Commodities Roundup: Copper Surplus, Baowu Steel, and Oil Price Slides

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.

MetalMiner, a sister site of ours, scours the landscape for what matters. This week:

Copper Surplus

According to the International Copper Study Group (ICSG), the global copper market posted a surplus of 40,000 tons through the first two months of 2019.

Copper mine production fell 1.8% over the first two months of the year compared with the same period in 2018.

Chile, the world’s top copper producer, saw its mine production fall 6% during the period.

Tin-novation

A British company is using tin in its development of a perovskite-based solar cell, continuing efforts to produce safer and more efficient photovoltaic cells.

The firm, Oxford PV, was founded in 2010 based on research conducted at Oxford University.

According to the International Tin Association, the firm plans to bring a tin-using, perovskite-based solar cell to market by the end of next year.

Baowu to Buy Majority Stake in Rival

MetalMiner’s Stuart Burns weighed in on China’s Baowu Steel Group and its reported move to purchase a majority stake in rival Magang Steel, part of a drive toward consolidation of China’s massive steel sector.

“The two companies had combined crude steel output last year of 87 million metric tons, the Financial Times reports, surpassing total U.S. steel output of 86.6 million tons,” Burns wrote. “The combined group is only slightly behind the world’s No. 1 steelmaker, ArcelorMittal, which produced 92.5 million tons of crude steel in 2018.

“Capacity of the merged group would be in the region of 90 million tons, making it likely that further acquisitions will see Baowu exceed ArcelorMittal at some stage in the not-too-distant future.”

Oil Price Slide

On the heels of a surge in April, the oil price has come back down of late.

“The Trump administration exacerbated the selloff with another threat of tariffs, this time against its southern neighbor Mexico if it does not stem the flow of immigrants across the border,” Burns explained. “President Donald Trump threatened to apply a gradually rising tariff, starting at 5%, on goods imported from Mexico beginning June 10.

“The threat was seen by investors as a negative move for both U.S. and wider region growth. The move was also seen as evidence, as if any were needed, that the president will continue to use his weapon of choice, tariffs, as a means to achieve his political ends — with negative consequences for growth.”

Gold is Shining

In other news, the gold price is outperforming other commodities, Burns wrote, having hit a three-month high this week at $1,327.90 per troy ounce.

However, it remains to be seen how much further gold could rise.

“Global political and economic developments would have to take a dire turning for the worse to stimulate a rise above the mid $1,300s,” Burns added.

Auto Sales Slump

U.S. auto sales overall continued to fall this past month, despite sales increases at automakers Toyota and Fiat Chrysler.

Fiat Chrysler’s May sales rose 2% year over year, while Toyota’s jumped 3.2%.

However, according to a forecast by J.D. Power and LMC Automotive, May new-vehicle retail sales are projected to drop 3.1% year over year.

Meanwhile, state-run news agency Xinhua reported China’s auto sales are projected to come in flat in 2019 compared with 2018 sales.

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