Commodities Roundup: Cornish copper; automotive struggles; negative oil

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:

Copper in Cornwall

MetalMiner’s Stuart Burns delved into the discovery of copper at a Cornwall site explored by Strongbow Exploration and Cornish Lithium, one that could potentially revitalize the southwestern tip of the U.K. if it proves economically viable.

“Strongbow is keen to point out one or two drill holes do not a mine make,” Burns wrote. “Much more extrapolation and further drilling needs to take place.

“But for the first time in over 30 years, Cornwall appears like it may have a multi-mineral deposit of commercial significance — copper, tin and zinc at a shallow 90-100 meters and lithium salt brines at 500-plus meters in the same area, allowing for multiple revenue streams to cover costs.

“The area desperately needs jobs, and mining work would be well-paid and long-term once the investment is lined up and committed. It raises the question: Has Cornish Lithium just struck lucky with its initial drilling or does the area offer further mineral riches still to be found?”

Automotive struggles amid COVID-19

The automotive sector has been hit hard by the COVID-19 crisis, as major automakers have suspended production all over the world.

“So when the automotive industry starts gearing up for a return to work following lockdowns across Europe and North America, there could be lessons for other industries similarly challenged to deal with safe distancing and virus contagion in the workplace,” Burns wrote earlier this week.

“Initially, some plants, particularly in North America, were hit not by shutdowns enforced by the authorities but by staff walkouts over safety concerns.

“In Europe, worker concerns were running in parallel with such an unprecedented collapse in sales that manufacturers rapidly followed each other in shutting down production. While demand is yet to come back, carmakers are losing such eye-watering amounts of money by staying closed that most are making plans for a gradual return to work as the pandemic slowly comes under some semblance of control.”

Oil prices turn negative

As oil prices have plummeted to their lowest level in years, Burns surveyed the state of the sector and the phenomenon of “negative” oil prices.

“Prices went negative, a New York Times article explains, because futures contracts that require buyers to take possession of oil in May expired on Tuesday and nobody wanted the oil because there was no place to store it,” Burns wrote. “Contracts for June delivery were still trading for about $22 a barrel.

“The normal outlet, refineries, are unwilling to turn oil into gasoline, diesel and other products because so few people are commuting or taking flights, and international trade has slowed sharply. Oil is already being stored on barges, supertankers, and both producer and consumer storage depots.”

Rio Tinto iron ore production up 5%

Miner Rio Tinto recently reported that its Q1 iron ore production increased 5% on a year-over-year basis, but fell 16% from Q4 2019.

The firm also weighed in on the global demand outlook amid the COVID-19 outbreak.

“Demand in China continues to recover,” the company noted in its production report. “In the rest of the world, the outlook is more uncertain. Commodity supply is being disrupted as COVID-19 restrictions impact supply chains and people movement globally.”

India’s stainless steel production forecast to drop this year

Meanwhile, Indian stainless steel production is forecast to drop this year, according to a report by the International Stainless Steel Forum.

India’s stainless steel production grew 5% last year, down from the 7% growth recorded the previous year.

While being impacted by the COVID-19 crisis, India’s stainless steel sector is also being negatively affected by rising imports of stainless steel flat products, which surged 50% last year, according to the Indian Stainless Steel Development Association.

Aluminum production up 1.5% in March 

Global aluminum production rose 1.5% in March, according to data from the International Aluminum Institute.

Total global production checked in at 5.48 million tons last month.

China, the top producer, churned out 3.1 million tons, up from 2.91 million tons in February.

Aluminum prices to remain down

The aluminum price, like that of other metals, has taken significant losses in recent weeks as supply soars past demand during the coronavirus outbreak.

“Global aluminum production rose 2.1% over the first three months of this year, Reuters reports, despite demand collapsing,” Burns wrote. “An 11% year-on-year jump in first-quarter production in the Gulf, the post states, reflects the ramp-up of a new 540,000 metric ton per year line at Aluminium Bahrain. Higher output in Latin America resulted from a return to full capacity of Norsk Hydro’s Albras plant in Brazil after a government-mandated part closure of the alumina refinery which feeds the smelter, and in North America, a 4.1% rise in output is largely due to the return of the Bécancour smelter in Canada after a crippling 18-month strike ended in July last year.”