Commodities Roundup: Auto sales capped by low inventory; aluminum, copper move sideways; oil bounces back

Here’s a quick rundown of news and thoughts from particular commodity sectors, including coverage of U.S. auto sales, metals prices, oil’s bounceback this week and more.

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

Auto sales remain suppressed by low inventory

Since at least August, the U.S. automotive market has faced capped sales as a result of low inventory.

J.D. Power and LMC Automotive recently forecast new vehicle retail sales in November would come in down 12.6% year over year.

By individual automakers, however, Ford Motor Co. reported a 5.9% year-over-year jump in November. Honda’s U.S. sales fell 17.1% month over month. Meanwhile, Hyundai sales dropped 20% year over year.

“Consumer demand remains exceptionally high, and our dealers are doing a fantastic job of turning vehicles quickly and selling many before they even hit the lot,” said Randy Parker, senior vice president, national sales, Hyundai Motor America. “Lingering availability issues persisted into November, but we are optimistic that we will close the year strong.”

Construction spending up 7.5% in YTD

The Census Bureau reported U.S. construction spending through the first 10 months of the year rose by 7.5% year over year.

For October, spending reached a seasonally adjusted annual rate of $1,598 billion, down 0.2% from September.

In other construction news, Nucor Corporation announced plans to build a third rebar micro mill in the South Atlantic region. The company already has rebar micro mill operations in Missouri and Florida.

Steel capacity utilization down to 81.9%

The U.S. steel capacity utilization rate for the week ending Dec. 4 fell to 81.9%, the American Iron and Steel Institute reported.

U.S. steel output during the week totaled 1.81 million net tons, or down 1.6% from the previous week. For the year to date, steel production totaled 88.08 million net tons, or up 19.6% year over year, at a capacity utilization rate of 81.6%.

U.S. steel prices remain elevated, but they have started to come down over the past couple of months. The U.S. hot rolled coil price, for example, fell to $1,770 per short ton last week, or down 6.1% month over month.

Aluminum prices move sideways

Meanwhile, after skyrocketing in late October before quickly losing ground to close that month, prices have trended sideways.

“Currently, aluminum is in a period of volatility,” MetalMiner analyst Nichole Bastin explained. “Aluminum is showing patterns that suggest it may either bounce off support levels to breach newly formed resistance levels, thereby confirming a reversal, or continue with further breakdowns in price to find new, lower support levels and create a change in the long-term trend.”

Copper prices consolidate

Similarly, copper prices have also consolidated after spiking then plunging in late October.

“Any bullish technical patterns are at risk of invalidation, as prices appear to trade consistently lower,” Bastin explained. “Additionally, its failure to break out of any bullish structures within smaller time frames suggests a weakness in buyer momentum.

“Until the occurrence of a strong rally to continue the long-term uptrend, copper will likely become bearish, as it cannot sustain its breakthroughs of historical resistance levels.”

Oil prices bounce back

After briefly falling below $70 barrel last week on the heels of concerns regarding the emergence of the omicron variant of the coronavirus, oil prices regained momentum this week.

The WTI crude price closed Wednesday at $72.36 per barrel, the Energy Information Administration reported. The price had increased by $6.79 per barrel from the previous week.

Meanwhile, Brent crude spot prices averaged $81 per barrel in November, down by $3 per barrel from October, the EIA reported in its Short-Term Energy Outlook.

Furthermore, the EIA forecast Brent crude prices will average $71 per barrel in December and $73 per barrel in Q1 2022.

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