Sourcing Strategies

Using robots that can “draw” steel structures in 3D, Dutch technology firm MX3D is planning to 3D “print” a steel bridge over one of Amsterdam’s famous canals in the center of the Dutch Capital. MX3D researches and develops robotic 3D printing delivery technology as well as projects such as the pedestrian bridge. The robots creating the will actually be large welder robots usually seen in factories rather than construction sites.

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The project is a collaboration between MX3D, design software company Autodesk, construction company Heijmans and many others. Designing and “printing” the intricate, ornate metal bridge is a test for the robots, software engineers, craftsmen and designers working on it, including designer Joris Laarman Lab.

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The planned steel pedestrian bridge in Amsterdam will be built by robot “welders” who 3D print the bridge from each side and meet in the middle. Image courtesy of Joris Laarman for MX3D.

“I strongly believe in the future of digital production and local production, in ‘the new craft,'” said Joris Laarman, principal of the Joris Laarman Lab. “This bridge will show how 3D printing finally enters the world of large-scale, functional objects and sustainable materials while allowing unprecedented freedom of form. The symbolism of the bridge is a beautiful metaphor to connect the technology of the future with the old city, in a way that brings out the best of both worlds.”

Bridge Welding Robots

MX3D will equip its multi-axis industrial robots with 3D printing hardware that can print metals, plastics and combinations of materials in virtually any form. The system is controlled by software developed by MX3D with support of new-generation tools from Autodesk, such as Autodesk Dynamo, an open-source design tool that can create algorithms to automate the creation of plans for complex geometric form such as those used in the Amsterdam bridge.

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Utilizing a process known as digital digital laser sintering, Amsterdam’s new pedestrian bridge will actually be welded in place in the field by large robots and not printed in a factory. Image courtesy of MX3D.

From large construction to small parts, the manufacturing techniques MX3D uses enables printing of strong, complex structures made of durable material, in this case ornate steel. It is more cost-effective and scalable than other 3D printing methods for projects such as the pedestrian bridge.

Construction Potential

“What distinguishes our technology from traditional 3D printing methods is that we work according to the ‘Printing Outside the box’ principle,” said Tim Geurtjens, CTO of MX3D. “By printing with 6-axis industrial robots, we are no longer limited to a square box in which everything happens. Printing a functional, life-size bridge is of course the ideal way to showcase the endless possibilities of this technique.”

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MX3D welder/sinterer/printer robot. Image courtesy of MX3D/Adriaan de Groot.

The project achieves one long-term goal of 3D printing supporters in that it delivers a project outside of the traditional confines of the technology, small parts created in a small printer in a manufacturing environment. This means possible on-site use by construction companies and more accurate quantities of welding/sintering material for metals buyers.

Of course, many more projects such as this one would be needed to prove the technology can work with modern construction methods.

“The MX3D platform is a potential game changer,” said Maurice Conti, Director Strategic Innovation at Autodesk. “Breaking free of the traditional limitations of additive manufacturing — small size prints and poor material performance — this technology opens up possibilities for architectural-scale, relatively low-cost, metal structures that are as complex as the designer’s imagination.”

Which Amsterdam canal the bridge will be built to span has not yet been announced but a visitor center accompanying the project is planned to open in September and construction and “printing” is expected to begin around the same time.

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Join Screen Shot 2015-06-15 at 12.57.29 PMus Monday, June 29 at 11 a.m. CDT for the webinar, 3 Bids and an Award: Are You Speculating When You Buy on the Spot Market?

Husband and wife team Jason Busch (founder and managing director, Spend Matters) and Lisa Reisman (CEO, Azul Partners and executive editor, MetalMiner™) will participate in a counter-intuitive debate on sourcing on the spot market.

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“Three bids and an award, or spot market buying, is 100% speculative because you are looking for the lowest price and you have outsourced the ‘risk premium’ to your supply base,” Reisman said. “It’s hugely dangerous in a rising market, but I’d argue that most companies don’t always know if they are in a rising or falling market yet will still buy this way in most markets.”

Busch counters, “What everyone does: sourcing using an index is not always best practice because companies are lying to themselves when they say they have perfect pass-through.”

To experience their entire back-and-forth on the matter, register for the live webinar!

Can’t make it live? Register anyway and we’ll send you a copy of the slides and recording of the webinar.

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The Bureau of Labor Statistics recently released its producer price index (PPI) for May. An analysis by the Associated General Contractors of America showed that steel mill product prices were down 2% for the month and 11% over the previous year.

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AGC Chief Economist Ken Simonson wrote that goods such as steel and concrete constitute 60% of the index (including 7% for energy); services, 40% (trade services, 25%; transportation and warehousing services, 4%; other services, 10%). The overall PPI for inputs to construction increased 0.6% from April to May. The index for energy soared 12% for the month, outweighing declines of 0.2% in the index for goods less food and energy and 0.1% in the services PPI.

