Articles in Category: Company News

This Thanksgiving Holiday, all of us here at MetalMiner would like to share what we’re thankful for this year.

(Mostly) Transparent Markets for the Metals You Buy

While it’s been a great year for buyers, with low commodity prices across the board, we are constantly reminded that prices are only as correct as the information behind them.

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This is the first full year for the new LBMA gold and silver prices. More open and transparent processes for precious metal prices can only help purchasers in the long run by giving them more information about what goes into the prices they are quoted. We are thankful for market transparency in all its forms.

Happy Thanksgiving from MetalMiner!

Happy Thanksgiving from everyone here at MetalMiner!

That’s why our own MetalMiner IndX is updated daily with over 600 price points from domestic and multiple international markets. We’re always happy to add more open and transparent price points. Read more

The London Metal Exchange (LME) launched three new contracts this week — LME Aluminium Premiums, LME Steel Rebar and LME Steel Scrap, the first new contracts to be offered by the Exchange in more than five years.

You can now hedge aluminum physical delivery premiums using an LME contract. Source: iStock.

You can now hedge aluminum physical delivery premiums using an LME contract. Source: iStock.

The two steel contracts are cash-settled against physical Turkish scrap and rebar price indexes as opposed to the current steel billet contracts that are settled by physical delivery and have largely proved to be  a failure since launch.

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Why, we might ask, would these new contracts prove anymore successful? Well acknowledging the failure with billet, the LME has worked assiduously to garner industry support both in the shaping and specification of the new contracts. Goldman Sachs, for example, is on the LME’s steel committee and major trading firms like Stemcor have publicly stated they intend to be actively involved from day one, although they still add the caveat “subject to market conditions and liquidity.”

Liquidity was always a major issue for the billet contract. It never secured anywhere near enough interest from the trade to generate sufficient volume and, hence, a fair market price.

Rebar and Scrap

The steel scrap and rebar contracts will be traded on LME Select in small lots of just 10 metric tons making them more accessible for smaller market players, while, at the same time, the LME is offering discounts for volume trades to encourage liquidity. Read more

As the US Green Building Council finished its annual Greenbuild Conference in Washington, DC, last week, one somewhat unlikely organization came away touting better opportunities for its green and sustainable products: The Steel Market Development Institute.

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Steel, you say? Doesn’t it burn a lot of fossil fuels just to get the iron ore out of the ground? Isn’t the process to turn it into structural beams and bars energy-intensive and dirty, as well? Perhaps, if you’re looking at mined and milled steel only, but if you look at less-obvious concepts like reusability, material reduction through smart design, recyclability, decreased maintenance cost and empowerment of adaptive reuse, steel and, even some other metals, are ahead of the game when it comes to construction specification.


All of these green and sustainable steel-framed buildings might get a boost from new LEED standards. Source: Dmitry Ersler/Adobe Stock

The USGBC introduced will put its latest sustainable building certification, Leadership in Energy and Environmental Design version 4 (LEEDv4), into effect early next year. It  approaches building materials content credits in a completely different way than previous editions of LEED.

“The new version of LEED, the primary changes are in the materials section and those changes are mostly around things like lifecycle assessment, environmental product declarations, transparency really,”  said Mark Thimons, vice president sustainability at the SMDI. “What’s it take to make this product? What’s in it?” Read more

A quiet revolution is going on in India’s defense sector.

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It is set to give an impetus to steel, aluminum and composite materials demand in the country. Recently, US aircraft manufacturer Boeing Co. and India’s Tata Advanced Systems Ltd. (TASL) announced a joint venture to manufacture aerostructures for aircraft beginning with the reputed AH-64 Apache fighter helicopter.

AH-64 Apache

Make in India, in this case, means making Apache helicopters there thanks to a joint venture with Boeing. Source: Adobe Stock / VanderWolf Images

The joint venture, according to media reports, would also then compete for additional manufacturing work packages across Boeing platforms, both commercial and defense.

Burgeoning Private Defense Industry

Currently, as many as 14 Tata companies are providing support to India’s defense and aerospace sector. In addition to TASL. The list also includes Tata Advanced Materials, a company that has delivered composite panels for cabinets and auxiliary power unit door fairings for the P-8I long-range maritime surveillance and anti-submarine warfare aircraft.

