This week, Chicago’s famed Sears Tower opened four glass boxes called “The Ledge” which hang from the building’s 103rd floor. The Ledge promises great views as far away as 50 miles to four states (on a clear day of course) Here are a couple of views from the boxes:

Photos Courtesy of:  The Skydeck Website

Of course being the metals gal that I am, I wanted to know more about the metal structure supporting the box. MetalMiner caught up with Lou Cerny, project manager at MTH Industries, the contractor working with Skidmore Owings & Merrill LLP, the firm who originally designed the Sears Tower. The 4 boxes (made of glass) are 10’ x 10’ with a 4’ cantilever over the edge. For those of you architect buffs, the cantilever concept became popularized through Frank Lloyd Wright (below is Wright’s famous “Falling Water” house built for the Kaufman family):

Photo Courtesy of Google Images
The “Ledge” is essentially a suspended glass structure with no steel framing. The 8’ x 8’ x ½’ structural ceiling front hangs from high strength steel beams, custom fabricated plate and high strength tube, custom machined pieces, stainless steel connections and a lot of little pieces. The entire box is suspended from bearing rollers, similar to wide flange beam traveling rollers. The system is run by a rigged chain drive overhead motor. Think of it as a “very expensive garage door opener”, according to Cerny. The glass corners are hung with fasteners every 18” – 2’. And even Cerny admits, “it took me a few times to get comfortable inside and we manufactured it.”

But MTH Industries is no stranger to interesting architectural projects particularly here in Chicago. That firm has done all of the bronze work at the Palmer House, the Cloud Gate Structure at Millenium Park, all of the space frame within Navy Pier and the aluminum doors at the new Modern Wing of the Art Institute as well as the bronze work for the Penny Pritzker residence (you may recall Ms. Pritzker was in charge of fundraising and finance for President Obama’s presidential campaign)
Let us know if you go to the “The Ledge.” We’re not sure we’re ready to step out yet….

–Lisa Reisman

We have written before about the growing phenomena of Urban Mining, a coming together of different trends such as metal scarcity and the green movement which could have ramifications for both consumers and producers. On the one hand, cities and states are trying to find solutions to the growing problem of what to do with obsolete electronics, particularly bulky items like TV’s, PC’s, printers, fax machines, etc. Throw them in a landfill and they become a source of potential pollution but to recycle them requires specialist equipment, skills and experience, not to mention the challenge of collecting them economically. If ever there was an opportunity for public and private enterprise to work together this has proved to be it. Maine, Oregon and some 16-17 other states have passed laws mandating recycling but more importantly creating free collection points for unwanted machines. States recognized that they had to make it free and easy to dispose of machines otherwise people would not do it. The EPA estimates over 99 million sets sit unused in closets and basements around the country according to the NY Times. Industry sources say this equates to over 320 million pounds of copper, not to mention over 200 million pounds of aluminum and various rarer metals found on the circuit boards. Then there are the PC’s, the fax machines, etc etc. Plus the return to be made from plastic and glass recycling.

States are also mandating producers design in a greater degree of recyclability but in the absence of a national standard this is proving an increasing burden for producers as every state has the potential to write different standards. Clearly federal action is required to take this forward. Discarded electronics represents a significant source of copper and rare earth metals that with the right technology could be recycled and to some extent reduce dependency on overseas supply.

The EPA estimates that 2.6m tons of electronic waste is lost in landfills every year resulting in a cost for the tax payer to operate, an environmental impact for this and subsequent generation.  It also represents a waste of natural resources that could be more efficiently used. At the moment the economics do not fully support this being left entirely in the private sector. Manufacturers say a reasonable rate for collection and processing of waste is 25 to 30 cents a pound. Still it is more than they say they can recoup from reselling the metals they harvest, particularly for televisions. So if it is agreed there is a wider benefit for the environment and society than some support, maybe in terms of running the collection points, by the state could be justified nationwide.

