Purchasing

Some new nickel fundamentals: The International Nickel Study Group is forecasting primary nickel consumption to increase 13.1% this year to 1.47 million metric tons slowing the 7.1% decline in 2007…the group is also forecasting record production of 1.54 million tons, suggesting a 70,000 metric ton surplus – well above some analysts projections…Societe Générale, however, is less than bullish over the near term as they, too, see nickel in surplus along with London Metal Exchange (LME) cash prices trending towards $20,000/metric ton ($9.07/lb). Macquarie is forecasting nickel to average $13.53 this year. (Editor’s Note: So far this year, LME spot nickel is averaging $13.06, down from $16.87 in 2007.)

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As April ended, published sources such as World Steel Dynamics (WSD) have No.1 heavy metal scrap at $500/gross ton; shredded scrap at $557, and No.1 bushelings at $587, delivered to the mills. WSD’s prices are in line with others. AMM, meanwhile, is quoting September pig iron at $690/mt delivered to New Orleans; Iron Age has the current pig iron market @ $671 f.o.b. New Orleans.

And, next month? May buying for ferrous scrap is well underway (and) most in the trenches are anticipating higher numbers for both prime and obsolete grades, with bundles setting the upper range…published sources are reporting a potential increase of +$50 for bundles, and +$20 for old scrap. As we understand from our friends at Steel Business Briefing, the monthly Chrysler scrap auto bundles auction increased an additional $135/gross ton for May, pushing the new price for the prime gr...Read More

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This second quarter looks especially firm on pricing to Barclays Capital (and others)…as they see it, refined copper supply looks tight resulting in inventories returning to all-time lows and prices testing all-time highs…as an average for the second quarter, the firm is forecasting a $3.54/lb LME cash average…last week Citigroup upped its 2008 copper forecast average to $3.56...for 2009, they’re calling for a $3.50 average...

This bullish theme was also apparent at last week’s Copper Spotlight during the Institute of Scrap Recycling Industries’ convention in Las Vegas…speaker Patricia Mohr, Scotiabank Group, offered fundamental evidence that supported her $3.50 average for this year along with a potential for copper to surpass the $4.00 mark as hedge funds add to their respective long positions…speakers Marc Natan, Sa...Read More

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Macro News...
The Institute of Supply Management (ISM) manufacturing index increased to 48.6 in March from 48.3 in February...the consensus had expected a decline to 47.4…according to First Trust Advisors, the index signals “restrained growth, not recession.” ISM says an index level of 49.2, which was the Q1 average, is consistent with a real gross domestic product (GDP) growth rate of 2.5%. First Trust is forecasting a 2% GDP growth for the first quarter…

Construction spending for February was also low but, again, better than expected…still, spending fell for the fifth straight month and was down 2.6% Jan-Feb ’08 vs. Jan-Feb ’07. Auto and truck sales for March were also a disappointment, as was February’s factory orders…

Last Friday’s anticipated non-farms payrolls report wa...Read More

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Latest in nonferrous comes from the World Bureau of Metal Statistics (WBMS), which placed January’s global copper market in surplus by some 56,000 metric tons. Although that sounds bearish, most analysts have re-thought the global balance for 2008 and now a number see the market trending towards deficit for the year as a whole (for ‘07, global refined copper consumption exceeded production by 42,000 metric tons.)

Barclays Capital, for one, is forecasting a “substantial” shortfall in this first half of the year with London Metals Exchange (LME) cash prices again testing all-time highs…an ever widening backwardation is also lending support. Also, China’s appetite for the red metal is not showing convincing signs of slowing down anytime soon. February...Read More

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Aluminum continues to draw pricing strength from fears of reduced supply owing to power shortages in South Africa and China…prices were holding above the $2,800 level ($1.27/lb) at midday Friday in London…Reason: South Africa’s state utility is considering a complete power supply buy-back from both of the country's aluminum smelters plus one in Mozambique for the balance of 2008, which could remove around 1.5 million metric tons of aluminum from the global market…

