Macroeconomics

The US steel industry is suffering because a barrage of imports has reached a record 34% of market share, steel executives said today at the American Iron and Steel Institute‘s press briefing in Chicago.

Nucor Corp. CEO John Ferriola said 4 million people whose livelihoods depend on the steel industry are at risk, but also that enforcing existing trade and anti-dumping laws consistently would make a wealth of difference for today’s producers.

Pool 4 Tool’s Automotive SRM Summit

“The first step is enforcing existing law as written,” he said. “Legally and consistently enforcing the laws on the books would help immensely… The American worker is still the most efficient worker in the world. We have relatively inexpensive energy, we have the raw material available, we have the best market in the world. When you look at those natural advantages, it makes no sense we should be operating at 60-70% capacity while the rest of the world is overproducing.”

Chinese Dumping

“While many nations continue to engage in unfair trade practices, China is of particular concern,” Baske said. “Last year, China exported 101 million metric tons. A surge of 60% over the previous year and that increase continued at record levels in the first quarter of this year. Some estimates are as high as 468 million mt. Steel demand in China declined last year and is expected to decline this year, too, according to the World Steel Association. China also manipulates its currency to give its products an unfair advantage.”

Baske also noted the business decisions US steelmakers have had to make due to declining prices due to the import surge and they are still in a difficult position due to what the glut has done to prices on the London Metal Exchange.

“On Sept. 3, almost eight months ago, hot-rolled ran $676 a ton. Now it’s $440 a ton,” he said. “In any industry, a 35% to 36% price reduction in that period of time would put pressure on the business. Fair trade will correct it.”

WTO Relief

The executives also noted that while bringing anti-dumping cases with the US International Trade Commission and the World Trade Organization has been somewhat successful, the process has not always worked in the favor of US producers. Even cases that were won, such as last year’s rebar case against Turkey, have not had high enough tariffs to discourage dumping. Gibson said the standard in a safeguard case is higher than in a trade case and the AISI, and the industry as a whole, continue to evaluate all options under the law.

{ 0 comments }

New metal technologies play a key role in all we do here at MetalCrawler and none could be more promising than Tesla Motors‘ line of batteries for the home. The Chinese yuan may also be on the cusp of being declared not manipulated by the International Monetary Fund.

Tesla Home Batteries

The idea is that homes and businesses powered by solar panels could harvest and store energy during the day that could be used to run homes at night, or be used as a backup during a power outage.

Why Manufacturers Need to Ditch Purchase Price Variance

Although the exact technology involved in the battery, called Powerwall, is a closely guarded Tesla secret, it probably isn’t based on revolutionary concepts, Jordi Cabana, a chemistry professor at the University of Illinois at Chicago told Live Science. Cabana studies new battery materials and said the batteries look as if they are based on the same lithium-ion batteries in Tesla’s cars.

“Just looking at the specs that they publicize, it doesn’t look very different — in terms of the cost — to what they’re putting in their cars,” Cabana said.

The company is also planning to unveil a business-based battery-storage system, called the Powerpack, though the price for that system has not been released yet. Tesla is already taking orders for its residential system, but the products won’t ship until late summer, company representatives said at the news conference.

IMF Close to Calling Chinese Yuan ‘Not Manipulated’

In what would be a blow to US manufacturers, particularly steelmakers, the International Monetary Fund is close to declaring China’s yuan fairly valued for the first time in more than a decade, according to the Wall Street Journal, a milestone in the country’s efforts to open its economy that would blunt US criticism of Beijing’s currency policy.

The fund’s reassessment of the yuan—set to be made official in IMF reports on China’s economy due out in the coming months—follows years of IMF censure of Beijing’s management of the currency.

{ 0 comments }

This is a fourth post on a series of posts on exponential technologies (see part 1, part 2 and part 3).

Why Manufacturers Need to Ditch Purchase Price Variance

Yesterday, I realized I was running out of underwear, which means that I didn’t have any more excuses to not do my laundry. As I was walking down the street, I pulled out my phone and without clicking any button I said: “Ok Google, remind me to do laundry when I get home.”

