Prices: Aluminium cables index up, copper down

27 Apr 2017

Region: Global

Topic: Prices, Trade, Production, Market & Product: End Use (Cable Materials supply), Energy (LV Power Cable)

Slightly firmer aluminium prices have raised aluminium cable indices by one point for April, while a fall in copper prices knocked off five points from copper conductor cable indices. With the exception of LLDPE and aluminium the CRU Raw Materials Index saw a decline for copper (six points lower), steel (two points lower) and PVC (down one point). This brings aluminium and copper conductor cables slightly closer for April.

Monthly CRU Raw Material and Cable Index
Base Index January 2009 = 100 / Jan / Feb / Mar / Apr / May / Jun / July / Aug / Sep / Oct / Nov / Dec
Raw Material Index
Copper / 2016 / 136 / 140 / 155 / 151 / 144 / 147 / 151 / 144 / 147 / 145 / 182 / 174
2017 / 179 / 184 / 181 / 175
Aluminium / 2016 / 104 / 108 / 112 / 117 / 110 / 115 / 113 / 117 / 117 / 119 / 126 / 123
2017 / 129 / 134 / 139 / 139
Steel / 2016 / 61 / 61 / 61 / 64 / 83 / 76 / 72 / 73 / 76 / 72 / 73 / 81
2017 / 82 / 85 / 86 / 84
PVC / 2016 / 123 / 123 / 126 / 129 / 131 / 130 / 131 / 131 / 130 / 132 / 131 / 130
2017 / 129 / 136 / 139 / 138
LLDPE Compound / 2016 / 138 / 135 / 144 / 151 / 151 / 151 / 151 / 151 / 160 / 160 / 155 / 151
2017 / 151 / 160 / 166 / 166
Cable Index
PVC Building Wire / 2016 / 134 / 137 / 150 / 147 / 142 / 144 / 147 / 141 / 144 / 143 / 172 / 166
2017 / 170 / 176 / 173 / 168
Cu Power Unarmoured (NYY) / 2016 / 134 / 137 / 150 / 146 / 142 / 144 / 147 / 141 / 143 / 143 / 172 / 166
2017 / 170 / 175 / 173 / 168
Cu Power Armoured (6944X) / 2016 / 133 / 136 / 148 / 145 / 141 / 143 / 146 / 140 / 143 / 142 / 170 / 165
2017 / 169 / 174 / 172 / 167
Al Power Unarmoured (NYY) / 2016 / 117 / 118 / 121 / 125 / 124 / 125 / 124 / 126 / 125 / 128 / 129 / 127
2017 / 129 / 135 / 139 / 138
Al Power Armoured (6944X) / 2016 / 113 / 114 / 118 / 122 / 122 / 123 / 122 / 123 / 125 / 126 / 127 / 126
2017 / 128 / 134 / 138 / 137
4 Core 11kV Armoured (IEC60502) / 2016 / 133 / 135 / 148 / 145 / 141 / 143 / 146 / 141 / 144 / 143 / 169 / 164
2017 / 168 / 173 / 172 / 167
Notes: Building wire is average of 1.5sq mm and 2.5 sq mm
Power Cables are 1kV rated 4 core 16 sq mm
11kV cable is 3 core 50 sq mm
The table is designed to show simply how cable prices are varying as a result of changes in basic raw material prices.
Data: CRU (for Steel); LME (for Copper & Aluminium); Townsend Solutions (for PVC & LLDPE)
Steel is for Global Long Products, Copper & Aluminium is LME 3 Months Average; PVC & LLDPE is Wire & Cable grade

COPPER

Despite the ending of the strike at Escondida late April, the 3 month price came within touching distance of $6,000/t in the run up to CESCO and again in the middle of the week of the event itself (April 3- 7).

However, with reports of at least a temporary solution to the impasse between Freeport McMoRan and the Indonesian government at Grasberg also hitting the newswires in early April, and still no evidence of a turnaround in the refined metal market, the price quickly stalled.

Indeed, subsequently the price drifted lower until the current week as investors continued to reduce long positions. This partly reflects perceptions of the copper and broader commodities space, but also a continuing pull back from some of the post-Trump-election euphoria surrounding potential increases in US materials demand. The price fell below $5,700/t in the run up to Easter and then recorded a four-month low of $5,530/t on April 19, before latterly pushing back up into a general trading range of between $5,600/t and $5,740/t.

Author: Robert Edwards, principal consultant, Copper, CRU.

ALUMINIUM

Aluminium prices rose by $24/t (1.3%) on average thus far in April, trading in a narrower range between $1,890-$1,960/t, compared to a range of $1,847-$1,952/t in March. The LME cash price closed at $1,933/t on April 24. Upward price pressure was caused by falling LME stocks, which have dropped 11% from 1,886,400 tonnes on March 30 to 1,687,785 tonnes on April 24. In addition, a falling oil price counteracted a stronger US dollar, but a stronger change in direction in either would likely push prices in that way.

