boeing

ronniechua/Adobe Stock

This afternoon in metals news, renegotiation efforts focused on the North American Free Trade Agreement (NAFTA) appear to be at a standstill, Chile’s state copper commission boosts its 2018 copper forecast and a European agency advises plane manufacturers to suspended their use of products from embattled Japanese steelmaker Kobe Steel.

Benchmark Your Current Metal Price by Grade, Shape and Alloy: See How it Stacks Up

NAFTA Deadlock

The fourth round of renegotiation talks regarding the 23-year-old NAFTA concluded yesterday, but the U.S., Mexico and Canada appear to be no closer to a consensus.

According to Bloomberg, initial hopes for a quick resolution have fizzled, as talks will now be extended into 2018 (which was previously hoped to be avoided, given the scheduled elections in each country next year).

The next round of talks is scheduled for Nov. 17-21 in Mexico.

Cochilco Forecasts Copper at Nearly $3/Pound in 2018

Chile’s state copper commission, Cochilco, on Wednesday put out a forecast for 2018 including a prediction of the average global copper price hitting $2.95/pound.

The new forecast is up significantly from Cochilco’s mid-year estimate of $2.68/pound. Greater Chinese demand is cited as a supporter of the global price.

Kobe Steel Saga Continues

The fallout from the Kobe Steel data falsification scandal continues, as the European Aviation Safety Agency (EASA) advised plane manufacturers to suspend their use of products from the firm, the third-largest steelmaker in Japan, according to CNN Money.

According to the report, EASA advised those manufacturers to find alternative suppliers and conduct a “thorough review of their supply chain.”

Free Download: The October 2017 MMI Report

A number of global heavyweights use Kobe Steel products, including GM, Boeing, Ford and Toyota, according to the report.

The U.S. Department of Commerce. qingwa/Adobe Stock

The U.S. Department of Commerce has recently issued preliminary determinations in countervailing duty (CVD) and antidumping investigations of imports from Japan, China, Romania, Kazakhstan and others.

Benchmark Your Current Metal Price by Grade, Shape and Alloy: See How it Stacks Up

Last week, the department added Canada to the list, dropping a major countervailing duty on imports of large civil aircraft. The move, coincidentally, came just before the third round of North American Free Trade Agreement (NAFTA) renegotiation talks, which wrapped up Sept. 27 in Ottawa.

The Department of Commerce issued a preliminary determination early last week in its CVD investigation of imports of 100- to 150-seat large civil aircraft from Canada, resulting in a whopping 219.63% tariff on the CSeries of planes exported to the U.S. by Bombardier, Inc.

“The U.S. values its relationships with Canada, but even our closest allies must play by the rules,” Secretary of Commerce Wilbur Ross said in a prepared statement. “The subsidization of goods by foreign governments is something that the Trump Administration takes very seriously, and we will continue to evaluate and verify the accuracy of this preliminary determination.”

According to the Department of Commerce’s preliminary ruling, exporters of the aircraft received countervailable subsidies of 219.63%.

The Commerce Department will instruct U.S. Customs and Border Protection (CBP) to collect cash deposits from importers of 100- to 150-seat large civil aircraft based on these preliminary rates.

The Boeing Company was the petitioner in the case. Petitions were filed April 27.

The ruling is a big win for Boeing — if it holds, that is — which as Bloomberg reported late last week, has developed an unlikely positive relationship with President Donald Trump.

However, as NAFTA negotiations unfold, such a move is sure to increase tensions. According to a recent Ipsos poll, just 33% of Canadians said renegotiating NAFTA was a good thing, compared with 48% of Americans and 46% of Mexicans — indicating, to an extent, that Canada is happy with the current order of business (of course, it’s just one poll).

Naturally, imposition of a nearly 220% tariff on any product, let alone large aircraft, is going to be a big deal. Bombardier’s stock dropped $0.07 from Sept. 28 to Oct. 1, from $1.82 to $.175 (a 3.7% drop). Boeing, meanwhile, closed at $253.70 on the New York Stock Exchange Sept. 26, compared to a closing price of $256 on Monday.

