Ferro Alloys

Based on preliminary Census Bureau data, the American Iron and Steel Institute (AISI) reported that the US imported a total of 3,243,000 net tons of steel in July.

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This includes 2,578,000 nt of finished steel (up 4.6% and 3.7%, respectively, vs. June final data).

On the year-to-date, through seven months of 2015, total and finished steel imports are 24,964,000 and 20,440,000 nt, respectively, no change and up 10% vs. the same period in 2014. Annualized total and finished steel imports in 2015 would be 42.8 and 35.0 million nt, down 4% and up 4% respectively vs. 2014 if they continue at this pace. The finished steel import market share was an estimated 27% in July and is estimated at 31% year-to-date.

Individual Steel Product Import Increases

Key finished steel products with a significant import increase in July compared to June are reinforcing bars (rebar). up 57%; plates in coils, up 29%; sheets and strip hot-dipped galvanized, up 26%; cold-rolled sheet, up 25%; heavy structural shapes, up 12%; sheets, strip and all other metallic coatings are up 12%; and cut-length plates are up 11%.

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Major products with significant year-to-date import increases vs. the same period last year include line pipe, up 55%; rebar, up 51%; standard pipe, up 33%: sheets and strip hot-dipped galvanized, up 22%: tin plate, up 17%; plates in coils, up 16%; cold-rolled sheets, up 14%; heavy structural shapes, up 13%; and cut-length plates, up 12%.

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Get your short- and medium-term buying strategy for industrial metals.

Less than one week away! Join us Thursday, August 27 at 10 a.m. CDT for the webinar, PREVIEW: MetalMiner Price Forecasts for September.

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For the second consecutive month, we will be providing a behind-the-scenes look at our metal price forecasts and how we formulate our new Monthly Metal Buying Outlook reports. If you source aluminum, copper, nickel, lead, zinc, tin or steel and are in need of expert insight, market commentary and a medium- and short-term trend analysis for these base metals then this is the webinar for you!

Speakers to include:

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Lisa has more than two decades’ experience in management consulting and direct materials sourcing. She previously owned and operated her own aluminum trading company, as well as served in past roles at Andersen and Deloitte Consulting.

 

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John also has more than two decades’ experience, but in listed derivatives, trading commodities and client advisement on hedging commercial risks. He comes to us from the CME Group where he was director of product marketing, and has been featured on CNBC, Bloomberg and Fox Business News.

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Existing home sales are up and a major iron ore producer reported plunging profits and cut its steel outlook.

US Existing Home Sales Surge

US Home resales rose to a near 8-1/2-year high in July, Reuters reported.

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While other data on Thursday showed a slight increase in the number of Americans filing new applications for unemployment benefits last week, the trend remained consistent with strong labor market momentum.

The National Association of Realtors said existing home sales increased 2% to an annual rate of 5.59 million units last month, the highest pace since February 2007.

Demand for housing is being boosted by a strengthening labor market. But supply remains tight, pushing up home prices and sidelining first-time buyers, who are a key part of a strong housing market. The share of first-time buyers fell to a six-month low of 28% last month.

BHP Billiton Reports Profit Plunge, Cuts Outlook

BHP Billiton Ltd. reported full-year profit plunged 52% on tumbling commodity prices and cut its long-term forecasts for steel output in China, its largest customer.

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Underlying profit was $6.4 billion in the year ended June 30 from $13.3 billion a year earlier, the world’s biggest mining company said Tuesday in a statement. BHP will increase its dividend by 2.5 percent to $1.24 a share.

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The selloff in Chinese stocks continued today and a major Japanese automaker has turned low steel prices into a cut in its supply costs.

Chinese Stock Market Still Falling

Chinese stocks plummeted Monday, erasing gains for the year, as fears about the deepening effects of a slowdown in the world’s No. 2 economy rattled investors world-wide.

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The Shanghai Composite Index closed down 8.5% at 3,209.91, bringing its losses since its mid-June peak to nearly 38%.

China’s main stock index has now tipped into negative territory for the year after gaining as much as 60% through its June peak. Benchmarks in Japan and Australia both shed nearly 4%.

At the heart of the selloff is the concern that the once-strong Chinese economy may be slowing down dramatically, which has triggered steep losses in global stock markets, commodities and emerging markets.

Toyota, Steel Suppliers Agree to Price Cut

Toyota Motor Corp. and major Japanese steel makers have agreed to lower prices for steel sheet for the April-September period, marking the first price cut in a year, industry sources told the Japan Times on Thursday.

Toyota and the steelmakers, including Nippon Steel & Sumitomo Metal Corp., reached the agreement as prices for iron ore and coal have dropped precipitously and are not expected to rise soon.

