Articles in Category: Best of MetalMiner

gui yong nian/Adobe Stock

It’s hard to believe that 2017 is already more than halfway in the books. As we celebrate the Fourth of July, let’s take a brief look back at the top five most-viewed stories here at MetalMiner from January through June.

Benchmark Your Current Metal Price by Grade, Shape and Alloy: See How it Stacks Up

Top 5 Stories of the First Half of 2017

  1. 3 Reasons Why Steel Prices Will Rise Well Into 2017. This piece was a hit with readers, raking in the most page views of any story through the first six months of this year. With the steel industry awaiting the Trump administration’s Section 232 verdict, prices are in a bit of a holding pattern (for now).

  2. The Land Rover Defender Will Rise From the Ashes… With an Aluminum Frame. Stuart Burns’ piece on the Land Rover Defender revved up interested with readers.

  3. Military Grade Aluminum? The Ford F-150 Debate Continues. What exactly does the term “military-grade” mean in the context of automobiles? This post from the tail end of 2016 continued to draw reader interest well into 2017.

  4. 2017 Steel Market Outlook: Strong Demand for Flat Products Expected. Everybody wants to know: What’s the deal with steel? After Donald Trump’s presidential election, many in the steel industry expected a boost accompanying a proposed uptick in infrastructure projects. Of course, much has happened since this post went live in early January — namely, the Trump administration’s announcement of an investigation into steel imports, using Section 232 of the Trade Expansion Act.

  5. 3 Reasons Why Aluminum Prices Will Rise in 2017. While steel has been the subject of much of the metal industry’s focus this year, aluminum is also being investigated under Section 232.  This post from January predicting a rise in aluminum prices was a popular one with readers.

    Free Download: The June 2017 MMI Report

metal-buying-risky-business-metal-minerLast week, Lisa Reisman (CEO, Azul Partners; Executive Editor, MetalMiner) sat down with Ron Wilson (CPO, Wilbur Curtis) and Bill DeMartino (General Manager, North American Operations, riskmethods) to discuss how metal-buying organizations are staying smart on risk. It made for a engaging conversation around risk management processes and strategy, and provided manufacturers of all sizes with a comprehensive risk management go-forward plan.

Although the live event experienced some unforeseen technical difficulties, MetalMiner is pleased to present the clean recording of Reisman’s discussion with Wilson and DeMartino. You can view the presentation by clicking the link below:

Before we head into the weekend, let’s revisit some of the stories and analysis here at MetalMiner this week.

Moody’s Downgrade of China: Something to Worry About?

Earlier this week, our Stuart Burns wrote about credit rating agency Moody’s and its downgrade of China’s credit status by one level (from Aa3 to A1). Credit downgrades are handed down all the time — but what do they mean, exactly? And, specifically, what does it mean for the Chinese economy and its growth?

Benchmark Your Current Metal Price by Grade, Shape and Alloy: See How it Stacks Up

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This is the second of a three-part series on MetalMiner Benchmark. Here’s part one if you missed it.

If data is the new natural resource in business, then when examining the landscape of third-party metal price tools, indexes and services, it’s safe to say that most of them fall into one of three categories:

  1. They report out the exchange-traded metal (meaning the metal that is traded on a formal exchange, typically a raw material form of the metal)
  2. Some report alloying elements and minor metals — important for mills and producers but less relevant to OEMs and most metal buying organizations
  3. They report out only a parameter or two such as alloy and form, e.g. cold-rolled coil (and typically a geography) but don’t get more specific than that

Our own MetalMiner IndX(SM), which we are no longer actively marketing, reports out most of the above and in some cases, by multiple geographies. Helpful? Sure, but limited in a number of key respects.

Limitations of Current Metal Price Indexes

Based on our own analysis and analyses conducted by our readers and shared with us, the three primary limitations of current metal price indexes (including our own) are as follows:

  1. They aren’t correlated enough with the metal prices buying organizations actually pay. The London Metal Exchange three-month aluminum price plus the Midwest premium certainly goes a long way in helping buying organizations understand the general aluminum price trend, but that still leaves some portion of the price a company actually pays out of the equation.

For example, the 3003 H14 .020 x 48” x 120” sheet that a company actually buys from a service center includes more than what current indexes supply:

  • LME three-month aluminum price + MW premium + Conversion Premium + margin + delivery to the customer.

CRU Group publishes a weekly CRC, HRC, HDG and Plate price for several geographies in the midwest but that CRC price is still not the same price as the price for 100,000 pounds of 1011 12 gauge x 48” coil.

  1. In some cases, other metal price indexes have the form, alloy and grade-level data (see stainless prices from MetalBulletin). American Metal Market also publishes form/alloy/grade data but it may not include specific sizes, quantity breaks or price differences based on those parameters. In addition, some of these may only be updated monthly.
  1. Current price indexes are all one-sided — They go from the publication out to the reader/user. There is no two-way method of giving your data and getting something back that allows you to compare your purchase price against others in your industry.

Benchmarking is always free with self-service!

