Commodities Roundup: Metals prices slide; Thawing US-EU trade tensions?; US auto sales surge

commodities gold coffee coal agriculture Adobe Stock

Here’s a quick rundown of news and thoughts from particular commodity markets, including retreating metals prices, a May surge in US auto sales and much more.

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

Metals prices pull back

After surging to, in some cases, record highs earlier this month, some metals prices have cooled off.

Some of that has to do with a warning issued by China's National Development and Reform Commission over the weekend.

How do you find the right procurement technology and vendor for your company? Spend Matters’ new 5-step “Procurement Technology Buyer’s Guide” can help — with how-to documents, checklist templates and other tips.

"In a meeting on Sunday — to which the firms were said to be 'collectively summoned' for interviews, according to the BBC’s report — and basically read the riot act to observe 'normal market orders,'" MetalMiner's Stuart Burns explained.

"The message was duly noted.

"Prices have pulled back sharply. The LME three-month copper price dropped by 1.6% to $9,881 per metric ton. Meanwhile, aluminum fell by 1.09% to $2,370 per metric ton."

Furthermore, there is some bearishness on the heels of President Joe Biden's counteroffer on his infrastructure plan, bringing it down from over $2.2 trillion to around $1.7 trillion.

"Market anxiety that President Joe Biden’s stimulus plan — or, at least, the metals-consuming infrastructure element of the plan — is being scaled back after facing opposition from Republicans has also added to negativity," Burns added.

"The spending plan is apparently being scaled back from $2.25 trillion to $1.7 trillion. Most of the cuts will include the most important parts for metals consumption, like broadband, roads and bridges."

US-EU trade relations

Trade tensions escalated between the US and EU throughout the Trump administration, as the former president slapped tariffs on imports of steel and aluminum from the bloc.

But with a new administration in the US, both sides appear to be coming to the table to ease those tensions.

"In March, the EU and US agreed to suspend all retaliatory tariffs on EU and US exports imposed in the Airbus and Boeing disputes for a four-month period," Burns explained. "The pause allows both sides to focus on resolving the dispute.

"Arguably, Trump’s hard-nosed approach is what ultimately brought both sides to the table. Biden’s approach may find a solution. Neither side has gained from the sanctions since 2018.

"As such, a solution is to everyone’s benefit."

In addition to the long-running Airbus-Boeing subsidy saga — which extends all the way back to 2004 — the aforementioned Section 232 tariffs remain a point of discord between the two allies.

However, to the chagrin of European producers, it is unlikely the tariffs are going away anytime soon.

"While arguments rage back and forth about the impact of the tariffs in the US, they remain a highly charged political issue," Burns added. "The tariffs have achieved one of the primary objectives the Trump administration had when rolling them out in 2018: lifting US steel mills’ capacity utilization rates.

"The latest solution seems to be a much closer cooperation with Europe to tackle Chinese steel overcapacity. That is a topic dear to the European steel industry’s heart. A solution could involve tightening rules of origin and setting import quotas in both regions.

"But an early removal of the tariff?

"There, the EU may be disappointed."

Copper prices likely to finish year lower

Speaking of metals prices, earlier this month, the LME copper price soared to an all-time high over $10,700 per metric ton.

Since then, the price has retraced, dipping just below $10,000 per metric ton this week.

As MetalMiner contributor Christopher Rivituso reported this week, copper prices could post further gains this year before ultimately closing the year down.

The Covid pandemic impacted copper mining operations in South America last year, which supported the price.

"High demand as the global economy recovers from the COVID-19 global pandemic may have also helped to boost prices," he added. "Political events in South America could now help them to rise further.

"Pedro Castillo, the socialist candidate for Peru’s upcoming presidential election on June 6, has spoken about his plans to raise taxes and royalties. He has also proposed renegotiating contracts with large companies if elected."

As we noted in last week's roundup, Burns delved into the copper market and the danger of overheating therein.

Global crude steel output falls slightly in April

Global crude steel output in April fell slightly from the previous month, the World Steel Association reported.

According to the report, global output totaled 169.5 million net tons in April, down from 170.1 million net tons the previous month.

However, the April total increased from the 137.5 million net tons posted in April 2020.

Despite the slight month-over-month decline, top producer China's output rose. Chinese steel production in April reached 97.9 million net tons, up from 94 million net tons in March.

New-vehicle retail sales headed for record May

J.D. Power and LMC Automotive forecast May new-vehicle retail in the sales are headed for an all-time high for the month.

Per their jointly released monthly forecast, they projected May sales in the US are on pace to reach 1,388,600 vehicles. That projection would marked an increase of 34.0% year over year.

Furthermore, the total marks an increase of 10.6% compared with May 2019.

Durable goods orders decline snaps 11-month streak

Meanwhile, new orders for manufactured durable goods declined in April, the Census Bureau reported.

New orders fell by 1.3% after rising by 1.3% in March, which had marked the 11th consecutive month of increases.

A decline in new orders for transportation equipment underpinned the April decline.

More MetalMiner is available on LinkedIn.

Share on Procurious

Discuss this:

Your email address will not be published. Required fields are marked *

This site uses Akismet to reduce spam. Learn how your comment data is processed.