Industry News

Thanks to fees from its state cap-and-trade law, Northern California homeowners will soon start receiving completely free crystalline silicon photovoltaic solar panels.

Why Manufacturers Need to Ditch Purchase Price Variance

Oakland nonprofit Grid Alternatives is using $14.7 million raised through the state’s cap-and-trade system to install the panels in lower income neighborhoods for free. The fees were paid by industries whose emissions exceeded the state "cap" set by the new law. The fees were donated by state to Grid and the money came out of the Greenhouse Gas Reduction Fund (GGRF), also established by the cap-and-trade law.

Silicon was the biggest mover this week on our renewables MMI, as well.

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New futures contracts for rebar and scrap cleared a hurdle recently and a major automaker said thanks, but no thanks, to aluminum bodies.

LME Closes in on Market Makers

The London Metal Exchange (LME) is close to sealing deals with market makers to guarantee liquidity for its new steel rebar and scrap futures, a move that industry experts say is a step in the right direction.

Why Manufacturers Need to Ditch Purchase Price Variance

But for real longevity, the contracts will need crucial support from major banks and participation of major steelmakers and institutional investors.

A senior level source with knowledge of the process told Reuters progress had been made in discussions with professional market makers as well as physical traders. The contracts are scheduled for launch in October.

“Having market makers would make a huge difference. In the current steel contracts there are no market makers,” Antonio Novi, a director at Levmet, a metals trader that also provides hedging services to industrial companies, told Reuters.

“If it’s true that there’s market makers, we’ll be using it, but until I see it I’ll doubt it very much.”

The LME’s only existing steel contract, a physical contract for billet, has struggled with scant volumes. Its new steel contracts will be cash settled, and so cannot be crippled by problems withdrawing metal from LME warehouses.

Some key steelmakers joined the LME Steel Committee earlier this year, including AK Steel, Klesch Group and the Turkish Steel Exporters Association.

Jeep Sticking With Steel

After months of confirmed reports from inside Fiat-Chrysler suggesting otherwise, FCA CEO Sergio Marchionne has confirmed that the next-generation Jeep Wrangler will not follow the Ford F-150’s lead and adopt an all-aluminum body. Instead, the 2017 Wrangler will stay predominantly steel, and use an aluminum hood, doors, and fenders to keep weight down.

Marchionne said they’d simulated the mileage, “but because of the difference in costs, not just in materials but the actual assembly process, I think we can do almost as well without aluminum,” according to the Wall Street Journal.

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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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The London Metal Exchange (LME) yesterday launched a month-long consultation on proposals designed to broaden access to its electronic trading platform, LMEselect. The changes put forward include opening up LMEselect access to category 3 and category 4 (non-clearing) members of the exchange as well as adding flexibility to the criteria required to apply for LME membership.

Why Manufacturers Need to Ditch Purchase Price Variance

“Today’s proposals are crucial to our overarching aim to maximize liquidity and participation on the LME,” said Garry Jones, LME CEO. “Opening up access to trading on LMEselect is beneficial to everyone trading on any one of our venues as it will bring more liquidity and price transparency to all.”

Adding flexibility to the application criteria for LME membership means that prospective members may, in some cases, benefit from exemptions from the UK Financial Conduct Authority (FCA) authorization requirements, which represents a significant step in the LME’s Liquidity Roadmap. The changes would make the LME electronic market more attractive to non-UK based traders who want to take advantage of the Exchange’s enhanced liquidity initiatives but who are currently not eligible or are discouraged from applying by electronic access restrictions.

If the LME decides to proceed with the proposed changes after the consultation period ends, then full details of the category 4 membership requirements including fees and B share requirements will be published.

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Minutes were recently released of the Federal Reserve Board’s most recent meeting and another rosy forecast for the US construction market was released.

Construction Starts About to Surge?

Construction starts for residential and nonresidential construction in the second quarter should improve after weak numbers in the first quarter, according to a forecast by consultancy CMD.

Why Manufacturers Need to Ditch Purchase Price Variance

However, construction starts overall in the US could rise 9.2% this year, even though both residential and nonresidential starts have been downgraded, CMD said. The CMD forecast is derived by combining proprietary data with macroeconomic factors.

No June Rate Hike

Federal Reserve officials believed it would be premature to hike interest rates in June even though most felt the US economy was set to rebound from a dismal start to the year, according to minutes from their April policy meeting released on Wednesday.

