Articles in Category: Public Policy

Renewable energy technology has been split into two camps since it became a reality around the turn of the century.

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On the one hand there are the passionate environmental believers for whom the inflated subsidies were an irrelevance in the face of saving our planet, and on the other were naysayers for whom the arguments about global warming were a plot by the far left to raise taxes or run some kind of tree-hugging environmental agenda at the expense of business and consumers.

Neither polarized position was fair, of course, and the quiet majority in the middle have watched the technologies become progressively more efficient and costs fall dramatically while the extremes of global warming horror stories have been discredited, but the hard science of gradually rising carbon levels has been widely accepted.

Who Cares Why The Temperature is Rising?

In the process, a wider acceptance has gained ground that global temperatures really are rising and whether it is part of a natural cycle or man-made is not a risk we can afford to take. Ultimately, action to reduce carbon emissions will be cheaper than many possible downside scenarios if left unchecked and most people would accept we are making a mess of our environment and really should behave more responsibly.

Meanwhile, politicians have been plowing our taxpayer money into supporting wind, solar and a number of other “renewable” technologies, with some degree of success. Costs for the major energy sources — solar and wind — have fallen, partly as a result of technology improvements and partly due to economies of scale, to the point now where private firms are signing up to invest in major wind projects for a tariff of just $100 per MegWatt/Hour (€90 per mw/h). Indeed, in Europe all the extra power capacity added since the mid ’90s has been renewable.

Source: Telegraph Newspaper

Source: Telegraph Newspaper

The biggest hurdle renewables now have to overcome is not the cost of production, but the curse of intermittency. Where does the power come from when the wind doesn’t blow or the sun doesn’t shine? Read more

This week, a comprehensive analysis of Dodd-Frank conflict minerals compliance filings showed that while some companies are going the extra mile to insure tantalum, tin, tungsten and gold are NOT influenced by the war in the Democratic Republic of the Congo, some still have a long way to go.

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Sadly, no Party City filing this year attesting to how conflict-free mylar party balloons are.

MetalMiner Olympic Construction Beat

The rushed and low-bid Olympic venues of Rio struck again this week as we all had to make sure to nut adjust the contrast on our sets when the games treated us to green water in indoor pools. Apparently they just ran out of pool-cleaning chemicals, not a high-up line-item in the Olympic punchlist, I’d imagine.

Just pretend it’s St. Patrick’s Day in Chicago. Rio visitors and athletes also got a visit from some ROUS’ (rodents of unusual size). Yes, they very much exist.

Metal Bulls

Our Metal Markets kept gaining this week as the Federal Reserve is still showing no stomach for interest rate increases and China’s stimulus keeps on stimulating. The London Metal Exchange is even breaking 30 years of tradition and introducing gold and silver contracts to get in on all of the precious fun.

LMEring_550

“Hey guys, let’s do this for silver and gold, too! Then, eventually, PGMs, too?” Source: London Metal Exchange.

Fresh off of slapping member-warehouse operator Metro International on the wrist, the LME is looking to expand its product mix and bring a greater return back to owner Hong Kong Exchanges and Clearing, Ltd.

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HKEX could use the help after this week.

Profits were down at Hong Kong Exchanges & Clearing Ltd. in the first half of 2016 and Rio Tinto and BHP Billiton are fighting an Australian iron ore mining tax.

Profits Down at HKEX in First Half

Core first-half earnings of the Hong Kong Exchanges & Clearing Ltd.’s commodity division slumped by 19% as trade in metals declined while hiring linked to a new spot commodities trading platform in China drove up costs, the exchange said on Wednesday.

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HKEX’s second-quarter net profit slumped 38% as falling trading volumes pushed down fees for buying and selling shares and commodities contracts.