According to a Reuters report, threats of retaliation from Quebec were already being heard late last week.

Quebec Premier Philippe Couillard took the Commerce Department’s preliminary ruling very seriously.

“Boeing may have won a battle but, let me tell you, the war is far from over. And we will win,” Couillard said, according to the Reuters report.

The ruling is only preliminary, but it certainly ratchets up tensions in what has already been a NAFTA dialogue fraught with tension, in large part a result of the accelerated negotiating schedule.

In addition, the ruling is not the first one this year to target Canadian imports. On June 26, the department issued a preliminary ruling calling for duties of 30.88% to 17.41% on imports of softwood lumber from Canada.

Free Download: The September 2017 MMI Report

The Department of Commerce has launched 68 antidumping or CVD investigations this year between Jan. 20 and Sept. 20, representing a 45% increase in cases from the same time frame last year, according to the department’s release.

A final CVD determination in the investigation is scheduled for Dec. 12.

It could be argued that Donald Trump’s arrival in the White House has come at the perfect time for the U.S.A.’s number two defense contractor, Boeing. If for no other reason than his assault during the election on the cost of Lockheed Martin’s F-35 program created an opening for Boeing to put a lower-cost alternative back on the table.

Lockheed Martin’s F-35C won’t be ready in time, enter Boeing and an F/A-18 Super Hornet upgrade. Source: Adobe Stock/Spacekris.

At the same time, the U.S. military, particularly the Navy, are facing a bit of a problem with their older F/A–18 Super Hornets. As an article in Sea Power magazine notes, after 16 years of nearly constant combat in Afghanistan, Iraq and Syria the F/A–18 Super Hornet is in danger of exceeding it’s 6,000 hours of operational life way before it had been expected in the next decade.

Benchmark Your Current Metal Price by Grade, Shape and Alloy: See How it Stacks Up

Meanwhile, the Navy variant of the F-35, the F-35C is still a long way from being finished and ready for service. Largely because of the compromises Lockheed Martin has had to incorporate into the F-35 program for the Marine Corps’ F-35B vertical-landing jet, the program is way over budget, running late and, still, according to Bloomberg has major operational capability shortcomings to overcome. Read more

President Donald Trump has formed a manufacturing jobs initiative, one that will include executives from Ford Motor Co., Dow Chemical, U.S. Steel Corp. and others.

Click Here for Current Metal Prices

Part of Trump’s overall jobs creation agenda, the project will involve ongoing meetings between the president and business leaders to “share their experiences and gain their insights.” According to a press release, Trump will call on the executives listed for perspectives on “how to best promote job growth and get Americans back to work again.”

Many of the executives listed as part of the initiative met with Trump on his first full day in office on Monday: Dow’s Andrew Liveris, Dell Computer‘s Michael Dell, Under Armour‘s Kevin Plank, Tesla Motors‘ Elon Musk Lockheed Martin‘s Marillyn Hewson, Klaus Kleinfeld of Arconic, Inc. and Nucor Corp.‘s John Ferriola. Scott Paul, President of the trade association the Alliance for American Manufacturing and union leaders Richard Trumka and Thea Lee, both executives in the leadership of the AFL-CIO, are also in initiative.

Two-Month Trial: Metal Buying Outlook

Press Secretary Sean Spicer said at a press briefing on Monday that the group will meet next month and then going forward on a quarterly basis.

Here’s the full list of Trump’s manufacturing jobs initiative members:

