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Commodities Roundup: Steel Tops Out, A Wild Month for Aluminum

04/27/2018 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:

Steel Prices Hitting a Top?

U.S. steel prices got a boost from the Trump administration’s Section 232 measure, but the pace of price increases has slowed down, MetalMiner’s Irene Martinez Canorea wrote earlier this week.

That slowdown begs the question: Is steel reaching a so-called top?

“A forecasted increase in demand acts as a support for domestic steel prices,” she wrote. “The higher the demand, the more prices may remain holding at their new, higher price levels.

“On the flip side, the current rally seems to have lost some its previous steam. Buying organizations may want to understand how to adapt their buying strategy to the current market changes.”

On the horizon is the potential expiration May 1 of country-specific exemptions. South Korea has already negotiated a long-term exemption, while Canada, Mexico, the E.U., Brazil, Argentina and Australia have received temporary exemptions.

Up and Down for Aluminum

Earlier this week, MetalMiner’s Stuart Burns wrote about the once again surging aluminum price, which had been generally sideways in Q1.

From April 3 to April 19, the LME aluminum price soared, up 29.3% to $2,597.50/metric ton. Fears regarding the U.S. sanctions on Russian companies and oligarchs, as well as the potential locking out of Russian aluminum giant Rusal’s metal, sent prices skyrocketing.

“Not only is the market deprived of new deliveries by the sanctions, but according to Bloomberg some 36% of global stockpiles on the LME and up to one million tons of metal held in inventories outside of China supporting financing deals is currently in limbo as buyers, traders, banks and brokers refuse to handle it for fear of falling foul of sanctions,” Burns wrote.

Those fears were clearly allayed, however, as prices came back down this week after the U.S. Treasury announced it would extend the deadline for U.S. businesses to wind down their relationships with Rusal. The Treasury also opened the door to eased sanctions if Russian oligarch Oleg Deripaska steps down from his role at the firm.

It remains to be seen how exactly the sanctions situation plays out, and where on the spectrum of severity they will fall. But the Rusal situation is certainly at the certain of the action — certainly a situation to watch for aluminum buyers.

Nickel Gets Roped In

The nickel price has behaved somewhat similarly to aluminum, buyers feared the Rusal situation could spill over into the aluminum market. LME nickel rose 15.8% between April 3 and April 19, from $13,555/mt to $15,700/mt. In fact, it jumped 10% in one day, the metal’s biggest one-day increase in a decade.

But on the heels of the U.S. Treasury’s announcement this week, the LME nickel price went back down in a big way (to the delight of electric vehicle makers, who use nickel in their batteries). Rusal has a stake in Norilsk Nickel, which explains the ripple effect touching nickel by way of aluminum.

Copper Prices Rise

Copper prices have picked back up again in the past month, rising 7.1% from March 26 to April 25, when the LME copper price hit $6,960/mt.

In copper news from around the world, Reuters reported Russian company Norilsk Nickel cut its 2018 output forecast for its new copper project near the Chinese border.

Similarly, Chilean miner Antofagasta PLC reported its Q1 production declined 10.5% year-over-year.