Company News

Autodesk recently released its 2016 software portfolio of design, engineering, and construction products.

Why Manufacturers Need to Ditch Purchase Price Variance

The 2016 suites for buildings and civil infrastructure projects are the Autodesk Building Design Suite, Autodesk Infrastructure Design Suite and Autodesk Plant Design Suite.

The biggest change is that each design suite now includes Autodesk ReCap, a laser scanning and large image processing program that allows project teams to capture existing conditions and directly import them into a 3D model.

The Revit Building Information Modeling platform also has new rendering engines. The “Mental Ray” rendering engine that has been used since Revit 2008 has been replaced by Autodesk Raytracer and Rapid RT in the 2016 version. This can mean, in some cases, a leap from 2 hours for a detailed rendering to 3 minutes.

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Autodesk, Inc. announced the release of its 2016 Design Suites at a launch event in Boston this week, offering more control over all aspects of the design-build process through a connected desktop and cloud user experience.

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For structural steel, the main difference in the 2016 suite of software products is a much tighter integration of the Advance Steel, a 2013 acquisition, and the Revit 2016 3D building information modeling platform.

“The means of production – how we think about and deliver buildings and infrastructure, both intellectually and physically, is changing,” said Amar Hanspal, senior vice president of Autodesk’s information modeling and product group. “By 2020 there will be 50 billion connected devices in use, with the number rising by 20 billion per year. Buildings are joining the digital world.”

New Rendering Engines

The 2016 version of Revit has new rendering engines that can deliver a rendered scene in minutes instead of hours under the old engine. It also has linked model cropping and better support of the open-source IFC file format.

“Customers don’t want to work in a different environment when doing design and detailing,” said Jim Lynch, vice president of Autodesk’s building group. “No longer have to use (a separate design tool) for detailing. Steel, cast-in-place concrete can all be done in Revit. The plan is to integrate (Advance Steel’s design tools) into Revit. We will keep Advance Steel as a separate product but WILL make it work seamlessly in the Revit environment.”

Better Integrated

Plant 3D, a plant design product, and Advance Steel have also been integrated so you can bring Advance Steel content into Plant 3D.

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Minutes were recently released of the Federal Reserve Board’s most recent meeting and another rosy forecast for the US construction market was released.

Construction Starts About to Surge?

Construction starts for residential and nonresidential construction in the second quarter should improve after weak numbers in the first quarter, according to a forecast by consultancy CMD.

Why Manufacturers Need to Ditch Purchase Price Variance

However, construction starts overall in the US could rise 9.2% this year, even though both residential and nonresidential starts have been downgraded, CMD said. The CMD forecast is derived by combining proprietary data with macroeconomic factors.

No June Rate Hike

Federal Reserve officials believed it would be premature to hike interest rates in June even though most felt the US economy was set to rebound from a dismal start to the year, according to minutes from their April policy meeting released on Wednesday.

The central bank debated whether a slew of disappointing data, including weak consumer spending, signaled a temporary slump or evidence of a longer-lasting slowdown, with most participants agreeing economic growth would climb to a healthier pace and the labor market would strengthen.

The US economy grew an anemic 0.1% in the first quarter, according to the most recent government data.

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According to a report, crude-steel output in China dropped 1.3% to 270.07 million metric tons in the first four months of 2015 as compared to the same period in 2014. The World Steel Association has forecast that China will end up using far less steel this year and maybe even the next. Which again means more supply and far less demand.

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The report quoted Alan Chirgwin, BHP Billiton iron ore marketing vice president, as saying steel supply was expected to rise by about 110 million metric tons this year, exceeding demand growth by around 40 mmt.

Yet this has not fazed Rio Tinto Group, for example, which recently announced it would continue with its plan to produce iron ore at full capacity despite the fall in prices. While BHP and Brazil’s Vale SA have, for now, stepped on the brakes vis-à-vis their medium-term plans, team Rio, on the other hand, thinks reducing production costs will help it hang on to its lead…and profits.

