. Currently per mile, prices sit at ¢81.
  • US shredded scrap steel rose in price by 4.8% and sat at $447 per short ton at the beginning of August.
  • Chinese h-beam steel dropped by 9% and sat at $597.54 per metric ton on August 1st.

 

The Stainless Monthly Metals Index (MMI) dropped 8.87% from June to July. After nickel prices hit a bottom mid-July, they followed the base metal trend upward. By the beginning of August, however, the rebound had faltered, and prices resumed their descent.

Source: Insights

Both last month’s increases and this month’s declines were extremely narrow. For that reason, prices appear consolidated within their current range, leaving no clear direction for the coming month.

Indonesia Plans New Export Taxes

Indonesia continues to pursue value adds to its nickel reserves. The hope is that doing so will aid in advancing its stainless steel and battery production capacity through export taxes on raw materials. Back in 2020, Indonesia banned the export of nickel ore entirely. The aim was to pressure its mining sector to invest in processing capacity.

That move forced China to replace ore imports with nickel pig iron and ferro-nickel in an effort to feed its stainless steel mills. Now, Indonesia plans to add an export tax to both of those products. This should provide the funding to allow for additional investment in its steel supply chain. Since 2021, Indonesia alone accounts for roughly half of all global nickel production.

Historic Impact on Nickel Prices

Nickel Prices: 2014-2017

The first export ban on nickel ore occurred in January 2014. Following the enforcement of that ban, nickel prices rose more than 39% throughout the first five months of that year. Eventually, market dynamics pushed prices lower once again. This dramatic price increase occurred despite weak economic conditions throughout parts of the world, including parts of the EU. For Indonesia, the ban had the intended effect as numerous companies in both Indonesia and China soon announced plans to construct NPI facilities on the archipelago. Outside of Indonesia, the ban forced countries like China, Australia, and Japan to pursue other sources of the metal. Before long, companies had secured direct shipping ore (DSO) from places like the Philippines and the Solomon Islands.

Indonesia substantially eased the ban in early 2017. This was due to several factors. One was a 2016 budget deficit. Another related to just how successful the ban was – spurring the development of nine additional nickel smelters (up from two). Ultimately, this led to a nearly 19% decline in nickel prices during the first half of 2017 alone.

Future Nickel Prices and Chinese Imports

Nickel Prices

Nickel Prices: 2019-2020

Despite previously-stated intentions to reimpose the export ban in 2022, Indonesia instead expedited its resumption to January 2020. The decision aimed to bolster the domestic processing sector, which saw rapid development during that time. The move also caused China to increase NPI and stainless steel projects in Indonesia, as it dramatically limited ore imports. Chinese imports of NPI from Indonesia also surged as a result. However, the ban’s reinstatement did not trigger the same impact in terms of price trend. This was likely due to the emerging pandemic. Instead, prices remained within an overall downtrend that did not hit bottom until late March of that year.

Export Taxes on the Horizon

Nickel Prices

Nickel Prices: 2022

The most recent announcement of potential export taxes comes as a result of the increased flow of NPI exports. It was supported by the forecasted increase in the number of domestic NPI and ferro-nickel processing facilities. In fact, the current estimate predicts an increase from 16 facilities to 29 over just five years. Still, a low-value product and limited exports of NPI will incentivize foreign investment in Indonesia as countries pursue battery and stainless steel manufacturing. It would also force importers like China to seek alternate sources for their supply.

However, the announcement has yet to spark any noticeable increase in prices. Instead, nickel prices have continued downward since their most recent rally stalled back at the start of August. According to Septian Hario Seto, Deputy Coordinating Minister For Maritime and Investment Affairs, the tax could begin as early as Q3 2022. That said, no formal date has yet been announced. When it comes, the announcement alone will likely trigger a sharp uptick in Indonesian NPI exports as countries prepare to absorb the tax. Of course, any actual response from nickel prices will likely follow the decided levy date.

