Commodities Roundup: Aluminum’s recovery; tin’s solid fundamentals; steel capacity utilization rises

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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:

Aluminum’s recovery in China

The aluminum price has enjoyed a solid recovery in China, MetalMiner’s Stuart Burns explained this week.

“According to Reuters, the most-traded September aluminum contract on the Shanghai Futures Exchange (SHFE) last week ended up 1.8% at 14,720 yuan a metric ton,” Burns wrote. “This came after hitting a two-year high set in April 2018 of 14,805 yuan ($2,114.21) earlier in the session.

“Supporting a picture of metal in demand, inventory levels also continued a relentless decline on the SHFE. Inventory dropped to 222,498 tons, down 58% from the 2020 peak in March.”

Meanwhile, LME stockpiles were near their highest level since April 2017, he noted.

USITC maintains duties on steel wire rod

The USITC recently held a five-year sunset review related to antidumping and countervailing subsidies related to imports of carbon and certain alloy steel wire rod.

The antidumping portion referred to imports from Brazil, Indonesia, Mexico, Moldova, and Trinidad and Tobago. The countervailing duty portion or the review referred to imports from Brazil.

The USITC voted to maintain the duties, arguing that removing them “would be likely to lead to continuation or recurrence of material injury within a reasonably foreseeable time.”

U.S. steel capacity utilization rises

The U.S. steel sector posted a capacity utilization rate of 59.3% for the week ending Aug. 1.

Production for the week totaled 1.33 million net tons, up 0.6% from the previous week (when capacity utilization was 58.9%).

Sound fundamentals for tin

In addition to aluminum's recovery, the tin price has received some support from strong underlying fundamentals.

“On the supply side, tin has taken some heavy knocks from COVID-19-related lockdowns,” Burns wrote.

“The pandemic has forced Malaysia, Brazil, Peru and Bolivia to either limit or curtail full operations, Reuters reports. All of them are vertically integrated from mine to smelter, meaning a fast transmission time to impact on the physical refined metal market.”

Meanwhile, demand for tin is strong among high-tech end users.

“The largest consumer is in tin solder for the semiconductor market and electronics, which have held up well during the pandemic this year,” Burns added.

“As if to underline the state of the market, Apple reported record $59.7 billion sales this week for the second quarter of 2020. The figure marked an 11% increase from last year, as consumers went on an electronics spending spree.”

Auto sales recovery takes ‘pause’

According to a forecast by J.D. Power and LMC Automotive, U.S. automotive sales in July were forecast to be down 9.5% year over year.

“One factor contributing to the pause in recovery in July is inventory constraints for many vehicles,” said Thomas King, president of J.D. Power’s data and analytics division, in a release. “While this is constraining overall sales, new production is arriving at dealerships daily and is being sold quickly to consumers.”

In other automotive news, Ford announced CEO Jim Hackett will retire later this year. COO Jim Farley is expected to take over.

Also, General Motors is teaming up with EVgo to bring an additional 2,700 electric vehicle charging station to the U.S. over the next five years.

MetalMiner 2021 Forecasting Workshop scheduled for Aug. 13

For those in metals procurement, the MetalMiner 2021 Forecasting Workshop will be held virtually this year, from 10 a.m.-1 p.m. U.S. Central time on Aug. 13.

MetalMiner experts will unveil their short- and long-term outlooks for a number of important metals, in addition to providing valuable insights on buying strategies in a year that has been and likely will continue to be filled with volatility.

Visit the 2021 Workshop landing page for more information and to register.

ABI gains, remains below 50

This month’s Architecture Billings Index, released monthly by the American Institute of Architects, reflected improvement in architecture billings.

The June reading checked in at 40.0, up from 32.0 the previous month. However, any reading below 50 indicates billings contraction, meaning the sector still has a long way to go before returning to pre-virus levels of activity.

In other construction news, the U.S. Census Bureau reported U.S. construction spending was at a seasonally adjusted annual rate of $1,355.2 billion, marking a 0.7% decline from the previous month.

Meanwhile, spending through the first half of the year totaled $667.9 billion, marking a 5.0% increase year over year.

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