Articles in Category: Commodities

NioCorp Developments Ltd. has successfully produced high-purity 99.9% commercial grade Scandium Trioxide from its Elk Creek, Ne., Superalloy Materials Project and the company has finalized plans for a proposed scandium purification circuit there.

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Niocorp also announced that it anticipates public release of the results of its Elk Creek Feasibility Study in the second calendar quarter of 2017. Following the release of the study, the company intends to intensify efforts to secure government permits and obtain project financing to prepare for the launch of construction operations in Nebraska.

NioCorp’s successful production of a high-purity commercial grade scandium, an element used to make superstrong and light alloys used in both the automotive and aerospace industries, was conducted at SGS Mineral Services lab in Lakefield, Ont., Canada. This is a major milestone in Niocorp’s plans to become one of the world’s largest producers of the high-value metal. A 99.9% purity level, otherwise known as 3Ns or “three nines” scandium, meets or exceeds the purity needed for the additive’s use in virtually all of its mainstream commercial applications, including ultra-high-performance aluminum-scandium alloys for the aerospace and automotive industries, in the solid oxide fuel cell industry, and in other defense and non-defense applications.

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NioCorp said in a news release that the test showed its scandium product meets or exceeds the purity specifications of all potential customers with whom it has been in discussions.

OPEC Output Cut Threatened: Saudi Arabia Demands Iranian Cut

Saudi Arabia may demand that Iran, which is allowed a slight rise in output under the Organization of Petroleum Exporting Countries’ deal with member-states and non-members such as Russia, commit to an output reduction as a condition of continuing the cuts, people familiar with the kingdom’s thinking told S&P Global Platts.

This part two of our sit down with Steel Manufacturers Association President Philip K. Bell at the recent S&P Global Platts Steel Markets North America conference here in Chicago. Bell currently serves on the Department of Commerce International Trade Advisory Committee on Steel (ITAC 12), advising the Secretary of Commerce and United States Trade Representative on trade policy, trade agreements, and other trade related matters that benefit U.S. businesses, workers, and the economy.

Jeff Yoders: You mentioned that the proposed border-adjustment tax is something you have to be very, very careful about.

Philip K. Bell: Ironically, when I look at things the administration should prioritize, I would really like to see infrastructure rise higher on that top five list as opposed to things like a healthcare repeal because that’s one clear way that you can jump start the steel industry.

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Philip K. Bell

Philip K. Bell. Source: SMA

The steel industry, to me, if you look at it in the simplest terms, is based on cost and demand. You can help lower steel producers’ costs by reducing taxes and regulatory burdens, but you can increase demand by having this $1 trillion infrastructure plan and that would be very important. Making sure you deal with countries that dump, subsidize exports, etc. would also help.

JY: Using countervailing duties, anti-dumping duties and the existing tools commerce has, right?

PB: Right.

JY: I asked Chad Utermark, executive vice president of Nucor, what, exactly, their representatives had heard about when we might get to see the ideas for an infrastructure bill precisely because of that. This seems like a slam dunk for economic growth for all the industries that support construction. Why isn’t it being pushed more?

PB: We certainly would like to see infrastructure investment made a higher priority. I love the idea of public-private partnerships. The P3 approach is good, you’re going to bring better managerial skill with people who can manage the entire supply chain of infrastructure investment. Keep in mind, infrastructure can be financed this way, but it also needs to be funded (to an extent by the government). There are some infrastructure projects that are very important but might not appeal to private investors. They might not be easy to get done. Read more

President Donald Trump said today that his administration has approved the Keystone XL pipeline, reversing the Obama administration’s decision to block the oil transportation project.

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Speaking from the Oval Office, Trump officially announced the approval shortly after the State Department issued TransCanada‘s permit, making good on one of his campaign promises. The approval greenlights the Canadian company to complete construction on the pipeline that will funnel crude oil from Canada to refineries on the Gulf Coast.

The American Petroleum Institute praised the approval.

