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Commodities Roundup: Steel Prices, Sustainable Mining and U.S.-China Tariffs

05/17/2019 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.

We scour the landscape for what matters — from price movements to policy decisions. This week:

Domestic Steel Price Weakness

MetalMiner’s Belinda Fuller touched on U.S. steel prices this week, which have shown weakness of late.

Prices of U.S. HRC, CRC, HDG and plate fell last month for a second month in a row.

Furthermore, the spread between U.S. CRC and Chinese CRC prices narrowed last month, reaching $161/short ton.

Sustainable Mining Practices

As governments set emissions targets in an effort to battle the impacts of climate change, demand is rising for a variety of metals used for renewable energy installations.

Of course, mining itself produces its own set of negative environmental impacts, so what results is a bit of a Catch 22.

In that vein, the World Bank recently announced the launch of a new fund to help make mining for minerals “climate-smart and sustainable.”

The World Bank launched the Climate-Smart Mining Facility, with plans to donate $50 million over the next five years toward the goal of sustainable mining practices.

U.S.-China Trade Talks Take a Turn

Despite building optimism in recent weeks, U.S.-China trade talks took a hit last week when President Donald Trump opted to raise tariffs on $200 billion in goods from China.

China has since responded with tariff on $60 billion in U.S. goods.

“Bolstered by stronger growth in both the U.S. and China during the first quarter, both sides seem unhelpfully bullish in the closing stages of the negotiations and, as such, rowing back on some previous commitments and playing hardball on still unresolved issues,” MetalMiner’s Stuart Burns said.

“U.S. President Donald Trump’s renewed threat — which came to fruition — to raise tariffs on Chinese imports, specifically mentioning increasing the levy on $200 billion in Chinese goods to 25% on Friday of last week, sent stock markets into paroxysms.”

Collateral Damage of Trade Wars

Speaking of tariffs, MetalMiner’s Stuart Burns wrote about the impact of trade wars on financial markets, which took hits across the board stemming from uncertainty after the breakup of U.S.-China trade talks without a deal.

The S&P 500 posted its worst intraday decline since early January, while the Nasdaq composite fell 3.4%, marking its worst drop this year.

“To keep stock-market falls in perspective, though they come on the back of a 17% rise so far this year, arguably the market has already achieved a year’s gains in just four months; a correction was to be expected,” Burns explained.

“The sharp falls, though, show how complacent the markets had become trusting a deal between the U.S. and China was just weeks, if not days away.”

Tata Steel Mulls Next Steps After Thyssenkrupp JV Falls Through

The much-anticipated joint venture of Tata Steel and Thyssenkrupp’s European operations fell through under scrutiny from Europe’s competition authorities, who expressed concerns that the JV would raise prices and limit choices for steel consumers in the market.

For Tata Steel, that means the focus returns to the firm’s $13 billion debt, as the planned JV was part of the firm’s plans to service that debt.

ILZSG Forecasts 2019 Lead Surplus, Zinc Deficit

According to the International Lead and Zinc Study Group, the global lead market is expected to be in surplus this year at 71,000 tons.

Meanwhile, zinc demand is expected to exceed supply by 121,000 tons.