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Base metals prices mixed, but sentiment more bullish again

Base metals prices on the London Metal Exchange and Shanghai Futures Exchange were mixed this morning, Monday October 12, but sentiment has turned more bullish, especially in aluminium, since China returned from its Golden Week holiday.

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* Expectations for extra stimulus in the United States have kept equities buoyant.
* China’s markets underpinned by steady recovery and by the fact it appears to have Covid-19 under control, unlike Europe and the US.

Base metals
Three-month base metals prices on the LME were split on Monday, with copper, lead and tin showing losses of between 0.2% and 0.3%. Copper is down 0.2% at $6,760 per tonne, while aluminium, nickel and zinc were up by an average of 0.4%.

The most-traded base metals contracts on the Shanghai Futures Exchange were also mixed, with November lead and December tin, down by 1% and 0.2% respectively, while the rest of the metals were up by an average of 0.6%, led by a 1.4% risen in November nickel, while November copper was up by 0.1% at 51,470 yuan ($7,560) per tonne.

Precious metals
The precious metals complex was also mixed on Monday. Spot silver led on the upside with a 1.1% gain to $25.39 per oz, followed by spot palladium, up by 0.8% at $2,455 per oz, while spot gold was up by 0.1% at $1,929.28 per oz, and platinum was down 0.2% at $887.50 per oz.

Wider markets
The yield on US 10-year treasuries remains upbeat this morning and was recently quoted at 0.77%. The move up off the 0.5-0.6% base of late suggests more risk-on appetite.

The Asian-Pacific equities were mainly firmer: the ASX 200 (+0.49%), CSI 300 (+2.7%), the Kospi (+0.32%) and the Hang Seng (+2.38%), while the Nikkei (-0.24%) was weaker.

Currencies
The US dollar index was trending lower again this morning after Friday’s fall. It was recently quoted at 93.04. The range since early September has been 91.73-94.75.

Most other major currencies were firmer, with the euro at 1.1823, the Australian dollar at 0.7230; and sterling at 1.3042, while at 105.46, the Japanese yen is slightly weaker.

Key data
Economic data already out on Monday showed Japan’s bank lending climbed 6.4% in September, compared with 6.7% in August, while producer prices (PPI) fell 0.8% in September, after a 0.6% fall in August.

Later there is data on German wholesale prices and Japan’s machine tool orders.
In addition, Bank of England Governor Andrew Bailey and United Kingdom Monetary Policy Committee member Jonathan Haskel are scheduled to speak.

Today’s key themes and views
The base metals are rebounding, led by aluminium, which broke higher on Friday to set a new 2020 high of $1,855.50 per tonne. Tin and copper are back in high ground, while the others are getting lift off from the lows, led by zinc, which is now mid-range.

The strength suggest dip-buying is still a powerful force, with the market focused on China’s recovery gaining momentum, with the potential for more stimulus in the US as demand rises and infrastructure projects get under way.

Gold prices are also on the rise, suggesting the rising tide in metals is lifting all boats, but the weaker dollar will also be helping.

Although rising treasury yields are a possible headwind for gold, maybe not just yet, because real 10-year treasury yields are still negative and yields are rising as the market is wary that all the stimulus may have inflationary consequences.

William Adams

Fastmarkets

Source: http://feedproxy.google.com/~r/BaseMetalsMonthly/~3/5KKd_0KF-v0/Base-metals-prices-mixed-but-sentiment-more-bullish-again.html

Metal

Construction MMI: Construction spending rises as billings remain down

The Construction Monthly Metals Index (MMI) rose by 3.2% this month, as January 2021 construction spending picked up. Cut-to-length adders. Width and gauge adders. Coatings. Feel confident in knowing…

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hard hat sitting on US banknotes

Andrey Popov/Adobe Stock

The Construction Monthly Metals Index (MMI) rose by 3.2% this month, as January 2021 construction spending picked up.

March 2021 Construction MMI chart

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Construction spending

US construction spending in January reached a seasonally adjusted annual rate of $1,521.5 billion, the Census Bureau reported this week.

The January rate marked an increase of 1.7% from the previous month. Furthermore, the January rate rose 5.8% compared with January 2020.

Private construction rose 1.7% to a seasonally adjusted annual rate of $1,160.0 billion. Within private construction, residential construction rose 2.5% to $713.0 billion in January. Nonresidential construction ticked up by 0.4% to $447.0 billion.

Meanwhile, US public construction spending rose 1.7% to $361.5 billion. Educational construction dipped 0.1% t0 $89.9 billion. Highway construction rose 5.8% to $107.8 billion.

