Articles in Category: Ferrous Metals

Our Stainless MMI rose 3.3% in November as nickel prices continue to look strong.

Stainless_Chart_December-2016_FNL

The Philippines’ output of nickel ore fell 16% in the third quarter from a year earlier, as a result of several mine suspensions due to environmental violations. The country has already stopped work at 10 of its 41 mines, eight of which are nickel mines. 20 More mines, 14 of which mine nickel, could see their licenses suspended.

MetalMiner Price Benchmarking: Current and Historical Prices for the Metals You Buy

Environment and Natural Resources Secretary Regina Lopez recently said that there will definitely be more mine suspensions when the country releases rulings on those 20 mines, possibly within the next few days.

Meanwhile, Indonesia will cut the royalty charged on sales of processed and refined nickel to 2%, from the current 4%, to encourage more miners to develop smelters. In addition, the country appears unlikely to resume nickel ore and bauxite exports.

Two-Month Trial: Metal Buying Outlook

On the other side of the equation, higher than expected Chinese demand is adding fuel to nickel’s price rally. The Caixin Manufacturing PMI in China was 50.9 in November, the fifth straight month of expansion. In addition, the U.S. is set to increase infrastructure spending as Donald Trump takes office.

Apart from the bullish narrative of more demand and less supply, prices are acting strong as it appears that bulls are still in control. Over the past few weeks, nickel prices are resting near $11,500/mt in what it looks like a pause to be followed by another price rally. Specially, considering the ongoing bullish sentiment across the entire industrial metals complex.

For full access to this MetalMiner membership content:
Log In |

We wrote recently about the probable impact of President-elect Trump’s forthcoming economic policy, particularly his focus on infrastructure spending, Global trade and putting U.S. manufacturing, particularly steel, at the heart of his economic policy.

MetalMiner Price Benchmarking: Current and Historical Prices for the Metals You Buy

His promises have been generally well-received yet they raise an awkward question: Creating demand and limiting supply — first by rolling out steel-consuming infrastructure projects and second by taking more aggressive action against steel imports — will inevitably raise domestic steel prices.

This would be good for domestic U.S. steel producers, in as much as construction companies could pass along the costs infrastructure projects, it would incur only marginally higher input costs as a result paid the taxpayer. But it would inevitably also have a wider impact on the steel market, rising prices for steel consumers and higher prices, in turn, for the wider population buying automobiles, refrigerators and other products manufactured with any significant steel content.

How We Got Here

The U.S. steel industry has suffered grievously at the hands of cheap imports. Steel dumped by producing countries with a massive overhang of spare capacity and hidden subsidies such as China have depressed prices and pushed many major producers such as U.S. Steel into loss-making positions that resulted in downsizing and the loss of jobs. Read more

Our Raw Steels MMI rose 14% in November amid rising Chinese and raw material prices and a rebound in domestic prices.

Raw-Steels_Chart_December-2016_FNL

Prices of flat steel products in the U.S. corrected since July but they finally showed some upside momentum in November. As we pointed out last month, there are reasons to believe domestic steel prices have found a floor and are set to rise as we move into 2017.

International Price Arbitrage Narrows: Imports Fall

Chinese demand from infrastructure and construction has been robust this year. So has its auto sector, a key industry for steel demand. Domestic prices fell over the past few months, but prices in China rose, trading now at their highest levels in two years. As a result, the international price arbitrage has come down to normal levels.

MetalMiner Price Benchmarking: Current and Historical Prices for the Metals You Buy

In some steel product categories,m like hot-rolled coil, this price arbitrage has narrowed enough that there isn’t much incentive for U.S. steel buyers to look for import offers. In October, The U.S. imported 2.4 million metric tons of steel, down 11% from the same period last year. Steel imports fell on a monthly basis for three consecutive months after they hit a one-year high in July. Fewer imports provide more pricing power to domestic steel producers in an otherwise well-supplied industry. While international steel prices continue to rise, domestic mills won’t find it difficult to find arguments for a price hike.

