Author Archives: Fouad Egbaria

This morning in metals news: the U.S. consumed a record amount of renewable energy in 2020; U.S. housing starts jumped in May; and the copper price has been on the decline since peaking last month.

Each month, MetalMiner hosts a webinar on a specific metals topic. Explore the upcoming webinars and sign up for each on the MetalMiner Events page.

US hits renewable energy consumption record

renewables

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The U.S. consumed a record amount of renewable energy in 2020, the Energy Information Administration (EIA) reported.

“In 2020, consumption of renewable energy in the United States grew for the fifth year in a row, reaching a record high of 11.6 quadrillion British thermal units (Btu), or 12% of total U.S. energy consumption,” the EIA said. “Renewable energy was the only source of U.S. energy consumption that increased in 2020 from 2019; fossil fuel and nuclear consumption declined.”

Housing starts gain in May

Meanwhile, U.S. housing starts picked up in May from the previous month, the Census Bureau reported.

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The Renewables Monthly Metals Index (MMI) dipped by 0.8% for this month’s index reading.

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June 2021 Renewables MMI chart

(Editor’s note: This report also includes the MMI for grain-oriented electrical steel, or GOES.)

Cobalt price falls

Earlier this year, the LME cobalt price surged as high as nearly $53,000 per metric ton.

As Stuart Burns noted last month, battery demand helped drive up the cobalt price in the first quarter.

However, the second quarter has been a different ballgame.

The LME cobalt price closed Monday at $42,500 per metric ton, or down approximately 20%.

G7 summit highlights climate goals

G7 leaders convened in Cornwall in the United Kingdom for the 47th G7 Summit from June 11-13.

Among a variety of issues, leaders of the G7 member states affirmed their commitments toward tackling climate change.

In a communiqué released after the summit, the leaders committed to supporting a “green revolution” that creates jobs, cuts emissions and limits the rise in global temperatures to 1.5 degrees.

“We commit to net zero no later than 2050, halving our collective emissions over the two decades to 2030, increasing and improving climate finance to 2025; and to conserve or protect at least 30 percent of our land and oceans by 2030,” the communiqué reads. “We acknowledge our duty to safeguard the planet for future generations.”

The leaders reconfirmed their commitment to the Paris Agreement. President Joe Biden brought the U.S. back into the agreement after former President Donald Trump had withdrawn from it.

The communiqué also highlighted the need to transition away from coal power and toward renewables.

“Recognising that coal power generation is the single biggest cause of greenhouse gas emissions, and consistent with this overall approach and our strengthened NDCs, domestically we have committed to rapidly scale-up technologies and policies that further accelerate the transition away from unabated coal capacity, consistent with our 2030 NDCs and net zero commitments,” the communiqué continues. “This transition must go hand in hand with policies and support for a just transition for affected workers, and sectors so that no person, group or geographic region is left behind.”

U.S. government to consider neodymium Section 232

The U.S. government could launch a Section 232 investigation covering neodymium magnets.

The Trump administration launched a Section 232 investigation in 2018 that resulted in tariffs on steel and aluminum.

Meanwhile, earlier this year, President Joe Biden earlier this year called for agency heads to initiate 100-day supply chain reviews. The reviews were to cover important materials including semiconductors, large-capacity batteries, pharmaceuticals and critical minerals.

This month, the Biden administration released a report with officials’ findings and recommendations.

“Neodymium (NdFeB) permanent magnets play a key role in motors and other devices, and are important to both defense and civilian industrial uses,” the report states. “Yet the U.S. is heavily dependent on imports for this critical product. We recommend that the Department of Commerce evaluate whether to initiate an investigation into neodymium permanent magnets under Section 232 of the Trade Expansion Act of 1962.”

Anglo American demerges thermal coal operation

Speaking of coal and the transition toward renewables, miner Anglo American announced it is demerging its thermal coal operations in South Africa.

“We have consistently believed in a responsible transition from thermal coal, being a transition that seeks to balance the needs and expectations of all stakeholders,” CEO Mark Cutifani said in a June 7 statement. “The demerger of Thungela lives up to that promise by bringing our employees, shareholders, host communities, host government and our customers along with us.”

Thungela will trade as an independent company on the Johannesburg Stock Exchange.

GOES MMI

The MMI for grain-oriented electrical steel (GOES) fell by 1.7% for this month’s reading.

June 2021 GOES MMI chart

In addition, the GOES coil price fell by 1.9% to $2,354 per metric ton.

