Articles in Category: Commodities

Before we head into the weekend, let’s take a look back at the week that was and some of the metals storylines here on MetalMiner, including competition between the COMEX and LME vis-á-vis electrification, consolidating copper prices, the upcoming MetalMiner 2020 Forecasting Workshop and much more:

Each month, MetalMiner hosts a webinar on a specific metals topic. Explore the upcoming webinars and sign up for each on the MetalMiner Events page.

Week of July 19-23 (electrification, hot rolled coil prices in Western Europe and much more)

electric vehicle charging

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This morning in metals news: copper prices have stabilized over the last month; U.S. natural gas prices have surged to their highest level since 2014; and, lastly, Cleveland-Cliffs released its second-quarter results.

Receive the latest short-term and long-term outlook for the full range of industrial metals (base and ferrous) at the annual MetalMiner Forecasting Workshop on Aug. 25

Copper prices stabilize

list of commodities prices

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MetalMiner Senior Forecast Analyst Maria Rosa Gobitz earlier this month covered the copper market, for which she noted prices had started to consolidate.

The LME three-month copper price had surged to an all-time high May 10 of around $10,700 per metric ton. The price proceeded to cool over the next 5-6 weeks, falling as low as $9,070 per metric ton.

The copper price then consolidated and has traded largely sideways over the last month. On Wednesday, the price closed at $9,244 per metric ton, or up 1.92% month over month, per MetalMiner Insights data.

Natural gas prices surge

Meanwhile, in energy news, U.S. natural gas prices have reached their highest level since 2014, the Energy Information Administration (EIA) reported.

“In June, the U.S. natural gas spot price at the Henry Hub averaged $3.26 per million British thermal units (MMBtu), the highest price during any summer month (April–September) since 2014,” the EIA reported. “Prices in July have increased from June, averaging $3.67/MMBtu through the first two weeks of July. Spot prices for July 14 in every one of the more than 175 pricing hubs tracked by Natural Gas Intelligence exceeded $3.00/MMBtu.”

Cleveland-Cliffs releases Q2 results

Cleveland-Cliffs reported net income of $795 million during Q2 2021, compared with a loss of $108 million during Q2 2020.

“In the second quarter of 2021 we achieved all-time quarterly records in revenue, net income, and adjusted EBITDA,” Chairman, President and CEO Lourenco Goncalves said. “The numbers unequivocally confirm our efficiency in operating the new footprint, resulting from the integration of the two major steel companies acquired in 2020 as a single and indivisible mining and steel company. They also demonstrate our flawless execution in ramping up our state-of-the-art Direct Reduction plant in Toledo to the current level of production above nominal capacity.”

Each month, MetalMiner hosts a webinar on a specific metals topic. Explore the upcoming webinars and sign up for each on the MetalMiner Events page.

This morning in metals news: global aluminum production rose in June compared to last year, the International Aluminum Institute reported; Ford of Europe reported its Q2 sales; and, lastly, June electricity demand surged amid a heat wave in the Pacific Northwest.

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Global aluminum production rises in June

aluminum ingot

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Global aluminum production reached 5.55 million tons in June, the International Aluminum Institute reported Tuesday.

The June total marked an increase from 5.31 million tons in June 2020. However, output declined from the 5.75 million tons tallied in May 2021.

Furthermore, China’s output reached an estimated 3.25 million tons in June 2021, up from 3.03 million tons in June 2020. However, its output declined from May’s 3.35 million tons.

Ford reports Q2 Europe sales

Meanwhile, Ford of Europe touted sales of 242,618 vehicles in Q2 2021, up 43.7% year over year.

For the year to date (through June), Ford of Europe reported sales jumped 22.6% year over year.

According to the automaker, 46% of its passenger vehicle sales in Euro 20 countries in the second quarter were electric vehicles.

Electricity demand jumps in PNW

Amid a historic heat wave for the Pacific Northwest in June, electricity demand surged, the Energy Information Administration reported.

