Commodities Roundup: Metals gain steam; Brent crude price bounces back; up-and-down gold

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 metals prices, the Brent crude price, and gold's gains and losses.

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

Copper rises to 28-month high

The LME copper price jumped to an over two-year high last month, MetalMiner’s Maria Rosa Gobitz explained in her recent rundown of copper developments.

The price retraced in the final week of October before ascending again in November, even closing Monday at $7,045 per metric ton before dropping to $6,934 per metric ton on Wednesday.

Per a recent Goldman Sachs report, the investment bank is bullish on commodities for 2021.

That outlook is also bright for copper.

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

“Besides the increase of electric vehicle demand, according to the International Energy Agency (EIA) energy investment is shifting away from fossil fuels, with renewables growing 80% by 2030.”

Aluminum price support

Like copper, aluminum prices have also been on the rise.

Gobitz noted the LME aluminum price reached a 17-month high on Oct. 16.

“The aluminum price continues to rise along with demand,” Gobitz wrote. “According to the JP Morgan Global Manufacturing PMI, global manufacturing activity increased to 53.0 in October. The October reading marked the PMI’s best in 29 months. In the the North American market, the U.S. and Canada saw increases in new orders and production, along with Germany.”

Steel on the rise

Continuing the theme, steel prices have also been ascendant and have showed few signs of slowing down.

“U.S. steel prices continued to increase in October for the third consecutive month,” Gobitz wrote.

“HRC, CRC, HDG and plate prices increased by 15.4%, 10.0%, 9.0% and 5.3%, respectively. As demand recovers, so have prices.

“Wire rod, however, was the only form of steel that did not increase in price this month, as it instead remained flat.”

China’s steel trade rebalances

For quite some time, China has been a major steel (and aluminum) net exporter.

That changed over the summer, as China’s imports of semi-finished products surged.

However, China’s historical metals flows are starting to revert back to normal, MetalMiner’s Stuart Burns explained.

“Sure enough, although volumes are still down on this time last year, exports have picked up and imports have fallen,” Burns wrote.

“In a recent post, Argus Media reported China’s steel exports in October rose by 5.2% from September to 4.04 million tons. Chinese mills shifted supplies to overseas markets, enabled — or forced, depending on your point of view — by falling domestic prices.”

Brent crude price bounces back

After news of a potential COVID-19 vaccine from Pfizer and BioNTech, stocks and oil jumped, Burns noted.

Oil prices had recently fallen below $40 per barrel but this week surged to over $43 per barrel.

“Joe Biden’s win in the U.S. presidential election is something of a double-edged sword for the oil market,” Burns wrote.

“The president-elect’s environmental policies could raise costs and, hence, stifle a rebound for the U.S. shale market. While supportive for prices, the possibility he would take the U.S. back into the European-U.S. Joint Comprehensive Plan of Action (JCPOA) deal with Iran is seen as a path to relaxing Trump-era sanctions. A return of the deal would ostensibly result in the release of Iranian oil onto the world market.”

Up and down for gold

Gold prices fell to $1,878 per ounce to close October.

However, like the Brent crude price, the precious metal regained some of its luster, rising up to $1,960 per ounce on Nov. 9. That same day, however, the gold price went on to drop, recording its largest single-day drop in seven years.

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