Industry Hopes After Trump’s Victory

What changes in the steel industry Donald Trump will make are still unknown. What’s clear is that the new president-elect made trade, manufacturing and the steel industry a cornerstone of his agenda. Stocks of American steel companies were the best performers in the stock market since the election as investors are optimistic that a Trump-led government will boost domestic infrastructure, which could be a boom for steel demand. In addition he has stated he would institute more measures to protect domestic steel producers.

Two-Month Trial: Metal Buying Outlook

A good benchmark for steel prices is the Dow Jones U.S. Steel Index, which tracks major steel producers around the globe. The index recently rose to the highest level in five years. Since the stocks of U.S. steel companies are linked to domestic steel prices, this powerful price increase hints at a big rebound in steel prices.

Rising input costs

Higher input costs help to keep supply in check as mills’ margins get squeezed. Thermal coal prices in China have more than doubled this year. Iron ore prices reached a two-year high in November, with prices trading near $80 a metric ton. This rising trend in input costs will help support the recent rally in steel prices.

Industrial Metals Boom

Finally, another reason to expect a rebound in steel prices is the ongoing price strength across the metal complex. We are witnessing powerful moves across the board. Even copper, a metal whose fundamentals didn’t look appealing, rose over 25% in a matter of days. The bullish sentiment across base metals is another reason to expect a continuation of this recent rebound in steel prices.

For full access to this MetalMiner membership content:
Log In |

The Census Bureau reported late last week that U.S. construction spending was up during October by 0.5% compared with the September total. Year-over-year, construction spending in October was up by 3.45. During the first 10 months of the year, construction spending amounted to $972.2 billion, 4.5% above the same period in 2015.

MetalMiner Price Benchmarking: Current and Historical Prices for the Metals You Buy

Our Construction MMI was up 8.7% as domestic demand for construction metals shot up just as prices increased nearly across the board for the entire industrial metals complex.

Construction_Chart_December_2016_FNL

Construction demand in the world’s largest metals consumer, China, continues to grow even as the central government there tries to restrict home buying, the engine for that demand.

“It’s likely that the government will expand infrastructure investment to make up for the gap left by property-related investment falling,” Julia Wang, China economist at HSBC told the Financial Times.

What is buoying construction the most is an investor class now excited about all industrial and construction metals. The election of President-elect Donald Trump promises $1 trillion in U.S. infrastructure investment and stronger protections against dumping of foreign imports.

Trump’s policies, while still in their formative stages, are seen as bullish for public construction, particularly infrastructure such as roads, bridges and airports. Stocks of construction companies and materials providers also jumped after Trump’s election.

Public construction spending actually accounted for most of the increase in U.S. construction spending in October — unusually, since that sector has been contracting in recent years — gaining 2.8% compared to September. Spending on educational facilities was especially brisk, up 4.1% for the month, while highway construction gained 1.9%. Compared with last year, however, public construction spending as a whole was off 0.6%.

Two-Month Trial: Metal Buying Outlook

While Chinese demand remains a concern, it’s a very good time to be a construction metals investor with positive sentiment nearly across the board when it comes to both construction and metals.

For full access to this MetalMiner membership content:
Log In |

Renewed economic confidence followed the election of republican nominee Donald Trump and Americans snapped up new vehicles at a rapid pace in November, giving the U.S. auto industry a chance of breaking its all-time record for full-year sales.

Two-Month Trial: Metal Buying Outlook

The Automotive MMI was up, too, jumping 8%.

In November, U.S. auto sales rose 3.7% compared with a year ago, according to Autodata Corp. On an annualized basis, that equaled a rate of 17.87 million units. November sales growth projections had ranged from 2.7% at Edmunds.com to 4.2% at Kelley Blue Book. Total sales for November were 1.38 million, that shattered a record for the month that was set in November 2001.

Automotive_Chart_December-2016_FNL

The month’s annual sales rate, adjusted for two extra selling days this November, was 17.9 million vehicles, more than the 17.7 million average estimate.

A contributing factor to the solid month was the Thanksgiving weekend and Black Friday sales, which are having an increasing effect on the month’s output. With one month to go, the auto industry has a decent chance to match or exceed its 2015 full-year record of 17.47 million vehicles sold.

