Commodities Roundup: RARE bill targets rare earths; U.S. steel capacity rate rises; Copper supported by supply fears

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:

Construction spending flat in July

According to the U.S. Census Bureau, U.S. construction spending reached a seasonally adjusted annual rate of $1,364.6 billion in July, up 0.1% from the previous month.

The July rate marked a 0.1% year-over-year decline.

Through the first seven months of the year, construction spending totaled $792.6 billion, or up 4.0% year over year.

Representatives introduce RARE bill

Two U.S. representatives from Texas earlier this month introduced a bill that seeks to curb the U.S.’s dependence on China for rare earths.

Republican Reps. Lance Gooden and Vicente Gonzalez introduced the Reclaiming American Rare Earths Act this month. The bill serves as the House’s companion bill to the Senate’s Onshoring Rare Earths Act (introduced by Texas Sen. Ted Cruz earlier this year).

Among other things, the RARE Act calls for the establishment of tax incentives for the production of rare earths in the U.S.

India’s economic struggles

As MetalMiner’s Stuart Burns explained this week, India is facing a double whammy consisting of a worsening coronavirus infection count and, simultaneously, economic struggles.

Like many places around the world, the country is attempting to balance caution vis-à-vis the pandemic with revitalizing the economy.

“As the unemployment figures show, some businesses are getting back to work despite the rising infection rates,” Burns wrote. “The authorities are trying to contain local outbreaks while limiting a nationwide surge, but it is a juggling act they appear to be losing.

“Workers remain reluctant to go back to work. Construction and factory workers are in many cases staying in their countryside villages.

“In addition, consumption is way down. That is due to consumers’ fear of catching the virus in shopping malls and because of uncertainty over what the future holds. As such, saving for tomorrow is more of a priority than spending today.”

Indian aluminum takes a hit

Sticking with India, MetalMiner contributor Sohrab Darabshaw delved into the challenges the country’s aluminum sector faces.

Like many sectors, the country’s aluminum sector has been hit hard by the COVID-19 pandemic, as domestic demand has declined.

As a result, producers in the country have looked to the export market and are asking the government to remove aluminum export caps.

“Uppermost on the list is a request to allow an export scheme for aluminum without any cap on the total exports,” Darabshaw wrote.

“The Engineering Export Promotion Council (EEPC) of India recently wrote to the Commerce Minister to continue with the Merchandise.

“Export from India Scheme (MEIS Scheme) without any limit on the aluminum exports. The change would help the sector survive the current crisis situation, the Council argues.”

U.S. steel sector capacity rate rises

After falling two weeks ago, the U.S. steel sector’s capacity utilization rate gained during the week ending Sept. 5, according to the American Iron and Steel Institute.

U.S. steel mills produced at a rate of 63.7% during the week, up from 61.7% the prior week.

Production during the week ending Sept. 5 totaled 1.43 million tons, up 3.3% from the previous week.

Copper shines

Meanwhile, the copper price has proved to be the brightest star among metals this year, Burns detailed Thursday.

“But just comparing copper to aluminum, the latter lifted only in proportion to the weakening dollar,” he wrote. “Meanwhile, copper has risen from March lows much more.

“From April to date, aluminum has jumped some 20%, largely as a result of a weakening dollar and recovering Chinese demand sucking in imports.

“But copper has risen some 33%, driven by the same dynamics but with the added anxiety of supply-side risks from major suppliers in South America.”

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