Industry News

President Obama just signed two significant trade initiatives – Trade Promotion Authority (TPA), and the extension of the Africa Growth and Opportunity Act and other trade preference programs, which includes renewal of Trade Adjustment Assistance (TAA) and trade remedy improvements. For the full story on how both got passed check out our recap of the last week in steel.

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TPA or “fast track” will ensure an up or down vote on future trade pacts, such as the Trans-Pacific Partnership, before the Senate can add amendments to them. TAA is a bill that will fund retraining programs and other support initiatives for workers displaced by future trade pacts. TAA also will improve enforcement of dumping actions against foreign manufacturers.

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Free trade gained some steam today as President Obama signed Trade Promotion Authority and Trade Adjustment Assistance.

The steel industry applauded today’s action, particularly enactment of the trade remedy measures for which the industry strongly advocated:

“Today’s bill signing is the culmination of dedication and hard work by many members of the steel industry, partner industries and numerous steel champions in the House and Senate who worked tirelessly to ensure the trade remedy provisions were included in the trade package,” Said Thomas Gibson, CEO and president of the American Iron and Steel Institute. “We thank the Administration for recognizing the critical role of the steel industry by supporting these initiatives to improve the effectiveness of our anti-dumping and countervailing duty laws.”

Gibson said the steel industry “greatly appreciate having these improved tools at our disposal in our continuing efforts to combat unfair trade, given the trade laws have not been updated by Congress in over 20 years. The surge in foreign steel imports continues at record high levels, leaving us with a great deal more work to do to mitigate the job loss and negative impact on our industry. We urge quick action by Congress to adopt the Senate version of the ENFORCE Act during the House-Senate conference on the customs bill, which will better enable companies and workers to combat the evasion of anti-dumping and countervailing duty orders. We hope to soon see the president signing that bill also,” Gibson concluded.

ENFORCE stands for Enforcing Orders and Reducing Customs Evasion. The tougher customs enforcement bill must still go through a House-Senate conference committee.

“I would not be signing these bills if I was not absolutely convinced that these pieces of legislation are ultimately good for American workers,” President Obama said at the ceremony.

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Echoing Nancy Reagan circa 1988, the US House of Representatives listened to Mitch McConnell and “just said no” – to the Environmental Protection Agency (EPA)’s Clean Power Plan. Meanwhile, the US Supreme Court finally ruled on Michigan v. EPA (involving the toxic emissions rule trying to limit mercury and air toxics, aka MATS), and the outcome, just announced today […]

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Today, the Greek debt crisis touched all markets, including commodities, and a bipartisan group of US Senators unveiled the long-term highway bill that the construction industry has long clamored for.

Greek Debt Crisis Roils Markets

Commodities could not escape the market turmoil caused by Greece’s capital controls and a hefty drop in Chinese equities, with the stronger dollar and risk aversion hitting raw materials led by oil and metals.

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On the London Metal Exchange, amid a sea of red for industrial metals prices, nickel plumbed a six-year low. The metal, an ingredient for stainless steel, fell 4.6% to $11,855 a metric ton, while aluminum was off 1.5%, copper fell 0.5% and tin dropped 2.5%.

Senators Unveil Long-Term Highway Bill

A bipartisan coalition of senators on Tuesday introduced a six-year bill that would boost overall spending on US roads and bridges.

Working against a July 31 deadline, the senators acknowledged that it will be an uphill effort to corral their Senate colleagues and the House to pass a bill.

The six-year bill would increase highway spending by almost 13% over the current level, bumping it up by more than $2 billion each year. It includes a new program to spread more than $2 billion a year among states to invest in improvements for freight facilities that move goods and products.

It further streamlines project approval, cutting federal red tape that state officials say has slowed projects down. It holds flat at $819 million the money for pedestrian and cycling improvements and for roadway landscaping. Senator Barbara Boxer (D.-Calif.) joined Sen. James Inhofe (R-Okla.), the committee’s chairman, and Sens. David Vitter (R-La.) and Thomas R. Carper (D-Del.) in writing the bill. The cost of the bill is estimated to be about $350 billion and would require new funding if it is passed.

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Yesterday, the only US-based rare earths miner — Greenwood, Colo.-based Molycorp, Inc. — filed for chapter 11 bankruptcy protection as part of a reorganization of the company's debt.

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This has been expected since Molycorp missed a debt payment early this month. In a statement, Molycorp President and CEO Geoff Bedford said, "The actions we have taken today are important steps toward achieving a restructuring of our $1.7 billion debt with our major creditor constituencies. In doing so, the company expects to exit Chapter 11 with an appropriate financing framework to support our business going forward."

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We have documented the long stock price slide Molycorp has experienced and how many manufacturers have simply found substitutions for the light rare earths they offer. As with any bankruptcy, Molycorp's shares will be removed from the New York Stock Exchange and move to the OTC pink sheets.

While it's difficult to say if Molycorp will be able to emerge as quickly as Bedford's prediction, it will take recovery in the overall rare earths market for it to succeed. Our MetalMiner Indx has documented a steady slide in rare earths prices over the last two years.

