Author Archives: Taras Berezowsky

In light of more than 20 states finally being able to lodge formal lawsuits against the EPA’s Clean Power Plan a month ago, the National Mining Association has commissioned Energy Ventures Analysis (EVA) to drill down into the costs of complying with the rule — for industrial users, commercial user and consumers alike.

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From a high level, EVA expects a “$214 billion increase in wholesale electricity prices, double-digit wholesale electricity price increases in 46 states, and $64 billion to replace lost power capacity serving 24 million homes.”

EPA Clean Power Plan Cost in Pictures

In a visual nutshell, here is what EVA projects the costs of the EPA Clean Power Plan to look like:

Source: Energy Ventures Analysis

Clearly, many of the hardest-to-be-hit states are also the most manufacturing-intensive. Source: Energy Ventures Analysis

US map of electricity prices under EPA CPP

Ouch for the Rust Belt. Source: Energy Ventures Analysis

US map compliance costs power capacity replacement

Source: Energy Ventures Analysis

What This Means for Industrial Manufacturers

According to EVA:

“The consequences for costs are evident in the looming price increases for electricity. EVA’s analysis projects that by 2030, when the CPP is fully implemented, the wholesale price for electricity will spike electricity prices nationwide by 21.2 percent above the non-CPP base case.

Commercial and industrial consumers of electricity will naturally experience the same price increases, which are likely to be passed on to consumers in increased prices for goods and services. Furthermore, the greater natural gas demand by the power sector will increase natural gas prices that will be felt beyond the power sector. Residential, commercial and industrial natural gas consumers’ bills would increase by $6-8 billion/year under the EPA Clean Power Plan to recover higher gas commodity purchase prices. In addition, if the industry requires additional investment in pipeline capacity to meet the power sector’s growing gas demand, these costs would also be passed onto consumers.”

Read the complete report for more context, analysis and, most importantly, EVA’s methodology.

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Before we get into Alcoa Inc., Micromill, their partnership with Ford Motor Co., or aluminum lightweighting, first up — Acronym Roll-Call:

CAE: here. FEA: here. FEM: here. FLC: here. FLS: present.

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These niche acronyms, when they roll off the tongue of presenters and attendees, will contribute to the soothing sounds of an upcoming conference titled Modeling, Simulation and Crash Testing Of Automotive Lightweight Materials Congress, which bills itself as The Only OEM-Led Congress Encompassing Cost-Effective Modeling, Crash Simulation And Lifecycle Prediction For Lightweight Materials And Composites. (Whew.)

Computer-aided engineering (CAE), finite element analysis (FEA), finite element method (FEM) simulations, forming limit curves (FLCs), and forming limit surfaces (FLSs) are all elements of the stuff that lightweighting dreams are made of — and the first round of folks that the Dreamers-in-Chief begin with are (with all due respect) the R+D Nerds-in-Chief, several of whom will be attending and presenting at the January 2016 conference.

Two such engineering experts, Steven Sheng, formability engineer for General Motors, and Xinran Xiao, professor of Mechanical Engineering at Michigan State University, recently gave interviews on what they expect to see on the lightweighting horizon.

hroephoto/Adobe Stock

Newer, stronger forms of aluminum should help vehicles perform better in crashes. hroephoto/Adobe Stock

While I don’t recommend reading both interviews in their entirety unless you’re deeply embedded in the R+D sector, the essential takeaways are that material fracture prediction and modeling and simulation will become more important than ever, which means CAE analysis will continue playing ever-larger roles in lightweighting. “To increase the use of composites in crash critical structures, we have to be able to predict the crashworthiness of the structure as we do for metal parts. Good material models, robust and accurate safety simulations are critical to vehicle lightweighting,” Xiao is quoted as saying. This, ultimately, will increase understanding of, say, aluminum’s performance under stress way before the first crash test.

Speaking of Aluminum…

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This is a Throwback Tuesday post from MetalMiner’s Top 50, updated with new information since it initially ran January 15, 2014. Hope you enjoy the first of many #tbt posts! This was the first of several posts about the new aluminum Ford F-150 that have since graced our pages.

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If there’s any reason at all to be anywhere near Detroit during Winter (believe me, I’m from the Metro D and can say such things with more than passing conviction), it’s to attend or be involved in the North American International Auto Show.

If it’s not sports, it’s cars, and at least the city keeps the lights on at the Cobo Center, where the latest designs are unveiled, human models awkwardly complement the exhibitions, and concept cars are the main attraction.

(It’s where I’ve spent many hours of my youth, to be followed by a Ride to Nowhere on the Detroit People Mover and coney dogs at Lafayette).

However, arguably, the biggest story from the Auto Show this year, although quite a concept, was not exactly a concept car – it was Ford’s all-aluminum F-150 truck.

How’d That Happen?

Apparently, after designing and building the new F-150, Ford “secretly” distributed the vehicles to a number of test subjects to see if their lightweighting efforts would hold up.

“The automaker was looking to test how lightweight aluminum alloys would hold up on the job, at a gold mine, an energy utility and a construction firm…What Ford learned from 300,000 total miles convinced the world’s biggest seller of full-size pickups to make wholesale changes to the F-Series,” writes Jerry Hirsch for the LA Times.

