Commodities Roundup: Pentagon explores rare earths options; platinum gains momentum; steel production falls
09/13/2019
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.
MetalMiner, a sister site of ours, scours the landscape for what matters. This week:
Pentagon considers rare earths plant in Australia
China’s overwhelming dominance of the rare earths market has long been a concern for the U.S., particularly because many rare earths elements have military applications.
With that in mind, Reuters reported that the Pentagon is in talks with Australia regarding the potential for the U.S. to host a rare earths processing plant in Australia.
A Pentagon official quoted by Reuters said the U.S. is exploring several options to expand its rare earths footprint, of which Australia represents “one of the highest potential avenues.”
Platinum momentum
For well over a year now, palladium has traded at a premium to platinum.
Lately, however, platinum has gained momentum.
This past month, the palladium-platinum spread fell from $638 per ounce to $539 per ounce.
U.S. steel production drops 1.7%
U.S. steel production for the week ending Sept. 7 dropped 1.7% on a year-over-year basis, the American Iron and Steel Institute reported.
Production during the week totaled 1.84 million tons at a capacity utilization rate of 78.8%.
Cobalt prices regain value
Like platinum, cobalt has experienced a bit of a recovery of late.
On recent news that Glencore plans to halt production at its Mutanda cobalt mine — the world’s largest cobalt mine — in the Democratic Republic of the Congo this year, the price has surged.
The LME cobalt price lost approximately 75% of its value from March 2018, falling to $25,000 per ton in July. Earlier this month, however, the price picked back up to just under $35,000 per ton.
Aluminum production and China’s manufacturing slowdown
As the U.S.-China trade war drags on, impacts can be seen in China’s manufacturing sector.
MetalMiner’s Stuart Burns observed the impact vis-à-vis the lens of aluminum production. For example, the top state primary aluminum producer saw its output fall 8% in the first half of 2019 compared with the first half of 2018.
In addition, China’s copper imports in August fell 3.8% year over year.
China is not the only country facing trade-related challenges, Burns noted.
“U.S. manufacturing output has remained positive, albeit slower than a year earlier,” he wrote. “However, early indicators, like the Institute for Supply Management survey, showed a contraction in August — the first since 2016, according to Bloomberg. That suggests at least parts of the manufacturing landscape are facing rising headwinds; we would be complacent to think the consequences of the trade war are falling solely on China.
“Western Europe is also slowing fast. German manufacturing is arguably already flirting with recession as a consequence of a slowing Chinese economy.
“Just as a rising tide lifts all boats, falling global GDP correspondingly depresses prospects for all.”
MetalMiner releases 2020 Annual Metals Outlook
As metals buyers set their buying strategies for the year ahead, they must be armed with data to make well-informed decisions.
With that in mind, this week MetalMiner released its 2020 Annual Metals Outlook, which features analysis and forecasting commentary for 10 metals (aluminum, copper, lead, tin, zinc, nickel, HRC, CRC, HDG and plate), in addition to analysis of the tariff landscape.
The full version is only available to corporate subscribers. However, a free sample copy featuring tin analysis, key market drivers and more is available for download.
Steel prices lag
As MetalMiner’s Belinda Fuller noted, U.S. steel prices lagged in August, losing momentum on the heels of previous increases.
“U.S. steel price increases lost momentum in August, as prices for HRC, CRC, HDG and plate all moved more or less sideways,” Fuller wrote.
Chinese HRC and CRC prices also trended sideways in August. In addition, Chinese steel production in July increased by 5% on a year-over-year basis but declined compared with June production.
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