Commodities Roundup: Auto Sales, Construction Spending and the Palladium-Platinum Spread

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:

U.S. Auto Sales

Automakers reported their January (or quarterly) sales on the first of the month, with General Motors announcing fourth-quarter deliveries of 785,229 units. The automaker also recently announced a new round of 4,000 layoffs (part of the 15% workforce cut announced in November).

Meanwhile, Ford announced it would, like GM, move to quarterly sales announcements (as opposed to monthly).

Fiat Chrysler saw its U.S. sales in January jump 2% year over year, and Honda’s were 1.5% year over year.

U.S. Construction Spending

According to a report from the U.S. Census Bureau, U.S. construction spending hit an estimated $1,299.9 billion in November, up 0.8% from the previous month. The November spending total marked a 3.4% year-over-year increase.

Meanwhile, private construction spending in November increased 1.3% month over month, while public spending dipped 0.9% month over month.

Construction billings growth slowed in December, according to the American Institute of Architects’ monthly Architecture Billings Index (ABI). The December ABI came in at 50.4, down from 54.7 the previous month (anything greater than 50 indicates billings growth).

Aluminum Prices

As MetalMiner’s Belinda Fuller explained this week, aluminum prices trended upward in January but have settled into a sideways trend so far this month.

“With only a weak uptrend followed by some sideways movement, prices have grown weaker at $1,783/mt this month,” Fuller wrote. “The politics of trade and financial uncertainty in China, rather than supply and demand in the aluminum market, continue to direct LME price levels into early 2019.”

Rare Earths Partnership

In the world of rare earths, Canadian firm Avalon Advanced Materials announced plans to join forces with Australia’s Cheetah Resources on a rare earths project in Canada’s Northwest Territories.

“We are delighted to have attracted a like-minded partner in Cheetah to the rare earth opportunity at Thor Lake,” Avalon President and CEO Don Bubar said. “The agreement structure will allow Avalon to resume its long-term development aspirations for the Nechalacho Project and secure a source of non-dilutive working capital to continue to advance our other near-term development aspirations for the East Kemptville Tin and Separation Rapids Lithium Projects.”

Platinum-Palladium Spread

Continuing to buck historical trends, the price spread between palladium and platinum has reached its highest level in the history of MetalMiner’s Monthly Metals Index (which dates to 2012).

For the 16th month in a row, Palladium continues to come in at a premium to platinum. Palladium registered at $1,325 per ounce to start the month, compared with $820 per ounce for platinum.

Steel’s Slide

As we’ve noted in previous roundups, steel prices — in both the U.S. and China — have been on the decline in recent months.

“CRC and HDG prices are back to June 2016 levels, while HRC is still slightly higher than the price point hit following the spring 2016 raw steel price surge,” Fuller wrote.

As is often the case, however, plate prices made gains, bucking the general trend for most forms of steel.

As for raw materials in the steelmaking process, iron ore prices have surged in recent weeks on the heels of a Jan. 25 deadly dam breach at Vale SA’s Corrego do Feijao mine in Brazil. Fuller adds that further iron ore price increases could be coming this year if the Chinese government takes additional actions to curtail iron ore and steel projects.