Two of the nonferrous metals sector’s benchmark metals, copper and nickel, spent the first four months of 2018 moving in opposite directions on the value spectrum. Both metals displayed volatility in late April and early May.
Three-month copper on the London Metal Exchange (LME) ended up 1.1 percent at $6,820 per metric ton May 2, after hitting $6,710 the day before, its weakest point since April 4, 2018. Nickel closed up 2.4 percent May 2 at $13,980, after hitting its lowest since April 12, 2018, the day before.
Metals were pressured down by a strong U.S. dollar. While the European Central Bank (ECB) balance sheet keeps growing and growing, the Fed continues to shrink its balance sheet. The ECB’s total assets now amount to almost 41 percent of Eurozone gross domestic product (GDP), while the Fed’s is now below 22 percent. In response, the euro has fallen to below $1.20 in value.
In the steel sector, China’s steel rebar futures price soared to the highest level in eight weeks Wednesday, May 2, buoyed by a firm physical market that helped run down inventories amid ongoing supply constraints.
The most active rebar contract for October delivery on the Shanghai Futures Exchange (SHFE) rose 4.3 percent after having earlier touched its strongest level since March 7, 2018.
Jiangsu Shagang Group, one of China’s largest privately owned steel firms by production capacity, said May 1, 2018, it will hike spot prices for rebar in May by RMB130 ($20.42) per metric ton, raising the price to RMB4,070 ($639).
Activity in China’s steel industry continued to grow in April, with the Purchasing Managers' Index (PMI) for the industry rising 1.1 percentage points to 51.7 percent from the prior month, according to data from the China Federation of Logistics & Purchasing (CFLP) released Monday, April 30.
“Demand for steel products remains at a high level, while supplies have been curbed due to environmental policies, which helps to lift market prices” said analysts at Orient Futures in a note to investors. Stockpiles of rebar held by Chinese traders decreased further in late April after hitting a five-year peak in mid-March. Inventory of 7.13 million metric tons heading into May was down 7.4 percent from a week earlier, data compiled by the SteelHome consultancy showed.
In Europe’s manufacturing sector, the Eurostat Eurozone manufacturing final PMI for April 2018 reads at 56.2 (compared to 56.6 in March). Slower rates of expansion were calculated in five out of the eight Eurozone nations.
According to Eursotat, Italy’s manufacturing PMI in April 2018 hit a 15-month low, followed by Germany’s at a nine-month low, Spain at a seven-month low, the Netherlands at a six-month low and France at a five-month low. All nations remain well above the 50.0 threshold that separates manufacturing growth from contraction.
Commodities Pricing Trends | | | |
| May 1, 2018 | Jan. 15, 2018 | % change |
LME Copper | $6,762 | $7,206 | -6.16% |
SHFE Copper | $7,974 | $8,547 | -6.70% |
LME Aluminum | $2,244 | $2,226 | +0.81% |
LME Nickel | $13,780 | $12,865 | +7.11% |
LME Ferrous Scrap | $356.50 | $371 | -3.91% |
SGX Iron Ore | $65.66 | $76.57 | -14.25% |
SHFE Rebar | $637 | $591 | +7.78% |
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(Prices per metric ton.) | | | |