The monthly crude metals index MMI is trading sideways this month after a 2.83% drop in August, with steel prices falling all across the board.

Steel prices tumbled 10.3% this month, plumbing January 2023 lows and heading towards $600 a tonne. 

Recently, automotive workers launched strikes against Ford, GM, Stellantis after the collapse of wage negotiations.

The strikes started with 13 thousand workers and could very well last a long time, potentially three months, in turn leading to a loss of 400 thousand tonnes of steel demand, alongside a drop of 550 thousand cars a month of lost production.

The first company that took heavy losses is US Steel company with its B steel furnaces idled due to weaker demand. 

In several major US Steel furnaces, it's estimated the capacity has fallen to 75% or so, and is expected to collapse across the board as the strikes carry on.

Historic Labor Strikes 

The UAW union has launched a strike for the first time ever against all three major automotive companies, following a single extended strike against GM for about a month in October in 50 factories, which similarly hurt steel prices considerably. 

The length and width of such automotive strikes have a history of negative impact on many industries ans chief of which the steel industry, however a quick resolution of the strikes is expected to easily boost steel prices and production once more. 

However, the current situation does look bleaker than usual, and could easily extend for six weeks or more, in turn dragging steel prices and production heavily down, not just in the US but worldwide. 

US stock indices fell on Thursday to one-month lows as US treasury yields rose once more while investors continue to assess the Federal Reserve's policy statements.

US treasury yields spiked to 15-year highs after bullish signals by the Fed, pressuring stocks.

Yesterday, the Fed held interest rates unchanged at 5.5%, the highest in 22 years, but hinted strongly at a hike in November. 

As for data, unemployment claims fell 20 thousand to 201 thousand last week.

On trading, Dow Jones fell 0.5%, or 190 points to 34,250, while S&P 500 fell 1.1%, or 47 points to 4355, as NASDAQ declined 1.2%, or 166 points to 13,302. 

Oil prices extended their gains in American trade on Thursday away from one-week lows, resuming strong gains after a two-day hiatus.

The gains come amid hopes the pressures facing world economies are subsiding as global central banks pause their aggressive policy tightening measures.

Prices are also boosted by the steep drop in US crude stocks last week in a positive sign for demand. 

Global Oil Prices

US crude rose 1.9% to $90.94 a barrel, with a one-week trough at $88.42, while Brent climbed 1.6% to $94.56 a barrel, with a one-week trough at $92.24.

On Wednesday, US crude lost 1.6%, while Brent slipped 1.3%, the second loss in a row on profit-taking off ten-month highs.

Global Economy 

Global central banks including in Switzerland, Britain, the US, have all decided to pause interest rate hikes to gauge economic response. 

Such a step will likely be followed by steps to support the economy early in 2024, which could include interest rate hikes.

A rebound in global economic conditions will obviously boost fuel demand. 

US Stocks 

The Energy Information Administration reported a drop of 2.1 million barrels in US crude stocks last week, while analysts expected a drop of 1.3 million barrels.

Gasoline stocks fell 800 thousand barrels to 219.5 million barrels, as distillate stocks fell 2.9 million barrels to 119.7 million barrels.

US Production

The EIA also reported no change in US production at 12.9 million barrels, the highest since March 2020.

Sterling fell on Thursday after Bank of England announced a surprise pause in the cycle of rate hikes, sending the pound to six-month lows amid concerns about the interest rate gap between the US and UK.

Such a pause by the BOE was certainly possible after inflation fell to 1/15 year lows while both the Federal Reserve and Swiss National Bank paused interest rate hikes. 

The main surprise was Governor Andrew Bailey's less than bullish press conference, which hurt chances of another UK interest rate hike this year. 

GBP/USD

GBP/USD fell 0.9% to 1.2234, the lowest since March, with a session-high at 1.2347, after losing 0.4% yesterday, becoming the worst performing major currency after UK inflation tumbled. 

BOE

Bank of England voted to hold interest rates unchanged at 5.25%, the highest since March 2008, confounding expectations of a 0.25% hike to 5.5%.

Such a pause is the first for Bank of England since it launched the current cycle of interestt rate hikes in Decemebr 2021, in turn hurting the pound's tanding.

The BOE stated it'll continue to monitor inflation indices and economic data, adding that the policies have become tight enough to bring inflation to the 2% target. 

The BOE's press release pointed to the slowing down consumer prices and labor conditions, and weaker business sentiment as basis for the decision.

Bailey

BOE Governor Andrew Bailey asserted the bank will continue to monitor data to judge the need for another interest rate hike.

However he noted how inflation tapered off in recent months, which is a trend expected to carry on.

UK Rates

After the meeting, chances of a 0.25% interest rate by Bank of England in November tumbled to 64% from 81%.

Chances of an interest  rate cut in September, 2024 rose from 27% to 55%.