Industry News

2021 Annual Outlook reportThis is a crucial time of year in the world of metals: contracting season. It also means it’s time for something else: the MetalMiner 2021 Annual Outlook report.

This past year has been marked by volatility, a situation that is not likely to change over the coming year.

For industrial metal buying organizations, that means the task of procuring metals is even more challenging than ever.

Accessing the 2021 MetalMiner Annual Outlook report

The Annual Outlook report is available only to MetalMiner subscribers.

To inquire about a subscription and get access to this invaluable resource, visit the dedicated 2021 Annual Outlook landing page.

Price drivers, support and resistance, and average prices

This U.S.-centric annual buying guide consolidates MetalMiner’s 12-month view and provides buying organizations with a complete understanding of the fundamental factors driving prices.

The Annual Outlook also offers a detailed forecast that can be used when sourcing metals for 2021 — including expected average prices, and support and resistance levels.

The Annual Outlook report covers 10 key metals in detail: aluminum, copper, zinc, lead, tin, nickel, HRC, CRC, HDG and plate.

Buyers have to know how to time their buys and be aware of a wide variety of factors influencing prices. Among other factors, MetalMiner’s analysis gives specific attention to the Chinese economy, oil prices and the U.S. dollar.

In addition, buyers need to continue to monitor the coronavirus pandemic and its impact on commodity and industrial metal markets.

India

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This morning in metals news: India is looking to curb its imports of copper and aluminum; Rio Tinto and Turquoise Hill reached a financing agreement for the Oyu Tolgoi underground mine project; and Germany’s steel industry needs state aid.

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India targets copper, aluminum imports

India is looking to curb its imports of copper and aluminum, Reuters reported.

Per the report, India is particularly targeting imports from China and other Asian countries. Among the proposed measures is a requirement for importers to register with the government.

Rio Tinto, Turquoise Hill reach financing deal

Miner Rio Tinto and Turquoise Hill have reached a financing deal toward the completion of the Oyu Tolgoi underground mine in Mongolia.

“The MOU agreed today with TRQ provides a clear funding pathway for the completion of the Oyu Tolgoi Underground Project,” said Arnaud Soirat, Rio Tinto’s chief executive of copper and diamonds. “We will continue working with TRQ and the Government of Mongolia to progress the underground project, which has the potential to unlock the most valuable part of the mine for the benefit of all stakeholders.”

Rio Tinto has a 50.8% stake in Turquoise Hill.

With the current development schedule, Turquoise Hill expects the massive copper-gold mine will be the world’s third-largest copper producer at peak metal production in 2025.

IG Metall head says German steelmakers need state aid

2020 has been a difficult year for Europe’s steelmakers.

Already battling imports, European steelmakers have struggled on the heels of the coronavirus pandemic and its resulting impact on demand.

In Germany, IG Metall head Joerg Hofmann said the country’s steelmakers need state aid, Reuters reported. In addition, German steelmakers need to form alliances in order the facilitate the transition to greener fuels for blast furnaces, Hofmann argued.

Are you prepared for your annual steel contract negotiations? Be sure to check out our five best practices. 

copper smelter

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This morning in metals news: copper prices gained momentum Wednesday; the rival of German steelmaker Thyssenkrupp rejected the idea of an alliance; and a Pakistani steelmaker is looking to ramp up its output amid a construction spike in the country.

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Copper price momentum

The LME copper price bounced back Wednesday after falling Tuesday, Reuters reported.

The copper price gained 0.2% Wednesday, as stocks fell to a 15-year low, per the report.

As with other materials, recovering Chinese demand continues to support metals prices (including copper).

Salzgitter CEO says company not interested in Thyssenkrupp alliance

The rival of German firm Thyssenkrupp told Reuters it is not interested in an alliance.

Salzgitter CEO Heinz Joerg Fuhrmann said a merger of the two would not improve the company’s standing.

Last year, Stuart Burns delved into Thyssenkrupp’s struggles, including its departure from Germany’s blue-chip DAX index.

In August, Thyssenkrupp reported on the impact of the coronavirus pandemic on its finances (citing the automotive technology fallout, in particular).

Pakistani steel firm aims to augment steel capacity

Per Bloomberg, China-backed steel projects in Pakistan are looking to raise a lot of money and significantly augment their steel capacity.

Agha Steel Industries Ltd. aims to triple its capacity for gray steel bars, Bloomberg reported.

Furthermore, the company plans to raise between 3.6 billion and 5 billion rupees, according to the report.

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India faces a dilemma — the country has the second-highest coronavirus caseload in the world at 4.2 million people and its economy is struggling.

India overtook Brazil this week, as it reported a record 90,000+ new cases on Saturday and nearly 92,000 on Sunday.

Yet, despite surging infections, India desperately needs to get its economy working again. It will need to do so in order to avoid the brutal impact of unemployment and rising poverty.

