Articles in Category: Ferro Alloys

Much to the delight of not only its executives and employees but both the global steel sector and even stock markets, the Luxembourg-based steel giant ArcelorMittal has posted its first annual profit in more than five years, registering the biggest jump in earnings in the same period.

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The world’s largest steelmaker by output swung from a $7.9 billion net loss in 2015 to a net profit of $1.8 billion last year. Read more

Our Stainless MMI inched lower in January but it’s already working higher in February as nickel prices rebound.

That Other Ban

In mid-January, Indonesia issued significant new mining rules that will relax its ban on exports of raw nickel ore.

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The revisions to the earlier regulation will allow miners to only export low-grade ore (defined as metal content of 1.7% or less) as long as they express a commitment to build their own smelters within five years and are able to supply domestic smelters with enough low-grade ore to meet at least 30% of the country’s input capacity.

Stainless MMI

This distinction between low-grade and high-grade ore (1.7% or more metal content) is important. Lower-grade ore increases the cost base for Chinese nickel pig-iron. In addition, NPI and ferronickel are more energy intensive than the higher grade refined nickel. Therefore, the greater use of lower grade nickel leads to more pollution, an issue that China is currently tackling.

According to Indonesia’s mining minister, Indonesia produces 17 million metric tons of nickel ore per year, of which 10 mmt is low-grade. The country’s nickel smelting capacity is currently 16 mmt and may reach 18 mmt this year.

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As its mining minister puts it, Indonesia may export up to 5.2 mmt of nickel ore a year under the country’s new rules. This is less than 9% of what the country used to export prior to the ban. Although this is important information to take into account, Indonesia’s easing will not flood the global market as many feared.

More Shutdowns In The Philippines

On February second, the Philippines ordered the closure of 21 mines, and seven others could be suspended. The nickel mines recently ordered to shut down account for about 50% of the country’s annual output. Prices rose sharply on the news as the mining shutdowns in the Philippines seem likely to be a to greater driver of price movements than the easing of Indonesia’s export ban.

What This Means For Metal Buyers

If we narrow our view to the supply/demand fundamentals of the nickel industry, the picture looks bullish, but rather complex. However, we need to widen our view to the whole industrial metals spectrum, and that picture looks quite bullish. Industrial metals continue to rise on robust demand and shrinking supply. The bullish sentiment across the metal complex, combined with more nickel mine closures should support prices in the mid-term.

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It can be tempting to lump our Renewables MMI in with the Rare Earths MMI as sub-indexes that rarely move with fairly calm, if lower-priced, markets.

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That might be true of the once-high-flying RE market, but to say that about renewables would be a mistake. Sure, many of the magnets and batteries derived from rare earth elements end up in wind power installations and hybrid/electric cars so there’s a direct relation from end use, but the real difference maker in the renewables market is solar.

An estimated 2% of all new jobs created in 2016 in the U.S. came from the solar industry, according to the Department of Energy. 10% Of those jobs came from non-warm weather climes such as Colorado, too, so regional limitation is essentially over. The solar industry employs more than three times the amount of people as the coal industry, despite the political power of the latter. Solar installations are expected to rise by 29% this year from last. While wind and other renewable technologies have a long road to adoption, the solar industry is largely “there” when it comes to supplying energy directly to homes and businesses with solar silicon photovoltaic panels affixed to them and even directly to modern energy grids.

Aside from those statistics, too, there are market forces at play that make solar adoption a strong investment opportunity. China’s National Energy Administration has revealed its solar power production more than doubled in 2016, hitting 77.42 gigawatts, making China the world’s largest producer of solar energy.

But Jeff, you say, isn’t this just yet another promised tipping point? Haven’t we been promised all of this before? What makes me feel different about these studies is that they are based on jobs, and not adoption numbers alone. You may have noticed that we have a new President who is very eager to develop new American jobs. As much as President Donald Trump might like oil pipelines, coal mines and steel mills, he’ll need solar to create millions of American jobs and to make us all tired of winning so much.

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The DOE report says 187,117 workers are employed at coal, oil, and natural gas power plants compared to nearly 374,000 people in the solar industry. This is somewhat misleading because an array of direct and indirect jobs related to exploration, excavation, construction, and well surveying—still employs millions of people come from fossil fuels such as oil and natural gas exploration and those aren’t counted. Still, the National Solar Jobs Census 2016 documents truly dramatic growth of a the solar industry in less than a decade and that 10% projected increase isn’t something the Trump administration can afford to miss. Workers who install rooftop solar panels make up the largest share employment in the sector at 137,133 jobs.