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John Correnti, an American steel executive who helped shift the domestic industry geographically and technologically, died Tuesday in Chicago.

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Correnti, 68, was chairman, founder and chief executive officer of Big River Steel LLC and was in Chicago for a board meeting of Navistar International Corp., the company said in a statement. The cause of death was not immediately provided.

Correnti was leading Big River Steel to build a $1.3 billion mill in Osceola, Ark., near the Mississippi River. The facility is planned to supply high-quality steel products to customers including automakers and energy companies.

Correnti served as CEO of Nucor Corp. from 1996 to 1999 and helped move the US steel industry away from its regional roots by expanding its reach to the South. Correnti also opened a steel mill for Severstal in Mississippi which was later sold to Steel Dynamics.

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Big River Steel released a statement saying, “Big River Steel will be one of many legacies John leaves with us all. John was a visionary, an innovator and a leader who dedicated his career to improving the steel industry and creating opportunities for those that worked within it.”

USW, ATI Digging in For Long Lockout

Picket lines staffed by locked out union workers appeared at several Allegheny Technologies, Inc. facilities this week. ATI has vowed to staff the plants with management and replacement workers and the United Steelworkers of America personnel locked out will be eligible for unemployment benefits during the lockout.

The two sides disagree about healthcare contributions for the union workers.

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SMU Steel Summit 2015

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More than that, though, we will be delivering a live and in-person steel price forecast. You’ve probably heard about our new Monthly Buying Outlook report by now, and this event will be a great opportunity to get a first-hand look at how we formulate our short- and medium-term analysis of base metals.

If you haven’t already, register for our upcoming webinar, PREVIEW: MetalMiner Price Forecasts for September on Thursday, August 27 at 10 a.m. CDT.

MetalMiner will be joined at the conference by steel producers, manufacturing companies, end-users and service centers for two days of discussions on current issues affecting the metals industry.

“This year will be a decisive test whether North American governments are prepared to address foreign government policies that are fundamentally at odds with market-oriented economics,” said Kevin Dempsey, senior vice president, public policy and general counsel at the American Iron and Steel Institute.

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\The Department of Commerce formally initiated new anti-dumping duty and countervailing duty investigations of imports of cold-rolled steel flat products from Brazil, China, India, South Korea, and Russia and anti-dumping investigations of imports of the same cold-rolled flat products from Japan, the Netherlands, and the United Kingdom.

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This action by commerce is in response to petitions filed by domestic producers on July 28th.

The petitioners are the usual group of US producers that have long said that foreign steel imports are subsidized by overseas governments in complete violation of US anti-dumping law. The group is composed of AK Steel Corp., ArcelorMittal USA LLC, Nucor Corp., Steel Dynamics, Inc. , and U.S. Steel Corp.

The products covered by these investigations are cold-rolled (cold-reduced), flat-rolled steel products, whether or not annealed, painted, varnished, or coated with plastics or other non-metallic substances. The products covered do not include those that are clad, plated, or coated with metal. The products covered also include coils that have a width or other lateral measurement of 12.7 millimeters or greater, regardless of form of coil (e.g., in successively superimposed layers, spirally oscillating, etc.).

The products covered further include products not in coils ( in straight lengths) of a thickness less than 4.75 mm and a width that is 12.7 mm or greater and that measure at least 10 times the thickness of the product. The group of products alleged to have been dumped also includes products not in coils (e.g., in straight lengths) of a thickness of 4.75 mm or more and a width exceeding 150 mm and measuring at least twice the product’s thickness.

The investigation will also take into account origin country. The petitioners allege that some cold-rolled products are shipped from their origin country and further processed in a third country before import into the US market. This is a key point for the domestic producers, particularly concerning exports of Chinese steel. The domestic producers have previously accused Chinese producers of shipping to third-party countries where the product are processed and changed in order to conceal the initial manufacturing country upon entry in US ports.

The US International Trade Commission (ITC) is scheduled to make its preliminary injury determinations on or before September 11.

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The alleged anti-dumping margins of each country:

Brazil: 30.28 to 35.43%
China: 265.79%
India: 43.12%
Korea: 75.42 to 177.50%
Russia: 69.12 to 227.52%
Japan: 71.35%
Netherlands: 39.43 to 121.53%
United Kingdom: 32.59 to 69.30%

All alleged subsidies by foreign governments, which would qualify the products for countervailing import duties are alleged to be above a 2% subsidy.

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Allegheny Technologies Inc. said Friday it was locking out more than 2,000 unionized workers at various facilities across five states.