The central bank debated whether a slew of disappointing data, including weak consumer spending, signaled a temporary slump or evidence of a longer-lasting slowdown, with most participants agreeing economic growth would climb to a healthier pace and the labor market would strengthen.

The US economy grew an anemic 0.1% in the first quarter, according to the most recent government data.

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Managing indirect spend is crucial for controlling costs. It is also a proven tactic. But direct connectivity still has a ways to go in aligning with indirect procurement. In a relevant piece of new research from our sister site Spend Matters, the team lays out just why direct procurement execution systems need to integrate visibly between tier-1 manufacturers, logistics providers, banking partners, MSPs, BPO firms, raw materials suppliers and more.

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An Indian steel major reports a loss and architecture billings slip in April.

ABI Down

The Architecture Billings Index (ABI) dropped in April for the second month this year. As an economic indicator of construction activity, the ABI reflects a nine to 12 month lead time between architecture billings and construction spending.

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The American Institute of Architects (AIA) reported the April ABI score was 48.8, down sharply from a mark of 51.7 in March. This score reflects a decrease in design services (any score above 50 indicates an increase in billings).

Tata Reports a Loss

Tata Steel Ltd. reported on Wednesday a consolidated quarterly loss of $888.8 million (56.74 billion rupees) for its fiscal fourth quarter ended March 31.

Consolidated net sales for the quarter fell about 21% from a year earlier to 333.4 billion rupees, hit by weak steel prices and international demand.

The results follow the company’s announcement last week of about $785 million non-cash charge in the fourth quarter, mainly related to its loss-making long products unit in the UK.

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Denied deals abound today in MetalCrawler. An Indian steel major says not so fast on a sale of its long products division and Rio Tinto Group might be close to moving an aluminum division but is refusing to comment so far.

Tata Says No Long Products Deal Done

Reports that Tata Steel is about to sell its long products division to Klesch Group are “speculative” and do not reflect the views of the company, the steelmaker told India’s National Stock Exchange on Tuesday.

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Geneva-based Klesch Group, a global commodities business involved in chemicals, metals and oil production and trading, declined to comment.

Tata Steel, Europe’s second-largest steelmaker, said in October it is in talks to sell its loss-making long products division, which employs 6,500 people mostly in the UK, to Klesch.

Same With Pacific Aluminium

Rio Tinto Group plans to sell some of its aluminum assets in a potential $1 billion deal, the Financial Times reported, reviving a sale plan for its Pacific Aluminium unit two years after it was canceled.

The FT, citing “people aware of Rio’s plans”, said on Sunday that Rio had hired Credit Suisse to find a buyer for Pacific Aluminium, known as PacAl, which comprises a group of smelters in Australia and New Zealand.

A spokesman for Rio Tinto said the company “doesn’t comment on market speculation.”

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The downturn in steel has led to more layoffs and a major liquid natural gas project was announced last week.

U.S. Steel Layoffs

U.S. Steel has laid off another 285 workers at its Gary Works mill in the latest wave of layoffs spurred by weak demand for its steel.

Why Manufacturers Need to Ditch Purchase Price Variance

Company spokeswoman Courtney Boone cited “challenging market conditions that are impacting the company” for the latest layoffs at the northwestern Indiana plant.

UGI Plans Pennsylvania LNG Processing Plant

UGI Energy Services LLC plans to build a liquefied natural gas production facility in Northeastern Pennsylvania.

The facility will be adjacent to UGI’s Manning compressor station in Washington Township, Wyoming County, Pa., the gas supplier announced Thursday. State and local officials have not yet approved the project.

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.

The plant could supply a variety of industries, spokesman Matt Dutzman told the Times-Tribune.

These include oil and gas drilling rigs, truck fleets and remote industrial users not well connected to pipeline grids. The new $60 million facility would support 50 to 75 construction jobs and at least six permanent jobs during operations.

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The Commerce Department determined that imports of steel nails from South Korea, Malaysia, Oman, Taiwan, and Vietnam have been sold in the US at dumping margins ranging from up to 11.80% for South Korea, 2.61% to 39.35% for Malaysia 9.10% for Oman, up to 2.24% for Taiwan, and a whopping 323.99% in Vietnam.

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The imports of steel nails from Korea, Malaysia, Oman, and Taiwan received “de minimis” countervailable subsidies resulting in final negative determinations that apply to those countries, respectively. Commerce determined that imports of steel nails from Vietnam received countervailable subsidies ranging from 288.56% to 313.97%.

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