Articles in Category: Metal Fabricated Parts

The monthly Aluminum MMI® registered a value of 76 in October, a decrease of 1.3% from 77 in September.

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Aluminum prices were more stable in September, only falling slightly from the previous month. This price stabilization is normal after 4 consecutive months of declines. Upside momentum is still lacking and it seems like the bears are firmly in control of this market. The aluminum trend keeps pointing down with no sign of a turnaround.

Aluminum_Chart_October-2015_FNLChina is Still Overproducing

The Aluminum Association expressed strong concern when the China Non-Ferrous Metal Industry Association (CNIA) called for the removal of a longstanding 15% tax on exported primary aluminum. This would increase the margins of Chinese exporters, potentially exporting more aluminum to international markets. Even with the tax in place, some in the US believe that aluminum producers in China are illegally mislabeling extruded products as semi-finished to avoid exports on billet.

Aluminum exports are up 22% on the year-to-date. Exports dropped over the past 2 months but production still looks high in China, so the drop in exports likely relates more to weaker global demand. Some analysts are waiting for a rebound in exports when final reports from last month come out.

Another interesting highlight of September was that Alcoa, Inc. will split itself into 2 companies. The firm has found that its legacy smelting business, the company’s vertically integrated structure, is not the advantage it once was.

One half retains the Alcoa name and comprises the legacy business of bauxite mining, alumina production and primary aluminum smelting. The second half of the business, or the “value add” business, is yet to be named, although it’s believed to include much of Alcoa’s specialty aluminum business and recent acquisitions such as titanium fabricator RTI.

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Two months ago we mentioned the slide in Alcoa shares. Even though the company made good acquisitions and investment in downstream value-added activities, its stock couldn’t buck the falling trend in aluminum prices. On top of that, premiums fell in September below $0.07/lb for the first time since January 2012, hurting the margins of Alcoa and the rest of the US aluminum producers.

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US construction spending in August was up 0.7%, to a seasonally adjusted $1.09 trillion, reaching its highest level in 7 years, according to data from the Commerce Department.

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Government projects and home building were big contributors to the gains, even as office and shopping-center projects declined.

Construction_Chart_October_2015_FNLThe construction sector added 8,000 jobs, and the unemployment rate remained steady at 5.1% here in the US. Increased employment and a 7-year high spending high should be good news for construction product prices eventually rising, yet oversupply in steel, aluminum and copper is still keeping materials prices low.

China’s Housing Collapse

The flip side to the positive US growth numbers is the continued collapse of the Chinese construction industry, based heavily on stalled urbanization in the world’s second-largest economy.

This month, China tried some new measures to jump-start home buying and, hopefully, construction there. The central bank and banking regulator said they would be lowering minimum down payments for first-time home buyers to 25%, from the previous 30%, in cities that do not have restrictions on purchases.

The problem immediately facing China’s construction industry, however, is production, there, to be entirely export-oriented as construction activity has fallen there.

Global steel production fell by 3% in August, according to the Brussels-based World Steel Association (WSA), its biggest fall this year, which was led by a decline in Chinese production.

Lower Your Expectations

It’s still difficult to envision US construction offering much more than shelter from the storm going on in China right now. Chinese growth and urbanization fueled a boom in construction there that we likely won’t ever see again. That being said, if the current oversupply situation can be dealt with, prices of steel, aluminum and copper could increase in 2016. Oversupply is the biggest problem for products such as H-beams, rebar and steel pipes.

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We echo the sentiments of analysts who are advising caution before investment in construction materials.

MetalMiner co-founder and editor-at-large Stuart Burns had this to say recently: “It’s definitely a bullish tone that bank and senior research analysts have taken…in our view, there’s still plenty of excess capacity out there, demand is weak, and the dollar is strengthening.”

While US construction might be a safe haven as compared to the markets in other parts of the world, investors should temper their expectations.

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The monthly Raw Steels MMI® registered a value of 51 in October, a decrease of 1.9% from 52 in September.

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Even though the 1.9% decline is not very big, we keep seeing sharp declines among steel products. A recent example was plate prices in the US, one of the steel products featured in our monthly forecast. Toward the end of the month, plate fell from $561 per short ton to $519/st. That’s a 10% decline in only one week.

Raw-Steels_Chart_October-2015_FNLSharp declines are par for the course in our current bear market. Over the past few years, placing forward buys has only served to reduce profit margins, not to manage risk. It is critical to understand the market we are in, because different buying strategies work for different markets.

Foreign markets have provided a home for the glut of steel that the oversupplied Chinese market has created with its overcapacity and weak demand. Chinese exports continue to grow year-over-year. In September, the vice-chairman of the China Iron Steel Association (CISA) said that they expect Chinese steel product exports to exceed 100 million metric tons this year. So far, during the first 8 months, product exports reached 71.87 mmt, up 26.5% compared to the same period in 2014.

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Solid automotive and construction data simply don’t make up for the slowdown in the same sectors in China. On top of that, we have a steel production cost declining thanks to lower oil, scrap and iron ore costs. In September crude oil fell again, remaining below $50 a barrel. Similarly, iron ore prices remained at low levels in September, below $55/mt.

What This Means For Metal Buyers

Based on the latest numbers, Chinese automotive, construction and manufacturing activity keep pointing down. As long as we don’t see improvements in China, more steel price declines might be around the corner. It seems like the time to start buying forward hasn’t come yet.

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This is part 1 of a 2-part series on scrap recycling in India, come back tomorrow for part 2.

The downturn in the Chinese economy has claimed another unwitting victim – the scrap metal industry. Already, in the US, scrap dealers are looking to fill a huge export demand gap left by China’s absence as a buyer.

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It’s not as if this has been an overnight development. US exports of ferrous scrap to China (excluding stainless) peaked at 5.5 million metric tons in 2009, and they have fallen every year since.

The fall in iron ore prices forced US scrap exporters to look for new markets to send their metal. Next in line for ferrous exports were India, Turkey, Thailand, Saudi Arabia and Mexico.

After China’s export demand fell even more this year, all eyes turned to the one place with enough population and development to make up that gap: India, the World’s largest democracy. Read more

Why are automakers not embracing stainless steel in structural applications to reduce overall weight and create safer and more fuel-efficient vehicles?


In addition to helping Marty and Doc get back to 1985, the DeLorean was innovative, practical and sported an attractive brushed stainless steel body.

Usually when you think of stainless steel in cars, the exhaust system, the trim or the DeLorean DMC-12 from the “Back to the Future” movies come to mind.

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The unpainted stainless body panels of the DeLorean made for a unique looking sports car/time machine, sure, but that seems to have done nothing for the mainstreaming of stainless steel use in the manufacture of passenger cars. Read more

commoditiesroundtable_550The Commodities Roundtable is the Institute of Scrap Recycling Industries’ premiere event for buyers and sellers of scrap commodities. It includes roundtable discussions on copper, aluminum, ferrous metals, nickel/stainless and plastics. Each Roundtable takes an in-depth look at the commodity and provides important information recyclers can put to use the moment they get back to their office.

The conference will be held today through Friday at the Hilton Chicago. Register at ISRI’s website or live at the event.

The Architecture Billings Index (ABI), an indicator of demand for design services, is showing strong markets for nearly all US nonresidential project types.

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An economic indicator of construction activity, the ABI reflects an approximate nine to twelve month lead time between architecture billings and construction spending. The American Institute of Architects (AIA) reported the July ABI score was 54.7, down a point from a mark of 55.7 in June.

This score still reflects an increase in design services (any score above 50 indicates an increase in billings). The new projects inquiry index was 63.7, up slightly from a reading of 63.4 the previous month.

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“On top of what has been a flurry of design activity in recent months, some architects are reporting a break in the logjam created by clients placing projects on hold for indefinite periods, which bodes well for business conditions in the months ahead,” said AIA Chief Economist Kermit Baker, Hon. AIA, PhD. “There is some uneasiness in the design community that rapid growth in construction costs could escalate beyond development capital and municipal budgets, which could trigger some contraction in the marketplace down the road.”

Key July ABI Highlights

  • Regional averages: Midwest (58.2), South (55.7), West (53.8) Northeast (53.5)
  • Sector index breakdown: institutional (57.3), mixed practice (56.8), commercial / industrial (53.4) multi-family residential (49.8)
  • Project inquiries index: 63.7
  • Design contracts index: 54.5

Construction spending still isn’t taking off in the US and most companies can’t guarantee their minerals are conflict-free.

Construction Spending Up, But Barely

US construction spending barely rose in June as private outlays posted their biggest drop in a year, but the underlying trend suggested the economy remained on solid ground.

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Construction spending increased 0.1%, the smallest rise since January, the Commerce Department said on Monday.

May’s outlays were revised sharply higher to show a 1.8% gain instead of the previously reported 0.8% rise. Economists polled by Reuters had forecast construction spending rising 0.6%in June. Construction spending was up 12% compared to June of last year.

Conflict Minerals Compliance Harder Than it Seems

US companies shelled out roughly $709 million and six million staff hours last year to comply with rules to disclose “conflict minerals” in their supply chains, according to recent research by Tulane University and Assent Compliance, a New York consulting firm, yet most still could not guarantee that none of their raw materials came from conflict areas.

“Conflict minerals” include tin, tantalum, tungsten and gold originating from the Democratic Republic of the Congo. The conflict-torn country holds vast reserves of these four minerals, which are widely used in a flurry of products, from electronic devices to engagement rings to auto parts, the Wall Street Journal reported.

Three Best Practices for Buying Commodities

90% of the 1,262 companies that filed conflict-mineral reports with US securities regulators last year said they couldn’t determine whether their products are conflict-free, according to Tulane University’s research.


The American Institute of Architects’ (AIA) semi-annual Consensus Construction Forecast, a survey of several construction forecasters, is projecting that nonresidential spending will see a nearly 9% increase in 2015, with next year’s projection being 8.2%.

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To see each of the panelist’s projections, click here.

“Buoyed mostly by the red-hot commercial sector, spending on nonresidential buildings should be close to $360 billion this year, approaching $390 billion in 2016,” said AIA Chief Economist, Kermit Baker, PhD, Hon. AIA. “But the demographic factors that are also fueling heavy demand for healthcare and education facilities are going to lead to a more balanced construction market in the foreseeable future.”

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Nonresidential construction is more tech-intensive than most residential structures and generally requires more copper wiring, aluminum conduit and other metal building materials. Commercial and industrial construction leads the group with a 12.3% spending increase for the year and 10.6% for 2016.

Market Segment Consensus Growth Forecasts2015    2016
Overall nonresidential building8.9%   8.2%
Commercial / industrial12.3% 10.6%
Industrial facilities21.9%9.9%
Office buildings14.7%11.7%
Institutional2.8%   5.6%
Amusement / recreation14.3%5.9%
Healthcare facilities2.4%5.8%
Public safety-1.9%2.9%

About the AIA Consensus Construction Forecast Panel

The AIA Consensus Construction Forecast Panel is conducted twice a year with the leading nonresidential construction forecasters in the United States including, Dodge Data & Analytics, Wells Fargo Securities, IHS-Global Insight, Moody’s, CMD Group, Associated Builders & Contractors and FMI. The purpose of the Consensus Construction Forecast Panel is to project business conditions in the construction industry over the coming 12 to 18 months. The Consensus Construction Forecast Panel has been conducted for 16 years.

SMU Steel Summit 2015We here at MetalMiner™ are thrilled to be a part of Steel Market Update’s 2015 Steel Summit Conference in Atlanta, Sept. 1 and 2, featuring metals industry professionals. We will not be alone, however, as this event will be filled with steel producers, manufacturing companies, end-users and service centers affected by the ebb and flow of the metals industry each and every day. The audience will be tuned in, the discussions engaging and the takeaways tangible.

“[We have] a perfect storm of weakening demand and surging supply [that] has sent benchmark ore prices tumbling, shacking miners’ business models across the globe. After a decade of super cycle, does 2015 mark the beginning of a ‘buyers’ market’ in steel raw materials?” – Serafino Capoferri, consultant, Steel Raw Materials & Steel Costs, from CRU Analysis

Capoferri will be joined by Peter Meyers, executive vice president at Metalico and Gaurav Chhibbar, raw material manager at Cargill Metals to discuss iron ore, scrap and world pricing for the Commodities & China: The Gorilla in the Room portion of the summit.

Our own Lisa Riesman (CEO, Azul Partners and executive editor, MetalMiner™) will also be in attendance, discussing our latest forecast report and where she sees the direction of commodities heading.

So come join us at the Georgia International Convention Center on Sept. 1 and 2 for what will surely be an engaging event!

More info and registration