“A heat wave in the Northwest United States in late June led to more regional demand for electricity. During periods of high temperatures, electricity demand increases as people turn up their air conditioners, dehumidifiers, fans, and other cooling equipment,” the EIA reported. “Very high temperature events, like the one in June in the Northwest, tend to push electricity demand to very high levels.”

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While the rest of the world is trying to com to grips with the European Union’s proposed carbon border adjustment mechanism (CBAM) – which calls for the levying of charges on non-E.U. products in relation to their embedded carbon footprint — China, on the other hand, is currently grappling with a slightly different energy-related issue.

A massive heat wave in some parts of the country coupled with a shortage of coal because of China’s spat with chief supplier Australia has sent coal prices soaring.

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China to ramp up coal production

coal pile

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Now, China, the world’s biggest consumer of coal, plans to add almost 110 million tons (MT) per year of advanced production capacity in the second half of this year to meet the rising demand of coal.

This Economic Times reported China’s National Development and Reform Commission (NDRC) said that around 400 MT of coal mining capacity is under review for the government’s approval. Another 70 MT capacity is also under construction, and would be launched in a phased manner.

What’s more, China’s state planner has asked power plants to build their coal inventory to the equivalent of at least seven days of consumption by July 21. News agency Reuters said the Chinese government was trying its best to ensure electric supply to the coal-fired plants amid surging power consumption from industrial and residential users.

In the first half of 2021, China has already added over 140 MT of coal mining capacity.

Eleven provinces registered record-breaking power load a few days ago, the Economic Times reported, as the heat wave led to higher use of electricity. In the first six months of 2021, power consumption rose by 16% from a year earlier, the report added.

Old coal

While simultaneously augmenting coal capacity, the NDRC has come down on outdated coal capacity. Where once there were 10,000 coal mines in China in 2015, now there are about 5,000. The NDRC has been urging coal miners to set up advanced mining capacity and ramp up output.

China’s average daily coal consumption has gone up to over 2.2 MT at key power plants in at least eight provinces in China as of July 15, Reuters reported.

Meanwhile, the South China Morning Post quoted the NDRC, which said China will release over 10 MT of coal from its state reserves.

Each month, MetalMiner hosts a webinar on a specific metals topic. Explore the upcoming webinars and sign up for each on the MetalMiner Events page.

This morning in metals news: Rio Tinto reported its Q2 production results; U.S. unemployment rates were down in seven states in June; and, lastly, the U.S. once again led the way in petroleum and natural gas production last year.

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Rio Tinto reports Q2 production results

Rio Tinto sign

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Miner Rio Tinto recently reported its Q2 production results, reporting Pilbara iron ore production of 75.9 million tons.

The total marked a 9% year-over-year decline and a 1% decline compared with the previous quarter.

Bauxite production reached 13.7 million tons, or down 6% year over year and up 1% from the previous quarter.

Unemployment falls in seven states

Unemployment rates fell in seven U.S. states in June, the Bureau of Labor Statistics reported.

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This morning in metals news: Chinese steel exports surged in June, according to General Administration of Customs data; meanwhile, the average cost for U.S. solar power construction continued to decline in 2019; and, lastly, Cleveland-Cliffs released its Sustainability Report 2020.

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Chinese steel exports jump in June

China map

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Chinese steel exports jumped by 23% to 6.49 million tons in June, the General Administration of Customs reported this week.

The country reported steel exports 5.27 million tons in May.

Meanwhile, exports of unwrought aluminum and aluminum products reached 454,397 tons in June, up from 439,097 tons in May.

In addition, exports of rare earths fell from 4,171 tons in May to 4,012 tons in June.

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This morning in metals news: import prices rose by 1.0% in June; Saudi Arabia and the United Arab Emirates have reportedly reached a deal to resolve their recent oil output spat; and, lastly, Norsk Hydro recently announced the restart of its aluminum extrusion plant in Sjunnen, Sweden.

Receive the latest short-term and long-term outlook for the full range of industrial metals (base and ferrous) at the annual MetalMiner Forecasting Workshop on Aug. 25. 

US import prices rise by 1.0%

imports

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U.S. import prices rose by 1.0% in June, the Bureau of Labor Statistics reported.

Import prices had jumped by 1.4% in May.

