Market Analysis

The Copper Monthly Metals Index (MMI) rose 0.8% for this month’s reading.

January 2022 Copper MMI chart

Copper prices continue to trade sideways within a big time frame, a resistance and support channel.

While prices have consolidated within the channel, there are certain points of interest marked as key levels that would indicate a macro bullish continuation or macro reversal to the downside.

As such, no significant direction in price is clear. More bullish actions need to occur to confirm an  upside.

All the metals intelligence, including copper, you need in one user-friendly platform with unlimited usage. Request a MetalMiner Insights platform demo.

Market pays close attention to Fed

Market sentiment continues to be swayed by the Federal Reserve.

After inflation reached 6.8% in November, the fastest pace since 1982, the Fed announced after its mid-December meeting it would double the pace of its tapering of quantitative easing measures put in place at the dawn of the pandemic. Beginning in January, the Fed scaled back bond purchases to $60 billion each month. Additionally, officials projected at least three quarter-percentage point rate hikes throughout 2022.

The announcement spurred LME copper prices to hit a two-month low Dec. 15. As prices descended, LME trading volumes spiked.

Prices recovered from the dip but faltered once again upon the release of the Federal Reserve’s meeting minutes. Amid persistent, rising inflation, a stronger economic outlook and “tighter” labor market, members suggested “it may become warranted to increase the federal funds rate sooner or at a faster pace than participants had earlier anticipated.”

Additionally, members considered the reduction of Treasury holdings and mortgage-backed securities. The prospect of impending rate hikes and hawkish policy shifts saw LME copper prices, once again, fall Jan. 5-6 as trading volumes picked up on the descent.

While the Fed began to scale back its asset purchases in January, uncertainty still lingers regarding the implementation and quantity of rate hikes. As copper prices have a historically inverse relationship with the U.S. dollar, the Fed’s efforts to address inflation will add downward momentum to copper prices. The Fed will reconvene Jan. 25-26.

Read more

The Stainless Monthly Metals Index (MMI) rose by 1.8% month over month.

January 2022 Stainless MMI chart

Although nickel edged up slowly in price, it squeezed into a wedge that is susceptible to big time frame resistance. Prices continue to consolidate within an October-November 2021 high-low price range.

A continuation to the upside with more volume from the bulls could push prices even further. Lower volume, however, could lead to price breakdowns in Q1 2022.

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

A&T Stainless petitions for tariff exclusion

U.S. flat-rolled stainless supply is expected to be constrained in 2022.

However, there may be some light at the end of the tunnel.

A&T Stainless, the joint venture between Allegheny Technologies (ATI) and China’s Tsingshan, has filed a new petition with the U.S. Department of Commerce for a tariff exclusion to import 304L and 316L hot-band coils from Indonesia.

In May 2018, Katie Benchina Olsen, MetalMiner’s senior stainless analyst, examined whether A&T Stainless should be granted an exemption. At the time, NAS and Outokumpu argued that they could supply slab to A&T Stainless. The exemption was denied.

The 2022 market is different because NAS, Outokumpu and Cleveland-Cliffs are all full capacity and have customers on strict allocation.

Approval would advance capacity

If the exemption is granted, A&T Stainless would restart the Direct Roll Anneal and Pickle (DRAP) line in Midland, Pennsylvania. The line would produce about 20,000 tons a month of thicknesses .048″ and heavier. If the DOC approves the request, the DRAP line would take several weeks to start up.

Read more

The Aluminum Monthly Metals Index (MMI) rose 4.8% following two consecutive months of decline.

January 2022 Aluminum MMI chart

After a sharp 7.6% drop in the early days of November, prices appeared to have found a bottom and formed a bullish “cup and handle” technical pattern around the summer support levels.

Aluminum prices have broken out of the bullish pattern and now seek new resistance levels on the smaller time frames. The October high will serve as the price target on the longer time frame for this newly confirmed price reversal.

Does your company have an aluminum buying strategy based on current aluminum price trends?

Europe’s energy crisis shutters production

The European energy crisis remains bleak, as the aluminum sector sees further casualties.

Our own Stuart Burns noted last week that Europe’s largest (Aluminum Dunkerque Industries France) and second-largest (Alcoa’s San Ciprián) smelters saw production derailed as energy prices surged.

