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14 hours ago
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Stainless Steel Market Reacts to Tariff Hikes
Via Metal Miner The Stainless Monthly Metals Index (MMI) moved sideways, rising by a modest 0.35% from May to June. However, the stainless steel price remains under pressure from several factors. In a move few saw coming, President Trump doubled Section 232 tariffs on steel and aluminum imports from 25% to 50%. The duty increase took effect on June 4, just days after its announcement, leaving both suppliers and buyers with no real window to prepare. The tariff increase proved controversial, drawing concern from many industry experts. According to stainless analyst Katie Benchina Olsen, 'The U.S. flat-rolled stainless steel market has always required imports to satisfy the market demand. In some years, import penetration exceeded 30%, with steady state hovering around 18%.' Because of this reliance, the 'rapid implementation of a 50% tariff is wreaking havoc on the stainless steel industry. This, in turn, seems destined to also impact the stainless steel price. Already, importers of products that U.S. mills cannot support are having to go back to their customers for the second time this year to adjust pricing. This is material that the customer has to accept to pay the 50% tariff.' Don't miss the next tariff adjustment. Opt into MetalMiner's free weekly newsletter. As those relying on imports get pinched by the tariff hike, the quick implementation of such a significant increase in duties also poses considerable risks for stainless steel price stability from domestic producers. The only reprieve to the tariff hike seems to be the weak market conditions, which have plagued the industry for over a year. This might explain why U.S. mills have yet to adjust prices, as market oversupply, at least for now, remains a limiting factor. Depending on how long tariffs last, a lot could change. Higher duties will allow domestic producers to prioritize more favored grades of stainless, including common grades like 304, which represents the bulk of demand. This means most buyers will not face shortage risks, especially as common austenitic grades like 304 experienced oversupply conditions ahead of tariffs. However, the same could not be said for ferritics, where supply continues to appear increasingly tight. While 304 will remain readily available to buyers sourcing domestically, other grades will likely prove less lucky. As mills prioritize material like 304 to fill capacity, they will likely turn away other orders more often. Some of this behavior has already started to occur. Ahead of tariffs, Outokumpu's discount adjustment released in February increased prices for a number of stainless grades the mill prefers not to produce. By late May, NAS had reportedly started to turn away orders for bright annealed. While mills will likely remain sensitive to demand destruction, price increases will probably follow in the coming months, assuming tariffs stick around. However, some argue that the latest tariffs may prove more temporary than some might expect. Although part of the Trump Administration's intention is to support domestic producers, trade negotiations still represent the larger goal. As MetalMiner's Stuart Burns points out, 'the Trump administration announced the UK would not face the additional 25% increase to 50% on steel and aluminum while negotiations continue.' This decision likely serves as a cue to other countries looking to secure a new trade deal with the U.S. Aside from stainless, the tariff exemption appeared to temper the impact of the tariff hike on other markets. Carbon steel prices remained bearish in the following days. This signals that markets anticipate further tariff changes and reductions in the coming months. While deals may begin to roll in and offer relief to stainless steel buyers, it is worth noting that supply conditions are still likely to change. Countries like Vietnam and Indonesia, the biggest culprits in suppressing global stainless steel prices, are unlikely to secure exemptions or quotas. Meanwhile, lackluster demand conditions will help mitigate the impact of higher duty rates in the short term. However, reduced supply from the cheapest Asian producers—primarily responsible for dragging the global price curve lower—will inevitably offer more leverage to domestic producers with regard to stainless prices. By Nichole Bastin More Top Reads From this article on Error while retrieving data Sign in to access your portfolio Error while retrieving data Error while retrieving data Error while retrieving data Error while retrieving data
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5 days ago
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Navigating Base Metal Price Swings Through Strategic Hedging