Automotive sales and metals prices are both benefiting from bullish sentiment among buyers and investors. Steel companies stock prices have increased after Trump’s election just as aluminum and copper prices in the bullish metals markets.

Another factor in new car sales is the enduring low prices for both oil and gasoline, which might change soon now that the Organization of Petroleum Exporting Countries and other producers such as Russia have finally agreed to a production freeze.

MetalMiner Price Benchmarking: Current and Historical Prices for the Metals You Buy

Rising oil prices, however, might not be the detriment to auto sales that they have in the past. Hybrid vehicles and simply more efficient fuel consumption have blunted the impact of gasoline prices on new car sales. One of the reasons that the gas tax has become such a poor funding mechanism for the federal Highway Trust Fund is that motorists simply have to buy less gas for today’s efficient, newer vehicles.

For full access to this MetalMiner membership content:
Log In |

In much the same way as President-elect Donald Trump conducted his election campaign, he has kept himself very much in the headlines in the interim period until he takes charge as president in January.

MetalMiner Price Benchmarking: Current and Historical Prices for the Metals You Buy

Trump won by promising infrastructure investment and that he’d protect American manufacturing jobs. What’s that mean for American steel? The two were seen by many as mutually supportive. Read more

The Department of Commerce, late yesterday, placed import duties on carbon and alloy steel cut-to-length plate from Brazil, South Africa, and Turkey.

MetalMiner Price Benchmarking: Current and Historical Prices for the Metals You Buy

For the purpose of anti-dumping investigations, dumping occurs when a foreign company sells a product in the U.S. at less than its fair value.

In the Brazil investigation. Commerce found dumping has occurred by Companhia Siderurgica Nacional and Usinas Siderurgicas de Minas Gerais SA, at a final dumping margin of 74.52%. The dumping margin for the mandatory respondents was based on adverse facts available (AFA) they did not cooperate in the investigation. Commerce established a final dumping margin of 74.52% for all other producers/exporters in Brazil.

In the South Africa investigation, commerce found dumping occurred by Evraz Highveld Steel and Vanadium Corp., at a final margin of 94.14%. They also did not cooperate in the investigation. Commerce calculated a dumping margin of 87.72% for all other producers/exporters in South Africa.

In the Turkey investigation, Commerce found dumping occurred by Ereğli Demir ve Çelik Fabrikalari T.A.Ş., at a dumping margin of 50%. It, too, did not cooperate in the investigation. Commerce calculated a final dumping margin of 42.02% for all other producers/exporters in Turkey.

Two-Month Trial: Metal Buying Outlook

As a result of the final affirmative determinations, Commerce will instruct U.S. Customs and Border Protection (CBP) to collect cash deposits equal to the applicable weighted-average dumping margins.

Washington news organizations such as Politico are reporting more details about what a potential Trump Administration $1 trillion infrastructure plan might look like.

MetalMiner Price Benchmarking: Current and Historical Prices for the Metals You Buy

The pictures that the Washington, D.C. media are portraying are quite dramatic and some of them engage in a level of speculation about funding mechanisms that likely only have a tangential relationship to what is being discussed right now at Trump Tower.

yoders_ironworkers_550_111016

Could more transit projects be part of a Trump infrastructure plan? Source: Jeff Yoders.

Politico’s analysis is a case in point, with speculation and quotes from both democrats and republicans about everything from a new gas tax indexed to the inflation rate to a quote from U.S. Rep. Peter DeFazio (D. Ore.), the top Democrat on the Transportation Committee, who said that public-private partnerships “won’t do much for the 143,000 bridges that need work nationwide unless you’re going to toll 143,000 bridges… it’ll help with individual sorts of big projects, but it’s not any kind of cure-all, and it certainly isn’t going to get the big bang that Trump has talked about in infrastructure.”

Federal Infrastructure Bank?