What This Means for Rare Earths Buyers

China eliminating quotas and opening its rare earth products up to foreign markets is depressing prices overall. Right now rare earths are in surplus and less production or greater demand will be necessary to bring prices back to 2011 levels.

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The Rare Earths MMI® collects and weights 14 global rare earth metal price points to provide a unique view into rare earth metal price trends. For more information on the Rare Earths MMI®, how it's calculated or how your company can use the index, please drop us a note at: info (at) agmetalminer (dot) com.

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Oil and gas take center stage today in MetalCrawler as the US makes gains in total production and refinery capacity.

US Beats Russia as Top Oil and Gas Producer

The US has topped Russia as the biggest oil and natural-gas producer in a demonstration of the seismic shifts in the world energy landscape emanating from America’s shale fields.

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US oil production rose to a record last year, gaining 1.6 million barrels a day, according to BP’s Statistical Review of World Energy released recently. Gas output also climbed, putting America ahead of Russia as a producer of the hydrocarbons combined.

The data showing the U.S.’s emergence as the top driller confirms a trend that’s helped the world’s largest economy reduce imports, caused a slump in global energy prices and shifted the country’s foreign policy priorities.

US Refinery Capacity Up, Too

US operable atmospheric crude distillation (CDU) capacity increased by 0.2% in 2014, reaching 18 million barrels per day (b/d) according to the Energy Information Administration‘s recently released annual Refinery Capacity Report. This was the second consecutive year of modest capacity growth following the 2.9% increase in 2012 that resulted from the restart of East Coast refineries that had closed in 2011.

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A couple of weeks ago we identified a new metal war ready to be waged against hospital-acquired infections, aka healthcare-associated infections (HAIs). And not surprisingly, only a few types of infections make up the majority of the problem, with the cost pegged at anywhere from $28 billion to $88 billion annually.

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So we wanted to know where the bacteria that cause some of these infections actually live and how hospitals have sought to lower infection rates.

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What can antimicrobial copper door handles and bedrails mean for hospital infections? A lot.

Quite simply, we see metals – specifically antimicrobial copper – as a big part of the solution (we will come to that in a moment).
In our prior piece we indicated the 4 most dominant categories of healthcare-associated infection: urinary tract infections, surgical site infections, bloodstream infections and pneumonia. The causes for many of these HAIs involve contamination of the healthcare setting, surgical procedures, medical devices, needles and tubes used for blood work, catheters, endotracheal procedures, contagious diseases between and among health care workers and patients, and more.

“Between” and “Among” are the Operative Words

So, where do these germs spread “between and among?”

Recently, the Wall Street Journal reported on the Hospital Microbiome Project, which collected microbe samples in a hospital setting to see how the design, room setup and items in a room exacerbate the spread of HAIs. Not surprisingly, bacteria and microbes live on places such as windows, counters, AC vents, cell phones, doorways, beds, curtains, tray tables, chairs and shower heads.

In short, microbes live on many surfaces containing metals or could contain metals such as bed rails, tray tables, counters, doorways, handles, fixtures, etc., and many of the above-referenced items.

MetalMiner followed up with Jack Gilbert of the US Department of Energy’s Argonne National Laboratory, who ran the Hospital Microbiome Project, and though the results of this study will not be released until 2016, Gilbert indicated that he supported the use of antimicrobials in hospital environments.

Furthermore, the World Health Organization (WHO) outlines a number of procedures and strategies designed to reduce infections from the environment as it pertains to hospital equipment and “all horizontal surfaces.” As one would expect, the horizontal surfaces look a lot like where the Hospital Microbiome Project saw all of the microbes.

Copper: Antimicrobial Alloys, Deploy!

And that’s where copper fits in. In 2008, five different groups of copper alloys received an EPA registration. The registration enables the registrant to “market these products with a claim that copper, when used in accordance with the label, ‘kills 99.9% of bacteria within two hours.’”

The alloys themselves contain a minimum of 60% copper and are currently marketed under CuVerro (by Olin Brass), the market leader. And herein lies the catalyst for Copper Wars – these new materials will need to compete with incumbent installed surfaces including stainless steel, plastic and other materials.

In a follow-up post we’ll examine the cost impact of regulatory penalties placed on poorly performing hospitals with unsatisfactory performance around HAIs. [Hint: it’s significant].
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President Obama and congressional republicans won a battle for trade authority in congress and a major rare earths restructured and sought bankruptcy protection.

Trade Promotion Authority Passes Senate

The US Senate voted Wednesday to give President Barack Obama “fast track” authority to negotiate trade deals—one of the final steps in a long political battle that pitted the White House against House Democrats in a battle over trade authority for the president. Fast track means deals such as the Trans-Pacific Partnership, which will be debated later this year, must be given an up or down vote by the Senate.

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The bill—which passed 60-38 in the Senate—will be sent to the president’s desk. Separate bills to provide assistance to American workers displaced by trade deals, known as Trade Adjustment Assistance, and to provide tougher anti-dumping enforcement protections from US Customs and Border Protection, particularly for the steel industry, are expected to follow and possibly be signed by the president simultaneously.

