Last week, the House Transportation and Infrastructure Committee’s passed the Surface Transportation Reauthorization and Reform Act (STRRA) of 2015.
US steel shipments decreased in July and a major steel trade association backed lifting limits on trucking tonnage in a new transportation bill.
Steel Shipments Decrease Again
For the month of July, US steel mills shipped 7,591,897 net tons, a 2.1% decrease from the 7,758,087 nt shipped in the previous month and a 10.6% decrease from the 8,492,744 nt shipped in July 2014. Shipments on the year-to-date in 2015 are 51,572,190 nt, a 9.9% decrease vs. 2014 shipments of 57,269,890 nt for 7 months.
A comparison of July shipments to the previous month of June shows the following changes: cold rolled sheets, down 1%, hot rolled sheets, down 4% and hot-dipped galvanized sheets and strip, down 5%.
AISI Backs Higher Trucking Tonnage Limit
The American Iron and Steel Institute applauded the introduction of a bill by Rep. Reid Ribble (R-WI), the Safe, Flexible, and Efficient Trucking (SaFE) Act, which enables states the flexibility of permitting six-axle trucks to carry up to 91,000 pounds.
Thomas Gibson, AISI president and CEO, said, “With nearly 70% of all US freight tonnage moved by trucks and overall freight tonnage expected to grow to nearly 25% truck weight reform needs to be included in the surface transportation reauthorization legislation when it goes before the House this Fall. Like many manufacturers, the steel industry utilizes all modes of transportation to move goods, but steel products moved by truck can easily reach current federal weight limits before they maximize truck capacity. AISI has long-supported this legislation to improve efficiency and safety, and lower logistical costs.”
“We applaud Congressman Ribble for introducing this critical measure, which will reduce road wear, reduce greenhouse gas emissions, minimize bridge impact, make truck transportation safer, and preserve state and local control. We urge the House to include the language in any House transportation funding bill,” Gibson concluded.
A giant robot fight will happen sometime next year.
I won’t try and justify this by the metal content — which is interesting in its own right — or by the turn of fortunes that has been created by taking an old repair shop for cargo ships and turning into a new industrial enterprise, admirable as that is, no this posts stands on its own two mechanical feet as pure fun.
The robot constructors of the American entry are three engineers who basically wanted to live out their childhood fantasies and build a fighting robot. Weighing in at 12,000 lbs. and measuring some 15-ft. tall the MegaBot MKII is everything a child could imagine and more.
The backers have found a worthy opponent in Japan’s Suidobashi Heavy Industries Kuratas, against whom they can wage war. Read more
Earlier this week the London Metal Exchange announced that its clearinghouse would now accept offshore Chinese renminbi as collateral, effective immediately. MetalMiner Editors and Co-Founders Lisa Reisman and Stuart Burns discuss the significance of this announcement but more important, its potential impact on industrial buying organizations.
Lisa: Do you think this could mean that eventually metals are offered in a currency other than US dollars?
Stuart: I think that is still some way off for the main London market but the HKEx has run RMB-priced Asian mini metals markets for aluminum, zinc and copper since late last year in Hong Kong. This announcement by the LME now is about collateral placed by market participants for open positions. They are not suggesting London contracts will be priced in RMB.
Lisa: Why do you think the LME made this move?
Stuart: On one level there is the recognition of the RMB’s growing importance as an international (although we’d like to point out, not freely traded) currency and of China (and Chinese companies) importance as a major player in the global metals markets. On another level, it could also be seen as a political move. The LME is owned by the Hong Kong Exchanges and Clearing Group (HKEx) and the key to unlocking fair value in their purchase of the LME was always their ability to open up China as a market for the LME’s services. Anything they can do to make the LME more accessible and more acceptable as a trading platform for Chinese companies is a beneficial step in that direction. Read more
The Commerce Department said Friday that housing starts in June climbed 9.8% to a seasonally adjusted annual rate of 1.17 million homes. All of that growth came from a 28.6% surge in multifamily housing that put apartment construction at its highest rate since November 1987. Starts for single-family houses actually slipped 0.9% last month.
An Associated Press report said that strong job growth and a rebounding economy have increased the number of buyers and renters searching for homes, while gradually rising mortgage rates have spurred homeowners to finalize deals. The Wall Street Journal also noted that rental-apartment vacancies remain near multi-year lows, and lease rates have risen by 10% in the past three years to the highest monthly average ($1,194) since research firm Reis Inc. began tracking the figures in 1980.
The boom in apartment and condo construction is regional, however. Housing starts jumped 35.3% in the Northeast, while climbing 13.5% in the South. In the Midwest and West they were actually down.
The US House voted last Wednesday to approve a short-term, $8 billion extension of federal transportation funding, which will last until December.
House Ways and Means Committee Chairman Paul Ryan (R-Wis.) has called on the Senate to pass the House’s $8 billion transportation funding patch “without any unrelated measures.”
Exports, Imports are Not Infrastructure
Ryan said after the temporary patch was approved on a 312-119 vote in the House, that the Senate should follow suit and send the lower chamber back a clean highway funding extension with no “unrelated measures.” Ryan was referring to a Senate plan to include an extension of the US Export-Import Bank’s charter in the upper chamber’s version of a new highway bill.
