Trends of the non ferrous metals at the base of bronze and special brass ingots
In July 2021, the price of main commodities continues to raise concerns. In such a delicate situation, the 35th appointment of “Scenari & Tendenze”, (lit. Scenarios & Trends), gave important food for thought to participating companies.
Some of the provided data are common to all the analysed markets, while others are specific for each industry.
The focus on the metal market was essential for our company and anyone working in the production of bronze, aluminium bronze and special alloy ingots.
This is an edition of the Circumstances Observatory held by Confindustria Brescia which aimed to provide attendees with interesting details not only regarding the economic scenario and the trends of the markets of interest, but mainly concerning a very current and significant topic: the surge in the prices of raw materials and their unavailability.
In particular we want to dig deeper into the trends, up to July 2021, of main non ferrous metals, such as aluminium, copper, nickel, zinc which are at the base of our production of copper based alloy ingots.
This scenario of uncertainty and difficulties is to some extent similar to what companies had to face during the economic crisis of 2009, but at the same time has new and unique dynamics.
Therefore, what stands at the base of such a current topic? Let’s see it shortly.
Skyrocketing prices and shortage of raw materials: main causes
The surge in the prices of commodities and their shortage arise from different causes:
- Tangible causes: The global standstill of manufacturing activities during the pandemic was combined with the subsequent race to secure raw materials in order to restore stocks, in some cases also exceeding normal requirement of companies;
- Financial causes: low rates and a low euro-dollar exchange rate made raw materials attractive for investors;
- Logistic causes: the high increase in sea freights was caused not only by pandemic and the consequent health measures, but also by the restart of companies. These factors, led to delays in normal port movement and shipment flows.
All the main commodities were affected by these factors, with a high increase in prices and shortage of materials. No industry can be excluded, even including wood, crucial for the production of pallets used for the shipment of goods, and the non ferrous metals vital for our industry.
Metal market: cycles and trends of the non ferrous metals at the base of RMG bronze production
The increase in raw material prices is an extremely important topic also for our production of copper based alloys, which starts with the use of virgin raw materials and the recovery of bronze and aluminium bronze scraps. The current situation of raw material prices is undermining the recovery of all the companies which use aluminium, copper, nickel and zinc for their production.
Therefore, which are the cycles and trends of these metals? Let’s dig deeper.
Trends of main non ferrous metals
In a circular economy, such as the one of Brescia, it’s important to understand the reasons of these skyrocketing prices.
Trend of main non ferrous metals. Source: Scenari & Tendenze, Confindustria Brescia
Looking at the graphics of the mean of all non ferrous metals quoted on LME based on weekly averages (US$/MT), it is possible to see an increase of +98%, followed by a correction of -3.2% which should be read as an adjustment.
With regards to the stock situation, an interesting trend could be observed in the first few months of 2021: despite the rise in volumes, prices kept on with increasing trend. This scenario shows the power of the demand. Stocks are now plummeting. This situation could explain why the prices of non ferrous metals are still on high levels.
If we analyse single metals, we observe different trends, but the forecasts are mainly the same: prices will settle on these top levels.
Let’s see now the trends of main non ferrous metals at the base of our production of bronze, aluminium bronze and special brass ingots.
Aluminium
Trend of aluminium. Source: Scenari & Tendenze, Confindustria Brescia
Considering the price on monthly averages (US$/MT), this metal has exceeded the maximum levels of 2018 with a +67.6%, without reaching the top levels of 2011. Aluminium weekly average (US$/MT) shows instead that the price of this non ferrous metal is still on the same levels of May 2021 (+74.5%).
The stock situation of aluminium is consistent with what has been said above. A rise in volumes could be observed in the last year, which has been followed by a decrease since April 2021, thus keeping price of this metal at high levels.
Copper
Trend of copper. Source: Scenari & Tendenze, Confindustria Brescia
Let’s see now the scenario for the main metal for our production of bronze and special brass ingots.
Looking at the price trend of copper quoted on LME based on monthly averages (US$/MT), an unprecedented increase can be seen which reaches +101%, thus exceeding the maximum levels of 2011. This significant movement might be connected to the strategic role that copper will be taking in the next few years in the production of electric means of transport.
If we consider weekly averages (US$/MT), it’s clear that the price of copper has a rapid increasing trend until May 2021 with a +120.4%, which is followed by a slight and short correction of -11.3%.
With regards to volumes, it is possible to see a decrease which suggests a new increase in copper price. A trend which could take the price back to the maximum level of May 2021.
Nickel
Trend of nickel. Source: Scenari &Tendenze, Confindustria Brescia
Looking at monthly averages (US$/MT), it is possible to see an increase in price trend also for this metal. A movement of +57.5% can be seen even though the price hasn’t reached the previous maximum levels.
The weekly averages (US$/MT) confirm this trend of nickel price which, after a jump of +73% and a subsequent correction of -16.6%, is rising once again. Such a trend is connected with the fall in stocks.
Forecast? Nickel price might reach the maximum tops of February and March, mainly due to its significant use for batteries of electric cars and in the stainless steel industry.
Zinc
Trend of zinc. Source: Scenari &Tendenze, Confindustria Brescia
Even though Zinc hasn’t reached the high levels of the first few months of 2018, weekly averages (US$/MT) show a price rise of +65.8%. This increasing trend is followed by a correction of -5% which has already wound down (+2.7%).
For what concerns this metal, it is possible to see an increase in stocks of +65.85%.
If compared to the other non ferrous metals, zinc has a lower rise.
We can gather that the effect of these factors on companies was significant up to July 2021. A scenario confirmed by Anna Tripoli, Vice president of the Young Entrepreneurs section of Confindustria Brescia, in her introduction to the Webinar:
"Italy is a transformer country and all these factors have caused many different inconveniences that we are still facing within our companies."
We just have to wait for the developments in the next few months. Stay updated on our news section.
Source: Confindustria Brescia - "Scenari & Tendenze", 13th July 2021.