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
Nov. 7, 2013, 3:20 PM
- Alcoa (AA -7.2%) shares tumble as the LME reveals final rules designed to speed the delivery of metal out of its global warehousing network.
- The LME's rule essentially would force warehouses that are home to long waits for metal to deliver out more metal than they take in, a move analysts say could speed the flow of aluminum out of warehouses and pressure prices lower.
- Alcoa, which had criticized proposed changes, now voices support for a "more transparent marketplace" while calling on the exchange to give a clear outline on when it plans to implement the new rules.
- Also: CENX -7.9%, KALU -1.9%, ACH -1.3%, NOR -1.5%.
- Benchmark aluminum futures (JJU) are flat, trading ~$1,822/metric ton, well below the level much of the world's aluminum production requires to break even.
Oct. 30, 2013, 8:02 AM
- Chinese aluminum output is likely to hit a record 24M metric tons this year, a research director at top producer Chalco (ACH) says, suggesting production may ramp up towards year-end.
- China's growth in aluminum output means it has had little need for imports from global markets where stocks are sitting at record highs, with prices falling to a four-year low below $1,800/metric ton in June.
- China's aluminum production grew by almost 9% to 16.2M metric tons in the first nine months of 2013 vs. 19.9M for all of last year; total capacity is seen at 32M by the end of this year.
- Related: AA, JJU.
Oct. 24, 2013, 6:55 PM
- No wonder top aluminum makers Alcoa (AA) and Rusal are the most vocal opponents of an LME proposal aimed at easing bottlenecks of aluminum stored at warehouses: They've reaped ~$1.4B in revenues from higher fees amid the logjam, WSJ reports.
- Many analysts say these premiums are likely to shrink from record levels if the new warehouse rules are implemented; lower premiums would hit a stream of revenue aluminum companies have come to rely on since 2010, because prices for the metal itself have languished in recent years.
- Big banks have attracted most of the scrutiny from regulators because they own warehouses in the LME system, but the pushback from Alcoa underscores how any fallout from changes could reverberate beyond Wall Street.
- ETF: JJU.
Sep. 20, 2013, 9:42 AM
- A senior executive of the world’s largest aluminum producer, Russia’s Rusal, says 40% of global aluminum production is unsustainable at current prices, which may not bode well for Alcoa's (AA -0.9%) Q3 results when they're announced early next month.
- Global aluminum supply exceeded demand in the first seven months of this year by 773K metric tons, while the surplus in all of 2012 was 506K; BHP, RIO and CENX all have increased production significantly YTD.
- Alcoa managed to lower its costs by $64/metric ton in Q2 but its realized price fell by $92/metric ton, and there's no reason to believe prices have gone anywhere but down in Q3, Paul Ausick writes.
- ETF: JJU.
Jul. 25, 2013, 7:55 PMGoldman Sachs makes the case for holding commodities as a strategic move. On Brent crude, the market should be well supplied in H2 as significant non-OPEC supply comes online and weak Chinese trade data signals relatively weak demand. Gold prices should decline to $1,050/oz. by year-end 2014 given a less accommodative Fed. Potash producers will maintain discipline and good margins despite falling crop prices. | 11 Comments
May. 16, 2013, 2:54 PMAluminum demand is strong despite record-high inventories and will be further buoyed in coming years by increased usage in the automotive and aerospace industries, a top Alcoa (AA +0.6%) and other industry players tell CRU's World Aluminum congress. Alcoa says it is investing $575M in two new U.S. automotive sheet production facilities to meet North American demand that should quadruple by 2015. | 4 Comments
May. 14, 2013, 7:49 AMThe aluminum market (JJU) remains vastly oversupplied, even as the world’s top producer United Co. Rusal cuts Q1 output 4% to trim the global surplus that’s helped send prices 10% down YTD. A push by China to bolster aluminum production in Xinjiang province is adding to excess domestic stocks, Rusal notes. Also, LME-approved warehouses globally are piled high with 5M-plus tons of the metal. | 2 Comments
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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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