Via Metal Miner There are many hedge fund strategies organizations can employ to generate returns and manage risk. Now, metal buyers are looking to apply these same concepts to certain metals. Base metals like copper have seen notable swings so far in 2025. According to the CME group, copper oscillated in a roughly $4.55–$4.80 per pound range throughout May as Chinese demand steadied and trade tensions eased. In contrast, aluminum has been much stronger. Analysts now predict that LME aluminum will average about $2,574/tonne in 2025 (up ~6% from 2024) on expected supply deficits. Figure: A January 2025 Reuters poll shows analysts' median 2025 forecasts for base metals. Aluminum is expected to outperform (≈+6% vs 2024), whereas copper (CU), lead (PB), nickel (NI) and tin (SN) forecasts were trimmed. Sources: VIA In short, base-metal prices remain volatile entering the second half of 2025. Emerging supply constraints (Chinese smelters pledging capacity cuts) and strong 'energy transition' demand globally remain counterbalanced by weaker growth and trade skirmishes. Amid this uncertainty, metal buyers cannot rely on 'benign' markets. Effective hedging, which involves using a mix of financial and operational tools, is essential to stabilize costs. As one risk manager put it, commodity hedging 'provides a level of price predictability' to aid in both budgeting and planning. Practical hedging involves locking in prices or managing exposure. One common strategy is buying metal futures on exchanges like the CME or LME. Forward contracts can also fix purchase costs. For example, a cable manufacturer might buy COMEX copper futures equal to its planned purchase, so any spot price rise is offset by gains on futures. In other words, if the physical price jumps later on, the hedged futures position gains an equivalent amount. According to the CME group, this 'back-to-back' hedging lets a producer or consumer offset price risk. Options give the right, but not the obligation, to transact at a set price. For instance, buying a call option lets you lock in a maximum purchase price (for a premium) while retaining upside if prices fall. Conversely, a put option can guarantee a minimum sale price for stored metal. See the details about the pros and cons of call and put options in MetalMiner's free guide 5 Best Practices of Metal Based Sourcing. The LME notes that a buyer pays a known premium for 'unlimited potential upside,' effectively capping the cost at the strike price. For example, a copper buyer might buy calls struck near current levels. If market prices spike, the call payoff compensates for the higher cost. To reduce premiums, companies can use collars (buying a put and selling a call) to set both floor and ceiling prices. In practice, options are best for insuring against rare extreme moves, whereas futures lock in cheaper prices when a move is expected. Over?the?counter fixed?price swaps or long-term supply agreements can also hedge budgets. In a swap, the buyer and bank agree on a fixed forward price. Monthly cash settlements then pay out any difference between the market average and that strike. For instance, a manufacturer could enter a 3-month swap on LME aluminum. If the monthly average LME price exceeds the swap price, the bank pays the company the difference (and vice versa). This ensures the company effectively 'locks in' its spend. Similarly, forward contracts with smelters or traders can fix quantities at agreed prices. If available, swap-based commodity funds or structured notes from banks (akin to swaps) are another option. This strategy is regularly covered in MetalMiner's Monthly Metals Outlook report for copper and other major base metal industries. These instruments allow hedging even when exchange liquidity is thin on certain tenors. Buyers can also negotiate contract terms with suppliers. A straightforward approach is a fixed-price agreement (tied to a metal index) for a set volume over a period. Alternatively, adding price caps or collars to contracts effectively shares risk. For example, the contract might allow price increases only up to a capped percentage or tie index adjustments to an agreed maximum. LME commentators note that collars 'define the maximum and minimum prices,' thus avoiding extreme swings. This way, if the market soars, the buyer only pays up to the cap. If prices fall, the supplier still gets at least the floor. Variations of this particular strategy include escalator clauses (prices rise only with a commodity index up to a limit) or step-up pricing. Holding extra metal inventory can act as a de facto hedge against shortages or sudden price jumps, but it also carries a cost. For instance, large buyers sometimes build safety stock when prices are low. However, as the LME warns, 'holding additional inventory exposes a company to the risk of a financial loss if its value falls.' For this reason, firms must balance carrying costs and capital lock-up against the premium paid for availability. In practice, companies might combine small buffer stocks with active financial hedges. Meanwhile, real-time monitoring of stock levels and contracts like prepaid forward deals (e.g., consignment stock or 'pay-as-you-go' structures) can