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 At the same time, the yield on U.S. Treasury notes fell from as high as 0.88% to less than 0.7% late in the week. Here’s a look at some of last week’s key commodity market developments:

Energy
WTI crude oil futures continued to be pressured lower last week towards $20 per barrel as plunging demand due to the coronavirus is being met with continued excess global supply. Reuters reports, “The price of oil is now so low that it is becoming unprofitable for many oil firms to remain active, analysts said, and higher cost producers will have no choice but to shut production, especially since storage capacities are almost full. “Global oil demand is evaporating on the back of COVID-19-related travel restrictions and social distancing measures,” said UBS oil analyst Giovanni Staunovo. “In the near term, oil prices may need to trade lower into the cash cost curve to trigger production shut-ins to start to prevent tank tops to be reached,” he added.”

Ferrous:
With respect to the global steel industry, the latest IHS report is not encouraging: “The coronavirus outbreak had a dramatic effect on global users of steel in February, latest PMI data showed, with output contracting at the quickest rate in over 11 years, amid much weaker demand and a lack of workers in key Asian markets. Delivery times across the world lengthened to the greatest extent on record, while exports also deteriorated sharply… The seasonally adjusted Global Steel Users Purchasing Managers Index™ (PMI) – a composite indicator designed to give an accurate overview of operating conditions at manufacturers identified as heavy users of steel – fell to a post-financial crisis low of 45.5 in February, from 49.4 in January, signaling a sharp deterioration in operating conditions at steel users worldwide.”

Here in the United States, Argus Media reports the following production developments:

• US Steel will idle a blast furnace at Gary Works and one at Granite City in response to the coronavirus. The Gary Works furnace had been slated for a 48-day outage starting in April. The steelmaker also cut its capex by $125 million and increased its borrowing under its revolving credit facility by $800 million. The EAF at Fairfield Works remains untouched and on schedule to begin melting in the second half of this year.
• AK Steel (now owned by Cleveland-Cliffs) will begin idling its Dearborn Works in Michigan on Monday in response to the auto sector shut down. There had also been a public push from lawmakers the shut the plant over concerns of virus spread.
• ArcelorMittal also will idle a blast furnace at Indiana Harbor West. And Gerdau idled its EAF-based special bar mills in Michigan and Arkansas, but it said it will restart the Arkansas mill late in the week. All told, there won’t be much of a scrap buy in Detroit in April. Gerdau also idled its Georgia merchant bar mill through the end of March.
• Ford said this week it plans to restart some operations by mid-April.
• Caterpillar also shut two foundries this week temporarily.

Nonferrous
Last week Edward Meir from the Commodity Research Group at ED&F Man Capital, ISRI's Assistant Vice President, International Affairs Adina Renee Adler, and Aaron Rutstein from Atradius Trade Credit Insurance were kind enough to share their thoughts with us on what’s happening on the commodity, trade, and insurance fronts. You can listen to the podcast here.

In New York last week, COMEX copper futures plunged as low as $2.02/lb. in intra-day trading on Monday before stabilizing around $2.15-$2.20/lb. late in the week. Similarly, in London LME 3-mo. copper and aluminum closed last week at $4,815/mt (=$2.184/lb.) and $1,552.50/mt (=70.4 cents/lb.).

ABN AMRO reports that base metals’ “…supply and demand fundamentals have deteriorated sharply. End users in construction, mechanical engineering and automotive sectors have shut down facilities. This dampened demand, while output remained elevated. This means high availability in the short term and will keep prices relatively low during the second quarter of this year.” Here’s their price outlook going forward:

Source: ABN AMRO Commodities, March 2020

Recovered Paper & Fiber
Our friends at Fastmakets RISI reports that recovered paper prices in the U.S. are surging across a wide range of grades: “As market players predicted last year, the low pricing and landfilling in 2019 has led to supply concerns and pricing pickups. In first-quarter 2020, demand for US recovered paper has picked up again after slumping demand last year. Recovered paper pricing has increased this first quarter along with demand. Mill demand has been steady so far this year, with one contact in the US Southwest seeing "a scramble for fiber by domestic mills, and export to Mexico, that is unprecedented." Several contacts told of strong old corrugated container (OCC) demand with increased price premiums this week in the USA, especially in the South…

"The scramble is effecting paper grades up and down the entire food chain -- from mixed paper to hard white. OCC is now selling to domestic mills well in excess of $110/ ton FOB in many markets across the country," a contact said.”

They go on to report, “If US mills follow China's lead in response to the coronavirus, collections could soon cease, and mills could shut down or slowdown in response. Nine Dragons Paper, one of the largest paper and board manufacturers globally, was forced to slow its mill machines due to the virus, among many Chinese mills. US mills increased recovered paper consumption by 8% and 185,600 tons in February 2020 vs February 2019, as well as increased OCC consumption by 11% and 174,900 tons, according to the American Forest & Paper Association (AF&PA) statistics.”