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The pace of change in the metals industry and at Metal Bulletin since the turn of the millennium has, as elsewhere in life, been greater in this century than at any time in the 20th, Trevor Tarring writes.
If it made some sort of sense for the first decade in this series to be a short one (1913-1920), there is no rationale for the last one being a long one (2000-2013). For the pace of change in the metals industry and at Metal Bulletin since the turn of the millennium has, as elsewhere in life, been greater in this century than at any time in the 20th.
This is illustrated by comparing the number of markets for which Metal Bulletin now provides price discovery – some 352 altogether – with the 103 markets covered by LH Quin in 1915. At that, all Quin’s prices were twice-weekly, whereas many of today’s are daily.
A new chapter in its history began with Metal Bulletin’s acquisition by Euromoney Institutional Investor plc for £230m ($368 million) on October 5 2006.
For readers of the journals the transition was almost imperceptible, except that the new names to reckon with were Raju Daswani as md of Metal Bulletin Ltd and president of American Metal Market (he had joined Metal Bulletin Research in the 1990s) and Alex Harrison as editor.
They took over when Martin Abbott and Chris Evans left to join the LME. Geographically, it meant a move from Lower Marsh after 30 years in that street to Euromoney’s warren of offices based on Playhouse Yard, Blackfriars. Reflecting continued growth there, MB has very recently moved to Ludgate Hill in the shadow of St Paul’s cathedral.
The world is changing For Metal Bulletin itself, no event could be more important than the realisation of a 40-year ambition, when in 2001 it bought American Metal Market from Reed Elsevier.
In short order we turned our venerable contemporary from a daily print product to an online service with a weekly print title. It immediately benefited from this format, so it was speedily replicated at Metal Bulletin itself after 86 years as a twice-weekly print product.
All this had to be done when the market was reeling from the terrorist strikes in the USA on September 11, 2001. This set a new record for human depravity, and launched Western hostilities against Al Qaeda in Afghanistan. Nevertheless, AMM did not miss an issue.
The same year we also bought BCA, Metal Bulletin’s first acquisition in the field of mainstream equities and bonds analysis. Apart, perhaps, from Systematics in 1986, almost all previous purchases and launches had some kind of nexus to our established business through commodity or futures markets. It also turned out to be our most financially astute.
It was as well to have the two items of good news, as for Metal Bulletin plc the decade began with the worst financial results, in percentage terms, since the dark days of the Second World War – a mirror of the state of the metal markets at the time.
New challenges for miners The metal and mining industry’s response to the challenges of the new century was to go for consolidation on a grand scale. As yesterday’s giants bought or merged with each other, new super-giants emerged, especially in steel and aluminium.
In base metals, it is questionable whether any story has been bigger than the sale of the LME to Hong Kong Exchanges & Clearing in December 2012.
It tested the mettle of the LME’s ceo at the time, Martin Abbott, but he was well equipped to cope after three periods of service with Metal Bulletin. In the last of these he began in New York as publisher of American Metal Market after we acquired it and ended in overall charge of global publishing.
That acquisition, together with that of BCA, ensured that North America overtook Europe as the group’s main market and that the US dollar provided more than half our total revenue.
Belt-tightening in the wake of the group 2001 results and rationalisation between Metal Bulletin and AMM led to the loss of several senior managers. Not before time we moved corporate headquarters from Worcester Park to Lower Marsh, as the board spent increasing time with contacts in London.
Another first in 2001 was an irruption of Chechen rebels into our Iron Ore conference in Istanbul, where they took two Metal Bulletin staff and 50 delegates hostage. Fortunately the crisis was resolved without further drama.
But the confidence-denting attacks in the USA did hurt some of the group’s business – mostly conferences – as it did everybody else’s.
An unusual feature of 2001 was US President Bill Clinton taking advantage of an arcane privilege on his last day in office, and granting a pardon to Marc Rich for his sanctions-busting oil trading with Iran.
This had kept Rich a fugitive from the USA for a number of years. Later, of course, he sold the business to his associates, who rebranded it Glencore and built its dominance of metal trading even further.
In steel, the principal concern has been China’s apparently insatiable demand for ores, notably iron; alloys and alloying metals; and finished steel. This pushed the prices of all these commodities up to unprecedented levels, even after accounting for inflation.
It was the same in the major non-ferrous metals, where markets were driven up by Chinese imports. Conversely, China assumed a controlling position in world supplies of a number of minor metals critical to 21st century technologies.
Changes at the LME Even without its sale to HKEx, the LME would still have had a tumultuous start to the 21st century.
The most significant of the huge changes in its operating environment was the growth in high speed, often algorithm-driven, trading in metals and the explosive growth in competition for derivatives business from markets throughout the world.
Many of these are very new, but even the apparently familiar names are often greatly changed from their 20th century identity through mergers or takeovers. To this can be added regulatory change directed at forcing traditional OTC business on to regular exchanges.
No aspect of the LME’s business more clearly reflects this than its registered warehouses.
When high-speed traders deal with tens of thousands of tonnes in milliseconds, there is no way warehouses can practically advance their physical handling capability for deliveries in and, especially, out beyond a few thousand tonnes a day in total.
Between these internal stresses and the rapidly changing climate of external control and regulation of markets, the LME’s own rule book has undergone profound change, not least in terms of large position reporting requirements and, most recently, warehouse regulation..
Equally profound has been the reappraisal of clearing houses as valuable elements in a futures market’s strategy, rather than as dull service units.
However, the LME was able to congratulate itself on its management of its trading and members through the years following the 2008 financial crash, bearing in mind that the crash’s biggest casualty, Lehmann Brothers, was an active member of the market.
Indeed, LME volumes have remained at record levels in the most recent years. This is despite the fact that none of the 21st century additions to the range of markets covered (steel, NASAAC, cobalt, molybdenum and, abortively, plastics) have yet proved runaway successes.
New products Metal Bulletin, however, had its own steel success stories with American Metal Market’s conference series of that title and the launch in 2012 of Steel First.
For all Metal Bulletin’s history as a steel markets reporter, there were areas of the steel chain, from ore to end-user, that had never accepted it as enthusiastically as the non-ferrous community; it was to fill that gap that Steel First was launched as a continuous-flow, internet-delivered service.
In 2013, Metal Bulletin also launched an awards programme for the global aluminium industry, as well as celebrating its centenary with a dinner in London.
Another success story of the noughties is that of Metal Bulletin Research, which now covers metal and steel market analysis more broadly and along a wider span of the chain from ore to finished product than ever before.
Its established status is reflected in the acceptance, within both the analysis and market sectors, of Metal Bulletin’s Apex service that measures the performance of metals analysts.
One of the major upheavals of the period – the Middle Eastern social unrest some call the Arab Spring that began in Tunisia and spread to Egypt, Libya and Syria – has so far had only limited impact on metal markets. These are not big mine producers of metals and the Gulf aluminium smelting industry is in countries that have so far avoided the worst unrest.
But the movement’s potential to affect metals cannot be ignored. In Russia’s huge engine of nickel, platinum and palladium production, Norilsk, it is inter-oligarch politics, rather than populist politics, that has kept these markets in a ferment for much of the present century.
As Metal Bulletin enters its second century, there is no prospect of the industries it covers becoming any less interesting or worth reporting and analysing.
Trevor Tarring editorial@metalbulletin.com