Despite my strong Spanish accent, the phone perfectly understood what I meant to say. Four hours later, as soon as I opened the door to my apartment I felt a vibration in my pants. My phone knows where I live and it used its GPS to figure out that I had just arrived home. I looked at the screen, and saw the reminder. A couple of hours later… I had a new set of clean underwear. Thank you, Google!

This is not just an example of low-level artificial intelligence, but also a sign that AI is reaching the knee of the exponential growth curve, getting ready to run wild as a disruptive technology. AI is an exponential technology about to be found everywhere in our daily lives and jobs.

{ 2 comments }

We have a problem, by we I don’t mean we in the metals markets specifically, nor we in the US or UK, nor even we in the western world.

Why Manufacturers Need to Ditch Purchase Price Variance

I mean we all have a problem: too much debt.

The International Debt Pile

“Whoa!” you say. Hold on, wasn’t the last financial crisis all about too much debt? Haven’t we learned our lessons – corporations are awash with cash, dividends and share buy-backs are at record highs, austerity measures are curbing government spending around the world, household debt — after years of recession — are under control again, what are you talking about?

Quantitative Easing (QE), started in the US by the Federal Reserve, was taken up by the Bank of England, followed by the Bank of Japan, the latest is the European Central Bank at €60 billion-a-month and even the Bank of China is talking about some form of unconventional monetary support, which we can read as QE to support flagging growth.

{ 0 comments }

In part one of this series of posts we talked about what exponential technologies are and why we should keep and eye on them and be flexible, as they will completely change industries before most even notice.

Pool 4 Tool’s Automotive SRM Summit

Before jumping into each exponential technology, in this post we’ll analyze three forces that are helping to speed up their growth:

The Do-It-Yourself Revolution

There have always been entrepreneurs out there. However, new breakthrough technologies are pushing a new breed of innovators, now more than ever, to solve problems that only big companies and governments were able to solve before. These innovators have free and instant access to information and the the capability to mass-share their progress. This allows an individual or a small group of people to create a new market and to disrupt an existing one within a matter years, sometimes even months.

{ 0 comments }

Today in MetalCrawler, the sleepy iron ore market was jolted to life. Is it a shift from the bearish trends we’ve seen lately? Only time will tell.

BHP Dials Back Mining Expansion

Iron ore advanced after BHP Billiton Ltd. curbed expansion plans and supplies from higher-cost mines dropped, easing concern that global output will outpace demand and feed a global glut. Miners’ shares jumped.

FREE Download: The Monthly MMI® Report – covering Steel/Iron Ore markets.

Ore with 62% content at Qingdao, China, rose 5.5% to $57.81 a metric ton early today, its highest since March 16. Benchmark iron ore is still 60% below the peak of $144.18 reached in August 2013. Visit our MetalMiner Indx for the latest prices.

Exports Fall for the Quarter

The Sydney Morning Herald’s Peter Ker writes that the week’s iron ore moves could have a major impact on markets if other producers follow BHP’s lead and constrain supply. Across Rio Tinto Group, Vale SA, Fortescue Metals Group, Arrium Limited, Mt. Gibson Iron and Grange Resources, exports were more than 19 million mt lower this quarter than in the December quarter, raising questions about why the iron ore price has fallen 28% during a period of supply weakness.

{ 0 comments }

For the first time in almost a year, the US dollar index is experiencing some turbulence.

Free Webinar: MetalMiner’s Q2 and Q3 2015 Forecasts

For the past two weeks the index is trading sideways. Still, the long-term trend is clearly up and we doubt this is a major top for the dollar. However, its sharp advance during 2014 certainly leaves the currency vulnerable to some profit-taking.

Weakness in the dollar is giving support to commodity prices. After a steep decline during the second half of 2014, commodities are now stabilizing. A weaker dollar during the past few months also explains recent upturns in stock markets tied to commodities such as Russia, Canada and Brazil.

Further weakness in the dollar throughout the rest of the year would give a bigger boost to commodities and these foreign markets.

Metals Still Bearish

Industrial metals haven’t really received a boost during the last few months. Although some base metals rose we also saw others recently fall to record lows. Worth mentioning, however, is oil prices climbing to their highest levels this year ($58 a barrel).

{ 0 comments }

Today in, MetalCrawler, steel growth is expected to slow down this year and the Obama administration wants pipeline repairs.