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European Commission Launches Anti-Circumvention Investigation

On July 26, the European Commission launched a new anti-circumvention investigation. The subject was hot rolled stainless sheets and coils imported from Turkey, but which originated in Indonesia. EUROFER, the association of European steel producers, triggered the investigation over allegations that imports from Turkey violate the anti-dumping measures imposed against Indonesia. Indonesia remains home to several Chinese stainless steel manufacturers. At the moment, the case is expected to be concluded in the next nine months. Meanwhile, all imports of SSHR from Turkey will be registered with immediate effect as instructed by the EC.

Could the U.S. Be Next?

Thus far, President Biden has largely continued the protectionist approach against China set forth by his predecessor. While the outcome of the investigation and subsequent response to its findings remain undetermined, Europe’s actions could inspire the U.S. to follow suit. After all, anti-dumping has always been a politically favored agenda. Furthermore, the investigation could cause materials once destined for Europe to instead shift toward the U.S. market. If that happens, it could embolden U.S. mills to lobby for political action to protect domestic interests.

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Biggest Moves in Stainless Steel and Nickel Prices

  • Chinese primary nickel rose by 4.71% to 28,520 per metric ton as of August 1.
  • Meanwhile, the Allegheny Ludlum 304 surcharge fell by 21.2% to 1.34 per pound.
  • The Allegheny Ludlum 316 surcharge dropped by 18.62% to 1.84 per pound.
  • Chinese ferrochrome lumps decreased by 11.38% to 1,223 per metric ton.
  • Chinese ferromolybdenum lumps declined by 10.49% to $23,650 per metric ton.

The Automotive MMI (Monthly Metals Index) dropped by 6.32% this past month, a downward trend it has been maintaining since May. The drop comes despite valiant efforts to put out some of the fires plaguing the car manufacturing industry. But with the microchip shortage, surging inflation, and issues with both supply and demand, the automotive market can’t seem to catch a break.

Automotive Index

Source: Insights

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J.D. Power Quality Study Puts “Premium Vehicles” on Blast

In an automotive market this tight, the industry does not need bad press. Unfortunately, that’s exactly what happened when leading market research firm J.D. Power published its latest report this past weekend. The 2022 U.S. Initial Quality Study (IQS) took the time to highlight the issues currently afflicting the industry. However, they also called out “premium” car companies for their extensive quality issues.

How bad? Apparently, this proved the highest number of vehicle problems reported in the 36-year history of the study. In fact, J.D. Power charted an 11% increase in “problems per 100 vehicles” compared with 2021. The report also stated that the vehicle quality has declined across the board since the pandemic,  pricier models had more quality issues than more affordable cars.

car manufacturing

This largely has to do with cars having so many more “bells and whistles.” After all, many of these high-end features require increasingly rare components. You might remember hearing how BMW now offers its heated seat function on a subscription basis. While this may not become the norm, it shows a a symptom of a very large problem.

According to J.D. Power’s Director of Global Automotive, David Amodeo, “automakers continue to launch vehicles that are more and more technologically complex in an era in which there have been many shortages of critical components to support them.” He also added that “given the challenges automakers and their dealers had to face in the past year, it’s somewhat surprising that initial quality didn’t fall even more dramatically.”

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Car Manufacturing Experts are at a Loss

This weekend, Automotive News published an article detailing the difficulty of forecasting the car manufacturing industry. The crux of the argument being that there are so many problems at work that analysts can’t account for all the different variables.

It’s rare for analysts to throw up their hands and say, “we simply don’t know,” but not completely unheard of. That said, this doesn’t necessarily mean we can stop listening to experts. In fact, it might be smart to think of this as a “call to attention.” That is, those investors who previously followed just one or two forecasting sites would do well to get a second, third, and fourth opinion.

Car Manufacturing

Fortunately, numbers are still numbers. For instance, LMC Automotive found that U.S. new light vehicles (NLV) sales were just 6.78 million from January to June. However, the National Auto Dealers Association found that NLV sales for July had actually gone up by 2.5%. It’s good news, sure. However, it’s important to remember that those figures are still down 8.9% from 2021.

And while those numbers are all factual, they don’t paint as clear a picture as they would in a normal market. Until some of these extenuating factors are mitigated, it will be hard for investors and buyers to find solid footing in the car manufacturing industry.

