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Commodities Roundup: LME Copper and Aluminum Fall, U.S. National Average Gas Price Hits 2018 High

04/13/2018 By

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:

Copper Slides

The second half of December 2017 saw the LME copper price surge above the $7,200/mt line, but the first quarter of 2018 has seen that price come back down.

LME copper closed the month down 2.5% month over month, MetalMiner’s Irene Martinez Canorea wrote in her Copper Monthly Metal Index (MMI) report.

“Meanwhile, trading volume appears to be about the same as last month, when selling volume appeared weak,” Martinez Canorea wrote. “As the selling volume remains weak, the downtrend seems more like a short-term price correction than a change of trend.”

So far in April, that appears to be the case, as LME copper has steadily risen, climbing back up to $6,887/mt as of April 10.

Big Boosts for U.S. Steel Plate, Cobalt

March saw LME aluminum, copper and nickel all post month-over-month drops — but not every metal followed suit.

U.S. steel plate and cobalt rose by 13.6% and 10.6%, respectively, month-over-month.

Within the renewables basket of metals, neodymium rose by 0.7%. As MetalMiner noted in this month’s Renewables MMI post, increased demand from Tesla for neodymium — to be used in magnetic motors — would strain an already limited supply, and thus send prices upward.

Strong as Steel

The true impact of the Section 232 tariffs imposed by the Trump administration last month remains to be seen, as several countries are lobbying for exemptions or, in many cases, have already won temporary exemptions pending further negotiations.

For now, though, U.S. steel prices have certainly gotten a boost from the move.

Since March 1, U.S. HRC prices are up 11.3% to $848/st as of April 11, according to MetalMiner IndX data. U.S. CRC prices are up 14.9% during that time period, up to $972/st. U.S. HDG, meanwhile, rose 12.8% to $1,086/st.

“Historically, prices usually increase during Q4 as many companies renegotiate their annual agreements as part of the budgeting season for the following year,” Martinez Canorea wrote in her Raw Steels MMI report. “However, this year, steel price increases didn’t occur until later. Prices appeared to wait for the Section 232 outcome (with its corresponding tariffs), which acted as a support for domestic steel prices.”

Even so, the longevity of this Section 232 boost remains to be seen.

“However, domestic steel prices seem closer to the end of this latest price rally,” Martinez Canorea added. “Based on historical steel price cyclicality, lower Chinese steel prices and decreasing raw material prices, domestic steel prices may fall in the coming months.”

Aluminum Prices Fall

Like copper (and to a lesser extent, nickel), the LME aluminum price fell last month, posting a 5.8% decline month over month.

“Though some may want to declare a bearish market for aluminum, prices are still over the $1,975 level, when MetalMiner recommended buying organizations buy forward,” Martinez Canorea wrote in her Aluminum MMI report. “Prices may retrace back toward that level.”

The decline in price could also be seen on the Shanghai Futures Exchange. Chinese aluminum primary cash fell 1.61% month over month.

National Average Gas Price Sits at Highest Level of the Year

Depending on where you live, you might be paying more at the pump than you have all year.

The U.S. national average gas price held at $2.66/gallon for one week, according to AAA.

“Gas prices are only a penny away from topping the $2.67 high of 2017,” said Jeanette Casselano, AAA spokeswoman, in a prepared statement. “The price is likely to increase as spring brings warmer weather and the switchover to summer blend gasoline, but hopefully we will only see mild jumps in coming weeks.”

According to AAA, gas prices jumped on the heels of the Energy Information Administration’s latest weekly report, which said gasoline inventories dropped by 1.1 million bbl.