Here is a brief overview of news and thoughts on particular commodity markets, including declining commodity prices, aluminum market movements and much more.

MetalMiner, one of our sister sites, is scouring the landscape for what matters. This week:

Commodity prices fall on a strong dollar

Commodity prices are generally inversely correlated to the US dollar. In other words, when the US dollar strengthens, commodity prices generally fall.

This relationship has manifested itself in recent weeks as the US dollar index has shown some strength.

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“Federal Reserve policymakers announced Wednesday that interest rates would rise from their all-time low in 2023, updating an earlier forecast of hikes not until 2024,” MetalMiner’s Stuart Burns wrote.

“The more bullish position on rates boosted the dollar. As a result, the dollar index gained 1.5% from last week. This marked its best result since last September.

“In turn, commodities have taken a hit across the board.”

The price of gold fell about 4% last week, he added, his worst performance in more than a year. Base metals also fell. LME copper, for example, after hitting a record high last month, closed at $ 9,321 per metric tonne on Wednesday, down 6.43% month over month.

Surplus aluminum deficit

Speaking of base metals, Burns also looked at the state of the aluminum market, which is currently extremely tight.

“Certainly last year was skewed by the pandemic,” he wrote. “However, from January to May, global foundries operated normally around the world. The pandemic has hit consumption hard, but production has remained resilient.

“It is therefore not surprising that this year has so far reached a deficit of 588,000 tonnes compared to a surplus of over one million tonnes (1,074 kt), as reported by the World Bureau of Statistics metals for the whole of last year. “

Production jumped to 5.74 million metric tonnes in May, the International Aluminum Institute reported, an increase of nearly 6% year-on-year. The increase in production could cap further price gains for the metal.

“But the increase in global production alone may be enough to limit the rise in global aluminum prices this year, as many large economies are approaching pre-pandemic consumption levels,” he said. he adds.

“In the short term, the rising dollar will add to deflationary pressure on prices, not only for aluminum, but throughout the commodities sector.

“As our recent annual price outlook indicated, the level of downside support is therefore positioned much lower than the upside resistance level. Fundamentally, the increase in supply seems be able to exceed growing demand. “

Belgian government offers loan to Liberty Steel asset

Spend Matters has previously covered the fallout from the collapse of Greensill Capital, the main funder of the GFG Alliance.

As such, Liberty Steel, a subsidiary of GFG, has made efforts to continue operations.

In Belgium, the government offered a loan to an asset of Liberty Steel to keep the plant in operation.

“The government of the Walloon Region of Belgium is considering granting a loan to Liberty Steel Liberty Liège-Dudelange (LLD) active in rolling and coating while looking for a new buyer for it. This decision follows the collapse in March of the steel group’s main creditor, Green capital“, reported Christopher Rivituso of MetalMiner.

“In this context, the company LLD is in the process of judicial reorganization by ‘collective agreement’ (since May 11) and there is a significant risk in the short term that it will not be able to continue its activities,” said the vice-president. President of the Walloon Region. President Willy Borsus said in a June 3 statement.

World copper production increases in the first quarter

Global copper mine production in the first quarter rose 3.7% year-over-year, the International Copper Study Group reported.

Peru, the second largest producer of copper, saw its production increase by 3%. Interested in the country’s mining sector, socialist Pedro Castillo, who won a narrow majority of votes in the last second round of the presidential election, has pledged an increase in taxes on the country’s miners. Opponent Keiko Fujimori, daughter of the imprisoned former president Alberto Fujimori, however disputed the result, citing electoral fraud.

The US State Department, however, praised the electoral process.

“We commend the Peruvian authorities for safely administering another round of free, fair, accessible and peaceful elections, even amid significant challenges related to the COVID-19 pandemic,” the department said. State. “These recent elections are a model of democracy in the region. We support giving the electoral authorities time to process and publish the results in accordance with Peruvian law.

The steel market remains tight in the United States and Europe

On steel, despite a more than 16% year-over-year jump in global steel production in May, steel markets in the US and Europe remain tight, Burns explained.

“In the United States, the market remains extremely tight,” he wrote. “Factory delivery times are over until the end of this year. In addition, prices are expected to remain high until 2022.

“The situation is no different in Europe. In Europe, the steel market is experiencing a similar post-pandemic rebound, a resupply of the supply chain and constraints, as in the United States, through tariffs on imported materials. “

Despite the year-over-year jump, steel production in May actually slowed from the previous month.

“But looking at the month-to-month growth rate, daily world steel production fell 0.4% in May,” he added. “This follows a 3.5% increase in April.

At the same time, the combination of disastrous warnings from Beijing on manipulative speculative prices, restrictions on credit for construction and pressure on polluting industries to reduce emissions have combined to cause a sharp correction in the price. previously dynamic iron ore, down 9% from Dalian. trading at $ 173 / tonne this week. “

U.S. steel imports drop in May

Sticking to steel, steel imports into the United States in May edged down from the previous month, the Census Bureau reported.

The United States imported about 2.3 million metric tonnes of steel in May, up from 2.4 million in April.

Lower imports of blooms, billets and slabs led to the decline. Imports of blooms, billets and slabs decreased by approximately 32% to 604,340 metric tonnes.

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