Market Analysis

The perennially bullish Goldman Sachs is not alone in predicting a higher oil price.

A recent report by the Boston Consulting Group asks the question, “are we on the cusp of a new supercycle?”

In BCG’s opinion? We are.

You want more MetalMiner on your terms. Sign up for weekly email updates here.

Bullish on the oil price

Brent crude oil price chart

SodelVladyslav/Adobe Stock

Hedge funds on the whole agree.

By a factor of 6-to-1, bullish long petroleum positions outnumbered bearish short ones on the NYMEX and ICE WTI contracts, according to Reuters.

Net long positions climbed to 919 million barrels, the highest since January 2020, before the pandemic took hold, and prior to that October 2018, before the trade war between the United States and China intensified, the post reports. Demand exceeds supply, which is constrained by OPEC discipline and a subdued US shale market.

In previous oil price rises, shale production has responded rapidly, lifting drilling within months and output inside of a year. However, this time around, those producers that survived the last crunch have chosen to repair their balance sheets rather than borrow and burrow.

Read more

The Renewables Monthly Metals Index (MMI) dipped by 0.8% for this month’s index reading.

The MetalMiner Best Practice Library offers a wealth of knowledge and tips to help buyers stay on top of metals markets and buying strategies.

June 2021 Renewables MMI chart

(Editor’s note: This report also includes the MMI for grain-oriented electrical steel, or GOES.)

Cobalt price falls

Earlier this year, the LME cobalt price surged as high as nearly $53,000 per metric ton.

As Stuart Burns noted last month, battery demand helped drive up the cobalt price in the first quarter.

However, the second quarter has been a different ballgame.

The LME cobalt price closed Monday at $42,500 per metric ton, or down approximately 20%.

G7 summit highlights climate goals

G7 leaders convened in Cornwall in the United Kingdom for the 47th G7 Summit from June 11-13.

Among a variety of issues, leaders of the G7 member states affirmed their commitments toward tackling climate change.

In a communiqué released after the summit, the leaders committed to supporting a “green revolution” that creates jobs, cuts emissions and limits the rise in global temperatures to 1.5 degrees.

“We commit to net zero no later than 2050, halving our collective emissions over the two decades to 2030, increasing and improving climate finance to 2025; and to conserve or protect at least 30 percent of our land and oceans by 2030,” the communiqué reads. “We acknowledge our duty to safeguard the planet for future generations.”

The leaders reconfirmed their commitment to the Paris Agreement. President Joe Biden brought the U.S. back into the agreement after former President Donald Trump had withdrawn from it.

The communiqué also highlighted the need to transition away from coal power and toward renewables.

“Recognising that coal power generation is the single biggest cause of greenhouse gas emissions, and consistent with this overall approach and our strengthened NDCs, domestically we have committed to rapidly scale-up technologies and policies that further accelerate the transition away from unabated coal capacity, consistent with our 2030 NDCs and net zero commitments,” the communiqué continues. “This transition must go hand in hand with policies and support for a just transition for affected workers, and sectors so that no person, group or geographic region is left behind.”

U.S. government to consider neodymium Section 232

The U.S. government could launch a Section 232 investigation covering neodymium magnets.

The Trump administration launched a Section 232 investigation in 2018 that resulted in tariffs on steel and aluminum.

Meanwhile, earlier this year, President Joe Biden earlier this year called for agency heads to initiate 100-day supply chain reviews. The reviews were to cover important materials including semiconductors, large-capacity batteries, pharmaceuticals and critical minerals.

This month, the Biden administration released a report with officials’ findings and recommendations.

“Neodymium (NdFeB) permanent magnets play a key role in motors and other devices, and are important to both defense and civilian industrial uses,” the report states. “Yet the U.S. is heavily dependent on imports for this critical product. We recommend that the Department of Commerce evaluate whether to initiate an investigation into neodymium permanent magnets under Section 232 of the Trade Expansion Act of 1962.”

Anglo American demerges thermal coal operation

Speaking of coal and the transition toward renewables, miner Anglo American announced it is demerging its thermal coal operations in South Africa.

