Copper inventories reach a four-year high
In February, copper averages held steady at $3.80. Prices rose early in the month but settled down with the start of the Chinese New Year on February 10, when Shanghai warehouses released more copper than anticipated.
Why it matters: This is the largest spike in copper inventories since early 2020. While inventories typically rise during the festival due to decreased factory activity, it’s unclear why levels increased so dramatically this year.
Big picture: Copper opened at $3.92 today after wobbling back and forth last week. On Friday, news of a cooling U.S. job market and optimism around future interest rate cuts brought prices closer to where they were at the start of the week.
- A 6% increase from vendors went into effect this morning.
- Analysts say copper could increase by more than 75% to reach record highs in 2025.
What we’re watching: We will keep a close eye on news surrounding China’s copper output and high inventories.
- China’s head of government cancelled an annual press conference following its parliamentary meeting that has offered foreign investors a glimpse into China’s economic policies for nearly 30 years.
- A federal court of appeals upheld the transfer of land in Arizona for a copper mining project. An Apache group considers the land sacred and says it will appeal to the U.S. Supreme Court.
- The copper output of Chilean state miner Codelco continues to fall to its lowest level in 25 years. Construction errors and a lack of maintenance have contributed to a series of delays and accidents.
Aluminum wire costs rise for the first time in a year
Vendors increased costs for aluminum wire by 5% on March 4, five weeks after the second-largest aluminum smelter in the U.S. shut down operations. This is the first increase in over a year.
Why it matters: The increase could be a sign of what’s to come with the closure of the smelter. So far, no market changes have been announced, but we will continue to watch for changes.
Big picture: Aluminum opened at $1.18 on March 11 and fell 16% between February 2023 and February 2024. Demand continues to soften as raw aluminum and finished goods are readily available from almost all vendors.
Steel pipe lead times remain at 2–3 weeks
Reacting to market conditions, steel pipe vendors adjusted prices down by roughly 3%. Lead times are mostly stable and remain at 2–3 weeks.
Big picture: Raw steel is still in good supply, and there has been a slight tick downward on some market costs for coil, hot-rolled steel and cold-rolled steel. Flatbed truck availability is improving, but challenges remain in some areas of the U.S.
What’s next: While there are pockets of maintenance among vendors, most manufacturers were positive about their output coming into March.
More steel news:
- The U.S. announced over 500 new sanctions against Russia, adding Russia’s largest steel pipe producer to the list.
- Mexico vowed to impose retaliatory tariffs on steel if the U.S. reinstates tariffs on Mexican steel and aluminum.
- Nucor, the largest steel producer in the U.S., is planning to build a $860-million rebar micro mill in the Pacific Northwest.
- A Nippon Steel executive is scheduled to meet with the United Steelworkers union to gain support for their acquisition of U.S. Steel, a deal which has drawn concern from some members of congress.
PVC suppliers announce a 3% increase
Resin prices have moved up slightly for March, and PVC suppliers announced a 3% increase for Monday, March 18.
Big picture: Overall, the PVC market continues to be soft. Supply is readily available from distributors and vendors, so we will see if the increase sticks as we head into construction season.
News roundup
A majority of economists say the Federal Reserve may start reducing interest rates in June, and a weakening job market may be the catalyst.
The British-owned ship that was struck by a Houthi missile on February 18 sank into the Red Sea on March 1. The conflict in the Middle East has not yet disrupted oil in the region, but we continue to watch the situation.