The PPI for all goods used in construction declined 3% over the last 12 months. Materials important to construction that had notable one- or 12-month price changes include diesel, up 11% for the month but still down 36% over 12 months. The aforementioned steel mill products fell -2% and -11%, respectively. Steel pipe and tube were down -1.9% for the month and -9.2% for the year. Copper and brass mill shape prices were up 3.7% in May but still -3.7% for the year. Fabricated structural metal bar joists and rebar prices were up .3% and 1.3% for the last 12 months.

What this Means for Metal Buyers

Energy prices are still rising, changing the cost calculations for construction projects, yet construction materials prices remain low, allowing estimators to reduce costs.

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Outokumpu has a competitive advantage that it hasn’t capitalized on and given the state of the stainless market we, quite frankly, can’t understand why.

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Outokumpu appears to be the only mill in North America that produces cold-rolled stainless steel 72 inches wide. But we’re not sure if anybody really knows that.

Coming from the mills, I believe each mill should focus on their competitive advantages, and Outokumpu is the only North American mill producing 72-inch-wide stainless. The US market for 72-inch-wide material has been historically served by imports from Outokumpu, Aperam and Tisco.

The Marketing Path is Well Paved

Outokumpu need not reinvent a marketing strategy to sell 72-inch-wide products. They only need to look at one of their direct competitors, North American Stainless.

In fact, Outokumpu ought to adopt the NAS strategy for 60-inch wide. Let’s flash back in time to about 25 years ago. Nobody used 60-inch-wide material. 60-inch wide was sold at a premium above 48-inch wide. It made sense for NAS to sell 60-inch wide at the same price, or even a cheaper price, as it optimized the full width of its rolling mills. Once the price difference went by the wayside, there were no penalties for buying wider material. Guess what? The market took off. Outokumpu should be deploying the same strategy.

It’s a Big, Wide Market

The market for 72-inch wide remains untapped. As I visited customers while working for a service center, I became interested in how many had wide lasers or other processing equipment. Other markets such as carbon steel and aluminum use wide material. Other markets such as carbon steel and aluminum use wide material. I saw that many customers had invested in new wider equipment. My hypothesis: I don’t think many buying organizations really know that 72-inch wide material is produced domestically.

That domestic capability ought to attract the attention of large cold-rolled stainless steel buying organizations.

Instead of stainless mills fighting for the same piece of pie, they need to focus on their respective competitive advantages. Outokumpu ought to be filling one of its three cold-rolling mills with 72-inch-wide orders. We just haven’t seen much promotion of this capability. The same holds true for Allegheny Technologies. Although Allegheny’s hot-rolling mill can go to 78.74-inch-wide, none of their cold-rolling processes are built around it. So, the best they can offer is to be an alternative for 60-inch wide, which in itself is not a bad thing. From a buyer’s perspective, competition is always good.

What This Means for Buyers

Wider is definitely better when it comes to welding. Wider widths help to reduce the number of welds needed. The last time we checked, welders were in short supply.

It’s pretty simple, Outokumpu: get rid of that premium and start making it attractive for people to buy your products. We’re pretty sure that will help fill that mill!

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Just about two months ago Zinc made a good rally. Despite the encouraging moves, it was hard to imagine this metal hitting record highs in a bearish commodity market.

Zinc 3M LME. 1 year out

Zinc three-month London Metal Exchange price (one-year out). Source: MetalMiner.

Last month, Zinc fell 10% as it couldn’t overcome resistance at $2,400 a metric ton. The metal is still the best performer among industrial metals and deserves some credit. If we saw a move upward in commodity markets we would expect zinc to rise to new levels but as long as markets remain bearish all we can expect for zinc is to stay range-bound.

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Similarly, lead prices surged in April but, as we expected, the rally didn’t last too long. Prices fell 12% in May.

Lead 3M LME. 1 year out

Lead, three-month London Metal Exchange price (one-year out). Source: MetalMiner.

What This Means For Metal Buyers

When the dollar is bullish and commodities bearish, industrial metals tend to fall. Metals in surplus have a tendency to fall sharply while those with better fundamentals have a hard time rallying and usually stay range-bound at best.

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A major aluminum producer challenged a US regulator’s authority to intervene in a foreign warehousing dispute and another nation placed tariffs on Chinese silicon this week.

Alcoa Challenges CFTC’s Authority

Alcoa Inc. on Monday challenged a federal commodities regulator’s authority to intervene in the contentious overhaul of the London Metal Exchange‘s warehouse policy that has caused an unprecedented drop in aluminum prices.

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In March, the Commodity Futures Trading Commission deferred a decision about the LME’s 2012 application to be registered as a “foreign board of trade,” telling the exchange it should do more to address concerns about long waiting queues.