“We have consistently believed in a responsible transition from thermal coal, being a transition that seeks to balance the needs and expectations of all stakeholders,” CEO Mark Cutifani said in a June 7 statement. “The demerger of Thungela lives up to that promise by bringing our employees, shareholders, host communities, host government and our customers along with us.”

Thungela will trade as an independent company on the Johannesburg Stock Exchange.

GOES MMI

The MMI for grain-oriented electrical steel (GOES) fell by 1.7% for this month’s reading.

June 2021 GOES MMI chart

In addition, the GOES coil price fell by 1.9% to $2,354 per metric ton.

Actual metals prices and trends

Within the Renewables MMI basket, the U.S. steel plate price rose by 7.8% month over month to $1,320 per short ton to open the month.

Meanwhile, Chinese steel plate dipped by 3.3% to $896 per metric ton. Korean steel plate jumped by 13.4% to $1,065 per metric ton. Lastly, Japanese steel plate fell 0.1% to $804 per metric ton.

Each month, MetalMiner hosts a webinar on a specific metals topic. Explore the upcoming webinars and sign up for each on the MetalMiner Events page.

The Stainless Monthly Metals Index (MMI) increased by 4.3% for this month’s reading, as stainless steel demand is likely to continue to grow in the years ahead.

June 2021 Stainless MMI chart

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

Increasing stainless steel production, demand

According to International Stainless Steel Forum (ISSF) data, stainless steel melt shop production increased by 24.7% year over year to 14.5 million metric tons through the first quarter of 2021.

Most of the production increase came from Europe and the U.S., where production jumped by 11.0% and 9.7%, respectively. The only region that saw a production contraction was China. China’s production fell by 0.5% to 8,198,000 metric tons.

This coincides with a report by Precedence Research, in which it estimates the stainless steel market size to increase to U.S. $168.24 billion by 2027 from U.S. $106.84 billion in 2019.

Precedence anticipates a 57.5% increase over the eight-year period due to the growing preference for stainless steel over ordinary steel and its increasing application in pre-engineered buildings. Additionally, demand for steel from construction and automotive and transportation sectors is expected to keep growing.

Read more

The Copper Monthly Metals Index (MMI) increased by 7.8% for this month’s reading, as the copper price remains high but dipped below the $10,000/mt level.

June 2021 Copper MMI chart

Each month, MetalMiner hosts a webinar on a specific metals topic. Explore the upcoming webinars and sign up for each on the MetalMiner Events page.

Copper prices retrace

On May 10, the LME three-month copper price closed at $10,720 per metric ton, hitting record highs last month.

Since then, prices declined below $10,000/mt.

SHFE prices followed the same trend.

The price retrace might be due partially to the stern warnings issued by Beijing about market discipline and excessive speculation in an effort to cool off prices.

Moreover, on June 7, trade data from China showed that copper imports fell 8% in May compared to the previous month. This might have scared some investors, as lower imports could mean lower demand, which decreases buying interest.

This could also signal that the pace of economic growth might be slowing. Along with less market speculation, that could mean the price will correct and consolidate.

Read more

The Raw Steels Monthly Metals Index (MMI) rose by 0.8% as U.S. steel prices continued to pick up but Chinese prices corrected.

June 2021 Raw Steels MMI chart

Each month, MetalMiner hosts a webinar on a specific metals topic. Explore the upcoming webinars and sign up for each on the MetalMiner Events page.

Chinese steel prices drop

China steel plant

gui yong nian/Adobe Stock

Since April 2020, Chinese steel prices have traded up consistently with a short decline period around December 2020. Around mid-May, all forms of Chinese steel prices peaked, as demand continued to soar in China.

Steel demand in China increased in the past few months as the government implemented its economic recovery plan, which includes infrastructure spending. Increasing steel prices continue to bring up infrastructure costs.

On May 26, steel prices saw a price drop of approximately 20% for all forms of steel. The sudden price decline in China could have been triggered by the severe punishment the Chinese government threatened to impose on any excessive speculation and fake news that might inflate critical raw material prices, such as steel.

