Wed, Nov. 11, 4:58 PM
- Alcoa (NYSE:AA) fell 3.2% in today's trade to post its lowest close of the year, weighed by rising aluminum production in China which has sent prices of the metal not far off six-year lows, WSJ reports.
- China's aluminum output has increased 18% Y/Y, according to the International Aluminum Institute, and Citibank estimates Chinese producers could add another 1M tons of new annual smelting capacity before year-end.
- "The capacity additions are very bearish for prices. It has driven the Chinese market into increasing oversupply and forced them to export more,” says Citi's Ivan Szpakowski, who expects only a moderate recovery for aluminum next year.
- ETFs: JJU, FOIL
Fri, Oct. 9, 7:49 AM
- Glencore's (OTCPK:GLCNF, OTCPK:GLNCY) planned cuts to its zinc production sends zinc prices soaring 9% overnight and bringing other base metals including copper along for the ride.
- The move is good news for Glencore's stock price too, with shares up more than 11% in London and more than doubling since reaching a record low last week.
- Glencore's reduced operations in Australia, Kazakhstan and South America will reduce global zinc supply by 500K metric tons/year, not a trivial amount in a 14.5M tons/year global market.
- Zinc has, along with nearly all commodities, been under pressure from oversupply, sliding to a five-year low of $1,601.50/ton on Sept. 28.
- Further destocking of zinc and a more visible recovery in China’s industrial activities will be needed to propel a more sustained price rally, says Xiao Fu, head of commodity markets strategy at BOCI Global Commodities.
- ETFs: JJC, DBB, JJN, JJU, CPER, JJT, BOM, RJZ, BOS, FOIL, JJM, LD, BDD, NINI, CUPM, LEDD, UBM, BDG, HEVY
Wed, Sep. 9, 11:19 AM
- Industrial metals continue their recent climb, with aluminum, zinc and lead trying to play catch-up with copper, which has gained 5% this week as more miners mothball operations at loss-making mines.
- Glencore's (OTCPK:GLNCY, OTCPK:GLCNF) Monday announcement that it will cut 400K metric tons of copper production over the next 18 months at two mines in the Democratic Republic of Congo and Zambia comes in the wake of closures or cutbacks at mines controlled by Freeport McMoRan (FCX +4.3%) and others; shortly after Glencore’s decision, the Chinese operator of the Baluba mine in Zambia said it was suspending operations and cutting jobs.
- The closures follow a high level of production outages across the copper industry this year because of bad weather and labor disputes, with the combined effect helping to tighten the difference between supply and demand.
- ETFs: JJC, DBB, JJN, JJU, CPER, JJT, BOM, RJZ, BOS, FOIL, JJM, LD, BDD, NINI, CUPM, LEDD
Wed, Sep. 2, 7:36 AM| Wed, Sep. 2, 7:36 AM | Comment!
Tue, Aug. 11, 11:35 AM
- Commodity metals are getting hammered by China's devaluation, with aluminum trading down nearly 2%, copper prices lower by 2.5% and nickel plunging more than 3.5%.
- Hardest hit of the mining stocks is Freeport McMoRan (FCX -14.1%), which has completely surrendered yesterday's 10.8% surge; shares now are down 72% over the past year and 57% YTD.
- Iron ore miners are sharply lower: BHP -5.5%, RIO -4.2%, VALE -7.8%, CLF -7.3%.
- Steel companies: X -9.7%, MT -5.1%, AKS -5.7%, NUE -2.9%, STLD -3.5%, CMC -4%.
- Also: AA -6%, CENX -4.9%, TCK -8.2%, SCCO -4.9%.
- ETFs: XLB, JJC, XME, SLX, PEO, VAW, COPX, DBB, UYM, CU, IYM, JJN, SMN, JJU, PICK, MATL, CPER, JJT, BOM, RJZ, FXZ, PYZ, BOS, FOIL, JJM, LD, BDD
Mon, Jun. 8, 5:44 PM
- Alcoa (NYSE:AA) challenges the CFTC's authority to intervene in a contentious overhaul of the London Metal Exchange's warehouse policy that has caused a big drop in aluminum prices.
- In March, the CFTC deferred a decision about the LME's 2012 application to be registered as a "foreign board of trade," telling the exchange it should do more to address concerns about long waiting times; Alcoa has questioned whether the agency has the legal authority to intervene, and today it filed a request under the Freedom of Information Act to find out what had caused the CFTC to delay its decision on the LME.
- Related aluminum ETFs: JJU, FOIL
Sat, Apr. 11, 7:00 AM
- The auto sleuths at Autoblog.com tip that the next version of the Chevrolet Silverado could include aluminum body parts (Silverado pics).