ABI moves up but remains low

The Architecture Billings Index (ABI), released monthly by the American Institute of Architects, reached a January reading of 44.9.

The January reading marked an increase from 42.3 the previous month. However, any reading less than 50 indicates a contraction in billings.

Meanwhile, the design contracts index moved up from 47.0 to 48.8.

While the sub-50 billings index reading marked the 11th straight month of billings contraction, there are some reasons for optimism, the ABI report stated.

“Inquiries into new work at firms reached its highest level since the pandemic began, while the value of new design contracts also approached growth once again, following two months of weaker conditions,” this month’s report stated. “With vaccinations picking up speed, and plans for additional relief measures making their way through Congress, there may be more reasons for hope ahead.”

By region, the South led the way vis-a-vis billings with a reading of 47.4. Trailing the South were the West (42.8), Midwest (42.2) and Northeast (41.9).

As the pandemic began to impact every aspect of Americans’ lives near the tail end of Q1 2020, some manufacturers idled production, consumers canceled vacation plans and employees working from home contributed to a drop in oil demand.

So, what about construction projects active in Q1 2020 that were delayed by the arrival of the COVID-19 pandemic?

This month’s ABI survey question asked architecture firms about the status of projects active as of Q1 2020 and prior to the pandemic.

The good news is that an overwhelming percentage of respondents indicated there have not been many outright cancellations.

Of the respondents, 93% said at least a few of their firm’s active projects from Q1 2020 have since been successfully completed with no major delays or issues.

However, just 2% of firms reported all their active projects from Q1 2020 have been completed. On the other hand, 35% said they have completed most, while 22% indicated they have completed many of those projects.

Construction employment unchanged in January

According to the most recently available employment summary from the Bureau of Labor Statistics, construction sector employment growth hit a wall to open 2021.

Construction employment had grown for eight straight months before losing 3,000 jobs in January. Employment had risen by 42,000 jobs in December.

Since last February, construction industry employment is down by 256,000.

The BLS will release the employment summary for February on Friday, March 5, at 8:30 a.m. EST.

Pending home sales slow in January

Like the automotive market last summer, prospective home buyers are dealing with a relative scarcity of inventory.

According to the National Association of Realtors (NAR), pending home sales fell 2.8% in January from the previous month.

On the other hand, January pending home sales were up 13% on a year-over-year basis.

“Pending home sales fell in January because there are simply not enough homes to match the demand on the market,” said Lawrence Yun, NAR’s chief economist. “That said, there has been an increase in permits and requests to build new homes.”

Actual metals prices and trends

The January 2021 construction spending gain could continue to pick up momentum as demand from prospective home buyers leads to some new construction.

The Chinese rebar price rose by 4.8% month over month to $715 per metric ton as of March 1. In addition, Chinese H-beam steel dipped by 0.7% to $576 per metric ton.

Meanwhile, the US shredded scrap steel price fell 10.2% to $412 per short ton.

European commercial 1050 aluminum sheet rose 8.5% to $3,200 per metric ton.

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Automotive

Automotive MMI: US auto sales strong in February despite inclement weather

The Automotive Monthly Metals Index (MMI) rose by 7.1% this month, as US auto sales were strong in February. You want more MetalMiner on your terms. Sign up for weekly email updates here. US auto…

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auto sale

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The Automotive Monthly Metals Index (MMI) rose by 7.1% this month, as US auto sales were strong in February.

March 2021 Automotive MMI chart

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US auto sales

Ford Motor Co. reported its February US retail auto sales reached 163,520 vehicles, down 1.8% year over year.

Ford truck sales increased 10.2% year over year. Meanwhile, SUV sales ticked up 0.2%. Ford car sales fell 56.5%.

Ford’s estimated retail share in February reached 12%, up from 11.7% last year.

“Share gains came from trucks and new product offerings of Bronco Sport and the fully electric Mustang Mach-E,” Ford said.

Honda sales overall fell 11.4% to 106,328 vehicles. However, the automaker reported its best-ever February for Honda truck sales. Truck sales rose 5% year over year.

Electric vehicles (EVs) still represent a small percentage of Honda’s total sales. Nonetheless, the automaker reported EV sales rose 96.2%, with deliveries nearing 8,000 vehicles.

Nissan, which moved to quarterly reporting last year, in January reported Q4 2020 sales in the US fell 19.3% year over year.

US auto sales growth in February

Late last month, J.D. Power and LMC Automotive forecast sales growth in February.