The new F-150 weighs 700 pounds less than the previous model, featuring an engine compartment, doors, hood, side panels, truck bed and tailgate all made of aluminum alloys. The way they’re marketing the featured material is by calling it “military-grade aluminum.”

Back to Car Wars: Aluminum vs. Steel 

So how do advanced high-strength steel (AHSS) producers – and the steel industry in general – respond to Ford’s move?

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PGM prices rebounded this month from being hit by the Volkswagen scandal last month, buoying the entire Global Precious Metals MMI for November. Our precious metal index hit 77 this month, a 4.1% increase from last month.


It helps that the rest of the complex did well across the board, with every single price point for platinum, palladium, and also gold and silver, appreciating across US, EU and Asian markets.

PGM Time

The US platinum price on the MetalMiner IndX ticked up considerably more than the US palladium price, almost-but-not quite proving our point from last month that “ultimately, in MetalMiner’s view, based on how investors reacted to the [VW] news, we’ll likely see both platinum and palladium trending in opposite directions in the short-to-medium term.”

Speaking of those investors, some big news in the ETF world: apparently platinum and palladium ETF outflows have approached some record lows. According to Reuters, platinum ETF holdings tracked by that news giant dropped 160,000 ounces near the end of October. Reserves of palladium ETFs were down 207,000 ounces over that same month, resulting in ETF holdings of both metals hitting their lowest since early 2014.

EconoTimes reported that just a few days ago, platinum and palladium ETF holdings were reduced by a further 31,600 ounces.

Interestingly, net-long positions, as the source reports, had risen to 13,500 contracts in that last week of October, which is itself the highest level since the beginning of July – so are we seeing investors taking a longer-term, slightly more bullish outlook? Remains to be seen.

In Economic Driver News: Fed Interest Rate Rise

The Federal Reserve recently announced that they would not raise interest rates, but it’s not ruling out a rate hike before the end of the year. Fed honchos see current economic indicators as generally favorable, which is the main reason the short-term rates have remained at near zero for the 7th year in a row.

However, as my colleague and MetalMiner’s lead forecasting analyst Raul de Frutos has pointed out, this waiting game is “generally bad news for metal prices and all commodity prices and the longer the Fed delays the more likely it is that when a rate increase does finally happen it will only make the US dollar more attractive to investors seeking yields.”

Which, of course, should bolster the dollar and, in turn, could ding at least gold prices…

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supreme court

EPA’s Clean Power Plan was finally added to the Federal Register this morning, after several months of limbo, officially putting the rule “on the books” – and thus clearing the way for lawsuits to be filed against it within the first 60 days.

Oh, don’t worry though – the wheels are already in motion. According to UtilityDive, 24 states have already prematurely filed challenges to the EPA Clean Power Plan, and will now be able to go to court. Many expect the states to do this today.

We’ll have more updates on this as the legal process glacially moves along; for now, check out what else is new in regulatory compliance this week!

WOTUS – huh, yeah – what is it good for?

As MetalMiner recently reported, the 6th Circuit Court of Appeals has stayed the Environmental Protection Agency‘s new water rule in all 50 states, giving a reprieve to manufacturers until the full court hears arguments over the legality of the new rule. The rule expands (to the detriment of clarity) the definition of “waters of the United States,” (WOTUS) and by extension the agency’s jurisdiction over private and public lands and their uses – what many states have contended is an overreach of the existing statutes under the Clean Water Act.

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The National Association of Manufacturers (NAM) has called the stay a “tremendous victory,” as NAM Senior Vice President and General Counsel Linda Kelly put it last week, as the manufacturing industry continues its fight against the rule.

But our first question is, well, what the heck does this new rule entail?

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MetalMiner’s Global Precious MMI lost what it had gained the previous month, dropping 2.6% back down to a reading of 74.

Nearly all gold, silver, platinum and palladium prices that we track on the MetalMiner IndX, across all regions, fell over the past month, matching this precious index’s all-time low.


Free Download: Last Chance – Get the full September MMI Report

Even though silver hit a 3-month high this last week, the metal is still in an overall long-term downtrend – as my colleague Jeff Yoders writes, hey, take the victories where you can get ’em.


And long-term downtrends are where it’s at lately for the precious sectors, mirroring the ferrous and base metal sectors. Platinum isn’t immune to losses either, as prices in the US, China, India and Japan have all come down over the last month. Palladium, however, did tick up a bit across those markets. (The price for US palladium bars, for example, rose 8.5% over the month of September, up to $651 per ounce.)

As my colleague Raul de Frutos wrote recently:

“Palladium and platinum prices have been volatile after investors heard of the Volkswagen Group scandal. Industry reports are suggesting that this could be the end of diesel cars. With 40% of platinum demand coming from the making of auto catalysts for diesel cars, that’s pretty bad news for the precious metal. Platinum fell 4% after the news, although it recovered some of its losses” soon after.

Ultimately, in MetalMiner’s view, based on how investors reacted to the news, we’ll likely see both platinum and palladium trending in opposite directions in the short-to-medium term.

