Sourcing Strategies

It’s here! At 9 a.m. CT/10 a.m. ET today (register here, now) Lisa Reisman of MetalMiner and Ian Krol of Bolero (along with MetalMiner’s Stuart Burns and David Gustin of Trade Financing Matters) are about to rock your world on the following: – A 3- and 6-month forecast for major metals including: steel, aluminum, copper and […]

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Although MetalMiner’s “crystal ball” may be going through a few tweaks and changes – and you, the readers, will be first to know when it goes down – we still want to give you a preview of our steel and stainless steel price forecasts before our free live webinar tomorrow, Friday April 24, where you’ll get our […]

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As we’ve heard many times before from our readers, conference attendees and loyal followers, “We’re not as interested in where metal prices have been, we’re much more interested in where prices are going.” We at MetalMiner have done our best to heed the call, from our daily coverage all the way up to our monthly […]

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Maybe because of Alcoa Inc.’s involvement in the Maadan smelter in Saudi Arabia, recent attention on the Middle East has centered on that production facility, but significant as its 750,000 metric tons is, it will be but part of a much larger regional capacity that has built up in recent years.

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A report from the fourth edition of Aluminium Middle East 2015 states that last year the Gulf region produced 4.83 million metric tons of primary aluminum compared to the 53.06 mmt produced globally. Of that, the United Arab Emirates (UAE) produced 2.3 mmt making it globally the fourth-largest producer accounting for more than 50% of the region’s production.

United Aluminum Emirates

85% of the metal is exported around the world although tax breaks, local metal supply and a buoyant construction infrastructure market have encouraged fast rising local consumption. Consumption for downstream application is growing at 8.4% per year compared to a global average of 3.5% supposedly making the Middle East the fastest growing aluminum market in the world according to the report.

The Gulf has six smelters: Alba, Dubal, Emal, Qatalum, Sohar and EGA, in addition to a growing alumina refining capacity. Although the UAE is nearing production capacity — it produced 2.3 mmt of it’s 2.4 mmt theoretical capacity last year — the management are tight lipped about further expansion plans.

Expansion Beyond Current Capacity

Emirate Global Aluminium’s vice chairman is also CEO of Dubai Electricity and Water Authority, underlining the close interdependency of aluminum smelters to electricity costs and water supply. Although the UAE earns some $3.9 billion in export revenues from aluminum production, it comes at a price in the consumption of vast amounts of natural gas and fresh water.

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It is one of those delicious ironies of life that India, the world’s largest consumer of gold, has very little to show when it comes to actually mining the yellow metal.

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That’s poor form because India sits on very large resources of gold, revealed by several geological studies in the past. One such study pegged India’s primary gold resources at about 491 metric tons. Despite its 6,000-year mining history, the country mines just around a pitiful 25 mt of gold annually.

Imports Flourishing

India is one of the biggest importers of gold, despite a punitive 10% import tax. In the financial year ended March 31, gold imports had touched 900 mt, up 36% from a year ago.

Perhaps keeping all this in mind, and the fact that gold mining could mean earning some big bucks, Western Australia recently expressed interest in developing gold mines in India, as part of the bilateral cooperation in minerals and energy sectors between the two nations.

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Fresh MetalCrawler news today on the US housing market, China's attempt to restructure its economy and a short-term fix to fund the Highway Trust Fund.

US Housing Starts Disappoint

US housing starts rose far less than expected in March and factory activity in the mid-Atlantic region grew modestly this month, suggesting the economy could struggle to rebound from a soft patch hit in the first quarter.

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There are expectations growth will rebound in the second quarter, but Thursday's lukewarm data suggest the momentum will probably not be strong enough for the Federal Reserve to start raising interest rates before September.

Controlling The Chinese Slowdown

Beijing's efforts to wrestle China's growth model from its investment and credit-fueled addiction to a more sustainable long-term footing, as well as to clean up the environmental damage wrought by decades of industrial pollution, is predictably slowing growth there. The difficult task for Chinese leaders will be to control the slowdown of the world's second-largest economy among calls for stimulus and government help.

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The US ranks 41st in the world in terms of the ease of gaining federal permits to proceed with construction or infrastructure projects, according to the 2014 World Development Indicators‘ Ease of Doing Business Index.

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Philip K. Howard of Common Good, recently discussed with us how permitting, not funding, is the biggest obstacle to renewing and replacing the nation’s crumbling infrastructure.