Alcoa has questioned whether the agency even has the legal authority to intervene, and on Monday filed a request under the Freedom of Information Act (FOIA) to find out what had caused the CFTC to delay its decision on the LME.

“Our goal is to learn the extent to which the CFTC has engaged in substantive discussions with the London Metal Exchange,” Alcoa said in a statement. “The CFTC should examine any LME aluminum contract performance issues only through an open, inclusive and transparent process where all affected market participants have the opportunity to present their views,” it said.

The CFTC declined to comment.

Australia Puts Tariffs on Chinese Silicon

Australia has issued an anti-dumping notice on silicon metal exported from China after an investigation into dumping and subsidization.

Following the investigation the Australian Government Anti-Dumping Commission set dumping and subsidy margins for Hua’an Linan Silicon Industry Co. Ltd., and Guizhou Liping Linan Silicon Industry Co. Ltd. at 18.3% and 6.3% respectively. Both companies will be subject to an effective rate of combined interim countervailing duty and interim dumping duty of 12%, according to a statement by the MOC trade remedy and investigation bureau.

The commission announced dumping margin and subsidy margin for “uncooperative, and all other exporters” of 27% and 37.6% respectively, with an effective rate of combined interim countervailing duty and interim dumping duty of 58.3%.

Australia began its investigation in February last year after allegations of dumping and subsidization of silicon metal goods that originated from China with a total value of $12.78 million dollars, according to the MOC statement.

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When pharmaceutical manufacturer Biogen Idec planned a new headquarters building in Boston’s growing Kendall Square tech center, they knew the construction and program needs of the 325,000-square foot, five-story project would be a challenge for the architects, engineers and general contractor selected.

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Cambridge, the suburban Boston municipality Kendall Square is located in, had a zoning requirement that all projects stay under 75 feet. That meant architect Spagnolo, Gisness and Associates had to cut its original plan for a six-story building down to five stories.

Biogen had its own needs, too. The company wanted to break down barriers between its management and employees and encourage collaboration among its scientists and researchers through the architecture of the building.

Open Office Plan

The new global headquarters has no private offices, just individually designed workstations called “I spaces” and common “huddle rooms” for private phone calls or spontaneous meetings. The company scrapped telephone landlines for employees, who are issued laptops and headsets.

Panels in the ceilings and floors can be brought down to add soft walls and subdivide rooms for smaller group collaboration.

“The idea was to bring everyone together, no separate offices for executives or private areas for senior management, everyone has the same office in the open floor plan,” said Malisa Heiman, senior associate in the real estate and site planning for Biogen.

Construction Manager Consigli Construction co-located with SGA and several of the project’s subcontractors during the design stage of the project. All mechanical, electrical and plumbing subcontractors were on board during design meetings.

By using 3D building information modeling Consigli and SGA were able to design and deliver a composite slab system with steel trusses. All trusses were prefabricated, some smaller with penetrations and spaces for mechanical systems in beams.

One Less Floor

Consigli and SGA were able to shave the entire mechanical floor off the building and achieve the 75-foot zoning height required by putting the mechanical systems in the steel frame. With the utility floor squeezed into the building’s steel frame was completed seven months early and $2.3 million under budget. Biogen took occupation in late 2013. The artifact handed over for facility management was a 3D model.

“We demanded detail early one. The level of coordination allowed fabrication to start more quickly,” said Andy Deschenes, director of project services and innovation at Consigli.

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Rare earth prices are falling because the metals used in magnets, batteries and electronics are not so, well, rare, these days. That availability has come with a major environmental price.

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China has lost control of its smaller, unauthorized rare-earth producers and, without export quotas, those metals are finding their way to foreign markets.

In addition to upsetting markets, most of unauthorized producers also have minimal environmental controls and even government-approved factories dump acid-rich, radioactive waste water into giant, leaky, unlined ponds which are threatening to pollute the Yellow River, a source of water for 150 million people.

Clean Earths

Molycorp, by contrast, has cleaned up its act and spent billions restoring its Mountain Pass, Calif., project, replacing its extraction systems and securing its mines.

Molycorp told Fortune it is building a rare earth supply chain that does not produce the kind of horrifying environmental damage other mines do. That means everything from using a process called chloralkali to use recycled water to separate the ore-less bad than chemicals, apparently-to generating power on-site.

The company is also using a new process to seal and bury its toxic tailings. Before reopening Mountain Pass, Molycorp used to dump its tailings in a slurry behind a dam. Now it uses a high-pressure system to squeeze out most of the water, leaving behind a "paste" that will be reburied in what's essentially a 90-acre landfill just west of the pit mine.

Molycorp was recently selected as a 10-year provider of rare earths to Siemens AG for its wind turbine business and both companies touted its clean supply chain as a reason behind the move. If Molycorp, and other US-based rare earths miners, want to compete with the glut of Chinese products the way they will have to distinguish themselves is through supply chain accountability.

