Articles in Category: Public Policy

The Steel Market Development Institute (SMDI), a business unit of the American Iron and Steel Institute (AISI), today released statements about the release of the draft Technical Assessment Report (TAR) by the U.S. Environmental Protection Agency, Department of Transportation and California’s Air Resources Board.

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The report is the first step in the mid-term evaluation of fuel economy and greenhouse gas emissions regulations and it examines a wide range of technology factors relevant to the 2022-2025 automotive model year standards.

Hybrid Car

Can a 54.5-miles-per-gallon average for all cars on the road be reached by 2025? Source: Adobe Stock/6th Gear.

The main question the report was created to address is should federal authorities adjust miles-per-gallon calculations in order to meet greenhouse gas reduction targets for the 2022-2025 model years. The stated goal by the Obama administration is to cut carbon emissions radically with rules that tighten to a nominal 54.5 mile-per-gallon average by 2025. Read more

We’ve previously written about how the U.S. government now pays more than a penny for the zinc required to make one penny, so when we saw this, it was a natural follow-up.

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In a letter this week to U.S. Treasury Secretary Jacob Lew and U.S. Mint Principal Deputy Director Rhett Jeppson, Institute of Scrap Recycling industries President Robin Wiener requested that the Mint reconsider its blanket moratorium on the repurchase of mutilated coins. ISRI requested an opportunity to meet with the appropriate representatives of the Mint and the Treasury to discuss this matter in further detail, too.

"Men, the real money is in selling zinc to the Mint to make nickels and pennies." Source: Adobe Stock/Bonzodog.

“Men, the real money is in selling zinc to the Mint to make nickels and pennies. not this smelting stuff. ” Source: Adobe Stock/Bonzodog.

Mutilated coins, such as the ones between the seat cushions of your old car that you’ve taken to get scrapped or even the pennies you placed on train tracks as a kid, could be a real boon to scrap yard recycler/operators. As scrap, they’re already cheaper than that more-than-penny-zinc the Mint buys to make new pennies and nickels. Read more

The U.S. warned China on Thursday that it had not done enough to qualify for market economy status, especially in steel and aluminum and pushed the two trading partners closer to a full-on trade war between Washington and Beijing at the end of 2016.

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U.S. trade diplomat Chris Wilson told the World Trade Organization meeting that the expiration of a clause in China’s original petition to join did not require other WTO members to automatically grant China market economy status on Dec. 11.

Instead, China must establish under each WTO member country’s domestic law that it is a market economy, he said, according to an outline of his remarks seen by Reuters.

“Second, there is little doubt that China’s market reforms have fallen short of the expectations that were held by many members when China joined the WTO,” he said. “This is particularly evident in the steel and aluminum industries where China’s pervasive interventions have led to a significant overcapacity of global supply that is threatening the viability of competitive firms in these industries around the world.”

The two giant trading partners have been locked in a war of words about China’s ascension for more than a year now.

The EU and China Announce ‘Bilateral Mechanism’

Meanwhile, China and the European Union agreed to establish a bilateral mechanism to deal with overcapacity in steel, Chinese Foreign Minister Wang Yi said on Thursday.

China is by far the world’s biggest steel producer and its annual output is almost double that of the 28-nation EU.

Rival producers have accused China of selling into export markets at below cost after a slowdown in demand at home, causing a crisis for the industry that has led to job cuts and plant closures.

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“Through this bilateral mechanism, the two sides can have … in-depth discussions to find solutions acceptable to both parties and in this way maintain free trade and sustainable development of the global economy,” Wang said.

Wang did not provide details on the planned mechanism.

The U.K. is far from alone in recognizing that in order to achieve any meaningful reduction in greenhouse gas emissions, nations have to embrace renewable energy and nuclear power. For those energy generation technologies without obvious natural benefits, like hydro-electric power, it isn’t a case of one technology or the other.