provide flexibility. Spreading purchases across multiple suppliers or regions can mitigate supply shocks or localized price spikes. For example, a U.S. buyer might source aluminum from both North America and Europe, or qualify alternate mines for copper. This reduces exposure to any one producer's outage or one government's policy. Procurement experts caution that multiple sourcing 'loses price leverage on volume commitment,' but note it limits counterpart risk. Relatedly, companies are exploring near-shoring and regional alliances to avoid tariffs or geopolitical risks. Forming strategic partnerships (e.g., joint buying consortia) can also lock in volumes and get better terms. Regardless of the tools chosen, rigorous risk management is essential. Establish clear policies (what percent of exposure to hedge, for how long), and use scenario planning to quantify potential losses without hedges. Track key indicators (inventory levels, exchange stocks, macro drivers) and adjust hedge ratios dynamically. As one banker advised, hedging should align with the company's risk tolerance. It's 'not a way to win a market bet; the goal is to mitigate risk, increase certainty.' In other words, companies should use hedges to stabilize budgets, not to gamble on prices. Global growth and trade jitters have cooled demand expectations, even as supply-side shifts (China policy, decarbonization) keep markets tight in spots. In this environment, proactive hedging is critical. By employing a mix of hedge fund strategies like futures, options, swaps and smart contract terms, procurement teams can lock in most of their costs and avoid budget-busting surprises. As experts note, robust hedging brings 'price predictability' and protects margins. By Metal Miner More Top Reads From this article on
Yahoo
21-05-2025
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Tariff Uncertainty Fuels Copper Price Volatility
Via Metal Miner The Copper Monthly Metals Index (MMI) retraced to the downside with a 4.23% decline from March to April. Looking at copper prices today, analysts seem to be struggling with ongoing trade policy shifts. Comex copper prices have experienced wild swings over the past few months. First, they hit a new all-time high in March before plunging in April. By mid-May, they entered into a shaky sideways trend. Source: MetalMiner Insights Tariffs continue to drive the market. This month, markets have mostly been reacting to the U.S.'s most recent deals with China and the UK. Both appeared to ease concerns that the broad-based tariffs announced over recent months may prove less extreme than expected, resulting in renewed optimism about the global economy. While mostly stable, the bias appears increasingly to the downside for Comex copper prices today. This is mainly because tariff deals have yet to fully ease the demand concerns that continue to plague the market. The International Copper Study Group counts itself among those not particularly concerned about supply. Contrary to previous worries that the copper market was on the verge of growing deficit, the ICSG expects the market to maintain its surplus status in both 2025 and 2026. The group noted 'Uncertainty surrounding international trade policy that is likely to weaken the global economic outlook and negatively impact copper demand, usage growth rates have been revised down compared to the Group's September 2024 forecasts.' As a result, the surplus expectation more than doubled for 2025. Considering the surplus accumulated during 2024, this will leave the market with a significant cushion as trade policy evolves. While the raw material market remains tight, global growth prospects remain a concern. The U.S. economy shrank by 0.3% in Q1. Meanwhile, deflation remains a lingering problem for China, which is struggling to lean on domestic demand amid trade barriers in the U.S. The U.S.-China trade deal may have eased some market concerns about the impact of steep tariffs on the world's two largest economies. However, uncertainty lingers as the current agreement will expire in 90 days and still leaves a steep 30% tariff on Chinese goods. Global stocks returned to the upside in May, offering no support for copper prices today. While inventory fluctuations do not boast a strong correlation to copper prices, the rise suggests demand conditions appear relatively stable. Both SHFE and LME inventory levels experienced considerable drawdowns over recent months as material moved to the U.S. amid tariff concerns. Source: MacroMicro But while LME stocks continue to decline, SHFE stocks have started to rebound. This, alongside the continued rise in Comex stocks, has added a further drag to bullish expectations for copper prices. Among the other leading indicators for copper prices, the U.S. dollar index appeared to stabilize, halting declines that pushed the index below its long-term range in previous months. Source: MetalMiner Insights, Chart & Correlation Analysis Tool The index, which trades inversely to copper prices, has started to