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UK Experts Feel They’re Falling Behind the EV Car Manufacturing Curve

A recent editorial in The Guardian gave voice to many UK residents who feel their government isn’t taking steps to meet electric vehicle demand. It’s true that the country is dealing with a lot. Their Prime Minister, Boris Johnson, recently resigned, inflation recently clocked in at 9.4%, and the cost of living soared.

But there are also other concerns. For instance, the UK produces a wide range of automobiles, including Jaguars, Minis, and Land Rovers. The UK also saw a huge rise in the demand for electric vehicles. However, many feel that the UK fell behind other European nations. This isn’t just in terms of EV production but in terms of component production as well.

EV batteries contain lithium, cobalt, and nickel, supplies which are hard to shore up – especially now. And while the rest of Europe is building some 35 batter Gigafactories at the moment, the UK so far has one. To make matters worse, little action was taken on behalf of manufacturers to get the ball rolling on more.

Lithium Ion Battery

Jaguar / Land Rover, for instance, has expressed interest in moving its EV production to Slovakia. Meanwhile, a proposed gigafactory in Coventry has been tied up in debate for months. And while the current Sunderland factory may expand in the future, experts estimate the country will need at least six more factories to meet future demand.

In short: the country isn’t where it needs to be, and there’s no plan in place to get it there. Though they certainly have “bigger fish to fry” at the moment. The UK cannot ignore its automotive market.

The  MetalMiner weekly newsletter covers copper developments as well as all the latest market news you need to know.

Automotive MMI: Actual Metal Prices and Trends

  • Chinese lead prices declined, but only slightly. Prices dropped 0.4% to $2,235.22 per metric ton.
  • Korean aluminum saw no change in price. Following suit with July, prices currently sit at $4.28 per kilogram.
  • US palladium bars fell quite a bit in price. The index dropped 16.11% and currently sits at $1,862 per ounce in bar form.

The Copper Monthly Metals Index (MMI) dropped 7.33% month over month as components declined across the board. Still, copper prices seem reluctant to pick a direction.

Source: Insights

In the lead-up to August, copper prices saw notable increases. There were also several bullish indicators of note, including higher short-term highs. In short: after months of declines, prices ended up moving sideways. Yet despite this bullish price action, the macro trend still remains bearish, leaving the current market direction unclear.

Unemployment Rate Falls to 3.5%

The growing prospect of a global economic slowdown weighed heavily on commodity prices these past few months. Before the recent base metal price consolidation, which included copper, analysts seemed to be pointing out warning signals left and right. The fear was that the US and elsewhere would soon enter a recession, and it provided the momentum for sweeping downtrends.

However, unlike every other modern recession, the labor market continues to surpass expectations. In fact, according to the Department of Labor’s most recent monthly jobs report, the US economy added 528,000 jobs in July. Furthermore, the unemployment rate – which was already at a historic low – fell from 3.6% in June to 3.5%. This is the lowest the index has been since February of 2020. The combination of an aging population and relatively few immigrants have likely kept the labor market tight in spite of the multitude of other economic pressures.

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Reexamining the Link Between Copper Prices and Recessions

Last month, MetalMiner examined how aluminum prices behaved during past recessions. Much like aluminum, copper price downtrends do not exclusively occur within recessions. However, they do invariably and substantially decline during economic downturns. In fact, if you trace their peaks to their lowest points during the last four recessions, global copper prices fell by 20.74%, 20.94%, 64.37%, and 11.07%, respectively.

Source: St. Louis Fed

It’s important to note that, of those four recessions, only two saw price downtrends precede the onset. For instance, during the eight-month-long recession in the early 1990s, prices peaked two months after the official slowdown began. Furthermore, the downtrend continued for an additional three months following the recession before being disrupted by a 5-month uptrend.

On the other hand, during the early 2000s recession, which also lasted eight months, the copper downtrend preceded the start by six months. During that time, prices fell by 11.2%. Incidentally, they hit a bottom one month before the culmination of the downturn.

Learning from History

The Great Recession was the longest of the four, lasting a total of one year and six months. However, copper prices actually peaked four months after the recession began. That downtrend continued for eight months before prices hit a bottom and reversed. It’s also important to note that this bottom preceded the official end of the recession by six months.

