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The Monthly MMI®:10 Brand New Metal Price Indexes

September 2012

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Table of Contents1. Introduction/Overview/Executive Commentary on This Month’s MMIs

2. Aluminum MMI® - September 2012

3. Copper MMI® - September 2012

4. Stainless MMI® - September 2012

5. Raw Steels MMI® - September 2012

6. Rare Earths MMI® - September 2012

7. Automotive MMI® - September 2012

8. Construction MMI® - September 2012

9. Renewables MMI® - September 2012

10. Global Precious Metals MMI® - September 2012

11. GOES (Grain-Oriented Electrical Steel) MMI® - September 2012

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Introduction and OverviewThank you for taking a look at a very exciting offering we recently launched here at MetalMiner. The genesis behind creating a range of indexes began with a phone call from one of our readers, a very large oil and services firm. We spoke with a commodity analyst who called to ask a very simple question: “Do you know of any indexes besides the BLS indexes that can help me track what is happening for a range of metal products that I buy?”

We asked the next set of follow-up questions – what metals do you buy, and what do you perceive as the limitations of existing BLS data?

The company buys a range of steel, stainless steel and nickel alloy high-pressure semi-finished products. The BLS data typically tracks only one single product/grade and, more importantly, bears little resemblance to what the company had paid for the range of products. The commodity analyst asked if we could do better.

We can’t promise a resounding “Yes” to that question yet (you’ll need to be the judge), but we said we’d at least take a shot. The 10 MMI reports that appear in this document represent our best initial attempt to devise a range of indexes that would provide value in the market using the following guidelines as the basis:

1. Each index should represent a basket of metals or raw materials (depending on the category) that impact the cost structure for that particular metal market (e.g. coking coal, scrap, and iron ore for steel prices)

2. The inputs should reflect the global market for that commodity. BLS indexes by default only include US data, but that may/may not be representative of underlying global price trends

3. Metal prices often depend upon the underlying demand for various industries (e.g. steel prices relate to construction industry activity), hence the addition of several key industry verticals that impact multiple metal markets

Readers can use these MMIs for a range of activities:

1. To better understand underlying month-to-month metal price trends across industries as well as within specific metal markets

2. To use as an economic indicator, much like the ISM PMI (Purchasing Manager’s Index) monthly numbers or the BLS PPIs (Producer Price Index)

3. To use for forecasting and predictive analytics

*Please Note: Exact prices for ALL metals and raw materials in all categories are available to MetalMiner IndXSM subscribers. Log onto www.metalminerindx.com for more info!

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Executive Commentary on This Month’s MMIsUnlike last month’s mostly negative MetalMiner IndXSM data readings, many of the industrial metals experienced a steady to rising price trend during the month of August (reported in the MetalMiner IndXSM on Sept. 1, 2012), despite some mixed macroeconomic news.

The MMIs that increased from the prior month (only Global Precious Metals MMI® and Automotive MMI®) now include five: the Global Precious Metals MMI®, the Aluminum MMI®, Copper MMI®, the Automotive MMI® and the Construction MMI®. The Raw Steels MMI®, Rare Earths MMI® and Renewables MMI® all held steady while only the Stainless MMI® fell (by one point). In addition, the Global Precious Metals MMI® and the Automotive MMI® have moved above their January 2012 baseline levels of 100.

Last month the following indexes showed a four-month declining price trend: the Aluminum MMI®, the Raw Steels MMI®, the Rare Earth MMI®, the Renewables MMI®, and the Construction MMI®. Perhaps significantly, all five of these MMI readings have broken out of their four-month declining price trend, leaving only the Stainless MMI® in a three-month declining price trend.

Rare Earths and Renewables: The Biggest Story?

Many have speculated on when the rare earth metal price drop would cease. We suggested in a recent interview with The Gold Report that we would need to first see the basis of a floor form before we’d expect to see any price rises. With a declining four-month price trend through August, we had not seen any evidence of a floor until this month’s Rare Earth MMI® came in at the same reading as last month.

