Second-quarter GDP growth is expected to be much lower than for the opening three months of 2019 - with most estimates coming in at around 1.5%, or less than half that of the previous quarter.
The US trade deficit grew in June, all in the face of tariffs and continued trade difficulties. Auto sales were down 1.8% for the first half of 2019. Increased prices may have dampened demand in the USA. New home sales have dropped by 3.7% this year, with May being a particularly bad month. Currently at 3.7%, the unemployment rate is sitting at historically low levels.
Trade talks are still a constant overhang of the US economy, with a high level of uncertainty on how things and when things will progress. The USA and China seem to be interested in making some progress with regard to their disputes, as the persistent trade war is affecting both economies.
Secondary scrap aluminium prices have deteriorated significantly over the last three months. The main published die cast price has dropped more than 10% since April and demand is sporadic, especially in this summer season. The LME traded index for that alloy is significantly below the published price, putting downward pressure on pricing. Scrap prices have dropped even more than ingot prices, with most dealers having difficulty with volume sales of secondary aluminium items. Falls in cast/old sheet have been in line with ingot price declines, but turnings prices are all down more than 15% since April. Shredded aluminium prices are also down nearly 20% as ingot makers are flush with metal and are turning towards cheaper alternative units. Billet makers are seeing a continued deterioration in their business as they are having to compete with inexpensive imported billet and slower consumption by extruders. Rolling mills are still full of metal and quoting for 30 days out or more; spreads remain wide for most items.
Domestic copper and brass demand remains reasonable, with most ingot makers coming out of their summer maintenance slowdowns in good order. Copper mills are a little further out on appointments with a few being out of the markets. Spreads are constant on most grades of copper.
The export markets are hit and miss. Business continues to move around South East Asia, as Malaysia has restricted flows of some materials. India also seems to be taking less material and is dropping prices. Secondary aluminium demand in Mexico is also slowing. High-grade copper items are flowing reasonably well.
It remains to be seen what the new import restrictions and licensing will mean for business to China.
Shapiro Metals (USA), Board Member of the BIR Non-Ferrous Metals Division