24 avril 2008
Steel imports creep up 1% in March
Steel imports remained low again in March at 2.51 million tons, increasing only 1.2% from February’s 2.48 million tons. While buyers are gagging over 2008 prices, domestic transactions remain lower than international prices and that is keeping foreign-made steel out of the U.S. marketplace.
According to year-to-date figures, imports have decreased 11.5% compared to 2007—or from 8.66 million tons in 2007 to 7.66 million tons in 2008. First-quarter imports are down 12% from Japan, 53% from Brazil, 59% from Russia, 29% from South Africa and 41% from China.
An analysis of Census Bureau data shows that products showing increases versus the same period in 2007 were line pipe (up 43%), oil country goods (up 14%) and such heavy structural shapes as wide-flange beams (up 9%). A review of the data by the American Institute for International Steel (AIIS) suggests that import arrivals in March were ordered from nations other that Mexico or Canada late in 2007.
“With the recent surprising run up in prices, those who received imports in March probably are benefiting by having missed some of the price increases,” says David Phelps, president of AIIS in a statement. Based on Purchasingdata.com statistics, steel prices in March were 16% higher than the fourth quarter of last year. Total steel imports in March were 17.4% below those of March 2007.
Looking ahead, independent analyst Michelle Applebaum expects imports to be up in April but suggests that “strong global prices, a weakening dollar and disciplined inventory management by service centers will lead to fewer imports into the U.S. during the summer months.” Analyst Timna Tanners at UBS Investment Research agrees that “importers continue to see limited import activity to the U.S. over the next few months.”
26 mars 2008
Brace for an increase in connector prices
Connector suppliers say it's likely that they will have to increase prices this year because of increased costs for precious metals and plastics.
"We continue to see rising raw materials costs most specifically for gold,” says Peter Krehbiel, president, connector products division, Molex Inc. in Lisle, Ill.. “We anticipate price increases this year due to rising costs for precious metals and resins." The last price hike implemented by Molex was last summer.
Tyco Electronics' Communications, Computer and Consumer Electronics (CC&CE) business unit implemented 5% price increases for some products in certain segments on Jan. 1. Additional price hikes are under evaluation.
Tyco has felt the impact of rising metal and oil prices. Gold is used in connectors and oil has impacted the price of plastics that Tyco also uses.
“We've been hit with some pretty good increases over the past several months and how this is going to impact us is a little tough to tell right now," says Jeff Brown, director of product management for the CC&CE business unit for Tyco in Harrisburg, Pa.
Brown says the biggest material cost impacts have been for palladium and gold, which are used heavily in the connector industry as plating materials. "Over the last few months we've been hit on multiple fronts with a lot of the raw materials we use," he says.
Despite having very focused programs in both manufacturing and engineering groups to reduce costs, Brown says it's getting more difficult to find ways to improve efficiencies and cost to offset those raw material price increases.
21 mars 2008
Import cutback by China to loosen copper supply
World copper supply may loosen this year if Chinese analysts are correct in predicting that the country’s net copper imports may fall by 10% this year from 2007 to 1.22 million metric tons. Meanwhile, short-term copper prices have tumbled to a three-week low as fears of a looming U.S. recession continue to spark a global market sell-off of stocks and futures.
The subscriber-only NymexDirect newsletter says that Maike Futures Brokerages’ deputy general manager, Shen Haihua, told the recent 2008 Base Metals Market Outlook forum that full-year refined copper imports will be 1.32 million metric tons, down from 1.48 million in 2007, while exports may fall to 100,000 metric tons from 124,000 last year. Shen forecasts there will be a 12% growth in domestic production to around 3.89 million metric tons, which should absorb a projected 8% increase in domestic consumption to 5.13 million metric tons. (The 2007 copper consumption total was around 4.74 million metric tons, a 22% gain from 2006 use.)
Meanwhile, the world copper price fell today back toward a $3 annual price average. It had jumped to $3.13/lb on Tuesday because of the aggressive rate cut of 75 basis points by the Federal Reserve in a bid to prevent the economy from sliding into recession. The 2008 consensus forecast for copper cathode is closer to $3/lb than last year $3.25, a projection endorsed by Xavier Garcia de Quevedo, the head of Mexico's Mining Chamber of Commerce, who sees cathode averaging $3, according to the Denver Post.