Renewables also saw a price boost with the GOES numbers bucking the trend against slightly falling steel plate prices. Industry sources tell us that many GOES market observers believe a 10-30% price drop looms on the near-term price horizon, but the GOES number within MetalMiner IndXSM reflects pricing as of Aug. 23, examining domestic GOES surcharges, trade data and other related variables. The GOES MMI® increased by 6 points (up from 253 to 259).

We caution MetalMiner readers not to blindly follow industry scuttlebutt or rumor, as we heard a similar “scrap price correction” earlier this summer that never materialized (in fact, the markets moved the other way).

Perhaps the Raw Steels MMI® flattening is just as notable, getting support in the form of continued recovery of steel scrap prices. Weighing against that rise, however, we note iron ore price trends suggest further weakening as China remains in a massive oversupply situation.

Stainless: The Biggest Loser

Though stainless fell by only 1 point (down from 89 to 88), we note 304 and 316 surcharges continue to decline, as did the base coil prices in China. (AK Steel recently announced a base price increase for several grades that don’t include 304 and 316, but do include 430.) Korean stainless coil pricing held firm while nickel remained mixed (the primary 3-month LME price rose while the spot price fell). Ironically, durable goods orders for July showed an impressive gain, according to Gerdau Market Update: “Shipments in July, up seven of the last eight months, increased $5.9B or 2.6 percent to $231.1B; this was also an all time high.” We will

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have additional commentary on stainless and nickel markets the week of Sept. 10, 2012, as MetalMiner attends the ISRI conference in Chicago.

A Comparative Analysis

As we reported last month, five indexes had a four-month declining price trend: the Aluminum MMI®, the Renewables MMI®, the Rare Earths MMI®, the Raw Steels MMI® and the Construction MMI® -- but this month, only the Stainless MMI® showed an actual decline.

The following graph shows how the MMIs stacked up against each other from January to September 2012. (Source: metalminerindx.com)

What Can We Conclude?

Metal price data has improved from one month ago on the back of stronger construction spending data, still-rising automotive sales (though August data declined slightly from July’s) and impressive durable goods sales (albeit from July). More importantly, MetalMiner IndX MMI data suggests the industrial metals markets, though not at their January baseline levels, have improved. Whether this appears as a short-term blip or a long-term trend remains unclear.

Come back and visit us in early October when we publish next month’s MMI series.

As always, we welcome your comments, suggestions and feedback. Feel free to drop me a line at lreisman@agmetalminer.com. In the meantime, happy forecasting!

– Lisa Reisman, Managing Editor, MetalMiner

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Monthly Aluminum MMI® Increases 1.1%The monthly Aluminum MMI® registered a value of 94 in September, an increase of 1.1 percent from 93 in August.

Source: MetalMiner IndX

"Though certainly not setting the world on fire, aluminum has shown some surprising strength this past month for a couple of reasons," said Lisa Reisman, managing editor of MetalMiner. "Stimulus announcements have lent recent support and some production cutbacks have begun to impact available aluminum stocks." However, many analysts including Harbor Aluminum believe the recent price run-ups toward $2,000 per metric ton may not last, because producers have failed to cut capacity to match declining global demand. MetalMiner's Stuart Burns recently penned two pieces providing further insight into recent aluminum price trends.

Select Price Drivers of the Aluminum Index Rise

After dropping the previous month, the aluminum 3-month price prices rose 1 percent on the LME to $1,890 per metric ton. The Indian aluminum cash price dropped 1.1 percent, continuing a steady slide downward over the past several months.

Chinese aluminum bar ticked up 0.4 percent. Chinese aluminum scrap prices also increased 0.4 percent. Meanwhile, Chinese aluminum billet saw its price drop 0.2 percent, and after dropping the previous month, the Chinese aluminum cash price decreased 0.4 percent.