Lastly, you have the two-month COVID-19 recession. In this case, copper prices began to decline two months before the slow down, dropping 6.41%. Prices then hit bottom at the end of the recession before entering a sharp uptrend that peaked in May 2021.

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Plenty More Bearish and Bullish Factors Remain

Ultimately, whether the US is in or will enter into a recession remains uncertain. And with copper prices in a short-term sideways trend, it’s hard to know what to expect. Fortunately, there are several factors that could help them find a direction.

1. Infrastructure

Both China and the US have designated infrastructure plans that specifically benefit copper, including electrification and power-related projects. In the US, spending related to the Bipartisan Infrastructure Law will take place over the next five years. Meanwhile, the latest tax, climate, and health package adds further investment into green technology like solar panels and EVs. In China, where construction sector accounts for almost half of China’s copper demand, the government’s infrastructure ambitions far exceed those planned by the US. For instance, China’s State Grid recently announced a 500 billion yuan budget for power infrastructure in 2022. This includes a 150 billion yuan ultra-high voltage power transmission line project set for construction in H2 2022.

Copper Smelter

2. China’s Property Crisis

On top of the continued downtrend of China’s property sector, the expansion of the crisis could cause China’s entire economy to spiral. Earlier this year, stalled projects and falling home prices led to a mortgage boycott that has now spread to over 90 cities. In response, hinese authorities have reportedly set up an $11.8 billion fund to help developers resume construction. However, that figure is dwarfed by the losses banks currently face due to the protests, which stand at more than $350 billion. If China’s efforts prove insufficient to contain the crisis, the entire property sector, which historically accounted for around 25% of China’s copper demand and 30% of its GDP, could collapse.

3. Chile’s New Constitution

On September 4, Chilean citizens will have the opportunity to adopt or reject a new constitution. If adopted, the new law of the land would have substantial implications on the copper market. Specifically, it could deter foreign mining investment and affect their long-term stability. Furthermore, the decentralization of government laid out in its policies could encourage widespread corruption. Chile represents roughly one-third of the global copper supply, and any limits within the region put pressure on projected supply deficits in the coming years. However, the latest polls suggest the document will be rejected.

The  MetalMiner weekly newsletter covers copper developments as well as all the latest market news you need to know.

Biggest Drops in Copper Prices

  • The LME primary three month copper price fell by 5.49% month-over-month to $7,792 per metric ton as of August 1.
  • Chinese copper scrap fell by 6.47% to $7,621 per metric ton. 
  • The Japanese primary cash copper prices declined by 7.34% to $8,066 per metric ton.
  • Meanwhile, Korean copper strip prices fell 12.69% to $9.55 per kilogram.

The Global Precious Metals MMI dropped by 3.77% from last month. Leading the trend were silver and platinum, which suffered the most significant drops.

Both gold and silver prices appear poised for an additional price drop on the back of elevated interest rates, which are still rising at a higher-than-expected pace. Last month, the Precious Metals MMI dropped by 3%, with palladium leading the downward charge.

Gold and Silver Experience Significant Drops

Gold prices have declined fairly recently, experiencing breakdowns during short-term trading time frames. Volatile sharp moves in price will continue to create a risk in the precious metals market, likely through Q3 at least. Although this short-term price action may only be relevant for this month, it indicates the increased uncertainty of metals markets establishing a “bottom” this summer.

MetalMiner Insights now offers forecast and predictive analytics for the full range of precious metals, including gold, silver, platinum, and palladium.

Meanwhile, silver prices have followed a pattern not unlike that of Gold. As channels break, the macro downtrend just continues. This creates a similar sentiment where the market has trouble establishing a bottom.

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For instance, silver started to breach support during the latest trading session. Gold, however, hangs above this level, but only by a thread. Ultimately, a strong dollar and high-interest rates have significantly reduced precious metals’ price momentum. On the other hand, this basket of metals could find support if inflation continues and the economy weakens further.

