Hold Your Copper, Don’t Delay

Last week, we continued to see energy prices fall as we saw gas fall 15 days in a row Hold Your Copper. Later in this report, we’ll have our energy economist explain more about the markets and what’s going on and how this will affect your pricing.

We have seen extreme price fluctuations in both the equity and commodity markets, with the market continuing to be highly volatile. We saw copper prices drop by $0.20 one day last week; this was after seeing it drop by $0.10 the previous day. As these extreme market conditions reacted to different federal reserve policies and possible recession fears, we saw a significant pullback in pricing.

Energy Column – Oil and Gas Prices

Gas prices are down about $0.10 from a week ago. Good news, right? Not so much when prices are still over $2 from last year. As a federal gas tax holiday proposed by the Biden Administration is now in the hands of Congress to be the final decision maker, we wanted to focus on some interesting discussions in Washington DC this week. In addition, the administration is urging states to forego tax shares included in the pump’s price, in order to provide some much-needed financial assistance to drivers. The question is, will that be, and for how long? It’s hard to say right now.

However, it’s hard to know whether consumers would see savings of $0.18/gal and $0.24 on diesel fuel if the federal tax holiday were imposed. The real problem is that refineries and big oil companies don’t produce more, so they can very well raise their pre-tax prices, which will offset any tax cuts for consumers who fill up. Everything here depends on supply and demand. There is currently too much pent-up demand in the gasoline and diesel market and refineries will not produce more to meet demand. So if this federal tax holiday passes, it remains to be seen how much it will help people’s wallets.

Non-Ferrous Prices and Market Situation

Many people are in a downward trend in the Hold Your Copper market for the next few months and we are overly optimistic about the future. But sometimes discussing future markets isn’t all that important because you’re trying to understand what’s going on at today’s prices.

In the next few months, we do not expect the rapid rise we saw in the copper markets at the end of 2020 and throughout 2021. These large market fluctuations we saw were mainly due to the significant amount of new currency being printed. As the federal reserve tightens its monetary policy, we will begin to see money come out of the market and commodities will be severely affected.

These interest rate hikes will affect Hold Your Copper prices and continue to hurt other metals such as aluminum, zinc and other mixed non-ferrous alloys. The rest of this year, we expect to see very volatile markets as the world struggles to deal with continued inflation and other commodity-related issues.

Iron Price and Market Condition

Not much good news is coming from steel and iron scrap prices. We continued to see these markets decline, with light iron falling to an average of $100 a ton. These significant declines are due not only to very large inventories at many bakeries, but also to different valuations of overseas currencies and ongoing logistical problems.

Iron markets have been promised an unexpected turnaround of this magnitude. The good news is that the markets seem to have bottomed out because of the risk that they won’t be able to go much lower or that large piles will start to form not only in the shipyards, but also in different factories and export markets.