Articles in Category: Metal Fabricated Parts

Both the USA and India’s steel mills are running at less than capacity thanks to the worldwide steel surplus. US steel mills continue to be buffeted by cheap, mostly Chinese imports and lukewarm demand and no one is willing to bet on when, or if, they will ever come back to full production.

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On the other hand, the future of India’s steel industry is tied to the percentage of expenditures on infrastructure that the government is expected to provide. The difference between the two is that India’s economy is merely in revival mode, while the US economy is growing at a rapid pace.

Rating Agencies Weigh In

A recently released report by Fitch Ratings titled, “2016 Outlook: Indian Steel Sector,” says that increased spending on infrastructure projects, such as housing and smart cities is the key to the revival of India’s steel industry.

Welded carbon steel pipe

Indian and US steelmakers both face a glut of imports and low prices in their struggles to get back into the black. Adobe Stock/Sasint

Indian steelmakers, however, have to face the onslaught of cheap imports just as their counterparts in the US do, especially imports from China. The difference is, the imports work, to an extent, in Indian producers’ favor, as opposed to how badly they harm US steelmakers.

In India, abundant steel only increases domestic demand in India as low prices and more supply are likely to spur government action as costly infrastructure investments are more likely to be seen as relative bargains.

“Spending by the Indian government on infrastructure will be the catalyst for any meaningful improvement in domestic steel demand. The agency expects India’s steel consumption to improve modestly by 7-8% in 2016,” according to the Fitch report.

No doubt, high imports and soft steel prices globally in 2016 might bring up sales in India, but that will still eventually result in far lower prices, meaning less profit for Indian steel producers despite more sales. Steel companies’ margins are likely to be lower in 2016 but could improve, incrementally, in 2017, supported by “(an) improving domestic demand and the imposition of safeguard duty on imports on certain steel products for 200 days,” according to the Fitch report.

The Effect of Tariffs and Duties

As with steelmakers worldwide, the prices of Indian steel dropped almost a quarter year-on-year as of the end of September. The imposition of a 20% duty on certain steel product imports, effective September 14, has saved the day for some Indian steel companies.

In a similar vein, another global ratings agency, Moody’s Investors Service, cautioned that failure to implement reforms in India could hamper investment amid weak global growth.

According to Vikas Halan, a Moody’s vice president and senior credit officer, a healthy 7.5% GDP growth for India for the fiscal year that will end in March 2017 (FY2017) and a pick-up in manufacturing activity will broadly support business growth.

The ratings agency expects upstream oil and gas companies to benefit from lower fuel subsidy burdens, although low crude and domestic natural gas prices will continue to hurt profitability.

Another Negative Outlook

The agency’s negative outlook for the steel industry reflects elevated leverage and an extended period of low prices due to continuing low steel import prices, while the negative outlook for metals and mining companies reflected bleak global commodity prices.

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While India’s steelmakers are banking on growth to see them through these difficult times, one of the biggest challenges that the US industry faces is the growth of steel imports. Its best bet is to reduce  imports and pray that the domestic market will swing back to buying for US mills.

Earlier this year, steel companies including AK Steel, Nucor and U.S. Steel filed trade cases to stem the flow of steel products entering the US. The only silver lining was that steel imports into the US have started to come down on a year-over-year basis for the last five months.

The author, Sohrab Darabshaw, contributes an Indian perspective on industrial metals markets to MetalMiner.


Airbus and Autodesk‘s design studio, The Living, have designed and developed the largest 3D-printed metal part for a commercial airplane in history, what they call a “bionic” partition that is 3D-printed from a direct metal laser sintering (DMLS) “printer” that uses a new super-strong alloy called scalmalloy to achieve the lightness of aluminum with the strength of titanium.

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Already used for small parts, often with complex shapes, the Airbus/Autodesk project brings additive manufacturing into the plane’s cabin. The assembly is for a partition that separates the passenger cabin of an A320 from the rear galley.


Autodesk CTO Jeff Kowalski unveils the new Airbus A320 “bionic” partition, made of 112 3D-printed parts. Photo: Jeff Yoders

The resulting “bionic” replacement is a stronger partition compared to the current model that also saves 55 pounds in weight. If one final test is passed next month, the new partition will be in every new A320 next year. The companies estimate that using it will remove 96,000 tons of CO2 a year thanks to less jet fuel being burned to transport the lighter partition system. Read more

Last week, I attended the Atlantic and SiemensBold Bets, billed as a conversation with Chicago Mayor Rahm Emanuel and industry leaders about the global marketplace and, as the workforce evolves, how the US is adapting to the challenges and opportunities changes in manufacturing present.

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It’s not the first time we have heard about how building a better workforce, through education that focuses on Science Technology Engineering and Mathematics (STEM) can help the US compete in the 21st century.


Is paying for community college a bold bet? Or just an old bet? The Atlantic Washington Editor-at-Large Steve Clemons and Chicago Mayor Rahm Emanuel talk it over. Photo: Jeff Yoders

Mayor Emanuel was his usual exuberant self, touting his initiatives that support students who go on to the City Colleges, Chicago’s version of community college, where they can get training for those popular STEM fields.

