Commodities Roundup: Industrial production dips; housing starts boom; steel capacity; copper deficit; IMF revises growth forecasts downward

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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:

Industrial production declines in December

The Federal Reserve recently reported U.S. industrial production in December declined 0.3%.

However, mining and manufacturing production increased by 1.3% and 0.2%, respectively. On the other hand, fourth-quarter manufacturing production dipped by 1.0%.

India faces global growth headwinds

MetalMiner’s Stuart Burns weighed in on the state of the Indian economy and the challenges it faces.

“Growth is estimated at just 6.1% in the current fiscal year up to the end of March 2020, according to the International Monetary Fund, the World Bank and the Reserve Bank of India,” Burns wrote. “Speaking to businessmen in Delhi this week, the sense is growth is in reality significantly lower than that — more like 4%, most seem to suggest.

“With revenue slowing and costs rising, the government could breach its deficit target of 3.3%, denting the country’s credit rating and potentially increasing borrowing costs.”

December housing starts reach highest level since 2007

U.S. housing activity boomed in December, according to recent data from the U.S. Census Bureau and the Department of Housing and Urban Development.

December housing starts reached a seasonally adjusted annual rate of 1,608,000, which marked a 16.9% increase from the previous month. On a year-over-year basis, December starts were up by a whopping 40.8%.

According to Freddie Mac, the average 30-year fixed-rate mortgage checked in at 3.9% in 2019, marking the fourth-lowest annual average since it began its weekly rate survey in 1971.

U.S. steel sector hits capacity utilization of 82.3%

Although the year is still young, the U.S. steel sector has posted a capacity utilization rate of 82.3% for the year through Jan. 18, according to the American Iron and Steel Institute.

During the aforementioned period, U.S. steel mills churned out 4.94 million tons of steel, which marked a 2.6% increase from production during the same period in 2019.

Global copper deficit reaches 439,000 tons

According to a recent report from the International Copper Study Group, the global copper market posted a deficit of 439,000 tons through the first 10 months of 2019.

Copper mine production slipped 0.3% during the 10-month period, while refined production was down 0.3%.

IMF revises global growth projections downward

The International Monetary Fund recently released its January 2020 World Economic Outlook, in which it downgraded its October forecast for global growth levels.

The IMF estimated global growth of 2.9% in 2019 and forecast growth of 3.3% in 2020 and 3.4% in 2021. However, the forecasts marked a 0.1% decline for 2019 and 2020, and a 0.2% decline for 2021.

“The downward revision primarily reflects negative surprises to economic activity in a few emerging market economies, notably India, which led to a reassessment of growth prospects over the next two years,” the IMF report stated. “In a few cases, this reassessment also reflects the impact of increased social unrest.”

NBER report surveys U.S. tariff burden

Amid a wave of U.S. tariffs imposed over the last two years, the National Bureau of Economic Research recently released a report analyzing who exactly is bearing the majority of the burden for those tariffs.

“Using data from 2018, a number of studies have found that recent U.S. tariffs have been passed on entirely to U.S. importers and consumers,” the report’s abstract states. “These results are surprising given that trade theory has long stressed that tariffs applied by a large country should drive down foreign prices. Using another year of data including significant escalations in the trade war, we find that U.S. tariffs continue to be almost entirely borne by U.S. firms and consumers.”

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