- Prices across most ore and alloy markets trended higher in September, buoyed by improving demand from steelmakers with the end of the summer holiday season in Europe and the United States, as well as maintained demand from Chinese steel mills. Tightening of alloy inventories in numerous markets after stocks were rundown in the immediate pandemic period is now prompting increased buying activity, which is supporting prices. Production cuts or outages in several markets including ferro-silicon, manganese alloys, molybdenum and vanadium are boosting prices. Moreover, the weakening value of the US dollar versus other global currencies is lending support to commodities priced in US dollar terms.
- Steel markets are gaining momentum globally, with impressive gains evident in Chinese steel production for much of the year. Although US and European steel production and prices are now both improving as well, growth remains well below that in China. Chinese crude steel output rose a further 8.4% year on year in August, with year-to-date output up by 3.7% versus the same period last year. Rest of world steel output growth fell by 11% year on year in August, and remains down by 14.5% year on year for the first eight months of 2020.
- Most prices in global chrome markets were stable in September, although with a slight upward bias. Improved demand for chrome materials from stainless steelmakers is driving some small price increases, however, further upward moves will be limited. End-use demand for stainless steel remains much below year-ago levels, and while in contrast to some other alloy markets, stocks of most chrome materials and stainless steel are still elevated. Fourth-quarter charge chrome contract prices in Europe have recently been rolled over once more.
- Molybdenum prices outperformed our expectations in September, and although prices have been declining most recently, we would not be surprised to see stable to higher pricing into the fourth quarter. Low inventories and gradually improving stainless steel output will support prices, offsetting expected increases in supply with the restart of operations at China’s Luming next month.
- The rebound in the tungsten market that we had originally forecast to occur in August ultimately materialized during September. We had expected persistently tight Chinese tungsten concentrates supply to drive prices higher in both China and Europe. Supply concerns combined with the return of European consumers to the market in September drove tungsten prices higher. Given the impressive gains in tungsten prices over the past month, we expect to see stability in pricing in October while prices consolidate near current levels.
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