Articles in Category: Ferrous Metals

Construction costs fell further in August, according to IHS Inc. and the Procurement Executives Group (PEG).

IHSPegAugust550

The current IHS PEG Engineering and Construction Cost Index (ECCI) registered 45.7 this month, down from 48.8 in July and well below the neutral mark of 50. The headline index has not indicated rising costs since December.

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The pricing environment appears to be deteriorating with the current materials/equipment index registering its lowest reading since. The underlying detail shows falling prices for nine of the 12 individual components tracked by the survey.

Prices for steel products continued to fall and showed particular weakness with the indexes for fabricated structural steel, carbon steel pipe, and shell and tube heat exchangers all indicating that prices are falling and that price declines have become more widespread.

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“Steel is a buyers’ market and will remain so,” said John Anton, principal economist, IHS Pricing and Purchasing, “Current import prices are far cheaper – up to 40% – than domestic prices, but if you are doing public projects with Buy America requirements, you cannot use them. However, imports can drag down prices your rivals pay, putting pressure on mills to give you similar deals.”

Access the original IHS research here.

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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lisa reisman metalminer headshotLisa Reisman, CEO, Azul Partners and executive editor, MetalMiner
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.

 

john conolly metalminer headshotJohn Conolly, managing director, Azul Partners
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.

Following our recent article on the seaborne iron ore market, some may assume the landlocked domestic contract supply market for iron ore and pellets is immune from the volatility found in Asia.

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To some extent that’s true, there isn’t a spot or futures market in the same way as we see in Asia, but the market is far from immune to global prices and prices have fallen in North America as they have elsewhere.

That makes Essar Steel’s decision to proceed with the massive $1.9 billion development of North America’s richest iron ore deposit across 150 kilometers of Minnesota’s Mesabi Iron Range particularly brave in today’s market.

Source FT

Source: Financial Times

Essar Steel is said by the Financial Times to be ramping up construction on a $1.9 billion mining and processing facility, with a planned completion in the second quarter of 2016. It will be one of the largest construction projects in North America by capital expenditure according to the paper and Essar hopes to produce 7 million metric tons annually of high-grade iron ore pellets for 70-80 years from the resource. Read more

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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“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.

 

Indian steel companies are asking for safeguards and some US hedge funds are placing big bear bets on domestic oil prices.

Tata, SAIL Want Safeguard Duties

Indian steel companies reeling under mounting imports from China, South Korea and Japan have urged the government to impose safeguard duties, to protect the domestic industry from the onslaught of cheaper imports, the Economic Times reports. Safeguards are measures designed specifically to protect local industry that go beyond anti-dumping or countervailing duties as outlined by the World Trade Organization.

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Safeguard duties are levied on imports as a temporary measure by the government to protect the local industry when they perceive a threat from a sudden surge in imports. State-owned Steel Authority of India (SAIL) and private steel makers such as Tata Steel have jointly filed a petition with the Director General of Safeguards (DGS) seeking the duties.

Hedge Funds Betting Against Oil

A relatively small group of hedge fund managers has placed a record bet on US oil prices declining further in the months ahead.

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Hedge funds and other money managers had accumulated gross short futures and options positions totaling 163 million barrels in the main NYMEX light sweet crude contract by Aug. 11, according to data released by the Commodity Futures Trading Commission.