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The U.S. steel sector reached a capacity utilization rate of 82.3% for the year through Jan. 18, according to the American Iron and Steel Institute (AISI).

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Production for the year to date reached 4.94 million tons, up 2.6% from production during the same period last year (when capacity utilization rate reached 80.4%).

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Pragmatically, you could hope Indian Prime Minister Narendra Modi’s Bharatiya Janata Party (BJP) focus on Hindu nationalism is more a smokescreen to deflect attention from a deteriorating economy than it is the start of India’s spiral to increasing polarization and fragmentation of its multicultural democracy.

The economy has certainly been on a slide for much of the last year and the BJP has been harassed increasingly by the opposition Indian National Congress over its handling of the economy.

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India’s consumer price index increase reached 7.35% in December 2019 from a year earlier, the third month in a row in which it has breached the Reserve Bank of India’s 4% target.

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According to the U.S. Federal Reserve’s latest report on industrial production, industrial production in December dipped 0.3%.

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Industrial capacity utilization dipped by 0.4 percentage point to 77.0%, which is down from the long-run average — from 1972-2018 — of 79.8%

Utilities fell 5.6% on the month, down to an index reading of 101.6% (with a reading of 100% equivalent to production in 2012) — marking its first decline since August.

“The drop for utilities resulted from a large decrease in demand for heating, as unseasonably warm weather in December followed unseasonably cold weather in November,” the Fed said.

Manufacturing ticks up in December

However, manufacturing production was up 0.2% (after rising 1.0% in November), while mining increased 1.3% after posting declines in four of the previous five months (including a 0.2% drop in November).

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The successor to the 1994 North American Free Trade Agreement, dubbed the United States-Mexico-Canada Agreement (USMCA), has now made its way through both chambers of the U.S. Congress.

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In December, the White House and House Democrats reached a deal over revisions to the USMCA, yielding an overwhelmingly bipartisan 385-41 vote Dec. 19 that sent the deal over to the Senate.

On Thursday, the Senate voted 89-10 to approve the USMCA via the United States-Mexico-Canada Agreement Implementation Act. Sen. Pat Toomey was the only dissenting Republican vote.

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The escalation in U.S.-China trade relations appeared to take a brief pause Wednesday when U.S. President Donald Trump and Chinese Vice Premier Liu He signed what has been billed as a “Phase One” trade agreement between the world’s two largest economies.

“Today we take a momentous step, one that has never been taken before with China, toward a future of fair and reciprocal trade as we sign Phase One of the historic trade deal between the United States and China,” Trump said in opening remarks during the signing ceremony Wednesday, adding the deal would begin to “right the wrongs of the past.”

Keep up to date on everything going on in the world of trade and tariffs via MetalMiner’s Trade Resource Center.

Over the past two years, following the launch of a Section 301 investigation in August 2017, the U.S. has imposed a total of approximately $370 billion in tariffs on Chinese goods, with China responding with tariffs of its own at each step of the way amounting to $110 billion.

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We have covered the precious metals and palladium, in particular, a few times over recent months, not because we have suddenly become PGM investors (although looking at price performance, that would have been a fortunate move) but simply because they are the only metals sector showing any real dynamism.

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The base metals have at best been lackluster. Aluminum has been range-bound for much of the last nine months, as has most of the base metals complex.

Copper has perked up since about November on the back of expectations of a thaw in U.S.-China trade relations. Nickel got interesting toward the back end of August when the market reacted to news of an Indonesian export ban but has since sunk back.

Only the precious metals have risen and sustained their rises during the period — albeit for differing reasons.

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The Global Precious Monthly Metals Index, a basket of precious metals, gained five points for a January MMI reading of 110.

Platinum, palladium prices rise after South Africa outages

Palladium and platinum prices received a boost last month after outages at South African mines, MetalMiner’s Stuart Burns explained.