–Stuart Burns

As a follow-up to Stuart’s post earlier today about Japan replenishing various key metals and the US’ need to do the same, a story released yesterday from Reuters mentions Japan Oil, Gas and Metals National Corp (JOGMEC) was unable to come to price terms for the purchase of two strategic metals – cobalt and ferro vanadium. This comes as no surprise, particularly in terms of cobalt which is currently in short supply. The supply market should ease somewhat as producers that shut down operations this summer re-open again in the fall.

In addition, cobalt will be available via a futures contract early next year on the London Metal Exchange. The LME will publish a daily price.

The last time Japan went out to the market for these items was back in 1993 for cobalt and 1994 for ferro vanadium.  Too bad the Japanese didn’t find any of these metals when they uncovered their latest uranium source, on the moon!

Now wouldn’t the moon be an interesting solution to the rare earth/critical metals supply problem!

–Lisa Reisman

Lots of state purchases are lumped under the banner of “strategic stockpiles.” Take China’s buying up of copper, zinc and particularly aluminum this year as examples. The purchases were made by the Strategic Reserves Bureau but they can hardly be said to be made for the strategic security of the country. China is the world’s producer of aluminum and hardly needs to stockpile it for security reasons. No, these SRB purchases fall largely in the camp of supporting the domestic producers. But some countries do buy and hold metals as a security buffer against global supply problems. In reality they cannot carry sufficient stock for an indefinite supply chain failure but the intention is often merely to supplement supplies if one or more source has a short term problem, such as South Africa’s power outages last year which disrupted platinum and other PGM shipments.

The US used to carry a strategic reserve, ironically they were one of the largest metals producers in the world but since the end of the cold war the stockpile has been run down. As sales of metal were released into the market and prices depressed, so have mines closed in the US such that now it could be argued the US needs a stockpile more than it ever has because a greater percentage of it’s metals are imported than ever before.

Japan clearly thinks so too. the country has announced their intention to increase from an average 19.5 days to 42 days the stockpile of seven metals plus the addition of two more. Japan realizes they are exposed by their near 100% import position and is allocating tens of millions of dollars to increase stocks of cobalt, tungsten, molybdenum, vanadium, nickel, chrome and manganese, in addition to adding indium and gallium. Interestingly, the last two are vital components in flat screens, LED’s and other electronics reflecting the changing nature of Japans’ industry since the previous list was drawn up that focused more on steel additives.

Despite have currency problems, some observers have termed it a disaster waiting to happen, South Korea is also increasing stockpiles, mostly for base metals. The state-run Public Procurement Service (PPS) said to Reuters that they were tasked with helping small to medium suppliers struggling with credit to maintain continuity of supply. The agency, plans to steadily increase reserves to 39 days’ worth of supply by end-2009 and 60 days by 2012, from 27 days now by using cheap metal prices.

Neither Japan nor South Korea’s purchasing is likely to impact metal demand sufficiently to move prices. The volumes are dwarfed by China’s recent forays into the market but they do underline the seriousness that some countries view their reliance on imported raw materials and the steps they are prepared to go to mitigate those risks. With China and other emerging markets rapidly becoming such major, almost dominant producers in certain metals, the supply market may not always be as reliable as it has been in the past.

–Stuart Burns

Two days ago we reported the Obama Administration and the Office of the United States Trade Representative filed a case with the WTO over Chinese export restraints on key raw materials.  You can read that post here.  But what we’ve just learned is that China had modified the export tax rates on June 22, effective July 1. Somehow, these changes failed to make the mainstream or even trade publication news though Metal-Pages did allude to tax changes that may go into effect July 1.

The export taxes for a range of metal products appear as follows:

• Molybdenum had a 10 or 15% export duty and now has a 5% export duty
• Tungsten went from 10% to 5%
• Indium went from 10% to 5%
• Indium powder, 10% to 5%, and indium scrap, and indium metal, 15% to 5%
• Aluminum bars are still subject to 15% export duty for big bars and 5% for small bars

The US case was filed on June 23 according to the United States Trade Representative. We will surmise that the Office of the United States Trade Representative had reviewed the changes and had not been satisfied (and hence filed the WTO case) or had not seen the proposed July 1 tax changes (though we suspect that is unlikely). In either case, our people in China are telling us that Chinese government officials “will make a new policy to make Obama happy.”

