The Week in Metals: Flash Crashes, Gold Panics and The Rare Steel Optimist

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Time for our weekly look at those direct materials we all know and love: industrial metals, with a dash of Brexit, dollar movements and a hint of gold.

Flash Crash: The Dollar Nearly Catches the Pound Sterling

On Monday our colleague, Stuart Burns, tried to explain how — months after the Brexit vote — the value of the British Pound and the Euro both fell precipitously and very nearly reached parity with the U.S. dollar. Basically, the E.U. and U.K. are starting to act particularly nasty to one another about trade terms when Great Britain finally leaves the union. Yes, it’s seriously that petty. And markets noticed.

Alcoa’s Last Earnings Report as a Unified Company…

Well, it was terrible. Alcoa, Inc. is splitting itself into separate aluminum and a value-added aerospace and automotive metals companies in November. That means this will be the last time that a unified Alcoa will kick off earnings season here in the U.S. … and boy, was it ever disappointing.

The company posted a higher third-quarter profit, but revenue fell and that discouraged investors who punished the company’s stock. I bet the titanium and nickel-alloy members of Alcoa thought to themselves, “not my problem anymore.”

Dollar Up, Gold Way Down… Nickelback Wins Again

As the U.S. dollar hit a seven-month high, gold dropped like a stone this week. So did the other precious metals we track. If the dollar was Nickelback, precious metals would be Bon Jovi. When investors put their money into the metal, itself, it directly affects the value of the commodity that’s merely a certified paper version of the former and, in this case, vice versa. It’s a good time to be Nickelback as the Federal Reserve finally seems serious about raising interest rates.

Steel Prices Could Come Back Soon

Our colleague Raul de Frutos has noticed some strange behavior in the U.S. and international steel markets. As long as prices in China don’t fall, he writes, domestic flat products shouldn’t fall more than $100 per ton from where they are now. Others are predicting steeper price decreases. Let’s see what happens.

 

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