Commodities Roundup: Cotton, Aluminum, Steel and Nickel were this Week’s Big Newsmakers

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For the buyers and category managers out there, especially those of you deep in the weeds of buying and managing commodities, here’s a quick rundown of news and thoughts from particular commodity markets.

From price movements to policy decisions, we scour the landscape for what matters. This week:

One of Our Network Analysts on NPR’s Marketplace Morning Report

While the U.S. aluminum producer and longtime economic bellwether Alcoa Corp. has had a good 2017, trade issues loom on the horizon, such as the U.S. Commerce Department’s Section 232 investigation into whether aluminum imports constitute a threat to national security.

MetalMiner Executive Editor Lisa Reisman spoke on NPR’s Marketplace Morning Report on Wednesday about the target of those investigations — China — and how the country moves aluminum markets.

(More on the steel side of Section 232 below.)

U.S. Cotton Prices Spike

For apparel manufacturing organizations, among others, paying attention to the cotton market is paramount. Lately, it’s been rather hot.

“Cotton prices rose 22% since the beginning of November, reaching high levels last seen in 2014,” according to Verity Michie of Mintec, a longtime Spend Matters guest contributor. But with U.S. cotton planted area still up 20% year-over-year for the current season, which would normally signal a price decrease, why have domestic prices risen?

The answer: India, according to Mintec.

Steel: “Protectionist” Moves To Do More Harm Than Good?

U.S. actions against China in the form of World Trade Organization trade cases have been highly successful in recent years — so much so that some are wondering if the Trump Administration’s Section 232 efforts will backfire with regard to steel imports, wrote MetalMiner Editor at Large Stuart Burns this week.

“Much of America’s steel imports are made up of material from the European Union and Canada,” Burns wrote. “To have any logic to it at all, action resulting from the Trump administration’s Section 232 investigation launched last April will have to be applied to all steel imports, falling predominantly on U.S. allies and trading partners.”

The U.S. Department of Commerce sent the results of its findings to the White House last week. The President now has 90 days to respond.

“The more time that goes by, the more the impression will grow that the response will be muted,” Burns continued. “Specific action against China, from which only some 3% of imported U.S. steel is supplied, would be hard to argue as a logical response, and would likely invite legal challenges at the WTO.”

“There’s nothing wrong with seeking to protect the U.S. steel industry — just pick the right target,” Burns concluded.

MetalMiner Releases Latest Metals + Commodities Index Report

If you care about more than just steel markets, our sister site MetalMiner produces a monthly series of sub-indexes tracking various ferrous, non-ferrous and end-use market baskets of metals called the Monthly Metals Index (MMI).

Some highlights from the past month’s trends:

  • Seven of 10 sub-indexes moved upward, with two holding flat and one dropping (the Construction MMI, which tracks certain forms of steel, aluminum, iron ore and U.S. bar fuel surcharges, fell by one point).
  • The biggest winner of the month was the Stainless Steel MMI, which rose 9.2% — driven primarily by nickel, a key raw material input in stainless production. Skyrocketing LME nickel prices backed the jump. After hovering around $10,600/metric ton in October, nickel jumped near $13,000/mt last month, and continued to climb in the early days of 2018.

Check out more analysis in the free report — download it here.

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