Metal prices can no longer escape downward pull
by David Fleschen
US President Trump has so far not followed his grandiose announcements of an economic stimulus package, so that the sell-off on the stock markets continued yesterday. Last night, Trump blamed the EU for the spread of the corona virus in the U.S. and imposed a ban on entry for Europeans. This leads to a further slump in the stock markets today. Even industrial metals can no longer escape this. Copper falls to $ 5,400 a ton, marking its lowest level since November 2016.
Aluminum is cheaper to $ 1,660 a ton. Contrary to the first reports from last week, Japanese aluminum consumers do not have to pay a higher physical premium in the second quarter. Initial deals between aluminum producers and buyers, at $ 82 a ton, indicate an almost unchanged physical premium compared to the current quarter. The producers had asked for a significant increase in premiums at the start of the negotiations, which was apparently unrealistic in view of the coronavirus crisis (see also our daily information on raw materials from March 5).
After all, according to industrial circles, demand suffers more than supply from corona virus. The fall in oil prices should also lower the production costs of the melts, since energy accounts for around 40% of the total production costs of aluminum. A tendency for a sustained high supply to be met with only modest demand. One of the world's largest aluminum producers only estimates global demand growth at 1.3% this year, after falling last year for the first time since the economic crisis in 2009.
Source: Commerzbank Research, Photo: Fotolia