Commodities Roundup: European growth forecasts; ‘green aluminum’; U.S. auto sales

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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, including European growth forecasts, the LME's proposed green aluminum contract and more.

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

European growth forecasts darken

First, amid new rounds of lockdown measures in the U.K., in addition to measures implemented in Belgium, France, Spain and elsewhere in the E.U., Europe’s economic growth forecasts are looking grimmer by the day.

“The new lockdown measures are not as severe as in the first half,” MetalMiner’s Stuart Burns explained. “We have all learned a lot about the transmission of infections and it is believed, with adequate precautions, schools, universities and manufacturing can remain open.

“But it is the impact on the services sector — retail, hospitality, and travel — that will have the most severe impact on economies that are highly weighted towards services rather than manufacturing or construction.”

DOC determines steel cylinders dumped from China

In addition to European growth forecasts, the U.S. Department of Commerce issued a preliminary affirmative determination in its anti-dumping probe of non-refillable steel cylinders from China.

The DOC determined Chinese exporters dumped the cylinders at margins between 57.83% and 114.58%.

LME’s new proposed ‘green aluminum’ contract

The London Metal Exchange has proposed to institute a new “green aluminum” contract that would aim to determine what type of premium buyers are willing to pay for aluminum that meets a to-be-determined carbon threshold, Burns explained.

“It is consulting with the market to test the appetite for voluntary disclosure of a producing mill’s product,” Burns added.

However, some primary aluminum producers, including Oslo-based Norsk Hydro, have expressed some opposition to the idea.

“Norsk Hydro, one suspects, does not want the LME setting the premium,” Burns wrote. “Rather, it believes it can get a larger premium if there is no benchmark price discovery mechanism to compare against. Aluminum producers were the most strident in arguing against the LME originally launching an aluminum contract back in December 1978. Allowing the market to decide reduces producers’ power.”

Construction, autos power West European flats

While forecasts for European growth might seem darker amid a second wave of coronavirus infections, MetalMiner contributor Christopher Rivituso checked in on the Western European flats market, including rising transaction prices for hot-rolled coil.

“Offers and transactions over the previous week on hot-rolled coil produced within Western Europe for January delivery occurred at €520-530 ($595-615), a rise from previous deals of €490 ($560), traders said Nov. 2.

Rivituso also checked in on the situation for cold-rolled coil.

“Bookings for the downstream product from West European mills occurred over the past week at €575-580 ($668-675), also for January delivery,” he reported.

Mills had originally sought €595-600 ($690-695), he added.

New-vehicle retail sales forecast to rise

Finally, J.D. Power and LMC Automotive forecast U.S. new-vehicle retail sales in October to jump 3.0% year over year.

Last month, General Motors reported its Q3 U.S. deliveries fell 10% year over year. Fiat Chrysler also reported a 10% year-over-year decline in U.S. sales.

In addition, Ford reported its U.S. sales fell 4.9% in Q3.

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