move sideways after regaining some of the losses accumulated in recent months. While it has fallen short of rebounding back to where it stood at the start of the year, the modest increase has seemingly weighed on copper prices over recent weeks. Investor expectations remain mixed on the future direction of the index. Speculation that the White House might favor a weaker dollar relative to other currencies added considerable weight, particularly after the Trump administration noted the strength of the U.S. dollar has come at the expense of U.S. exports. However, U.S. officials have subsequently clarified that currency policy is not part of ongoing trade negotiations. Meanwhile, the Federal Reserve has yet to blink with regard to rate cuts. Chairman Jerome Powell has remained reluctant to cut rates since last year, as tariff announcements have risked further inflation pressures in the U.S. While the most recent CPI and negotiations with China could incentivize a softer stance from the Fed, Powell has repeatedly cited 'uncertainty' as reason to hold rates steady. A cut from the Fed would add further pressure on the U.S. dollar, potentially dragging it back below its current range. This could stem further losses for copper prices today, tomorrow, and in the near future. Read MetalMiner's market outlook and copper price forecast here. By Nichole Bastin More Top Reads From this article on
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17-05-2025
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Buyers Are Racing To Stock Up on Key Metals Before Tariff Deadline
Via Metal Miner The Renewables MMI (Monthly Metals Index) moved sideways, rising a slight 2.83%. Metals prices, including those for copper, steel, lithium and cobalt, have seen significant swings in recent weeks as U.S. companies scramble to source material before tariffs are imposed. For instance, U.S. copper prices surged in Q1 as buyers raced ahead of potential import restrictions, only to tumble in early April when China retaliated with steep tariffs on U.S. goods. Trading data shows U.S. copper futures plunged 14% in a week, briefly dropping below $9,000/ton on the LME. The volatility reflects a classic import-arbitrage play. According to Reuters, with U.S. prices running about $756/ton above global benchmarks, U.S. inventories could jump once actual duties kick in. For now, copper's short-term trajectory is down from its March peak as tariffs lifted pressure on buyers. The steel sector shows a milder correction. Tariff anxiety earlier this year sent U.S. hot-rolled and plate prices to multi-year highs, but they had leveled off by early April. One market report noted that U.S. hot-rolled coil slid from its March peak (about $920/st) while steel-plate bids came off the boil. Meanwhile, domestic lead times for mills are already shrinking from the chaotic early-March rush, suggesting short-term demand has softened. Still, American steelmakers remain in a tight spot as 'reciprocal' tariffs announced for April 4 left already-protected items like steel and aluminum under the old 25% levies. Battery metals tell a mixed story. After surging last year, lithium prices remain under heavy pressure. S&P Global notes that a flood of new spodumene output and high inventory levels are driving an unprecedented oversupply. In fact, new mine projects and the restarting of operations in China sent lithium carbonate and hydroxide quotes lower throughout Q1. S&P forecasts further downward pressure into Q2 2025. This glut has knocked lithium to nearly three-year lows on some Asian indexes, raising questions about whether this is a reset or a longer-term trend. Cobalt prices have been equally volatile as a year of oversupply pushed prices to nine-year lows in January. In late February, the Democratic Republic of Congo imposed a surprise four-month export pause. Cobalt immediately spiked about 40% through March, closing Q1 around $34,000/ton, but the disruption has left the market on edge throughout May. Reports indicate that few traders expect the rally to last once Congolese shipments resume. Still, Q1's rush shows how sensitive cobalt is to geopolitical shifts even as longer-term demand for EV batteries and grid storage continues to grow. Overlaying all these trends are ongoing policy shifts, especially after the 2024 Trump campaign unveiled a plan for a broad tariff agenda that would reshape metal markets. A White House 'fact sheet' dated April 2, 2025 outlined a new 10% levy on all imports that would go into effect on April 5. It featured higher reciprocal rates for countries running big trade surpluses, which many argued could have significant impacts on metals prices. Those tariffs have since been placed on hold until July. But if these import restrictions do happen, markets will likely face short-term volatility. While Trump's plan sidelines copper from new tariffs, the broad trade war could still constrain supplies of battery metals used by the clean-energy sector, including lithium and cobalt. U.S. renewable projects