Market Analysis

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. 

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The Automotive Monthly Metals Index (MMI) rose by 4.5% for this month’s reading, as many automakers posted record auto sales in May.

June 2021 Automotive MMI chart

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US auto sales

auto sale

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Among monthly reporters, Ford Motor Co. reported its total sales in the US in May rose by 4.0% year over year. However, retail sales dropped by 11.2%.

Ford’s total truck sales fell by 11.6%. Meanwhile, SUV sales rose by 48.6% and car sales dropped 62.4%.

Furthermore, Ford sold 10,364 electrified vehicles, good for a jump of 184%.

“Growth came from Mustang Mach-E, which totaled 1,945 vehicle sales, while F-150 PowerBoost totaled 2,852 for the month, Escape electrified sales totaled 3,617 – up 125 percent over last year,” the automaker said. “Explorer Hybrid sales also had a big increase of 132 percent over a year ago on sales of 1,156 SUVs.”

Honda, meanwhile, reported an all-time monthly sales record of 176,815 vehicles. Total sales rose by 46.2%. Truck sales rose by 52.2%, while car sales rose by 37.9%.

Similarly, Hyundai reported a monthly sales record for the third consecutive month. Hyundai’s May total sales rose by 56% to 90,017 vehicles. In May, Hyundai also unveiled the IONIQ 5 for North America, which it says has a targeted driving range of 300 miles and the ability to charge from 10% 80% in 18 minutes.

A record May

In their monthly automotive forecast, J.D. Power and LMC Automotive forecast May would be a record month for new-vehicle retail sales in the US.

They projected retail sales would reach 1,388,600 vehicles, or up 34.0% from May 2020. The total also marked an increase of 10.6% from May 2019.

“The U.S. auto industry is showing tremendous adaptability in maintaining a record sales pace, despite historically low inventory levels,” said Thomas King, president of J.D. Power’s data and analytics division. “May is usually one of the highest-volume sales months with buying activity peaking around the Memorial Day weekend when manufacturers typically offer incremental incentives.”

General Motors to boost deliveries to US, Canada

General Motors said it plans to increase its deliveries of vehicles to customers in the US and Canada.

The automaker said the move aims to “meet strong consumer demand for Chevrolet, Buick, GMC and Cadillac vehicles.”

Furthermore, production of the Chevrolet Silverado HD and GMC Sierra HD full-size pickups will increase by about 1,000 trucks per month beginning in mid-July. Meanwhile, shipments of Chevrolet Colorado and GMC Canyon mid-size pickups will increase by about 30,000 total units from mid-May through the week of July 5.

GM also said assembly plants that build GM’s “most capacity-constrained products” will not take any dedicated vacation downtime this summer.

Despite the ongoing semiconductor shortage that has impacted the automotive industry, GM expressed optimism about its first-half performance.

“As a result of GM’s ongoing efforts to prioritize semiconductor usage, its success engineering solutions that maximize the utilization of chips as well as the pull-ahead of some projected semiconductor deliveries into the second quarter, the company now expects its first-half financial results to be significantly better than the first-half guidance previously provided,” GM said. “GM is optimistic about the full year and expects to share additional information during its second-quarter earnings conference call on Aug. 4.”

Nonetheless, the automaker said production at certain manufacturing facilities in North America, Asia and South America “will continue to be impacted” by the global semiconductor shortage through June and July.

China auto sales up 8.6%

Meanwhile, auto sales in China rose by 8.6% year over year in April, according to the China Association of Automobile Manufacturers.

Sales reached 2.25 million vehicles in April. However, sales dropped by 10.8% from the previous month.

For the January-April period, sales rose by 51.8% year over year.

Actual metals prices and trends

The US HDG price rose by 1.1% month over month to $1,884 per short ton as of June 1. The US shredded scrap steel price rose by 3.2% to $450 per short ton.

Meanwhile, LME three-month copper rose by 2.3% to $10,171 per metric ton.

The Korean 5052 aluminum coil premium increased by 3.7% to $3.91 per kilogram.

Volatility is the name of the game. Do you have a steel buying strategy that can handle the ups and downs?

This morning in metals news: Nucor Corporation today announced it will acquire Cornerstone Building Brands‘ insulated metal panels business; the oil price approached $70 per barrel to close last week; and the aluminum price has retraced over the last month.

