- India has big plans to modernize its railway system, our Sohrab Darabshaw writes.
- In case you missed it, our November MMI report is out. You can download it here to catch up on news and trends affecting our 10 MMI sub-indexes.
- Electric vehicles are all the rage — but what about simply smaller vehicles when it comes to curbing emissions? Our Stuart Burns delved into the matter earlier this week.
- The recently released Panama Papers shined a light on the world of corporate finance, and, furthermore, tax-dodging methods.
- Prefer to get your metals news and analysis in audio format? You’re in luck, as we recently relaunched the MetalMiner Podcast! In case you missed it, check out the first episode with Michael Stumo, CEO of the Coalition for a Prosperous America.
- Investor interest in commodities has picked up — Burns touched on why that is on Wednesday.
- Aluminum has cooled down a bit, but it might be a temporary dip.
- Our Irene Martinez Canorea offered her own take on the surge in commodities interest, with reference to the CRB index.
- Chinese excess capacity has been a long-standing gripe of producers in the European Union and U.S. But circumvention of antidumping tariffs via third parties is also on the E.U. and U.S.’s radar, Burns writes.
President Donald Trump may not have said much, if anything, about China’s steel exports during his recent tour. Both European and U.S. legislators, however, are carrying out investigations into not just simple dumping but more complex and illegal activities, such as shipping via third parties to hide the origin and avoid pre-existing dumping tariffs.
A Reuters article this week explains how the European Union’s anti-fraud office (OLAF) said it has found Chinese steel was shipped through Vietnam to evade the bloc’s tariffs.
In part, the current case may be a matter of timing.
This morning in metals news, U.S. imports of steel are up 19.4% through the first 10 months of the year, the European Union’s antitrust watchdog is eyeing ArcelorMittal’s bid to buy Ilva and London copper posted little movement Thursday.
Steel Import Market Share Hits 26% in October
According to data released by the American Iron and Steel Institute (AISI), for the first 10 months of 2017, total and finished steel imports were 32,841,000 net tons (NT) and 25,375,000 NT, up 19.4% and 15.1%, respectively, from the same period in 2016.
In addition, the estimated finished steel import market share in October was 26% and is 27% for the year to date.
EU to Look at ArcelorMittal’s Ilva Takeover Bid
The EU’s antitrust watchdog is taking a look at ArcelorMittal’s bid to buy Ilva, amid concerns that the purchase could stifle competition and lead to rising prices, the Associated Press reported.
According to the report, the EU Commission said Wednesday that it fears “the merger may reduce competition for a number of flat carbon steel products.”
London Copper Doesn’t Budge
It was a quiet Thursday for LME copper, as the metal traded just above the previous one-month low, Reuters reported.
With light volumes, LME copper held at $6,856 a ton by 1:27 GMT, marking a 0.4% gain from the previous session, per the report.
This morning in metals news, Tata Steel announces a big investment, Chinese steel shipments have continued to drop and the U.S. International Trade Commission (ITC) will expedite a five-year sunset clause review of carbon and alloy steel standard, line, and pressure (CASSLP) pipe from Germany.
Tata Steel Makes Big Port Talbot Steel Investment
Tata Steel announced it is investing £30 million in its Port Talbot steelworks, the BBC reported.
According to the report, the Indian firm will install a 500-ton steelmaking vessel at the plant, in addition to other upgrades.
Dropping Chinese Steel Shipments
President Donald Trump kicked off his tour of Asia this week; while North Korea draws much of the headlines, China’s steel industry is also among the list of items in the spotlight.
Bloomberg notes that dropping steel shipments from China, the world’s top steel producer, undercut the Trump administration’s rhetoric calling out China’s excess steel capacity.
“Exports from the country that accounts for half of global production dropped to 4.98 million tons last month, down from September’s 5.14 million, and the lowest since 2014, according to customs figures,” Bloomberg’s report reads. “That’s a far cry from the monthly peak in late 2015, when they exceeded 11 million tons.”
U.S. ITC Expedites Review of CASSLP Pipe From Germany
The U.S. ITC announced Monday that it voted to expedite its five-year sunset review concerning the antidumping duty order on seamless CASSLP pipe from Germany.
“As a result of the vote, the Commission will conduct an expedited review to determine whether revocation of the order would be likely to lead to continuation or recurrence of material injury within a reasonably foreseeable time,” the ITC release about the vote reads.
The European Steel Association (Eurofer) had good news about the EU steel sector last week, albeit with a caveat.
According to a report from Eurofer last week, EU investment in steel and its exports have trended positively.
“Strengthening investment and robust exports are boosting the performance of steel-using sectors in the EU,” the report states. “Steel demand is expected to continue its gradual recovery in 2018.”
The report continues with a caveat.
“However, increasing import pressure in in the second quarter of 2017 signals that foreign supply remains a critical issue for the EU steel sector.”
Steel consumption in the EU dipped slightly in the second quarter compared to the first quarter, according to the report. As a result, EU domestic suppliers suffered. Deliveries by EU domestic suppliers in the second quarter fell 3.5% year-over-year. In addition, third country imports rose by 10% year-over-year.