“Rising prices for fuel and nonfuel imports contributed to both the June and May advances,” the BLS reported.

Meanwhile, U.S. export prices increased by 1.2% in June after rising by 2.2% in May.

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This morning in metals news: the Consumer Price Index (CPI) for All Urban Consumers increased by 0.9% in June, the Bureau of Labor Statistics reported today; meanwhile, U.S. crude oil production efficiency increased in the Bakken region in 2020; and, lastly, North American Stainless experienced a production slowdown late last week.

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Consumer Price Index up 0.9%

Consumer Price Index

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The Consumer Price Index for All Urban Consumers increased by 0.9% in June, the Bureau of Labor Statistics reported today.

The index had jumped by 0.6% in May.

The June jump marked the largest one-month increase since June 2008, the BLS reported, when the index jumped by 1.0%.

US crude oil production efficiency up in Bakken

Crude oil production efficiency increased in the Bakken region in 2020, the Energy Information Administration reported.

However, the Bakken region proved to be the only US region with a rise in production efficiency last year.

“In 2020, U.S. initial crude oil production per well, or well production efficiency, increased significantly in the Bakken region, according to our Drilling Productivity Report (DPR), which we update monthly,” the EIA reported. “Productivity in other drilling regions remained largely steady or decreased slightly, DPR data shows.”

NAS delays

Last week, Bloomberg reported production challenges at North American Stainless’ (NAS) facility in Ghent, Kentucky, reporting a shortage of industrial gases that impacted operations and caused it to declare force majeure.

NAS accounts for approximately 40% of the U.S. stainless steel market.

However, a source told MetalMiner that NAS sent letters to customers rescinding the force majeure and had only opted to reduce, rather than halt, production. The slowdown will result in delays of about two weeks, MetalMiner has learned, and will largely impact September order books.

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This morning in metals news: General Motors reported strong Q2 sales in China; miner Anglo American said it had completed its first maritime biofuel trial; and, lastly, the copper price has trended sideways so far in July.

Receive the latest short-term and long-term outlook for the full range of industrial metals (base and ferrous) at the annual MetalMiner Forecasting Workshop on Aug. 25

General Motors reports strong China sales in Q2

General Motors headquarters

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General Motors reported its Q2 sales with its joint ventures in China rose by 5.2%.

The automaker said vehicle deliveries totaled more than 750,000.

“The growth was driven by luxury and premium vehicles, midsize/large SUVs and MPVs, including the Cadillac CT5 and XT6, and Buick LaCrosse, Enclave and GL8 family,” GM said. “Sales of new energy vehicles (NEVs) across GM’s brands also posted a strong performance.”

GM also touted the expansion of its Ultium platform to China.

“In addition to offering popular EVs underpinned by SAIC-GM-Wuling’s locally developed GSEV platform, GM is bringing to China its advanced global EV platform – Ultium – which will empower a range of multi-brand and multi-segment EVs,” GM said. “The first Ultium-based model for China, the Cadillac LYRIQ all-electric SUV, made its global public debut at Auto Shanghai 2021, before it goes on sale early next year.”

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In a relatively rare example of disagreement — or, at least, such public disagreement — usually close allies Saudi Arabia and the United Arab Emirates (UAE) have failed to reach agreement last week on an extension to the oil output cuts scheduled to expire in April 2022.

Saudi Arabia and the other 23 members of OPEC+ are in agreement to increase production by a modest 400,000 barrels per day each month from August to December. They would then extend the current baseline cuts from the scheduled end in April 2022 to December 2022.

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UAE bristles at oil output cut schedule

oil barrels featuring flags of OPEC nations

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But the UAE has been a standout dissenter, according to the Financial Times. Under the proposed OPEC+ deal, the UAE would proportionally cut its production by 18%. That compares with a 5% cut for the kingdom and a 5% increase for Russia.

The UAE said it has suffered with around 35% of its current production capacity shut for two years now, compared with an average of around 22% for others in the agreement.

Both the Financial Times and Middle Eastern news source Al Jazeera have pointed to a number of areas where the once close allies have diverged in the last couple of years.

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