Imports

MetalCrawler brings you warning of more domestic steel producer layoffs and China released new rare earth quotas.

More Layoffs Coming

U.S. Steel Corp. could slash 1,400 jobs as it continues to grapple with a difficult market.

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The Pittsburgh-based company notified workers last week, mostly at plants in Texas and Arkansas, that they could be out of a job as early as June 17, U.S. Steel spokeswoman Sarah Cassella said Monday.

The potential cuts include 579 employees in Lone Star Tubular Operations; 166 in Offshore Operations Houston; 255 at Wheeling Machine Pine Bluff in Arkansas; and 404 managers throughout its tubular operations.

China Sets Rare Earth Quotas

China’s Ministry of Industry & Information Technology recently released rare earth production quotas for 2015.

Rare earth oxide (REO) mining quotas were set at 52,500 metric tons while smelting and separating limits came in at 50,050 mt.

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The big news in metals this week was China’s economy growing at the slowest rate since 2009. If our bearish markets are to turn around this year, it would appear they’re going to have to do it without help from the world’s second-largest economy.

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But that’s not all that we learned from China this week. In many ways, China doesn’t really look like an economy growing at even 7%, with exports plunging in March, power generation dropping 3.7%, and a host of other indicators pointing to sluggish growth. This is bad because the most of the demand for our metals is based on China at least maintaining 7.5% economic growth. In today’s world economy, if you’re not growing, you’re dying.

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India’s dependence on thermal coke from abroad is beginning to raise concern in international circles, though some exporting countries are happy to have the business.

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India sits on mountains of thermal coke, yet mainly due to bureaucracy, it has to depend on imports.

The day, it seems, is not far off when India will topple China as the World’s number one importer, if analysts were to be believed.

Coal, Coal, Everywhere But Nary a Chunk to Mine

The situation is, indeed, grim. It has made Indian Power Minister Piyush Goyal remark at a public platform that it (importing thermal coke) is shameful. The minister told an audience after inaugurating a power project recently near Nagpur in central India that the government plans to almost double the government coal production by 2019-20. He added that importing coking coal, used for making steel, may be a necessity but thermal coal is at a surplus in the country, yet India is still being forced to import it. A Ministry of Coal report estimated coal reserves at about 300 billion metric tons, of which 125 billion mt were in the “proved” category.

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The nation’s reliance on imported minerals has more than doubled in the past 30 years and manufacturing executives say the lack of domestic exploration has affected their businesses.

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In a recent PricewaterhouseCoopers report published by Minerals Make Life, 78% of high-tech industry CEOs said that their businesses face minerals and metals scarcity. 73% of automotive CEOs and 67% of renewable energy CEOs agreed that their businesses face minerals and materials scarcity.

Though the US is home to more than $6.2 trillion worth of key mineral resources US-based businesses imported more than $42 billion worth of minerals last year to help meet manufacturing needs.

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Investments in automotive aluminum keep popping up in MetalCrawler.

Constellium Expands Plant

Aluminum manufacturer Constellium recently said it has invested $40 million for a 210,000-square-foot expansion of its Detroit are plant to meet the increasing demand for aluminum by automotive manufacturers.

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Constellium has hired nearly 200 additional workers at the Van Buren site and will employ a total of 370 there after it hires about 20 additional workers.

Freeport Plans to Expand

Freeport McMoRan Inc. is expanding and that has it poised to become the world’s biggest copper producer at a time of slowing China growth.

The Phoenix-based company will close the gap with current world No. 1 Codelco next year after expanding mines in Peru and the US and as the Chilean state-owned company runs out of profitable ore at a mine in the Atacama Desert.

US Dollar Climbing Again

Gold eased Monday as the US dollar gained ground against other currencies, sapping foreign investors’ interest in the dollar-denominated metal.

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Today, in MetalCrawler: a federal regulator urged replacement of rail tank cars, but just wants new tank cars and doesn’t want to replace them with pipelines. Alcoa, Inc., insists it’s now a “multi-materials” company and not just an aluminum producer, and construction associations have petitioned the federal government for guaranteed costs for change orders on federal projects.

NTSB Wants New Rail Cars

Federal officials Monday called for the urgent replacement of railroad tank cars to make them more fire-resistant in the event of an incident like last month’s fiery derailment near Galena, Ill., of a train hauling crude oil.

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The current rail car fleet should be aggressively replaced or retrofitted with better protection against heat from fires and by increasing the capacity of pressure relief devices, the National Transportation Safety Board recommended.