Another company, TAL Manufacturing Solutions, has manufactured floor beams out of composite materials for the Boeing 787-9, and provided ground support equipment for the C-17 Globemaster III strategic airlifter. Read more

Last week, we here at the MetalMiner Week in Review told you about how BHP Billiton CEO Andrew Mackenzie immediately went to Brazil to, essentially, say “I’m sorry” about the Samarco iron ore mine disaster that has left 11 dead and more missing.

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BHP Chairman Jac Nasser has since doubled down and said the company has already committed $363 million to rebuild following the tragedy. The “deeply sorry” strategy shows that BHP is not only committed to rebuilding, but wants to make amends for the damage its failed dam has caused and wants to continue to be a part of iron ore mining in Brazil. Read more

In honor of Throwback Thursday, we are revisiting MetalMiner’s top 50 posts, including this one about one of the first vehicles designed specifically for emerging markets, the Renault Kwid. It’s become one of our most clicked and commented on since its publication last July. Happy #TBT!

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Priced at Rs 300,000 ($4,700) is it certainly pitched price-wise at the emerging markets and at first glance should prove popular in its first market, India, but also in other emerging markets in time such as Indonesia, Vietnam and others.

Emerging Auto Markets

The attractions are clear, all have massive populations, low per-capita car ownership markets with huge medium-to-long term potential. A Financial Times article explains that Renault had to start from the ground up in designing the Kwid to achieve such a low price.

They based the whole design team in Chennai, the city known as the Detroit of India – a first for a western car maker – using mostly Indian designers and sourcing Indian parts. The concept they say is frugal, innovation and required a completely new clean sheet approach.

Illustrating the problem, the FT quotes Navi Radjou, a management theorist in saying “companies don’t like to learn new things, to be blunt. They try to exploit their existing knowledge, not to rethink what they do from scratch.”

Why Automakers Miss

Western businesses see developing economies mostly as new markets where they can sell more of what they already produce. Those that try to come up with something new tend only to tweak existing offerings, which rarely works. GM and Volkswagen may well be cases in point, having poured millions into the market with limited success.

Even Indian firms get it wrong. Tata Motors‘ Nano was certainly cheap when it was introduced in 2009, but it flopped. Spurned, the article says, by rudimentary features and a poor safety record.

Screen Shot 2015-06-03 at 12.38.16

The Renault-Nissan Kwid, a crossover SUV that breaks the $5,000 barrier.

Renault’s design team has focused on what emerging market buyers place priority on, roomy interiors to accommodate large families, heavy duty air-conditioning to cope with summer temperatures and fancy navigation and media systems.

Read more

Fallout from the Samarco mine disaster in Brazil continues, and construction input prices are at their lowest cost, overall, since 2011.

Insurance Caps Already Exceeded

The cost of a deadly dual dam burst at an iron ore mine in Brazil run by Samarco has already exceeded the insurance cap for civil damages, co-owner Vale SA said on Monday.

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Samarco, owned by Vale and BHP Billiton has been fined 250 million Brazilian reals ($65.5 million) and forced to pay for accommodations for the dispossessed, after two dams burst earlier this month, killing at least seven people, with 15 still missing.

Construction Materials/Inputs Fall in Price Again

The Producer Price Index for inputs to construction industries declined for a fourth consecutive month in October, according to an analysis of the Bureau of Labor Statistics data by the Associated Builders and Contractors (ABC) of America.

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The index stands at its lowest level since the first quarter of 2011 as prices for construction inputs declined 0.2% on a monthly basis and 4.6% on a year-ago basis. Nonresidential construction input prices exhibit a similar pattern, falling 0.3% since last month and 5.1% over the past 12 months. Nine of 11 key input prices are down on a year-over-year basis.

Some key takeaways for metal purchasers:

  • Steel mill product prices fell 1.7% in October and are 16.1% lower than one year ago.
  • Natural gas prices shrank 1.8% on a monthly basis and 36% on a yearly basis.
  • Iron and steel prices lost 4.4% month-over-month and 21.2% year-over-year.

