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For the week ending Wednesday, November 23rd
Commodity prices remained under pressure this holiday-shortened week in the U.S. as debt worries on both sides of the Atlantic, coupled with signs of slower manufacturing output in Europe and China and mixed economic data in the U.S. weighed on prices. (Due to the Thanksgiving holiday, the Friday Report comes out on Wednesday this week.)

In London, base metal prices dropped on Monday morning, with LME official 3-mo. copper down to $7,335.50/mt as 3-mo. aluminum eased to $2,098.50/mt. By Wednesday morning, Reuters reports LME official 3-mo. copper was down to $7,195/mt, with official 3-mo. aluminum ($2,019/mt), nickel ($17,130/mt), lead ($1,980/mt) and zinc ($1,900) following suit.

By midday in New York today, COMEX copper for December delivery was off nearly 6 cents/lb. to $3.276/lb. as a disappointing bond offering in Germany didn’t help matters any. Other commodities came under pressure as well, with crude oil prices down below $97/bbl as gold dropped to around $1,685/to, while still up over intra-day lows of $1,667/to earlier in the week.

On Wall Street, the Dow Industrials were off more than 1% in early afternoon trading while the yield on 10-yr. treasuries edged up to 1.945% and the Euro weakened to $1.335. Macro news… From the failure of the “super committee” in the U.S. to reach agreement on saving $1.2 trillion over 10 years to rising European sovereign debt worries to slower manufacturing output in China and elsewhere, the economic news this week failed to inspire much confidence.

This morning, the Wall Street Journal reports that Germany was only able to sell €3.644 billion out of a planned €6 billion bond (bund) offering, while credit default swaps for major French banks including Crédit Agricole, BNP Paribas and Société Générale were on the rise as Spanish and Italian bond yields remained elevated. To make matters worse, Markit’s Flash Eurozone Manufacturing PMI for November came in lower than expected at 46.4, reportedly the lowest level since July 2009, and HSBC’s preliminary PMI number for China dropped to 48.0, down from 51 in October and the worst monthly decline since March 2009. In the U.S., the economic news wasn’t all bad this week but hardly made for thrilling reading either.

Contrary to expectations, the GDP estimate for the third quarter was revised lower from 2.5% to 2.0%, while durable goods order decreased 0.7% in October, the second consecutive monthly drop following the 1.5% contraction in September. Last month’s decline largely reflects a 16.4% drop in new orders for nondefense aircraft and parts, though, and excluding transportation, durable goods orders were up 0.7%.

Also of concern was the slower growth in personal spending (0.1%) last month, despite the 0.4% increase in personal income as the personal savings rate rose to 3.5%. On the positive side, weekly unemployment claims for the week ending November 19 remained below the key 400,000 level, while new home sales edged 1.4% higher in October to 4.97 million units. So it seems the gradual economic recovery in the U.S. remains on track, although headwinds from overseas may have picked up this week. MF Global Update (cont.)

The CME Group reportedly offered to raise its guarantee this week to $550 million in order expedite cash distributions to MF Global customers following the dealer/broker’s bankruptcy filing on October 31. As reported in last week’s Friday Report, the CME Group had previously extended an offer to the MF Global trustee to guarantee $300 million of customer money in order to “accelerate interim distributions, and…not {as} a general guarantee of the customer shortfall.” A Congressional hearing on MF Global’s collapse is currently scheduled for December 15. Ferrous… The American Iron and Steel Institute reports that domestic raw steel production increased for the second consecutive week to 1.873 million net tons for the week ending November 19, up 2% from the prior week as the capacity utilization rate rose to 75.6%. Flat rolled prices have reportedly been on the rise as well.

Platts reports a mid-point HRC price of $645/st ex-works Indiana this week, up $15/ton from late last week, while Severstal North America announced it is raising its HRC price to $700/st ex-works for “all new non-contract orders acknowledged for shipment 12/26/2011 and later.” This follows on a $30/ton increase earlier this month. In the lead up to the Thanksgiving holiday, most sources were indicating basically steady ferrous scrap prices this week. Scrap Price Bulletin this week was indicating unchanged composite prices for No. 1 HMS at $372.50/gt, as well as for shredded and No. 1 dealer bundles at $414.17/gt and $450.83/gt, respectively.

Looking forward, Scrap Price Bulletin’s trend indicator for December of 50.7 shows nearly evenly divided opinions on scrap pricing next month, while respondents reportedly expected stronger prices past December. By grade, December expectations were higher for cut grades (51.5) and foundry grades (51.3) than for prime grades (49.6) and frag grades (48.4). Nonferrous… As indicated, nonferrous prices remained under pressure this week as global economic concerns continue to outweigh market fundamentals. LME official 3-mo. copper was down to $7,195/mt this morning, off markedly from Friday’s official price of $7,610/mt. Our friends at the International Copper Study Group this week reported that the global refined copper market was in a deficit of 45,000 mt in August as stronger Chinese demand contributed to a nearly 7% monthly increase in world consumption.

For the year-to-date, ICSG reports the global refined copper market was in a deficit of 161,000 mt (not seasonally adjusted). Of note, world secondary refined production, or refined copper output from scrap, increased 12% during Jan-Aug 2011 to nearly 2.4 million mt. In other news, the Aluminum Association reports that aluminum demand in the U.S. and Canada increased nearly 6% during Jan-Sep 2011 to reach an estimated 16,057 million pounds, while demand for semi-fabricated (mill) products was up almost 4% 11,181 million pounds. Here’s a look at the World Bank’s latest commodity prices forecasts: As primary prices retreated this week, nonferrous scrap prices were also reportedly somewhat softer in the first half of the week with AMM reporting brass ingot makers’ scrap prices for Bare Bright @ 326-328 cents/lb. (from 330-333 late last week), No. 1 @ 313-315 cents/lb. and No. 2 at 299-301 cents/lb. Secondary aluminum prices were also reportedly flat to off slightly this week with old sheet and cast mostly indicated in the upper 60’s, siding in the high 60-70 cent range, and MLC mostly in the low 70’s.

Recovered Paper and Fiber… Figures recently released by the Bureau of International Recycling show that global recovered paper collections increased 6.2% in 2010, including a 19% jump in collections in China, to reach a total of 223.4 million tonnes. Collection also increased sharply in India (+21%) the Netherlands (+17.6%), South Korea (10.4%), Indonesia (9.5%) and Mexico (7.4%). Meanwhile, apparent consumption of recovered paper last year reportedly climbed 6.8% higher to reach 221.1 million tonnes, including sizeable gains in China (+6.2%), the U.S. (8%), Germany (10%), Japan (3%) and South Korea (13%).

This Week’s Quote: “I am thankful for my family and yummy food to eat. Gobble gobble.” Georgia Pickard (age 7) This Week’s Thanksgiving Story: A man in Phoenix calls his son in New York the day before Thanksgiving and says, "I hate to ruin your day, but I have to tell you that your mother and I are divorcing; forty-five years of misery is enough.” "Pop, what are you talking about?" the son screams. “We can't stand the sight of each other any longer," the father says. "We're sick of each other, and I'm sick of talking ...about this, so you call your sister in Chicago and tell her." Frantic, the son calls his sister, who explodes on the phone.

"Like heck they're getting divorced," she shouts, "I'll take care of this," 6 She calls Phoenix immediately, and screams at her father, "You are NOT getting divorced. Don't do a single thing until I get there. I'm calling my brother back, and we'll both be there tomorrow. Until then, don't do a thing, DO YOU HEAR ME?" and hangs up. The old man hangs up his phone and turns to his wife. "Okay," he says, "they're coming for Thanksgiving and paying their own way."