Yet, a mere 45-minute drive away, the Baltimore Sun praised another idea supposedly being debated by President-elect Trump and his advisors. U.S. Rep. John K. Delaney (D. Md.)’s Partnership to Build America Act would use repatriated corporate profits now held overseas (made available by a reduced tax rate on overseas earnings brought home and a larger tax on profits that remain off-shore) to put billions into the Highway Trust Fund and to create a new U.S. investment bank — with a $750 billion infrastructure fund — that would be available to state and local governments. Read more

India’s mining sector has the potential to contribute as much as $70 billion to the country’s economy by 2030 and generate about 6 to 7 million jobs, believes the country’s industry association, the Confederation of Indian Industry.

MetalMiner Price Benchmarking: Current and Historical Prices for the Metals You Buy

A report titled, Mining Opportunities – Realizing Potential was recently released by the CII, though with an added a cautionary note: clearances “still remain an impediment for a smooth transition from auction stage to implementation stage.”

Mining Reforms Having an Effect

The current Modi government initiated reforms in the mining sector, which underperformed during the previous regime, many say, due to red tape. One of the most important steps was the clearance of the National Mineral Exploration Policy (NMEP) by the government in.

NMEP has the following main features for facilitating exploration in the country:

  1. The Ministry of Mines will carry out auctioning of identified exploration blocks for exploration by the private sector on a revenue-sharing basis. If exploration leads to auctionable resources, the revenue will be borne by the successful bidder of those auctionable blocks.
  2. Creation of baseline geoscientific data as a public good for open dissemination free of charge.
  3. A National Geoscientific Data Repository was supposed to be set up to collate all baseline and mineral exploration information generated by various central and state government agencies and also mineral concession holders and to maintain these on a geospatial database.

While these policy changes have been welcomed overall, there has been some criticism over the implementation. The CII report, for example, talks of the “inordinately long time that is required for obtaining this clearance and the cumbersome process involved therein.”

Why Can’t Companies Start Mining Faster?

The report was recently released at the International Mining and Machinery (IMME) and Global Summit 2016. It said that the Environment and Forest clearance processes take a long time and added that there was significant room for improvement in the clearance system in terms of efficiency, speed of decision making, predictability and transaction.

There’s also unexpected criticism from another quarter on the new mining policy. A report in the DNA newspaper, quoting global miner Anglo American PLC, said the Indian auction system discourages foreign direct investment as the auction process does not provide adequate risk-reward incentive.

Two-Month Trial: Metal Buying Outlook

In the report, John Vann, group head of exploration at Anglo, said the auction system makes it difficult to see India competing with other countries where Anglo American invests. According to him, the granting of licenses rather than auctioning off mines would give confidence to foreign investors.

Dutch 3D printing technology firm MX3D is close to beginning construction on its stainless steel, 3D-printed pedestrian bridge in Amsterdam.

We wrote about the bridge and its design in 2015. MX3D Co-Founder and CMO Gijs van der Velden recently explained to me at the Autodesk University trade show in Las Vegas where the project is at and why they expect construction (via giant welder robots who will weld individual parts “printed” in mX3D’s facility together) to start in early 2017.

MetalMiner Price Benchmarking: Current and Historical Prices for the Metals You Buy

“We’re at the point where we’ve printed every critical part of the bridge and all we need is approval from the engineers,” van der Velden said. “Our design is quite elaborate and all the diameters change everywhere and we use 3D printed parts. We’re getting pretty close and once they approve we have agreed with the City government that once we do a full load-bearing test it will be acceptable. It’s not the normal procedure but the city was very helpful in accommodating us.”

The bridge, which will be made of stainless steel 316 alloy, will be installed in a public park in Amsterdam and cross one of the city’s famous canals.

yoders_MX3D_stainless_bridge_550_112816

One of the stainless steel supports of MX3D’s 3D-printed pedestrian bridge that will soon be assembled and welded together in Amsterdam. Source: Jeff Yoders.

“(We chose 316 stainless) because it’s highest grade standard and not too expensive,” van der Velden said. “We want to make this technique available for other professions — other than aerospace (where it’s already being used) — so, we want to work in steel, stainless steel, bronze, aluminum.”