The Korean 3003 coil premium over 1050 sheet, as well as the Korean 5052 coil premium over 1050 sheet both ticked up marginally last month. Korean 1050 aluminum sheet did not move. However, prices for European 5083 plate showed upward movement, rising 2.2 percent. European 1050 aluminum prices also increased 2.2 percent.

The Aluminum MMI® collects and weights 12 global aluminum price points to provide a unique view into aluminum price trends over a 30-day period. For more information on the Aluminum MMI®, how it's calculated or how your company can use the index, please drop us a note at: info (at) agmetalminer (dot) com.

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Monthly Copper MMI® Increases 2.2%The monthly Copper MMI® registered a value of 94 in September, an increase of one percent from 93 in August.

Source: MetalMiner IndX

"This index reading would appear even higher based on today's copper values, but news of stimulus measures occurred after Aug. 31," said Lisa Reisman, managing editor of MetalMiner. "It should not come as a surprise to anyone that copper has risen -- especially when one considers precious metals, particularly gold."

"With the exception of the Japanese primary cash price for copper, all individual forms, grades, types and regions included in the monthly index increased," noted Reisman. "Copper, like gold, often bucks downward price trends, but several MetalMiner MMI® index values have seen increases this month."

Select Price Drivers of the Copper Index Rise

The price of US copper producer grade 110 rose 0.7 percent over the past month, while the price of US copper producer grade 102 also rose 0.7 percent.

On the LME, the 3-month copper price climbed 1.1 percent, settling at $7,610.50 per metric ton after falling the previous month. Chinese copper wire prices inched up 1.6 percent. After dropping the previous month, the Chinese copper cash price prices rose 1.5 percent. The price of Chinese bright copper scrap increased 1.8 percent.

Last month was steady for the Japanese copper cash price, which only increased 0.4 percent. Korean copper strip ticked up just slightly, staying below $10 per kilogram.

The Copper MMI® collects and weights 12 global copper metal price points to provide a unique view into copper price trends over a 30-day period. For more information on the Copper MMI®, how it's calculated or how your company can use the index, please drop us a note at: info (at) agmetalminer (dot) com.

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Monthly Stainless MMI® Falls 1.1%The monthly Stainless MMI® registered a value of 88 in September, a decrease of 1.1 percent from 89 in August.

Source: MetalMiner IndX

"Despite strong July durable goods orders, rising close to 40 percent above the recessionary low according to Gerdau Market Update, stainless prices and surcharges continue to decline," said Lisa Reisman, managing editor of MetalMiner. "The monthly reading would have likely fallen further without the support of Korean stainless prices that held steady along with ferro-moly prices," Reisman continued.

US surcharges for 304 and 316 stainless peaked and held steady from March 1 to June 1, but have declined every month since June. Chinese stainless prices have fallen across the board reflecting poor demand.

Select Price Drivers of the Stainless Index Fall

For the second month in a row, the Allegheny Ludlum 316 stainless surcharge declined, falling 5.5 percent over the past month. The Allegheny Ludlum 304 stainless surcharge fell 2.6 percent over the past month, the second straight month of declines.

Meanwhile, the price of Chinese 316 stainless coil fell 1.3 percent. After remaining essentially unchanged the previous month, the price of Chinese 304 stainless steel scrap fell 1.3 percent. The price of Chinese 304 stainless coil dropped 1.3 percent as well, after staying flat the previous month. Last month was consistent for Chinese 316 stainless steel scrap, which ticked up 0.4 percent.

It was a strong month on the LME for the 3-month price of nickel. LME nickel 3-month reached $16,360 per metric ton after a 4.9 percent increase. The price of Chinese primary nickel, however, dropped 1.6 percent over the past month.

Chinese ferro-chrome prices increased slightly, back up several dollars per metric ton. Chinese ferro-moly rose a bit last month as well, staying around $22,800 per metric ton. The price of Korean 304 stainless coil increased about $6 per metric ton. Korean 430 stainless steel coil

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hardly budged, moving up only $3 per metric ton.