ABC_ producerpriceindex_construction_111715

This week started with the horrible Samarco mine disaster in Brazil. Two mine dams burst and waste from tailings ponds created to service the iron ore mine flooded local villages and affected water supply within a 60-plus-mile area. The death toll has now reached eight people.

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My colleague, Stuart Burns, warned that the co-owners of the mine, BHP Billiton and Vale SA, could be in deeper water than anyone. Remember BP after the oil spill?

BHP CEO Andrew Mackenzie hopped the first flight to Brazil to put as best a face as he can on the response. Yet the Brazilian government has already set its sights on Vale and BHP as the responsible parties and literal owners of the disaster.

Read more

The US Aluminum industry is going the same way as the UK steel industry we wrote about recently. Faced by relatively higher power costs, higher labor costs, environmental regulations and subsidized competition from China, US aluminum producers are throwing in the towel in their struggle to survive globally low prices.

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Not mincing his words, Michael Bless, president and chief executive officer of Century Aluminum is quoted in the Financial Times as saying this week that Chinese metal is transported and processed via “blatantly uneconomic methods that would not be possible but for the large subsidies these Chinese producers are receiving from the government.”

Century Aluminum Shutdowns

Century said it would curtail one of three pot lines at its Sebree, Ky., aluminum smelter by Dec. 31, the company’s third capacity reduction in two months, reducing the 210,000 metric ton-per-year plant’s capacity by around 70,000 mt. The news comes just one week after it announced plans to close its 224,000-mt Mount Holly, S.C., smelter by Dec. 31 if it does not receive a favorable power deal. Only the company’s Grundartangi smelter in Iceland has remained untouched by the cost cutting.

Alcoa Shuts Down Smelters, Too

Reuters reported last week that Alcoa, Inc., will idle three of its four active US aluminum smelters, suspending operations at its Intalco and Wenatchee smelters in Washington state and the Massena West smelter in New York state. In addition, it announced the firm will also permanently close Massena East, also in New York, which was shuttered in 2014 bringing the total closure to 503,000 metric tons and leaving just the 269,000-mt-per-year Evansville smelter in Indiana as its sole US primary plant.

Alcoa and Century’s cuts represent around 30% of US aluminum production and will leave just four smelters operating in the US, with capacity to produce 759,600 mt per year. According to Reuters, quoting the U.S. Geological Survey that is the lowest output since the 1950s and compares with 23 smelters in 2000.

Foreign Smelters Win

So where will firms like Alcoa and Century source their primary metal, you may ask? From overseas is the unfortunate reply. Alcoa runs the massive 760,000 mt per year Ma’aden Aluminium Smelter in Saud Arabia. As capacity has been closed here in the US, it has been supplanted by metal from abroad. In the year through to August 2014, Saudi Arabia shipped 2,700 mt of primary aluminum to the USA, in the same period this year it shipped 66,290 mt. Exports from the UAE and Bahrain also grew substantially, a recent Thomson Reuters article noted.

Not surprisingly as domestic supply has withered, the physical delivery premium has begun to firm, rising to $0.08 per lb. this week, the biggest one-day jump in months and an indication that the one beneficiary of reduced domestic primary aluminum supply will be the London Metal Exchange’s midwest Premium.

The loser will be, collectively, aluminum consumers, who thought they had seen physical delivery premiums retreat to historic levels after LME rule changes and the demise of the stock and finance trade.

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The country’s growing reliance on imports, whether near-shore such as with Canada or further afield such as the Middle East, will inevitably add transportation costs and, in a tighter market, the opportunity for producers and traders to demand higher physical delivery premiums. Base prices may remain low but premiums are in for a better ride next year.

President Barack Obama today rejected the proposed Keystone XL pipeline, ending the political fight over the Canada-to-Texas project that has gone on for much of his presidency.

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Secretary of State John Kerry concluded the controversial project is not in the country’s national security interest, and Obama announced from the White House that he agreed.

Pipeline in California's Mojave desert.

The Keystone XL pipeline was rejected by the Obama administration this morning.

“America is now a global leader when it comes to taking serious action to fight climate change, and frankly approving this project would have undercut that leadership,” Obama said. Read more