Metallprisnyheter augusti
The war in Iran has slipped out of focus, even though peace talks broke down over the summer. Now, the metal markets seem to navigate according to the general economic development in the US, Europe and China.
Macroeconomic developments
In June edition, we wrote about a possible peace agreement between the US and Iran, but that has long since broken down. However, metal prices have reacted differently this time than they did in the first phases of the war: Aluminium is currently at about the same level as when the war started in February, while copper is at an all-time high, but for completely different reasons.
Oil has only risen slightly after the flare-up.
Generally speaking, the war has receded into the background. Financial markets seem to be focusing more on general economic developments, with interest rates staying lower than expected in both Europe and the US. This is a sign of low inflation. China is in a similar situation and is struggling to keep growth going in both the labour market and the housing market.
Aluminium
The price of aluminium is significantly lower than in spring of this year. Since June, the price has fallen by about $250/tonne, and it has only gone up by about $50/tonne since the war flared up again in July.
Currently there are two tangible supply chain factors pulling in opposite directions: The Al Taweelah plant in the Middle East has restarted production after being damaged in the war and is now running at approximately 50% capacity. On the other hand, Alunorte, the world's largest non-Chinese alumina refinery, has limited production due to a lack of natural gas supply.
Overall, for the first time since February, the aluminium price appears to be driven not by the war in Iran, but instead by general economic developments.
Copper
Copper has been a funny thing all year. Production is not directly affected by the war in Iran, but prices have kept going up nonetheless.
Right now, there are three main factors pushing the price upwards:
- The US has been buying large amounts of copper all year to prepare for a possible upcoming tariff from Donald Trump. There is no clarification on the tariff yet, so the US exchange COMEX continues to stockpile copper (see the green line in the graph below).
- Last week, the price shot up on rumors that DR Congo will ban the export of copper concentrate. The purpose is to keep the processing in Congo to stimulate economic growth and jobs.
- The sudden rise in prices last week caught some short-sellers in a short squeeze. They have been betting that the price of copper would fall, and when the price instead rose dramatically, they needed to get their hands on physical copper stocks to fulfil their obligations. This sudden demand caused prices to rise even more.
Stainless steel
The summer holidays are still occupying most of Europe, and Italy and Spain have just begun the usual summer shutdown of stainless steel plants.
Plates/sheets
There has been hoarding in the market up to 1 January and 1 July due to uncertainties about CBAM and the safeguard quota, which means European stocks are high. But now that both frameworks have been clarified, the market needs to find a new, sustainable equilibrium.
Lead times are going down towards a more normal level. The expectation is that European plants will face pressure to decrease prices over the coming month as lead times become shorter. Right now, some EU wholesalers are selling at a lower cost than what the plants offer.
Bars
Prices and lead times are fairly stable, and the market seems healthy. There are no indications of supply chain bottle necks.