The Globe and Mail newspaper in Toronto suggests that slowing growth in the U.S., the world's biggest economy, could hurt demand for metals. Industrial metals have been focusing on movements in global financial markets in recent weeks rather than on supply and demand fundamentals. “Fundamentals really had little to do with any of ... (the) moves,” Standard Bank said in a research note. “Instead, the metals again looked to technical signals, the rest of the complex and the wider global markets for direction.”
Codelco to expand copper mining capacity
After some news sources report its annual output declined in 2007, Chilean copper miner Codelco plans to increase capacity in 2008 by upping its capital spending to $2 billion, up from $1.69 billion last year. Of that, $241 million will go to its new mine in Gaby due to start production in March, pumping out 100,000 metric tons of copper this year.
Codelco said this week its biggest risk to production is lack of energy. Bloomberg reports that energy prices in Chile, the world's largest supplier of copper, surged 29% in 12 months because of a shortage of natural gas from neighboring Argentina.
Copper prices in the U.S. hit their highest point in three weeks after the reports of Codelco’s reduced output hit the market to combine with weather-related concerns in China and lower stockpiles on the London Metal Exchange.
"It's a combination of these copper-specific fundamentals against the macro, and certainly with copper prices at $3.45/lb, the macro is losing," said Bill O'Neill, managing partner of LOGIC Advisors in a recent Reuters report.
Copper prices approach $4/lb as supplies tighten
Spot copper prices remain in the $3.70-$4.00 range as global stockpiles have dropped to the lowest level in six months, spurring speculation supply will trail demand for the year. “Copper looks the tightest market from a fundamental perspective,'' writes Barclays Bank analyst Kevin Norrish in London. Inventories may reach an all-time low and prices are sure to rise to an even higher record, he suggests.
A Thompson Financial report this morning says that sentiment towards nonferrous metals has swung since the start of this year. Most analysts had warned that base metals' prices were set for sharp falls as the credit crunch lingered, which meant players would sell off their holdings to raise cash and cover losses. But, in recent weeks, commodities have become tipped as useful assets. In the wake of the crisis, raw materials hold their value on a tight supply/demand balance, unlike equity markets which can crash completely. It is that perception that helped world copper hit its highest ever price of $4/lb on March 6 at the same time as gold and oil prices tested record highs.
Copper’s price has climbed for six consecutive years as production disruptions at mines from the Asia-Pacific region to Latin America have limited supply growth while demand from China, the world's largest user of the metal, and other developing nations has expanded. A weak dollar makes industrial metals cheaper for local currency holders and boosts the appeal of commodities. So, copper was up 27% in mid-March since the start of the year.
However, some other analysts suggest that copper prices may see some downward correction because the depressed U.S. economy will reduce near-future demand for the metal and China’s imports for the high-priced red metal may start declining. “Overall, we expect volatile trading in this short Easter week,” agrees analyst William Adams at BaseMetals.com. “Also, copper prices above $4 seem to be unattractive for Chinese investors,” adds an analysis by Karvy Comtrade in Mumbai, India.
23 août 2007
Copper and brass shipments down 8.4%
Continued cutbacks in new-housing construction starts have reduced need for copper and brass mill products this year. The housing industry is by far the largest end user of copper, around 40%. And that’s why midyear shipments by copper and brass service centers are 8.4% lower at 207.8 million pounds than the 226.8 million shipped in the January-June period of 2006.
For the initial six months of the year, total copper shipments are down 2% from the companion period of last year, while brass and bronze shipments are down an even sharper 12.6%, reports Frank Brown, executive director of the Copper & Brass Servicenter Association in Wayne, Pa.
Year-to-year shipments for copper rod and bar, which are predominantly used in fasteners and wiring, are up 7.63%, “the only significant bright spot” for distributors this year, says the industry group. Copper sheet is down 6.3%, copper plate has crashed 16.5%, copper pipe is off 13.5%, 200-series brass sheet is down 14% and 200-series brass plate has collapsed by 32%, while 300-series rod and bar has dropped 11.4%.
02 août 2007
Chip prices now seen rising
Citigroup’s Glen Yeung now expects the average sales prices for semiconductors in the third quarter to increase by 5%-10%, rather than a previously expected 5%-10% decline. “Suggestions of recent rush orders to motherboard makers gives us confidence that the upward price movement in DRAM (dynamic random access memory) pricing is poised to continue,” he writes in a research note.
Yeung points out that memory-chip makers have been cutting their equipment orders to reign in supply, hoping to boost prices. Also, his views mesh with those of Toshiba, which says that NAND flash average selling price for the second calendar quarter “seems to have increased about 5% percent'' when Toshiba had expected a decline of as much as 10%.
