Commodities Roundup: Base Metals Prices Rise in May, Rio Tinto-Minmetals Joint Venture
06/15/2018
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:
Stainless Surcharges, LME Nickel Prices Rise
As MetalMiner’s Irene Martinez Canorea recently reported, both stainless steel surcharges and LME nickel prices ticked up in May.
“LME nickel prices increased at a quicker pace in May. The increases continued through the beginning of June, driving prices to 2014 highs,” she wrote.
Meanwhile, the pace of surcharge increases slowed, but still remained in an uptrend, Martinez Canorea explained.
Precious Price Points
As for the basket of precious metals, MetalMiner’s Taras Berezowsky noted the widening price spread between platinum-group metals (PGMs) platinum and palladium.
“The spread ($58 per ounce last month) widened to $77 per ounce for the U.S. bar prices of those respective metals. Palladium is on a record run of its own: it remains at a premium to platinum for the eighth straight month,” he wrote.
Also, the gold price dipped below $1,300 per ounce for the first time since December.
GOES Imports Rise
Imports of grain-oriented electrical steels (GOES) picked up in May, MetalMiner’s Lisa Reisman reported.
The U.S. GOES coil price jumped 8% last month, rising to $2,712/mt as of June 1.
Reisman also offered an update on the state of Section 232 tariff exemption requests.
“Based on a quick search of exemption requests to the Section 232 steel tariffs, the Department of Commerce received 9,935 requests as of press time. However, MetalMiner could not find any additional grain-oriented electrical steel (GOES) requests since last month, when Nachi American Incorporated filed four requests on grounds that the only domestic GOES producer can not produce in the widths required,” she wrote.
Domestic Steel Sector Gains Momentum
Domestic steel prices continued to pick up speed last month, Martinez Canorea reported, hitting more than seven-year highs last month.
The imposition of the 25% steel tariff on imports from the E.U., Canada and Mexico has also supported domestic steel prices.
However, scrap steel prices haven’t joined in on the party, and have traded sideways of late, Martinez Canorea noted.
Meanwhile, Chinese steel prices have started to rise again after a winter season featuring higher-than-expected production (coming in spite of winter capacity cuts).
“Despite recent price increases, Chinese steel remains cheaper than U.S. domestic steel (even with a 25% steel tariff). This comes down to the price run-up of U.S. domestic steel prices, which have moved toward 2012 highs,” she wrote.
Copper, Zinc Prices
Copper and zinc prices have also been on the upswing so far this month, with the former surging above the $7,300/mt mark.
Demand in China is a key indicator of the strength of copper prices, as the country is the world’s top consumer of the metal.
“Chinese copper imports have surged since the beginning of the year. According to Chinese customs data released at the beginning of this month, copper imports increased to 475,000 tons. The 22% increase compared to April imports marks the highest total in more than 17 months,” Martinez Canorea wrote.
Despite a short-term downtrend in February, she added, zinc continues to run in a long-term uptrend, including an upward trajectory in May.
U.S. Imports of Steel Drop
The American Iron and Steel Institute (AISI) reported this week that U.S. imports of steel through the first five months of 2018 are down 2.5% compared with the January-May 2017 period.
The finished steel import market share reached 25%, according to the report, down from the year-to-date figure of 26%.
Rio Tinto, Minmetals Come Together in JV
Multinational miner Rio Tinto announced a joint venture deal with China’s Minmetals, one that will see the two firms come together for mineral exploration in China.
“The formalisation of the exploration joint venture is an important milestone in our growing partnership with China and Minmetals, who is an increasingly important player in the global mining industry,” Rio Tinto CEO J-S Jacques said in a prepared statement. “Our complementary strengths in exploration put us in the best possible position to find metals and minerals essential to human progress.”
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