Steel

Autodesk, Inc. announced the release of its 2016 Design Suites at a launch event in Boston this week, offering more control over all aspects of the design-build process through a connected desktop and cloud user experience.

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For structural steel, the main difference in the 2016 suite of software products is a much tighter integration of the Advance Steel, a 2013 acquisition, and the Revit 2016 3D building information modeling platform.

“The means of production – how we think about and deliver buildings and infrastructure, both intellectually and physically, is changing,” said Amar Hanspal, senior vice president of Autodesk’s information modeling and product group. “By 2020 there will be 50 billion connected devices in use, with the number rising by 20 billion per year. Buildings are joining the digital world.”

New Rendering Engines

The 2016 version of Revit has new rendering engines that can deliver a rendered scene in minutes instead of hours under the old engine. It also has linked model cropping and better support of the open-source IFC file format.

“Customers don’t want to work in a different environment when doing design and detailing,” said Jim Lynch, vice president of Autodesk’s building group. “No longer have to use (a separate design tool) for detailing. Steel, cast-in-place concrete can all be done in Revit. The plan is to integrate (Advance Steel’s design tools) into Revit. We will keep Advance Steel as a separate product but WILL make it work seamlessly in the Revit environment.”

Better Integrated

Plant 3D, a plant design product, and Advance Steel have also been integrated so you can bring Advance Steel content into Plant 3D.

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When the Tiger and the Dragon dine together the world sits up and takes note.

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Signing business agreements worth $22 billion is a big deal so Indian Prime Minister Narendra Modi’s recent visit to China made big, bold headlines here. Some of India’s old, and some not so old (Adani, Bhusan Power and Steel), players in the steel and power sectors, were signatories to the 26 deals.

Steel and Energy Deals

The notable contracts included the one between India’s IL&FS Energy Development Co. and China Huaneng Group for a 4,000-megawatt thermal power project, and India’s Bhushan Power and Steel sealing a pact with China National Technical Import and Export Corporation for an integrated steel project in Indian province of Gujarat.

So here were two Asian, nee global, giants, breaking bread and talking business at the same table, sending analysts scurrying to their laptops to chalk out spreadsheets and draw pie charts in an effort to understand the impact of all this in the long term.

While business leaders of both nations, including Alibaba Group Chairman Jack Ma, spoke of long-term interests, such talk brought the arclight swinging back to the present and short-term situation currently prevailing in the Asian region, especially in iron ore and coking coke, two crucial ingredients in making steel.

There’s no doubt in anyone’s mind that steel is the mainstay of Asia’s infrastructure, a fact that has had iron ore and coal miners — and even steel majors in China, India and as so far as Australia — jockeying for a major piece of new market share. With demand from Europe and the US lacking, suppliers in all three countries are walking a thinly veiled tight rope to ensure their survival.

Wither Demand

Once a destination of hope, the Chinese dragon, for now, has lost some of its hunger. Some say next-door neighbor India is where one can find fresh action. The jury’s honestly still out on that one, though. But the slowdown in China’s economy means less need for steel, in turn, lowering the demand for ore and coking coal. Leaving miners re-tweaking their business plans.

Last year, for example, the Rio Tinto Group, BHP Billiton Ltd. in Australia, and Vale SA of Brazil, to stem the tide, had stepped up low-cost output to pump up volumes, leading to a glut. Now, everybody’s mantra seems to be – cut production costs faster than the falling prices.

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The transportation funding can got kicked down the road in Washington and a major steel company agreed to pay for a predecessor’s Michigan environmental infractions.

House Passes Short-Term Highway Bill

The House voted Tuesday to extend federal transportation funding for two months, in an attempt to prevent an interruption in the nation’s infrastructure funding at month’s end, the Hill reported.

Why Manufacturers Need to Ditch Purchase Price Variance

The decision to punt a long-term funding extension to the summer was approved by a 387-35 vote, over the objection of Democrats, who argued Congress should have found a way to pay for a longer-term extension.

Twelve Republicans and 23 Democrats voted against the bill. Rep. Mark Amodei (R-Nev.) voted “present.”

Ahead of Tuesday’s vote, White House officials said President Obama is willing to sign the temporary transportation funding extension if it is passes the Senate later this week, even though he would prefer a longer-term solution.

AK Steel Dearborn Pays Severstal’s Fines

AK Steel will pay $1.35 million to settle alleged air pollution violations at a Dearborn plant previously owned by the American subsidiary of Russia-based Severstal.