Molycorp Files for Chapter 11

Molycorp, Inc. filed for chapter 11 bankruptcy protection today.

The only US miner and producer of rare-earth elements—15 elements used in magnets, batteries, catalytic converters and other high-tech products—said it had secured an agreement with creditors to restructure its $1.7 billion in debt. The deal also provides $225 million in new financing to continue operations.

Molycorp and 20 subsidiaries filed chapter 11 petitions in the U.S. Bankruptcy Court in Wilmington, Del. The company said it expects to exit chapter 11 before the end of 2015. The restructuring support agreement is with creditors that hold over 70% of the aggregate principal amount of the company’s 10% senior secured notes.

The Company’s operations outside of North America, with the exception of non-operating companies in Luxembourg and Barbados, are excluded from the filings. Molycorp Rare Metals (Oklahoma), LLC, with operations in Quapaw, Oklahoma, also is excluded from the filings as it is not 100% owned by the Company.

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Architecture billings increased in May, while Morgan Stanley changed its forecast for nickel prices to a more bearish outlook.

ABI Back in Positive Territory

Led by growing demand for new schools, hospitals, cultural facilities and municipal buildings, the Architecture Billings Index (ABI) increased in May following its second monthly drop this year. As an economic indicator of construction activity, the ABI reflects an approximate nine to 12 month lead time between architecture billings and construction spending. The American Institute of Architects (AIA) reported the May ABI score was 51.9, up from a mark of 48.8 in April. This score reflects an increase in design services (any score above 50 indicates an increase in billings).

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“As has been the case for the past several years, while the design and construction industry has been in a recovery phase, we continue to receive mixed signals on business conditions in the marketplace,” said AIA Chief Economist Kermit Baker, Hon. AIA, PhD. “Generally, the business climate is favorable, but there are still construction sectors and regions of the country that are struggling, producing the occasional backslide in the midst of what seems to be growing momentum for the entire industry.”

Morgan Stanley Bearish on Nickel

Morgan Stanley slashed its nickel price forecasts for the second half of the year Tuesday as demand from stainless steel producers continues to be undermined by a deteriorating outlook for global growth. The bank cut its third quarter 2015 nickel price forecast by 12% to $13,228 a metric ton; and its fourth quarter outlook by 10% to $13,448 a metric ton.

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Steel production fell worldwide last month as Russia’s top oil producer, Rosneft, expanded exploration to Venezuela and ArcelorMittal USA has lost nearly $300 million since it was created via a merger in 2006.

WSA: Steel Production Fell Last Month

Global crude steel production fell 2.1% in May from the same month a year ago, as output declined in most major producer regions including China, figures from the World Steel Association (Worldsteel) showed on Monday.

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Global crude steel output fell to 139 million metric tons in the month while output in China, which produces half the world’s steel, fell 1.7% to 70 million mt.

Russia’s Rosneft Signs Exploration Deal With Venezuela

Venezuelan state oil company PDVSA said this week it has signed investment agreements with top Russian oil producer Rosneft, including a plan to create a joint venture to produce natural gas in the South American country.The venture would include the fields of Mejillones, Patao and Rio Caribe – all part of the large offshore Mariscal Sucre gas project.

ArcelorMittal USA Lost $1.5 Billion

ArcelorMittal – forged through an international merger of steel companies in 2006 – has pumped a huge amount of money into its US operations, but hasn’t seen a profit from it, ArcelorMital USA Flat Carbon President and CEO Andrew Harshaw told the Times of Northwest Indiana.

“Our USA business is not getting a return on its investment,” he wrote in a blog post. “Since 2010, the company has invested an average $1.5 billion per year into our USA facilities in both capital investment and the long-term maintenance of our assets. During those same five years, our USA business lost nearly $1.5 billion dollars, an average loss of $293.8 million per year.”

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The iron ore price recovery looks like it’ll be short-lived and half of the board of an Australian uranium miner quit after their partner company refused to expand.

Chinese Steel Slump

A slump in Chinese demand for steel has poured cold water on a rally in iron ore, with prices for the raw material likely to drop over the rest of the year, traders and analysts said.

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Dwindling stocks at China’s ports suggested tighter supply in a market that had been hit hard by plentiful or, but Goldman Sachs is predicting prices will fall back below $50 a metric ton as lack of demand persists in China.

Half of ERA Board Quits

Half of the board members of Energy Resources of Australia (ERA), the operator of Northern Australia’s Ranger uranium mine, have announced their resignations amid uncertainty over the mine’s future.

Three members remain on the board after ERA chairman Peter McMahon and independent non-executive directors Helen Garnett and David Smith stepped down over the weekend. The board members said majority owner Rio Tinto Group‘s decision to abandon work on the mine’s expansion. They said the cancellation made it difficult for the company to pursue its goals. ERA’s stock has plunged more than 70% since it said, June 12, that it would not proceed with the final development study for the Ranger 3 Deeps uranium project due to low prices.

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