Actual metals prices and trends

Within the Renewables MMI basket, the U.S. steel plate price rose by 7.8% month over month to $1,320 per short ton to open the month.

Meanwhile, Chinese steel plate dipped by 3.3% to $896 per metric ton. Korean steel plate jumped by 13.4% to $1,065 per metric ton. Lastly, Japanese steel plate fell 0.1% to $804 per metric ton.

Each month, MetalMiner hosts a webinar on a specific metals topic. Explore the upcoming webinars and sign up for each on the MetalMiner Events page.

This morning in metals news: the U.S. and E.U. have reportedly reached a deal to end the long-running AirbusBoeing dispute over state subsidies; meanwhile, U.S. steel capacity utilization touched 82.6% last week, the American Iron and Steel Institute reported; and, lastly, Cleveland-Cliffs announced increases to its second-quarter and full-year 2021 financial guidance.

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US, EU reach deal to end Airbus-Boeing dispute

Airbus plane

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Allegations of state subsidies between the U.S. and E.U. vis-a-vis their respective aircraft manufacturers, Boeing and Airbus, have extended all the way back to 2004.

Now, the parties have reportedly reached a deal to end the dispute.

Per media reports, the deal features a five-year suspension of tariffs stemming from the ongoing Airbus-Boeing dispute.

In 2019, the World Trade Organization authorized the U.S. to impose up to $7.5 billion in tariffs on E.U. goods. Meanwhile, last year, the WTO authorized the E.U. to impose $4 billion in tariffs on U.S. goods.

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This morning in metals news: China auto sales cooled in May, according to the China Association of Automobile Manufacturers; production of crude oil and natural gas in New Mexico reached a record high in March; and, lastly, labor productivity fell in 13 of 29 service-providing industries in the U.S. last year.

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China auto sales drop

cars on the road in Shanghai, China

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China auto sales dropped in May on a year-over-year basis for the first time since March 2020.

Auto sales in China fell by 3.1% year over year in May 2021, the China Association of Automobile Manufacturers reported this month.

Furthermore, May sales declined by 5.5% month over month. May sales reached 2.13 million vehicles. For the January-May period, sales reached 10.88 million vehicles, up 36.6% year over year.

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Before we head into the weekend, let’s take a look back at the week that was and some of the metals storylines here on MetalMiner, including steel sector news, the Biden administration’s release of a 250-page supply chain report and much more:

steelmaking in an EAF

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The MetalMiner Best Practice Library offers a wealth of knowledge and tips to help buyers stay on top of metals markets and buying strategies.

Week of June 7-11 (steel sector news, Biden administration’s supply chain review and more)

Each month, MetalMiner hosts a webinar on a specific metals topic. Explore the upcoming webinars and sign up for each on the MetalMiner Events page.

This morning in metals news: production has resumed at Tenaris‘ steel plant in Koppel, Pennsylvania; meanwhile, Anglo American said it has demerged its thermal coal operations in South Africa; and, lastly, the United Steelworkers union commented on the Biden administration’s recently released supply chain review.

Each month, MetalMiner hosts a webinar on a specific metals topic. Explore the upcoming webinars and sign up for each on the MetalMiner Events page.

Tenaris steel plant in Pennsylvania resumes production

Tenaris logo

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Luxembourg-based Tenaris’ steel plant in Koppel, Pennsylvania, has resumed production after a yearlong hiatus for upgrades.

“Steel production is now underway at Tenaris’s first melt shop in the United States that will soon supply steel bars for its seamless pipe mills in the States and Canada,” Tenaris said in a press release.

“The steel shop in Koppel, PA, part of the company’s strategic acquisition of IPSCO, completed in 2020, has started producing steel bars following a year-long investment of more than $15M USD in upgrades to integrate the facility into Tenaris’ global network of steel mills.”

Last year, on the heels of the outset of the COVID-19 pandemic, Tenaris announced idling of a number of U.S. plants. In April 2020, the company said declining oil and gas prices, oversupply in the oil market and COVID-19 operational restrictions underpinned its decision.

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The Global Precious Monthly Metals Index (MMI) rose by 1.3% for this month’s reading, as the gold price rose to around $1,900 per ounce.

June 2021 Global Precious MMI

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Gold price picks up to close May

gold price

Olivier Le Moal/Adobe Stock

The gold price made steady gains in May, rising to around $1,900 per ounce to close the month.

Since then, however, the price dropped to around $1,860 per ounce to start June. The gold price then bounced back to around $1,890 per ounce Wednesday afternoon.

Meanwhile, the U.S. dollar index, which generally moves inversely to the gold price, dropped in early May. After that, the dollar trended sideways, closing Tuesday at 90.08.

In other economic indicators, the U.S. 30-year treasury yield, which also generally moves inversely to the gold price, fell to 2.21% on Tuesday. The yield curve rate marked its lowest level since March 2.

The 10-year yield fell to 1.53%, its lowest since March 10.

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This morning in metals news: the United States International Trade Commission made determinations in a five-year sunset review covering imports of cut-to-length carbon steel plate; meanwhile, United States Trade Representative Katherine Tai will outline the Biden-Harris administration’s “worker-centered trade policy” today; and, lastly, the Consumer Price Index for All Urban Consumers rose by 0.6% in May.

The MetalMiner Best Practice Library offers a wealth of knowledge and tips to help buyers stay on top of metals markets and buying strategies.

USITC rules on cut-to-length carbon steel plate imports

United States International Trade Commission

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The USITC recently made determinations in a five-year sunset review regarding an existing anti-dumping duty order on cut-to-length carbon steel plate from China and terminating suspended investigations on imports of the product from Russia and Ukraine.

In its vote, the USITC said revoking the anti-dumping duty order on the carbon steel plate from China “would be likely to lead to continuation or recurrence of material injury within a reasonably foreseeable time.”

It also voted to maintain existing suspension agreements for the imports from Russia and Ukraine.

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The Rare Earths Monthly Metals Index (MMI) fell by 19.6% this month, as China has loosened rare earths production quotas and the Biden administration could possibly launch a Section 232 investigation for neodymium magnets.

June 2021 Rare Earths MMI chart

The MetalMiner Best Practice Library offers a wealth of knowledge and tips to help buyers stay on top of metals markets and buying strategies.

US to consider neodymium Section 232 probe

As noted in yesterday’s morning roundup, the Biden administration released the findings of its 100-day review of critical U.S. supply chains.

Earlier this year, President Joe Biden called for various agency heads to execute 100-day reviews of critical U.S. supply chains. Specifically, the president’s order referenced supply chains for critical minerals, in addition to large-capacity batteries, semiconductors and pharmaceutical products.

The report stemming from that review notes the possibility of launching a Section 232 investigation for neodymium magnets. Former President Donald Trump used Section 232 to impose tariffs on steel and aluminum.

In a section summarizing recommendations, the report called for strengthening international trade rules and trade enforcement mechanisms. The review calls for evaluation of whether or not a Section 232 investigation for neodymium magnets is warranted.

“Neodymium (NdFeB) permanent magnets play a key role in motors and other devices, and are important to both defense and civilian industrial uses,” the report states. “Yet the U.S. is heavily dependent on imports for this critical product. We recommend that the Department of Commerce evaluate whether to initiate an investigation into neodymium permanent magnets under Section 232 of the Trade Expansion Act of 1962.”

NdFeB magnets are used in computer hard disk drives, magnetic resonance imaging (MRI), precision guided munitions, automotive motors and wind turbines.

Prices fall as China relaxes rare earths production quotas

As MetalMiner’s Stuart Burns explained earlier this month, the Chinese government recently relaxed production quotas for rare earths.

Consequently, prices for rare earth oxides took a fall.

“Market prices remain volatile, though,” Burns explained. “A half yearly quota set by government officials is not the optimal system to match supply, demand and prices. As the economy bounced back last year, the rare earths market was caught on the hop and prices rose strongly.

“Some light rare earths, like praseodymium-neodymium (PrNd) oxide, reached multiyear highs.”

However, Beijing relaxed the quota from 66,000 tons to 84,000 tons.

Furthermore, the Rare Earths MMI has fallen for the third straight month.

“This suggests the MIIT’s loosening of production limits has had the desired impact and availability is proving sufficient to meet demand,” Burns added.

Lynas plant in Malaysia continues to operate

Lynas Rare Earths Ltd. offered an update last month on its Malaysian plant.

The Malaysian government issued a movement control order May 12, which is in effect until June 7.

“The MCO, which is in effect for the period from 12 May 2021 until 7 June 2021, permits all economic sectors to continue to operate during the period of the MCO,” Lynas said in a statement. “Consistent with the MCO and previous updates, the Lynas Malaysia plant continues to operate with Standard Operating Procedures (SOPs) in place. Lynas Malaysia has already implemented strict health and hygiene protocols that meet and exceed the Ministry of Health’s requirements. Products produced at the Lynas Malaysia plant are essential to the manufacturing supply chains for critical industries including automotive, medical devices, oil refining and machinery & equipment.”