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Both renewable and nuclear energy require essentially subsidized energy tariffs to make them viable. In the case of renewables it is feed-in rates and the provision of back-up power for when the wind doesn’t blow or the sun doesn’t shine that add to the carbon footprint. Britain’s proposed Hinckley Point nuclear project has an index-linked, guaranteed feed-in tariff at $121.54 per megawatt/hour (£92.50 MWh) for 35 years in order to make the $21.02 billion (£16 billion) project for two reactors with a combined output of 3.26 gigawatts viable. Compare that to recent auctions for solar projects which went at around $104.10/MWh (£79.23/MWh) and that number gets close to the price of natural gas before back-up power is factored in.

Carbon Emissions Flourish Elsewhere

Of course, many countries in the world are doing no more than paying lip service to reducing carbon emissions. India, for example, has its sights set on bringing onstream as much new generating capacity as possible to meet rising population and industrial demand. As anyone who has spent time in the sub-continent will know, reliable electricity supply is a still a luxury for many of the massive country’s regions.

Nuclear may be thought of as yesterday's technology, but its emission-less power generation makes it attractive. Source: Adobe Stock/mandritoiou.

Nuclear may be thought of as yesterday’s technology, but its emission-less power generation makes it attractive. Source: Adobe Stock/mandritoiou.

A 1.3 billion and rising population lives there so it should come as no surprise that — although new solar and wind is being added at breakneck speed including some 36 gw of renewables or 15% of its demand, not shabby by any means — India is planning to add another 69 gw of coal-fired power generation as well. New capacity will be progressively better technology, but much of the existing coal infrastructure is of low efficiency and, therefore, particularly polluting for every KWh produced. Where Japan manages efficiency levels around 40%, the U.S. is said to be around 35%, but India struggles to meet just 25%. Read more

Rarely do a government’s stated aims and the aspirations of industry align quite so perfectly as they do in today’s India regarding steel.

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Prime Minister Narendra Modi’s government has been championing a “Make in India” mantra since coming into power in 2014. It has manifested itself in various ways and most intensely with the state-run enterprises who are more open to government pressure. Even so, it has become a pervasive theme across the entire national economy, coercing companies to finds ways of buying domestically in rupees rather than directly importing materials and paying in foreign currency. Read more

As if there hasn’t been enough fall out from the U.K.’s decision last month to leave the European Union, a Financial Times article reveals that European Commission president Jean-Claude Juncker is set to ditch fast-tracking the European Union’s trade deal with Canada, officially known as The Canada and European Union Comprehensive Economic and Trade Agreement (CETA), a deal that has already taken five years to negotiate.

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In a move criticized as undemocratic, Juncker had sought to push approval through on the nod of trade ministers and ministers of the European Parliament, giving no recourse to the 38 parliaments (some of them are regional, only 28 are national members of the E.U.) if they don’t agree to it.

France, Germany Block Fast-Track

Apparently, Berlin and Paris put a stop to the Commission’s move, seen by some as yet another example of the Commission’s undemocratic behavior put into the spotlight by Britain’s objections to rising control from Brussels. Read more

One of my British colleagues forwarded me this Bloomberg article about several German automotive original equipment manufacturers — including BMW, Volkswagen, Robert Bosch, ZF Friedrichshafen and Daimler — who were apparently “raided” by a German regulator for creating a steel buying cartel.

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Funny thing is, here in the States, we call these groups “buying groups” or “group purchasing organizations.” For the life of me, I can’t figure out how a GPO extracts pricing that would somehow harm a consumer. What would they do? Pass on too much of their savings to their customers?

Volkwagen Rabbit toy with coins.

Can German automakers set prices for the steel used in a Volkswagen Cabrio any more than Hot Wheels can set the price of plastic for this tiny version of one? And why don’t they still call it the Rabbit? That was a great car name. Source: Adobe Stock/VRD.