Why Form/Alloy/Grade/Size Matter

By providing a means to identify the market price at the granular level of form/alloy/grade/size, buying organizations can now effectively compare the actual industrial prices paid against peers as well as the market as a whole. This capability also allows buying organizations to identify alternative suppliers, pinpoint specific SKUs and areas of opportunity, and strengthen existing supplier relationships.

It’s clear that, indeed, “data is the “new” natural resource in business. In our next post we’ll cover how buying organizations can use these types of resources to lower their average cost.

Click here to see a sample enterprise benchmark report.

As the new year dawns, we turn our eyes toward the metal markets of 2017. Will the bull run of 2016 continue? What will be the standout performer of the metals we track? Will New Coke finally make a comeback as Even Newer Coke? Only to re-reintroduce Coke Classic in all its aluminum-encased glory? We have predictions. Lots of them.

Steel on Wheels

That’s right, the North American steel market is picking up steam and chugging toward expanded production and renewed profitability for many of the companies we track. Contributor James May said this week that flat products will enjoy higher demand while hot-rolled coil capacity will expand thanks to a combination of new capacity going online (Big River Steel‘s plant is set to open) and the trade policies of the incoming Trump Administration.

Iron Ore Overseas

China consumes over 70% of the world’s seaborne iron ore and a strong year for the Chinese economy bolstered the steelmaking raw material from from $40 per metric ton to $70/mt in global markets last year, an increase that helped re-energize the bottom lines of mining majors Rio Tinto Group, Vale SA, BHP Billiton and Fortescue Metals Group.

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This week, Sohrab Darabshaw pointed out that that was cold comfort to smaller miners in India who are still hamstrung by high export taxes and can’t get their ore into China or other lucrative world markets. That could change soon, but MetalMiner Co-Founder Stuart Burns was even more cautious, reminding us that physical iron ore prices were influenced by a rampant futures market last year.

Source: Adobe Stock/Geargodz

“The interplay of the futures market, physical demand from steel mills, and seaborne iron ore supply has too many variables to predict 2017 and ’18 with any certainty,” he said.

Trumping Trade

While some of the markets are still murky, one thing we all agreed on this week was, once Donald Trump is installed as President of the United States, 2017 certainly won’t be boring when it comes to international trade. Read more

We look forward to providing you with metal prices, forecasting and market intelligence in 2017!

Source: Adobe Stock/Geargodz

US Steel plant in Granite City wide

The U.S. Steel Granite City Works captured by Google Street View in September, 2014 — a year and two months before the latest idling of the mill.

See the latest multimedia version of this story here.

This is our final top-rated post of 2016. Chinese market economy status was a huge issue for the entire year and this interactive package, originally published in May, put all facets of the problem into one package. How China will change its economy to compete with the rest of the world without overproduction for export is still an open question and a major threat to market stability. — Jeff Yoders, editor

Dan Simmons has seen a lot during the 38 years he’s worked at U.S. Steel’s Granite City Works in Illinois, just outside St. Louis.

From starting out as a general laborer, to swinging hammers on the track gang, to “feeling like Mr. Haney from Green Acres” while trucking around the mill, Simmons took it all in. There were days “you were whistling when you came in, and whistling when you left,” he said.

But nothing compares to what he’s seeing now.

“I have grown men coming into my office, crying,” said Simmons. “You see the pain, the ‘what ifs,’ the blank stares…”

Simmons, who just turned 56, is now the president of the United Steelworkers Local 1899, and some of the grown men coming to him are pipefitters just like he had become during his long tenure, which began in 1978.

However, those men and women aren’t coming to him because they’ve been hurt on the job. They are coming to plead for help, because they have lost their jobs, and in many cases still don’t know when they’ll land their next one.

Cyclicality in steel production is nothing new, but it wasn’t until 2008 — when the global markets began crashing — that USS Granite City Works endured its first indefinite idling in its history.

“We had the unemployment office cycling 400 people through at a time,” Simmons told MetalMiner. “The biggest fear is not knowing. If I could have given them a definitive timeframe, they would’ve said, ‘OK, I can handle that.’ But after two to three months, people come to me and don’t know what to do with themselves.”

And now, after the mill went idle a second time in December 2015, some of those workers have been without a job for nearly half a year. Last December, 1,500 people were laid off — 75% of the mill’s total workforce. Across the country, a total of 13,500 steel workers have been laid off over the past year.

Simmons knows what it’s like to feel that fear firsthand. “I got a brother that works here, a brother-in-law that works here, so it’s personal. You worry about where your whole family will be.”

So what’s different today, compared to 2008?

For Simmons and scores of others in the country’s steel sector and other manufacturing industries, much of the pain can be traced back to one main source: China.

A History of Unfair Trade?

The world may have never encountered a more crucial Year of the Monkey than 2016.

That is, at least as far as global trade between China and the Western world is concerned. At the end of this year, China believes it ought to receive Market Economy Status (MES). This would allow China to enjoy the same market status as the U.S. and European Union when it comes to anti-dumping investigations before the World Trade Organization.