Actual metals prices and trends

The Chinese yttrium price rose by 1.6% month over month to $33.75 per kilogram as of June 1. The terbium oxide price fell by 17.1% to $1,044 per kilogram.

The neodymium oxide price fell by 8.5% to $77,706 per metric ton.

The Europium oxide fell by 3.3% to $30.61 per kilogram. Meanwhile, the dysprosium oxide price dropped by 11.7% to $385 per kilogram.

Each month, MetalMiner hosts a webinar on a specific metals topic. Explore the upcoming webinars and sign up for each on the MetalMiner Events page.

The Construction Monthly Metals Index (MMI) held flat for this month’s reading.

June 2021 Construction MMI chart

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US construction spending ticks up in April

housing starts

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U.S. construction spending reached a seasonally adjusted annual rate of $1,524.2 billion in April, the Census Bureau reported.

The estimated April rate marked a 0.2% increase from the previous month and a 9.8% increase on a year-over-year basis.

Construction spending amounted to $452.3 billion during the first four months of the year, or up 5.8% from the same period in 2020.

Meanwhile, private construction spending reached a seasonally adjusted annual rate of $1,180.7 billion, up 0.4% from March. Under the umbrella of private construction, residential construction increased by 1.0% to a rate of $729.2 billion in April. Nonresidential construction fell by 0.5% to $451.4 billion in April.

Public construction spending fell 0.6% to $343.5 billion. Educational construction spending fell 0.5% to $84.8 billion. Highway construction rose 0.6% to $99.8 billion.

Construction employment declines in May

On the labor side, employment in the construction sector fell by 20,000 in May, the Census Bureau reported. Employment in construction is down by 225,000 from February 2020.

The Associated General Contractors of America noted contractors continue to struggle with unpredictability with respect to securing materials.

“Steadily worsening production and delivery delays have exceeded even the record cost increases for numerous materials as the biggest headache for many nonresidential contractors,” said Ken Simonson, the association’s chief economist. “If they can’t get the materials, they can’t put employees to work.”

ABI posts growth for third consecutive month

For the third straight month, the Architecture Billings Index, released monthly by the American Institute of Architects, showed growth (meaning an index value greater than 50).

After the onset of the pandemic, the ABI had contracted each month for a year until the February 2021 reading.

For April, the ABI checked in at 57.9, up from 55.6 the previous month. The design contracts index reached 61.7, up from 55.7 the previous month.

The ABI marked its highest level since before the Great Recession.

“Interest in new projects remained extremely strong as well, with the Inquiries score rising to 70.8, and the value of new signed design contracts reaching 61.7, the highest score in that index since data collection started in late 2010,” the ABI report stated. “This means that not only are clients talking to architecture firms about starting new projects, but that they are also signing contracts to begin that work at a high rate.”

By region, the Midwest led the way with an ABI reading of 60.6. Trailing the Midwest were the South (58.3), Northeast (55.0) and West (52.4).

As we’ve noted in this space on a regular basis, shortages and delays in receiving materials have had a ripple effect. The sudden surge in demand throughout some sectors has produced a bullwhip effect.

The ABI report noted the 0.8% jump in the Consumer Price Index from March to April and the 4.2% jump from April 2020 to April 2021, which marked the largest increases since before the Great Recession.

“In addition, core inflation rose by 0.9% in April, the largest increase in that indicator since 1981,” the ABI report notes. “Rising consumer prices at this time are largely caused by supply constraints due to a shortage of key inputs subsequently leading to production delays, and by rising demands for services, particularly travel and hospitality.”

Pending home sales drop in April

Meanwhile, in the housing market, pending home sales fell by 4.4% in April, the National Association of Realtors (NAR) reported.

“Contract signings are approaching pre-pandemic levels after the big surge due to the lack of sufficient supply of affordable homes,” said Lawrence Yun, NAR’s chief economist. “The upper-end market is still moving sharply as inventory is more plentiful there.”

Actual metals prices and trends

The Chinese rebar price dipped 0.7% month over month to $802 per metric ton. Meanwhile, the Chinese H-beam steel price fell 2.3% to $815 per metric ton.

The U.S. shredded scrap steel price rose by 3.2% to $450 per short ton.

The European 1050 commercial aluminum sheet price rose by 0.4% to $3,577 per metric ton.

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