Betting on a Comeback

Rio Tinto sees China coming back with renewed vigor and driving global iron ore demand through 2030.

Where does that leave India? So far as iron ore or even steel consumption is concerned, China is miles ahead of India, even in the fatigued condition it finds itself today. India, as reported by MetalMiner, drew a blank for about two years due to a court-imposed ban on ore mining, which left its steel companies at the mercy of imports, something that they continue to rely on even today.

That had also affected its iron ore exports, especially from the ore-rich provinces of Goa and Odisha. India’s iron ore imports went up dramatically to a record 6.76 million tons in the first 7 months of the 2014-15 fiscal year. Once, the country was the third-largest supplier of iron ore to the world, but, because of the export duty and a national mining ban, it had turned into an importer.

Analysts predict India was likely to remain a net importer of iron ore in 2015-16 as well, no thanks to the continued drop in falling international rates. The only silver lining, claimed analysts, could be that due to the resumption in the domestic production of iron ore, the quantity of imports may not be as high as the last fiscal year.

Captive Market

India’s steel companies do not have captive mines, so they have to get their average 95 mmt a year of iron ore from elsewhere. With international price of ore hovering today at about $50 per mt for high-grade ore, it is too attractive a deal for Indian steel mills to be passed on. As reference points, last year, iron ore imports happened when rates had touched $90 per mt.

In all this, Australia, a country that sells about 80% of its ore to China, sits in a happy position. While it hopes that the recent cuts in interest rates will revive the Chinese economy, and thus its demand for iron ore and coking coke, it is also looking increasingly to India to pick up its stock. Last year, for example, as reported by MetalMiner Australia had approved Adani Group’s approximate $15.5-billion (AUS $16.5 billion) Carmichael coal project in Queensland that could yield up to 60 million mt of coal per year. That was just the beginning. For the Aussies, if the dragon’s appetite for iron ore and coking coal is satiated, the hungry tiger is always lurking in the background.

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When the Tiger and the Dragon dine together the world sits up and takes note.

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Signing business agreements worth $22 billion is a big deal so Indian Prime Minister Narendra Modi’s recent visit to China made big, bold headlines here. Some of India’s old, and some not so old (Adani, Bhusan Power and Steel), players in the steel and power sectors, were signatories to the 26 deals.

Steel and Energy Deals

The notable contracts included the one between India’s IL&FS Energy Development Co. and China Huaneng Group for a 4,000-megawatt thermal power project, and India’s Bhushan Power and Steel sealing a pact with China National Technical Import and Export Corporation for an integrated steel project in Indian province of Gujarat.

So here were two Asian, nee global, giants, breaking bread and talking business at the same table, sending analysts scurrying to their laptops to chalk out spreadsheets and draw pie charts in an effort to understand the impact of all this in the long term.

While business leaders of both nations, including Alibaba Group Chairman Jack Ma, spoke of long-term interests, such talk brought the arclight swinging back to the present and short-term situation currently prevailing in the Asian region, especially in iron ore and coking coke, two crucial ingredients in making steel.

There’s no doubt in anyone’s mind that steel is the mainstay of Asia’s infrastructure, a fact that has had iron ore and coal miners — and even steel majors in China, India and as so far as Australia — jockeying for a major piece of new market share. With demand from Europe and the US lacking, suppliers in all three countries are walking a thinly veiled tight rope to ensure their survival.

Wither Demand

Once a destination of hope, the Chinese dragon, for now, has lost some of its hunger. Some say next-door neighbor India is where one can find fresh action. The jury’s honestly still out on that one, though. But the slowdown in China’s economy means less need for steel, in turn, lowering the demand for ore and coking coal. Leaving miners re-tweaking their business plans.

Last year, for example, the Rio Tinto Group, BHP Billiton Ltd. in Australia, and Vale SA of Brazil, to stem the tide, had stepped up low-cost output to pump up volumes, leading to a glut. Now, everybody’s mantra seems to be – cut production costs faster than the falling prices.