We’ll follow-up with a Chinese perspective on this WTO case and the myriad of anti-dumping cases filed here in the US.

In the meantime, if anyone would like to see the new export tax list, drop me a line at lreisman(at)aptium global(dot)com

–Lisa Reisman

Last week, the House passed a cap and trade bill with a vote of 219 for it and 212 against it. The bill will next go to the Senate where Senator Barbara Boxer (D-CA) hopes to introduce and vote on a bill before the August recess. But a controversial provision in the bill will likely spark huge debate both within the Senate and for President Obama in terms of whether or not he will support the bill with the provision intact. The provision calls for tariffs on all goods imported from countries that don’t have a similar carbon emissions restriction. The provision would affect many countries’ goods but would certainly take aim at Chinese and Indian origin materials. Democrats added that provision to ensure US industries do not have to face “unfair competition abroad.”

Who supports cap and trade and who opposes it? In the broadest terms, several organizations have taken positions against cap and trade. These include the National Federation of Independent Businesses and the National Association of Wholesaler-Distributors. The NAW’s membership comprises a broad range of other industry trade associations as opposed to specific companies. The trade associations relevant to the metals industry include: American Machine Tool Distributors Association, Copper and Brass Service Center Association, National Fastener Distributors Association, Petroleum Equipment Institute, Metals Service Center Institute among many others. Both organizations have prioritized Cap & Trade legislation as “key vote,” according to Roll Call. This means, both associations will grade various legislators based on their specific votes for this legislation. Grades help determine how PAC monies are allocated and which Congressmen/Congresswomen receive support from the trade association. [Read more →]

There has been a lot of comment (much of it unwelcome in the US anyway) from China recently about replacing the US dollar as the reserve currency. Nearly everyone (outside of various tin-pot republics that would like to see the US brought down to their level) realizes it is just talk and that for the medium term there is no way the dollar could be replaced by another currency or even by an IMF sponsored currency underwritten by special drawing rights as suggested in this WSJ article. The fact is China is getting worried that their massive dollar holdings – either as currency or as treasury bills – could be decimated if the value of the dollar slides. They possibly fear that this is the US administration’s long term aim to devalue the currency and via inflation, reduce the burden of US debt. The fact China achieved these massive dollar surpluses by artificially suppressing the renminbi exchange rate is a fact I am surprised the administration does not make more of an issue about.

However, the point remains that from a peg in the early years of this decade the currency was allowed to appreciate some 20% against the dollar following an announcement in July 2005. The intention stated at the time was that the currency would be allowed to rise against a basket of currencies and fluctuate within certain bands. This wasn’t implemented immediately, according to this well researched article. It was 2006 before the renminbi appreciated significantly and even then it was still weighted heavily to the dollar. In 2007, the weighting system evolved and a significant allowance (probably up to half) was given to the Euro and other currencies. As a result, the renminbi appreciated against the dollar because the Euro appreciated against the dollar. But since the collapse of Lehman Brothers the government’s formulaic weighting has moved completely back to the dollar with an almost fixed peg while the Euro has been allowed to fluctuate significantly.

What does this show? That rather than move towards a freely convertible currency, a pre-requisite of any currency being part of a global reserve currency basket, the Chinese have reverted to pegging the currency exclusively to the dollar. The question is what will the government do next? Will they allow the renminbi to resume its slow appreciation against the dollar seen in 2007/8 or not? With China’s export industries struggling to survive it would seem highly unlikely, but one thing is certain. Until the currency is allowed to fluctuate freely, China will not have earned its place at the table to discuss a global reserve currency.

