Supply crunch, demand recovery put metals prices at multi-year highs

Just months after some products within the metals complex were plumbing multi-year lows and bears were predicting an extended downturn, metal prices are reaching their multi-year highs on supply crunch and recovery in demand. 

While the COVID-19 pandemic still had the global economy staggering, price of hot-rolled coil in the US had dipped to a 2020 low of $439.25 per tonne in early August. HRC, typically a bellwether of the industry’s health, is currently the most expensive it’s ever been at more than $1,320 a tonne, nearly double the 10-year average and roughly 200% above that August low.

There’s a similar story in ferrous scrap, a main feedstock for electric-arc furnace steelmaking. The US shredded scrap currently is at around $446.25 per tonne, about $115a tonne over its historical average and a level not seen since 2014.

Not to be outdone, non-ferrous metals are hitting the roofs as well. The Platts Midwest aluminum transaction premium recently hit a 29-month high of 20.5 cents a pound. That’s still below the all-time peak of 24.25 cents/lb seen in January 2015, but it’s more than double the multi-year low of 8 cents/lb reached in May 2020.

Copper is at a 10-year high of more than $ 9,144/tonne, while nickel hit $ 19,689 a tonne late last month, the highest level since July 2014. Nickel has since dipped into a range of $16,100-$16,500 per tonne, but is expected to rally again.

These elevated metals prices are only a factor of traditional economic fundamentals – supply is tight, inventories have been drawn down and demand is improving.

Producers of both ferrous and nonferrous metals have struggled to catch up with the demand uptick ever since they idled capacity due to the COVID-19 crisis early last year. Add to that the US tariffs on steel and aluminum imports, and it’s easy to see why there’s an upward pricing pressure.

For aluminum, the US market is a net importer and questions linger regarding the extension of quotas on Canadian exports. Canada is America’s largest aluminum supplier, and domestic demand continues to exceed supply. Copper and nickel are tied tightly to the electric vehicle and energy storage sectors, where demand continues to rise, as well. 

US and China are thus spearheading the global prices of both ferrous and non-ferrous metals. 

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