Essentially penalizing people for saving money seems like a curious thing to do to try to turn around a struggling economy, but it’s not the first time banks have gotten a push to force them to lend. The European Union has done it, too, in recent memory.
Boy does Toyota Motor Corp. ever wish it had a bigger supply chain this week. Source: Adobe Stock/cacaroot.
My colleague and metal price analyst Raul de Frutos wrote that, “negative interest rates mean that depositors must pay regularly to keep their money in the bank. This measure encourages people and businesses to spend, invest and lend money rather than pay a fee to save it and keep it safe.” Read more
The very idea that America’s workhorse could be made from something so fragile as aluminum was a complete anathema to some people, but the resulting product on the whole has been well received.
An aluminum-bodied Rolls? It’s more likely than you think. Source: Adobe Stock/Dimitri Surkov.
Lighter, more economical and more responsive it can be said in most quarters to have been a success; so much so that Ford has recently announced it will increase the aluminum content in 2017 models.
GM Plays Catch Up
Despite initially trashing the idea, General Motors has now said it would sink $877 million into its Flint, Mich., truck factory this year with the intention of converting many of the bodies for models such as the Chevrolet Silverado and GMC Sierra pickups into aluminum. Read more
ATI will be focusing on global markets with high barriers to entry. As we reported last month, ATI is reducing its exposure in commodity products by idling its Midland, Pa., plant, a commodity stainless facility, and its Bagdad GOES production facility in Gilpin Township, Pa.
ATI’s Brackenridge facility is the future and commodity stainless is its past. Source: ATI
Earlier this week, ATI reported in its earnings call a net loss of $378 million for 2015 as compared to a net loss of $2.6 million in 2014. ATI’s flat-rolled products business segment is to blame for the staggering losses. Operating losses for flat-rolled products were $242 million for 2015. For this reason, Rich Harshman — ATI’s chairman, president, and CEO — stated that ATI is taking “rightsizing actions” to return the segment to profitability as quickly as possible and “execute our strategy for sustainable long-term profitable growth.”
Will NAS implement another base price increase effective in March or April? Last month, NAS, never known to be a follower, announced a base price increase which was half that of its competitors Allegheny Technologies, Inc. (ATI), AK Steel and Outokumpu Coil Americas. This meant that the only increase buyers would be paying was the less aggressive 2-discount point adjustment (approximately $0.04 per lb. increase on 304 base gauge).
Will NAS increase base prices in March or April? Source: Adobe Stock/Jovanning.
Stainless base prices may have gone up since January 1, but buyers should still be paying a lower net price for standard 304 2B this month than they did in December. The increase on base gauge 304 was offset by the over $0.05 per lb. decline in the 304 alloy surcharge. 304 Base gauge net prices should decline in February since NAS’ February 304 alloy surcharge will be $0.3321 per lb., which is $0.0031 per lb. less than the January surcharge.
North American Stainless’ Market Position
NAS is in the best position to endure depressed stainless prices longer than any of its North American competitors, but now they are losing money, too. Acerinox, NAS’ parent company from Spain, posted a loss of over €8 million in Q3 2015, after being in the black the previous three quarters. Acerinox’s 2015 results will not be announced until February 29, but I would expect the results to be worse as alloy surcharges continued to decline through the end of 2015.
I believe NAS will announce another base price increase once its March production is filled, which should be in the next week. The base prices in Q4 2015 were unsustainably low as a result of Outokumpu Coil Americas’ push to fill its Calvert mill with lower prices than NAS.
As long as mill lead times remain in check, service centers will support the domestic mills so that they can keep inventory as lean as possible while still being able to provide for the manufacturer’s requirements. My experience has been that when alloy surcharges are still declining, price increases are easier for the market to accept. Another base price increase is not only feasible for March or April, it is necessary to realign base prices to manageable levels for producer, service center and manufacturers. NAS needs to lead the next price increase and act like the market leader.
This is part two of a series on the potential of lithium for energy storage and the investor reaction. See part one first if you missed it.
California is said to have ordered its electricity firms to offer 1.3 gigawatts of non-hydroelectric storage capacity within five years, more than double the 0. 5GW of batteries plugged into grids around the world today.
It remains to be seen how popular Tesla’s “Powerwall” electricity storage devices will become, but as the price comes down through competition and technology improvements they will prove popular in countries where solar panels can supply domestic power economically such as Australia and the southern US, or where power supply is intermittent as in India or South Africa.
So, the market is looking good for lithium even though the technology still needs considerable improvement to achieve truly large-scale uptake. As the Argonne National Laboratory in Chicago is quoted in the Economist as saying, large-scale batteries need to offer hundreds of miles of driving range, be rechargeable in minutes instead of hours, and provide power at costs comparable with natural gas before they can take off. In the meantime, though, supplies of lithium are not, as was the case with rare earths, held in the stranglehold of one country. As this graphic courtesy of the Economist shows, supplies are already well established from several stable, developed mining countries.
Source: US Geological Survey.
Lithium minerals have been used for years in the ceramics and glass industry according to the US Geological Survey, so extraction is not a new technology and nor is the supply chain undeveloped.
Every year, the Consumer Electronics Show draws thousands of attendees to Las Vegas to showcase the latest ideas and examples of cutting edge consumer technology. It’s a nerd nirvana and this year was no exception with 170,000 attendees able to see the latest virtual reality technology, driverless cars, drones and, yes, the item that caught my eye an autonomous flying vehicle.
The Ehang 184. Now you can drone yourself to work and back! Source: Ehang.
The AFV is a single seat drone capable of carrying a human. Admittedly due to (they say) US legislation the Chinese Ehang 184 could not be seen in operation and even the firm’s YouTube clips show test flights that probably don’t involve a human passenger but the technology does appear to be approaching the point of manned testing and the company claims it has made manned test flights in less-regulated China. Read more
The Department of Commerce announced affirmative preliminary determinations in the countervailing duty (CVD) investigation of imports of hot-rolled steel flat products from Brazil yesterday. It also announced negative preliminary determinations in the investigations of imports of hot-rolled steel flat products from the South Korea, and Turkey.
Countervailable subsidies are financial assistance from foreign governments that benefit the production of goods from foreign companies.
In the Brazil investigation, Commerce preliminarily determined that mandatory respondents Companhia Nacional Siderurgica (CSN) and Usinas Siderurgicas de Minas Gerais SA (Usiminas) both received a subsidy rate of 7.42%. All other producers/exporters in Brazil were assigned a preliminary subsidy rate of 7.42%.
The subsidy rates in the South Korea and Turkey investigations were all found to be less 1% or “de minimis” meaning that no import duties will be due and no cash deposits will be necessary.
As a result of the preliminary affirmative determination for Brazil, Commerce will instruct US Customs and Border Protection to require cash deposits based on the preliminary rates, 7.42%, established for producers and exporters of hot-rolled steel flat products from Brazil.
Today in MetalCrawler, Alcoa, Inc., has closed a major US smelter and a judge dismissed a private antitrust lawsuit in which zinc purchasers accused affiliates of Goldman Sachs Group Inc., JPMorgan Chase & Co. and Glencore Plc. of conspiring to drive up the metal’s price.
Major Alcoa Smelter Closes
Alcoa said it plans to close its 269,000 metric-ton-per-year Warrick smelter near Evansville, Ind. Thursday. This will bring US aluminum output to its lowest level since just after World War II as the industry endures tumbling prices amid rising trade tensions with China.
Warrick is the largest currently-operating smelter in the US and the biggest shoe to drop in a string of recent curtailments and closures, potentially boosting prices and possibly bolstering some US producers’ claims they are harmed by subsidized Chinese production. 600 Jobs will be lost due to the smelter’s permanent closure.
Zinc Price Fixing Lawsuit Dismissed
In an 87-page decision, US District Judge Katherine Forrest in Manhattan said zinc purchasers failed to show that defendants Goldman Sachs, JP Morgan Chase & Co. and Glencore Plc. artificially inflated zinc prices by violating the Sherman Antitrust Act.
The class-action lawsuit was dismissed and the class plaintiffs’ attorney did not make a statement to reporters.
“Plaintiffs cannot adequately plead their broad, five-year conspiracy simply by noting developments in the zinc market, particularly when many of those developments occurred at vastly different times over the class period such that the possibility of causation is hard to assess,” Forrest wrote.
The major trends that drove the winter — and spring, summer and fall — of low prices and producer discontent were nothing new: the slowing Chinese economy and its subsequent lack of construction demand, a race to the bottom between OPEC and US shale oil drillers eroding the price of crude and global economic sluggishness outside of the US. The domestic economy, while showing positive growth (2% in the third quarter), wasn’t exactly operating full-bore, either, as inventories remained high and inflation cut into buying power.
So, without dwelling too much on the past, we offer MetalMiner’s Year-in-Review, a look at the issues, news and trends that affected metal prices.
3D Printing: Now in Manufacturing
Additive manufacturing continued to transform aviation and other sectors. We saw the largest 3D-printed part ever made for commercial us by Airbus and Autodesk for use in the new A380. The interior partition is made up of 122 components and reduces the weight of the partition by 30%.
This partition cover can be customized for the individual airline and its branding. Strong but able to be used by anyone. Source: Airbus
In other materials science news this year:
Tin could possibly be used as a catalyst to enable clean carbon capture for electrical power generation.
A flexible aluminum-ion battery could one day replace the lithium-ion battery.
The Year in Dumping
It was a big year for dumping, dumpling. China continued to be the main nemesis of the US when it comes to illegally subsidizing and exporting steel, aluminum and several other metal products. China was also the culprit of choice for India, Russia, the European Union and, well, most of the world.
We sometimes indulge our more geeky side and cover topics that, while metals related, are never going to significantly move the needle on metals consumption, pricing or supply and demand. We reserve the right to be geeky.
While a recent development recently discussed by Mark Shackleton, Professor of Finance and Associate Dean Postgraduate Studies at Lancaster University definitely falls under the “geeky” heading, it could, one day, potentially move the needle for tin demand if the economics permit.
Carbon Capture and Carbon Taxes
One of the biggest dynamics in the next 10 years will be how legislators approach carbon emissions. If they seek to control emissions by putting a significant price on carbon, it will have profound implications for the metals industry, along with just about every energy-consuming activity out there.