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Metal Market Report | June 2017

Ferrous:

The ferrous market is stuck in a low pressure cooling trend and looks to remain there throughout the remainder of June.  Neither scrap sellers nor buyers are expecting prices to increase anytime in the near future and both seem to be more focused on which grades will continue to suffer price cuts and discounts or remain sideways as a best case scenario.  The market saw another $10 decrease this month once again due to a lack of export pressure and sufficient scrap supplies at the domestic mills. Without threat of losing tons to offshore buyers, the domestic mills are enjoying their cake and eating it too at the expense of their suppliers and consumers.

Major U.S. automaker sales continue to slide, posing the real likelihood of the first down year since 2009.  Ferrous and nonferrous scrap markets are feeling the strain of the slump in auto sales which could continue to decline throughout 2017. We experienced a post-election bump where prices climbed for a few months, but that psychological surge did not translate into higher sustained demand.  Buyers remain cautious, still feeling the sting of past pricing collapses, in part due to the uncertainty of future auto sales and the sluggishness of promised infrastructure spending activity.

Much of the volatility factors are apparent but there also seems to be other negative forces occurring right now that are difficult to pinpoint.  There is considerable buzz around the pros and cons of Section 232 Trade Restrictions and the Texas “Buy American” bill.  President Trump is contemplating “major action” once he receives the Commerce Department’s June report from their investigation into foreign buildup and the dumping of steel into the domestic market.  The Commerce Department could recommend to the president to impose stiff tariffs, quotas on how much foreign steel would be allowed to be imported into the U. S., or possibly a combination of both duties and quotas.  However, an overreaction to the findings in “232” could result in catastrophic losses to the industries in the United States that the bill is designed to protect.

 

Nonferrous:

May was a difficult month for commodity prices and base metals. As you can see below, all items retreated from their previously higher levels during the first quarter of 2017. Most notable has been the erosion of Nickel prices, falling 5.7 % in the past month and over 13% in a 6 month period.  Stainless mills have lowered their prices and scrap buying quotas in the third quarter due to lower than anticipated demand for stainless products worldwide. The aluminum index fell nearly 2% last month while aluminum scrap domestically is in ample supply at the mills causing most domestic mills to lower their buying prices and delay incoming delivery timeframes. This surplus of aluminum scrap is forecasted to continue through June and July. The copper index is bouncing consistently up and down within a 10 cent range. It fluctuates each day like a kite drifting in the wind currents created by various US and Asian economic metrics released in the news.

 

As of October 12, 2016 % Change
COMMODITIES  September Ave. 30 Day Change (January) 6 Month Change 12 Month change
Copper Comex ($/LB) $         2.54 -1.9 5.3 22.7
Aluminum ($/LB) – LME  $         0.86 -1.8 11.3 24.1
Nickel ($/LB) – LME  $         4.13 -5.7 -13.3 11.5
Lead ($/LB) – LME  $         0.97 -4.3 2.0 31.2
Zinc ($/LB) – LME  $         1.17 -1.7 2.6 40.0
Gold (LB/OZ)  $  1,243.76 -1.9 2.6 0.7
Silver ($/OZ)  $       16.69 -7.2 3.7 6.5
Crude Oil ($)  $       48.53 -5.1 11.5 9.3
Jan\Feb Change 6 Month Change 12 Month Change
Scrap Steel Prices – No. 1 Heavy Melt (Intermountain west) -5.1 19.0 -16.7
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