“We can’t wait a decade for safer rail cars,” NTSB Chairman Christopher Hart said in a statement. “Crude oil rail traffic is increasing exponentially. … The industry needs to make this issue a priority and expedite the safety enhancements, otherwise, we continue to put our communities at risk.”

The New Alcoa

Alcoa is at the forefront of two trends changing the metals industry, the Wall Street Journal reports, both of which will be on display Wednesday, when the company is expected to report earnings of 25 cents a share, up from nine cents a year earlier. In January, it reported its best full year results since 2008.

The first trend: an eastward shift in raw production, driven by economic growth in Asia and changes in relative costs.

The second: a turn by metals companies toward making parts for fast-growing markets like aerospace and automotive, which are more profitable than making raw metal.

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With Iran and the US coming to terms over the Islamic Republic’s nuclear program, India finds itself in an enviable position where all the players in the game have aligned on the same side – one big “Us,” Israeli protests not withstanding.

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Moving forward, India will be more than willing to sign on the dotted line on several deals in the pipeline with Iran, especially in the steel sector. In March, Iran’s Deputy Industry Minister, Mehdi Karbasian, was quoted by Azer News saying Iran was ready to accept Indian investment in the steel sector, and “planned to start activity in the country.”

Along with India, a large number of other foreign mining companies including some from Kazakhstan had already visited Iran in the past year, looking for similar investment opportunities.

New SAIL Facility

At the start of 2015, India’s state-run Steel Authority of India (SAIL) had announced a proposal for a multimillion dollar, nearly 2 million-metric-ton integrated steel plant in Iran.

SAIL has already asked the Iranians to provide 500 hectares of land near the country’s Bandar Abbas port and another 500 hectares of contiguous land for future expansions.

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It was supposed to be a test case for the stainless steel industry of India.

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One of the country’s leading steel makers, Jindal Stainless Ltd. (JSL), had applied to the government for the imposition of a safeguard duty on foreign stainless steel, but the Directorate General of Safeguards (DGS) rejected the application, much to the consternation of JSL and the rest of India’s stainless steel industry.

The DGS falls under the Finance Ministry’s Department of Revenue. In its order, the DGS ruled JSL had failed to prove that there was “injury to the domestic industry as a result of the cheap imports.”

A JSL spokesperson told The Economic Times that the company was disappointed with the ruling.

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You know you are a metal nerd when you rush home from a family dinner and force your kids and your kids’ friends to watch a 60 Minutes segment on the state of the rare earths market!

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For those of you that may have missed Leslie Stahl interviewing MetalMiner friends and colleagues Daniel McGroarty and Ed Richardson last week.

The segment does a great job of highlighting the public policy issue at the core of the rare earth metals debate – that national security relies upon a raw material supply source provided exclusively from one nation – a nation that is not exactly Washington’s best friend – China.

That creates substantial risk for US security interests.

But the private sector appears to be not only a deer in the headlights, but dead at the wheel!

Why The Inaction?

The answer is actually quite simple. The underlying supply and demand fundamentals create absolutely no business case for the private sector to behave any differently. As long as heavy rare earths continue to flow from China (we are talking about the following metals: yttrium, terbium, dysprosium, holmium, erbium, thulium, ytterbium, and tuteium and some might add europium and gadolinium) at a “not break the bank” price, the private sector remains content with the status quo.

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We here at MetalCrawler are as broken up about Zayn Malik leaving One Direction as you are, but we soldier on and provide the latest metal news, including major US steel CEOs speaking to congress, a Russian aluminum giant finding an index where its shares can be traded and China’s biggest copper producer is still in the red.

US Steel Companies Say Steel Dumping As Bad as the ’90s

Executives for the nation’s largest steel companies told the Congressional Steel Caucus Thursday that the government needs to take a three-pronged approach to save the industry from illegal trade practices — improve its trade policies, invest in the workforce and finance improvements to the nation’s infrastructure.

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U.S. Steel Corp. President/CEO Mario Longhi and ArcelorMittal USA President/CEO Michael Rippey, joined other industry leaders in the annual hearing in Washington, D.C. Rippey is also chairman of American Iron and Steel Institute.

They said today’s imports from China, Turkey and South Korea have surpassed the amount dumped here in the late ’90s that resulted in the bankruptcies of major steel players, including Bethlehem Steel, Inland and LTV. Rippey said China alone has 371 million tons of excess capacity looking for a home.

UC Rusal Listed on Moscow Exchange

UC Rusal will start trading on the Moscow Exchange (MOEX) on March 30, as the major Russian aluminum producer looks to expand its base of investors.

The company’s ordinary shares have been admitted to the exchange in the first level quotation list, Rusal said in a statement on Tuesday.

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