A STEM Job in Every Pot

“You need a 21st century infrastructure to move on education,” Emanuel said. “There’s nothing that China is doing that, on a manufacturing level, we can’t compete and win on.” Read more

More anti-dumping investigations were announced this week, including one covering mechanical elevator parts and pulley systems. The number of US construction projects is up significantly over the same time last year.

Commerce Seeks Duties on Elevator Parts from China and Canada

The Commerce Dept. has initiated anti-dumping duty and countervailing duty investigations of imports of certain iron mechanical transfer drive components, mostly for use in elevators and pulley systems, from China and an anti-dumping investigation of imports of the same iron mechanical transfer drive components from Canada.

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Dumping occurs when a foreign company sells a product in the US at less than its fair value. For the purpose of countervailing duties investigations, countervailable subsidies are financial assistance from foreign governments that benefit the production of goods from foreign companies and are limited to specific enterprises or industries, or are contingent either upon export performance or upon the use of domestic goods over imported goods.

The petitioner for these investigations is TB Wood’s Incorporated.

US Construction Continues to Outpace 2014

New construction rose by 21,000 projects in the third quarter of 2015 compared to 2014’s third quarter. According to the BidClerk Construction Index, Q3 2015 had more than 76,000 new projects valued at over $200 billion nationally ($35 billion more compared to 2014).

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Texas led the way with a 10% increase in actively bidding projects followed by:

  • Florida (5%)
  • Washington, D.C. 95%)
  • Pennsylvania (3%)

Fallout from the Samarco mine disaster in Brazil continues, and construction input prices are at their lowest cost, overall, since 2011.

Insurance Caps Already Exceeded

The cost of a deadly dual dam burst at an iron ore mine in Brazil run by Samarco has already exceeded the insurance cap for civil damages, co-owner Vale SA said on Monday.

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Samarco, owned by Vale and BHP Billiton has been fined 250 million Brazilian reals ($65.5 million) and forced to pay for accommodations for the dispossessed, after two dams burst earlier this month, killing at least seven people, with 15 still missing.

Construction Materials/Inputs Fall in Price Again

The Producer Price Index for inputs to construction industries declined for a fourth consecutive month in October, according to an analysis of the Bureau of Labor Statistics data by the Associated Builders and Contractors (ABC) of America.

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The index stands at its lowest level since the first quarter of 2011 as prices for construction inputs declined 0.2% on a monthly basis and 4.6% on a year-ago basis. Nonresidential construction input prices exhibit a similar pattern, falling 0.3% since last month and 5.1% over the past 12 months. Nine of 11 key input prices are down on a year-over-year basis.

Some key takeaways for metal purchasers:

  • Steel mill product prices fell 1.7% in October and are 16.1% lower than one year ago.
  • Natural gas prices shrank 1.8% on a monthly basis and 36% on a yearly basis.
  • Iron and steel prices lost 4.4% month-over-month and 21.2% year-over-year.

ABC_ producerpriceindex_construction_111715


Source: US Energy Information Administration depiction of Federal Highway Administration data.

Earlier this year, the federal Highway Trust Fund (HTF) reached its lowest level in decades, ending July at $6.1 billion dollars. A congressionally approved transfer of more than $8 billion boosted the fund’s balance to end the fiscal year (September 30) at $12 billion, but that is still the second-lowest year-end level since 1984. As we speak, the House and Senate are working on a six-year funding extension for it. The fund pays for all federal highway projects and another (mass transit above) pays for all federal mass transit projects. Both are suffering as the gas tax that funds them has not been raised since 1993 and most cars are much more fuel efficient these days.

With the Federal Reserve hinting at an increase in interest rates soon and a few metals gaining at least a little bit of their lost values back, the search for a market bottom is on.

MM-IndX_TRENDS_Chart_November-2015_FNL-TOPVALUE100This month we saw some encouraging signs that the metals undergirding our MMIs, such as Copper and Stainless, were posting gains but the overall trend still pointed to historically low prices. The underlying prices comprising our steel, aluminum, construction and renewables indexes all fell again.

Even the strong performers in this bear market, such as copper and stainless, come with a caveat: that their gain — for copper, a 1.5% increase and a 1.4% increase for automotive — or simply steady performance could very well be mere pauses in a year of losses, rather than true market bottoms. The Stainless and Rare Earths MMIs managed to hold their low price levels from October. Certainly good news for producers in this market, but not indicative, yet, of any real potential for future increases.

The Global Precious MMI showed a genuine increase of 4.1% with strong price performance from all its individual metal components. This includes increases in gold and silver as hedges against what some investors perceive as a future move to weaken the US dollar’s continuing strength against commodities and other currencies, an increase in interest rates.

It’s still too early to tell but maybe, just maybe, some of these metals are poised to bottom out.

Our copper MMI index rose by just 1 point in November to 66 from 65 in October.

