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U.S. steel imports through the first 11 months of 2019 were down 17% compared with the same period in 2018, according to preliminary U.S. Census Bureau data.
Imports through the first 11 months of 2019 reached 23.9 millions tons, down from 28.9 million tons from January-November 2018.
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Before we head into the weekend, let’s take a look back at the week that was and some of the metals coverage here on MetalMiner, including: steel prices, commodities markets, precious metals, the U.S.-China Phase One trade deal and the Senate’s approval of the United States-Mexico-Canada Agreement.
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This morning in metals news, aluminum maker Alcoa released its financial results for Q4 and 2019, an Ohio steel plant touts investment that it says will bring new jobs and a Pittsburgh-based metals manufacturer says it will have to close a facility unless it wins a steel tariff exemption.
Aluminum maker Alcoa reported a net loss of $303 million ($57 million excluding special items) in Q4 2019.
Fourth-quarter revenue came in at $2.4 billion, down from $2.6 billion the previous quarter and $3.3 billion in Q4 2018.
“In 2019, we acted to further strengthen Alcoa, completing the divestiture of uncompetitive assets, modernizing labor agreements in three countries, implementing a new operating model, and making quick progress on the asset review process we announced last quarter,” Alcoa President and CEO Roy Harvey said.
“While the market in alumina and aluminum challenged us, we maintained a strong cash balance of nearly $900 million and drove operational stability,” Harvey said. “Also, our low-cost, top-tier bauxite and alumina segments both set new annual production records based on our current portfolio.”
This morning in metals news, a Chinese firm is poised to take over the insolvent British Steel, Chinese iron ore futures were down Monday and speakers at a recent convention in Budapest weighed in on the stainless steel market.
After talks with Turkey’s Ataer Holding fell apart, Chinese firm Jingye Steel has reportedly signed a deal to rescue British Steel, the BBC reported.
British Steel was put into forced liquidation in May, setting off a bidding process for the ailing steelmaker.
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According to the BBC, Jingye plans to £1.2 billion in British Steel.
The deal is pending and still requires regulatory approval, according to a statement by the Official Receiver.
“Completion of the contract is conditional on a number of matters, including gaining the necessary regulatory approvals,” the Official Receiver said. “The parties are working together to conclude a sale as soon as reasonably practicable.
“The business will continue to trade as normal during the period between exchange and completion. Support from employees, suppliers and customers since the liquidation has been a critical factor in achieving this outcome.”
According to Reuters, Chinese iron ore futures fell by as much as 3.1% on Monday.
The most-traded iron ore futures contract on the Dalian Commodity Exchange fell 2.1% to 594 yuan ($84.93) per ton.
At the recent BIR World Recycling Convention Round-Table Sessions held in Budapest, speakers delved into the seemingly curious current relationship between nickel prices and stainless steel values.
According to Natalie Scott-Gray, senior metals demand analyst at INTL FCStone, stainless steel production is forecast to rise 2% this year, with demand projected to rise 16% over the next five years, Recycling Today reported.
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Another guest speaker at the event, Olivier Masson, said the stainless steel market is going through a “relatively soft patch,” partially impacted by a shift in trading patterns as a result of the U.S.’s Section 232 tariffs and China’s exports of hot-rolled material, according to the Recycling Today report.
The Stainless Monthly Metals Index (MMI) followed last month’s six-point increase with a 16-point jump this month.
Once again, the index surge came as a result of strong nickel price gains, even though a slim majority of global prices in the index declined (albeit mildly compared to nickel price increases).
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LME nickel prices increased 28.5%, based on supply disruption news. Nickel prices in China and India also reacted strongly, increasing by 25.9% and 24.1%, respectively.
Source: MetalMiner analysis of the London Metal Exchange (LME) and FastMarkets
Source: MetalMiner analysis of FastMarkets
The Indonesia nickel ore export ban will now take effect two years earlier than planned, on Jan. 1, 2020. SHFE prices surged just prior to, and during the day or so around, the actual approval of the ban date by the Indonesian government.
Opinions appear mixed as to whether prices will drop back down anytime soon, with some analysts foreseeing further price increases.
Indonesia produced around 26% of global mine supply last year, according to the International Nickel Study Group.
It is possible ramped-up production of nickel pig iron in Indonesia will stave off further price increases from supply shortages. According to Reuters, large mining companies reportedly welcomed the ban and plan to increase smelting output.
Also, higher ingot prices higher, incentivizes mine production; as such, increases could also come from other sources.
According to a recent Reuters report, Dante Bravo, president of the Philippine Nickel Industry Association indicated mine production looks set to ramp up in 2020, but constraints, such as government-imposed mining curbs, will limit growth. Bravo added mining volume most likely peaked with 2014’s record-setting high of 50 million tons.
The Philippines produced 11.31 million tons of nickel during the first half of 2019, up by 3% compared with the first half of 2018, Reuters reported.
Source: MetalMiner data from MetalMiner IndX(™)
Stainless 304 and 316 NAS surcharges increased in August due to sizable nickel price increases. Next month’s MMI looks set to show a greater impact from surcharges than they showed in August.