“Power cuts earlier this year pushed the country close to recession,” Burns wrote. “The most recent outages have intensified over the last 36 hours, as heavy rains have flooded some power stations.

“Multiple failures affecting about a quarter of the country’s power plants have forced the utility to introduce severe rolling ‘stage 4’ cuts of 4,000 megawatts of power on Tuesday of last week, but it was still scrambling to fix breakdowns affecting another 15,000 megawatts — roughly a third of its generating capacity — by the end of the week.

“The rolling blackouts were escalated to stage 4 on Friday last week, with a rise to stage 6 (a complete loss of power) bringing many mining companies to a complete halt.”

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The Rare Earths Monthly Metals Index (MMI) ticked up one point for a January reading of 20.

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Malaysian regulators opt not to increase Lynas’ processing limit

Lynas Corp., the largest rare earths firm outside of China, announced in December that Malaysian regulators did not increase the firm’s lanthanide concentrate processing limit for calendar year 2019.

The Australia-based miner and processor operates a refinery in Kuantan, Malaysia. Last year, the Malaysian government granted Lynas a six-month renewal of its license to operate in the country.

However, regulators opted not to extend the firm’s permitted lanthanide concentrate processing limit for 2019.

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The Stainless Steel Monthly Metals Index (MMI) gained one point for a January reading of 75.

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Just a few months back, in September 2019, the index hit a five-year high of 91.

LME nickel prices increased again in the second half of December after finding support just above the $13,000/mt price level:

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Gold and silver prices in India have hit new highs recent days, to the glee of traders and the consternation of retail buyers.

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Multiple reasons are being attributed to the price rises, first and foremost being rising geopolitical tensions following the U.S. airstrike that killed top Iranian general Qassem Soleimani. Other factors include the fall of the Indian rupee versus the U.S. dollar in currency markets following the rise in the price of petroleum products.

As trends show, gold is normally considered to be a safe-haven asset in times of political or economic strife, as investors and even everyday buyers back off from buying equity or trading in currencies.

Last Monday, gold prices moved past the approximately $569.31 (Rs 41,000) per 10 grams mark, which was in line with sentiments in the international markets.

On India’s Multi Commodity Exchange (MCX), February gold futures, too, surged by 2.4% to a record high of about $570 (Rs 41,073) per 10 grams the same day, clearly underlining the market was betting on the price rise to continue in the coming days.

Last Friday, gold had already breached the $555 (Rs 40,000) mark per 10 grams. In the two days since the rally, the price rose by $25 (Rs 1,800) per 10 grams.

Silver futures on the MCX also went up 2.25% on Monday to trade at about $675 (Rs 48,595) per kilogram.

On Tuesday, however, gold and silver prices fell sharply in Indian markets because of the rupee’s rebounding.

On the MCX, gold futures rates fell 0.51% to $327.12 (Rs 40,265) per 10 grams, Livemint reported.

Back on Wednesday morning, the shine was back in India’s bullion market, riding on the back of prices escalating in the international markets by over 2% to touch $1,610.90, its highest level since March 2013. Gold prices in India hit an all-time high of about $573 (Rs 41,278).

Silver prices, too, were up 1.25% to $18.62 in the global markets, according to CNBCTV18.

Part of the resurgence in prices was attributed to Iran’s firing of rockets at U.S. bases in Iraq, read as a sign of an escalation in Middle East tensions.

Most analysts in India think if geopolitical tensions continue to boil, gold and silver’s upward momentum will also continue.

In addition to the tensions between the U.S. and Iran, other factors that are pushing bullion prices up, including uncertainties related to Brexit and the Hong Kong protests.

Some analysts are even forecasting Indian gold prices to touch $616 (Rs 44,300).

Keep up to date on everything going on in the world of trade and tariffs via MetalMiner’s Trade Resource Center.

Also on gold traders’ radar is U.S. Vice President Mike Pence’s speech next week, in which he is expected to lay out the government’s policy on Iran.