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After getting off to a choppy start this week as U.S. existing home sales, durable goods orders and flash PM] readings for China and the Euro zone disappointed, commodities staged a rebound in the second half of the week thanks in part to a better than expected reading on U.S. unemployment claims and somewhat softer U.S. dollar. In London, LME official 3-mo. copper started the week in negative territory at $6,916/mt ($3.137/1b.) but LME 3-mo. nonferrous metal prices were back in positive territory on Thursday, including higher closing prices for copper ($7,180/mt = $3.257/1b.), aluminum ($1,941/mt = 88 cents/lb.) and nickel ($15,450/mt = $6.99/1b.). In New York, COMEX May copper gained 2.5% on the day Thursday to close at $3.237/1b., while gold futures advanced to $1,462/to, a gain of over $100/to since last Monday. Meanwhile, NYMEX crude oil for Jun delivery finished at $93.64/bbl yesterday, a 2.4% gain for the day. On Wall Street, the Dow Industrials posted gains in 3 of the first 4 trading sessions of the week to close at 14,700.8 yesterday, while in foreign exchange trading the U.S. Dollar Index dropped 0.23% on Thursday.
| Last | CHG | %CHG | Prior Settle | Open | High | Low |
COMEX Copper May | 3.237 | 0.080 | 2.5% | 3.157 | 3.1645 | 3.259 | 3.1525 |
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COMEX Gold Jun | 1,462.0 | 38.3 | 2.7% | 1,423.7 | 1,430.3 | 1,468.6 | 1,426.3 |
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COMEX Silver May | 24.14 | 1.3 | 5.7% | 22.83 | 23.11 | 24.36 | 23.02 |
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NYMEX Light Sweet Crude | 93.64 | 2.21 | 2.4% | 91.43 | 91.58 | 93.87 | 91.11 |
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SHFE Aluminum Aug | 14,655 | 45 | 0.3% | 14,610 | 14,655 | 14,695 | 14,620 |
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SHFE Copper Aug | 50,980 | 1,030 | 2.1% | 49,950 | 50,780 | 51,400 | 50,410 |
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SHFE Zinc Aug | 14,715 | 120 | 0.8% | 14,595 | 14,745 | 14,780 | 14,675 |
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Prices for Thursday, April 25, 2013.
On Friday, base metal prices at the Shanghai Futures Exchange settled higher but LME prices were drifting lower as investors awaited the advance estimate of 1St quarter GDP in the U.S. (Due to our attendance at MRAI's 2013 India Metal Recycling Conference in New Delhi, the Friday Report comes out before today's GDP release.) In London, LME 3-mo. copper reportedly traded as low as $7,095/mt ($3.218/1b.) this morning and LME 3-mo. aluminum dipped as low as $1,928/mt (87.45 cents/lb.), although today's reports on GDP and consumer sentiment could significantly change investor sentiment. Stocks in Asia were mixed today but the major bourses in Europe were all in negative territory this morning as the FTSE 100 declined 0.5% and stock indexes in France and Spain were off more than 1%. The Euro eased to around $1.3003 early this morning ahead of today's economic releases in the U.S.
Macro news...
While investors reportedly welcomed the news that U.S. initial unemployment claims dropped to 339,000 for the week ending April 20, some of the other economic indicators out this week were decidedly less encouraging. Overseas, the HSBC flash Manufacturing PMI figure for China dropped from 51.6 in March to 50.5 in April, signaling slower manufacturing growth there. Meanwhile, the numbers for the Euro zone continue to indicate contraction in the manufacturing sector, as Markit's flash Euro zone PMI for April came in at 46.5, the 191h drop in the last 20 months as Spain's unemployment rate is now up to 27.2%:
Markit (Flash) Eurozone PMI and GDP
Source: Markit. Eurostat. GDP gross domestic product
As if that weren't enough, the Census Bureau reported this week that U.S. durable goods order decreased 5.7% in March (-1.4% ex-transport), including weaker orders for primary metals (-3%), fabricated metals (-1.5%), machinery (-1.4%), electrical equipment, appliances and computers (-2.4%).
The markets will be paying close attention to the Bureau of Economic Analysis' GDP report due out a little later today, with more forecasters expected growth advanced between 2.8% and 3.2% in the first quarter. The University of Michigan's final reading on consumer sentiment in April is also due out today, with the consensus looking for a modest improvement.
