Metal Price News - February
The first month with Trump as US president has passed. There has been renewed focus on tariffs, Greenland, Gaza and most recently Ukraine, but the markets remain relatively unaffected so far.
Macroeconomic developments
USA
News have been coming out of the US at a breakneck pace. Trump started by imposing tariffs of 25% on Canada and Mexico, which have not yet taken effect. Tariffs on China were raised by 10%, and China has responded with 10% tariffs on selected American goods.
The US has also imposed tariffs on steel and aluminium of 25%. This tariff will particularly affect Canada, Mexico and Brazil. The aluminium prices on the LME (London Metal Exchange) seem unaffected by the tariffs, but this may change when the tariff comes into force on 4 March.
Most recently, the United States has initiated peace talks with Russia over the war in Ukraine. Right now, there are many questions and few answers about the specifics of the negotiations.
Looking at the economy, inflation for January came out at 3.0%, which is well above the FED inflation target of 2.0%.
China
China is just getting back from the Chinese New Year and has had no major news other than a response to the US trade measures.
China continues to struggle with declining growth, very low inflation and a troubled property market.
Europe
Europe is divided between centrism and right-wing politics, and this is causing discord in the EU. The events of the past week highlight the challenges, and it remains to be seen how Europe will react to peace talks in Ukraine and the tariff war.
Meanwhile, several European economies continue to struggle. The ECB (European Central Bank) cut interest rates by 0.25% at the beginning of February, but economic indicators continue to show only a slight improvement. To help the European economies along, the ECB are expected to cut interest rates a further 3-5 times in 2025.
Commodities
The geopolitical turmoil may affect commodity prices, but metal markets have shown subdued reactions so far.
Possible tariffs, a boycott of Russian aluminium and the developments in US interest rates are some of the questions that remain unanswered at the moment.
If any of these scenarios become reality, we could be facing a volatile market with metal prices reacting to the changes.
We saw an example last Friday, when the copper cash price suddenly rose sharply and went back down to a normal level at the end of the day. The increase was not caused by any news but rather by the uncertainty in the market right now.
Copper
China has launched plans to increase domestic production of copper by 5-10% by 2027. This will not affect the current demand much, but it will reduce China's need to import copper going forward and could therefore cause the price to fall in the long run.
Aluminium
The aluminium price has been stable over the past month. Trump's tariff increases and renewed focus on boycotting Russian aluminium have not significantly affected the aluminium price. However, we may see the reaction when the tariff increases come into effect.
There is still a strong focus on Chinese aluminium production and Chinese growth. China is producing record amounts of aluminium, while growth in the country is slowing. This could cause the aluminium price to fall in the long run.
Stainless steel
Sheets/plates
Demand has picked up, and the effects are showing in the market. Prices are moving upwards because the wholesalers are building up stock.
The EU safeguard quota on imports from Asia was used up within 24 hours, which shows an unusual level of activity. The Q2 quota is expected to be used up fast as well.
Bars
We expect a slight decrease in alloy surcharges on 4301 (0.4%) and 4404 (1.3%) in March.
Nickel
The price is quote low and seems to stay at that level. The global supply is quite high, as well as the LME stocks, so the price is expected to remain within the $15,000-$16,500 range.
