Rising oil prices; a record for renewable energies; British trade after Brexit
Here’s a quick look at news and thoughts from some commodity markets, including the price of oil, a US record for renewables, and more.
MetalMiner, one of our sister sites, is scouring the landscape for what matters. This week:
Britain after Brexit
Will post-Brexit Britain be for free trade or for protectionism?
MetalMiner’s Stuart Burns weighed in on what UK business strategy might look like going forward.
How do you find the right procurement technology and the right supplier for your business? Spend Matters’ new 5-step “Procurement Technology Buyer’s Guide” can help – with how-to documents, checklist templates and other tips.
The UK has already signed trade agreements with Japan and Australia. However, deadlocks remain over a possible deal with the United States and the imminent expiration of steel guarantees instituted three years ago.
“But after Britain’s chief negotiator, International Trade Secretary Liz Truss, announced the imminent signing of a new deal with our friends across the world, cries of protest erupted in the media and among lobbying against a dreaded influx of agricultural imports, ”Burns wrote.
“The likelihood of such a flood happening is slim and not for our pages here. But in the heavy metal industries, equally fierce lobbying continued against the non-renewal of old EU safeguards. which expire soon for three years.
“Warranties cover 19 different steel categories, comprising 253 products. These products go into goods ranging from cars and appliances to rebar used in construction and tubing with applications ranging from pipes to scaffolding,” reports The Telegraph. “
China steel prices plunge in late May and recover
On the heels of a warning from the Chinese government to curb soaring prices and speculation, Chinese steel prices plunged on May 26 by about 20%.
Since then, however, prices have regained some of those losses.
“The demand for steel in China has increased in recent months as the government implemented its economic stimulus plan, which includes infrastructure spending,” said Maria Rosa Gobitz. “Rising steel prices continue to push up infrastructure costs.
“On May 26, steel prices fell about 20% for all forms of steel. The sudden drop in prices in China may have been triggered by the harsh sanction the Chinese government has threatened to impose on excessive speculation and fake news that could inflate the prices of critical commodities, like steel.
“After the correction in Chinese prices, they continued to rise but at a slower pace, closing in May at 6,060 CNY / mt against 6,100 CNY / mt at the end of April. Since then they have continued to increase in the first week of June but remain below Level 6,250 CNY / mt. “
New Mexico crude oil and natural gas production hit record high in March
New Mexico’s crude oil and natural gas production hit an all-time high in March, the Energy Information Administration reported.
“New Mexico recorded a record production of crude oil and natural gas in March 2021, averaging 1.16 million barrels per day (b / d) of crude oil and 6.19 billion cubic feet per day (Bcf / d) of natural gas “, he added. says EIA. “The March 2021 increases in crude oil and natural gas production were the largest monthly increases on record for New Mexico. The increase in production came after a month when production fell in response to extreme winter conditions in the south-central region of the United States. “
Copper cools off after record
Meanwhile, after hitting an all-time high of over $ 10,700 per metric tonne in early May, the price of copper has since cooled.
Despite this, the price of copper remains high. The LME three-month copper price closed Wednesday at $ 9,538 per metric tonne.
“Often referred to as ‘Dr Copper’, the metal gets its nickname because of its ability to diagnose the overall health of the economy,” Gobitz explained.
“Copper has a unique and widespread application in most industries. As such, the demand for copper is a reliable indicator for overall market analysis.
“As oil and copper are often affected by similar economic factors, prices fluctuate in the same way. Conversely, an inflated US dollar tends to increase the demand for copper because it increases affordability for holders of other currencies. “
Demand for stainless steel is increasing
Meanwhile, the demand for stainless steel is expected to increase.
“According to data from the International Stainless Steel Forum (ISSF), the production of the stainless steel smelting workshop increased 24.7% year-on-year to reach 14.5 million metric tons in the first quarter of 2021, ”explained Gobitz.
“Most of the increase in production came from Europe and the United States, where production jumped 11.0% and 9.7%, respectively. The only region that experienced a contraction in production was China. Chinese production fell 0.5% to 8,198,000 metric tons.
“This coincides with a report from Precedence Research, in which it estimates that the size of the stainless steel market will grow to US $ 168.24 billion by 2027, from US $ 106.84 billion in 2019.”
The price of cobalt drops
After surging in the first quarter, the price of cobalt on the LME fell in the second quarter.
The LME price of cobalt reached nearly $ 53,000 per metric tonne in the first quarter. Since then, however, the price has dropped by around 20%. The price closed earlier this week at $ 42,500 per metric tonne.
High cobalt prices are a barrier for electric vehicle manufacturers, for whom cobalt is vital for use in vehicle batteries.
Rising oil prices
The rise in the price of oil is not expected to ease in the near future, Burns said this week.
“By a factor of 6 to 1, long bull positions in oil outnumbered short bears in NYMEX and ICE WTI contracts, according to Reuters,” he wrote.
“Net long positions reached 919 million barrels, the highest since January 2020, before the pandemic set in, and before that in October 2018, before the trade war between the United States and China broke down. ‘is stepping up, the post reports. Demand exceeds supply, which is constrained by OPEC discipline and a sluggish US shale market. “
Improving sentiment after the vaccine rollout has boosted demand. The offer, however, does not follow, as both OPEC and OPEC + members have used supply discipline to keep prices higher. Even a possible renewed nuclear deal with Iran might not slow the price hike, Burns added.
“It is almost certain that the increase in the supply of shale will come at some point, provided it is not stifled by overly ambitious environmental restrictions,” he added. “While it’s unlikely to be to scale or at the speed before, a lot has been learned both operationally and technologically. In short, that means it would be better and cheaper. .
“Energy intensive users may want to factor high oil prices into their annual forecasts. This will be true even as the world moves to a low carbon future.
“We will still be dependent on oil for a few more years. Assuming these long positions are correct, we will face price volatility as a result.”
The United States consumes a record amount of renewable energy in 2020
We talked about the price of oil in the previous section, but what about renewables?
According to the Energy Information Administration, the United States consumed a record amount of renewable energy in 2020.
The consumption of renewable energy in the United States increased for the fifth consecutive year in 2020.
“In 2020, the consumption of renewable energy in the United States increased for the fifth consecutive year, reaching a record 11.6 quadrillion British thermal units (Btu), or 12% of the total energy consumption of the United States. United, “said the EIA. “Renewable energy was the only source of energy consumption in the United States that increased in 2020 compared to 2019; consumption of fossil and nuclear fuels has declined.
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