Our Blog

Metal Market Report | December 2016

Ferrous:

Temperatures outside are getting colder but the scrap markets are heating up. In our current ferrous market, momentum is currently on the upside and will hopefully hold into Q1 of 2017.  However, with the recent price roller coasters that we have all encountered, approaching this latest upswing with cautious optimism is well advised. We saw similar price strength in April and May this year and then immediate price weakness June thru October.

 

President Elect Trump has proposed a $1 Trillion, 10 year infrastructure package as a top priority to be introduced and passed within his first 100 days of office.  The prospect of widespread multiyear economic stimulus resulting from new infrastructure projects has created a buzz in the markets for steel and base metals. The infrastructure proposal, if passed, should produce a positive widespread impact in a variety of steel and steel making products including structural beams, steel studs, water, gas and oil pipe, coal, oil, natural gas and much more.  Avoiding congressional gridlock and special interest opposition will most likely continue to be the major hurdle, albeit in a more benign regulatory environment buoyed by a majority rule in the house and senate.

 

As China continues to produce steel in excess, which is still highly subsidized by the Chinese government, the ongoing result is a flood of imports that hampers scrap prices and steelmakers in the U.S.  Improved trade policy with China looks to be a long awaited priority with the new administration.  Hopefully we will see some positive changes in 2017 to level the playing field in reducing subsidized competition from China.  If Trump is aggressive in blocking some of the existing imports of raw steel, and strengthening domestic prices, then ferrous scrap prices and downstream mills are likely to benefit.  A strong economy coupled with improved Trade Protection is the recipe for better times ahead. Let hope the “rubber meets the road” when the time comes to pass such infrastructure upgrades and overseas regulatory measures instead of just rhetoric.

 

Non-Ferrous:

November was a great month for base metals. Most of the price increases took place after the election following Trump’s win. Copper prices climbed to a 18-month high, up 13%  in November, while lead and zinc prices hit multiyear highs and continued their momentous pace. Aluminum prices saw a more restrained increase but made steady progress throughout the month. Precious metals took a different path last month due to stronger dollar values and investment surges into the equities markets.  Gold shot up over $60 oz. the night of the election but took a track of steady decline shortly after. Ferrous scrap prices are up 16% for this December and differ greatly from the low prices seen in December last year.

 

Cheers to 2017!

 

As of October 12, 2016 % Change
COMMODITIES  September Ave. 30 Day Change (November) 6 Month Change 12 Month change
Copper Comex ($/LB) $         2.46 13.0 14.6 12.4
Aluminum ($/LB) – LME  $         0.78 3.2 7.7 15.4
Nickel ($/LB) – LME  $         5.05 7.9 20.0 17.2
Lead ($/LB) – LME  $         0.98 6.1 21.4 25.5
Zinc ($/LB) – LME  $         1.16 9.5 20.7 38.8
Gold (LB/OZ)  $  1,235.00 -2.3 -3.4 12.2
Silver ($/OZ)  $       17.35 -1.4 0.5 17.0
Crude Oil ($)  $       45.85 -8.9 -6.5 6.3
Nov\Dec Change 6 Month Change 12 Month Change
Scrap Steel Prices – No. 1 Heavy Melt (Intermountain west) 16.4 1.8 63.0

Tags: , , , , , , , , , , , , , , ,

Show Comments (0)

This is a unique website which will require a more modern browser to work! Please upgrade today!