Movements of precious metals; a major decision by US Steel; copper flies away
Here’s a quick look at the news and thoughts on some commodity markets, including precious metals moves, a major move by US Steel, and soaring iron ore and steel prices in Asia.
MetalMiner, one of our sister sites, is scouring the landscape for what matters. This week:
US Steel cancels $ 1.5 billion upgrades to Mon Valley Works
Earlier this month, US Steel announced it was ending previously announced plans to execute massive upgrades to its My Valley Works operations.
The upgrades would have represented an investment of about $ 1.5 billion.
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MetalMiner CEO Lisa Reisman and VP of Business Solutions Don Hauser weighed in on the decision.
“The combined investments would have enabled US Steel to produce thin gauge HRCs at CRC gauges, ”they explained.
“Purchasing organizations would have the option of paying less per tonne for this material than the cold-rolled coil alternative. In other words, the price of steel in that line would likely have dropped somewhere between hot-rolled and cold-rolled prices.
“Today only Nucor and Steel dynamics have that kind of ability. “
However, they focused on the steelmaker’s decision not to modernize its coking coal facilities.
“In addition, it will permanently idle three batteries at the Clairton plant, according to the Pittsburgh Post-Gazette,” they added. In addition, US Steel will reduce its coke production by 17%. This decision suggests that US Steel plans to reduce production of steel produced by BOF production methods.
“These production cuts will likely impact the steel produced at the company’s Gary Works site. It has already closed capacity at Granite City.”
Silver price movements
Precious metals have surged lately, but the outlook for silver may not be so rosy.
“After hitting a low of $ 24 / oz in early April, the price of silver has appreciated steadily to just under $ 27.50 an ounce today,” wrote MetalMiner’s Stuart Burns.
“However, it still hasn’t hit the artificial eight-year high seen in January, as it hit nearly $ 30 / ounce on frenetic demand from retail investors.
“About $ 1 billion was invested in money-backed ETFs in a single day in January, the Financial Times reported, after comments on the online Reddit WallStreetBets forum incorrectly suggested that the banks of American investment suppressed the price of the metal. “
Although silver is seeing some growth in industrial demand, this has worked against its interest as a safe haven.
“Silver has at times benefited from its heavy industrial use,” Burns added. “However, its volatility due to industrial demand hampers its desirability, like gold, as an inflation hedge or as a safe haven.
“As inflation fears grow, they are doing little more than supporting gold this year – and little for silver.”
Gold climbs to its highest for three months
Sticking to precious metals, the price of gold recently hit a three-month high.
Impacting the precious metal, the US dollar index has fallen in recent weeks to just over 90, from over 93 at the end of March.
In addition, 30-year Treasuries yields also fell, falling to 2.25% last week. The 30-year yield peaked at 2.45% in 2021 in March.
However, the 30-year yield rebounded this week, closing Thursday at 2.40%. The price of gold fell from last week’s three-month high, closing at around $ 1,815 an ounce on Thursday.
Soaring cobalt prices
Amid the gradual adoption of electric vehicles around the world, one of the battery components that are constantly talked about is cobalt.
The high cost of cobalt and ethical concerns related to mining conditions in the Democratic Republic of the Congo are leading some automakers to consider alternatives.
“The Financial Times reports that cobalt prices jumped 40% in the first quarter, blaming only demand for batteries,” Burns said recently. “Of all the metals that make up EV batteries, cobalt faces the most constrained supply base. A very large percentage of this cobalt still comes from the Democratic Republic of the Congo.
“Some buyers, like the one from China CATL, has no reservations about investing in countries facing allegations of child labor. The company recently invested $ 138 million in an undeveloped copper and cobalt resource in the country.
“Others vote with their wallets. These companies limit contracts to suppliers in Russia, Australia, the Philippines and even, in the case of Bmw, from Morocco.”
Iron ore and steel prices soar in Asia
Continuing the theme of steadily rising commodity prices, Burns touched on this week’s iron ore and steel price boom in Asia.
The relentless rise in iron ore prices this year intensified on Monday, reaching a limit of + 10% and prompting the Dalian Commodity Exchange to raise trading limits and margin requirements in an effort to calm down speculation, ”Burns wrote.
Separately, the Shanghai Futures Exchange has said it will set a fee for closing positions on its steel rebar and hot-rolled steel coil futures contracts at 0.01% of the value. total transaction.These transactions were previously free.
“Meanwhile, on the Singapore Stock Exchange, the June contract for iron ore jumped 10.3% to a record $ 226.25 per tonne.”
As a result, Chinese steelmakers have pushed up steel prices to offset rising raw material costs.
“China is the world’s largest importer of iron ore and coking coal,” he added. “Such rapid price inflation has a serious impact on the competitive position of the country.
As such, expect further action from Beijing. Prices have almost certainly moved away from fundamentals, which hasn’t stopped speculators before. However, it invites more determined action from Beijing. to keep things from getting worse. “
Copper price hits record high
Meanwhile, the price of copper has also hit a record high. (Burns last month described the differing views of banks on the outlook for the price of copper.)
The three-month LME price closed at over $ 10,700 per metric tonne on Monday. The price is up about 19% from a month ago.
Tight supply, stronger demand and the weaker US dollar all contributed to the price escalation.
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