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Commodities Roundup: March in Review, U.S. Steel Imports Down and Copper Cools

03/30/2018 By

Adobe Stock

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, our MetalMiner editors scour the landscape for what matters. This week: 

A Turbulent Month

MetalMiner’s Irene Martinez Canorea recapped what was a turbulent month for commodities.

“Crude oil prices (one of the most important price indicators in the commodities basket) increased this month, which may still lead to a higher CRB index by the end of the month,” she wrote.

“However, the long-term uptrend for commodities remains in place. Next month, buying organizations can expect to see price increases.”

Base metals in general traded lower — but not steel.

“With the recent tariffs imposed on steel products, steel prices remain at more than four-year highs for plate, and at 2011 levels for all the other steel forms (HRC, CRC and HDG),” Martinez Canorea wrote.

Through February, Steel Imports Down 5.3%

According to data from the American Iron and Steel Institute, U.S. imports of steel are down 5.3% through the end of February compared with the first two months of 2017. In addition, steel imports in February were down 18% compared with the previous month.

Of course, the Trump administration recently took action by imposing tariffs of 25% on steel and aluminum. Countries have been lobbying for exemptions from the tariffs, with a number of allies doing so successfully.

Last week, U.S. Trade Representative Robert Lighthizer announced the E.U., Australia, Brazil, Argentina and South Korea had won temporary exemptions. Earlier this week, however, the U.S. and South Korea announced agreement in principle on tweaks to the U.S.-Korea Free Trade Agreement, a discussion that concluded with permanent exemptions from the tariffs for South Korea, albeit with a 70% quota imposed.

Other countries, including Japan and Turkey, will continue to angle for exemptions of their own.

Copper Continues 2018 Slide

Last year saw prices of LME copper skyrocket, closing the year at $7,215/metric ton.

This year, however, the metal has cooled off considerably. LME copper has trended downward thus far in 2018.

Despite a brief rally earlier in March, the metal has trended downward over the last two weeks, dropping 5.9%, to $6,601 on March 28 from $7,014.50 on March 14.

LME copper dropped to $6,499 on March 26, its lowest since early December, when it hit $6,530.

According to Reuters, the price has dropped as a result of rising stockpiles and concerns regarding trade tensions between the U.S. and China. The Trump administration took the next step in its Section 301 investigation of Chinese trade practices when Trump announced the potential for up to $60 billion in tariffs on Chinese imports.

In a March 24 release, China’s Ministry of Commerce pushed back against the U.S. announcement vis-à-vis the Section 301 probe, claiming the U.S. is “ignoring WTO rules.”

“With regard to the 301 investigation, China has clearly stated its position on many occasions,” the release stated. “China does not want to fight a trade war, but it is absolutely not afraid of that. We are confident and capable of meeting any challenge. It is hoped that the U.S. will pull back before it is too late and not drag bilateral economic and trade relations into danger.”

Crude Oil Price to Drop to Nearly $50/Barrel, Analysts Say

The price of oil could fall to nearly $50/barrel by the end of this year, according to J.P. Morgan research cited by CNBC.

The Brent crude oil price has surged in recent weeks, up from $62.59 in mid-February to an opening price of $69.86 on March 29.