The Justice Department announced the agreement among the steelmaker, the federal government and the State of Michigan Wednesday, saying it settles 42 violations alleged by the state Department of Environmental Quality and two notices issued by the Environmental Protection Agency against Severstal North America.

AK Steel, based in Ohio, announced last summer its intention to purchase Severstal’s Dearborn coke-making facility and other assets for $700 million. Following the sale, completed in September of last year, AK Steel took responsibility for past violations.

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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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As coil import arrivals drop off (the arbitrage for speculative tonnage disappeared in 2015, but it takes 3-4 months for physical arrivals to catch up), we expect that metal service centers will be back in the purchasing game over the next quarter.

Why Manufacturers Need to Ditch Purchase Price Variance

Crucially however, they do not need to buy in big volume, but expect to see steadier business filling in holes in certain products rather than big blanket buys. That trend would be supported by a stronger economic environment than in Q1.

That will mean the initial going for a price increase in hot-rolled or cold-rolled coil will be tough sledding, but we expect prices in the short-term to hit the $470 per ton target by the end of this month.

Despite probable attempts by mills to increase the price again, we believe that coil will fluctuate around this price through the second quarter, as distributors have plentiful inventory and are well-stocked with lower-priced (import) coil that is competitive. Moreover, too aggressive a price move will bring imports back in as there is plenty of cheap coil around.

Once that inventory is cleared, however, thanks to lower imports and cuts in domestic production, we expect a moderate gain in pricing in the second half of the year – back over $500/ton.

One wild card that we would consider a trigger for further price gains is an anti-dumping filing against Chinese, Indian and potentially other sources on CRC and HDG. Chinese supply of CRC was 6% of the US market in 2014 while Chinese and Indian supply of HDG was a combined 8%.

This is not insignificant, but highlights that this will not be a cure-all for the sector, although we suspect that if the US mills do go for a filing, they will blanket the market and try to pick up other suppliers in their net, such as Korea, Taiwan, Brazil and Russia that will account for a few more percentage points.

Our view remains that anti-dumping action is “whack-a-mole” to some extent with other non-named suppliers popping up as alternatives. Nevertheless, the removal of China, in particular, would result in some of the really low-priced coil exiting the market and the Chinese are looking to some extent to develop a long-term customer base of end-users that would be detrimental to US mills.

As such, we believe that a filing would help US mill volumes (at least initially), although we believe that the pricing impact would be short-term at best.

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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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With HR coil prices at $450 per ton in mid-April (although big buyers could get $420/ton), HR coil prices had dropped $250/ton since late summer. US mills blamed imports – which is true – but forgot to mention that they had kept steel prices at elevated levels for 9-12 months while prices in the rest of the world were tanking. What did they expect?

Why Manufacturers Need to Ditch Purchase Price Variance

It is our view that we are now at the bottom and in late April, ArcelorMittal led the industry with a $20/ton increase for June deliveries. Since then, transaction prices have edged up to $460/ton and slightly above. So where do we go from here?

Lead times across the industry vary from around 3-5 weeks for hot-rolled coil. The aim of the price increase was to extend those order books and lead times and therefore create momentum for further price gains. It certainly brought some buyers back in with any remaining May tonnage sold out quickly at the lower price.

Inventory Surplus

At this point in the cycle, the inventory situation is critical. Inventories remain elevated, but total flat-rolled stocks appear to have stabilized at just over 6 million tons (around 10-11 weeks of demand) and we expect them to begin to fall steadily over the next few months as service center order levels have been slack for much of 2015 as they received earlier orders – both domestic and import.

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Like most governmental, or worse intergovernmental, bodies the Organisation for Economic Co‑operation and Development is more dedicated to talking shop than legislating, and a report following the recent meeting of the OECD Steel Committee is no exception. Long on talk and short on hard recommendations.

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As a snapshot of the current, global steel market it deserves a pause and review even if its recommendations are likely to be largely ignored by those governments that can most have any beneficial impact on the market.

Their first finding, and this will come as no surprise to anyone in the industry, is global apparent steel use has nearly ground to a halt in 2015. According to the OECD’s March 2015 “Interim Economic Assessment,” the effects of lower oil prices and monetary policy easing have led to a slight improvement in economic growth prospects in the major economies, but the near-term outlook is still one of reduced world GDP growth.