MetalMiner’s stainless steel price index hit near a five-year high, rising to a value not seen since November 2014’s value of 92. As indicated last month, prices appear speculatively high; premium prices also surged.
Therefore, industrial buyers need to stay alert for the right opportunity to buy.
Buying organizations interested in tracking industrial metals prices with greater ease will want to request a demo of the MetalMiner Insights platform.
Buying organizations seeking more insight into longer-term steel price trends should read MetalMiner’s Annual Metal Buying Outlook.
Once again, nickel prices registered double-digit increases for the monthly index reading.
The LME primary three-month nickel price increased by 28.5% to $18,475/mt. China’s primary nickel price increased by 25.9% to $20,601/mt. India’s primary nickel price increased by 24.1% to $17.99/kilogram.
The U.S. 316 and 304 Allegheny Ludlum stainless surcharges increased by 14.1% and 16.6%, respectively, to $1.00/pound and $0.69/pound.
More than half of the prices in the index dropped, albeit mildly compared with the price increases.
Chinese Ferro Alloys FeMo lumps dropped by 4.7% this month, while FeCr lumps dropped by 4%.
Chinese 316 and 304 stainless steel scrap prices both dropped 4%, down to $1,827/mt and $1,401/mt, respectively.
Chinese 304 CR stainless steel coil increased 4.4% to $2,259/mt, while 316 CR coil dropped by 0.8% to $3,081/mt.
Korean prices for 430 CR 2B stainless steel coil and 304 CR 2B stainless coil both decreased by 2.2%, down to $1,195/mt and $2,101/mt, respectively.
The Stainless Steel Monthly Metals Index (MMI) declined this month, dropping by two index points to 69. A few of the prices in the basket registered fair declines, with nickel prices showing weakness.
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The LME primary nickel 3-month price decreased nearly 8% over the course of April. While prices showed strength early in the year into March, prices faltered and began to trade sideways.
Source: MetalMiner analysis of FastMarkets
More recently, however, prices appear on a declining trend, which could indicate a pricing correction, rather than a shift in trend.
Source: MetalMiner analysis of FastMarkets
However, with negative volume still high — as indicated on the weekly chart of LME nickel prices with trading volume shown along the bottom — the correction remains in progress.
The present global economic outlook could be characterized as uncertain in the face of ongoing trade talks between the U.S. and China.
After much press early in the year over China’s slower rate of growth, with forecasts shifted downward at the start of the year, the FXI — an index of large-cap Chinese companies — surprised the market with a show of strength.
Source: MetalMiner analysis of Yahoo.com data
Chinese stimulus measures helped bolster the economy’s performance. Recently, however, the boost seemed to lose steam; meanwhile, the FXI uptrend waned.
Economic indicators continue to fluctuate into 2019, for both the U.S. and China.
For example, while Q1 growth appeared stronger than expected in the U.S., construction spending and new home starts showed weakness in March, while new auto sales slowed this year. China’s performance remains mixed, with auto sales also weak there.
This month, the 304/304L-Coil and 316/316L-Coil NAS Surcharges dropped to $0.63 and $0.92 per pound, respectively, from $0.64/pound and $0.93/pound at the beginning of April.
Downward-trending prices provide good news for industrial buyers, with stainless steel prices showing weakness this month overall.
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Stainless steel prices showed weakness, with price declines hitting the subindex.
In particular, LME nickel prices fell 7.9% month over month to $12,210 mt. Primary nickel prices in China and India fell by 3.5% and 5.8%, respectively, with Chinese primary nickel averaging $15,412/mt and Indian primary nickel averaging $12.49 per kilogram.
The Stainless Steel Monthly Metals Index (MMI) held steady this month at 71.
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LME nickel prices mostly ended up moving sideways as March progressed after hitting a six-month high early in the month, with the price peaking at $13,750/mt during trading.
Source: MetalMiner analysis of FastMarkets
SHFE nickel prices climbed back up to higher levels as well during the first quarter of 2019, currently at a higher year-on-year price as of April.
Source: MetalMiner analysis of FastMarkets
SHFE nickel prices showed strength on the back of the strong performance of the Caixin China General Manufacturing PMI, which hit 50.8 this March (its highest level since July 2018). The March PMI surpassed expectations and was up from 49.9 the previous month. The increase seems to come from Chinese state stimulus measures now impacting the economy, according to press reports. Additionally, other sources cite recovered export demand as the impetus behind the upbeat PMI reading.
The availability of cheaper pig nickel iron — an innovation created in China, which uses laterite nickel ores instead of pure nickel — helps mitigate nickel price increases by serving as an alternative to standard nickel as an input in stainless steel production.
In order to produce pig nickel iron, raw material, in the form of nickel laterite ore, generally must be sourced from outside of China, with Indonesia and the Philippines accounting for most nickel laterite ore production globally.
The mining of nickel laterite ore reserves out of Indonesia increased quite a bit as a result, with several notable Chinese joint ventures in operation or planning operations within Indonesia.
Recently, China’s Tsingshan Group, for example, partnered with GEM Co Ltd for the buildout of additional nickel-related production facilities in Sulawesi, a nickel mining hub in Indonesia. The recent project, which just broke ground in January, aims to develop nickel sulphate for export, slated for use in lithium-ion batteries for electric vehicles (EVs).