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Debt approaches highest level in four decades as India’s economy struggles

According to The New York Times, the government’s tax revenues have plummeted. Some states are unable to pay health care workers and government debt is approaching its highest level in 40 years.

As the below graph from Trading Economics shows, unemployment soured in the spring following the government’s ill-fated lockdown March 24:

The recovery has been swift but far from complete. Tens of millions of migrant workers, for example, are reluctant to return from the countryside to the cities.

As the New York Times explains, the lockdown was announced with just four hours notice. Offices, factories, trains, roads and even the borders between states were closed.

Instantly, tens of millions of Indians lost their jobs. Facing potential starvation, many began streaming back to their homes in the countryside, often by foot, in an epic migration of biblical proportions.

In the process, they spread the virus to every corner of the country and within touching distance of all 1.3 billion people.

Back to work?

As the unemployment figures show, some businesses are getting back to work despite the rising infection rates. The authorities are trying to contain local outbreaks while limiting a nationwide surge, but it is a juggling act they appear to be losing.

Workers remain reluctant to go back to work. Construction and factory workers are in many cases staying in their countryside villages.

In addition, consumption is way down. That is due to consumers’ fear of catching the virus in shopping malls and because of uncertainty over what the future holds. As such, saving for tomorrow is more of a priority than spending today.

Cities like New Delhi that had seen a gradual return to life are now seeing local containment zones being applied again as infection rates rise.

The New York Times cited a recent Google Mobility Report — which tracks cell-phone data — that noted trips to retail and recreation areas have dropped by 39% compared with before the pandemic. In Brazil and the United States, the drops were less than half as severe.

Economy struggles even before pandemic

The economy was suffering before the pandemic.

Quarter by quarter, India’s economic growth rate has been dropping, The New York Times states, from 8% p.a. in 2016 to 4% right before the pandemic.

A growth rate of 4% would be great for the U.S. or Europe. In India, that level is nowhere near enough. Millions of young people are streaming into the workforce each year, hungry for their first job.

Thankfully, the death toll is low compared to the level of infections. However, even at the official figure of 71,680 to date, it is sufficiently high for the population to be extremely wary of returning to life as normal. Many suspect – both inside the country and outside observers – that the true figure is much higher.

The resulting caution is a major hindrance to the economy returning to any level of growth before next year and even beyond.

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Photo by Jeffrey Sauger for General Motors

This morning in metals news: General Motors announced a partnership with Nikola Corporation; U.S. manufacturing corporations saw their profits plunge in Q2 2020; and Chile’s copper shipments fell in August.

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GM announces partnership with Nikola

General Motors on Monday announced plans to partner with Nikola Corporation, a partnership that would see the Detroit automaker manufacture the Nikola Badger.

“As part of the agreement, Nikola will utilize General Motors’ Ultium battery system and Hydrotec fuel cell technology, representing a key commercialization milestone for General Motors,” GM said in a release.

Manufacturing profits decline

To no one’s surprise, manufacturing profits declined significantly in Q2 2020.

After-tax profits for U.S. manufacturing corporations reached $47.2 billion in Q2, according to the U.S. Census Bureau. The quarterly total marked a decline from the $113.0 billion in Q1 2020 and the $136.3 billion in Q2 2019.

Chile’s copper shipments fall in August

According to Bloomberg, No. 1 copper producer Chile saw a decline in the value of its copper shipments last month.

Per data released by the Chilean government today and cited by Bloomberg, Chile’s copper exports totaled $2.76 billion in August, marking an 11% decline from the previous month.

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To our U.S. readers, MetalMiner wishes everyone a happy and safe Labor Day weekend.

The next several days will be busy ones here at MetalMiner.

Keep an eye out for the release of our big Annual Outlook report, which offers a more expansive view of the various metals categories tracked in our Monthly Metal Outlook (MMO).

On top of all that, also keep an eye out for our usual Monthly Metals Index (MMI) reports, which will continue this week.

With the official end of summer drawing near, let’s take a look back at the most popular posts of the summer season (for the purposes of this list, that’s June-August):

  1. Silver’s recovery has been dramatic — but how high can it go?
  2. Aluminum price is pulled this way and that on rising trader interest, supply glut
  3. Aluminum MMI: Aluminum price makes gains, index rises 6.7%
  4. Chinese construction steel prices dip amid cluster of new coronavirus cases
  5. Copper MMI: Copper price rally continues, rises to pre-coronavirus levels
  6. Copper MMI: Will the copper price continue in its V-shaped recovery?
  7. Aluminum MMI: Aluminum price climbs despite overwhelming supply
  8. Rare Earths MMI: DoD reverses decision to fund two U.S. rare earths separation facilities
  9. U.S. aims to break rare earths dependence on China with Lynas project
  10. Stainless MMI: LME nickel prices contradict market fundamentals

cars on the road in Shanghai, China

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Before we head into the long Labor Day weekend, let’s take a look back at the week that was in the world of metals.

