Articles in Category: Company News

Details of another hack are at the heart of U.S. Steel‘s section 337 complaint, including what it calls theft of lucrative automotive alloy Dual-Phase 980. Chinese commodity futures trading volumes are hitting records despite attempts by regulators there to rein in speculation.

U.S. Steel Alleges Dual-Phase 980 Stolen by China

According to filings with the International Trade Commission, U.S. Steel claims a forensic analysis into an alleged 2011 illegal hack of its systems by culprits based in China — one that used a similar method as the confirmed 2014 hack of U.S. Steel and other companies by the Chinese military — included stealing plans for the chemistry for an automotive specialty steel alloy and its coating, the necessary temperature for heating and cooling the metal and the proper layout of its production lines.

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The automotive steel is one of U.S. Steel’s most popular products, Dual-Phase 980, that can withstand more than 140,000 lbs. per square inch, making it a light, strong metal coveted in the lucrative automotive market for its safety as well as its ability to meet government weight standards.

Two years after the 2011 hacking, China’s Baosteel Group, the world’s fourth-largest steelmaker, started selling a new line of products that included Dual-Phase 980. U.S. Steel says it can prove to the ITC that the product was stolen in the 2011 hack.

Chinese Commodity Futures Hitting Records

Commodity futures linked to China’s vast steel sector rebounded sharply on Friday, Reuters reported, led by iron ore and rebar, as robust construction demand spurred buying even as the country’s regulator ordered exchanges to rein in speculative trading.

Big bets on Chinese commodities futures this year from hedge funds, retail investors and others have driven up contracts on everything from iron ore to cotton, prompting many analysts to warn of parallels with a boom in China’s stock markets that ended in a sharp crash last summer.

Steelmaking raw materials iron ore, coking coal and coke ended April with their biggest monthly gain on record.

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Rebar, a construction steel product, also posted its biggest monthly rise ever, with volumes in the most-traded contract in Shanghai hitting a record 1.4 billion metric tons, enough to build San Francisco’s Golden Gate Bridge more than 15,000 times over.

Oracle announced Thursday it agreed to acquire Textura, a cloud-based solution for the construction industry with end-to-end capabilities spanning from initial bid estimation and sourcing through to subcontractor management, communication and collaboration, invoicing and payment.

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Textura can not only catalog the cost of installation of this structural form, but also log its completion and pay the sub-contractor that put it in. Image: Jeff Yoders/MetalMiner.

“Textura’s mission is to bring workflow automation and transparency to complex construction projects while improving their financial performance and minimizing risks,” Textura CEO David Habiger said in a statement. Read more

In a complaint filed Tuesday with the U.S. International Trade Commission, U.S. Steel Corp. demanded penalties on Chinese steel imports which could include a total ban on imports into the country. U.S. Steel said that Chinese steelmakers conspired to fix prices, stole trade secrets and circumvented duties with false labeling in filing a section 337 petition.

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“We have said that we will use every tool available to fight for fair trade,” said Mr. Longhi. “With today’s filing, we continue the work we have pursued through countervailing and anti-dumping cases and pushing for increased enforcement of existing laws.”

How to Prove Unfair Competition?

But what, exactly, is a section 337 petition? What law is U.S. alleging Chinese producers Hebei Iron & Steel Group, Anshan Iron and Steel Group and Shandong Iron & Steel Group Co. violated? The ITC provides us with a handy frequently asked questions page. It reports that “most Section 337 investigations involve allegations of patent or registered trademark infringement. Other forms of unfair competition, such as misappropriation of trade secrets, trade dress infringement, passing off, false advertising, and violations of the antitrust laws, may also be asserted.”

Chinese black hat hacker steals password from computer screen concept

Chinese black hat hacker steals password. Source: Adobe Stock/beebright.

China has been implicated in stealing trade secrets before, and U.S. Steel was one of the victims. In 2014, a U.S. grand jury indicted five members of China’s People’s Liberation Army on charges they stole information from U.S. Steel and other American firms. Computer hacking, espionage and other charges were alleged in federal court in Western Pennsylvania (U.S. Steel is headquartered in Pittsburgh). Other victims of the alleged hacking included the U.S. arm of SolarWorld AG, Westinghouse Electric Co., Allegheny Technologies Inc. and Alcoa, Inc. Read more

Allegheny Technologies, Inc., reported in its first quarter earnings call this week that its high-performance materials and components segment sales were up. Sales were $493 million in the first quarter, up approximately 8% compared to the fourth quarter of 2015. 73% of segment sales were to the aerospace and defense market.

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Operating profit increased by nearly 40%, compared to the fourth-quarter 2015. Segment operating profit was 5.9% of sales.