A Chief Permitting Officer

Senators Rob Portman (R. – Ohio) and Claire McCaskill (D. – Mo.) have introduced a bill that requires the first chief permitting officer for federal agencies. The bill would impact projects that cost more than $25 million and receive federal dollars, which includes most interstate roads and bridges. However, it does not give the new CPO the right to force individual agencies involved with projects to make decisions or move forward on projects in a timely manner.

“It’s a multi-headed federal bureaucracy that we have,” Howard said. “The problem with their bill is the CPO doesn’t have any authority. He can’t lean on one unreasonable agency if it’s holding up a project. There needs to be a dialectic here. If any one of 19 different agencies involved (in the Bayonne Bridge project in New Jersey) decides it’s going to dig in its heels in, there is no alternative but to give in to what they want. That feeds the paralysis. There needs to be a presumptive authority somewhere. There needs to be someone who can cut through that. If that authority is too high-handed that won’t work, either. You want an incentive for everyone to be reasonable and agree to make decisions within a reasonable timeline.”

In countries that rate higher on the Ease of Doing Business Index, interstate road or bridge projects there is a permitting officer or a department designated as the one stop for permitting and review. You can’t ignore it. There is an internal mechanism where agencies inside the permitting process can, essentially, complain if their concerns are being ignored by the overseeing agency and its CPO.

“If the question is the adequacy of environmental review, the decision maker to draw the line on that would be an environmental official,” Howard said. “If it’s a powerline running through several states, it should be the agency responsible for the adequacy of the power grid.”

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India’s dependence on thermal coke from abroad is beginning to raise concern in international circles, though some exporting countries are happy to have the business.

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India sits on mountains of thermal coke, yet mainly due to bureaucracy, it has to depend on imports.

The day, it seems, is not far off when India will topple China as the World’s number one importer, if analysts were to be believed.

Coal, Coal, Everywhere But Nary a Chunk to Mine

The situation is, indeed, grim. It has made Indian Power Minister Piyush Goyal remark at a public platform that it (importing thermal coke) is shameful. The minister told an audience after inaugurating a power project recently near Nagpur in central India that the government plans to almost double the government coal production by 2019-20. He added that importing coking coal, used for making steel, may be a necessity but thermal coal is at a surplus in the country, yet India is still being forced to import it. A Ministry of Coal report estimated coal reserves at about 300 billion metric tons, of which 125 billion mt were in the “proved” category.

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The nation’s reliance on imported minerals has more than doubled in the past 30 years and manufacturing executives say the lack of domestic exploration has affected their businesses.

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In a recent PricewaterhouseCoopers report published by Minerals Make Life, 78% of high-tech industry CEOs said that their businesses face minerals and metals scarcity. 73% of automotive CEOs and 67% of renewable energy CEOs agreed that their businesses face minerals and materials scarcity.

Though the US is home to more than $6.2 trillion worth of key mineral resources US-based businesses imported more than $42 billion worth of minerals last year to help meet manufacturing needs.

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Construction employment declined by 1,000 in March but is still up by 282,000 compared to March 2014, as the sector’s unemployment rate fell to 9.5%, according to an analysis by the Associated General Contractors of America. Association officials noted that declining demand for residential and public sector projects offset gains in other areas to contribute to the overall month job losses.

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“After 14 months of steady job gains, construction employment suffered in March,” said Ken Simonson, chief economist for the AGC. “Except for multifamily construction, home building remains weak and government officials just can’t seem to find a way to pay for needed repairs to a host of aging facilities.”

Housing/Commercial Construction Shortfall

Construction employment totaled 6.34 million in March, compared to 6.345 million in February and 6.06 million in March 2014, the AGC reported of its analysis of US Census Bureau data. Residential building and specialty trade contractors lost 2,800 jobs (-0.1%) since February but added 136,300 jobs (6%) over 12 months. Results were split in the homes sector, with residential building contractors adding 3,700 jobs for the month while residential specialty trade contractors lost 6,500 jobs compared to February.

Nonresidential contractors—building, specialty trade, and heavy and civil engineering construction firms—hired a net of 1,100 workers for the month and 145,000 (3.8%) since March 2014. As with the residential sector, the nonresidential employment sector varied by segment. The nonresidential and specialty trade contractors and nonresidential building contractors added a combined 5,000 jobs for the month, but heavy and civil engineering contractors—who typically perform public sector projects such as highway construction—lost 3,900 jobs since February.

Non-Existent Investment

The employment figures are consistent with February federal spending data released earlier this month that showed declining investments in residential and public sector construction projects offsetting growing demand for private, nonresidential construction. Simonson noted that the industry’s recovery would continue to suffer if public sector investments continue to decline and the residential market remains weak.

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