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.

Nucor to acquire insulated metal panels business

mergers and acquisitions

iQoncept/Adobe Stock

Nucor announced today that it plans to acquire the insulated metal panels business of Cornerstone Building Brands.

The acquisition comes at a cash purchase price of $1 billion. Nucor said it expects the transaction to close later this year, pending regulatory approvals.

“Today’s announcement accelerates our vision to broaden value-added solutions that Nucor provides to our targeted end markets. Additionally, it enhances our strong financial position with attractive free cash flow conversion rates and accretive EBITDA margins,” Nucor President and CEO Leon Topalian said. “We are excited about this opportunity to acquire a historical leader and innovator in the quickly growing IMP product category serving the non-residential market.”

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China’s rare earth (RE) oxides market is a controlled market — or at least it is today.

There was a time it was the mining equivalent of the wild west with multiple operators. There were once zero controls and, as a result, the sector’s operations led to massive environmental damage.

The authorities stepped in, consolidated the operators and enforced licences.

Become part of the MetalMiner LinkedIn group and stay connected to trends we’re watching and interesting metal facts.

Managing the rare earth oxides market

rare earths loaded on cargo ship in China

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Today, Beijing’s Ministry of Industry and Information Technology (MIIT) with the Ministry of Natural Resources sets quotas every half year for how much can be produced.

Market prices remain volatile, though. 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.

As a result, the MIIT relaxed quotas this year. It raised the quota from 66,000 tons in the second half of 2020 to 84,000 tons in the first half of 2021. Prices continued to rise as global demand roared back. China’s exports are also controlled (the country still produces something like 90% of global supply). Grateful producers elsewhere have made up the shortfall.

MetalMiner tracks Chinese rare earths prices on a daily basis and produces a rare earths Monthly Metals Index (MMI) displayed above. After rising strongly in Q1, the index took an unexpected reversal in April and again in May, as my colleague Fouad Egbaria posted at the time.

The index has dropped again for the start of June. This suggests the MIIT’s loosening of production limits has had the desired impact and availability is proving sufficient to meet demand.

Last year, rare earth element refiners operated at just 45% of capacity, the Global Times reported. Even with higher output this year, there is still substantial spare capacity. With exports likewise controlled, producers’ enjoyment of higher output permits look like they will be mitigated by lower prices.

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.

Hot rolled coil prices in Western Europe have not slowed their upward trek over the past month. Demand continues to outstrip supply for the flat-rolled product, industry watchers said June 1.

“It has everything to do with high demand in Europe and the United States,” one trader told MetalMiner.

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

Rising hot rolled coil prices

hot-rolled coil steel

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Sources confirmed prices for hot rolled coil at €1,120-1,130 ($1,370-1,385) per metric ton exw for rolling and delivery into Q4. That compares with hot rolled coil prices of €1,000-1,020 ($1,225-1,250) in May.

Cold rolled coil is now carrying a premium of €125 ($150) per ton over HRC, sources indicated.

The auto and construction sectors are behind the high demand, one source said.

New registrations for passenger vehicles within the European Union rose by 218.6% year over year in April to approximately 862,226 units from 270,651 units, the European Automobile Manufacturers’ Association (ACEA) stated on May 19.

Restrictions from the COVID-19 pandemic in April 2020 were the main reason behind the increase, however, the association noted.

“Indeed, despite this big percentage increase, last month’s sales volume was almost 300,000 units lower than that recorded in April 2019,” ACEA added.

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China’s increased appetite for iron ore has become a problem for neighbor India.

In the first four months of 2021, ore exports from India increased by 66% to 22.42 million tons (MT). As much as 90% of this went to China, according to Business Today.

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.

India’s iron ore problem

India iron ore barge

natmat/Adobe Stock

China is the largest consumer of iron ore. The country imports about 70% of the world’s production. Last year, it imported a record 1.17 billion tons.

The spike in iron ore exports is becoming a problem for Indian steelmakers, as they are struggling to get this critical raw material. Some have now demanded that the government ban iron ore exports from India.

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iron ore stockpile

John/Adobe Stock

The iron ore price has been about as volatile of late as most of us can remember.

