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Commodities Roundup: Aluminum Output Up, Palladium Sets Record and Indian Gold Demand

10/26/2018 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, we scour the landscape for what matters. This week:

Aluminum Output Increases

Global aluminum output jumped 2.5% in September compared with production during September 2017, according to a recent International Aluminum Institute (IAI) report.

Output in September hit 5.3 million tons, according to the IAI report. Of that total, China produced an estimated 3 million tons in September.

Global Zinc, Lead Demand on the Rise

According to a report from the International Zinc and Lead Study Group (ILZSG), global demand for lead and zinc is forecast to rise for this year and next.

Global zinc demand is forecast to rise 0.4% and 1.1% in 2018 and 2019, respectively. Lead demand is forecast to rise more modestly, by 0.2% and 0.7% in 2018 and 2019, respectively.

Steel Capacity Utilization Rate Hits 77.7%

According to a recent report from the American Iron and Steel Institute (AISI), the U.S. steel sector’s capacity utilization rate reached 77.7% for the year through Oct. 20.

The figure is up several percentage points from last year, when it was 74.3% through the same point in the year.

In the leadup to the imposition of Section 232 steel and aluminum tariffs, the Trump administration expressed the goal of reaching 80% capacity utilization for both steel and aluminum.

Per the AISI report, production for the single week ending Oct. 20 hit 1,875,000 net tons at a capacity utilization rate of 80%.

Palladium Peaks

While other metals have had their ups and down, palladium has been soaring this year.

Palladium has been trading at a premium to platinum for the majority of the past year, contrary to the two platinum-group metals’ (PGM) historical relationship. In fact, palladium recently breached the $1,000 per ounce mark for the first time in eight months, and earlier this week hit a record high of $1,150.50 an ounce.

Palladium is most commonly known for its use in automotive catalytic converters.

The price has surged so much that some analysts have cautioned about a possible correction for the surging PGM.

Preliminary Ruling in Dumping and Duty Cases

The Department of Commerce issued preliminary rulings in its anti-dumping and countervailing duty investigations of steel propane cylinders from China.

The DOC calculated countervailing duties as high as 145.37%.

In 2017, the value of imports of the steel propane cylinders reached $89.8 million.

U.S. Tariffs and the Indian Market

The U.S.’s Section 232 tariffs on steel and aluminum have had ripple effects throughout the world. Not only have producing countries found their products hit with U.S. tariffs, some countries have struggled with diverted supplies flooding into their country.

India, which has risen up the ranks of the top steel producers, is one such country, and has sought to protect its industry.

MetalMiner’s Stuart Burns touched on the subject this week, including the Aluminum Association of India’s efforts to convince the government to protect domestic aluminum via duties of their own on imports.

“The association has called for curbs on imports of aluminum, either by abolishing inverted duty structures or hiking customs duties on imports of aluminum end-use products (or both),” Burns wrote.

Not So Golden Days

It’s festival season in India, a heavy gold-buying time in the country, as MetalMiner’s Sohrab Darabshaw explained this week.

However, so far this year it appears that the alluring sheen of gold isn’t as alluring as it usually is.

“At the first marker of this season, that is Dusshera, when buying the yellow metal is considered auspicious, demand was down between 20-40% in some places, as compared to the same period last year, according to a Reuters report,” Darabshaw wrote.

With Diwali, the Hindu festival of lights, in November, it remains to be seen if gold demand will pick up during what is a normally busy time for gold buying in the country.