Commodities Roundup: Global steel output rises; Oil price steadies; Raw material shortages

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Here’s a quick rundown of news and thoughts from particular commodity markets, including global steel production, the state of the oil price and much more.

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

Crude steel production rises in March

The World Steel Association reported global crude steel production totaled an estimated 169.2 million net tons in March.

The output marked a 10.0% year-over-year increase.

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China's output continues to chug along despite efforts to curb production in the steelmaking hub of Tangshan. China's March output reached an estimated 94.0 million tons, or up 19.1% year over year.

Oil price holds steady amid ongoing demand uncertainty

While oil prices have gradually recovered to the $60-$65 per barrel range in recent months, further gains likely won't be had until demand is on more stable ground. (We previously touched on the oil price in this space earlier this month.)

That is particularly true as coronavirus cases have surged in India and Japan, two of the top five biggest oil importers.

"India has posted several days of record-setting COVID-19 cases, with expectations they are going to get even worse," MetalMiner's Stuart Burns wrote. "Bloomberg reports that demand for fuels could plunge by 20% in April.

"It seems likely that new lockdowns could be in place for several weeks or even months. In turn, that would seriously impact Indian demand.

"Likewise, Japan, the world’s fourth-largest importer, is seeing rising infection levels. There is now a third state of emergency in Tokyo, Osaka and two other prefectures began this past weekend, Reuters reports.

"Lowered expectations of a return to pre-Covid levels of aviation are also depressing sentiment. As such, prices are being restricted to a $60-70 band — at least for the time being."

Raw material shortages and supply chain woes

Also this week, Burns weighed in on the challenge of raw material shortages for metal users and manufacturers.

"So far, constrained steel and aluminium supply has not materially impacted consumers’ production programs," Burns wrote. "For example, we are not hearing of automotive or white goods manufacturers idling production lines for want of sheet products or castings.

"However, major automakers — including VolkswagenFord and Honda — have idled production lines due to the semiconductor shortage.

"As automakers delay delivery of automotive sheet due to these slowdowns, sheet makers will pivot to commercial clients’ demands and to serve distributors who are looking to restock after strong end-user demand in recent months."

China's aluminum import continues to surge

China's aluminum imports surged to a record high in March, MetalMiner contributor Sohrab Darabshaw explained earlier this week.

That fact seems somewhat counterintuitive given China's place as the top aluminum producer, by far, in the world.

"Just like China’s steel sector, new energy and environmental laws have affected its aluminum production," Darabshaw wrote. "Operating lines in the Inner Mongolia province negatively impacted production, even though new capacity — about 500,000 tons — has come online.

"Producers have to also deal with new scrap guidelines and import codes. The government’s guidelines aim to reduce construction waste.

"The pandemic impacted secondary scrap used in some forms of alloy the most. Then the import code to halt the influx of poor scrap and replace it with high-purity material has compounded the problem for China.

"Cumulative scrap imports of 680,000 tons so far this year are down 48% year-on-year."

New-vehicle retail sales forecast to have record April

In other records, J.D. Power and LMC Automotive forecast US new-vehicle retail sales are on track to hit a record high for April.

The automotive intelligence firms forecast sales of 1,325,500 units for April. Trucks and SUVs account for just over three-fourths of that total.

“Despite low inventory, April 2021 will be another record-breaking month for the US auto industry,” said Thomas King, president of J.D. Power's data and analytics division. “Building on the strength that began in Q4 2020 and continued through Q1 2021, the industry will set records for April sales volumes, transaction prices, consumer expenditure and retailer profitability.”

US steel imports rise in March

Meanwhile, the US Census Bureau recently reported steel imports totaled an estimated 2.1 million metric tons in March.

That marked a jump from 1.7 million metric tons in February.

Products with the biggest month-over-month increases were sheets and hot dipped galvanized strip (up 43.1%) and reinforcing bars (up 65.6%).

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