“The relative balance between growth in domestic and foreign supply seen in the first quarter of 2017 was reversed at the expense of EU steel mills,” said Axel Eggert, director general of Eurofer, in a prepared statement. “Despite a reduction in imports from China and several other countries owing to corrective anti-dumping duties put in place third country import volumes have risen again in the second quarter.”
Overall, however, EU steel consumption for 2017 is forecast to rise 2.3%. The report also notes that steel demand is expected to continue its “gradual recovery” into next year (a recovery dating back to 2014). The report cites the “expected rise in real steel consumption in the EU market and very modest support from the stock cycle” as factors underpinning the ongoing bounceback.
As for steel-using sectors, the report states production activity grew by 3.1% year-on-year. Moreover, first-quarter growth was revised up to 6.3% (compared to the same period in 2016).
“We welcome the healthy performance of relatively steel-intensive sectors,” Eggert said in the release. “These include the automotive and engineering industries, as well as tube manufacturers, over the first half of 2017. Growth in the construction industry was the strongest it has been for many years and clearly reflects improving fundamentals in this important steel-using segment.”
Eurofer expects total output to continue to trend positively throughout the remainder of the year, building on the momentum of the first half. Total output is forecast to rise by 4.2% for the year, according to Eurofer.
Despite import pressures, the total economic picture for the EU bloc leaves room for optimism. Eurofer’s October outlook forecasts GDP growth of 2.1% this year and 1.9% for 2018.
“The business climate looks set to remain supportive to continued healthy investment growth, whereas private consumption growth is foreseen to slow down somewhat,” the report states. “In combination with stable growth of government consumption, domestic demand will be the major driver of economic growth in the EU.”
Before we head into the weekend, let’s take a look back at the week that was:
- Our Sohrab Darabshaw checked in on what’s happening in the world of Indian scrap steel.
- After a brief lull, copper prices rallied again, our Irene Martinez Canorea writes.
- Automated trading is becoming more prevalent in a number of markets.
- China’s steel output has been dropping — come spring and beyond, though, will it stay that way?
- Auto groups behind a new “Driving American Jobs” coalition are hoping to convince the Trump administration that NAFTA has been a good thing for the U.S.
- The parent group of Rusal is looking to raise some cash for upcoming projects, and is looking to London to do it.
- Martinez Canorea did a second deep dive on what’s behind the rising graphite electrode surcharge.
- The outlook for the global steel market is pretty positive, according to the World Steel Association’s most recent report.
- Speaking of steel, while the YTD percentage of steel imports coming into the U.S. has dropped in recent months, the number stood at just under 20% through the first nine months of 2017, according to Census Bureau data cited by the American Iron and Steel Institute.
So far this year, the U.S. has imported 19.6% more steel than it did through the same time frame last year, according to data released by the American Iron and Steel Institute (AISI) on Wednesday.
According to preliminary Census Bureau data cited by AISI, through the first nine months of 2017, total and finished steel imports amounted to 29,663,000 and 22,890,000 net tons (NT), respectively. Compared with the first nine months of 2016, total and finished steel imports are up 19.6% and 15.7%, respectively.
Finished steel import market share was an estimated 27% in September, a percentage point below the 28% year-to-date market share. Estimated finished steel import market share peaked in June — around the same time as the Trump administration’s first self-imposed Section 232 steel probe deadline, which came and went without a decision (and remains outstanding) — when it eclipsed the 30% mark.
By item, a number of steel product imports jumped significantly in September compared with the previous month. Those spikes include: reinforcing bars (up 85%), line pipe (up 35%), tin plate (up 31%), oil country goods (up 23%) and plates in coils (up 11%).
In the year to date, imports of oil country goods (up 255%), line pipe (up 60%), standard pipe (up 45%), mechanical tubing (up 32%), cold rolled (up 28%), sheets and strip all other metallic coatings (up 26%), sheets and strip hot dipped galvanized (up 22%) and hot rolled bars (up 19%) all posted notable increases.
South Korea once again emerged as the top steel exporter to the U.S. last month. In descending order by volume, the top exporters to the U.S. were: South Korea (321,000 NT, down 11% from August), Japan (169,000 NT, up 32%), Germany (151,000 NT, up 53%), Taiwan (120,000 NT, down 2%) and Turkey (112,000 NT, up 5%).
South Korea also leads the way through the first nine months of the year, sending 2,949,000 NT to the U.S. (down 2% versus the same period in 2016), followed by Turkey (1,944,000 NT, up 5%), Japan (1,234,000 NT, down 14%), Taiwan (1,026,000 NT, up 36%) and Germany (1,001,000 NT, up 6%).
Speaking of Section 232, the Trump administration’s probe of the national security implications of steel imports, the wait continues for a ruling. The probe, launched in April, carries a Jan. 15 deadline. At that point, Commerce Secretary Wilbur Ross is required to present the president with a report detailing findings and recommendations. If Ross determines the imports are a threat, the president then 90 days to decide if he agrees and whether or not to use his statutory authority to adjust import levels.
