• NonFerrous Beat

Nonferrous Market Developments

For the year-to-date (through May 23rd), nickel has had the best performance among the major base metals at the London Metal Exchange, rising more than 18 percent as compared to the end of 2017, followed by tin prices, which have advanced nearly 4 percent.

Following last year’s ramp up in zinc prices, the LME official 3-mo. price for zinc was down 8 percent for the year-to-date, while the corresponding copper price declined 5 percent:


As for the copper market in China, Macquarie Research reports that “industry and trade sentiment in China’s copper market, regarding the next three months, remains generally positive – but it lacks the buoyancy that we identified earlier this year. Yes, sequential growth in copper sales (fabricators, traders, smelters) have extended, but momentum in end-user engagement has eased, following last month’s strong month-on-month jump … On the supply side, smelter output rates dipped this month despite a month-on-month lift in sales. So smelters now expect production to increase in the coming month. Concentrate inventories of smelters were drawn down this past month; they’re now keen to restock, particularly as spot TC/RCs have lifted in recent weeks, partly on a smelter shutdown in India.” Meanwhile, Macquarie reports range-bound copper prices in China:


The International Copper Study Group reports that global refined copper production increased 3.3% during the first two months of 2018 as primary production rose 3 percent and secondary refined production (from scrap) increased 4.5 percent as compared to the first two months of 2017. As a result, ICSG estimates a world refined copper supply surplus of around 110,000 metric tons during the first two months of 2018 (or a surplus of around 105,000 tons adjusted for estimated changes in Chinese bonded stocks).

As for the aluminum market, the impacts of the Section 232 investigation tariffs and Russian sanctions continue to reverberate throughout the U.S. market. The Financial Times recently quoted Novelis North America president Marco Palmieri as saying “The combination of President Donald Trump’s aluminum tariffs and U.S. sanctions against Rusal, the largest producer outside China, has created more turmoil in the aluminum market than at any time since the collapse of the Soviet Union … ‘We have seen aluminum prices in the past higher than they are today,’ he said, ‘but what we don’t like is the volatility, the uncertainty.’” Mr. Palmieri was also quoted as saying “The price of aluminum scrap in the US could fall if US exports of its scrap to China were hurt by tariffs imposed by Beijing.” Here’s the trend in the U.S. producer price index for aluminum scrap going back to 2011 according to the Bureau of Labor Statistics:

PPI Industry Data

Of note, Bloomberg recently reported that “Russian billionaire Oleg Deripaska took the first steps to reduce his influence over his commodity business as he seeks to persuade the U.S. to lift sanctions. Deripaska stepped down as a director of En+ Group Plc, the company said on Friday. He also won’t be seeking re-election as a director of United Co. Rusal at the forthcoming annual general meeting… Deripaska is seeking to persuade the U.S. to roll back sanctions that blacklisted Rusal and En+ from Western markets and fueled chaos in the global supply chain for aluminum since they were announced April 6. En+ announced last month the tycoon agreed ‘in principle’ to cut his stake in En+ and resign. It’s not clear whether the concessions will be enough to satisfy U.S. authorities.”

Nonferrous Beat

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