An earlier 2017 joint venture between Tsingshan and ERAMET formed around the nickel deposit at Weda Bay — said to house 9.3 million tons of nickel — focuses on nickel ferroalloy production.
This month, the 304/304L-Coil and 316/316L-Coil NAS surcharges remained the same as last month. Surcharges sit at higher levels than in the recent past, but are still down somewhat from the recent high point in July 2018.
Stainless steel prices stayed flat this month overall, with some declining prices reported among Chinese and Korean basket prices.
The Allegheny Ludlum 316 and 304 stainless surcharges did not move this month, while nickel prices in the basket showed mixed movement. LME nickel prices moved up slightly.
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Therefore, with prices essentially flat but somewhat high, industrial buyers may want to watch the market carefully in the coming weeks and adjust course as needed in case weaker Chinese prices offset typical seasonal price increases as we move into peak construction season.
This month, only a few of the prices in the stainless basket increased.
In particular, China FeCr (or Ferro Chrome) lumps increased in price by 6.2%, bucking the trend among the other Chinese prices in the basket, which otherwise declined.
Of the Chinese prices that decreased, 304 stainless coil dropped the most (by 3.5%), while the other price decreases were smaller, ranging from 0.3% to 1.2%. The Korean prices for 430 stainless steel coil and 304 stainless coil decreased as well (by less than 1%).
LME nickel and Indian primary nickel both increased in price by 0.8%.
The Allegheny Ludlum 316 and 304 stainless surcharges held flat this month.
The Stainless Steel Monthly Metals Index (MMI) increased again this month by 4.3% to 71, up again after last month’s 11.7% gain.
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Once again, nickel price increases provided an impetus for rising prices. This month, prices increased for all the metals in the stainless steel basket across the board, ranging from 0.2-10%. U.S. stainless steel surcharges increased slightly.
LME nickel prices. Source: MetalMiner analysis of FastMarkets
LME nickel prices started to rise again following a brief downward trend in the first part of February; however, uptrend volumes are weaker than during recent price increases.
Despite weaker volume, prices finally surpassed the $13,300/mt price point, surging past $13,600 in a single day of trading and potentially signaling an underlying bullishness in the nickel market.
However, the price retraced once more toward the well-trodden $13,300/mt level in the days following the price surge.
This month the 304/304L-Coil and 316/316L-Coil NAS surcharges increased by 0.3% and 1.96%, respectively, reversing the previous downward trend dating back to July 2018.
Source: MetalMiner data from MetalMiner IndX(™)
It remains to be seen whether this is a seasonal adjustment or a reversal in trend as we move into the last month of Q1, which is when prices tend to cyclically rise.
Stainless steel prices are rising — but is this a new change in direction or a temporary price increase based on the annual cyclical business cycle?
With some weakness reported in the global economy by the OECD last week, it will be interesting to see whether this is the start of a new trend in higher prices or just a flattening out from previous price declines.
All of the metals included in the Stainless MMI increased in price this month.
Chinese Ferro Alloys FeMo Lumps registered the greatest increase at 10.14%, while Chinese Ferro Alloy FeCr Lumps increased 0.2%.
Korean stainless steel coil (430 CR 2B) increased in price by 5.92%.
The three nickel prices included in the MetalMiner IndX(™) also increased across the board again this month, with increases ranging from 4.5–5.5% for LME, Chinese, and Indian prices. However, the increase this month dropped from high rates of change last month, which were in the 14.76-17.39% range.
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Chinese stainless steel 304 and 316 scrap prices registered increases of 0.2%.
With the February 2019 Monthly Metals Index (MMI) report, we can officially move past 2018 and begin to take a look at the world of metals thus far in the new year.
On the trade front, trade officials from the U.S. and China met in January for renewed talks on the ongoing trade standoff between the economic powerhouses. A March 2 deadline approaches, however, after which President Donald Trump had previously indicated the U.S. would up its tariff rate from 10% to 25% on a a wide variety of Chinese imports (worth approximately $200 billion).
However, this week the president indicated he might not stick to that March 2 deadline, which could allow for further negotiations between the two countries if the deadline were postponed.
Meanwhile, in the world of metals, seven of our 10 Monthly Metals Indexes (MMIs) made gains this post month, with the remaining three posting no movement.
A few highlights from this month’s round of MMI reports:
Read about all of the above and much more by downloading the February 2019 MMI Report below:
With the January 2019 Monthly Metals Index (MMI) report, we can close the book on 2018 and what was a wild year in the world of metals and metals price movements.
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It was a book that closed with a pessimistic chapter for metals (and commodities in general), with many posting price declines as markets feel the effect of simmering trade tensions between the U.S. and China.
In our latest MMI report, you can read about all of the latest news and trends in our 10 metals subindexes: Automotive, Construction, Rare Earths, Renewables, Aluminum, Copper, Stainless Steel, Raw Steels, GOES and Global Precious.
A few highlights from this month’s round of reports:
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Read about all of the above and much more by downloading the January 2019 MMI Report below: