The WTO ruled that India’s domestic content requirements under its new solar power program were inconsistent with international agreements. Indian officials have said they will appeal the ruling to the WTO’s dispute panel in the next two months.
Photovoltaic solar array, the kind US manufacturers would love to send to India.
The US alleged that India’s ambitious solar program discriminates against US crystalline silicon photovoltaic and thin-film solar panel manufacturers by requiring Indian producers to use locally manufactured silicon or thin-film cells and by offering subsidies to those developers who use domestic equipment. Read more
Both metals have a pretty neutral supply/demand story, in which production is outpacing demand but not by much. However, both metals are falling as China’s bearish momentum hasn’t changed, it’s actually gotten worse.
World lead production, minus usage. Graph: MetalMiner.
The lead market has been in surplus over the past few years. However, production versus usage has been pretty stable since 2013, which might have caused prices to remain pretty stable since 2013.
Three-month London Metal Exchange lead since 2011. Graph: MetalMiner.
However, lead broke that price range this year leading it to more declines. It seems like although the supply/demand picture hasn’t really changed over the past few years, concerns about China are what’s really weighing on this metal.
Zinc’s supply/demand equation is a bit different:
World zinc production minus usage. Graph: MetalMiner.
After two years of deficit, zinc supply has outpaced demand so far this year. The main reason for this shift involves China, which is now producing more and consuming less zinc. Chinese imports of refined zinc have decreased by 66.3% to 126 kilotons, according to the International Lead and Zinc Study Group.
Three-month London Metal Exchange zinc since 2011. Graph: MetalMiner.
With this shift in demand/supply and a bearish market in China’s future, zinc prices have fallen more than 30% in less than four months, a sharper decline than lead’s. The metal is now at a five-year low and heading south.
The combined company, to be called Konecranes Terex Plc. Both companies are global lifting and material handling solutions companies. They have estimated combined 2014 revenues $10.0 billion and EBITDA of $845 million. The combined company will maintain headquarters in Hyvinkää, Finland as well as Westport, Conn.
Molycorp Shuts Down Mountain Pass
Molycorp, Inc. announced today that it will transition its Mountain Pass Rare Earth Facility to a “care and maintenance” mode while it plans to continue serving its rare earth oxide customers via its production facilities in Estonia and China. Customers of the company’s rare earth magnetic materials, as well as its rare earth-based water treatment products, will not be impacted.
Rare earth production at the Mountain Pass facility will be suspended no later than October 20, 2015, and the site, including idled machinery and equipment, will be maintained to ensure it remains in safe and stable condition, and that government regulatory commitments can be met.
Rare earth pricing, which has declined dramatically over the past four years, was a key factor in the decision to suspend rare earth production at Mountain Pass, company officials said.
Three-month London Metal Exchange tin price, one year out. Graph: MetalMiner.
Two main factors are supporting tin prices:
Indonesian’s new regulation this month: New rules only allow refined products from legal mines to leave the country. The country is the world’s largest exporter, and some producers are expected to fail to get the necessary approval, which would lead to lower production and exports.
Prices are technically oversold: Tin prices have fallen as much as 45% since the beginning of 2014, being one of the worst performers among industrial metals. When prices suffer a sharp and steady decline it is normal to see a price rebound as short-sellers cover positions and bottom fishers come into the market. Prices need some time to digest losses. We saw this happen this year with other metals such as copper.
If our Monthly MMI® series was ever collectively looking to tell a big story, this is it: a whopping 9 out of the 10 individual monthly metal category sub-indexes that comprise the series hit an all-time low for the August 2015 reading.
The outlier, our GOES MMI, was spared, but that index was down, as well, even though it didn’t hit a low like its base, minor and precious metal brethren.
Of course, if you’ve followed regular MetalMiner coverage and our monthly outlook reports on ferrous and base metal markets, this should be much less of a surprise to you, as equity markets, commodity and exchange rate movements have roiled the status quo for virtually all industrial metal categories.
This month there were plenty of multi-year lows to go around… even beyond metals.
This month we saw the Thomson/Reuters-Jefferies CRB Index hit a six-year low, itself, and China devaluing its own currency this week has sent commodities such as oil tumbling, as well.
Race to the Bottom
Since the beginning of 2015, plummeting prices have caused the Aluminum MMI to drop 10.1%, the Copper MMI to lose 15.2%, and the Stainless MMI to take a whopping 23.8% hit.
Since the MMI series began in January 2012, against the baseline value of 100, the Aluminum MMI has now dropped 20%, the Copper MMI has dropped 33%, and the Stainless MMI has dropped by more than a full third – 36%.
How to make your purchases in this volatile commodity environment? What indications, if any, are there of prices hitting rock bottom? Check out the full report to find out.
Substitution and weak demand are the biggest culprits but China’s stock market crash has had a particularly profound effect on rare earths which have been used for much more than industrial consumption there.
Chinese Rare Earths Exchange Freezes Deposits
Investors in the financial products sold by the Fanya Metal Exchange demanded their money back in July as the exchange simply stopped disbursing funds last month to depositors. About $6.4 billion in investments is frozen, according to estimates by Chinese media.
Fanya is a forum for trading rare earths and other minor metals such as bismuth that has also functioned as a shadow banking institution — not only leveraging metal deposited with the exchange as collateral for loans, but offering high interest investment products to retail investors.
The online report of a November 2014 meeting by the Yunnan provincial government on “tidying and reorganization” of local exchanges included a warning by the head of the Yunnan branch of the China Securities Regulatory Commission that “risk at the Fanya Metal Exchange was noted as very large.”
The collapse of the exchange is the latest example of a weakening rare earths market. Earlier, the only US-based rare earths miner, Molycorp, Inc. filed for chapter 11 bankruptcy protection. It is difficult to predict a rare earths price turnaround this year.
The Rare Earths MMI® collects and weights 14 global rare earth metal price points to provide a unique view into rare earth metal price trends over a 30-day period. For more information on the Rare Earths MMI®, how it’s calculated or how your company can use the index, please drop us a note at: info (at) agmetalminer (dot) com.
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Could world markets finally see a respite from Chinese steel imports? Molycorp, Inc. vowed in court papers that it won’t completely shut down its Mountain Pass, Calif., facility.
Chinese Steel Prices Collapse
A collapse in Chinese prices last month is set to push already stretched Chinese steel mills even further into the red, curtailing production and exports, according to billionaire steel mogul Lakshmi Mittal, CEO of ArcelorMittal, the world’s largest steel producer.
Chinese prices for the benchmark product, hot-rolled coil, already at rock bottom, fell a further 10% last month.
We have been hearing a lot that the Chinese government wants to reduce capacity,” Mittal, chief executive officer of ArcelorMittal, the world’s biggest steel producer, told investors on July 31. “This should really accelerate the process of closing down the capacity.”
Molycorp Won’t Shut Down Mountain Pass
In a bankruptcy-court filing, Molycorp, Inc., said it is weighing a number of options for its Mountain Pass, Calif. operation, which has consistently lost money. From 40 to 200 of the 400 jobs at the facility could be saved, depending on how much of the Mountain Pass facility Molycorp decides to keep running while it addresses a $1.7 billion pile of debt, according to court papers filed Wednesday.
The monthly Renewables MMI® registered a value of 57 in August, a decrease of 1.7% from 58 in July. Like many other metals that we track, this is an all-time low.
Unlike some of the other metals we track, though, fundamentals haven’t really changed that much for silicon, cobalt cathodes and most of the renewable metals we track. The fact that the index fell only 1.7% — a pittance when compared to the steep drops of other indexes — it shows this is a low created by ongoing tepid demand and the bearish environment affecting all commodities.
The Steady, Slow Fall of Renewables
The slow fall of renewables may have more to do with the continually falling commodity prices of oil, liquid natural gas and other competing energy products. Uncertainty over the possibility of Iranian oil hitting the global market is only making crude potentially more competitive with solar panels, wind turbines and other renewable energy investments, too.
We have long lamented the subsidized nature of renewable energy investments in the developed world and how those subsidies disconnect infrastructure investment costs from actual payback in the form of lower energy prices, but that’s something that won’t change anytime soon or help renewable energy inputs in the short term. Sorry, Milton, but prices will be just one part of the renewable energy information puzzle for the foreseeable future. We wish it wasn’t so, but it’s the reality. There is, however, no reason why they shouldn’t be a bigger part of that equation.
Subsidies Distort Payback Picture
If renewable energy investments were judged by how much solar panels on your house or, say, wind farms for a utility company, would cost to install and how long it would take lower energy bill prices to pay back those installation costs, we would likely see more US adoption and fewer poor investments in low-wind or solar areas. As it is, though, government incentives artificially distort those costs and create high-adoption areas, such as California, where there are incentives and high adoption and no incentives and low adoption, thanks to low oil and LNG prices, in places without the natural advantages.
Prices for renewable inputs such as silicon are fairly stagnant in high-adoption countries such as Germany, too. The bearish commodity environment has hit low demand sectors as hard as the higher demand ones.
The Renewables MMI® collects and weights 8 metal price points used extensively within the renewable energy industry to provide a unique view into renewable energy metal price trends over a 30-day period. For more information on the Renewables MMI®, how it’s calculated or how your company can use the index, please drop us a note at: info (at) agmetalminer (dot) com.
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US companies shelled out roughly $709 million and 6 million staff hours last year to comply with regulations to disclose conflict minerals in their supply chains, according to recent research by Tulane University and Assent, a software and services firm that partners with companies to automate their compliance processes.
Adorable possible violations of the Dodd-Frank conflict minerals compliance regulations.
A glance at the results of the study, which included 2015 Dodd-Frank 1502 form SD submissions, showed how each company performed according to Securities and Exchange Commission regulations and OECD due diligence guidelines. A team led by Tulane University’s Chris Bayer, PhD., ranked all 303 respondents according to both criteria. Assent has provided an excellent video explanation of the criteria for anyone interested.
We have also written extensively about how US manufacturing firms can comply with the Dodd-Frank conflict minerals regulations and this study is the first major one to quantify the difficulty firms, large and small, face in confirming that their supply chains are conflict minerals free. Read more
With the exception of the very specialized grain-oriented electrical steel (GOES) market and the Renewables MMI®, all of our indexes lost ground in June and could not gain traction amid falling commodity prices and a strong US dollar.
The one index that was steady from last month, which tracks raw material inputs of the renewable energy sector, has been stagnant for two years and, until trends show otherwise, its steadiness is more a measure of a lack of market activity than anything close to a turnaround or a new trend toward increasing prices.
The Stainless MMI is flirting with two-year lows and our Raw Steels index is up against lows not seen in years as well. Weakness in the Chinese stock market has put additional pressure on metals that were already reeling from the effect of the strong dollar. This is bad news for steelmakers, miners, refiners and smelters by itself, but coupled with increased supply in most of the metals we track, it’s become a real deterrent to profitability.
Moreover, both Europe and the US have higher-than-normal inventories of semi-finished products at service centers. Mill lead times remain short suggesting weak demand. Weak demand will continue to place downward pressure on prices.