After Chinese prices corrected, they continued to go up but at a slower rate, closing May at CNY 6,060/mt from CNY 6,100/mt at the end of April. Since, they continued to increase the first week of June but remain below the CNY 6,250/mt level.

However, volumes do not suggest speculation. Rather, the Chinese government wishes to control the rising price situation. After all, a lower domestic price can help boost the competitive advantage for Chinese firms exporting value-added products.

Read more

The Global Precious Monthly Metals Index (MMI) rose by 1.3% for this month’s reading, as the gold price rose to around $1,900 per ounce.

June 2021 Global Precious MMI

Each month, MetalMiner hosts a webinar on a specific metals topic. Explore the upcoming webinars and sign up for each on the MetalMiner Events page.

Gold price picks up to close May

gold price

Olivier Le Moal/Adobe Stock

The gold price made steady gains in May, rising to around $1,900 per ounce to close the month.

Since then, however, the price dropped to around $1,860 per ounce to start June. The gold price then bounced back to around $1,890 per ounce Wednesday afternoon.

Meanwhile, the U.S. dollar index, which generally moves inversely to the gold price, dropped in early May. After that, the dollar trended sideways, closing Tuesday at 90.08.

In other economic indicators, the U.S. 30-year treasury yield, which also generally moves inversely to the gold price, fell to 2.21% on Tuesday. The yield curve rate marked its lowest level since March 2.

The 10-year yield fell to 1.53%, its lowest since March 10.

Read more

China’s steel and aluminum market is undergoing a quiet revolution.

It’s not a revolution of investment or innovation.

Each month, MetalMiner hosts a webinar on a specific metals topic. Explore the upcoming webinars and sign up for each on the MetalMiner Events page.

Peak aluminum, steel in China?

China aluminum

Grispb/Adobe Stock

According to Reuters, Beijing’s target of peak coal use by 2030 is asserting a dampening effect on new steel mill and aluminum smelter investment.

As such, the country could be at or near peak production. As Reuters’ Andy Home notes, the country’s rising output over the years as had a dampening effect on prices. That trend has led some Western producers to cease operations.

But a combination of harsher environmental legislation resulting in Beijing dissuading investment in new coal fired power projects, combined with Western markets’ meaningful action — after years of simply complaining — to block out Chinese exports of aluminum and steel products suggests the Chinese impetus to build capacity and the rest of the world’s willingness to buy product are both going through a transformational change.

Read more

The Rare Earths Monthly Metals Index (MMI) fell by 19.6% this month, as China has loosened rare earths production quotas and the Biden administration could possibly launch a Section 232 investigation for neodymium magnets.

June 2021 Rare Earths MMI chart

The MetalMiner Best Practice Library offers a wealth of knowledge and tips to help buyers stay on top of metals markets and buying strategies.

US to consider neodymium Section 232 probe

As noted in yesterday’s morning roundup, the Biden administration released the findings of its 100-day review of critical U.S. supply chains.

Earlier this year, President Joe Biden called for various agency heads to execute 100-day reviews of critical U.S. supply chains. Specifically, the president’s order referenced supply chains for critical minerals, in addition to large-capacity batteries, semiconductors and pharmaceutical products.

The report stemming from that review notes the possibility of launching a Section 232 investigation for neodymium magnets. Former President Donald Trump used Section 232 to impose tariffs on steel and aluminum.

In a section summarizing recommendations, the report called for strengthening international trade rules and trade enforcement mechanisms. The review calls for evaluation of whether or not a Section 232 investigation for neodymium magnets is warranted.

“Neodymium (NdFeB) permanent magnets play a key role in motors and other devices, and are important to both defense and civilian industrial uses,” the report states. “Yet the U.S. is heavily dependent on imports for this critical product. We recommend that the Department of Commerce evaluate whether to initiate an investigation into neodymium permanent magnets under Section 232 of the Trade Expansion Act of 1962.”

NdFeB magnets are used in computer hard disk drives, magnetic resonance imaging (MRI), precision guided munitions, automotive motors and wind turbines.

Prices fall as China relaxes rare earths production quotas

As MetalMiner’s Stuart Burns explained earlier this month, the Chinese government recently relaxed production quotas for rare earths.

