Market Analysis

As the World Bureau of Metal Statistics (WBMS) will tell you, the global aluminum market reached a surplus of 1,603 kt in the January to September 2020 period.

That tripled the surplus of 480 kt recorded for the whole of 2019.

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

Global aluminum market sees rising production

Production continued to rise in China. In addition, production made a strong comeback in North America, where it rose 4.3% year over year, according to Capital Economics, largely due to the recovery of Alcoa’s Becancour smelter in Canada.

Chinese output grew 3.8% to nearly 31 million tons in the January to October period. Even so, demand still outstripped supply. The country imported some 766 kt of primary metal, according to Reuters.

Despite Chinese demand — or maybe because of it — an estimated 3.2-million-ton global surplus will build this year, according to CRU estimates. Some 2.9 million tons of that tonnage will occur outside of China.

Aluminum stocks and demand

Yet if ever there was an example of how exchange stocks are no indication of demand, LME inventory levels actually fell this year (down by 53 kt so far).

Surplus production has a way of disappearing off the radar in the aluminum market. The stock and finance trade soaks up excess production and profitably stores it away on the back of a strong LME forward price curve.

The portion that is visible via the LME’s off-warrant reporting structure doubled from 730 kt in February to 1.56 million tons by September. That figured has continued to climb since.

Read more

The World Platinum Investment Council (WPIC) released a report this month with a bullish view of the platinum market in 2021.

The WPIC is bullish on the basis of stronger investment demand and restricted production in South Africa.

Sign up today for Gunpowder, MetalMiner’s free, biweekly e-newsletter featuring news, analysis and more.

Platinum in deficit

The WPIC is predicting a record deficit of 1.2 million ounces in 2020. The projected deficit would mark a sharp uptick up from a deficit of 100,000 ounces in 2019.

The report states supply in 2020 fell by 18% due to virus-induced lockdowns. Meanwhile, demand fell only 5% as automakers managed to maintain output, resulting in a deficit of -1,202 Koz.

Next year, the council is expecting demand growth of 2%. That growth, it expects, will come on the back of stronger consumer and industrial demand as consumers return to less cautious ways and increase spending on jewelry and cars.

Automotive will see support not just from increased car sales but also greater per-vehicle PGM use as implementation of new, tighter Euro 6 emission standards in Europe come into effect.

This is expected to result in supply increasing by 17% and demand rising by 2%, resulting in a lower deficit of -224 Koz.

Read more

copper smelter

Bombardho/Adobe Stock

Earlier today we touched on aluminum prices — well, the copper price is similarly ascendant.

The copper price has, as we’ve mentioned on multiple occasions, been supported by a recovering Chinese economy.

Furthermore, according to data released Monday by the International Copper Study Group (ICSG), global copper production declined over the first eight months of the year.

Stop obsessing about the actual forecasted copper price. It’s more important to spot the trend. See why.

Copper price rises to 2020 high

The LME three-month copper price closed last week at $7,195 per metric ton, its high for 2020.

In addition, the price point in fact marked its highest since early 2014.

How much further can it go? Certainly, markets at large and metals in particular — including copper — showed upward momentum after recent announcements of potentially effective COVID-19 vaccines from Pfizer and Moderna.

As Maria Rosa Gobitz explained in this month’s Copper Monthly Metals Index (MMI) report, copper prices could continue to go up. In fact, according to investment bank Goldman Sachs, copper could rise to $7,500 per metric ton by this time next year.

While it’s still early to say, with the copper price already approaching the $7,200 mark, $7,500 next year is not out of the question. The LME three-month copper last reached the $7,500 per metric ton mark in spring 2013.

Read more

The disconnect in recovery between Asia and North America/Europe is having an unprecedented impact on the transpacific and Asia-Europe container markets.

The world’s shipping industry had a near-death experience in the early part of the year as China went into lockdown.

To its credit and to consumers’ detriment, the industry has since got a grip of the situation and turned disaster into triumph.

Sign up today for Gunpowder, MetalMiner’s free, biweekly e-newsletter featuring news, analysis and more.

Container markets see rising rates

Ocean carriers are charging skyrocketing rates. In a bid to maximize returns, they are exacerbating shippers’ woes. Carriers have been shipping empty containers back from destination markets to origin rather than carrying cargoes.

The problem, as laid out by The Load Star, is a shortage of containers rather than space on container ships. That shortage is the main driver of the unrelenting spike in freight rates.

But the situation is made worse by carriers actively working to reposition their empty equipment as quickly as possible back to Asia to take advantage of skyrocketing spot rates. Meanwhile, they do not get those rates on the U.S.-Asia direction.

Exporters scrambling

This has left exporters around the world scrambling for boxes.