In its quest to grow its economy over the past two decades, China has become the leading producer — by far — of steel, aluminum, cement and other industrial materials. Read more

As we continue to look back at our highest-rated posts of 2016, it’s no surprise that another price predictions article was among the most-read. Contributor James May of Steel-Insight gave us his price outlook for the second half of 2016 and, yes, 2017. Enjoy this best of metalminer post with an eye toward next year. — Jeff Yoders, editor.

U.S. flat-rolled steel prices appear to abhor a vacuum — they seem to either go up or down.

Two-Month Trial: Metal Buying Outlook

JamesMayheadshot_150

James May

Moves this month, therefore, have to be perceived as efforts to hold pricing, even though they are pitched as price increases. For now, the moves appear to have worked; hot-rolled coil is steady at $620 a short ton out of minimills and $640/st from integrated mills with cold-rolled coil at $820-840/st.

Amid lower scrap prices, the minimills certainly have room to negotiate. Meanwhile, buying tends to slow over the summer. Import deals are also firming up given the spread. As such, it is our view that the bias is to the downside, but discounting — at least initially — will be limited. Hot-rolled coil lead times remain at around six weeks, although some minimills are closer to four to five weeks. Cold-rolled coil and hot-dipped galvanized remain in the eight to 10 week range — down from their peak, but not long enough to allow distributors much leeway in negotiation. Moreover, with some mills having downtime in August, there is no incentive to cut prices to fill schedules.

US Hot-Rolled Coil Prices ($/metric ton ex-works Midwest) Margins Widen

Steel_Insight_Coil_prices_550_071116

Source: Steel-Insight

Falling scrap prices and high steel prices are leading to rising spreads for minimills, a further reason to maximize output. Slab re-rollers are still seeing their spreads widening as well. At around $350/mt free-on-board Black Sea, the spread to U.S. domestic steel is around $300/mt over landed slab, an enormously profitable spread. It is, perhaps, no wonder that provisional semi imports in May were over 700,000 mt. We would expect them to move higher as buyers take advantage of the arbitrage. However, we caution that this could be another contributory reason for U.S. prices to drop later in the year as rising supply of coil hits the market. Read more

As we continue to spotlight and republish our top posts of 2016, we travel way back to New Year’s Day 2016 for another metal price story. This one by our Editor-at-Large and MetalMiner Co-Founder, Stuart Burns noting an aluminum price increase from almost exactly one year ago today. — Jeff Yoders, editor.

Aluminum has since taken off with the rest of the base metals and we’re in a full bull market. It’s quite a contrast from situation just one year ago.

The London Metal Exchange (LME) aluminum price has risen from the low $1,400s per metric ton in October to the mid $1,550s this week.

MetalMiner Price Benchmarking: Current and Historical Prices for the Metals You Buy

At the same time, the Japanese have started settling first quarter 2016 physical delivery premiums at $110 per mt, 22% higher than the previous quarter, the first time they have risen in a year.

rolled aluminum on table with worker

What is behind the increase in the aluminum prices? Adobe Stock/uwimages.

Meanwhile, probably not unconnected, Japanese port stocks have fallen at the country’s three major ports. Stockpiles fell in November by 7.5% to 401,000 mt according to Reuters. Over the in US, the Midwest transaction price, which includes the LME price and premium that buyers pay to take delivery of the metal, has risen steadily this month to $1,736 per metric ton by December 24, up from $1,599/mt on 28 October, which was its lowest point since May 2009. Read more

No greater debate has ever roiled our virtual pages than the one about Ford Motor Company and its use of the term “military-grade aluminum.” This post from last May is just one of several posts we have written about Ford’s ad campaign for the aluminum-bodied F-150 pickup and all not only rank high in our site stats but also seem to draw the most commenters willing to lend their expertise that, mostly, rejects Ford’s use of the term.

Enjoy this look back and feel free to post if you have any strong feelings about “military-grade” yourself as we look back at the year that was. — Jeff Yoders, editor

No term has brought up more discussion in the pages of MetalMiner than Ford Motor Company‘s insistence that the F-150 pickup truck is made of “military grade” aluminum.

MetalMiner Price Benchmarking: Current and Historical Prices for the Metals You Buy

On this Memorial Day, we thought we’d revisit whether military grade was actually a specification or a simple marketing ploy on Ford’s part. Since the aluminum-bodied F-150 was introduced in the 2015 model year, more information about its actual construction has been shared by Ford.

Individual dealers are now touting the strength and research that went into the cab and other body parts of the F-150. “Military grade” is still sprinkled throughout the the video, but they also concede the alloy is also part magnesium and silicon. Ford also mentions that a large portion of the F-150 is, in fact, high-strength steel.

Ford has also admitted that the F-150 is primarily built from 6,000 series aluminum alloy, the strength of which is increased by heat-treating after it is formed.

The “military grade” refers to the specs that military applications of 6,000 series alloy is used in. In fairness to Ford, manufacturers and fabricators have been promoting their products as “military grade” for decades, and that’s really no different than Ford’s use of the term.

Two-Month Trial: Metal Buying Outlook

We certainly wouldn’t recommend that anyone take an aluminum-bodied F-150 into a war zone to test just how “military grade” it really is, but, from a specification standpoint, Ford seems to have good reason to be proud of the rigor of the processes it uses to produce the F-150.