Steel sheet prices still weak
The U.S. sheet steel market remains challenged due to lackluster demand from such key end markets as automotive and appliances, which are prolonging the long overdue drawdown on sheet inventories. There’s no argument from buyers, since 62% of those surveyed this month reported steel prices flat or falling.
“Sheet steel prices are weak,” says analyst Randy Cousins at BMO Capital Markets in a research note today. And that’s why hot-rolled sheet has fallen to $516/ton from a cyclical peak of $630 last August and cold-rolled sheet has dropped to $603 from a peak of $725 last July-August. Prices of galvanized sheet, whether hot-dipped product or electrogalvanized coils, also are lower.
Several analysts say sheet prices will continue to slip in August—probably to around $500 for hot-rolled and $600 for cold-rolled—because of bland demand and reduced scrap costs. Analyst Mike Willemse at CIBC Capital Markets in a research note today says “steel inventories will be worked down over the coming months, and overall steel prices (particularly hot rolled coil) may begin to rebound in September.” Purchasing sees a slight pickup coming later, in October. See the latest Steel Flash Report commentary and price forecasts at www.purchasingdata.com.
19 juillet 2007
Steel prices drop for third straight month
Steel sheet prices in North America have fallen for a third consecutive month and hot-rolled sheet in coil (HRC) may even be lower than the $520/ton July price forecast by Purchasingdata.com. Subscription-only CRU Steel Monitor says its “latest assessments put HRC prices for medium-sized buyers at $520/ton, fob Midwest mill.” Analyst David Lipschitz at Merrill Lynch says “current pricing is $510/ton” but suggests that pricing may be near bottom.
The latest Steel Flash Report and Cold-Rolled Sheet Steel Report and Forecast both are available for sale at Purchasingdata.com. The reports point out that the overall economy is advancing at its slowest pace in five years, the struggling U.S. manufacturing sector is weaker than expected, steel buying is wilting in the early-summer heat, integrated steelmakers have increased production and carbon and alloy steel prices in general tumbled in June to the same averages as in March.
Just this week, with fresh market data providing evidence that mill and service center shipments are sliding in the face of very weak demand, analyst Mike Willemse at CIBC World Markets says “demand may not rebound enough in the third quarter for a firm pricing rebound to take place.”
Aluminum price forecasts vary widely
Why there is such a broad spread now? “It comes down to whether you feel we are heading into a U.S. slowdown that will drag global growth down with it and, hence, metal prices, or whether you are in the stronger for longer camp, in which case metal prices will hold higher longer,” says analyst William Adams of BaseMetals.com, a subscription news service, in an e-mail to Purchasing.com. “Also, Chinese exports are being curbed, which should reduce supply to the West and may even lead to some more production in China being curbed.” Adams says he believes that “analysts will gravitate to the ‘stronger for longer’ outlook so the lower-priced forecasts will be revised higher over the next quarter and as we approach LME Week in October.” LME Week is when metals forecast seminars and a big commodity exchange dinner are held, and when some year-ahead supply contracts are negotiated. At present, economists at Rio Tinto in London and analysts at Morgan Stanley in New York are at the high end of the range ($1.30) as both expect the bull market to continue next year. In fact, Rio Tinto, the mining company that’s buying Alcan of Montreal, expects the global demand outlook for aluminum to remain positive for the next ten years. The company expects world demand growth to be above 6% until 2011—paced by an annual average 15% growth in use in China. A report to clients by metals consultancy Harbor Aluminum in Laredo, Texas, points out that “there was a recent aluminum price forecast poll by the Reuters News Service, consisting of 28 analysts, which showed the average price forecast for 2008 was around $1.13/lb.” More bearish, however, are the economists at Macquarie Bank of Sydney, who expect a lower price average next year ($1.10/lb) as they believe that Chinese aluminum supply growth has more than matched Chinese aluminum demand growth. But, the most bearish to date are analysts at the J.P. Morgan Securities’ base metals desk in London and Deutsche Bank’s offices in London, who see $1.02 as the 2008 price average because of perceived explosion ahead in Chinese supply. Goldman Sachs of New York also projects that aluminum prices are set to weaken in 2008 (and probably 2009, as well) as the analysts there forecast Chinese aluminum production to increase by 35% versus Chinese aluminum demand growth increasing by 32%. |