Increasing installations would be considered the low-hanging fruit of jobs growth. The Renewables MMI was up 2% this month.

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Our Raw Steels MMI rose 8% in January. Flat products achieved or came close to multiyear highs across the sub-index. In this post we will lay out some of the factors driving this price rally. A rally that we predicted three months ago.

Rising International Steel Spreads

In late January, President Donald Trump took executive action to advance construction of the Keystone XL and Dakota Access oil pipelines. This will significantly increase U.S. steel demand from the energy sector.

The new president also issued another executive order that required them, and all pipeline projects, to use only American-made steel. There is no language in Trump’s memo that indicates any waivers for American-made steel would exist for trade-agreement countries. If this policy is adopted, for at least the next four years even by only the executive branch, it is, by far, the most stringent definition of “American-made” we have seen in federal steel procurement.

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With the expected increase in U.S. demand for steel and new “Buy American Steel” policies, the spread between U.S. and international prices could widen this year. Spreads bottomed at the end of November and it looks like there have room to rise again.

Strong Chinese Steel Prices

China shut at least 45 million metric tons of steel production capacity last year, meeting its target, in a drive to address a glut through 2020. In January, China unleashed its boldest reform plan so far for its bloated steel sector, saying it will eliminate all production of low-quality steel products by the end of June.

Coal burning is the biggest contributor to air pollution in China. One of the principal users of coal, and therefore most polluting, is its steel industry. This is another reason to believe Beijing will strengthen its supply-side reforms this year.

Meanwhile, demand indicators from China, by far the largest consumer of steel, continue to look strong. This combination of lower-than-expected supply and stronger-than-expected demand has translated into rising steel prices in China, which continue to look strong. In addition, iron ore prices have held above $80 per mt. Chinese steel mills rely heavily on seaborne iron ore.

Falling China Steel Exports

Chinese steel exports have fallen in double digits for four consecutive months. The E.U. has slapped anti-dumping duties on some Chinese steel products. India has set a minimum import price for steel products to fend off cheap Chinese steel from its borders. The U.S., no slouch when it comes to anti-dumping and countervailing duties on Chinese steel already, now favors a more aggressive trade policy, regularly citing job losses as a result of imports from foreign countries, especially China.

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As more countries act against the menace of Chinese steel products, we could see further moderation in Chinese steel exports in 2017, and this would bode well for global steel markets.

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U.S. construction spending unexpectedly fell in December as investment in private projects rose marginally and public outlays tumbled, which could have an impact on the economic growth estimate for the fourth quarter.

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The Commerce Department said on Wednesday that construction spending slipped 0.2% to $1.18 trillion. Construction spending in November increased by an unrevised 0.9%.

Economists polled by Reuters had forecast construction spending gaining 0.2% in December.

Construction spending still increased 4.5% in 2016, but the rate of increase was less than half of its 10.6% surge in 2015. The government reported last week that GDP increased at a 1.9% annualized rate in the fourth quarter after accelerating at a 3.5% pace in the July-September period.

Our Construction MMI increased nearly 3% in February, as prices of both steel and aluminum products increased and buoyed the index. 73% Of construction firms said they expect to expand their payroll this year, according to survey results released Tuesday by the Associated General Contractors of America and Sage Construction and Real Estate.

Increased prices and general optimism about the infrastructure plans of the incoming Trump administration are contributing the overall bullish environment for construction metals. The steel sector, in particular, is suddenly a hot investment sector. Michael Tomera, head of PricewaterhouseCoopers‘ U.S. steel analysis arm, recently told me in an interview that, “There are momentum drivers here. If you look at liquidity, market conditions, infrastructure development in the U.S. with the new infrastructure and trade plans, all of those are good indicators for the metals industries and growth going from 2016 into 2017.”

Equipment manufacturers are also investing heavily in new technologies to apply to construction site safety, inspections and other fields. Equipment manufacturer Caterpillar, Inc. has invested in San Francisco drone tech startup Airware. Rather than make its own unmanned aerial vehicles, Airware has focused its efforts around providing software and services that help large enterprises use drones throughout their operations. Airware’s cloud-based software helps companies plan flights, automate them as much as possible, then analyze all the data their drones collect.