Indeed, one U.K.-based carrier executive reportedly admits, “We would much rather stick the empties back on the ship to Asia where we can use them straight away with premium-rate cargo than have them tied up for weeks on an export load from Europe.”

The same predicament pertains to the U.S.-Asia Pacific route.

Read more

Industrial metals have had a good few months in Q3, in part due to a China recovery.

It’s not a bull market, of course — we have called it a sideways market.

However, it has been a pretty positive sideways market. Copper is up from $2.60/lb at the end of the European lockdowns to $3.20/lb today. Aluminum is up from $0.70/lb to approaching $0.90/lb.

The MetalMiner 2021 Annual Outlook consolidates our 12-month view and provides buying organizations with a complete understanding of the fundamental factors driving prices and a detailed forecast that can be used when sourcing metals for 2021 — including expected average prices, support and resistance levels.

China recovery

Much of that rise has ridden on the back of a resurgent Chinese economic recovery driving such strong domestic demand that the country has switched to becoming a net importer on key metals this year.

Ongoing policy stimulus in China has made its way into industrial and construction investment. That should continue to boost investment and industrial output in the coming months.

Retail sales, while slow to recover in the early summer, are now back to pre-pandemic levels. Auto sales have benefited from pent-up demand earlier in the year supporting the retail sales numbers.

How long can China’s recovery continue?

Industrial metals buyers may be asking how long can this continue. Will prices continue to rise?

Read more

We all remember the Obama-era Trans-Pacific Partnership (TTP) trade deal, right? The trade deal the U.S. withdrew from in early 2017 after President Donald Trump called it a disaster for American workers?

Well, Australia, Japan, and nine other countries went ahead with it, lowering tariffs and bolstering trade within the region.

But, crucially, TTP did not include China. Part of the attraction for the Obama administration was that the deal strengthened the U.S.’s role in Asian regional trade at the expense of China.

Even so, the deal was also a source of puzzlement to participants at the time. The argument went, if it did not include China, then why was the U.S. so worried about American jobs (as TTP gave no privileges to China)?

Two years on and the region has just signed an even larger agreement.

Want an occasional email from MetalMiner that highlights new content with NO sales ploys? Join that list today.

RCEP trade deal and worries over China’s dominance

The Regional Comprehensive Economic Partnership (RCEP) cuts tariffs on trade across a new trade zone larger than the E.U. in population. Gross domestic product of the zone represents some 30% of the global total, the Washington Post reports.

Unfortunately, America’s absence from this agreement has left the way clear for Chinese dominance.

The U.S.’s absence also contributed to the withdrawal of Asia’s third-largest economy India from the agreement.

There is still some trepidation, even among parties that have signed up, that without the counterbalance of the U.S., the agreement leaves China in too dominant a position.

Australian labor unions have questioned the deal. Singapore is concerned about the failure of RCEP to detail rules around issues like data privacy, IP protection, digital trade, and e-commerce. These are all issues the U.S. would have put at the top of its agenda.

Read more

European Union flag

Andrey Kuzmin/Adobe Stack

(Editor’s Note: This is the first of a two-part review of the European steel sector.)

While steelmakers east of Berlin are working to meet rising demand, others are facing myriad technical and regulatory challenges.

Those challenges include a global pandemic that has severely impacted economies, industry watchers and market participants told MetalMiner.

Sign up today for Gunpowder, MetalMiner’s free, biweekly e-newsletter featuring news, analysis and more.

European steel faces higher costs, environmental restrictions

Steel plants in Central and Eastern European states that are members of the European Union face not only higher costs, but also environmental restrictions that could eventually mean an additional $30-40 per tonne to make steel.

China’s recovery from the coronavirus pandemic has led to increases there in steel production and cheaper imports.

As a result, China’s rebound has further impacted European steelmakers in Central and Eastern Europe.

‘Shifting east’

Foreign metals and mining groups started to acquire plants in Central and Eastern Europe in the late 1990s to early 2000s. Governments in those regions sought to privatize what in many cases were previously state-owned assets.

“The view was that the market was shifting east in terms of manufacturing bases,” as Western European automakers and white goods producers were setting up shop in those countries, one analyst said.

Some of the acquired assets also have either captive raw materials sources or easier access to them. This solved potential supply chain questions and allowed the acquiring groups to redistribute material elsewhere within their own network.

Many of the newer member states that joined from 2004 were also receiving subsidies from Brussels for infrastructure improvements. Those improvements would, in many cases, require steel, the analyst added.

Read more

India came in for considerable criticism over its reaction to the spread of the coronavirus pandemic in the first wave.

Locking down the economy almost overnight and trapping millions of migrant workers from returning home, only to then release them a week or two later to flood out into rural areas and spread the virus, was roundly condemned (both inside the country and out).