Consequently, prices for rare earth oxides took a fall.

“Market prices remain volatile, though,” Burns explained. “A half yearly quota set by government officials is not the optimal system to match supply, demand and prices. As the economy bounced back last year, the rare earths market was caught on the hop and prices rose strongly.

“Some light rare earths, like praseodymium-neodymium (PrNd) oxide, reached multiyear highs.”

However, Beijing relaxed the quota from 66,000 tons to 84,000 tons.

Furthermore, the Rare Earths MMI has fallen for the third straight month.

“This suggests the MIIT’s loosening of production limits has had the desired impact and availability is proving sufficient to meet demand,” Burns added.

Lynas plant in Malaysia continues to operate

Lynas Rare Earths Ltd. offered an update last month on its Malaysian plant.

The Malaysian government issued a movement control order May 12, which is in effect until June 7.

“The MCO, which is in effect for the period from 12 May 2021 until 7 June 2021, permits all economic sectors to continue to operate during the period of the MCO,” Lynas said in a statement. “Consistent with the MCO and previous updates, the Lynas Malaysia plant continues to operate with Standard Operating Procedures (SOPs) in place. Lynas Malaysia has already implemented strict health and hygiene protocols that meet and exceed the Ministry of Health’s requirements. Products produced at the Lynas Malaysia plant are essential to the manufacturing supply chains for critical industries including automotive, medical devices, oil refining and machinery & equipment.”

Actual metals prices and trends

The Chinese yttrium price rose by 1.6% month over month to $33.75 per kilogram as of June 1. The terbium oxide price fell by 17.1% to $1,044 per kilogram.

The neodymium oxide price fell by 8.5% to $77,706 per metric ton.

The Europium oxide fell by 3.3% to $30.61 per kilogram. Meanwhile, the dysprosium oxide price dropped by 11.7% to $385 per kilogram.

Each month, MetalMiner hosts a webinar on a specific metals topic. Explore the upcoming webinars and sign up for each on the MetalMiner Events page.

The global logistics market has gone through a horrible winter.

The pandemic caused massive disruption. US and European ports became gummed up with PPE and medical equipment. This resulted in port delays and tens of thousands of containers being out of position at destination when they are needed at origin, further exacerbating a lack of space.

We’re offering timely emails with exclusive analyst commentary and some best practice advice. Sign up here.

Shipping market challenges

Shipping

enanuchit/Adobe Stock

Shipping lines that had cut back in the pandemic have been caught on the hop. As such, they have been unable to catch up with the unprecedented surge in demand for shipping space as global supply chains have rushed to restock.

Any consumer who imports or relies on domestic suppliers who in turn import — or rely on imported components — will have been hit with delays and cost overruns.

Back in the early part of this year, many observers, us included, expected the market would improve. Indeed, freight rates – a barometer of demand – had started to come down early last month. That encouraged some to believe the worse was past.

Read more

The Aluminum Monthly Metals Index (MMI) increased by 0.9% this month, as aluminum prices reached a nine-year high during the first half of the month but later declined. 

June 2021 Aluminum MMI chart

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

Aluminum prices

The LME aluminum price reached a nine-year high May 10 when it reached $2,565/mt. 

Since then, prices dropped below the $2,500/mt mark, averaging $2,434/mt throughout May.

Chinese prices behaved similarly to the LME. They reached a peak of CNY 20,030/mt on May 10 but have declined since then. 

EPI study claims tariffs incentivized US domestic production

On May 25, the Economic Policy Institute (EPI) published a white paper that argues the domestic aluminum producing and consuming industries have thrived as a result of the Section 232 tariff that former President Donald Trump implemented in March 2018. 

As MetalMiner reported last week, the EPI report argues the 10% duty has led to job growth in the sector and increased production.

The paper concluded that U.S. production of primary aluminum, including both alumina refining and secondary smelting and alloying of aluminum, increased by 37.6% to 1.14 million metric tons annually from March 2018 to February 2020. This increase came from the restart or production increase of five of the six smelters in the U.S. 

Read more

1 2 3 259