Base Metals Dashboard - Week Ending June 16, 2023

According to the LME’s latest Country of Origin report, released Monday morning, total warehouse on-warrant inventories fell to 386,075 mt last month, down from 491,675 mt in April. Most of this drawdown stemmed from traders canceling warrants on Indian-origin aluminum in Malaysian warehouses. Indian-origin on-warrant stocks fell to 116,800 mt, down from 228,800 mt in April. Most of these stocks remain in warehouses, however, according to LME statements. As for Russian-origin inventories, that on-warrant volume now totals 263,125 mt, up only 7,000 mt from April. Russian-origin aluminum now represents approximately 68% of total LME on-warrant stocks. Currently, about 98% of LME on-warrant inventories are of either Russian or Indian origin. (Source: LME)

Copper

Like miners, some drilling service companies are also bullish on copper prices and demand due to the energy transition. Major Drilling Group International, one of the world’s largest drilling service providers, recently proclaimed the energy transition “will require an enormous volume of copper,” leading to “increasing pressure on the existing supply/demand dynamic.” The energy transition will also require “substantial additional investments in copper and other base metal exploration projects," they also stated. (Source: Bloomberg)

China is once again trying to boost its economy with additional stimulus measures, which in turn pushes copper prices higher. On Monday night, the Chinese central bank lowered interest rates, a move that aims to boost borrowing and consumer spending. The Chinese government is also considering a much broader, larger stimulus package that will target the sagging real-estate sector. This potential stimulus package could include further interest rate adjustments, sources told Bloomberg. (Source: Bloomberg)

Boliden AB, a Swedish metals producer, has temporarily stopped production at its 218,000 mt Ronnskar, Sweden copper smelter due to a fire. “The main part of the Ronnskar production is expected to be resumed within a few weeks, but we assess that it will take years until the production is fully back to normal since the electronic refinery has to be rebuilt,” a spokesman stated. In April, the International Copper Study Group predicted that the copper market could be in a 114,000-ton deficit this year. The fire at Ronnskar will likely add to the potential supply deficit this year. (Source: Bloomberg)  

Steel

Automotive steel demand in the US could increase slightly, based on AutoForecast Solutions’ newly revised estimates of annual automotive production. The researcher now believes that American car producers will make 15.65 million vehicles this year, up 80,000 units from their prior estimate. "Sales of new light vehicles continue to chug along and automakers say they don't foresee a slowdown in the near term. This is mostly due to automakers increasing their sales to fleet customers, who have been starved of new product over the past couple of years," AutoForecast stated.

Prices for CME busheling scrap have tumbled nearly 20% since mid-March. This is likely due to more supply reaching scrapyards, according to recent comments from Bloomberg. Busheling scrap is an essential raw material for steel producers and a key driver of steel mill profitability. (Source: Bloomberg)

Argus’s weekly domestic HRC assessment has now fallen for four consecutive weeks as service centers remain disciplined about purchases, keeping inventory to a minimum. The assessment fell to $880/st this week, down $70/st from the prior week. (Source: Argus)

Like HRC, prices for hot-dipped galvanized (HDG) and cold-rolled coil (CRC) steel continue to drop. Argus’s HDG assessment fell to $1061.25/st this week, down $57.25/st compared to last week, and the CRC assessment now stands $1,065/st, down $77/st from last week. As the market struggles to calculate end-user demand, offers for both CRC & HDG remain in a wide range, from $1,040-1,120/st, Argus also reported. (Source: Argus)