The Stainless MMI® collects and weights 14 global stainless steel and raw material price points to provide a unique view into stainless steel price trends over a 30-day period. For more information on the Stainless MMI®, how it's calculated or how your company can use the index, please drop us a note at: info (at) agmetalminer (dot) com.

Monthly Raw Steels MMI® Holds Steady at 87The monthly Raw Steels MMI® registered a value of 87 in September, on par with August's value.

Source: MetalMiner IndX

"We can see how recent steel producers' announcements of a worsening economy could impact earnings (and steel prices) throughout the second half of the year," said Lisa Reisman, MetalMiner's managing editor. "Our steel price index highlighted conflicting signals that indicate some steel price weakness at least throughout the end of this quarter and into the fourth quarter."

"The only elements lending support to the overall reading include scrap prices, which saw price increases from one month ago as well as a jump in the CME HRC spot price," Reisman continued, "but the remaining complex appears weak as prices in China fell across the board as did billet prices."

"In addition, steel buyers may wish to pay close attention to the CME HRC forward price curve as the futures price traded at $620 per short ton yesterday, while the spot price traded at $649 per short ton," Reisman said.

Select Price Drivers of the Raw Steels Index

US shredded scrap prices rose 19.9 percent over the month. The US HRC futures contract spot price rose 7.1 percent to settle at $649 per short ton. Korean steel scrap closed the month with a 5.3 percent rise in price.

Chinese billet finished the month following a 7.6 percent decline in price. Chinese slab prices fell 5.1 percent. On the LME, the cash price of steel billet fell 9.3 percent to $340.00 per metric

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ton. A 10.4 percent decline for the 3-month price of steel billet on the LME left it at $345.00 per metric ton. Following a 3.1 percent decline, the 3-month price of the US HRC futures contract reached $620.00 per short ton.

The price of Chinese coking coal ticked up very slightly on the month, rising only about a dollar per metric ton. Prices for Korean pig iron also ticked up about a dollar per metric ton.

The Raw Steels MMI® collects and weights 13 global steel and raw material price points to provide a unique view into global steel price trends over a 30-day period. For more information on the Raw Steels MMI®, how it's calculated or how your company can use the index, please drop us a note at: info (at) agmetalminer (dot) com.

Monthly Rare Earths MMI® Holds Steady at 52The monthly Rare Earths MMI® registered a value of 52 in September, holding steady against August's value.

Source: MetalMiner IndX

"For the first time since May, the Rare Earths MMI® appears to show a little support, perhaps suggesting a floor to the recent but steady rare earths price drops experienced throughout this year," said Lisa Reisman, managing editor of MetalMiner. "Most of the rare earth metals within the complex increased in price," she continued. "We continue to see weakness only in lanthanum oxide and cerium oxide."

Whether Chinese export restrictions and edicts limiting the number of mining firms authorized to lawfully export rare earth metals have begun to have an impact on pricing remains unclear; but the establishment of a price floor may, in hindsight, suggest a turning point for rare earth metal pricing.

Select Price Drivers of the Rare Earths Index

Neodymium prices increased 2.2 percent. Praseodymium neodymium oxide ticked up a bit more, recording a 2.5 percent increase. The price of lanthanum oxide fell 5.1 percent; cerium oxide was also down 5.1 percent for the month. Neodymium oxide ticked up only slightly, notching a 0.4 increase.

The balance of the rare earths complex tracked by the MetalMiner IndXSM saw similar marginal

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increases in price.

The Rare Earths MMI® collects and weights 14 global rare earth metal price points to provide a unique view into rare earth metal price trends over a 30-day period. For more information on the Rare Earths MMI®, how it's calculated or how your company can use the index, please drop us a note at: info (at) agmetalminer (dot) com.

Monthly Automotive MMI® Rises 2%The monthly Automotive MMI® registered a value of 101 in September, an increase of 2 percent from 99 in August.