- The 2016.5 Silverado model is expected to be unveiled later this year.
- The development follows the bold bet Ford made this year with a move to aluminum with the F-150.
- Demand for the new F-150 has been solid amid stellar reviews, although the fuel economy impact of trimming 700 pounds from the new F-150 was muted a bit when gas prices fell sharply last fall.
- Fiat Chrysler Automobiles (NYSE:FCAU) has been toying with a plan to use aluminum with the next-gen Jeep Wrangler.
- Initiatives by General Motors (NYSE:GM) or Fiat Chrysler to use aluminum could benefit Alcoa (NYSE:AA), Kaiser Aluminum (NASDAQ:KALU), and Constellium (NYSE:CSTM).
- Related Aluminum ETFs: JJU, FOIL.
Tue, Feb. 3, 10:24 AM
- Copper prices are on track for their biggest gains since September on speculation that China would use stimulus measures to jump-start its economy and boost demand for the metal.
- Rising oil prices and Chinese stimulus speculation “have changed the focus to the upside and the short-covering has done the rest,” says Saxo Bank's Ole Hansen, adding that “energy is such a big and important part of the commodity sector, and the somewhat improved sentiment there also helps other” raw materials; aluminum and nickel also are rising to multi-week highs.
- "We’re in this perverse world where bad news is good news,” says BNP Paribas analyst Stephen Briggs, and "a lot of people are thinking China’s going to join the rest of the world and lower interest rates or [offer] some kind of monetary response."
- Raw materials companies are off to a strong start today: FCX +5.8%, BHP +3.9%, RIO +2.4%, VALE +3.9%, SCCO +3.4%.
- ETFs: JJC, DBB, JJN, JJU, JJT, CPER, BOM, RJZ, BOS, LD, BDD, JJM, FOIL, NINI, CUPM
Fri, Jan. 23, 8:21 AM
- "The primary reason for the changes to our forecasts is cost deflation," says the team, noting "actual and anticipated U.S. dollar strength, cheaper energy and other input costs and our expectation of an improvement in mining productivity."
- The bank cut its expectations for metals and mined raw materials over the next three years by between 10 and 20 percent.
- Bearish on copper (NYSEARCA:JJC) even after a 20% decline over the last year, Goldman cuts its forecast for this year to $5,542 per metric ton from $6,400.
- Facing a sustained period of oversupply, iron ore is now seen averaging $66 per ton vs. $80 previously. Gold's forecast is trimmed to $1,089 per ounce from $1,200.
- ETFs: JJC, DBB, JJN, JJU, JJT, CPER, BOM, RJZ, BOS, LD, BDD, JJM, FOIL, NINI, CUPM, RGRI, LEDD, UBM, BDG, USMI, HEVY
Jul. 17, 2014, 11:39 AM
- Aluminum prices reach their highest levels in 16 months as falling inventories, smelter closures and a strong demand outlook continue to attract buyers.
- Companies such as Alcoa (NYSE:AA), Rusal and Rio Tinto (NYSE:RIO) have been shutting smelters over the past two years in an effort to tackle aluminum oversupply, while demand has remained strong; Citi sees demand growth of 6%/year through the end of the decade, driven by the increased use of aluminum in car production.
- Sentiment also has been helped by declining inventories, as LME stocks have dropped below 5M metric tons for the first time since Sept. 2012, but analysts say it will take years to whittle away at the further 5M tons of inventories thought to be held in non-LME warehouses.
- ETFs: JJU, FOIL
Jul. 3, 2014, 2:12 AM
- Alcoa (AA) is warning that if newly proposed warehousing rules are approved, premiums it charges for physical metal delivery will likely shift.
- The company has also replied to SEC inquiries regarding the matter, saying if the reforms are passed, more aluminum can hit the physical market, hitting the premiums paid by customers who need physical delivery of the metal.
- Aluminum producers and Alcoa earn a premium above the London Metal Exchange benchmark price from buyers needing an actual delivery, with some premiums hitting record highs this year.
- ETFs: JJU, FOIL
Jun. 17, 2014, 10:45 AM
- ArcelorMittal ([[MT] -0.3%) is fighting back against aluminum's advances in the U.S. and European auto industries by investing in fast-growing car markets, such as China and Mexico, CEO Lakshmi Mittal says.
- Mittal also challenges claims that aluminum is invariably lighter, saying the aluminum industry uses outdated data when comparing its metal to steel and that new forms of steel "can provide all the weight reduction that auto producers require to satisfy the new fuel-efficiency standards, for all types of vehicle."
