The latest COVID-19 (coronavirus) news impacting the metals market.

  • The Institute for Supply Management's manufacturing sector Purchasing Managers' Index registered a reading of 49.1 in March, down from February’s reading of 50.1. While this would typically indicate only a slight contraction in overall activity levels, a closer look at the Supplier Deliveries Index could paint a different picture. This index registered 65, up 7.7 percentage points from the February reading of 57.3, and limited the decrease in the composite PMI.

    This index is one of five equally weighted sub-indexes that directly factor into the PMI, along with New Orders, Production, Employment, and Inventories. A rise in this index is typically a response to strong demand, with firms unable to meet orders. But could this month’s Supplier Deliveries Index reading be more of a reflection of supply chain disruptions due to COVID-19?

    According to ISM, “… a reading of above 50 percent indicates slower deliveries, which is typical as the economy improves and customer demand increases. However, the high index reading in March was primarily a product of coronavirus-related supply problems.
    Read the full release here. (4/1/20)

  • The Federal Reserve Bank of Dallas' general business activity index for manufacturing in Texas dropped to -70 in March from 1.2 in the previous month. This is the lowest reading since June 2004, with the production index, a key measure of state manufacturing conditions, dropping to -35.3 from 16.4. This could suggest a notable contraction in output. In addition to COVID-19 impacts, the Texas market is also particularly vulnerable to the downturn in the oil market. Read more here(3/31/20)

  • Western Canada crude oil, which was above $40/barrel at the beginning of 2020, is currently trading at $4/barrel. Could this lead to prices entering negative territory due to the cost to store and transport oil? This will be a trend to monitor. (3/31/20)

  • After exceeding the 200,000 metric ton mark earlier in the year, LME Nickel inventories appears to be leveling off.  Some market analysts are estimating that 60% of nickel miners and 50% of aluminum smelters are unprofitable at current price levels. (3/31/20)

  • As U.S. automakers continue to announce closures, steel mills that supply this market are beginning to feel the impact. For instance, steelmaker AK Steel announced it will shut down its Dearborn Works (Detroit), which makes flat rolled products for the U.S. automotive industry. (3/31/20)

  • The price of U.S. crude oil continues to move downward. Market prices closed on March 30 at an 18-year low of $20.09/barrel. In fact, the price dipped as low as $19.27/barrel during trading, the weakest intraday price since February 2002. Fears of reduced consumption amid social-distancing throughout the world while Saudi Arabia and Russia are flooding the world with excess oil are contributing to the decline. (3/30/20)



  • Which countries are most vulnerable to COVID-19? A new COVID-19 Country Vulnerability Index, launched by IHS Markit, takes both a near-term and long-term look at countries’ capacity to deal with the virus outbreak.


    (source IHS Markit)

    The index weighs demographics, economic vulnerability, health care capacity, and state preparedness data. It also takes into account a country’s prior experience with pandemics. The index indicates that the vulnerability may be the highest in countries not yet affected by the outbreak. Read more here. (3/30/20)

  • In a letter to Mark Morgan, acting Commissioner of the U.S. Customs and Border Protection (CBP), five of our leading steel industry associations expressed concern about a recent CBP notification that importers may be granted additional days for payment of estimated duties, taxes and other fees, in connection with the COVID-19 pandemic.

    The group’s concerns center on the idea that the CBP should “not allow this crisis to encourage bad actors from taking advantage of an at-risk system during this crisis period,” potentially exposing domestic producers to the “adverse impact of unfairly-traded steel imports, as the effects of this pandemic are uneven worldwide and certain major steel-producing nations continue producing steel despite softening demand that occurred before the pandemic even began.” Read more here. (3/29/20)

  • One of the largest steel producers in the world, U.S. Steel announced a series of “aggressive and meaningful actions.” U.S. Steel will, among others, immediately idle two of its blast furnaces, plans to idle most or all of its tubular operations in late May, and significantly reduce 2020 capital spending to preserve cash and liquidity in an attempt to blunt the impacts from COVID-19 and the significant changes in global oil and gas markets. Read more here.(3/29/20)

     
  • Ryerson continues to take steps to protect customers and drivers. Effective immediately, Ryerson has temporarily suspended required customer signatures on delivery receipts or e-signature pads. Drivers, upon delivery of material, will ask for the name(s) of receiving personnel and may take photos to confirm delivery. (3/25/20)

  • A recent poll of 600 supply chain managers by the Institute of Supply Chain Management finds that nearly 75% of companies report supply chain disruptions in some capacity due to coronavirus-related transportation restrictions, and more than 80% believe that their organization will experience some impact because of COVID-19 disruptions. Read more here. (3/23/20)

  • For manufacturers, the National Association of Manufacturers recently published expanded NAM COVID-19 Policy Action Recommendations. (3/22/20)

  • According to the American Iron and Steel Institute, "The coronavirus epidemic is exacerbating the global glut in steel production and threatens to unleash a new surge in imports into the United States, which would be devastating to the American steel industry and our national security." AISI has sent a letter to Congress to support steel tariffs during this time. (3/20/20)

  • The Aluminum Association released a framework for policymakers developing economic stimulus and other programs in response to the COVID-19 pandemic. The document – “American Aluminum Jobs: Essential to the Nation” – underscores the essential nature of U.S. aluminum production, fabrication, and recycling and calls for a number of measures to support the industry during the ongoing public health crisis. (3/20/20)

  • The price of crude oil dipped below $30 on March 16, impacted by both the demand and supply side. A softer demand for crude comes as people cut back on travel, for example, while a breakdown in OPEC talks could lead to an excess in supply. For more on the current situation in the global oil market, read this joint letter from Executive Director of the International Energy Agency (IEA), Dr Fatih Birol, and the Secretary General of the Organization of the Petroleum Exporting Countries (OPEC), Mohammad Sanusi Barkindo. (3/16/20)

  • Spot market freight volume has remained healthy, according to monthly updates from DAT. In February, truckers experienced the lowest rates since May. Comparing against the year-ago period, van spot rates were down 5.2%, flatbed spot rates were down 7.8%, and reefer spot rates were down 5.1%. However, load-to-truck ratios trended up, meaning rates could thaw soon, despite a reduction in import cargo volumes due to the coronavirus.

    On the contract rate side, The Cass Transportation Index Report January 2020 shows shipment volumes dropped 9.4% in January compared with the year-ago period. This was the lowest reading in roughly three years and the steepest decline since 2009.

    According to Cass, weakness in the U.S. transportation market is due partially to elevated inventories. Depending on the severity of the plant shutdowns and trade volumes in China, inventories could dip even further with the potential of a required restocking period to occur. (3/16/20)

  • The latest report on worldwide PMI surveys from IHS Markit showed the pace of expansion slowed to the weakest level since May 2009. The slowdown was linked primarily to businesses across both manufacturing and services being affected by the coronavirus outbreak, in particular China, where a record fall in output occurred. 

    The 50.1% reading for the U.S. PMI in February technically remained in expansion territory, but at a weaker level than the previous month (50.9) and below analyst expectations (roughly 50.8)
    The next set of global PMI reports are due out in early April. (3/16/20)