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Like other base metals, copper prices have been more stable over the past three months. After the metal plummeted during the summer, prices recovered from six-year lows on the back of supply cuts by major producers. However, we still see a lot of price weakness across the board and the fact that prices are not able to fully rally on supply cuts may be indicative of the fact that we have yet to see a floor for copper prices.

Copper_Chart_November-2015_FNLIn early November, Glencore announced that it would reduce its copper production more than expected. The company is now aiming to cut output by 455,000 metric tons by the end of 2017, 14% up from its previously announced figures. Glencore’s cuts and another recently announced pullback in production from Freeport-McMoRan could raise hopes of more shutdowns, however, other major producers have indicated that they don’t have any intention of cutting production.

Low Prices, Lower Costs

Despite low prices, many copper producers are still earning decent profits thanks to lower operating costs. BHP Billiton and Rio Tinto Group are ramping up their copper production.

In fact, BHP says that its mines are still generating cash. The company is confident that its well-diversified and low-cost portfolio will keep generating profits in spite of falling prices. Meanwhile, Rio Tinto announced no intentions to cut its production and lose market share. Thanks to its low-cost assets, the company sees an opportunity to actually increase its market share by expanding its Oyu Tolgoi copper mine in Mongolia.

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Given that 45% of copper demand comes from China, the slowdown in the Chinese economy offset the boost from production cuts on copper prices. So far, mine shutdowns have been unsuccessful in triggering a bull run. It seems that production cuts are only giving support to falling copper prices but it remains unclear if these shutdowns would hold prices against more disappointing macroeconomic releases coming from China.

What This Means For Metal Buyers

Copper is not giving buyers any reason to panic on mine shutdowns. While we have a strong dollar, weak Chinese demand and a still-bearish commodity environment it will be hard to see copper making significant upside moves. Refer to our monthly outlook for key price levels that we are seeing in copper markets at the moment.

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Shipments from US steel companies were down in September and the federal Highway Trust Fund reached its lowest level in several decades in July.

Steel Shipments Down in September

The American Iron and Steel Institute (AISI) reported that for the month of September, US steel mills shipped 7,120,663 net tons, a 4.7% decrease from the 7,470,120 net tons shipped in the previous month and a 15% decrease from the 8,372,929 net tons shipped in September 2014.

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Shipments on the year-to-date in 2015 are 66,162,973 net tons, a 10.7% decrease vs. 2014 shipments of 74,123,773 net tons for the first nine months of last year.

A comparison of September shipments to the previous month of August shows the following changes: cold-rolled sheet, down 7%, hot-dipped galvanized sheets and strip were down 8% and hot-rolled sheets were down 10%.

How Low Did The Highway Trust Fund Go?

According to the US Energy Information Administration, the Highway Trust Fund reached its lowest level in decades earlier this year, ending July at $6.1 billion dollars.

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A congressionally approved transfer of more than $8 billion boosted the fund’s balance to end the fiscal year (September 30) at $12 billion, but that is still the second-lowest year-end level since 1984.


Our Stainless MMI held steady at 59 for the second consecutive month.

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Nickel prices are hovering near the lows of 2009. That level is giving support to prices as traders remain hesitant on whether nickel prices can go below recession levels. While other base metals are still trading comfortably above recession lows, nickel could be the first industrial metal hitting that psychological level.

Stainless_Chart_November-2015_FNLAnother factor supporting prices this month is the speculation that Glencore Plc, the world’s fifth-largest producer of nickel, could cut nickel production following cuts to its copper and zinc output to reduce its heavy debt levels. Moreover, other industry shutdowns could follow given that 60% of the world’s nickel is estimated to be non-profitable at current price levels.

Can Prices Go Up?

Some analysts argue that Philippine ore won’t be sufficient to cover nickel pig-iron (NPI) producers’ capacity in China, tightening the nickel market. However, Indonesia is already working on producing more NPI, as the country is pushing to win more profit from its mineral sources. Chinese producer Tsingshan Group is set to triple its capacity to produce NPI in Indonesia as soon as May, having an installed capacity of 900,000 metric tons of NPI.

Even though nickel’s supply-demand dynamics may actually be tightening, the market is facing other problems:

High Stock Prices

A period of super-fast production growth has left record high inventories. Although LME stocks declined in October, they are still above 400,000 Tons, almost 5 times higher than in 2011. Such a huge overhang of metal is pressuring prices, removing any hopes of market deficit.

Demand Woes

The slowdown in Chinese demand is keeping a lid on any price increase. Moreover, investors fear that the worse is yet to come. So far, demand woes are trampling supply woes, underscoring that significant price increases won’t likely happen until demand fears vanish.

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Finally, rumors of an increase in US interest rates from the Federal Reserve are pushing the dollar higher. The dollar index is surging as foreign currencies tumble. This is another, and not less important, factor that will continue pressuring nickel prices.

What This Means For Metal Buyers

There is no point in making predictions. After this pause, nickel prices could go both ways but we wouldn’t discard the possibility of nickel falling below the lows of 2009. Buying only small quantities remains the dominant purchasing strategy but buyers should watch nickel’s support and resistance levels to be ready to change their strategy.

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