–Stuart Burns

As we have said dozens of times before, the first time you see something it’s a data point. The second time you see it, it’s a line and the third time you see it, it’s a trend. But a trend in rising consumer confidence was not to be had this month as the Conference Board reported much-lower-than-expected index numbers of 49.3, down from 54.8 in May (investors had expected the number to remain in that 55 range) Consumer confidence had increased for both April and May.

What does that mean from a metals market perspective? We put consumer confidence squarely in the realm of “demand signal.” And as we have argued recently with regard to aluminum and copper, as well as steel, the price increases may not be sustainable.  Other economic indicators also suggest a long haul ahead, particularly for housing according to this Bloomberg article.

This news reminds me of something that once struck me as odd last year, when the prices for many commodities skyrocketed. We as market observers often believe markets move one of two ways – up and down. But in reality, they often spend quite a bit of time moving sideways. And though we are long term optimistic about the economy, we may skate sideways for some time yet.

–Lisa Reisman

I cringed this weekend as my six year old opened up a Trasformer birthday gift and squealed with glee.  There is something about these boy toys that I will never understand. But my son, despite being obsessed with the firearm capabilities of these toys also enjoys tinkering with each piece to understand its functionality and of course dual purpose.

And despite the movie sequel, “Transformers: Revenge of the Fallen” having received embarrassingly awful movie reviews, the film has become a major blockbuster already earning over $200m at the box office. Luckily, I can avoid my son watching that!

Instead of looking at the bill of materials for a transformer (we took our stab at that with Iron Man) to examine the metal content, we found an interesting story on how the Pentagon is looking at ‘transformer’ technology and specifically how to make metal fold upon itself.

Take a listen here:

 Other Media: Download

–Lisa Reisman

We have written recently about what a shambles we feel the whole cap and trade policy is in the US and how it is essentially a form of taxation but that the funds will flow as much into private coffers as the state, as can be evidenced by the enthusiasm with which major financial institutions such as Goldman Sachs are supporting it. However Cap and Trade may be what we are going to get and so along with federal tax credits for “green” technologies we may expect to see a plethora of projects that are essentially subsidized by the tax payer in the name of saving the environment.

Unfortunately even as technologies that could make a rapid contribution to reducing carbon emissions such as more efficient coal fired power stations are shunned by our politicians in the interests of long term pipe dreams – read this article in the NY Times about FutureGen – it is hard to see what benefit the changes will bring apart from just increasing cost. However one exception is a project that may reach fruition on the back of federal tax credits in New Jersey of all places. We say it in that manner because a coal fired power station has not been built in the state since the mid 90’s but if this manages to gather all the permits and approvals necessary it will be because it is designed to not release any carbon dioxide according to a NY Times article. The idea is to liquefy the CO2, pump it 70 miles off shore in a 2ft diameter pipe and then bury it one mile below the ocean floor in sandstone beds. The CO2 would displace seawater through a second drill hole and it is claimed would remain buried in the rock for eons. The project is to cost $5bn on current estimates but would become progressively more economical as carbon emissions become progressively more expensive. The Norwegians have been doing something similar in the Sleipner Field under the North Sea for the last 13 years, and oil wells in Texas frequently use CO2 to boost recovery rates, so the technology is largely proven.

Indeed coal fired power stations still hold enormous promise to produce economical lower carbon emission energy if the administration’s energy department and the environmental lobby can just get over their hang ups about coal being the cause of climate change. Even China is proving with their latest power stations that carbon emissions a third to a half of older plants are possible without government subsidy simply by embracing new higher temperature burn technology, coal gasification and the economies of scale that come with a concerted effort to replace old polluting plants with modern much cleaner plants. Meanwhile law makers in the US and Europe are clinging onto the zero emission nirvana of wind and solar power with all the accompanying hurdles that those technologies are going to have to overcome before they can realistically provide the majority of society’s power demand some decades into the future. Meanwhile we continue to pump millions of tons of carbon into the atmosphere when technology exists to dramatically reduce it.

–Stuart Burns