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China has changed its tack on steel exports.

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In previous years it has sought a more conciliatory position to complaints by trade partners, a WSJ article says in the past CISA, China’s steel trade association, has sought to persuade local steel mills to curb exports and show restraint but this year, in the face of an unprecedented surge in volumes, Ministry of Commerce spokesman Shen Danyang is quoted as taking a much more defensive line saying the rise in steel exports is due to higher global demand and is a result of Chinese steel products having strong “export competitiveness.”

Chinese Now Say Exports ‘Justifiable’

Set against a backdrop of the EU’s recent investigation into dumping of cold-rolled coil from China and Russia, Shen is reported to have come out fighting, saying “Under such circumstances (demand and competitive pricing), I feel that it’s quite normal for Chinese steel exports to these countries to be rising, and it’s quite justifiable.”

Meanwhile, the WSJ adds the US, Australia and South Korea have also signaled that they are lining up support for trade action against Chinese steel exports, which rose by 50.5% last year to a record 93.8 million metric tons and have continued at a high level this year.

Chinese steel mills are on a roll according to data reported by the WSJ. Between September last year and January this year, the volume of China’s outbound steel shipments each month shattered the preceding month’s record. While in the first four months of 2015, steel exports were 32.7% higher than a year earlier.

The reason isn’t hard to find, domestic steel prices in China have been on a slide as demand has collapsed. According to a Bloomberg article Infrastructure and construction together account for about two thirds of China’s steel demand, citing HSBC research, and construction is slow as housing prices fall there.

Construction Slump Continues

New home prices slid in 69 of the 70 cities tracked by the government in April from a year earlier, according to National Bureau of Statistics data. As a result construction-related steel prices such as rebar have hit their lowest level since 2003.

What’s worse is the peak buying period for the construction sector is now in the past and demand would fall for seasonal reasons even if construction was strong. According to Reuters, prices have dropped 13% so far this year with the most-traded rebar futures contract for October settlement on the Shanghai Futures Exchange down to 2,355 yuan ($379.71) per ton, while MetalMiner’s own China tracking service has recorded a 16% fall in domestic steel prices this year from 2,810 yuan/mt at the beginning of the year to 2,340 yuan now.

What is Chinese ‘Cost?’

Such a slump in prices has aided steel mills in their drive to dump excess capacity overseas. Is it below cost? What is the cost price in China? what are a mill’s true costs for state enterprises that receive all kinds of support both at the regional and state level?

Steel mills are under pressure to close excess capacity but so far the result has been limited, excess capacity is being offered for export rather than any real attempt made to exercise market discipline and shutter plants. The trend is likely to get worse before it gets better, particularly if Beijing’s hard line continues, we can expect more trade disputes and possibly lower prices in the year ahead.

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ast week UGI Energy Services announced plans to build a liquefied natural gas production facility in Wyoming County, Pennsylvania.

Why Manufacturers Need to Ditch Purchase Price Variance

The facility will draw Marcellus Shale gas from UGI’s Auburn gathering system, then chill it to produce up to 120,000 gallons per day in liquid form. While we have regularly reported the slowdown in both new shale oil and LNG projects in the US this year — and the subsequent cutbacks in oil country tubular goods production — investments are still being made, in the US and overseas, in drilling.

Plants, Projects Planned

Bloomberg Business reported this week that Anadarko Petroleum Corp. selected a group of developers including Chicago Bridge & Iron Co. for a potential $15 billion LNG project in Mozambique.

CBI’s joint venture with Japan-based Chiyoda Corp. and Saipem SpA, based in Italy, will work on the onshore project that includes two LNG units with 6 million metric tons of capacity each, Anadarko said Monday. Construction plans also include two LNG storage tanks, each with a capacity of 180,000 cubic meters, condensate storage, a multi-berth marine jetty and associated utilities and infrastructure, according to Texas-based Anadarko, which says it will make a final investment decision by the end of the year.

Last week, the Department of Energy gave Cheniere Energy Inc. final approval for the nation’s fifth major export terminal at Corpus Christi in Texas, which will ship the fuel from 2018.

What’s Driving Infrastructure Investment?

While oil prices have bounced back from lows seen earlier this year, it’s certainly not the market that’s driving these investments. While high-cost projects, such as those in Canada’s oil sands, have been canceled by oil exploration companies, relatively inexpensive projects with a quicker path to payback, such as these LNG projects, are still being funded.

The payback is diverse and not confined to domestic home heating. LNG has been priced at a fraction of diesel prices for the last four years. Domestic trucking (18-wheelers and other heavy consumers of diesel) have yet to make a large-scale commitment to LNG, and most places where fuel is dispensed have yet to put in expensive infrastructure to handle the product, but there has been enough success for UGI to justify committing resources to its adoption.

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