Automakers released August sales reports, mostly showing sales remain down compared with 2019 levels.

Meanwhile, for the week ending Aug. 29, U.S. steel mills’ capacity utilization fell compared with the previous week, interrupting an extended stretch of weekly capacity increases.

In other news, President Donald Trump took aim at steel imports from Brazil and Mexico. With respect to Brazil, Trump opted to cut Brazil’s semi-finished steel quota for the remainder of the year down to 60,000 tons from 350,000 tons.

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Week of Aug. 31-Sept. 4

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steel

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This morning in metals news: steelmaker Nucor will open a new steel plant in Florida by the end of this year; U.S. gasoline prices are low heading into the Labor Day weekend; and Chinese demand continues to power high iron ore prices.

5 Mistakes Buyers Can Make When Sourcing Steel

Nucor to open steel plant by end of 2020

Nucor will open its new steel plant in Frostproof, Florida, by the end of this year, The Ledger reported.

Employment at the plant is expected to reach approximately 250 workers next year, The Ledger reported.

U.S. gas prices at lowest since 2004

For those getting in the car and traveling over Labor Day weekend, there’s good news.

According to the Energy Information Administration, U.S. gasoline prices are at their lowest since 2004. 

As of this Monday, the U.S. average price stood at $2.22 per gallon.

“U.S. gasoline prices are relatively low because of continued low demand for gasoline since mid-March, when travel demand fell because of efforts to limit the spread of coronavirus,” the EIA said.

Iron ore rises to six-year high

On the other hand, demand for steelmaking raw material iron ore remains high in China.

Per mining.com, Chinese demand has helped push the iron ore price to a six-year high.

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This morning in metals news: the U.S.’s levels of exports and imports were approximately equal in May, according to the Energy Information Administration; Vale offered an update on emergency protocols at two of its dikes; and the U.S. has seen elevated levels of imports of standard pipe and tin plate in recent months.

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Energy exports, imports even in May

Per the Energy Information Administration, the U.S.’s energy exports and imports came in approximately even in May.

“The United States had been a net exporter of energy in several months of the past year,” the EIA reported. “Changes in domestic production and declines in global demand for energy since mid-March in response to COVID-19 have shifted energy trade balances back in the direction of net imports, especially for U.S. crude oil and petroleum products.”

Vale updates on Paracatu, Patrimônio dikes

Brazilian miner Vale offered updates on ongoing emergency protocols related to two of its dikes.

The Paracatu and Patrimônio dikes, it reported, both received negative Stability Condition Declarations.

Furthermore, Vale reported negative declarations for four other sites.

Standard pipe from Thailand up 378%

According to steel import trends reported by the Steel Import Monitoring and Analysis system, U.S. imports of several steel products have surged over the May-July 2020 period.

Imports of standard pipe from Thailand, for example, jumped 378% during the May-July period compared with the August 2019-April 2020 period.

In addition, tin plate imports from China jumped 365%.

Does your company have a steel buying strategy based on current steel price trends?

mining

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This morning in metals news: MetalMiner’s September Monthly Metal Outlook (MMO) is now available; a Peruvian official says copper mining in the country has recovered after disruptions related to the COVID-19 pandemic; Finnish stainless steel producer Outokumpu announced a leadership change; and the U.S. Department of Commerce recently issued an affirmative final determination in a countervailing duty investigation covering steel cylinders from China.

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September MMO now available

It is a crucial time of the year for metals buyers who are busy setting their short-, medium- and longer-term spend strategies.

Buyers should make sure to equip themselves with the knowledge to source smartly in what has been a volatile year.

In that vein, the MetalMiner Monthly Metal Outlook (MMO) report for the month of September is now available. Readers will find news, analysis and much more covering copper, aluminum, nickel, tin, lead, zinc, HRC, CRC, HDG and plate.

Don’t miss out on the MMO report’s invaluable insights — learn more today.

Reuters: Peruvian government official says mining has almost completely recovered

Despite disruptions this year related to the global pandemic, the mining sector has almost completely recovered in Peru, a government official said, according to Reuters.

Peru is the No. 2 copper producer in the world.

“In Peru, stoppages resulting from the COVID-19 pandemic, combined with operational issues/adverse weather that affected a few major mines, led to a 23% decline in mine output over the first five months, with April and May registering declines of 33% and 41%, respectively,” the International Copper Study Group recently reported.

Leadership change at Outokumpu

Outokumpu, Europe’s largest stainless steel producer, announced the departure of its executive vice president for communications, marketing and investor relations, Reeta Kaukiainen.

Kaukiainen will continue in the role through the end of September, the firm said in a release.

DOC makes preliminary determination on steel cylinder imports

The Department of Commerce last week announced an affirmative preliminary determination in its countervailing duty probe related to imports of non-refillable steel cylinders from China.

The DOC calculated subsidy rates for Chinese exporters ranging from 22.97-190.67%.

Imports of the cylinders were valued at $71.8 million in 2019.

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