The USA has just uncovered its first cases of COVID’s Omicron variant. The appearance of this new strain of the virus has riled the stock markets because of the uncertainty surrounding its resistance to the vaccines and how it might impact the global economy. Booster vaccinations are now being administered to those who are willing to receive them but a large segment of the population continues to be hesitant about getting the vaccines in what remains a highly politicized issue.
In November, the US Congress passed the long-awaited, US$ 1.2 trillion Infrastructure Bill which addresses issues such as road and bridge repair, clean water needs, access to high-speed internet and improvements to public transport by rail and air. There is also funding for expansion of clean energy modes of transportation.
The next agenda item for Congress is the Build Back Better plan. The current proposal calls for US$ 1.75 trillion over 10 years, significantly reduced from the initial plan of US$ 3.5 trillion. The package would include money for combating climate change, for improved access to childcare and pre-school programmes, for healthcare expansion and for extended family/medical leave.
US GDP slowed significantly in the third quarter to 2.1% from over 6% in the first half of the year. Most of the reduction has been attributed to continued labour shortages, ongoing supply chain challenges and COVID Delta variant constraints. Inflation seems to be more of an issue than originally expected: the annual rate of 6.2% is the highest for more than 30 years and is weighing heavily on consumers at the lower end of the pay scale.
The metals markets have been very volatile over the last two months, with some falling rapidly but others rising on the back of very tight supply. The all-in primary aluminium price has lost more than US$ 400 per tonne since the previous Mirror report, with the regional premium dropping by US$ 200-plus. The US government is slowly unwinding some of the Section 232 tariffs on aluminium and steel, with the EU tariffs coming off at the beginning of 2022.
While the primary aluminium price has dropped rapidly, secondary aluminium has rebounded on the heels of rapid price increases in additives and hardeners (silicon and magnesium in particular). The high-volume automotive die cast alloy is close to parity with primary aluminium in the USA. As primary aluminium prices have declined, spreads have tightened on the lesser mill grade items, while profile and high magnesium alloys remain tight to primary prices. Secondary ingot prices have increased by more than 15% in the last month, mostly due to additive price gains, even as automotive build rates remain in the doldrums owing to continued chip shortages; new car lots remain empty and used cars are in high demand.
Scrap prices are increasing domestically whereas export prices are suffering as a result of lower ingot prices in overseas markets.
Copper spreads continue to be tight both domestically and for export as demand is very good across the board. There have been no big changes on brass prices as the market appears to remain in balance. Copper exports and spreads remain strong into Asia. Zorba consumers are slowing slightly while overseas ingot prices continue to drop.
The port situation in the USA remains challenging, with shortages across the entirety of the supply chain.