New Generation of Jet Engine Parts

ATI’s product mix improved through increased sales of next-generation jet engine advanced materials. Sales of nickel-based alloys and specialty alloys increased by 8%, and sales of titanium and titanium alloys increased by 17%. Sales of ATI’s precision forgings increased 15%, driven nearly exclusively by growing demand for jet engine components and airframe forgings.

StuartsF35_500

ATI is very pleased with its sales of airframe and jet engine materials.

“Our differentiated products here include proprietary and unique alloys, as well as products that few others can make,” ATI CEO and President Richard Harshman said, “such as ATI 718+ alloy, Rene 65 alloy, ATI 720 alloy large billets, plasma arc-melted titanium alloys, powder metals, titanium aluminides, as well as hot-die forgings, isothermal forgings and titanium investment castings.”

PAM Power

ATI is currently the only qualified plasma arc melt producer of titanium alloys used for jet engine rotating parts.

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PAM is the preferred process for titanium alloys used in jet engine rotating parts for much of the industry.

“ATI has the most powerful open-die press forge in the industry, which enables fine-grained structure in complex nickel-based super alloy billet and the billetizing of powder alloys,” Harshman said. “ATI is one of only two independent and integrated qualified producers of nickel super-alloy powders and isothermal forged parts.”

Saudi Aramco released an IPO plan of sorts about how it plans to diversify from being the world’s largest energy company to being much more and the Federal Reserve, as expected, left rates unchanged.

Saudi Aramco’s New Plan

The world’s biggest energy company, Saudi Aramco, outlined financing plans on Wednesday that will support its expansion into new areas under a sweeping economic reform plan released in Riyadh this week. The reforms envisage Aramco transforming itself from an oil and gas firm into a “global industrial conglomerate” involved in many sectors and services, using its vast financial resources to create jobs and help diversify the Saudi economy beyond oil.

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The plans suggest Saudi Arabia’s state oil company, which Deputy Crown Prince Mohammed bin Salman estimated this week was worth over $2 trillion, aims to move rapidly into a new role offering diversified services such as shipbuilding and offshore rig services in the near term.

Fed, As Expected, Leaves Interest Rates Unchanged

Federal Reserve officials left interest rates unchanged and remained ambiguous about raising rates in June as mixed global economic signals and low inflation at home weighed on policy makers struggling to spark robust growth seven years after the recession’s end.

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In a statement Wednesday after a two-day meeting, the Fed stuck to its longstanding plan to move carefully on raising the benchmark federal-funds rate, which it has held between 0.25% and 0.50% since December, when it raised short-term rates after holding them near zero since 2008.

U.S. Steel is accusing Chinese steelmakers of intellectual property theft and Germany is subsidizing its electric car industry.

U.S. Steel Files Section 337 Petition

U.S. Steel Corp. has launched a campaign to prevent imports from China’s largest steel producers, it said on Tuesday, the boldest step yet by a U.S. company as a trade brawl with the world’s largest steel producer escalates.

In a complaint to the U.S. International Trade Commission, the domestic steelmaker called on regulators to investigate dozens of Chinese producers and their distributors for allegedly conspiring to fix prices, stealing trade secrets and circumventing trade duties by false labeling.

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The petition, known as Section 337 is used to protect against intellectual property theft, listed some of China’s top producers, including Hebei Iron & Steel Group and Anshan Iron and Steel Group and Shandong Iron & Steel Group Co.

“We have said that we will use every tool available to fight for fair trade,” said U.S. Steel Corp President and Chief Executive Officer Mario Longhi in a statement.

Germany Subsidizes Electric Car Development

Germany’s auto industry risks being overtaken by foreign competitors unless it receives greater domestic support, the country’s economy minister said today, announcing a 1 billion euro ($1.13 billion) plan to subsidize electric cars that are seen as the technology of the future.

Electric vehicles have had a sluggish start in Germany, the country where the combustion engine-powered automobile was born. A government plan to get 1 million e-cars on the streets by 2020 is far behind schedule, with just 50,000 sold so far.

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“After a long debate we have agreed to a subsidy program that aims to show on the home market that we can master these new drive trains, from plug-in hybrid to battery-powered vehicles, and make them suitable for the mass market,” Economy Minister Sigmar Gabriel said at a news conference in Berlin.

Allegheny Technologies, Inc., hosted its first quarter earnings call yesterday morning and reported higher earnings for many of the specialty metal markets it serves, while admitting it has not yet “right-sized” its flat-rolled products business. ATI booked a net loss of $101 million ($0.94 cents per share), a loss that was less than most analysts anticipated.

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Revenue for the first quarter fell 33% year-over.year to $758 million.

