Right here’s a fast rundown of stories and ideas from specific commodity markets, together with treasured metals actions, a significant U.S. Metal resolution, and booming iron ore and metal costs in Asia.
MetalMiner, a sister website of ours, scours the panorama for what issues. This week:
U.S. Metal cancels $1.5B Mon Valley Works upgrades
Earlier this month, U.S. Metal introduced it’s ending beforehand introduced plans to execute huge upgrades to its Mon Valley Works operations.
The upgrades would have amounted to an funding of roughly $1.5 billion.
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MetalMiner CEO Lisa Reisman and Vice President of Enterprise Options Don Hauser weighed in on the decision.
“The mixed investments would have allowed U.S. Metal to provide skinny gauge HRC at CRC gauges,” they defined.
“Shopping for organizations would have the chance to pay much less per ton for this materials than the chilly rolled coil different. In different phrases, the worth of metal from this line would have seemingly fallen someplace between sizzling rolled and chilly rolled costs.
“In the present day, solely Nucor and Metal Dynamics have this sort of functionality.”
Nonetheless, they zeroed in on the steelmaker’s resolution to not improve its coking coal services.
“Moreover, it can completely idle three batteries on the Clairton plant, in line with the Pittsburgh Put up-Gazette,” they added. “As well as, U.S. Metal will scale back its coke manufacturing by 17%. This transfer means that U.S. Metal plans to trim manufacturing of metal produced by way of BOF manufacturing strategies.
“These manufacturing cuts will seemingly affect metal produced on the firm’s Gary Works location. It has already shuttered capability at Granite Metropolis.”
Silver value actions
Valuable metals have surged of late, however silver’s outlook is perhaps not as bullish.
“After hitting a low of $24/oz again in early April, the silver value has seen a gradual appreciation to only below $27.50/oz in the present day,” MetalMiner’s Stuart Burns wrote.
“Nonetheless, it has nonetheless not hit the bogus eight-year excessive seen in January, when it reached practically $30/oz on the again of frenzied retail buyers’ demand.
“Round $1 billion flowed into silver-backed ETFs on a single day in January, the Financial Times reported, after feedback on the Reddit on-line discussion board WallStreetBets erroneously urged that US funding banks have been suppressing the worth of the metallic.”
Whereas silver is seeing some progress in industrial demand, that has labored in opposition to its desirability as a secure haven.
“Silver has benefited at occasions from its robust industrial use,” Burns added. “Nonetheless, its volatility attributable to industrial demand hampers its desirability, like gold, as a hedge in opposition to inflation or as a secure haven.
“Whereas inflation fears are rising, they’re doing little greater than offering help to gold this yr — and little for silver.”
Gold jumps to three-month excessive
Sticking with treasured metals, the gold value not too long ago touched a three-month high.
Impacting the valuable metallic, the US greenback index has retreated in current weeks to only over 90, down from over 93 as of the top of March.
Moreover, 30-year Treasury yields additionally backtracked, falling to 2.25% final week. The 30-year yield hit a 2021 excessive of two.45% in March.
Nonetheless, the 30-year yield has bounced again this week, closing Thursday at 2.40%. The gold value has retreated from final week’s three-month excessive, closing at round $1,815 per ounce on Thursday.
Cobalt costs surge
Amid the gradual uptake of electrical autos around the globe, one battery element that’s constantly mentioned is cobalt.
Cobalt’s excessive value and moral considerations associated to mining situations within the Democratic Republic of the Congo go away some automotive producers contemplating alternate options.
“The Monetary Instances studies that cobalt costs jumped 40% in Q1, laying the blame solely on battery demand,” Burns explained recently. “Of all of the element metals in EV batteries, cobalt faces probably the most constrained provide base. A really vital proportion of that cobalt nonetheless comes from the Democratic Republic of the Congo.
“Some patrons, akin to China’s CATL, don’t have any reservations about investing in nations that face allegations of kid labor. The agency not too long ago invested $138 million in an undeveloped copper and cobalt useful resource within the nation.
“Others are voting with their wallets. These corporations are proscribing contracts to suppliers in Russia, Australia, Philippines and even, within the case of BMW, from Morocco.”
Iron ore, metal costs surge in Asia
Persevering with the theme of ever-rising commodities costs, Burns touched on this week’s boom in Asian iron ore and metal costs.
“Iron ore costs’ relentless rise this yr went into overdrive Monday, hitting a +10% restrict up and prompting the Dalian Commodity Trade to boost buying and selling limits and margin necessities in an effort to calm hypothesis,” Burns wrote.
“Individually, the Shanghai Futures Trade mentioned it could set charges for closing positions on its metal rebar and hot-rolled metal coil futures contracts at 0.01% of the overall transaction worth. These transactions had beforehand been free.
“In the meantime, on the Singapore Trade, the June contract for iron ore leaped 10.3% to a report $226.25 per ton.”
Because of this, Chinese language steelmakers bumped up metal costs to compensate for the rising uncooked materials value.
“China is the world’s largest importer of iron ore and coking coal,” he added. “Such speedy value inflation significantly impacts the nation’s aggressive place.
“As such, anticipate additional motion by Beijing. Costs have nearly actually indifferent themselves from the basics, which hasn’t stopped speculators earlier than. Nonetheless, that does invite extra decided motion by Beijing to stop issues getting worse.”
Copper value reaches report excessive
The LME three-month value closed at over $10,700 per metric ton on Monday. The value is up roughly 19% from a month in the past.
Provide tightness, strengthening demand and a sliding US greenback all contributed to the escalating value.
Extra MetalMiner is available on LinkedIn.