The details appear quite scant: in June, a raid occurred at six automotive OEMs and at least two Tier 1 suppliers (Tier 1 companies are direct suppliers to OEMs). According to Bloomberg, “antitrust rules may have been violated.” Read more

The British government insists that its pension and equity stake for Tata Steel U.K.‘s biggest operation in Port Talbot, South Wales, is still on the table.

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Gold also hit a two-year high today.

Government’s Port Talbot Deal Still Available

The British government’s offer of financial aid to Tata Steel U.K. and to potential buyers of its assets is still on the table — including its massive steelworks in Port Talbot, South Wales — business minister Anna Soubry told Reuters on Wednesday, despite Britain’s vote last month to leave the European Union.

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Seeking to avoid thousands of job losses, the government had offered millions of pounds in support for the company and its potential buyers. It also pledged to take a 25% equity stake in Tata’s U.K. branch and reform the British Steel Pension Scheme (BSPS).

Gold Hits a Two-Year High

Gold increased for a seventh straight session after touching its highest point in more than two years in the previous session as investors are still seeking safe-haven assets even as stock markets are tentatively bouncing back after the U.K.’s Brexit vote last month.

Our coverage was dominated this week by the implications of the U.K.’s vote to leave, or Brexit, the European Union.

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So many questions still need answers, despite metals markets essentially calming down as the week went on. What will any future deal with the E.U. look like? What does this mean for metals markets? Can Tata Steel sell its U.K. assets without a pension bailout that was being discussed before the vote? Is China taking advantage of the situation by devaluing the yuan again while nobody’s looking? Will U.K. Independence Party leader Nigel Farage get through his gloating speech to the European Parliament without being booed and hissed out of Brussels?

We told you it could happen. Source: Adobe Stock/Stephen Finn.

We told you it could happen. Source: Adobe Stock/Stephen Finn.

Actually, we know the answer to that one, he got through it with some help from European Parliament President Martin Schulz asking for order, but not before he blamed his fellow ministers of parliament for “exporting poverty to the Mediterranean” and “bringing the Lisbon Treaty in through the back door.”

To try to answer all of these questions, as best we can, we’re holding a webinar on July 13th with MetalMiner Co-Founders Lisa Reisman and Stuart Burns. They’ll discuss all of the issues for metals, North American manufacturing and trade that Brexit presents.

Non-Brexit News

Alcoa LogoAlcoa, Inc. settled on Arconic, a truly Tronc-worthy new name for its value-added automotive and aerospace business.

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Alcoa, Inc. — whose spin-off will now be Alcoa, Corp. — revealed the new name in a securities filing and did not even have the decency to apologize and say “sorry guys, Google was already taken.”

Indonesia’s Dirty Coal Mines

Indonesia’s tropical coal mining sector is winding down production due to low global prices and poor production, but the island nation might be sitting on an environmental time bomb as few of the country’s mining companies have the resources to properly clean up the sites before they pull out. Almost none of the companies have paid their share of billions of dollars owed to repair the badly scarred landscape. Nothing to snark at here.

You wouldn’t expect the ripples to have spread quite this far, but Britain’s Brexit from the E.U. is lapping on the shores of the South China Sea and has forced the People’s Bank of China (PBOC) to intervene to “stabilize” the yuan in the face of a slump in the pound and euro and a surge in the U.S. dollar.

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Chinese policymakers have guided the yuan to a 5.6% decline against an index of its trading partners this year as exports fell every month apart from March. The 13-currency gauge fell to a 20-month low last week as the PBOC continued its policy of “stability” while maintaining responsiveness to market forces — plainly such a policy can be contradictory at times, especially in times of volatility as we are now facing.

Source: Bloomberg

Source: Bloomberg

The PBOC, after years of gradual appreciation, has presided over a period of depreciation again in an attempt to help exporters, but an unexpected downward adjustment last August spooked markets and caused shares to fall causing an estimated $1 trillion capital outflow from the country as investors panicked, fearing the prospect of their assets falling in dollar values. Read more