Notable Precious Price Mover

  • US palladium bars shot up 8.5% over the month of September, up to $651 per ounce from $600.

Free Download: Last Chance – Get the full September MMI Report

Monthly Metal Buying Outlook for Sept 2015MetalMiner’s Monthly Buying Outlook report for October is now available. Sharpen your sourcing strategies for buying aluminum, copper, nickel, lead, zinc, tin and multiple forms of steel, complete with our coverage of drivers, market commentary, polished charts and more!

If you’re a manufacturer in North America that’s buying multiple metals, this is the ideal one-stop-shop report for you.

This month, you’ll learn:

  • Whether the Federal Reserve’s decision not to raise interest rates matters for metal prices
  • To what degree the China Dragon drives the Global Bear(ish commodity markets)
  • What the steel plate price tumble means for ferrous markets

Plus a short- and medium-term industrial buying strategy for the rest of the metals that you buy.

Individuals, small- and mid-sized manufacturers are encouraged to subscribe to our annual buying outlook reports. You can sign up at any time and receive the next 12 monthly reports emailed directly to you. Learn more and subscribe today!

You read right, dear readers – MetalMiner unveiled its forecast of average 2016 prices for aluminum, copper, nickel, lead, zinc, tin and hot-rolled and cold-rolled steel yesterday, and you may be surprised that we’re more bearish than the big banks (the Standards, Macquaries, Goldman Sachses and the like) and their 2016 average price forecasts.

And all of these average price forecasts can be yours…as soon as our Annual Metal Buying Outlook is published and ready for download. (Hint: it could drop as early as the end of this week. We’ll update this post with the link to the report, so bookmark us!)

As far as MetalMiner’s departure from the banks’ forecasts, co-founder and editor-at-large Stuart Burns had this to say recently: “It’s definitely a bullish tone that bank and senior research analysts have taken…in our view, there’s still plenty of excess capacity out there, demand is weak, and the dollar is strengthening,” and those factors, ultimately, may make many of the banks’ forecasts turn from bullish to bearish sooner rather than later.

We’re not the only ones on the block with a bearish outlook – just yesterday, the WTO released updates on its 2015 and 2016 global trade outlook. According to their full release, WTO economists have lowered their forecast for world trade growth in 2015 to 2.8%, from the 3.3% forecast made in April, and reduced their estimate for 2016 to 3.9% from 4.0%.

WTO Trade Forecast Revised Downward

Some main takeaways:

  • The same exact things we at MetalMiner have been hammering home. Falling import demand in China, Brazil and other emerging economies; falling prices for oil and other primary commodities; and significant exchange rate fluctuations drove the revisions downward. (What’d we tell ya?!) Also, the WTO goes so far as saying, “Risks to the forecast are firmly on the downside, the most prominent being a further slowing of economic activity in developing economies and financial instability stemming from eventual interest rate rises in the United States.”
  • China, China, China. Globally and regionally, China’s lower economic growth rates and falling demand have really upset the apple cart. According to the WTO, Asian export and import growth for 2015 has been revised down as slower growth in Chinese imports has reduced intra-regional trade. Also, China’s struggling import demand plays a big role in world merchandise trade volume, which is expected to rise only 2.8% in 2015 – lower than the previous estimate of 3.3%.
  • Trade took H1 2015 hits – just like the overall commodities and metals sectors. As the WTO puts it, “At the time of our last forecast in April 2015, world trade and output appeared to be strengthening based on available data through 2014 Q4. However, results for the first half of 2015 were below expectations as quarterly growth turned negative, averaging ‑0.7% in Q1 and Q2.” Yep, the first half of 2015 was definitely not great for the metals sector, either.

For more on what US and global construction sector indicators can tell us, make sure you check out my colleague Jeff’s rundown today.

Don’t forget, come back for our annual 2016 outlook!

United States Steel Corporation’s CEO Mario Longhi made the media rounds recently, evangelizing U.S. Steel’s – and most of the domestic industry’s – key plank in their policy platform: creating a globally fair playing field when it comes to international trade.

He showed up on Maria Bartiromo’s show, denouncing unfair subsidies in foreign economies and tariffs on certain US imports into countries such as China.

mario longhi us steel

Screenshot from video of Maria Bartiromo’s interview with Mario Longhi. Source: Fox Business.

He also spoke to Politico about the granting of “market economy” status to China next year, which would change how the Commerce Department determines anti-dumping duties on Chinese goods, including steel.

RELATED: MetalTalk! Podcast Episode 1 – ‘Dumping 101’

As you may know, China is pushing a bunch of steel beyond its borders. As my colleague Stuart Burns reports, while China’s steel production may have dropped, its exports have risen. In the first 8 months of this year, product exports reached 71.87 million metric tons, up 26.5% compared to the same period of 2014.

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In fact, the China Iron and Steel Association’s vice chairman is quoted as saying that this year, the country will export more than 100 mmt of steel – that’s equivalent to more than the entire production of North America. Or nearly as much, purely in exports, as the next largest producer, Japan, produces both for domestic and export combined, according to Burns.

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