Uh Oh…Copper’s Falling Fast – 6/22/22

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What is REALLY going on?

Here we are looking at the markets trying to figure out our left hand from our right hand. We’ve seen copper prices decline by over $0.60 in the last three weeks and there haven’t been any strong signs of market growth or stimulation from any direction.

Federal Rate Hikes…

After the federal reserves raised interest rates we started to see the US dollar growing but we started to see commodities shrinking. Moving into the rest of the summer we do not expect to hear much more positive news as the federal reserve is slated to increase the rates again in July which could decrease commodities for another month and a half or so.

We have not seen the price of steel decreased in the last few days but we have seen more rumblings that there could be further price decreases coming.

Energy Column – Gas & Oil Prices

Prices are not budging. Gas and diesel prices continue their streaks of record highs and market analysts believe there won’t be much relief in sight for the average consumer until well into 2023. Refining capacity has been the key catalyst for the jump and stabilization of record prices for refined products. There is some promising news for next year in terms of capacity additions in the Middle East and Africa, which can help to bring more gasoline and diesel to markets that are starved right now. If more product can move into Europe from these capacity additions coming online, then the Europeans will be less reliant on American gasoline and diesel fuel, increasing availability for Americans to consume.

There have been murmurings of further White House action to try and allow some reprieve to Americans as they fill up at the pump. The Biden administration has been examining the idea to curb exports of gasoline and diesel. If implemented however, this decision could very well lead to even more pain for energy prices in the US. Sure, it sounds good on the surface; keeping product within the US borders so that Americans can consume more at cheaper prices. However, due to gasoline and diesel being a derivative of oil, there is a justified fear oil price would skyrocket if Biden imposed this policy and refiners in the US would have their input costs go even further up to purchase more expensive barrels of oil. After all, oil is very much a global commodity and policies that are siloed to one specific country simply cannot work with such a commodity like oil. If you don’t believe me, look at what has happened with the Russia-Ukraine conflict. There has been a ripple effect throughout the oil, gasoline and distillate markets across the world because of one localized, geopolitical event.

We’ll sign off on one last piece of news coming out of the White House. Biden penned a letter to the major refiners in the US to start producing more and drive their capacities up to lower gas and diesel prices. We are confident this anything-but-love letter to the major refiners will do nothing to change their minds. They got burned in 2020 when prices went negative and are still shell-shocked. It’s surely going to take a lot more than a strongly worded letter from President Biden to start changing the ways of big oil.  

Non-Ferrous Prices & Market Status

  • Copper – SELL

  • Aluminum – HOLD

  • Brass – SELL

  • Copper Wire – HOLD

  • Stainless Steel – HOLD

We’ve seen the markets come down again with copper falling this morning at one point over $0.15 in early morning trading. This just shows that there’s further pressure from Chinese shutdowns as well as different supply chain issues that we continue to see. On top of that, they’re talking about gas and oil prices continuing to stay at very high levels which will cause more disruptions down the road. 

Some of what we talked about in the original paragraph, will show you that the federal reserve potentially hiking interest rates up again will also affect the copper market in a negative way. If you haven’t sold the material that you have you might want to consider selling now or sitting on it for the seeable future. 

We’ve also seen the NICKEL market have massive callbacks with stainless steel prices dropping $0.30-$0.40 from the highs that they were a few months ago. Even though the NICKEL markets are still very strong, we are not seeing the demand there as more signs of weakening continue.

Ferrous Prices & Market Status

  • #1 Steel – HOLD

  • Shreddable Steel – SELL

  • Light Iron – SELL

  • Cast Iron – HOLD

  • Complete Car – SELL

With oil prices continuing to increase over the scale for diesel and gasoline, we are continuing to see steel prices having an opposite effect. The market looks to be continuing the weekend and this may be the new normal for a little period of time throughout the rest of the summer.

Boosted Catalytic Converter Prices at RRCats

Catalytic Converter Prices & Market Status

  • Catalytic Converters – HOLD or SELL

We have seen an increase in the national average for catalytic converters by about four dollars per cat over the last week. We saw an increase in the platinum and the Palladium market which are positive signs and show that the auto industry might be getting itself back online after massive supply chain disruptions.

10 Days of Price Locking

Knowing that you can have 10 days of locking prices through RRCats.com it is a big positive when looking to get quotes on catalytic converters from markets.

Thank You.

Don’t forget to check out weekly videos and podcasts on YouTube!

– Tom

 


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