The MetalMiner 2021 Annual Outlook consolidates our 12-month view and provides buying organizations with a complete understanding of the fundamental factors driving prices and a detailed forecast that can be used when sourcing metals for 2021 — including expected average prices, support and resistance levels.

Coronavirus pandemic in India

Since then, infections have been on a relentless rise. Infections reached a peak in mid-September of some 93,000 per day. That brought the total to some 9 million cases and deaths to nearly 130,000 (one of the highest totals in the world).

Rolling local containments and much more effective work at the city and community levels have gradually reduced infections. Infections are about half of what they were in late September, as this graph illustrates:

chart of coronavirus cases in India

Lacking the financial firepower of mature economies, the government has been unable to support the economy in the way many Western governments have done.

As a result, India’s GDP contraction has been brutal.

According to the Financial Times, gross domestic product contracted almost 24% year over year in the second quarter of 2020. In the third quarter, GDP fell by an additional 9%.

The decline puts the country into a technical recession for the first time in its history.

Read more

The Renewables Monthly Metals Index (MMI) rose 2.0% for this month’s index value, as Lynas Corporation reported a rise in neodymium-praseodymium output during the most recent quarter. (Editor’s Note: This report also includes coverage of grain-oriented electrical steel, or GOES.)

November 2020 Renewables MMI chart


The MetalMiner 2021 Annual Outlook consolidates our 12-month view and provides buying organizations with a complete understanding of the fundamental factors driving prices and a detailed forecast that can be used when sourcing metals for 2021 — including expected average prices, support and resistance levels.

Lynas Corp. posts rise in quarterly neodymium-praseodymium output

Lynas Corp., the largest rare earths company outside of China, recorded neodymium-praseodymium (NdPr) output in the quarter ended Sept. 30 of 1,342 tonnes.

The quarterly total marked an increase from neodymium-praseodymium output of 775 tonnes the previous quarter.

Neodymium is a key component in permanent magnets in a wide variety of electronic devices.

“Following the temporary shutdowns in both Malaysia and Mt Weld as a result of the COVID-19 Movement Control Order (MCO) issued by the Malaysian government, production of NdPr was at 75% of Lynas NEXT production rates during the quarter (equivalent to original nameplate production rates),” Lynas reported in its quarterly activity report. “This is currently sufficient to meet demand from our customers while COVID-19 uncertainty remains.”

Fortescue to invest in renewable energy

Australian iron ore mining giant Fortescue Metals Group plans to take a big step into the renewable energy sector.

According to the Australian Financial Review, Fortescue Metals Group chairman Andrew Forrest said during the company’s annual general meeting this week that the company would move toward becoming a “renewables and resources” company.

Fortescue shares are up nearly 60% in the year to date.

Read more

gold bars

misunseo/Adobe Stock

The Global Precious Monthly Metals Index (MMI) fell 2.2% for this month’s index reading, even as the gold price surged in late October.

November 2020 Global Precious MMI chart

The MetalMiner 2021 Annual Outlook consolidates our 12-month view and provides buying organizations with a complete understanding of the fundamental factors driving prices and a detailed forecast that can be used when sourcing metals for 2021 — including expected average prices, support and resistance levels.

Gold price surges before significant drop

After hovering around $2,000 per ounce in August, the gold price took a step back over the ensuing months.

In late October as Election Day approached in the U.S., gold fell to $1,878 per ounce to close the month. The price rose as high as $1,960 per ounce by Nov. 9.

However, the gold price lost a good deal of shine that day, plummeting back down to $1,860 per ton. The single-day decline marked gold’s largest drop in seven years, according to MarketWatch.

News of a potential Pfizer and BioNTech COVID-19 vaccine sent the dollar upward. The dollar index closed last Friday at 92.23 before closing Monday, Nov. 9, at 92.72.

Gold in Scotland?

Late last month, MetalMiner’s Stuart Burns delved into Scotgold’s efforts to develop gold reserves in Scotland’s Trossachs National Park.

“So, it has taken a strong gold price and political blessing for Scotland’s only domestic gold miner, the aptly named Scotgold, to gain permission to develop gold reserves in the Trossachs National Park,” Burns wrote. “The park is in an area of outstanding natural beauty and is home to some of the best-preserved oak woodlands in Scotland.

“Gold mining and Scotland are not activities and locations that one immediately makes an association between. In fact, more Scots rushed to California’s gold rush than ever mined at home.  However, gold prospectors have looked for gold in Scotland’s rivers for centuries.

“The country is in the broad gold belt that stretches from Scandinavia across Greenland to Canada with, in places, similar topography and geology.”

Read more

1 2 3 243