Outside of energy, base metals had a mixed week. Tin lost almost 4% on the week, finishing at $53,000/ton. Prices dropped to a low of $51,259/ton at one point. Aluminum was another loser, off by about 1.6% on the week. Investors are expecting more aluminum supply going forward, especially out of China and Indonesia.
Despite the recent attacks in the Gulf, we were surprised to see Saudi shipments have increased substantially. In fact, Saudi oil flows are running at their highest levels since the war began.
After a mostly negative reaction to Federal Reserve Chair Kevin Warsh’s press conference Wednesday following the Fed policy statement, Thursday brought us a surprise upside reversal in most markets.
We generally saw less hectic conditions in the various markets this past week as the lack of significant geopolitical or macro headlines kept volatility somewhat at bay.
It was a very hectic week in a number of markets, but not so much in the ferrous and nonferrous metals space.
We have seen aluminum correlate quite well with oil prices since the Iran war started. But there has been a noticeable disconnect between the two over the past few weeks.
With a tenuous memorandum of understanding signed between the US and Iran, crude oil prices continued to sell off this past week, although the declines were not as steep as what we saw in the week prior.
There was a lot going on this past week on both the geopolitical and economic fronts. Investors were fixated on the two-day visit to China by President Trump. He arrived in Beijing last Wednesday night, with a massive corporate delegation in tow. Expectations were high that some progress would be made on a host of thorny issues. But at the end of the day, the trip produced relatively modest results.
Things took an ominous turn after President Trump announced he would order the US Navy to block any vessels entering or exiting the Gulf. We suspect we will see another sizable bounce in crude and a resumed slide in both precious metals and base metals as the two parties now potentially resort to replacing talks with missiles.
Aluminum was very in the spotlight this past week on growing concern about damage inflicted on some of the Persian Gulf's key smelters.