  • Andrew Liveris, The Dow Chemical Company
  • Bill Brown, Harris Corporation
  • Michael Dell, Dell Technologies
  • John Ferriola, Nucor Corporation
  • Jeff Fettig, Whirlpool Corporation
  • Mark Fields, Ford Motor Company
  • Ken Frazier, Merck & Co., Inc.
  • Alex Gorsky, Johnson & Johnson
  • Greg Hayes, United Technologies Corp.
  • Marilynn Hewson, Lockheed Martin Corporation
  • Jeff Immelt, General Electric
  • Jim Kamsickas, Dana Inc.
  • Klaus Kleinfeld, Arconic
  • Brian Krzanich, Intel Corporation
  • Rich Kyle, The Timken Company
  • Thea Lee, AFL-CIO
  • Mario Longhi, U.S. Steel
  • Denise Morrison, Campbell Soup Company
  • Dennis Muilenburg, Boeing
  • Elon Musk, Tesla
  • Doug Oberhelman, Caterpillar
  • Scott Paul, Alliance for American Manufacturing
  • Kevin Plank, Under Armour
  • Mchael Polk, Newell Brands
  • Mark Sutton, International Paper
  • Inge Thulin, 3M
  • Richard Trumka, AFL-CIO
  • Wendell Weeks, Corning

Subsidies given by the U.S. state of Washington to Boeing are illegal under international trade rules derived from the General Agreement on Tariffs and Trade (GATT), the World Trade Organization said on Nov. 28.

MetalMiner Price Benchmarking: Current and Historical Prices for the Metals You Buy

It was a victory for rival aircraft maker Airbus and the European Union. The ruling from a WTO panel is the latest blow in a drawn out trans-Atlantic battle between the aviation industry’s two titans, which has seen both Airbus and Boeing score points along the way.

In the decision, the WTO said that subsidies set up by Washington state to support production of Boeing’s 777X commercial jet, were “prohibited” as they encouraged the use of domestic materials, fueling unfair trade distortions.

The panel called  for the subsidies to be withdrawn within 90 days.

Airbus was represented by the European Union in the case while the U.S . federal government fought for Boeing and Washington state because companies and regional authorities are not represented at the Geneva-based WTO.

Potential Tata, Thyssen Merger Could Shutter Half of Port Talbot

Tata Steel and Thyssenkrupp AG are looking at reducing the size of Britain’s largest steel plant in Port Talbot, Wales, industry sources told Reuters, as the two firms press ahead with merger plans for their European steel operations. The plan would also deal with the overcapacity afflicting the industry.

Two-Month Trial: Metal Buying Outlook

The move could see one of Port Talbot’s two blast furnaces shut, halving the plant’s capacity. Up to 4,000 people are employed at the site.

It may be strong political lobbying or maybe a perception that the industry is crucial for economic development, but the aerospace and shipping industries have certainly avoided the worst of environmental regulation over the last decade or so.

MetalMiner Price Benchmarking: Current and Historical Prices for the Metals You Buy

The energy and heavy industry sectors have borne the brunt of what some would call over-regulation. But that’s all about to change. 191 Countries gathered in Montréal last week to adopt a global market-based system to tackle the rise of carbon emissions from international air travel an article in the Telegraph explains.

Offset Market

Under the new deal, airlines will be expected to offset their emissions growth after 2020 by buying “offset credits” in line with their carbon footprint, the terms of the agreement layout. The carbon costs are expected to incentivize the industry to develop lower carbon fuels and more efficient technologies, according to the newspaper. Read more

Today in Metalcrawler, a major construction project in Washington will eventually require 33,000 tons of steel and a powerful lawmaker wants to tie the Highway Trust Fund to a trade bill.

Boeing 777X Plant Requires Giant Steel Trusses

About 33,000 tons of steel are needed to build the $1 billion Boeing 777X wing plant in Washington state. The building is 1,200 feet long and has two open spans of 420 feet wide and 460 feet wide.

Free Download: MetalMiner’s Top Service Centers Guide

To support those spans, 45-foot-deep steel girders are being used. At any moment 50 trucks are on the road bringing steel to the site from Oklahoma, Arkansas and Colorado.

The $1 billion, 1.3-million-square-foot building will be where Boeing fabricates carbon composite spars and skins for the 777X wings.

Pelosi Wants to Link Trade, Highway Bills

House Minority Leader Nancy Pelosi (D-Calif.) said Democrats would be more likely to support the controversial trade bill that was defeated on Friday if Republicans would support a long-term transportation funding package, the Hill reported.