The cuts continue to roll in.

Most recently, Norsk Hydro’s Slovalko smelter will drop production to 60%. This cut, which equates to roughly 35 thousand mtpa, follows a previous cut which had lowered production down to 80% in 2019.

Soaring energy prices throughout Europe have eroded smelter profitability. Those smelters that rely upon long-term energy supply contracts and renewable energy, including hydroelectric capacity, have remained largely sheltered from the closures and cutbacks.

Read more

The Automotive Monthly Metals Index (MMI) fell by 3.4% for this month’s reading, as auto sales continued to slump in the face of ongoing supply and inventory constraints.

January 2022 Automotive MMI chart

Stay up to date on MetalMiner with weekly updates – without the sales pitch. Sign up now.

US auto sales

In the U.S. market, General Motors reported Q4 2021 sales of 440,745 vehicles, or down 43% year over year.

Despite the decline, the automaker indicated the semiconductor supply shortage improved in the fourth quarter.

“GM entered the quarter with record low inventories; however, the company’s fourth-quarter production and wholesale deliveries were up significantly from the third quarter as semiconductor supply conditions improved,” GM said in a release.

However, Toyota outsold GM in the U.S. in 2021, marking the first time GM did not hold the top sales spot since 1931, according to Reuters.

Toyota sold 2,332,262 vehicles in 2021 compared to 2,218,228 vehicles for GM.

Meanwhile, Ford reported its total December sales fell 17.1% to 173,740 vehicles. Truck sales fell 15.5%. SUV sales dropped by 11.1%.

However, while still a relatively small part of the whole, Ford’s electrified vehicle sales jumped by 121.1% to 12,284.

In that vein, Ford announced a commitment to further expand its EV production. The automaker said it plans to nearly double production of the F-150 Lightning pickup to 150,000 vehicles per year at its Rouge Electric Vehicle Center in Dearborn, Michigan.

Read more

This morning in metals news: aluminum prices have surged this week; U.S. nonfarm payroll employment rose by 199,000 in December; and, lastly, electricity prices surged throughout 2021, in large part on the back of rising natural gas prices.

Request a 30-minute demo of the MetalMiner Insights platform now.

Aluminum prices surge

aluminum price

Grispb/Adobe Stock

Aluminum prices are on the ascent once again.

The LME three-month aluminum price peaked back in October, reaching as high as $3,200 per metric ton, according to MetalMiner Insights data.

After falling to just over $2,500 per metric ton in early November, aluminum prices traded largely sideways for the next month.

Since mid-December, however, aluminum prices have surged. LME three-month aluminum closed Wednesday at $2,923 per metric ton, its highest in over two months. The price is up 13.05% month over month.

US adds 199K jobs

U.S. nonfarm payroll employment rose by 199,000 in December, the Bureau of Labor Statistics reported.

Read more

The Construction Monthly Metals Index (MMI) rose by 3.3% for this month’s reading, as construction spending picked up in November.

January 2022 Construction MMI chart

Stay up to date on MetalMiner with weekly email updates.
U.S. construction spending reached a seasonally adjusted annual rate of $1,625.9 billion in November, or up 0.4% from October, the Census Bureau reported.

Furthermore, the November rate marked a 9.3% year-over-year increase.

Meanwhile, through the first 11 months of 2021, construction spending reached $1,463.2 billion, or up 7.9% year over year.

Spending on private construction reached a rate of $1,273.6 billion in November, or up 0.6% from October. Public construction spending reached $353.2 billion, or down 0.2%.

“Private nonresidential spending appears to be on a solid upswing, with five consecutive months of growth, but public outlays for construction remain erratic,” said Ken Simonson, chief economist for the Associated General Contractors of America, in a release. “The public side isn’t likely to post steady gains until funds from the new infrastructure law become available and turn into actual projects.”

ABI growth slows

The Architecture Billings Index, a leading indicator of nonresidential construction activity in the U.S., reached 51.0 for November. Any reading greater than 50 indicates billings growth.

Read more

Having risen solidly from mid-December, the oil price took a bit of a hit just prior to the new year as worries about the spread of the omicron variant and its possible impact on travel and GDP growth hit prices.