and EV supply chains remain metal-intensive, and current market signals are mixed. For now, copper and steel prices have paused their tariff-fueled rallies, while lithium and cobalt are adjusting to big swings in supply. The Grain-Oriented Electrical Steel MMI (Monthly Metals Index) moved up by 10.17% month-over-month. In the world of current metals prices, electric-grade steel has its own tale to tell. Prices for GOES have been relatively flat to slightly up in recent weeks. One industry index puts North American GOES at about $3.87 per kilo in May (roughly a 0.5% uptick month-on-month). And with few new U.S. mills and inventories thin, any surge in electrical steel orders could keep contracts firm over the summer. While grain-oriented steel demand is rising on efficiency mandates, the craft's tight production base means any hiccup in imports could leave U.S. transformers waiting. All the while, proposed trade curbs have buyers and planners on watch. By the Metal Miner team More Top Reads From this article on Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
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13-05-2025
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China's Steel Exports Surge, Impacting ASEAN Markets
Via Metal Miner There's no doubt that China is desperately seeking new markets to hawk its goods and commodities after the U.S. trade tariffs kicked in. This is especially true when it comes to the country's steel industry. In fact, even prior to the trade war, Beijing was actively looking at expanding its access to steel markets. So, as anticipated, there are now reports of Chinese steel being dumped in Indian and ASEAN countries. While India quickly responded with a 12% safeguard duty, ASEAN countries like Malaysia and Vietnam now find themselves recipients of millions of tons of cheap Chinese exports. The boost in exports to ASEAN was clearly evident in the Q1 20245 export-import figures for steel, which showed a 32% year-on-year increase totaling 36.55 million tons. According to reports, the figure represented about 70% of China's total exports during that period, while only about 30% was earmarked for countries in other regions. Malaysia, for example, saw an uptick of 71.3%, while Vietnam experienced a hike of 68.5%. The high export figures have since sent the ASEAN Steel Committee into a tizzy as they sought to protect local steel markets. As per figures by the General Administration of Customs, China's rebar export touched 839,687 tons in Q1, up by 112% year-on-year. Meanwhile, wire rod exports added another 1.43 MT, up by 55% year on year. Finally, billet exports totaled 1.44 MT, a 10-fold year-on-year increase. However, the real caveat is that all of this happened when these steel products had yet to be impacted by the tariff war, though the clouds had certainly started to show on the horizon. ASEAN nation policymakers now have a tough call to make. For a long time, this group enjoyed the fruits of China's growth, including the country's re-laying and re-aligning of the global supply chain. Even in earlier times, when the U.S.-China trade relations ran into a dispute, this part of the world remained isolated from the fallout, sometimes even benefiting from the adverse conditions. According to one think tank's analysis, the fact that China's industrial capacity continues to outpace itself has put the ASEAN nations bang in the middle of an economic crisis. Reports indicate that exports to ASEAN by Beijing started moving upwards from 2023, sometimes even exceeding the export numbers of the U.S. and the European Union. In 2024, ASEAN total export figures from China increased by 12%, and from all available indications, they are set to rise even more in 2025. On the other hand, exports from ASEAN nations to China have declined by 3% since 2022, leading to a significant regional trade deficit. The aforementioned report indicates that part of the export growth was intermediate goods, thus propping up the export story of many an ASEAN nation. But today, final goods make up much of the exports, thus affecting employment and local economies. The current fear is that China's 'oversupply' could affect the ASEAN region's larger economic and industrial health, and could also have a cascading effect down the supply chain for the rest of the world. Where India is concerned, the demand to impose an anti-dumping duty on steel coming in from China has been there for some time now. In the wake of the U.S.-China tariff war, the government of India put a 12% safeguard duty on non-alloy and alloy steel flat products in April. According to the Ministry of Finance, the decision came after a probe by the Directorate General of Trade Remedies, which falls under the Ministry of Commerce and Industry. The report by the latter revealed that there had been a startling rise in imports, retaining the potential to hit India's local steel industry particularly hard. The new tariff will be in effect for 200 days. By Sohrab Darabshaw More Top Reads From this article on