“Today’s action to approve the Keystone XL pipeline’s cross-border permit is welcome news and is critical to creating American jobs, growing the economy, and making our nation more energy secure,” said API President and CEO Jack Gerard. “This critical infrastructure project has been studied longer than any pipeline project in U.S. history with exhaustive reviews by the State Department concluding that the project is safe for the environment and the best option for transporting domestic crude and Canadian oil to U.S. refineries.”

The 1,179-mile addition to existing pipelines that will stretch from Alberta, Canada to the U.S. Gulf Coast is estimated to create 42,000 construction jobs but only 35 full-time, maintenance positions once it’s completed.

Lopez Allows Suspended Mines to Ship Out Stockpiled Nickel Ore

The Philippines’ environment ministry, led by Environment and Natural Resources Secretary Regina Lopez, has allowed eight suspended nickel ore miners to ship out stockpiles of mined ore, sources told Reuters, temporarily boosting supply from the world’s top exporter of the raw metal after a major crackdown.

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More than half of all the mines in the Philippines have been ordered to permanently shut to protect watersheds in an eight-month campaign led by Lopez.

The strike at Chile’s Escondida, the world’s largest copper mine, is ending after workers decided to invoke a rarely used legal provision that allows them to extend their old contract, the union said on Thursday.

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Hours earlier, talks between the two sides failed, and Escondida, which is operated by BHP Billiton, said it would attempt to restart production, presumably with replacement workers. The workers said they would present their decision to the government on Friday and return to work on Saturday.

Escondida produced 5% of the world’s copper last year.

Asian LNG Buyers Come Together

The world’s biggest liquefied natural gas buyers, all in Asia, are clubbing together to secure more flexible supply contracts in a move which shifts power to importers from producers as oversupply grows.

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Korea Gas Corp. said on Thursday it had signed a memorandum of understanding in mid-March with Japan’s JERA and China National Offshore Oil Corp (CNOOC) to exchange information and “cooperate in the joint procurement of LNG.”

The Organization of Petroleum Exporting Countries in general, and Saudi Arabia in particular, have done the U.S. oil industry a massive favor, and they are probably ruing the day they tried to squeeze America’s shale industry out of existence.

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The collapse in oil prices that ensued after Saudi Arabia-led OPEC opened the spigots two years ago forced American companies, and their many subcontractors, to innovate in a way that would never have happened so fast or gone so far without the imminent threat of survival forcing the pace.

Oil Prices Allow Reopening of Old Wells

Now, U.S. shale producers have achieved economies of scale that allow them to return to previously closed wells in fields like Eagle Ford and achieve 30% returns even at $40 a barrel. U.S. explorers may be making hay in the domestic market, but huge potential exists for these same firms to take their technology abroad. Read more

The Architecture Billings Index returned to growth mode in February, after a weak showing in January. An economic indicator of construction activity, the ABI reflects an approximate nine-to-12 month lead time between architecture billings and construction spending.

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The American Institute of Architects (AIA) reported the February ABI score was 50.7, up from a score of 49.5 in the previous month. This score reflects a minor increase in design services (any score above 50 indicates an increase in billings).

ICE Delays London Gold Price Benchmark

Intercontinental Exchange (ICE) has delayed the launch of clearing for London’s benchmark gold price because not all participants in the auction will be ready, two sources involved in the process told Reuters on Tuesday. The delay could weaken its bid to become the dominant exchange in London’s $5 trillion-a-year bullion market, sources say.

 

For an industry that has for decades been criticized by environmental groups as the root of all evil it is ironic that oil and gas producers are aligned in championing carbon capture with such enthusiasm.

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The fossil fuel industry is at the forefront of lobbying for radical changes in public policy into research to cut the costs of extracting CO2 from hydrocarbon energy. Industry leaders like Bob Dudley from BP are quoted in the Telegraph as saying, “we can’t just keep our heads in the sand”.

The reality is the hydrocarbon industry has seen the writing on the wall. Public attitudes are hardening, aided by worries about particulate emissions from diesel cars and air pollution in major cities from Beijing to Delhi and even in western capitals like London. The industry is under huge pressure from sovereign wealth funds, pension funds and activist shareholders to find long-term solutions to the carbon question and thwart claims that hydrocarbons are our sunset energy source. Read more

The U.S. dollar fell sharply last Wednesday against a basket of currencies as the Federal Reserve announced a rate increase of a quarter point.