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ast week UGI Energy Services announced plans to build a liquefied natural gas production facility in Wyoming County, Pennsylvania.

Why Manufacturers Need to Ditch Purchase Price Variance

The facility will draw Marcellus Shale gas from UGI’s Auburn gathering system, then chill it to produce up to 120,000 gallons per day in liquid form. While we have regularly reported the slowdown in both new shale oil and LNG projects in the US this year — and the subsequent cutbacks in oil country tubular goods production — investments are still being made, in the US and overseas, in drilling.

Plants, Projects Planned

Bloomberg Business reported this week that Anadarko Petroleum Corp. selected a group of developers including Chicago Bridge & Iron Co. for a potential $15 billion LNG project in Mozambique.

CBI’s joint venture with Japan-based Chiyoda Corp. and Saipem SpA, based in Italy, will work on the onshore project that includes two LNG units with 6 million metric tons of capacity each, Anadarko said Monday. Construction plans also include two LNG storage tanks, each with a capacity of 180,000 cubic meters, condensate storage, a multi-berth marine jetty and associated utilities and infrastructure, according to Texas-based Anadarko, which says it will make a final investment decision by the end of the year.

Last week, the Department of Energy gave Cheniere Energy Inc. final approval for the nation’s fifth major export terminal at Corpus Christi in Texas, which will ship the fuel from 2018.

What’s Driving Infrastructure Investment?

While oil prices have bounced back from lows seen earlier this year, it’s certainly not the market that’s driving these investments. While high-cost projects, such as those in Canada’s oil sands, have been canceled by oil exploration companies, relatively inexpensive projects with a quicker path to payback, such as these LNG projects, are still being funded.

The payback is diverse and not confined to domestic home heating. LNG has been priced at a fraction of diesel prices for the last four years. Domestic trucking (18-wheelers and other heavy consumers of diesel) have yet to make a large-scale commitment to LNG, and most places where fuel is dispensed have yet to put in expensive infrastructure to handle the product, but there has been enough success for UGI to justify committing resources to its adoption.

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If there is a rock star among industrial metals, it’s zinc.

Why Manufacturers Need to Ditch Purchase Price Variance

The metal just rose 15% in only one month and it’s now hanging near a 4-year high. Zinc has been the only base metal able to fight this bearish commodity market that we have been in since 2011. While most metals in the group kept falling like dominoes, zinc has managed to hold its value well. We noticed this divergence just a year ago.

The metal’s fundamentals are mixed. Zinc is supposed to move in to deficit but most analysts say that it will take some time until that deficit materializes. Demand is expected to remain robust and the impeding closure of of the world’s two biggest mines (Brunswick and Century) could create supply constraints.

The technical picture tells a more positive story. The market is not letting prices fall and it seems like zinc takes every chance it gets to move up. Recent weakness in the dollar drove zinc prices up (and most base metals), but the metal will soon meet resistance near $2,400 per metric ton.

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Denied deals abound today in MetalCrawler. An Indian steel major says not so fast on a sale of its long products division and Rio Tinto Group might be close to moving an aluminum division but is refusing to comment so far.

Tata Says No Long Products Deal Done

Reports that Tata Steel is about to sell its long products division to Klesch Group are “speculative” and do not reflect the views of the company, the steelmaker told India’s National Stock Exchange on Tuesday.

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Geneva-based Klesch Group, a global commodities business involved in chemicals, metals and oil production and trading, declined to comment.

Tata Steel, Europe’s second-largest steelmaker, said in October it is in talks to sell its loss-making long products division, which employs 6,500 people mostly in the UK, to Klesch.

Same With Pacific Aluminium

Rio Tinto Group plans to sell some of its aluminum assets in a potential $1 billion deal, the Financial Times reported, reviving a sale plan for its Pacific Aluminium unit two years after it was canceled.

