MetalMiner July Newsletter
MetalMiner
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When you need prices and forecasts that cover the metals, forms and gauges you actually buy, only MetalMiner Insights provides the detailed price data that can be used in contracting, supplier negotiations and cost reduction initiatives due to its extensive pricing database.
It's not a matter of how many price points you have access to, it's a matter of having access to the correct price points and alerts to prevent poor metal buying decisions.
Analyst Commentary
Demand Looks Weak and So Do Steel Prices
It doesn’t take a rocket scientist to see that the U.S. manufacturing economy continues to slow. A recent Renaissance Macro Research tweet highlighted an interesting anomaly - current market conditions look quite weak but six months out, conditions look a lot better. And another daily Bloomberg digest called out a key culprit to the slowdown: the U.S. presidential election. This newsletter has often discussed the one thing markets hate the most - uncertainty. Companies become hesitant to buy, particularly in a higher interest rate environment.
A recent WSJ article calls out the pain - declining orders and growing stockpiles are driving businesses to progressively curtail production and lay off staff. Among the several causes of this collapse are a drop in consumer demand and the tiredness of pandemic-related economic stimulus. Deere, a maker of farm equipment, for example, has drastically slashed output to prevent overproduction and inventory buildup—a strategy followed by many other companies now reconsidering their plans for growth in view of an extended downturn.
Falling steel prices impact demand because companies typically “buy only what they need” knowing tomorrow’s cost might be lower than today's. To reduce risks related to changing steel prices, companies find themselves carrying the least amount of inventory possible. Manufacturers must use this strategy if they are to negotiate the current economic environment, in which keeping a balance between supply and demand is becoming difficult because of these erratic events.
Nucor has attempted to shore up prices by raising its weekly spot price. But the wider downtrend is on, see the commentary below from our colleague.
“Supercycle” Calls Once Again Disappoint
Does anyone remember these articles?
Those are only a few and if you believed them, you weren’t alone.?
Bulls flooded the news cycle throughout Q2 promising untold gains and a one-way trip up for metals including copper. For a few months, metal prices made a promising run, aided by investor FOMO and the return of investment fund money into the commodity space. Unfortunately for those who bought into the narrative, those rallies peaked in late May followed by an incredibly sharp retracement over the following months. Now, one month into Q3, all of Q2’s gains are down the drain as base metal prices are either at or beneath where they stood at the close of Q1 still in search of new bottoms.
领英推荐
As we often are, MetalMiner?stood as a contrarian?to the prevailing narrative,?cautioning?buyers of the emerging speculative bubble. “Supercycle” calls are nothing new to the commodity space, as they remain a fixture within markets popping up every few years. The latest bubble serves as a good reminder of the importance of accurate forecasting (see our track record here) and retaining a healthy dose of skepticism when reading the news.
- Nichole Bastin
Piece of Recommended Content
Utility Bills Finally get Cheaper, But Someone's Here to Spoil the Party
Utility bills recently dropped a bit, giving consumers some optimism, but this might be short-lived due to increasing power demands from artificial intelligence (AI). Electricity prices have started rising again, with a 5.9% increase over the past year. This is partly due to more energy use from hotter weather and more electric vehicles and manufacturing. However, AI is a major factor pushing up electricity use, as it consumes a lot of power. By 2026, more electricity will be needed, potentially preventing any long-term reduction in utility bills...
Some Shameless Self Promotion
MetalMiner Expands it's Forecasting Offerings With new Price Points
As part of our promise to help customize forecasting price points to your specific metal types, grades, forms and gauges, MetalMiner has expanded it's offering with brand new price points:
From Mexico:
From India:
Coming soon:
If you are interested in seeing how MetalMiner's forecasting services can work for your company, contact our Founder and CEO, Lisa Reisman.