FMA newsletter explores shifts in metal markets

In its latest Fabrinomics® newsletter, Fabricators & Manufacturers Association Intl. (FMA), Elgin, Ill., addresses recent tumult in the steel sector that has been affecting consumption numbers:

“The threats of a large tariff imposed on steel coming from outside the country has captured the attention of both producers and users. At this point, the details of the tariff have not been released, and it seems that the different exporting countries will be playing by different rules. The largest exporter to the U.S. is Canada, and the majority of the top 10 exporters are longtime allies. Given that this tariff is supposed to be for the protection of national security, it makes little sense to equate steel imports from China with those from Canada, and there may yet be exemptions to the 40 percent tariff.

“Beyond this uneasiness as to what is planned, steel users want to protect themselves from impending higher prices, and that has meant more stockpiling. The actual consumption of steel has not grown all that much, but the accumulating is showing up in these higher consumption figures.

“For the month [July 2017], the prices of metal have been trending back up, but over the past several months they generally have been down from where they were at the start of the year. The decline in pricing was mostly due to fluctuating demand, but now there are many producers that have chosen to reduce their output in response to that slack in demand.

“Not all metals are responding the same way, as aluminum trended up late last year and has been bouncing along at about the same level for the bulk of this year. Copper jumped up last year and has been holding steady since. Nickel plunged at the start of the year and has not recovered much since. This is connected to the issue that has been affecting steel production and demand.

“There is a lot of uneasiness in the metals market right now, as politics has played a far greater role than it has in the past. The threat of steel tariffs has been looming since the election, and it has been hard to get a real read. The issue has been China (at least politically), but China accounts for only about 2.7 percent of the steel imported into the U.S. Canada is the No. 1 supplier, and [it has] already secured an exemption (along with Australia). Others will soon follow as the bulk of imported steel comes from U.S. allies in Europe and Asia. Meanwhile users have been trying to do some stockpiling in case the prices get out of control.”