Source: MetalMiner IndX

"Despite headline automotive sales declining slightly between August and July, we note that the Automotive MMI® reflects the price points for a range of metals for the month of August," clarified Lisa Reisman, managing editor of MetalMiner. "That basket of metals, unlike some of our other monthly index data, shows rising metal prices across the spectrum of metals comprising this index," Reisman said.

Precious metal price improvements along with HDG and a steel scrap recovery all lent support to the complex.

Select Price Drivers of the Auto Index

The price of US platinum bar rose 7.5 percent to $1,502 per ounce after falling the previous month. The price of US HDG rose 5.8 percent over the past month, the second straight month of gains. The 3-month price of copper saw its value rise 2.9 percent on the LME to $7,610 per metric ton. The price of Chinese lead saw a 0.4 percent rise for the month.

The price of Korean 5052 coil premium over 1050 sheet held generally flat over the past month, experiencing only a very slight uptick.

The Automotive MMI® collects and weights 7 metal price points used in automotive production to provide a unique view into automotive metal trends over a 30-day period. For more information on the Automotive MMI®, how it's calculated or how your company can use the index, please drop us a note at: info (at) agmetalminer (dot) com.

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Monthly Construction MMI® Rises 1.1%The monthly Construction MMI® registered a value of 88 in September, an increase of 1.1 percent from 87 in August.

Source: MetalMiner IndX

"Steel scrap price improvement formed the basis of support for this month's Construction MMI®," said Lisa Reisman, managing editor of MetalMiner. "Despite slowing headline construction spending numbers, commercial construction led by larger apartments, parking garages and even retail construction has fueled the commercial growth," she added.

Several metal prices that comprise the Construction MMI® actually declined, but rising fuel surcharges stemming from rising diesel fuel prices, as well as the steel scrap, lent support.

Select Price Drivers of the Construction Index

After dropping the previous month, the price of US shredded scrap prices rose 19.9 percent. The weekly US Rocky Mountain bar fuel surcharge closed the month following a 16.7 percent upswing. The weekly US Midwest bar fuel surcharge climbed 11.5 percent, while the weekly US Gulf Coast bar fuel surcharge rose 10.4 percent over the past month.

The Chinese low price of 62% Australian iron ore fines finished the month with a fall of 15.3 percent. Chinese rebar prices finished the month 4.7 percent lower. This was the second straight month of declines for rebar prices. Chinese H-beam steel prices decreased by 2.9 percent this month.

The price of Chinese aluminum bar increased by a few dollars per metric ton, the second month in a row that price closed relatively steady. Prices for European 1050 aluminum remained quiet this past month, holding above $2,800 per metric ton.

The Construction MMI® collects and weights 9 metal price points used within the construction industry to provide a unique view into construction industry price trends over a 30-day period. For more information on the Construction MMI®, how it's calculated or how your company can use the index, please drop us a note at: info (at) agmetalminer (dot) com.

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Monthly Renewables MMI® Steadies at 74The monthly Renewables MMI® registered a value of 74 in September, on par with August's value.

Source: MetalMiner IndX

"The Renewables MMI® held steady on the back of a rising GOES (grain-oriented electrical steel) pricing," said Lisa Reisman, MetalMiner's managing editor. "However, we see some weakness in the complex as nearly every other metal held flat to slightly lower, including several steel plate reference points across multiple global geographies, as well as sliding cobalt prices," she continued.

Steel plate prices continue to drift slightly and industry scuttlebutt suggests that some feel GOES pricing will likely fall rather substantially over the next couple of months, despite slightly rising HRC prices (a key raw material to GOES) and rising GOES surcharges, according to Reisman.

Select Price Drivers of the Renewables Index

After dropping the previous month, the price of silicon prices rose by 0.4 percent. The price of Chinese cobalt cathodes dropped 0.5 percent after falling the previous month. Neodymium prices increased last month, experiencing a 2.2 percent hike.

US grain-oriented electrical steel (GOES) rose 2.3 percent near the end of last month. Chinese steel plate prices finished after falling 5 percent. The price of US steel plate drifted 2 percent lower.