- A recent report from Ducker Worldwide said 18% of all vehicles will have all-aluminum bodies by 2025 vs. less than 1% now, and that Ford’s move to use an aluminum body for its 2015 F-150 pickup signals a shift by automakers toward lightweight materials for pickups and SUVs to meet tougher fuel-economy standards.
- ETFs: SLX, JJU
Apr. 29, 2014, 7:15 PM
- U.S. government forecasters predict a more than 65% chance for an El Niño weather phenomenon by the end of the year, a development that threatens to drive up prices for food and other staples.
- El Niño has a reputation for triggering sharp run-ups for prices in markets as diverse as nickel, coffee and soybeans, and commodities investors, traders and analysts are bracing for impact at a time when global supplies of many raw materials already are stretched.
- Global food prices - which at the start of 2014 were expected to be largely flat this year - could easily climb 15% to record highs in as a little as three months after an El Niño occurs, says World Bank economist James Baffes.
- But Société Générale analysts say it is miners, not farmers, who have the most to worry about; since 1991, nickel prices rose the most (13.9%) during El Niño years among commodities the bank tracks.
- ETFs: DBA, CORN, DBC, JO, JJC, RJA, JJG, WEAT, SOYB, DJP, SGG, DBB, COW, NIB, GSG, RJI, CAFE, BAL, GCC, DAG, USCI, JJA, GRU, CHOC, CANE, JJN, RGRA, AGA, JJT, RGRC, CPER, AGF, GSP, BOM, RJZ, JJU, GSC, LSC, FUD, DJCI, USAG, BOS, SGAR, JJM, DEE, BDD, UCI, LD, WEET, UAG, DYY, DIRT, BCM, CMD, DDP, NINI, JJS, CTNN, TAGS, UBC, CUPM, FOIL, UCD, ADZ, RGRI, LEDD, UBM, CMDT, BDG, SBV, USMI, DPU, LSTK, CSCB, GRWN, HEVY, CSCR
Mar. 27, 2014, 12:43 PM
- Alcoa (AA +6.1%) shares are surging after a U.K. court ruling that for now nixes a planned overhaul of warehouse operations by the London Metal Exchange.
- The High Court in London ruled in favor of Russian aluminum producer Rusal, which fears prices of its products will suffer from the LME's efforts, that the consultation process had been unfair.
- LME reforms designed to make owners of warehouses in the exchange's global network deliver metal more quickly to consumers had been due to take effect April 1.
- ETFs: JJU, FOIL.
Mar. 18, 2014, 10:33 AM
- CME Group announces the May 5 launch (pending regulatory approvals) of a North American physically settled aluminum futures contract. The contracts will trade in 25 metric ton sizes and come to market as Midwest premium prices have jumped more than 50% this year.
- Press release
- Aluminum ETFs: JJU, FOIL
Dec. 27, 2013, 4:29 AM
- The WSJ shines a light onto "shadow warehouses," a hidden system of facilities that store tens of millions of tons of aluminum, copper, nickel and zinc across the globe for banks, hedge funds and commodity merchants.
- The warehouses operate outside the London Metal Exchange's system, are unregulated, and don't provide details of their holdings. As a result, it's unclear how much metal is held in the shadow system. This lack of visibility could cause major price swings.
- The WSJ article follows allegations that warehousing companies have artificially boosted the price of metals, particularly aluminum.
- Companies that operate metals warehouses include Goldman Sachs (GS), Glencore Xstrata (GLCNF) and JPMorgan (JPM), although the latter is looking to sell its commodities unit.
- Relevant tickers include VALE, AA, AWC, KALU, MNSF, CENX, NOR, BHP, RIO, ACH.
- ETFs: DBC, JJC, DBB, DJP, GSG, RJI, GCC, USCI, CFD, JJN, JJT, BOM, RGRC, CPER, CTF, RJZ, GSC, LSC, GSP, JJU, DEE, BDD, BOS, JJM, DYY, DDP, DJCI, LD, CMD, BCM, CUPM, UCI, RGRI, UCD, UBM, FOIL, BDG, LEDD, CMDT, SBV, USMI, DPU, NINI, FTGC, CSCB, CSCR, HEVY
The Dow Jones-UBS Aluminum Subindex Total ReturnSM is a sub-index of the Dow Jones-UBS Commodity Index Total ReturnSM and is intended to reflect the returns that are potentially available through an unleveraged investment in the futures contracts on physical commodities comprising the index as well as the rate of interest that could be earned on cash collateral invested in specified Treasury Bills. The Dow Jones-UBS Aluminum Subindex Total ReturnSM is a single-commodity sub-index currently consisting of one futures contract on the commodity of aluminum, which is included in the Dow Jones-UBS Commodity Index Total ReturnSM.
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