WSA Expects Steel Growth to Slow

Steel use will grow more slowly, according to the World Steel Association, thanks to the production slowdown in China.

Free Webinar: MetalMiner’s Q2 and Q3 2015 Forecasts

“We hear increasingly positive use from developed economies, especially … the euro zone. In the developing world we see increased optimism about India and growth in the Middle East and North Africa and Association of Southeast Asian Nations countries,” said Hans Jurgen Kerkhoff, chairman of the group’s Economics Committee.

“While these developments will not be enough to counter-balance the deceleration of China, we expect to see gradually improving growth prospects beyond 2016,” he told Reuters.

Global apparent steel use – steel both known and assumed to have been used – is expected to grow by 0.5 percent this year to 1.544 billion metric tons, compared with growth of 0.6 percent last year, Worldsteel said.

Obama Administration Proposes Pipeline Overhaul

The Obama administration on Tuesday proposed spending as much as $3.5 billion to replace aging natural gas pipelines nationwide. The amount of money the administration is proposing is just a fraction of what it would take to replace the hundreds of thousands of miles of decades-old cast-iron and bare-steel natural gas distribution pipes — the lines that are considered most vulnerable to ruptures. A full replacement would cost $270 billion, a 348-page government report accompanying the request says.

Matt Sparks, a spokesman for House Majority Leader Kevin McCarthy (R.-Calif.), pointed to three oil and gas infrastructure bills that the chamber has already passed with Democratic support this year, including a measure that President Barack Obama vetoed that would have approved construction of the Keystone XL oil pipeline. “If the administration is serious about securing our energy future, a good start might be” by working with Republicans on those bills, he told Politico via email.

{ 0 comments }

Markets move in trends. We can observe trends in any financial market, in any time. The price of the metals you buy move in trends and as you well know, and industrial metals are in a downtrend since the spring of 2011.

Free Webinar: MetalMiner’s Q2 and Q3 2015 Forecasts

So why does the price of your metal trend? Is it that the starts align and that produces a trend in a commodities market?

Heck, no! Traders are the ones making prices move and behavioral finance can help explain why trends are formed. We’ll mention three human behaviors to explain it.

{ 0 comments }

There are several potential sources of financial shock to markets this year but for the financial markets an exit from the Eurozone by Greece, while potentially serious, seems to have slipped from the headlines as being very unlikely of late.

Free Webinar: MetalMiner’s Q2 and Q3 2015 Forecasts

Earlier this year, the press was awash with dramatic headlines on the probability that Greece’s new leftist government, led by the Syriza party, would lead the country out of the euro in protest at the punitive terms placed on the people in return for Europe’s continued support.

Kicking the Greek Debt Problem Down The Road

The domino effect of other ClubMed countries voting in equally anti-austerity parties was raised as the nuclear result of a Greek exit. But the rounds of meetings between Greece and the Troika got so tedious and the progress so glacial that the markets began to lose interest as the problem of how Greece was to repay its debts seemed to be kicked down the road. First by weeks, then by months.

But it would be a mistake to think that the problem has gone away. Central to Greece meeting its terms is the ability of the state to raise sufficient taxes to meet debt repayments when they come due.

The country’s debt pile has risen form 154% of GDP in 2012 to 177% in 2014, that’s a staggering €317 billion (or $336 billion). Syriza’s problem could be said to be of Syriza’s making. The party came into power on a wave of public support and optimism based, in large part, on what they promised in the election campaign, backed by the threat that if the EU didn’t agree Greece would leave the euro.

Campaigning Vs. Governing

Once in office, though, they immediately reversed certain austerity steps but, more significantly, both business and the population positioned themselves for what they expected to happen next. Companies and individuals sent funds overseas in expectation that Greece may leave the euro and any funds held in Greek banks would be converted into Drachma (or whatever would replace the euro) at a much lower rate.

As a result of the cash outflow, the country’s banks are being kept alive through emergency funds (ELA) from the European Central Bank. The ECB has been forced to hike the limits on this cash on a weekly basis as capital has fled the country, a London Telegraph article reports. A further €800 million was drip-fed to banks on Tuesday to keep them solvent. What’s worse is that everyone stopped paying taxes as the money fled Greece.

{ 0 comments }