US Dollar index: Source @stockcharts.com.

The move seems to contradict common economic wisdom. In theory, higher raters in the U.S. should make the dollar more attractive for yield-seeking investors when interest are rates are lower around the globe. Then, what caused the currency to weaken?

All About Expectations

A rate increase came as no surprise to U.S. markets. The real surprise came in the language that wrapped the announcement. Fed officials intend to keep raising rates, however they want to keep the economy from getting too hot… but also not too cold.

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Investors were probably betting on an acceleration in the path of raising interest rates, not a warming down. Read more

We haven’t heard much of late about President Donald Trump’s border adjustment tax, but that doesn’t mean to say it has gone away.

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Indeed, the fact that it has a measure of support in the Republican Party suggests it could be on the agenda in the not-too-distant future. The idea is to transform the corporate tax landscape from a system that has prevailed for nearly 100 years, in which profits are taxed at the place of production, to a system in which profits are taxed at the place of sale.

A-destination based cash flow tax (DBCFT), as proposed by the House Republican tax plan, would include border adjustments that exempt exports but include imports in tax bills rather than raising federal income from a corporate income tax. As William Gale, a senior fellow in Economic Studies at the Brookings Institution explained in a recent article, all advanced countries except the U.S. already have a form of value-added tax (VAT), generally levied on top of corporate income taxes. All of those VAT systems are border adjusted, such that goods that are imported are taxed and those that are exported are not.

BAT or VAT

As part of the president’s pledge to bring jobs back to America, the border tax could have much to commend it. For example, if the U.S. introduces the system unilaterally, a factory in Ohio will pay no tax on the goods it exports to the E.U. while a factory in the E.U. will pay the border tax on its exports to the U.S. If you are a multinational corporation, suddenly it makes a ton more sense to have your new factory based in Ohio rather than some “lower cost” location. Read more

This week, metals manufacturers, construction and automotive companies and even the Federal Reserve expressed optimism about the strong economy we’ve seen since the election of President Donald Trump.

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We love economic optimism as much as the next metals intelligence and price data service, but count us among the many who wonder if all these happy thoughts are based on real world data or just, well, feelings?

When Can We Get an Actual Bill?

We kind of expected to have at least something concrete (pun intended) out of the administration on infrastructure by now but even the most optimistic among us concede that an infrastructure bill might not even happen this year with a healthcare repeal currently sucking up all the oxygen in Washington and tax reform, supposedly, the next big hurdle.

The Fed raised interest rates a quarter-point this week and hinted at more rate increases later in the year, pointing to strong jobs and manufacturing data but the tax cut the administration promised looks like it will only happen after the Summer, if at all, this year.

Automakers got some good news this week in the form of a promised review of corporate average fuel economy emissions standards that the industry says will hurt sales and production by the time they’re fully implemented between 2022 and 2025, but the actual rules haven’t changed yet and no one knows what the final review will keep or cut.

All of this begs the question: Are we being too optimistic?

TIGERs Ensnared

While Trump’s budget blueprint cut construction TIGER grants that fund many transportation projects, including the New York-New Jersey Gateway, it did allocate $2 billion toward the design and construction of a  wall between the U.S. and Mexico. That’s not what many construction companies were planning on hearing.

“Looked at in the absence of any broader infrastructure plan, it is hard not to view proposals to eliminate programs like the TIGER grants and wonder how such cuts are consistent with the President’s oft-repeated pledge to invest in infrastructure,” the Associated General Contractors of America Executive Director of Public Affairs Brian Turmail said.

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We, too, would like to see the text of actual infrastructure and tax reduction bills from the administration before we predict continued economic growth or even a continuation of the metals bull market. Or at least a working framework. With the pace in Washington, many of the president’s priorities are going to have to move to year two and delays beyond that would further threaten action in this term.