Minneapolis Washer - Your Source for Current Steel Price Information

COPPER PRICES MAKE A TENTATIVE MOVE HIGHER

DANIEL MAGNOWSKI

Monday, June 16, 2008

LONDON - Industrial metal copper rose more than 1 percent in London on Monday, while the premium for metal for nearby delivery rose ahead of a key trading day.

Three-months futures in the metal, often considered a good gauge of underlying economic activity, were up $80 at a quoted $8,060/8,080 (U.S.) per tonne on the London Metal Exchange by 1056 GMT.

"Overall the complex is looking quite supportive as we go into the week," analyst Nick Moore at ABN Amro said.

the premium for copper for immediate delivery over metal for delivery in three months, often used as an indicator of how tightly-supplied markets are, rose to around $200 per tonne from $130 at the start of the month.

Traders were attempting to exit short positions they had built up in the expectation that prices would fall, analysts said.

"The backwardation is flying up, but I think it's a technical move ahead of Third Wednesday," Mr. Moore said, referring to options declaration day, which falls on the third Wednesday of each month.

Copper, though well below the peak it touched earlier this year, is still up 19 per cent for the year so far, making it one of the better-performing assets on financial markets.

"We still consider copper as on the expensive side even after the decline from the all-time high of $8880/t, yet limited and tight inventories make it very hard (and expensive) to short the metal," analyst John Reade at UBS said in a report.

Production of refined copper in China, the world's biggest user of the metal, rose 18.3 per cent in May to 323,800 tonnes, while aluminujm output rose 21.3 per cent to 1.16 million tonnes, data showed on Monday.

Still, the rise has not been enough to totally offset the 25 per cent decline in copper imports, according to interim data, forcing buyers to raid Shanghai warehouses for metal.

Lead, which fell steeply last week on account of high stock levels, was down a further $5 at $1,770/1,780 per tonne.

"It reminds people that certain commodities are uncomfortably in surplus," ABN's Mr. Moore said.

Aluminum was up $30 at $2,975/2,980 per tonne and zinc was unchanged at $1,900/1,910 per tonne.

Research body, the International Lead and Zinc Study Group said the world zinc market was in surplus by 78,000 tonnes in the first four months of this year.

Nickel was up $125 at $24,125/22,335 per tonne, and tin was up $500 at $21,500/21,750 per tonne.

LOFTY STEEL PRICES COULD KEEP CLIMBING

Reuters May 19,2008

by: Steve James

NEW YORK: Steel prices have soared almost 50 percent this year and could rise even higher as the cost of raw materials keeps climbing and global demand shows little sign of abating.

Steel makers have been steadily raising prices to benefit from a strong market after years of decline in the industry and also to pass along to customers the spiraling costs of iron ore and scrap metal, two major components for making steel.

Others have regularly added a surcharge to shipments to cover the extra costs of making steel, which is in huge demand in China, India and other countries building up their economies.

"We have not peaked," Michelle Applebaum, and independent steel industry analyst in Chicago, said Friday.  "Raw material prices will continue to rise and so will steel prices."

Michael Locker, who runs the steel industry consulting firm Locker Associates in New York, said that steel prices were unlikely to ease off much in the near term.

"Prices will peak soon, and then drop some," Locker said, but he added that even after the decline, prices would still be about double what they were last year.

Manufacturers who buy steel are feeling the pinch, but often have no recourse.  Toyota Motor just agreed to pay Nippon Steel and other Japanese steel makers 30 percent more for sheet steel.

Steel makers have already agreed to pay 65 percent more for iron ore from Brazil and face a possible 85 percent increase this year for Australian iron ore.

Those that use scrap instead are also paying record prices.  According to trade reports, auto factory scrap now sells for $690 to $710 a ton, about 70 percent higher than in March.

According to the industry newsletter World Steel Dynamics, the price of U.S. hot-rolled band steel rose 5.2 percent to $1,154 a ton in the past two weeks, while the world export price rose 2.9 percent to $1,024 a ton and the Western European price rose 2.1 percent to $1,088 a ton.

ArcelorMittal, the world's largest maker of steel, just raised its price in Europe by $186 a ton, or about 20 percent.

AK Steel Holding, which said its average first-quarter selling price was $1,135 a ton, last month raised spot market prices for carbon steel products $150 a ton.

The increase, it said, was in response to greater demand as well as "the need to recover unprecedented increases in steel making inputs."  AK also advised customers of a $640-a-ton surcharge to be added to invoices for electrical steel products shipped in June.

The U.S. Steel chairman and chief executive, John Surma, told Wall Street analysts last month that flat-rolled steel prices in the second quarter could be as much as $300 a ton higher - almost 50 percent above the average $646 first-quarter price.  He did not rule out surcharges to cover raw material costs.

A company spokesman, John Armstrong, said that "U.S. Steel only discusses pricing with its customers, but we endeavor to get market prices for our products."

Although most analysts surveyed by Reuters said they anticipated prices rising for a while, Peter Marcus of World Steel Dynamics said they might have topped out.  He said prices might slip because some users were unable to pass increases along to customers.

Marcus also mentioned that more banks were refusing to lend to finance high-priced steel inventories and that demand had dropped in Western countries "because consumer spending on steel-intensive goods is crowded out by rising outlays on fuels, food and other staples."

Locker, the industry consultant, said that rising steel prices have made U.S. steel makers more cost-competetive, while imports of less expensive foreign steel, which U.S. makers have complained about for years, were no longer part of the equation because prices have risen globally.

Applebaum, the industry analyst, said that although ArcelorMittal raised U.S. prices $40 to $60 a ton for June and July, it guaranteed the same price for August after discussions with customers.

"The message from the steel buyers was:' We understand what's happening with raw material costs, but the volatility and the speed with which it's happening is killing us," ' she said.

GLOBAL STEEL PRICES COULD SEE CORRECTION

Reuters

April 30,2008

London:  Sky-high production costs, strong demand and tight supplies have pushed global steel prices to new highs so far this year, but a correction may be on the way towards the end of this year, analysts say.

Global steel prices have risen by 40 per cent so far in 2008 as an export tax in China has halted supplies out of the country, squeezing the world market.

Production costs have more than doubled, with the price of key steel making ingredients such as coking coal and iron ore having risen by 300 percent and at least 65 per cent respectively.

Steel producers have managed to pass on their rising costs to their customers.  ArcelorMittal for example has raised its prices several times in the last four months.

Analysts say there's still room for prices to climb higher, but then a bumpy rise might be at the door.

"At the moment most indicators we track are suggesting tight fundamentals and possibly higher prices," said Neil Buxton, analyst at Industry Consultants GFMS.

Cost pressures

Buxton explained the reasons for higher prices as "cost pressures, lower exports for some products from China as well as surprisingly strong demand conditions".

Citi has recently raised its 2008 average hot rolled coil and rebar benchmark price estimates both by more than 14 per cent to reflect the cost increases of iron ore, coking coal and scrap prices.

"Underlying steel demand is expected to remain solid for at least H1 2008," the Bank said.  "However, we believe current steel demand is partly driven by inventory re-stocking, as distributors and other consumers anticipate higher prices related to raw material cost increases."