Commodities Roundup: Industrial production rises; Chinese construction steel prices take a hit; copper’s hot streak continues

commodities

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 bounces back in May

After posting a historic decline in industrial production in April, U.S. production ticked up 1.4% in May, buoyed by the restart of automotive operations after an approximately two-month suspension of production due to the coronavirus pandemic.

However, the May index remained down 15.4% compared with pre-pandemic levels, like in February.

Manufacturing output in May rose 3.8% after falling 15.5% and 5.3% the previous two months.

Chinese steel prices fall

Demand for a wide range of metals has picked up in China as the country has tentatively emerged from the worst part of its coronavirus pandemic.

However, concerns about a resurgence are rising amid a recent spate of positive cases in Beijing, MetalMiner’s Stuart Burns explained.

As a result, prices for construction steels, like rebar, have taken a hit.

“Stocks wobbled and Chinese rebar prices drifted lower as investors worried about the risk of a surplus if construction was hit,” Burns wrote. “Anxiety in China over steel consumption had already been surfacing, as the onset of the wet season in southern provinces slowed construction activity.

“Steel prices and the cost of steel inputs, such as iron ore and coking coal, have all weakened in recent days. Rebar futures may well have topped out what had been a 10% gain in the second quarter.”

Global steel production down 8.7% in May

According to the most recent reporting from the World Steel Association, global steel production dropped 8.7% in May, with 148.8 million tons produced in the month.

However, China’s steel output rose 4.2% after a mere 0.2% gain in April.

Other major Asian steel producers — India, South Korea and Japan — saw major declines in May.

Copper production up slightly in Q1

Global copper mine production gained 0.5% in the first quarter of this year, according to recent reporting from the International Copper Study Group (ICSG).

According to the ICSG, the global copper market posted a surplus of 130,000 tons in Q1.

The copper price continues to rally after falling to just over $4,600/mt in late March (a 2020 low). Since then, the price had gained approximately 26% as of the start of this week.

The average LME cash price jumped 3.7% in May compared with the average price in April.

USITC issues final determination on steel staples

In trade news, the United States International Trade Commission (USITC) this week ruled imports of collated steel staples from China are harming U.S. industry, paving the way for the Department of Commerce to issue anti-dumping and countervailing duty orders.

The value of collated steel staples imported from China came in at $54.9 million in 2019 and $88.8 million in 2018.

According to the USITC, collated steel staples are produced in just three U.S. states: New Hampshire, West Virginia and Ohio.

India slaps duties on steel from China, South Korea, Vietnam

In trade news elsewhere, the Indian government has opted to slap anti-dumping duties on flat-rolled steel from China, South Korea and Vietnam, MetalMiner contributor Sohrab Darabshaw explained.

“Significantly, the order against China comes just days after a border skirmish between soldiers of the two countries that had resulted in the death of at least 20 Indian soldiers,” Darabshaw wrote.

“The Indian revenue department in its order said flat-rolled product of steel coated with alloy of aluminum and zinc was being imported into India from these three countries below their normal value, resulting in dumping and causing injury to domestic producers, Livemint reported.”

Liberty Steel UK invests in the future

Steelmakers around the world are struggling as a result of the precipitous drop in metal demand on the heels of the coronavirus pandemic.

The impact has certainly been felt in Europe, which was already dealing with elevated import levels and concerns by steelmakers about the efficacy of the European Union’s steel safeguard measures.

One firm, however, is investing in the future — for both after the pandemic and after Brexit, Burns explained.

“LSUK purchased the Rotherham steel operations from Tata Steel three years ago and have proved good stewards so far, investing heavily in a new electric arc furnace and raising production from just 225,000 tons to over half a million prior to the pandemic lockdowns,” Burns wrote.

“The firm is quoted in the local press as saying it has looked across its product mix, assets and cost base to find ways to improve competitiveness and prepare for changing market demands. New investments at the Thrybergh Bar Mill allow the firm to boost rebar production, normally a low-end product often imported into the U.K. LSUK sees significant opportunities for projects such as Britain’s high-speed rail project, HS2, as well as other post-pandemic infrastructure projects it perceives Britain will need to boost activity post-lockdown and, more importantly, post-Brexit.”

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