Commodities Roundup: Goldman Sachs is bullish on 2021 commodities narrative; Steel imports down; Why are aluminum cans scarce?

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, including Goldman Sachs' bullish outlook on commodities and much more.

MetalMiner, a sister site of ours, scours the landscape for what matters. This week:

Better 2021 for Western Europe's steelmakers

MetalMiner contributor Christopher Rivituso took a look at the outlook for Western European steelmakers in 2021.

“The World Steel Association (worldsteel) also predicted in its Oct. 15 short-range outlook that crude steel production within the European Union would improve by almost 11% to 149 million tonnes in 2021,” Rivituso wrote. “Meanwhile, the Brussels-based organization predicted 134 million tonnes of production for 2020.

"The latter forecast reflected a 15.2% decrease from the over 158 million tonnes of crude steel poured in 2019, worldsteel noted."

Scottish gold

MetalMiner’s Stuart Burns delved into the potential for authentic Scottish gold from miner Scotgold.

“So, it has taken a strong gold price and political blessing for Scotland’s only domestic gold miner, the aptly named Scotgold, to gain permission to develop gold reserves in the Trossachs National Park,” Burns wrote. “The park is in an area of outstanding natural beauty and is home to some of the best-preserved oak woodlands in Scotland.

“Gold mining and Scotland are not activities and locations that one immediately makes an association between. In fact, more Scots rushed to California’s gold rush than ever mined at home. However, gold prospectors have looked for gold in Scotland’s rivers for centuries.”

U.S. steel imports drop over 8%

In the steel market, U.S. imports of steel products dipped over 8% from August to September, the Census Bureau reported.

“Increases occurred primarily in tin free steel, used rails and light shaped bars,” the Bureau reported. “The largest country decreases occurred with Russia. Increases occurred primarily with Turkey, Brazil and Mexico.”

Goldman Sachs bullish on commodities for 2021

This year has been a difficult one for many sectors. While some markets have recovered in recent months, the COVID-19 pandemic continues to depress demand for a number of commodities.

But what about 2021?

Investment bank Goldman Sachs is bullish on commodities for next year, as Burns explained earlier this week.

“Goldman estimates a Biden win would increase U.S. copper demand by 2% over the next five years,” Burns wrote. “In addition, it predicted copper prices, which have fallen back to $6,800 on a general metals pullback this week, to be at $7,000 in three months. Furthermore, it predicts copper to hit $7,250 in six months and $7,500 by this time next year.

“Precious metals are one of the biggest beneficiaries, the bank suggests. Gold is used as both a hedge against the loss of purchasing power of a weaker dollar and for pullbacks in equity portfolios, the note said. The note continues, adding with gold currently in the low $1,900s per ounce, it could be at $2,300 per ounce next year.”

U.S. steel capacity utilization approaches 70%

U.S. steel mills produced at a capacity utilization rate of 69.7% for the week ending Oct. 24, per the American Iron and Steel Institute (AISI).

Steel output during the week reached 1.54 million net tons, up slightly from the previous week but down 14.6% on a year-over-year basis.

Copper mine production down

According to the International Copper Study Group, global copper mine production fell 0.8% during the first seven months of the year.

Refined copper output, however, rose 1.0%.

In other copper news, Reuters reported union leaders at the Escondida mine — the world’s largest copper deposit — had reached a deal to avoid a strike. Workers at the mine went on strike for six weeks in 2017.

Aluminum can market faces supply crunch

Beverage makers this year have struggled with a shortage of aluminum cans — or, rather, a supply that is not meeting surging demand.

“Can stock is not fundamentally in short supply,” Burns wrote. “Domestic mills are running hard and imports are making up the shortfall. Despite tariffs on some origins, buyers can get metal for a price.

“The problem is there is not enough can-making capacity.

“Crown, a major producer, said it is only able to meet demand. While lockdowns have depressed Latin American demand, demand is coming back. As such, there are supply issues building for the U.S. in 2021.”

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