Here’s a brief overview of news and thoughts on particular commodity markets, including automotive industry news, iron ore price volatility, and much more.
MetalMiner, one of our sister sites, is scouring the landscape for what matters. This week:
Carbon emissions at the heart of corporate strategy
As governments around the world announce their climate change initiatives, both short and long term, companies are increasingly adjusting their strategies for a greener future.
MetalMiner’s Stuart Burns reflected on the latest developments on the board of directors of oil giant ExxonMobil.
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“In the United States, activist investor Engine No. 1 forced at least two and possibly three directors to sit on the board of directors of Exxon Mobil“He wrote.” In doing so, he aims to force a change of direction for the world’s largest oil company, away from oil and gas and towards a lower carbon future.
“What’s remarkable is that the No.1 engine was successful in getting new directors on board when it only had a 0.02% (or $ 54 million) stake in the company. has secured support from state pension funds, such as New York State, and managers such as Black rock, Avant-garde and State Street, reported the Financial Times. “
Elsewhere, a Dutch court ruled that oil major Royal Dutch Shell must “accelerate its energy transition strategy by reducing greenhouse gas emissions more sharply and faster than expected,” Burns added. .
While the transition from fossil fuels to newer renewable energy sources will not be instantaneous – whether in the automotive sector, power generation in general, or whatever – it is happening. good.
“The fossil fuel industry is not going to disappear overnight,†added Burns. “Large industrial activities with a high carbon footprint are not either, such as steel production.
“But the drivers of these business models, the economy, are already moving. There will be winners and losers.”
Peru grappling with the pandemic
Elsewhere, Burns reviewed the current Covid crisis in Peru, the second largest producer of copper. (Last week’s summary reviewed recent copper price movements.)
As he noted, the country faces a skyrocketing death rate from the pandemic. In addition, his presidential election presents two relatively unpopular candidates.
“The frontrunner in last month’s first round is a previously obscure former teacher by the name of Pedro Castillo. Castillo’s Marxist policies rocked the markets, plunging the Peruvian stock market by 12%,†he wrote. “It also caused the currency to fall to an all-time low of 3.85 per dollar, reports the Financial Times.
“His party, Peru Libre, wants nothing less than revolution, the post reports. It aims to overthrow the free market model that has ruled the country for a generation.
“In its manifesto, the party says foreign mining companies should be forced to pay 80% of their profits to the state rather than the ‘miserable’ 10%, 20% or 30% they are currently paying.
Iron ore volatility
The price of iron ore, a key raw material in the steel industry, has shown significant volatility.
After peaking just before mid-May, the price of iron ore fell sharply into bearish territory, Burns noted earlier this week. At the end of last month, Beijing “sought to moderate inflation in commodity costs by issuing a series of warnings about speculation and excessive prices.”
“After reaching its target of lowering prices, you would think Beijing would have stopped there,” Burns continued.
“But last week, China’s Ministry of Industry and Information Technology said it would seek to establish a mechanism to contain steel production on the basis of carbon emissions, pollutant releases and in energy consumption, Bloomberg reported. “
The increase in supply could spell the end of the current soaring prices.
“However, most observers believe the current rise in iron ore is a final hurray and see Brazilian production up, up 20% in the last 14 days and up 16% year-on-year, as leading indicators of lower prices, â€Burns wrote.
Hot Rolled Coil Prices Rise In Europe
Western European buyers are facing rising hot-rolled coil prices and general supply shortages.
“Sources have confirmed hot-rolled coil prices at € 1,120-1,130 ($ 1,370-1,385) per metric tonne exw for rolling and fourth quarter delivery,†he wrote. “This compares to hot-rolled coil prices of € 1,000 to € 1,020 ($ 1,225 to $ 1,250) in May.
“The cold-rolled coil now carries a premium of € 125 ($ 150) per tonne over the HRC, sources said.”
Strong demand from the auto and construction sectors fueled the increases, he added.
GM to increase auto deliveries to US and Canada
Speaking of automobiles, General Motors this week announced plans to increase deliveries to customers in the United States and Canada.
It will increase production of its Chevrolet Silverado and GMC Sierra by approximately 1,000 trucks per month starting in mid-July. The automaker also said deliveries of Chevrolet Colorado and GMC Canyon midsize pickup trucks will increase by about 30,000 units in total from mid-May to the week of July 5.
Productivity up in the first quarter
The Bureau of Labor Statistics reported that the labor productivity of the non-farm business sector in the United States increased 5.4% in the first quarter of 2021.
In addition, production during the quarter increased 8.6%. At the same time, hours worked jumped 3.0%.
Labor productivity in the manufacturing sector, however, fell 1.7% in the first quarter of 2021. Manufacturing output increased 1.4% and hours worked increased 3.1%. At the same time, manufacturing productivity rose 1.8% from levels in the first quarter of 2020.
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