ATI's Brackenridge facility is the future and commodity stainless is its past. Source: ATI

ATI executives noted during yesterday’s conference call and webcast the company’s Brackenridge production facility is only open three days, with three shifts each day. ATI would like to increase production there. Source: ATI

“Our High Performance Materials and Components segment is well positioned for profitable growth over the next five years, driven primarily by strong and growing demand from commercial aerospace,” ATI CEO Richard Harshman said. “We are committed to making the tough decisions to return our flat-rolled products segment to sustained profitability. This requires the business to be repositioned and restructured and to be more focused on differentiated products that have higher technical barriers to entry and serve markets that are global with attractive long-term growth prospects.”

Aerospace Products

Harshman and ATI’s executive team reported that the commercial aerospace market, which ATI has pursued as a growth market for the last two years, was starting to show dividends.

“ATI sales to the aerospace and defense markets grew 12% in the first quarter of 2016, compared to the fourth quarter 2015,” Harshman said. “Breaking that growth rate down by specific end markets, sales to the commercial aerospace market grew approximately 20%, with jet engine sales growth of nearly 15% and airframe sales growth of nearly 30%.”

Quarterly Numbers

The overall sales total of $758 million was up 3% over the fourth quarter of 2015, even though it was down year-over-year. High-performance materials and components sales were $493 million, up 8% over Q4 2015. Flat-rolled product sales, though, totaled $265 million, down 6% over Q4 2015. Harshman and the other ATI executives blamed the long work stoppage that ATI weathered for more than 8 months and said that production would increase with United Steelworkers personnel back on the job. ATI attributed $26 million of pre-tax costs to the work stoppage and labor contract return-to-work provisions.

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ATI also booked a $9 million for severance packages from recent flat-rolled products layoffs.

Russia said it will increase oil production without a deal with Saudi Arabia and other Organization of Petroleum Exporting Countries members and the U.K. has reluctantly agreed to subsidize a deal to help sell Tata Steel‘s on-the-block U.K. mills.

Russia Says It’ll Increase Oil Production

Russia said on Wednesday it was prepared to push oil production to historic highs, just days after a global deal to freeze output levels collapsed and Saudi Arabia threatened to flood markets with more crude.

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Venezuela predicted prices could crash in the next few weeks if producers failed to resume dialogue and urged that non-OPEC participants be observers at a June OPEC meeting, as the specter of oversupply loomed once more.

Cameron Government Supports Nationalizing U.K. Steel Mills

Great Britain could part-nationalize Tata Steel‘s remaining U.K. interests by taking a 25% equity stake, as part of a support package worth hundreds of millions of pounds designed to attract a buyer and save at least 10,000 jobs.

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The Conservative Cameron government, which privatized the steel and other industries under former Prime Minister Margaret Thatcher, is seen as being anxious to avoid an imminent closure of the U.K.’s biggest steel works at Port Talbot in South Wales just before a referendum on European Union membership in case of a protest vote.

Allegheny Technologies, Inc. recently announced the elimination of more then 250 salaried employees in its Flat Rolled Products operations. ATI’s salaried workforce in the FRP segment will be reduced by approximately one-third by the end of June.

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ATI will record a $9 million severance charge in its first quarter 2016 results. Rich Harshman — ATI’s Chairman, President and CEO — said the job cuts were “another step in our journey to return the FRP business to profitability as quickly as possible, and to execute our strategy for sustainable, long-term, profitable growth.”

Flat-Rolled Future

ATI expects the FRP business segment will be modestly profitable by the second half of 2016. The workforce reduction will generate an annualized cost savings benefit of over $30 million beginning in the third quarter of 2016.

ATI's Brackenridge facility is the future and commodity stainless is its past. Source: ATI

ATI’s Brackenridge facility is the future and commodity stainless is its past. Source: ATI

ATI’s FRP business segment was to blame for ATI’s staggering losses last year. Operating losses for  the division were $242 million for 2015, as we reported in February. Read more

A former success story in U.S. renewable energy has filed for chapter 11 even as China’s “zombie mills” fire up steel production again.

SunEdison Files for Bankruptcy

U.S. solar energy company SunEdison Inc. filed for Chapter 11 bankruptcy protection on Thursday, becoming one of the largest non-financial companies to do so in the past 10 years.

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Once the fastest-growing U.S. renewable energy developer, SunEdison embarked on an aggressive acquisition strategy that left it struggling with $12 billion in debt.

In its bankruptcy filing, the company said it had assets of $20.7 billion and liabilities of $16.1 billion as of Sept. 30.

China’s Zombie Mills Fire Up Production

The rest of the world’s steel producers may be pressuring Beijing to slash output and help reduce a global glut that is causing losses and costing jobs, but the opposite is happening in the steel towns of China.

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While the Chinese government points to reductions in steel making capacity it has engineered, a rapid rise in local prices this year has seen mills ramp up output. Even “zombie” mills, which stopped production but were not closed down, have been resurrected.