Meanwhile, the LME Has Quietly Exited the Precious Metals Markets

Due to low liquidity, the LME unceremoniously withdrew its precious metals gold and silver contracts on July 11. That leaves Comex as the primary exchange serving the precious metals markets.

Global Precious Metals MMI: Actual Metal Prices & Trends

  • US platinum prices dropped from XXX to $893/oz from $965/oz
  • Japanese silver prices dropped from $6.74/ten grams to $5.78/ten grams
  • Indian gold bullion performed the best in the basket, falling from $659/10 grams to $636/10 grams

It is not an idle question. For the last two decades, China’s infrastructure spending has been the engine of demand growth for steel, copper, and aluminum prices. So when the South China Morning Post reported that local governments sold 1.94 trillion yuan (US$289 billion) worth of bonds in June to fund infrastructure spending and boost economic growth, markets took note.

China aluminum

Grispb/Adobe Stock

The Chinese Government Remains Focused on Infrastructure

This news came on the heels of last month’s announcement from the top of China’s State Council. At that time, they said state banks would increase their credit lines to provide 800 billion yuan of funding for infrastructure projects.

Issuance so far this year has come to more than Rmb5tn, the SCMP reports. The majority, some Rmb3.4tn of this amount, came from special-purpose bonds specifically to fund infrastructure. Still, the figure represents 93% of the central government’s annual quota for such bonds. That seems to suggest that the second half of the year will see a sharp drop off.

However, a Financial Times Unhedged post quotes Bloomberg’s report that China’s Ministry of Finance is considering allowing local governments to sell Rmb1.5tn ($220bn) of special bonds in the second half of this year. This suggests that funding quotas will be exceeded this year as a whole.

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Copper and Aluminum Prices Could See a Boost

Setting aside the record infrastructure bond sales already completed, the projected above-quota infrastructure bond sales, the development banks’ infrastructure fund, and Unhedged estimates that those banks’ increased lending quotas come to Rmb2.6tn. That’s more than 2% of gross domestic product and enough to push the market bullish for metals.

On top of that, early indications suggest funds are not primarily intended for China’s beleaguered housing sector. Instead, they may go towards public works. In that case, rail electrification and power could be particularly beneficial for copper and aluminum prices.

Share prices among Indian aluminum and steel producers all rose last week on the news. In fact, they’re up over 5% in most cases as investors see the increased funding as positive for India’s metal exporters. But whether news stimulates metals prices or buoys share prices elsewhere remains to be seen. According to most experts, this will largely depend on whether the lift provided by the increased infrastructure spending is depressed by woes elsewhere.

China’s Economy Still Has Challenges to Face

China has been suffering rolling COVID lockdowns, and anecdotal evidence provided to MetalMiner suggests unemployment is becoming a serious issue. Against this unstable domestic backdrop, and with developed markets facing rising interest rates and the threat of recession, there are counterbalancing negatives at home and abroad.

Most metals markets were assessed as being in surplus during the first half of this year. In fact, aluminum moved from a deficit last year to a surplus this year despite historically low exchange inventory levels.

China has been an exporter of many metals despite tariff barriers dissuading energy-intensive aluminum and zinc exports. So if demand were to pick up in China, it wouldn’t take much for those exports to stop. Were that to happen, an inventory-starved market outside of China would feel a sharp pinch, despite recessionary limits to demand.

It is too early to call, but China’s recent moves suggest we should not count out their boosting growth by pumping money into the construction sector. If it happens, it may serve to support metals prices in the second half of the year and next.

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The Stainless MMI continues its decline this month. Moreover, nickel prices continue to show weakness without any apparent bullish anticipation from market participants. As the entire industrial metals market sloped downward, nickel prices followed suit. Moreover, volumes remain lower than pre-LME shutdown levels, which will continue to foster slow price movement.

The Stainless Monthly Metals Index (MMI) dropped 9.55% from June to July.

 

Tsingshan Tycoon Caps Losses at $1 Billion After Nickel Crisis

According to a recent Bloomberg report, the man behind the historic March nickel squeeze walked away from the crisis with an estimated loss of $1 billion. To most, that figure sounds almost unimaginable. However, it’s a far cry from the more than $10 billion loss he faced when nickel prices surged past $100,000/mt. Instead, Xiang Guangda, owner of mining and steelmaking company Tsingshan Holding Group, managed to close out nearly all of his short positions almost four months later.