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Drones have been used on construction sites for the last five to ten years, but the fact that a key player like Cat is investing in the technology is a sign of a maturing market. Site technology doesn’t directly affect construction metal prices but it is part of a trend in lean project delivery that has delivered better results, and better projects, for general contractors and construction managers over the last decade. In other words, the increase in construction projects in the U.S. is directly proportional to better project management.

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Yesterday, the Department of Commerce placed final, affirmative anti-dumping and countervailing duties on imports of stainless steel sheet and strip from China.

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Commerce found that dumping  occurred by mandatory respondents Shanxi Taigang Stainless Steel Co., Ltd. and Tianjin Taigang Daming Metal Product Co., Ltd. Commerce also determined that the mandatory respondents are not eligible for a separate rate and, therefore, part of the China-wide entity.

Commerce calculated a final dumping margin of 63.86% for the non-China-wide respondents eligible for a separate rate. Commerce assigned a dumping margin of 76.64% based on adverse facts available for all other producers/exporters in China that are part of the China-wide entity due to their failure to respond to Commerce’s requests for information. Read more

Based on preliminary Census Bureau data, the American Iron and Steel Institute (AISI) reported that the U.S. imported a total of 2,686,000 net tons of steel in December 2016, including 2,146,000 net tons nt of finished steel (down 4.3% and up 0.6%, respectively, vs. November final data).

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For the full year of 2016, total and finished steel imports are 33,009,000 and 26,327,000 nt, down 14.9% and 16.4%, respectively, compared to full year 2015. Finished steel import market share was an estimated 26% in December and is estimated at 26% for full year 2016.

Key finished steel products with significant import increases in December compared to November include oil country goods (up 55%), line pipe (up 38%), sheets and strip all other metallic-coated products (up 27%), tin plate (up 24%), sheets and strip hot-dipped galvanized (up 14%) and hot-rolled bars (up 11%). Tin plate (up 15%) had a significant increase in 2016 vs. the prior year.

Trump Signs Order Mandating Regulations Be Cut

President Donald Trump signed an executive order Monday morning requiring that for every new federal regulation implemented, two must be rescinded.

“This will be the biggest such act that our country has ever seen,” Trump declared moments before signing it in the Oval Office. “There will be regulation, there will be control, but it will be a normalized control where you can open your business and expand your business very easily. And that’s what our country has been all about.”

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The executive order signing, which fulfills a campaign pledge, comes after the president held a listening session with small-business leaders.

Two global steel giants, India and Japan, are headed toward a trade war. For once, one participant in the trade row isn’t the U.S… not directly, at least.

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Japan, the world’s second-largest producer of steel, has threatened to take India to the World Trade Organization over import restrictions asserted by India. If incoming reports are true, Japan may soon be joined by Taiwan and even Russia.

Despite the excellent trade relations the two nations enjoy, Japan is unhappy with India’s decisions to place a minimum import price and other assorted duties to protect its domestic steel industry. Japan claims this has halved its steel exports to India in the last year.

Working quietly on the sidelines, Indian government officials having been trying to iron out differences with their Japanese counterparts and settle the dispute in consultation but, so far, the sides have not had much luck. According to a news report, India’s Director-General of Safeguards and the Ministry of Steel were assessing points raised by Japan against the calculation of safeguard duties so that they could counter Japan and defend the duties before the WTO. India, obviously, does not want Japan — for that matter any other nation — to escalate this matter into a full-fledged dispute at the WTO.

But why is Japan reacting now, especially since some of the restrictions have been in place in India for almost two years? Analysts say that with U.S. President Donald Trump raising the cry of “America, First,” Japan is now concerned that it could lose a large chunk of its steel export market, and thus, is making an open stand for what it considers free and fair international trade. India is just the proxy country used to fight a larger war against MIPs and other border taxes.

A Japanese industry ministry official, explaining a Dec. 20 request for WTO dispute consultations with India over steel safeguard duties and the MIP for iron and steel products, said it needed to stop unfair trade actions from “spreading.”