Meanwhile, in precious metals, platinum prices are reflecting South Africa’s power problems with spot platinum hit another record high of $2,050…as for futures, following a (rare) down day on Tuesday, Wednesday’s April contract came roaring back, added $61.90 on the day, closing at an all-time high, and briefly trading above the $2,000 level…Thursday, the Ap...Read More

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There’s been no let up on rising flat-rolled sheet prices, noted Platts and others this week…the Platts Steel Market newsletter’s Midwest HR coil reference price for March is figured at $652.50/net ton, ex-works…cold rolled placed at $745…as they see it, it’s all about “tight supply” and “cost-side pressures” – a formidable one-two punch…

Purchasing.com placed the January transaction price average for HR sheet at $579 and credited what they view as “price inflation” to positive global demand for steel; low imports levels; tight supplies and price volatility for steel-making materials; low service center inventories; and higher freight charges…and lets not forget the impact of a weak dollar…ma...Read More

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Copper futures prices got some much needed support this week from buyers who saw inventories continuing to fall (now at 2 ½ month lows)….amidst the knee-jerk response to the stimulus packaged agreed to by the Bush Administration valued at more than $150 billion worth of rebates and business tax cuts...

Gold…

What’s bigger than the Fed lowering rates by 75 basis points? Tuesday’s move by the Fed marked the biggest funds rate cut on record going back to 1990. The action was taken following Monday’s heavy global selling rising concerns that weakness in the

world's largest economy was spreading worldwide…even if this latest move proves to have a calming effect, many believe the Fed will again move to cut rates at its January 29-30 meeting. The Federal Funds rate now stands at 3.5%.

And tha...Read More

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The metals story this month is all about–or mostly about–the domestic steel industry, and it’s all bullish. To some, however, it’s only about higher scrap prices but that’s an oversimplification…those closest cite a number of related issues that has led year-to-date finished steel prices moving higher and faster than most anyone would have guessed as last year ended. For March deliveries, the range now quoted for hot-rolled sheet in coil (HRC) is $640 - $670/net ton f.o.b. (World Steel Dynamic’s SteelBenchmarker has the current spot market for HRC at $598…

The drivers include low inventories of scrap and finished steel going into 2008…add to that, steel makers also can credit lower steel imports, low service center inventories, increased export opportunities, production probl...Read More

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“Headwind” is generally defined as a wind blowing in a direction opposite to a course. Aircraft pilots and ship captains know all about head winds as a force of nature. Economists also use the term to describe certain fundamental factors that may be acting upon the larger economy. In both instances, it’s the relative strength of the "wind" that determines the course of a craft or the direction of a business cycle.

As 2006 was drawing to a close, the global marketplace seemed in flux. Analysts hinted at a potential slow start to 2007 but a more robust second half, with Asia and Europe offsetting assumptions about a relatively sluggish domestic economy that year. The principal worries at the time included increased inflationary pressures, higher-than-expected energy prices, a greater-than-expected slowdown in the U.S. economy (triggered by the ...Read More

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Latest on 2008 Chinese steel production…according to the China Iron and Steel Association (CISA), crude steel production is forecast to reach 540 million metric tons next year compared with 490 million metric tons estimated for this year. For the first ten months of this year, production was figured at 409 million metric tons, up 18% year-on-year. Note that global steel production through October was figured at 1.1 billion metric tons, 8.1% greater than comparable 2006 figures.

Also, latest on domestic prices from Purchasing magazine has hot-rolled sheet averaging $532/net ton last month. That’s up from October’s $520 average but with little conviction that a firming trend has been established, despite four consecutive months of increases. ...Read More

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Updated Monday, Dec. 3, 2007
Macro news of interest to commodity sellers & buyers
Fed Chair Ben Bernanke unnerved equity and commodity markets following his sober outlook for the U.S. economy, remarking that the housing/subprime crisis is far from over and that GDP growth could slow significantly this quarter and going into the first quarter of 2008.  So, will the Fed stand pat at next month’s FOMC (Federal Open Market Committee) meeting? There’s a lot of passion expressed regarding the direction of interest rates and the overall economy.

Navellier & Associates, for example, believes that “the market is screaming for another interest rate cut on December 12. The fed funds futures contract is currently pricing in a 96% pr...Read More

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