Guangda’s ability to withdraw with nearly all his assets intact and, for him, a manageable loss, was notably aided by a few big players. For instance, when nickel prices skyrocketed, the LME halted trading. That move allowed Guangda time to strike a deal with roughly ten banks and brokers attached to his short position. Perhaps even more crucially (and controversially), the LME canceled multiple transactions. This brought prices back to the previous day’s closing of just under $50,000. However, Guangda did not, in fact, begin closing his short positions when the exchange reopened. Instead, the deal he struck allowed him to hold off until prices dipped to more acceptable thresholds, capping his net losses and allowing him to remain very much a billionaire.

Know what to do when the market shifts. Related article: The Art of Timing Your Buy

Damage Far-Reaching for Nickel Prices, Could Extend Months if Not Years

While Guangda appears “in the clear,” the damage of the squeeze extended far beyond the actual events. For one, the LME’s reputation seems severely, and perhaps permanently, harmed. Of course, the exchange was caught between a rock and a hard place. That said, it did choose a side. And that will always leave the other side angry.

Understandably, the exchange felt incredible pressure amid the chaos. According to the LME’s chairman, Gay Huey Evans, “had the LME not taken these decisions, the effect on the nickel market would have been intensely damaging and felt throughout the nickel value chain investment community.” Although it’s been denied, speculation persists that Beijing may have influenced LME’s parent company, Hong Kong Exchanges and Clearing Limited.

As the LME’s chosen winner walks away, the losers remain furious. On the one hand, the exchange has found itself the target of numerous lawsuits and investigations. On the other hand, the crisis triggered a retreat from the LME due to distrust and risk aversion among market participants. Open interest across the metals has trended downward since March. Its nickel contract, though still functional, stands as the most substantially damaged, with trading volumes roughly half of what they were.

Beyond the LME, the wider nickel market continues to struggle to find a fair value for trade hedges. This is largely due to low volumes harming liquidity and widening spreads. As no CME contract exists, India’s MCX and China’s SHFE stand as the only viable alternatives. Both, however, are priced in non-freely convertible currencies. The SHFE appears as the obvious beneficiary, but not necessarily to a substantial degree. Instead, the market remains shaken. In MetalMiner’s opinion, the true fallout of the nickel crisis will likely extend months, if not years.

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NAS July Fuel Surcharge Rises to 51%

North American Steel’s fuel surcharge hit a new record in July as it climbed for the second consecutive month to 51% from 50% in June. The figure has more than doubled since May of 2021 amid record energy prices. The surcharge during the first seven months of 2022 now sits over 71% higher than what it was during the same period of 2021.

Fortunately, fuel prices are projected to see some relief in the near future. In fact, oil slid 2% last week to reach a 12-week low of just under $100 a barrel. That said, the only reason for this sudden drop is increased worries about a global recession. If that looming threat comes to fruition, there may be worse things to worry about than fuel surcharges.

See the impact on stainless steel prices. Check out MetalMiner’s stainless steel should cost models by scheduling a demo of the Insights platform.

 

Actual Metals Prices and Trends

  • The Allegheny Ludlum 304 stainless surcharge fell by 6.59% to $1.70 per pound as of July 1. Meanwhile, the Allegheny Ludlum 316 surcharge dropped 7.76% to $2.26 per pound.
  • Chinese primary nickel decreased by 18.8% to $27,236 per metric ton.
  • LME three-month nickel fell by 13.49% to $The 8,245 per metric ton.
  • Indian primary nickel increased by 14.72% to $8.63 per kilogram.

 

The Construction MMI (Monthly Metals Index) extended its decline from last month. Altogether, the index fell 10.69% from June to July.

China is Poised to Inject Big Money into Infrastructure

News recently broke that China’s State Council is preparing to increase credit lines across the board, providing an additional 800 billion yuan to fund infrastructure projects. This puts the country at around 93% of its annual spending quota for infrastructure. However, the government seems committed to keeping the money coming.