India imposed duties of up to 20% on some hot-rolled flat steel products in September 2015, and set a floor price in February 2016 for steel product imports. India’s anti-dumping duty amounts to $474-557 a metric ton on hot-rolled flat products of alloy and non-alloy steel imported from China, Japan, South Korea, Russia, Brazil and Indonesia in August. These nations account for almost 90% of India’s steel imports.

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Russia and Taiwan, too, may join Japan in requesting consultations at the WTO over India’s use of a MIP regime. Proceedings could start as early as February.

China will impose higher power costs for steel mills operating outdated production equipment, the country’s economic planner said in a statement on Tuesday.

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The National Development and Reform Commission (NDRC) ordered utilities to raise power prices by 0.5 yuan ($0.0719) per kilowatt-hour on top of current prices for steel mills preserving equipment that ought to be eliminated.

AISI Hires Tax and Trade Policy Director

The American Iron and Steel Institute today announced the appointment of Raphael Goodstein as director of tax and trade policy.

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Goodstein has 15 years of Congressional and government affairs experience, including 10 years representing the common policy interests of the domestic auto industry as legislative director with the American Automotive Policy Council. He has also worked on Capitol Hill, for Senator Debbie Stabenow, and for a number of political and public affairs organizations.

Anti-dumping actions were once again a hot topic this year. Back in February India imposed a minimum import price for nearly all foreign steel entering the country. This was only one of many anti-dumping actions taken this year with both the U.S. and European Union tightening tariffs this year. — Jeff Yoders, editor

It’s a problem that’s dogged almost all the major economies as well as developing nations – the dilemma of steel cheap imports. Steelmakers in the U.S. have, in the past, not only cried foul at the World Trade Organization but also imposed steep anti-dumping duties on cheap imports from China, Korea and India making their way into the U.S. market, thus further depriving an already-stressed out market.

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A few days ago, as reported by MetalMiner, seven EU nations asked the European Commission to intervene to stop cheap imports of steel, particularly from China and Russia.

India has imposed a minimum import price on most steel products. Source Adobe Stock/Jovanning.

India has imposed a minimum import price on most steel products. Source Adobe Stock/Jovanning.

In India, a market where steel consumption continues to grow bucking global trends, the situation is no different. So, finally giving in to the loud protests by domestic steel companies against cheap imports, the Indian government recently imposed a minimum import price (MIP) ranging from $341 to $752 per metric ton on 173 steel products as a “temporary” measure.

Minimum Import Prices

The MIP conditions are valid for six months from the date of the notification or until further orders, whichever is earlier. The MIP, though, will not be applicable on imports under the advance authorization scheme and high-grade pipes used for pipeline transportation systems in the petroleum and natural gas industry are exempt.

The move seems to have gone down well with a majority of the steel trade bodies and a large section of India’s steel industry, but some have called it simply a band-aid for the hemorrhaging steel sector.

India’s domestic steel production between April-January 2016 dropped 1.8 % to 75.66 million mt, while imports rose 24.1% to 9.3 mmt. Consumption grew 4.2% to 65.91 mmt. For domestic steelmakers, apart from the MIP, the import duty has also been raised to 10% for flat products and 7.5% for long products.

The rationale behind the MIP was explained by Steel Secretary Aruna Sundararajan, in an interview with The Economic Times. She said the move would give India’s steel industry much-needed breathing space to get healthy.

Emergency Measure

Over the last couple of years, India had seen a spurt in steel imports, leading to a decline in prices. According to the Steel Secretary, India had over 400 mmt of surplus steel. All that surplus has put the domestic steel industry into distress.

While imposing the MIP, the Indian government also took care to ensure that downstream users were not affected. That’s why certain categories of steel — required by end-user industries — not manufactured in India, were exempted.

The government’s decision to impose MIP will, however, reduce the benefit of lower commodity prices for automobile companies, according to many experts. Also, according to the engineering goods exporters’ body, EEPC India, the MIP will lead to further erosion in engineering exports. It has thus sought from the government a compensatory mechanism to make up for the increased raw material price (about 10%) for the distressed exporters, mostly in the small and medium-sized enterprises segments.

The Indian government has dubbed the MIP an “emergency provision.” In the next six months, it will be looking at anti-dumping duties  and moving toward more stable, longer-term measures. It will also be keeping a close watch on imports after the MIP, as well as the response of domestic steel companies and consumers.