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ATI said it will continue to operate the affected plants with ATI salaried and nonunion employees and temporary professional staffing until a new contract can be finalized with the United Steelworkers of America union. ATI is a Pittsburgh-based specialty metals company that is one of only two US companies that manufactures grain-oriented electrical steel. ATI also produces a full range of steel products, titanium and titanium alloys, nickel-based stainless alloys and superalloys.

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The two sides have been in contract talks since before the previous agreement expired June 30. ATI and the USW began formal negotiations in May for contracts for new contracts for about 2,200 employees of ATI’s flat-rolled products division. Until Friday’s lockout announcement, the union was working under the terms of the previous contract.

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The monthly Stainless MMI® registered a value of 64 in August, a decrease of 5.9% from 68 in July and another all-time low in this month where all but one index we track fell to, what we hope, is a new bottom.

Stainless_Chart_August-2015_FNL

Ever since nickel broke a key support level back in March prices have done nothing but free fall, putting nickel at its lowest level since 2009.

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Not only nickel but aluminum, copper and tin have also fallen to levels not since 2009. No one can deny the strong relationship among industrial metal prices.

What a Difference a Year Makes

Just about a year ago, nickel miners were rubbing their hands in glee, expecting that the Indonesian export ban would put the market in deficit. However, Philippine suppliers have taken up the shortfall. Moreover, a strong dollar, record nickel stockpiles and weaker than expected demand from China helped in the decline.

The slump in prices now has nickel miners rethinking output. Australian miner Mincor Resources said in July that it will reduce production by 56% during the second half, as its operations can't be sustained at current price levels.

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Poseidon Nickel, another Australian miner also gave in after saying that its Lake Johnson mine would be put into care and maintenance.

Many are arguing that prices will rise since they are below producers' costs, however, we have previously pointed out that production costs do not determine prices, investors do.

What This Means for Stainless Steel Buyers

We recommend our readers be careful when fishing for a price bottom based on production costs. With commodity prices falling across the board, and weak demand from key consumer China, we might see a few more closures before the upside comes.

* Get the complete prices every day on the MetalMiner IndX℠

The Stainless MMI® collects and weights 14 global stainless steel and raw material price points to provide a unique view into stainless steel price trends over a 30-day period. For more information on the Stainless MMI®, how it's calculated or how your company can use the index, please drop us a note at: info (at) agmetalminer (dot) com.

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It was no surprise last week when AK Steel Corp., ArcelorMittal USA LLC, Nucor Corp., Steel Dynamics, Inc., and U.S. Steel Corp. filed petitions with the Commerce Dept. and the US International Trade Commission against eight countries the domestic industry believes are receiving illegal government subsidies and “dumping” flat cold-rolled coil products here.

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The eight countries included in the anti-dumping petitions and the dumping margins alleged by AK Steel and the domestic industry are:

  • Brazil, 50 to 59.74% subsidy rate
  • China, 265.98%
  • India, 42.28%
  • Japan, 82.58%
  • South Korea, 93.32 to 176.13%
  • Netherlands, 47.36 to 136.46%
  • Russia, 69.12 to 320.45%
  • The United Kingdom 47.64 to 84.34%

The petitions also allege that the foreign producers benefit from numerous countervailable subsidies.

Coiledsteel_585

Could the cold-rolled coil anti-dumping cases set a new precedent for dumping steel in the US?

Again, this was no surprise as the case with China, in particular, has been well-documented and this isn’t the first go around with anti-dumping duties with most of these countries. What will be interesting to see, however, is how new trade remedy measures adopted by the federal government as part of two trade bills signed by President Obama in June, will affect enforcement of anti-dumping or countervailable duties that come out of these petitions.

At the time American Iron and Steel Institute President and CEO Thomas Gibson said, “We thank the Administration for recognizing the critical role of the steel industry by supporting these initiatives to improve the effectiveness of our anti-dumping and countervailing duty laws.”

Part of the remedies in the trade package was language that would force US Customs Enforcement and Border Protection to tariff imports more stringently, eliminating loopholes that allowed countries to essentially created stops in other ports to disguise the origin of shipments.

“AK Steel and the domestic industry have been facing a surge of what we believe are unfairly dumped and subsidized imports of cold-rolled steel coming into this country,” James L. Wainscott, chairman, president and CEO of AK Steel said in a statement. “The negative impact to our company and to other U.S. producers has been significant in terms of pricing, production, sales and earnings.”

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If the new measures deliver high margin tariffs and enforceable import protections it will be the culmination of decades of legislative of enforcement work by the US steel industry. Work that began as far back as the North American Free Trade Agreement.

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