Ferrous...
The World Steel Association reported earlier this week that, for the month of March, world steel output increased 1% year-on-year to 135 million mt, while world crude steel production in 10 2013 was up 2.3% y-o-y to reach 388.7 million mt. Out of the Jan-Mar total, the association reports Asia accounted for nearly 260 million mt of crude steel output (+6.4%), while production in the EU declined 5.4% to 41.5 million mt and North American output dropped 5.7% to 29.7 million mt as compared to 10 2012:
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Source: worldsteel
For the week ending April 20, 2013, the American Iron and Steel Institute reports that domestic raw steel production fell 7.7% y-o-y and was down 1.2% from the previous week to 1.858 million net tons as the capacity utilization rate dipped to 77.6%. AISI also reported this week that, based on corrected preliminary Census Bureau data, U.S. steel imports declined 1.3% in March to 2.476 million nt while year- to-date U.S. steel imports (through Mar) are down nearly 12% by volume. Notwithstanding the drop in domestic output and import demand, the potential disruption at US Steel's Lake Erie Works could result in tighter domestic sheet market conditions, according to Steel Market Intelligence, which reports that spot hot-rolled coil prices have dropped nearly 7% since the end of 2012 despite repeated attempts by steel producers to raise prices.
Looking forward to May, Scrap Price Bulletin's trend indicator is signaling bearing at 45.3 overall as soft export demand and little expected improvement in domestic mill demand are projected to more than offset tighter local scrap supplies. By grade, Scrap Trends Outlook indicates especially bearish May indicators for cut grades (38.5), foundry grades (39.0) and prime grades (39.3).
Nonferrous...
Nonferrous metal prices at the LME have come under sharp pressure this month, and while prices rebounded somewhat this week (through Thursday, at least), base metal prices have racked up significant losses since the end of 2012. As of Thursday morning, LME official 3-mo. lead prices were down just over 12%, followed weaker nickel (-11.2%), tin (-11.1%) and copper (-11%) prices:
Category | MAR | FEB | JAN | DEC | NOV |
Total Durable orders | -5.7% | 4.3% | -3.7% | 3.6% | 0.6% |
Less Defence | -4.7% | 3.4% | 1.3% | 0.3% | 0.5% |
Less Transport | -1.4% | -1.7% | 3% | 0.8% | 1.2% |
Transportation | -15% | 20% | -17.7% | 9.9% | -0.7% |
Capital Goods | -12.6% | 10.2% | -11.4% | 11.5% | -1.7% |
Nondefense | -10.6% | 7.1% | 2.0% | 1% | -2.2% |
Non defense/non aircraft(core cap gds) | 0.2% | -4.8% | 6.7% | -0.8% | 3.3% |
Defense Cap Goods | -33.2% | 58.7% | -70.8% | 107.2% | 2.8% |
Following a build-up in nickel stocks in 2012, the International Nickel Study Group is projecting that global nickel supply will continue to exceed demand, as per their latest revised forecasts released this week. As compared to primary nickel production of 1.76 million mt in 2012, INSG expects nickel output to increase to 1.86 million mt this year, outstripping the improvement in world nickel usage, which is expected to grow to 1.77 million mt.The International Lead Zinc Study Group also released their latest forecasts this week, and the Study Group continues to expect global market surpluses for the sister metals in 2013. For zinc,ILZSG projects that global demand for refined zinc metal will recover 5.2% to 12.98 million mt, this year, as increased zinc production in China is expected to help push world zinc metal production to 13.25 million mt, resulting in a global zinc market surplus of 273,000 mt.
As for lead, the Study Group projects a more moderate surplus of 42,000 mt in 2013 as world lead metal output is expected to rise to 11.13 million mt as demand improves 4.8% to 11.09 million mt. This week,AMM was indicating relatively steady domestic smelter lead scrap prices, including remelt lead at 82-84 cents, cable lead at 81-83 cents, scrap lead metal at 78 -80 cents, and whole batteries at 40-42 cents.
© 2013 Institute of Scrap Recycling Industries, Inc.
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| Alternator | 0.32 (0.01) |
| #1 Copper Bare Bright | 3.77 (0.07) |
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| 6061 Extrusions | 0.64 (0.02) |
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