The Ex-Im Bank’s charter was recently allowed to expire and House Republicans have soured on the credit institution for US exporters. Many conservative groups view the bank as an outdated federal bureaucracy ready to be thrown on the scrap heap of government innovation and streamlining, believing that private banks can provide loans for exporters as they can for any other financial transactions. The Ex-Im Bank’s supporters claim it’s a vital institution needed to support US export competitiveness. Read more
Some argue that the bull market has already run for too long, and that concerns outside the US are putting enough pressure to make the stock market tumble. However, the opposite might be true.
The Tenacity of the US Stock Market
The unwillingness of domestic stocks to fall is a sign of strength and we could see stocks rise even further, especially if things start to calm down globally.
Major market indexes like the Dow Jones Industrial Average, S&P 500 and the New York Stock Exchange remain range-bound since February. We recently pointed out that this trendless period was causing investors to hesitate. It was hard to tell whether the market is going to roll over or continue on its way up. Some new clues are pointing to the latter.
The fact that US stocks held their values well as Chinese markets plunged proves that Chinese financial news can only affect US stocks in the short term. In the longer term, China does not lead the US and its recent troubles do not appear to affect markets here that much.
What This Means for Metal Buyers
Moreover, the NASDAQ (a technology-focused index) recently hit an all-time high. The fact that technology stocks are leading the market is a positive sign. Lower oil and commodity prices are hurting the shares of energy and commodity producers, which helps explain why the other indexes are still range-bound. But, good earnings reports from leading tech companies are increasing the appetite of funds to buy stocks.
In conclusion, the US market is not immune to what happens outside the US. Further bearish news from outside could weigh on US shares, but, so far, things are looking good for US stocks in the second half of the year.
My colleague, Jeff Yoders, referred last week to action taken by Alcoa, Inc. to challenge the Commodity Futures Trading Commission (CFTC) over its involvement in the London Metal Exchange’s (LME) upcoming rule changes.
The LME is in the process of a long running review of it’s warehouse rules following industry criticism of the length of queues, particularly at it’s Detroit and Vlissingen (Netherlands) warehouses, a situation that was initially viewed as driving up physical delivery premiums. It has since been seen to be only part of a wider problem created by the stock and finance trade’s competition for physical metal.
Queues have declined in nearly all locations but still remain at upward of a year in Detroit and Vlissingen, although Metro International and Pacorini, the warehouse operators at those locations, have taken steps to further limit intake while the LME’s deliberations are underway. Read more
At the Metalminer Week-In-Review, we promise to report accurate prices every day through our Indx. But what if that’s not enough? What about the add-ons, over-and-aboves and shipping charges? Buying steel? We’ve got bar fuel surcharges for eight US regions. Eight!
We’ve been covering that pesky Midwest aluminum premium like Richard Sherman on a wideout, too. Want to know about anti-dumping and countervailing duties. You’ve come to the right place! All of these non-price inputs made our homepage this week as the gulf between the price and what you actually pay reared its head again this week.
Who Polices the Midwest Premium?
With falling London Metal Exchange aluminum prices and much-reduced physical delivery premiums even the combined, all-in price of aluminum is below cost for many smelters these days.
That’s enough reason for smelters such as Alcoa, Inc., to question the involvement of the Commodities Futures Trading Commission in discussions with the LME on how best to reform their warehouse network and cut down the one-year-plus wait to get ingots out of the operations in Detroit (Metro International) and Vlissingen, Netherlands (Pacorini).
Higher premiums benefit producers such as Alcoa and UC Rusal, after all. Is it any wonder that producers want the CFTC to butt out? Yet, the CFTC still wants to butt in.
Don’t Let Your Profitability Drown in the VAT!
Meanwhile, over in China, rampant speculation is going on over how Beijing will replace its current business tax system with a new system of value-added taxes. A VAT taxes the difference between the sale price charged to a customer, minus the cost of materials and other taxable inputs.
The best estimates we have seen show that the new VAT will considerably increase what US buyers pay for metals from China and likely from nearby markets trying to compete with Chinese steel. China’s VAT is just one of many ways that imports could become more expensive later this year as… Read more
Using robots that can “draw” steel structures in 3D, Dutch technology firm MX3D is planning to 3D “print” a steel bridge over one of Amsterdam’s famous canals in the center of the Dutch Capital. MX3D researches and develops robotic 3D printing delivery technology as well as projects such as the pedestrian bridge. The robots creating the will actually be large welder robots usually seen in factories rather than construction sites.
The project is a collaboration between MX3D, design software company Autodesk, construction company Heijmans and many others. Designing and “printing” the intricate, ornate metal bridge is a test for the robots, software engineers, craftsmen and designers working on it, including designer Joris Laarman Lab.
“I strongly believe in the future of digital production and local production, in ‘the new craft,'” said Joris Laarman, principal of the Joris Laarman Lab. “This bridge will show how 3D printing finally enters the world of large-scale, functional objects and sustainable materials while allowing unprecedented freedom of form. The symbolism of the bridge is a beautiful metaphor to connect the technology of the future with the old city, in a way that brings out the best of both worlds.” Read more