The automotive intelligence groups forecast a 3.3% increase year over year when adjusting for differences in selling days.

“Despite challenges posed by inclement weather in most of the country, retail sales demand continues to be strong with the industry posting a second consecutive month of year-over-year gains,” said Thomas King, president of the data and analytics division at J.D. Power. “Typically, weather related sales disruptions are made up in the weeks following, so most of the sales lost at the beginning of February will be made up at the end of February and trail into early March.”

Semiconductor shortage

Among a bevy of supply-chain issues impacting end users right now is the semiconductor shortage for the automotive industry.

Demand for semiconductors from the automotive industry is only increasing as vehicles become more complex.

As we noted last month, the problem has gotten so severe that General Motors announced it would extend downtimes at several plants due to the shortage. The automaker extended downtimes at its Fairfax (Kansas), CAMI (Canada) and San Luis Potosi (Mexico) plants.

Today, the automaker offered an update on the semiconductor shortage.

“GM continues to leverage every available semiconductor to build and ship our most popular and in-demand products, including full-size trucks and SUVs for our customers,” GM said in a statement released today. “GM has not taken downtime or reduced shifts at any of its truck plants due to the shortage. We continue to work closely with our supply base to find solutions for our suppliers’ semiconductor requirements and to mitigate impacts on GM.”

Furthermore, GM said it would extend the downtime again from the earlier mid-March target to the end of March for the Mexico plant. For Fairfax and CAMI, the automaker will extend downtimes through “at least mid-April.”

“Our intent is to make up as much production lost at these plants as possible,” GM concluded. “We contemplated this downtime when we discussed our outlook for 2021 last month.”

White House takes notice

The semiconductor crisis has garnered the White House and the new administration’s attention.

Last week, President Joe Biden signed an executive order that calls for reviews of several critical supply chains. Among the key materials the administration will review are semiconductors and critical minerals.

The reviews will also focus on pharmaceutical products and large capacity batteries (like those used in EVs).

“The United States is the birthplace of this technology, and has always been a leader in semiconductor development,” the White House said. “However, over the years we have underinvested in production—hurting our innovative edge—while other countries have learned from our example and increased their investments in the industry.”

The executive order called for a review within 100 days of supply chain vulnerabilities for semiconductors.

“The Secretary of Commerce, in consultation with the heads of appropriate agencies, shall submit a report identifying risks in the semiconductor manufacturing and advanced packaging supply chains and policy recommendations to address these risks,” the order stated.

Ramping output back up

According to the Semiconductor Industry Association (SIA), the US’s global share of semiconductor manufacturing has slipped from 37% in 1990 to 12% today.

Falan Yinung, director of industry statistics and economic policy for the SIA, said the semiconductor sector is in the process of ramping fabrication capacity utilization back up.

“When market demand runs high, such as in a cyclical market upturn like the one the market is in now, front-end semiconductor fabrication facilities, or fabs, will typically run above 80 percent capacity utilization, with some individual fabs running as high as between 90-100 percent,” the director said. … “Higher fab utilization will increase chip output and allow the industry to fully meet the increased demand in the market.”

The SIA is urging the Biden administration to invest in domestic semiconductor manufacturing incentives and research initiatives.

“Doing so will make more resilient America’s economy, national security, global technology leadership, and semiconductor supply chains,” Yinung added.

Actual metals prices and trends

The US HDG price rose by 7.1% month over month to $1,475 per short ton as of March 1. In addition, the US shredded scrap steel price fell 10.2% to $412 per short ton.

Meanwhile, the LME three-month copper price surged by 15.8% to $9,121 per metric ton.

The Korean 5052 aluminum coil premium dipped 0.9% to $3.45 per kilogram.

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Metal

Anglo American Brazil to invest up to $250 million in Minas-Rio

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Anglo American Brazil plans to invest between $200 to $250 million at its Minas-Rio site in 2021, according to a media report by Diario do Comercio.

The investment is part of the company’s $1 billion investment to complete phase 3 of its Minas-Rio project, a 529­km­long (328­mile­long) pellet feed-transporting slurry pipeline project.

The $200-250 million investment should also help Anglo American Brazil to increase iron ore output at Minas-Rio. Anglo American Brazil expects to reach a capacity of 26.5 million mt by 2022.

Despite the uncertainties in the domestic and global markets due to Covid-19, Anglo American Brazil expects increased iron ore demand.

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Source: https://www.steelorbis.com/steel-news/latest-news/anglo-american-brazil-to-invest-up-to-250-million-in-minas_rio-1188834.htm

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