Metals Market Update – Month/Quarter/Year Ending 31 December, 2012 (See downloadable spreadsheet with all data at bottom of page)
Metals prices closed 2012 with mixed performance compared to November, end of the third quarter, and year-ago levels. The lack of strong direction reflects ongoing questions buffeting world-wide economies, government policy, and overall demand expectations.
With new year data, though, there are some indicators of improving demand:
December saw Chinese manufacturing log its largest expansion in 19 months.
Given those indicators, stable/jumbled metals pricing may simply be the calm before a tide of rising prices. That said, pressure against price hikes will be supported by relatively low immediate demand and reasonable inventory levels (growing significantly vs. year ago for some metals). 2012 US raw steel production logged only a 2.6% gain vs. 2011, and mills were operating at a tepid 72.5% of capacity for November and December 2012, compared to 75% for the same period in 2011.
That said, base metal pricing is decidedly lower than two years ago, off nearly 20% on average compared to December 2010/January 2011 pricing. So… take comfort for now, but prepare for increases should demand improve.
Data for year-end 2012, comparing quarterly and year-ago LME pricing and inventory levels (spreadsheet below):
Aluminum closed December down 1% compared to end of 3rdquarter averages, but up 3% year over year. 2 year change: DOWN 17%. LME inventories were 5% higher than year ago levels – not likely a substantial enough difference to affect pricing.
Next Update: For week ending Friday, 11 January, 2013.