The price powered relentlessly upwards this year on the back of surging demand from China and constrained supply from Brazil.

Then, after hitting a peak May 10 and 12, it fell sharply into bear territory, as Beijing sought to dampen inflationary raw material costs by issuing a string of warnings about speculation and excessive pricing.

Having achieved its objective in dampening prices, you would think Beijing would have left it at that.

But last week, China’s Ministry of Industry and Information Technology said it will seek to establish a mechanism to contain steel output based on carbon emissions, pollutant discharges and energy consumption, Bloomberg reported.

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

Iron ore bounces back

Iron ore promptly bounced back, climbing more than 6% in Singapore. Meanwhile, steel futures in Shanghai recovering on fears of constrained steel supply.

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Global copper mine production rose by 3.5% through the first two months of the year, the International Copper Study Group reported.

Furthermore, copper concentrate production rose by 5% during the period, while solvent extraction-electrowinning fell by about 3%.

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

Recovering copper production

copper mine

vadiml/Adobe Stock

Strong Chinese demand powered metals markets last year, particularly as demand still lagged in Europe, the United States and elsewhere.

Meanwhile, on the supply side, copper mine production took a hit, particularly in South America, as the COVID-19 pandemic worsened. (MetalMiner contributor Christopher Rivituso recently summarized developments in the copper market and where prices could go this year.)

However, output recovered throughout the year and into 2021.

Chile, the top copper producer, saw its copper mine production fall by 2.6% during the first two months of the year.

Meanwhile, Peru, the second-largest producer, saw its output fall by 7.5% in January. Peru’s mine output bounced back in February, leading to an aggregated 3.7% drop for the two-month period.

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Over three years later, analysis, assessments and calls for removal or maintenance continue to pour in with respect to the former Trump administration’s Section 232 tariffs on steel and aluminum.

In 2018, former President Donald Trump used Section 232 of the Trade Expansion Act of 1962 to impose tariffs on steel and aluminum of 25% and 10%, respectively, citing national security concerns. The administration sought to boost domestic industry and bring capacity utilization rates up to around 80% (considered a barometer of industry health).

With respect to aluminum, the Economic Policy Institute (EPI), in a white paper released this week, argues for the success of the Section 232 aluminum duty.

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

EPI: Section 232 aluminum tariff spurred investment, jobs growth

tariffs overlaid on US currency

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Among its primary conclusions, the EPI white paper argues the 10% duty has led to job growth in the sector and increased production.

“Projects, investments, jobs, and capacity are on the rise since the initiation of the Section 232 aluminum tariffs,” the EPI argued. “At least 57 new and expansion projects are in downstream aluminum industries producing extruded (rod and bar, pipe and tube, and extruded shapes) and rolled (sheet and plate) products. These new and expanded facilities will employ more than 4,500 additional workers, generate $6 billion in new investments, and add more than 1.1 million metric tons of annual rolling and extrusion capacity to the downstream domestic aluminum industry.”

Furthermore, the EPI argued US primary aluminum production increased on the heels of the Section 232 tariff.

US primary aluminum production increased by 37.6% from March 2018-February 2020 compared with the previous two-year period, the EPI said.

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This morning in metals news: new-vehicle retail sales are on pace to hit their highest total ever for the month of May, according to J.D. Power and LMC Automotive; meanwhile, new orders for manufactured durable goods declined in April after 11 straight months of gains; and, lastly, LME aluminum has backtracked over the last two-plus weeks.

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

New-vehicle retail sales set to have record May

auto sale

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US new-vehicle retail sales are on pace to have a record May, J.D. Power and LMC Automotive reported in their jointly released automotive forecast today.

They project new-vehicle retail sales this month will reach 1,388,600, good for an increase of 34.0% year over year. Furthermore, the sales forecast would mark a jump of 10.6% compared with May 2019 sales.

“The U.S. auto industry is showing tremendous adaptability in maintaining a record sales pace, despite historically low inventory levels,” said Thomas King, president of the data and analytics division at J.D. Power. “May is usually one of the highest-volume sales months with buying activity peaking around the Memorial Day weekend when manufacturers typically offer incremental incentives. This year, notwithstanding supply constraints and significantly reduced incentives from manufacturers, May 2021 will be another record-breaking month for the industry.”

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