Miniscule Growth

Global crude steel production grew by only 1% in 2014, driven by China’s slowdown and modest growth in developed economies. In the first quarter of 2015, global crude steel production decreased by 1.8%, while Chinese crude steel production in the first quarter of 2015 fell by 1.7%, reaching 811.5 million metric tons in annualized terms.

In the rest of the world, crude steel production was 810.8 million mt in the first quarter of 2015, in annualized terms, down 1.9% compared to the previous year. Looking forward, global apparent steel use (of finished steel products) is expected to grow by only 0.5% in 2015 and by 1.4% in 2016, after 2014 when it grew by an equally anaemic 0.6%.

Anyone active in the North American market will not be surprised to hear that OECD expects demand here to decline by 0.9% in 2015 and remain weak in Central and South America. Only the Middle East and Asia, outside of China, are expecting to show decent growth with India probably leading the way.

In light of the poor growth prospects, and discussion went so far as to suggest we may be in a permanently low steel growth environment from here on as population growth slows and populations age, overcapacity and the consequences thereof featured highly in the committee’s attentions.

Too Much Investment

Too much new steel investment continues to be made, often aided and abetted by governments even though overcapacity is chronic globally and severe in markets where normal market forces do not provide counterbalancing controls. As a result, steel-related trade actions are on the rise, with complaints accounting for as much as 25% of the total number of complaints brought to the WTO in recent years.

This isn’t going to get any better in 2015-16 and will create distortions in markets as producers switch their sales focus in response to legislation.

Mandatory Climate Change Comment

No intergovernmental meeting would be complete without reference to climate change or environmental factors and, not to disappoint, the OECD wraps up with the observation that progress on low-carbon industrial innovation over the next decade is crucial. The iron and steel sector accounts for about 22% of total industrial energy use and 31% of industrial, direct CO2 emissions. So, like it or not, changes in environmental legislation are going to have a major impact on the industry in coming years, particularly in those countries where these standards are actually enforced.

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409 is often considered “the barely stainless steel,” or affectionately the most humble of the stainless steels. Stainless steel must have a minimum of 10.5% chromium to be stainless steel. 409 Contains a minimum of 10.5% chromium, thus the moniker barely stainless steel.

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In addition to minimal chromium content, 409 stainless has three additional properties that make it an attractive product for substitution: it is the lowest cost stainless, it has good oxidation resistance and excellent formability.

Middleweight Corrosion Fighter

According to AK Steel, 409 gets specified where oxidation and corrosion requirements go beyond carbon steel and some coated steels. North American Stainless suggests, “it is not as resistant to corrosion or high-temperature oxidation as the higher-alloyed stainless steels (430 or 304), but it is still far superior to mild steel and low alloy corrosion resisting steels and most coated mild steels.”

And not to ignore the other main US producer of 409, Allegheny Technologies explained its usage in automotive mufflers, “The good fabricability of this alloy, combined with its basic corrosion resistance and economy have significantly broadened the utility of ATI 409HPtm stainless.”

As most MetalMiner readers know, alloy substitutions in stainless steel have typically occurred when an alloying element such as nickel has increased in price. When nickel becomes volatile, manufacturers have sought options with less nickel or no nickel that have sufficient properties to make the final product without compromising quality. Both 304 and 316L are readily available and could be considered the path of least resistance in terms of specifying stainless steel; however, in some cases, these alloys may exceed the necessary properties for the final application.

Most consider 304 or 316L the “old standby” grades, but that thinking contains a few misconceptions. For example, stainless is stainless because it has at least 10.5% chromium (some would say 11% chromium), not because it contains nickel. Stainless can be both magnetic and non-magnetic. In commercial food service equipment — NSF specifies, for food zones, stainless needs to have a minimum chromium content of 16% and has nothing to do with whether or not it is magnetic.

Compliance Alloy

In the early 2000s, product substitution meant a new push to inform the manufacturer that type 430 has 16% chromium and is, thus, NSF 51-compliant. In many cases, a transition occurred in which buying organizations switched from 304 to lower nickel-bearing grades such as 301 or 201 before the switch to 430 occurred. In cases in which 430 could not be substituted for 301 or 201, the next wave of substitution came from higher-chromium ferritic grades such as 439 or 441. Both alloys were developed for the automotive market in which weldability and formability were necessary along with added corrosion resistance from the basic 409 automotive grade.

In residential appliances, the major manufacturers became reticent to move to magnetic stainless grades due to a perception that magnetic equated to not “real” stainless steel.

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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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