Brent crude oil price chart

SodelVladyslav/Adobe Stock

The new year has started more optimistically, though. While significant work days are being lost due to widespread infections, hospitalizations have remained sufficiently acceptable to avoid the widespread lockdowns that proved so damaging following the spread of previous variants.

MetalMiner’s monthly buying outlook reports give you pricing and specific buying strategies for 10 metal types.

Oil prices look bullish

As an OilPrice.com newsletter observed this week, there has been a noticeable shift in sentiment in the oil market, with an increasing number of forecasts taking a bullish stance.

Oil demand remained solid in December, essentially trending on par with November levels. Meanwhile, global manufacturing activity strengthened amid easing supply chain bottlenecks.

The supply side remains a mixed bag. OPEC+ agreed at its most recent meeting to extend an increase in February of 400,000 barrels per day. However, as OPEC+ has increased its output target each month, actual production has lagged as some members struggle with capacity constraints.

So, the announcement of a further increase is being taken by the market with a pinch of salt.

OPEC+ producers missed their targets by 730,000 bpd in October and by 650,000 bpd in November, the International Energy Agency said last month.

Read more

This morning in metals news: U.S. steel prices have continued to decline; OPEC will continue its output increase schedule in February 2022; and, lastly, Alcoa at the end of last year announced plans to curtail production at its San Ciprián aluminum smelter in Spain.

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

US steel prices continue to cool

steel production

photollurg/Adobe Stock

Although U.S. steel prices remain elevated, prices have cooled over the last few months, according to MetalMiner Insights data.

U.S. hot rolled coil, for example, closed last week at $1,587 per short ton, or down 8.3% month over month. Cold rolled coil, meanwhile, fell 3.2% to $2,019 per short ton.

Hot dipped galvanized is down 2.6% to $2,050 per short ton.

However, steel plate, critical for the energy sector, has bucked the general trend, particularly amid rising oil prices in Q4 2021. U.S. steel plate is up 1.6% month over month to $1,856 per short ton.

OPEC to maintain output increases

OPEC today announced it plans to continue previously agreed upon monthly output increases of 0.4 million barrels per day for February 2022.

Read more

As our colleague Fouad Egbaria noted this week, rising power costs in Europe, almost wholly down to the cost of natural gas, resulted in reduced output at Europe’s largest aluminum smelter, Aluminium Dunkerque Industries France. Losses there ballooned to €20 million ($22 million) during November, as natural gas prices quadrupled this year.

aluminum ingot

WestPic/Adobe Stock

Most aluminum smelters operate on long-term power contracts. However, spot prices do impact costs for many mills, either with contracts linked to spot prices or when contracts come up for periodic adjustment when the prevailing spot price comes into play.

So, it is hardly surprising that the Dunkerque smelter is but the tip of the power crunch-induced iceberg.

All the metals intelligence you need in one user-friendly platform: request a MetalMiner Insights platform demo.

Alcoa announces production halt in Spain

In a separate post, Bloomberg reported Alcoa Corp. is set to halt primary aluminum production at its plant in Spain, Europe’s second-largest aluminium plant, for two years, depriving the European market of valuable supplies at a time of near-record demand. Bloomberg reports Alcoa’s advice that the smelter will continue to supply strategic clients in the pharmaceutical and food industries by remelting aluminum, while maximizing billet production of 65,000 tons per year and producing more than 25,000 tons of aluminum slab, but no primary smelting of virgin ingot.

Nor are the aforementioned smelters alone in announcing closures.

Read more

This morning in metals news: nickel prices have consolidated in December; North American Stainless announced a reduction in its fuel surcharge; and, lastly, the Energy Information Administration reported U.S. liquefied natural gas exports reached a record high in the first half of 2021.

Are you under pressure to generate stainless steel cost savings? Make sure you are following these five best practices

Nickel prices trend sideways to close the year

nickel price

leszekglasner/Adobe Stock

The nickel price surged around Thanksgiving, rising to just over $21,000 per metric ton (a 2021 high).

However, the LME three-month nickel price has since cooled.

Nickel closed last week at $20,125 per metric ton, according to MetalMiner Insights data. The price is down 1.5% month over month.

NAS announces fuel surcharge reduction

Speaking of nickel — a majority of which goes into stainless steel production — North American Stainless announced a reduction in its fuel surcharge for stainless flat and long products.

Read more

1 2 3 4 275