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This is the Global Economic, Scrap Metal, Commodities and Recycling Report, by BENLEE Roll off Trailers and Lugger Trucks, December 17th, 2018.
Last week commodity prices were mostly down and economic reports were mostly negative.
U.S. steel production fell again. Slowing continues, as interest rates and nervous markets hurt manufacturing, including steel.
Oil fell about $2/barrel to $51.13 as OPEC and Russia agreed to the major production cuts and the U.S. changed their position allowing Iran to sell oil to major countries such as China and India. Therefore there is a lot of oil out there, until OPEC cuts kick in.
U.S. oil production fell slightly to 11.6 M barrels a day, just off the recent record. The U.S. imports more crude oil than it exports, but since we also export refined gasoline and diesel fuel, the U.S. just became a net exporter of all fuel including crude and refined products, for the first time in decades.
Iron ore rose 50 cents a ton to $67.50 on softened demand as economies continue to show weakness.
Scrap steel #1 HMS fell slightly to $329/GT, on downward pressure in many markets. It is too early to call January prices, but sideways to slightly down, is possible.
Hot roll coiled steel remained at $1085, near the multi-year high, due to tariffs. As the U.S. and global economy slows, there is downward pressure on prices.
Copper fell and recovered ending at $2.75 despite China’s slowing. China consumes 50% of the world’s copper, so we could see more downside. Copper is down about a penny this morning.
The 5-year copper chart shows prices remain in a range for about the past 6 months. Global slowing is bringing downward pressure though.
Aluminum was down 2 cents to 86.8 cents, remaining near an 18 month low on global slowing and nervous markets.
November’s Chinese Industrial Production fell to the lowest growth in years. China remains the world’s second largest economy and produces more than half the world’s steel and consumes half the world’s copper. This slowing is putting downward pressure on global commodity prices.
December’s U.S. Manufacturing Purchasing Managers’ Index fell to 53.9, with the slowest expansion in factory activity since November 2017 as new orders and employment rose at a slower pace. Business optimism fell to its lowest level in 26 months as concerns rose on the global economy and rising commodity prices due to tariffs.
December’s U.S. Composite Purchasing Mangers’ index also fell to 53.6 as Services fell along with Manufacturing. The composite was the lowest since May 2017.
November’s U.S. Industrial production rose .6% from October, as mining output surged, which includes oil and gas extraction. Utilities output rose as well due to unseasonably cold weather, while manufacturing overall was unchanged.
November’s U.S. Federal Budget deficit at $205 Billion was the widest budget gap for any November. Government spending surged 18.4%. Despite a growth economy with higher profits, incoming revenue to the government fell 1.2%. November’s interest expense was $33 Billion, about the same as spent on Veterans and transportation combined. The first two months of the Federal Budget year 2019, October and November, the deficit was up 51% from last year. This is a huge problem that will raise interest rates.
November’s U.S. inflation fell to 2.2%, with lower gasoline prices helping offset higher shelter and used car and truck prices. Excluding food and energy prices, inflation also rose to 2.2%. Lower inflation will help reduce upward pressure on interest rates.
Wall Street’s Dow Jones fell 287 points to 24,101, driven by all the data showing slowing markets around the world. A record $46B was reported having been pulled from the stock market in the last reporting week and a near record $18 B pulled from the Bond market. Markets do not see an end to the slowing.
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