The FT, citing “people aware of Rio’s plans”, said on Sunday that Rio had hired Credit Suisse to find a buyer for Pacific Aluminium, known as PacAl, which comprises a group of smelters in Australia and New Zealand.

A spokesman for Rio Tinto said the company “doesn’t comment on market speculation.”

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With HR coil prices at $450 per ton in mid-April (although big buyers could get $420/ton), HR coil prices had dropped $250/ton since late summer. US mills blamed imports – which is true – but forgot to mention that they had kept steel prices at elevated levels for 9-12 months while prices in the rest of the world were tanking. What did they expect?

Why Manufacturers Need to Ditch Purchase Price Variance

It is our view that we are now at the bottom and in late April, ArcelorMittal led the industry with a $20/ton increase for June deliveries. Since then, transaction prices have edged up to $460/ton and slightly above. So where do we go from here?

Lead times across the industry vary from around 3-5 weeks for hot-rolled coil. The aim of the price increase was to extend those order books and lead times and therefore create momentum for further price gains. It certainly brought some buyers back in with any remaining May tonnage sold out quickly at the lower price.

Inventory Surplus

At this point in the cycle, the inventory situation is critical. Inventories remain elevated, but total flat-rolled stocks appear to have stabilized at just over 6 million tons (around 10-11 weeks of demand) and we expect them to begin to fall steadily over the next few months as service center order levels have been slack for much of 2015 as they received earlier orders – both domestic and import.

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409 is often considered “the barely stainless steel,” or affectionately the most humble of the stainless steels. Stainless steel must have a minimum of 10.5% chromium to be stainless steel. 409 Contains a minimum of 10.5% chromium, thus the moniker barely stainless steel.

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In addition to minimal chromium content, 409 stainless has three additional properties that make it an attractive product for substitution: it is the lowest cost stainless, it has good oxidation resistance and excellent formability.

Middleweight Corrosion Fighter

According to AK Steel, 409 gets specified where oxidation and corrosion requirements go beyond carbon steel and some coated steels. North American Stainless suggests, “it is not as resistant to corrosion or high-temperature oxidation as the higher-alloyed stainless steels (430 or 304), but it is still far superior to mild steel and low alloy corrosion resisting steels and most coated mild steels.”

And not to ignore the other main US producer of 409, Allegheny Technologies explained its usage in automotive mufflers, “The good fabricability of this alloy, combined with its basic corrosion resistance and economy have significantly broadened the utility of ATI 409HPtm stainless.”

As most MetalMiner readers know, alloy substitutions in stainless steel have typically occurred when an alloying element such as nickel has increased in price. When nickel becomes volatile, manufacturers have sought options with less nickel or no nickel that have sufficient properties to make the final product without compromising quality. Both 304 and 316L are readily available and could be considered the path of least resistance in terms of specifying stainless steel; however, in some cases, these alloys may exceed the necessary properties for the final application.

Most consider 304 or 316L the “old standby” grades, but that thinking contains a few misconceptions. For example, stainless is stainless because it has at least 10.5% chromium (some would say 11% chromium), not because it contains nickel. Stainless can be both magnetic and non-magnetic. In commercial food service equipment — NSF specifies, for food zones, stainless needs to have a minimum chromium content of 16% and has nothing to do with whether or not it is magnetic.

Compliance Alloy

In the early 2000s, product substitution meant a new push to inform the manufacturer that type 430 has 16% chromium and is, thus, NSF 51-compliant. In many cases, a transition occurred in which buying organizations switched from 304 to lower nickel-bearing grades such as 301 or 201 before the switch to 430 occurred. In cases in which 430 could not be substituted for 301 or 201, the next wave of substitution came from higher-chromium ferritic grades such as 439 or 441. Both alloys were developed for the automotive market in which weldability and formability were necessary along with added corrosion resistance from the basic 409 automotive grade.

In residential appliances, the major manufacturers became reticent to move to magnetic stainless grades due to a perception that magnetic equated to not “real” stainless steel.

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