Immediately after the announcement, share prices among Indian steel and aluminum producers rose more than 5%. Exporters are understandably thrilled at the prospect of a commodities-hungry China. However, there’s no escaping the sheer number of hurdles the country faces, some of which they seem powerless to do anything about.

For instance, China has been enforcing a zero-COVID initiative for months now. Despite oppressive and expensive lockdowns, rolling outbreaks are still occurring. There’s also the looming threat of a global recession, the war in Ukraine, and rising interest rates to contend with. In the end, only time will tell if the investment will pay off. Meanwhile, the announcement has not affected the Construction MMI one bit.

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Contruction MMI

US Construction Industry Still Projecting Growth

The US economy has been rocked by instability, sending some buyers and investors running for the hills. However, industry insiders remain confident that the construction sector will experience substantial growth. In fact, last month’s report from GlobeData detailed how the $1.9 trillion industry should expand by 3% between next year and 2026.

It’s true that the US housing market is starting to cool. However, we’re still seeing significant investments in renewable energy, transportation, and housing. And while Reuters has made it clear for months that home building permits are on the decline, commercial projects are on the rise. It’s a hodgepodge of positives and negatives, but the industry appears in a position to come out on top.

It’s also worth noting that the construction industry added 13,000 jobs last month. Though this was lower than May’s hiring surge, it’s still a sign that there are projects to be completed and money coming in. In an economic climate where the prevailing sentiment is “what now?” this is enough to keep most analysts happy.

Like the information provided by our Construction MMI? Make sure you are following the five best practices for sourcing steel.

China Expected to Ramp Down Steel Output

An early July report from S&P Global detailed how China is expected to reduce 2022 crude steel output by 2%-3% this year. Altogether, this would remove around 20 to 30 million metric tons from the marketplace. But while global demand is indeed going into the gutter, Chinese producers are unlikely to cut back production much more. According to one source, doing so would “trigger unemployment and put great downward pressure on GDP growth.”

Of course, as with everything else in our global economy, this isn’t a “China only” problem. Raw materials suppliers from Brazil to Australia are going to feel the pinch of the ramp down. In fact, on Friday, representatives from Hunan Province’s Hunan Valin Iron and Steel held an online meeting with investors. They explained that the current supply and demand situation is unlikely to support a sharp rise in raw material prices.

Already the country has implemented a zero import duty on coal, negatively affecting prices. As iron ore supplies increase, support for those prices will also start to weaken.

A Rocky Few Weeks for US Steel

At the end of June, news hit the wire about a potential closure of the US Steel plant in Granite City, Illinois. The company stated that it plans to sell and repurpose the facility’s blast furnaces, which may end up switching to pig iron production. And while company representatives repeatedly stated that the move would not lead to immediate job losses, they do plan to lay off some 950 workers over two years.

The local union feels the move is a “betrayal” to workers, saying that “the announced potential agreement could cause the permanent shut down of the steel making and finishing operations at the Granite City works. The result would be the permanent loss of close to one thousand jobs.” It’s true that the Granite City economy is heavily dependent on the steel industry and has been for nearly 100 years. For a city with a population of just 28,000, this would be a crippling blow to the job market.

On the other side of the spectrum, US Steel has announced it will be investing some $50  million into one of its Minnesota mines. The move is intended to upgrade the facility to produce iron or feedstock. These are DR-grade pellets that can be used to make Direct Reduced Iron and Hot Briquetted Iron for steel mills.

While those employed by US Steel are wary of their overall job security, the company remains incredibly proud of its recent moves. “We are strategically investing in our raw materials that will feed the advanced steel mills of today and tomorrow,” said CEO David Burritt. “Our conviction remains that steel mined, melted, and made in America is vital to our national and economic security.”

 

Construction MMI: Actual Metal Prices and Trends

  • China H-Beam steel fell by 8.84% to $656.83. In addition, China Rebar fell by 7.65% to $662.59
  • China aluminum bar also saw a significant drop of 7.6% to $3034/mt.
  • Other notable drops included US shred scrap and European aluminum.

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