In China, SHFE prices rose by RMB 323/t on average thus far in April, trading in a wider range between RMB 13,785-14,400/t, compared to a range of RMB 13,540-14,050/t in March. The SHFE cash price closed at RMB 14,180/t on April 24. The upward pressure in April is believed to be a direct result of market expectations of a Chinese aluminium supply-side reform.

At this stage, CRU understands that an official document has been submitted to Chinese authorities and we expect to see the document released to the public soon. Additionally, on April 1, the Chinese government announced a plan to build a new economic zone called the Xiong'an New Area, 100 km southwest of Beijing. The announcement caused a great deal of market interest. The purpose of the new area is to shift non-capital function activities from Beijing to the zone in order to ease congestion and air pollution in the capital. Xiong'an is seen by the government as following in the footsteps of the Shenzhen Economic Zone and the Pudong New Area in Shanghai.

Our forecast on China calls for a shrinking surplus over the next quarter, from more than 1 million tons in Q1 2017 to 133,000 tonnes in Q2 2017. This will lead to a further rise in Chinese stocks over the next several months. However, the global market will be in deficit in Q2 2017, which will lead to a fall in global inventories to 12.41 million tonnes. As a result of these factors, and in the wake of the news on a supply-side reform, we have revised our LME 3 month price forecast upward to $1,930/t for Q2 2016.

Author: Doug Hilderhoff, Team Lead - North American Aluminium, CRU.

STEEL

Long products prices in Germany are currently stable. Demand, particularly from the construction sector, remains seasonally strong, and the supply/demand balance in Germany is good. However, weakness from other markets, including Italy, Turkey, and China, is dampening sentiment and threatening stability according to some participants.

These conditions have made some participants confident that prices will remain stable in the coming weeks. However, other market participants are bearish given developments in global steel and raw materials markets.

Still no announcement has been made regarding import licenses and quotas for rebar and wire rod in Algeria. The market expects prices in Italy to increase if a sufficient quota is announced. For now, Italian rebar delivered to Germany sits slightly below local prices. This small price differential is not a problem during this season of strong demand, but price pressure in Italy could spread to southern Germany if sufficient licenses are not issued.

Meanwhile, rebar and wire rod export prices have fallen w/w in Turkey following decreases in scrap prices. Rebar prices are down $7 /t w/w to $423 /t FOB, and low carbon wire rod prices are down $5 /t w/w to $455 /t. Demand in domestic and export markets is weak for Turkish producers.

Meanwhile, Chinese domestic long products prices fell sharply in the third week of April, leading end-users to accelerate purchases amid lower prices. The improvement in demand supported a modest price rally by the end of the third week, which extended to this week. Rebar prices are around the average cost of traders' stocks of RMB 3,235 /t currently. Looking ahead, restocking efforts around the Labour Day holiday over April 29 to May 1 may provide some support to prices. In addition, there is a widely circulated rumour in the market that steel mills in the Beijing-Tianjin-Hebei region will cut production to ensure good air quality during the Belt and Road Summit that will be held in Beijing on May 14 and 15.

In the export market, Chinese square bar has regained pricing competitiveness relative to products originating from countries including Russia and Turkey in the South East Asian market. Lower prices have also improved Chinese wire rod exports, but overseas demand for rebar remains subdued due to sufficient stocks and worries about market uncertainty.

Author: Elizabeth Johnson, senior consultant, Steel, CRU.

POLYVINYL CHLORIDE (PVC)

PVC prices moved higher in March as at least 2.0 cts/lb of the 3.0 cts/lb increase sought by producers appears to have been implemented in the market. The increase was fuelled by higher feedstock costs. PVC prices rose 1.8 cts/lb in on a volume?weighted average basis for buyers surveyed by Townsend. Wire/Cable grades rose 1.9 cts/lb, slightly higher than most other grades. A 3.0 cts/lb increase remains on the table for April. It might also be met with resistance as PVC pricing in many global regions has been moving lower lately and ethylene costs have fallen and appear to be stabilizing somewhat. Export prices out of the US Gulf have fallen about $10/mt during the first week in April on these pressures and many are said to be pushing for even lower pricing.

POLYETHYLENE (PE)

PE prices rose in March as some producers ended up only pushing through half of the original 6.0 cts/lb increase they sought. Many restated and lowered their March increase to 3.0 cts/lb late in the month as resistance from buyers and sharply falling ethylene spot prices provided the incentive. LLDPE prices rose 3.0 cts/lb in March on a volume?weighted average basis for buyers surveyed by Townsend. The additional 3.0 cts/lb that producers want for April PE may be a little hard to get. Sources are suggesting the domestic market is still feeling some downward pressure with upstream costs expected to remain stable or move lower. Some even say this downward pressure may continue into the coming months. Ethylene prices are starting to stabilize somewhat after dropping sharply in March.

Authors: Roberto P. Ribeiro, president, Townsend Solutions & Terry Bourgeois, business analyst, Townsend Solutions.