The price of Korean steel plate remained relatively steady over the past month, rising by about a dollar per metric ton. This was the second month in a row of little movement for Korean steel plate. Meanwhile, the price of Japanese steel plate dropped by a few dollars per ton.

The Renewables MMI® collects and weights 8 metal price points used extensively within the renewable energy industry to provide a unique view into renewable energy metal price trends over a 30-day period. For more information on the Renewables MMI®, how it's calculated or how your company can use the index, please drop us a note at: info (at) agmetalminer (dot) com.

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Monthly Precious Metals MMI® Rises 2.9%The monthly Global Precious Metals MMI® registered a value of 106 in September, an increase of 2.9 percent from 103 in August.

Source: MetalMiner IndX

"Traditionally, when gold prices rise, prices across the industrial metal complex tend to drop accordingly," said Lisa Reisman, MetalMiner's managing editor. "However, the fact that we've seen several of our MMIs this month rise alongside the Global Precious Metals MMI® may be a positive sign that demand across several industrial metal sectors is not as lethargic as many fear."

Select Price Drivers of the Global Precious Metals Index

It was a strong month for Chinese platinum bar. The metal posted a 15.8 percent increase, finishing at CNY 315.00 ($49.57) per gram.

After rising 8 percent, US silver finished the month at $30.44 per ounce. At $1,502 per ounce, US platinum bar finished the month up 5.8 percent. The price of Indian silver climbed 5.9 percent to INR 56,659 ($1,018) per kilogram. Chinese palladium bar prices hardly moved, leaving them at CNY 150.00 ($22.26) per gram.

Following a 2.7 percent shift up in price, Indian gold bullion closed the month at INR 30,735 ($552.44) per 10 grams. The price of US gold bullion jumped 2.1 percent last month to $1,655 per ounce. Chinese gold bullion reached CNY 338.90 ($53.33) per gram after a 2.3 percent increase for the month.

The Global Precious Metals MMI® collects and weights 14 global precious metal price points to provide a unique view into precious metal price trends over a 30-day period. For more information on the Global Precious Metals MMI®, how it's calculated or how your company can use the index, please drop us a note at: info (at) agmetalminer (dot) com.

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Monthly Grain-Oriented Electrical Steel (GOES) MMI® Rises 2.9%Grain-oriented electrical steel (GOES) prices increased again for the month of August -- the second straight month of upward movement -- putting August’s GOES MMI® value at 259, a 2.4 percent increase.

GOES coil prices increased 2.3 percent on our MetalMiner IndXSM. Comparatively, July’s GOES index value stood at 253, an increase from 250 in June.

What's Driving the GOES Price?

“Grain-oriented electrical steel (GOES) prices bucked the trend of a falling stainless market by rising 2.3 percent this month on the back of rising construction spend and hot rolled coil pricing, which has just started to increase again,” said Lisa Reisman, managing editor of MetalMiner.

HRC prices still display a positive forward curve, and US HRC prices in August have been 4.6 percent higher on average over July prices, according to MetalMiner IndXSM data.

“Also, Reed Construction Data’s total construction spending forecast has improved from last month which we take as a positive sign, despite slightly falling power construction spend numbers,” Reisman noted.

According to Reed’s latest analysis, assuming no recession, the forecast is for total construction spending to increase 8.1 percent in 2012, and 7.4 percent in 2013. Total seasonally adjusted US power construction spending, meanwhile, dropped from May to June by 3.1 percent, according to the US Census Bureau.

Incongruously, the GOES price increase appears to be at odds with falling US GOES surcharges (down 30 percent in August from March’s figure) and falling stainless steel surcharges (dropping across the board for the last six months, based on averages for representative sample of surcharges from February 2012 to August 2012, according to MetalMiner IndXSM data).

However, those trends were not enough to overcome solidifying HRC prices and expectations of brighter construction outlooks.

Next month’s GOES MMI® report will be released near the end of the month.