Mid-summer optimism from domestic producers, who expected the Trump administration to enact some sort of trade remedy (whether in the form of tariffs, quotas or a combination of the two) has waned. With NAFTA, health-care reform, tax reform, immigration and a number of other issues dominating the administration’s focus, Section 232 chatter has seemed to die down in recent months.
U.S. steel producers are still holding out hope for Section 232 action addressing the rise of imports. Nucor CEO and Chairman John Ferriola touched on the issue of imports during the company’s third-quarter earnings call last week.
“Nucor continues to believe significant work remains to be done to achieve free and fair trade for U.S. manufacturers,” Ferriola said during the call. “More specifically, it’s time for comprehensive and broad-based remedies that address the illegal foreign trade practices that have materially weakened our nation’s economic vitality.”
The last Section 232 probe took place in 2001, when the George W. Bush administration looked into imports of iron ore and semi-finished steel. Ultimately, it was determined those imports did not pose a threat to the country’s national security.
This time around, U.S. producers are hoping for a different determination.
This afternoon in metals news, European steel demand is expected to grow 2.3% this year, Bloomberg takes a look at the Trump administration’s “Made in America” pledge and Freeport-McMoRan is working with the Indonesian government to resolve a mining permit dispute.
European Steel Demand to Grow 2.3%: Eurofer
The European steel association Eurofer predicts 2.3% growth in 2017 for European steel demand, according to a Reuters report.
The European steel industry is worth about 170 billion euros a year, according to the report.
Made in America?
Among other things, President Donald Trump has pushed a “Made in America” agenda, aiming to boost domestic industry.
But, in practice, has there been a rise in U.S.-based production? A Bloomberg report outlines the reality of rising steel imports and pipeline contracts increasingly being won by Russia’s Evraz.
Freeport, Indonesia Look to Settle Permit Dispute
Richard Adkerson, chief executive of copper miner Freeport-McMoRan Inc., said on Wednesday that the miner wants to avoid arbitration vis-a-vis a mining dispute in Indonesia.
Freeport is looking to renew the permit for its Grasberg copper and gold mine.
For the longest time, India has been one of the largest global importers of scrap steel, behind only Turkey.
That could change in the coming years if a recent policy announcement is any indication.
Chaudhary Birender Singh, India’s minister of steel, recently said his ministry proposed to set up steel plants with scrap as the raw material in various parts of northern and western India.
What the government expects is that in the next few years, 44% of the total scrap available in the country would be generated in various locations in the states of Jammu and Kashmir, Punjab, Haryana and Delhi. The main use for the scrap would be steel production.
The minister said the Indian government’s efforts to recycle waste products for productive purposes would save of 65% of iron ore, which is currently the main raw material for steel production.
For some time now, the Indian government has been toying with the idea of using scrap instead of iron ore for use in steel plants. One must remember that the supply of ore was disrupted due to a ban on mining for a few years.
Such scrap-based steel plants could go some way in helping meet the government’s steel production target of 300 million tons by 2030. According to the minister, the Indian government was adopting a 360% holistic approach wherein the recycling industry can help in achieving the production target by providing raw material for the steel industry.
India imports approximately 6 million tons of scrap steel every year, though the figure has come down a bit since last year. In November 2016, India imported 482,000 tons of scrap. However, combined imports during the initial 11-month period in 2016 were down considerably when matched with the corresponding period in 2015.
The government’s plan to set up the five scrap-based steel plants may happen within the next year. A Press Trust of India report quoting Aruna Sharma, India’s steel secretary, had said all the scrap will be reused to make steel, which could be about 40 million tons of steel. The first such plant would come up next month in Noida, Uttar Pradesh, followed by one in southern India.
State-run metal scrap trading firm MSTC signed a joint venture agreement with Mahindra Intertrade for setting up the first such plant. As of now the JV is between MSTC and Mahindra. Mahindra Intertrade is a part of Mahindra Partners Division of the $17.8 billion diversified Mahindra Group.
According to the same report, Hyundai had also shown interest in setting up the southern India plant.
Before we head into the weekend, let’s take a look back at the week that was.
- Holidays in India mean an uptick in gold buying — our Sohrab Darabshaw covered India’s holiday gold surge.
- The fourth round of renegotiation talks focused on the North American Free Trade Agreement (NAFTA) concluded earlier this week. We covered the latest round of talks, which by all accounts have the three negotiating teams at an impasse.
- As the fallout continues from Kobe Steel’s quality data falsification scandal, our Stuart Burns wrote about what exactly might have gone wrong at Japan’s third-largest steelmaker.
- The World Steel Association’s Short Range Outlook came out this week, predicting solid, albeit moderated growth for the global steel market.
- Precious and base metals have been behaving similarly, our Irene Martinez Canorea wrote this week.
- The U.S. International Trade Commission launched a new Section 337 probe related to automation systems.
- The value of the U.S. dollar has a significant impact on the fortunes of a number of metals, our Stuart Burns explained.
- And how about palladium? Burns also touched on the rise of the platinum group metal and its leapfrogging of platinum (for the time being).
- It’s third-quarter earnings report time. Alcoa and Nucor were among the latest companies to announce their earnings for the latest quarter.