BHP, Rio Blast Proposed Australian Iron Ore Mining Tax

Mining giants Rio Tinto Group and BHP Billiton on Tuesday issued statements attacking proposals for a new Australian mining tax as damaging and unfair. Brendon Grylls, leader of the National Party in Western Australia, has proposed an iron ore levy of $3.86 (Australian $5) a metric ton that would specifically target BHP and Rio.

The Department of Commerce announced its final determinations in the anti-dumping duty investigations of imports of hot-rolled steel flat products from Australia, Brazil, Japan, Korea, the Netherlands, Turkey, and the U.K., and the countervailing duty investigations of imports of hot-rolled steel from Brazil, Korea, and Turkey.

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The big loser in this latest round of tariffs was South Korean steel giant POSCO (formerly the Pohang Iron & Steel Company) which received a total of 60.93% anti-dumping (57.04%) and countervailing duty (3.89%) tariffs on its hot-rolled imports. Read more

While demand for iron ore is up in China, the Philippines has shut down its only producer.

Chinese Iron Ore Imports Increase

On July 19th, the iron ore benchmark for immediate delivery to China’s Tianjin port fell by 2% to $55.10 per metric ton, the lowest since July 1st. Chinese iron ore imports rose 8.3% in July from the previous month to hit its second-highest on record, customs data showed on Monday.

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The move followed a significant drop in the most traded benchmark for construction material rebar on the Shanghai Futures Exchange. Demand for the key steel-making ingredient has increased as Chinese steel mills fired up furnaces on the back of higher prices.

Philippines Shuts Down Lone Iron Ore Miner

The Philippines has suspended the operations of the country’s only iron ore miner due to environmental infractions, officials said on Monday, bringing to eight the number of mineral producers halted in a government crackdown.

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The Southeast Asian nation, the world’s top nickel ore supplier, began an audit of all its metallic mines on July 8, shaking global nickel markets as seven nickel miners were suspended for causing environmental harm.

The U.S. International Trade Commission, on Friday, overturned an administrative law judge’s order temporarily suspending U.S. Steel‘s 337 petition seeking to block all Chinese carbon and alloy steel products from entering the U.S. market.

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The move comes ahead of a meeting of senior US and Chinese officials in Beijing next week. U.S. Steel, in late April, filed the case under the Section 337 rule, which allows trade sanctions for intellectual property theft.

It alleged that some four dozen Chinese companies and their U.S. subsidiaries had both acted as a cartel and benefited from the cyber theft of its production secrets.

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The ITC gave the go-ahead for the case to proceed, setting the stage for a legal battle that experts say could probably take more than a year for an administrative judge to decide.

Olympics organizers on Monday rushed to fix bad wiring, broken plumbing and other problems in the athletes’ village in Rio de Janeiro after several foreign teams complained that accommodations were dirty and in disrepair less than two weeks before the start of the Games.

Entirely Expected

Here at MetalMiner, we often write about the quirks of Olympic construction and the graft, price inflation and other things that come along with them. We also document how major steelmakers often set up new operations just to provide products for events such as World Cups and Olympics. Brazil is definitely the rule and not the exception.

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We even scraped together a World Cup of industrial metals to see which metals were gaining the most from World Cup demand back in 2014 when Brazil was rushing to get stadiums, athlete accommodations, hotels and businesses done in time … as opposed to today when just Rio is rushing to get stadiums, athlete accommodations, hotels and businesses done in time.

Construction_yoders_550_030116

Can we do Olympic construction better? Choosing cities years ahead just makes prices escalate faster anymore. Photo: Jeff Yoders

Why isn’t Olympic construction ever done on time, on budget and up to the quality standards that International Olympic Committee member-countries demand anymore? Sochi wasn’t smooth by any stretch of the imagination but, aside from the study in hubris that was Bob Costas’ pink-eye broadcasts, it’s looking like Rio’s problems dwarf Sochi’s. Yes, Rio, you made Sochi look good. Why is each Olympics worse than the last? And more costly? Read more

Our Raw Steels MMI rose by 2 points in July, thanks to the stabilization of Chinese steel prices. On the other hand, prices in U.S. remained flat for the second consecutive month as this year’s rally seems to be losing momentum.

Chinese Prices Up on Demand Growth

Chinese steel prices rose steeply earlier this year but we saw a correction start in late April. However, following the downward pressure, steel prices in China rose in July. Last month, stability in Chinese steel prices seemed to be driven by improved demand.

Raw-Steels_Chart_August-2016_FNL

The Caixin Manufacturing PMI in China rose to 50.6, way above June’s levels and that easily beat expectations. It’s the first time since 2015 that the index is in expansion (readings above 50) since February 2015. The country’s real estate indicators have also improved this year. This demand improvement seems driven by the fiscal and monetary stimulus provided by the Chinese government and markets expect China to announce more stimulus measures.

The demand side of the equation looks solid, assuming China provides more stimulus, but the supply side is still question mark:

China Not Cutting Capacity… Yet

China cut 13 million metric tons of excess crude steel capacity in the first half of the year, less than a third of its annual target. In June, China exported 10.9 million metric tons of steel, a 21% increase from June 2015 and the second highest total ever. The data raises questions on whether the demand growth is enough to absorb this much steel coming out of China without it weighing on prices.

However, China’s vice industry minister said in July that the country will step up efforts to cut capacity in the second half. The minister pointed out that the focus of their work in the first half was mission planning, and in the second half they will step up the implementation and enter a new stage, from allocating targets and drawing policies to actually pushing capacity cuts.

China’s second- (Baosteel) and sixth-largest (Wuhan Iron & Steel Co.) Chinese steelmakers said last month that they were planning on restructuring (merging) together. While the two state-owned enterprises (SOEs) didn’t provide any details on what that entailed, there are rumors that these companies may have been ordered by Beijing to take over all or a majority of the other amid a broader push to reduce the number of state-owned enterprises.

Rally in US Prices Cools Off

Meanwhile, in the U.S., prices struggled to build on previous gains. It’s still unknown whether this price stabilization is a market top or just a pause before domestic prices continue to climb. That will likely depend on what the world’s largest steel producer and consumer does in the second half. First, will China provide more stimulus and, therefore, more demand for steel? Second, will China actually cut that steel capacity it promised? Lots of things to watch for in the second half…

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A recent series of data points suggests the U.K.’s decision to leave the European Union, while a step in the dark, may at least have the benefit of serendipitous timing.

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After seven years of recession and then stagnant growth, the runes are aligning to suggest global growth may not be as fragile as many fear. In a recent Telegraph article mention is made of a number of measures that, on the whole, point toward a global economy that is picking up on multiple fronts.

Some regions will see a stronger pickup than others, but, broadly, all are pointing in the right direction. A monthly measure of global activity assembled by Fulcrum Asset Management suggests stimulus and fiscal measures adopted partly in response to the risks of Brexit — but more widely due to ongoing slow growth — have combined to create an increase in momentum over recent weeks. The numbers suggest we could see robust world growth of 4% annualized over the second half of the year, even if there is a hiccup in the U.K. This is up from 3.4% in the last quarter and 2.4% in late 2015. Read more

Gold prices near multiyear highs

Gold prices are near multiyear highs. Source: MetalMiner analysis of @StockCharts.com data.

Gold prices surged last week, settling near multiyear highs. Two developments added fuel to gold’s bull market:

Weak GDP Data

For the second quarter, the U.S. gross domestic product grew at a seasonally adjusted annual rate of 1.2%, less than half the rate economists had predicted for the second quarter, casting doubt on the strength of the U.S. economic recovery. Gold benefited from safe-haven demand on a worsening economic outlook.

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Meanwhile, Federal Reserve officials said earlier last week that they could raise rates as early as September, but most analysts agree that their language isn’t hawkish enough to suggest an increase is forthcoming. Read more