Pelosi helped sink President Obama’s trade package in a Friday vote by announcing her opposition, but she also signaled she wants Republicans to consider a deal involving highway funding in a letter to her conference. The Highway Trust Fund was extended through the end of July recently but both parties have said they desire a long-term deal that will fund federal highway maintenance through at least the next five years.

Congress has been grappling with a shortfall in transportation spending that is estimated to be about $16 billion per year, and they have not passed an infrastructure package that lasts longer than two years since 2005.

Free Download: Latest Metal Price Trends in the June MMI Report

Okay, so who’s the most successful aircraft maker in the world? Yes I know it’s a silly question, it depends on how you define successful but the two behemoths, Airbus and Boeing, have just released numbers for the fourth quarter that top off their 2014 performance.

FREE Download: The Monthly MMI® Report – covering the Aluminum market.

The FT reports Airbus hit a new production record to supply 629 aircraft in 2014, marking 13 consecutive years of increased deliveries. Not to be outdone, Boeing delivered 723 aircraft in the period, making the US group the world’s largest manufacturer of aircraft for the third year in a row. So colors to Boeing then? Well, not quite because according to the Telegraph Airbus booked 1,456 net new orders for its aircraft in 2014 – net aircraft being new orders less cancellations, their second-best year ever and down only 3% on 2013 when they sold 1,503 aircraft.

StuartsF35_500

Not THAT kind of dogfight! Source: Istock.com

Boeing, by comparison, booked 1,432 new orders in 2014 so, counting new orders, Airbus came out on top. Both firms have massive forward-order books, or a backlog on deliveries depending on how you want to term it. This is great for suppliers, both mills and distributors, who can see a book of business stretching off into the future. No wonder aluminum extrusion and plate mills capable of meeting the requirements of the aerospace industry are investing with more confidence in capacity and supply chain logistics than any other – with the notable exception of automotive which, like aerospace, appears to be on a long-term growth trend for aluminum consumption.

Read more

aluminum warehouse stocks

Quite a summer for the light, gray metal – Goldman Sachs getting in hot water with LME warehousing, Boeing giving aluminum a vote of confidence, and prices still underperforming for the most part.

How Boeing Buys Aluminum: Metal Prices and Raw Material Cost

  • We did a Q&A with Jeff Carpenter, Senior Procurement Manager, Raw Materials, of Boeing Commercial Airplanes Supplier Management

How Aluminum Producers Profit from the LME Warehousing Scheme

  • We broke down an exclusive look at how Alcoa Inc. and other primary producers make bank, not just Goldman Sachs

And we showed you exactly how aluminum trickles from upstream down – and how the LME warehouses used to supply secondary producers:

LME warehouse scheme infographic

The Boeing Company, long known for its extensive supply chain management practices (not counting the recent 787 Dreamliner debacle), is one US-based OEM that can teach us a lot about metals procurement.

Procurement of the raw materials that go into the aerospace OEM’s products, including but certainly not limited to aluminum and titanium and its alloys, is quite a job considering the thousands of parts that go into a typical Boeing aircraft. And the competition spurred by newly developed materials, such as plastic and carbon fiber composites, give the old dogs a run for their money.

One old dog, in this case, is aluminum.

RELATED: Download the latest (free!) Monthly MMI® Report – covering the Aluminum market.

Recently, at the Paris Air Show, Boeing CEO Ray Connor “defended the use of traditional aluminum metal for the fuselage of its upgraded 777 twin-aisle jet as Airbus SAS (EAD)’s A350, a competing model made chiefly of composite plastic,” made its first test flight just before the show began. Connor told Bloomberg BusinessWeek that “using the existing 777 production system is part of Chicago-based Boeing’s strategy to reduce the cost of airplane development.”

These costs of airplane development, and how aluminum procurement by Boeing as a major OEM reflects their management of suppliers and supply chain, are naturally what MetalMiner is interested in. So we did a Q&A with Jeff Carpenter, Senior Procurement Manager, Raw Materials, of Boeing Commercial Airplanes Supplier Management:

Read more