Author Archives: Fouad Egbaria
scrap steel

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This morning in metals news: global steel groups renewed calls for the Global Forum on Steel Excess Capacity to continue its work targeting steel overcapacity; Freeport-McMoRan released its Q3 financial results; and, finally, U.S. natural gas exports to Mexico have increased.

Stop obsessing about the actual forecasted steel price. It’s more important to spot the trend. See why.

Steel groups call for renewed emphasis on steel overcapacity

Groups around the world have asked governments to “intensify” their work with the Global Forum on Steel Excess Capacity.

“Steel industries throughout the world expressed tremendous concern about the recent increase in steel overcapacity at a time when steel demand is severely depressed by the COVID-19 pandemic, reversing a trend of gradual decreases in overcapacity in the three years after the GFSEC was established (2016 – 2019),” the American Iron and Steel Institute (AISI) said in a release.

Among the action items suggested by the groups included development of “stronger disciplines” related to industrial subsidies. In addition, the groups called for upholding “effective trade remedies” in order to ensure a level playing field.

Freeport-McMoRan releases Q3 financials

Miner Freeport-McMoRan released its Q3 financials today, reporting net income of $329 million, up from a loss of $207 million in Q3 2019.

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The International Lead and Zinc Study Group (ILZSG) forecast global lead and zinc demand will decline by 6.5% and 5.3%, respectively, this year.

Meanwhile, ILZSG forecast lead and zinc demand will rise by 4.4% and 6.6%, respectively, in 2021.

The MetalMiner 2021 Annual Outlook consolidates our 12-month view and provides buying organizations with a complete understanding of the fundamental factors driving prices and a detailed forecast that can be used when sourcing metals for 2021 — including expected average prices, support and resistance levels.

Lead demand

The ILZSG forecast lead demand will fall to 11.39 million tonnes this year. Next year, ILZSG forecast demand will pick up to 11.89 million tonnes.

In China, the world’s largest automotive market, the group forecast lead usage will decline this year. The group forecast China’s usage will fall by 1.6% this year. A drop in automotive production will be partially outset by increasing production of e-bikes and lead-acid batteries.

Furthermore, the group forecast lead usage will decline by 9.7% in Europe this year. In the U.S., the ILZSG forecast usage will decline by 7.5%.

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electric vehicle charging

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This morning in metals news: General Motors will invest $2 billion to transition its Tennessee plant for the production of electric vehicles (EVs); Rio Tinto announced its Q3 2020 production results; and Norsk Hydro has made a deal to merge part of its hydropower generation with that of Lyse. 

The MetalMiner 2021 Annual Outlook consolidates our 12-month view and provides buying organizations with a complete understanding of the fundamental factors driving prices and a detailed forecast that can be used when sourcing metals for 2021 — including expected average prices, support and resistance levels.

General Motors to invest $2B to repurpose Tennessee plant for EVs

General Motors will invest $2 billion to transition its Spring Hill, Tennessee plant for the production of electric vehicles.

The plant will be GM’s third to transition to producing EVs, after Factory ZERO in Detroit and Hamtramck, Michigan, and Orion Assembly in Orion Township, Michigan.

Rio Tinto releases Q3 output figures

Miner Rio Tinto recently released its output results for Q3, reporting iron ore production of 86.4 million tons.

The Q3 production figure marked a 5% decline on a both a year-over-year and month-over-month basis.

Rio Tinto’s Q3 bauxite production totaled 14.5 million tons, up 5% year over year and down 1% from the previous quarter.

Aluminum output reached 797 kt, up 1% year over year and up 2% from the previous quarter. In addition, copper output reached 129.6 kt, down 18% year over year and down 2% from Q2 2020.

Hydro, Lyse to establish hydropower company

Meanwhile, Oslo-based Norsk Hydro announced it will merge part of its hydropower capacity with that of Lyse.

The new firm, Lyse Kraft DA, will have annual power production capacity of 9.5 TWh. Hydro will own 25.6% of Lyse Kraft DA, while Lyse will own 74.4%.

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September 2020 housing starts in the U.S. got a big boost on a year-over-year basis, the Census Bureau and Department of Housing and Urban Development reported.

Privately owned housing starts increased 11.1% in September 2020 compared with September 2019.

The MetalMiner 2021 Annual Outlook consolidates our 12-month view and provides buying organizations with a complete understanding of the fundamental factors driving prices and a detailed forecast that can be used when sourcing metals for 2021 — including expected average prices, support and resistance levels.

September 2020 housing starts up 1.9% from August

Furthermore, September 2020 housing starts gained 1.9% month over month.

Starts reached a seasonally adjusted annual rate of 1,415,000 in September.

Meanwhile, single-family housing starts in September hit at a rate of 1,108,000, or up 8.5% from August. In addition, the September rate for units in buildings with five units or more reached 295,000.

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Aluminum production

Alexander Chudaev/Adobe Stock

This morning in metals news: the International Aluminum Institute released global aluminum production totals for September; the U.S. International Trade Commission (USITC) made duty determinations in the investigations related to imports of prestressed concrete steel wire strand; and September unemployment rates fell in 30 states.

The MetalMiner 2021 Annual Outlook consolidates our 12-month view and provides buying organizations with a complete understanding of the fundamental factors driving prices and a detailed forecast that can be used when sourcing metals for 2021 — including expected average prices, support and resistance levels.

Global aluminum production hits 5.42M tons in September

Global aluminum production reached 5.42 million tons in September, the International Aluminum Institute reported.

The total marked a decline from 5.52 million tons in August.

Chinese production totaled an estimated 3.15 million tons last month, down from 3.18 million tons the previous month.

USITC opts to maintain steel wire strand duties

In a five-year sunset review, the USITC voted to maintain existing duties covering imports of prestressed concrete steel wire strand.

The duties cover imports of the products from Brazil, India, Japan, Korea, Mexico and Thailand.

“The U.S. International Trade Commission (USITC) today determined that revoking the existing antidumping and countervailing duty orders on imports of prestressed concrete steel wire strand from Brazil, India, Japan, Korea, Mexico, and Thailand would be likely to lead to continuation or recurrence of material injury within a reasonably foreseeable time,” the USITC said in a prepared statement.

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The U.S. steel sector continued to show incremental gains in capacity utilization last week.

Capacity utilization by U.S. mills rose to 69.4% for the week ending Oct. 17, 2020, according to the American Iron and Steel Institute (AISI).

See why technical analysis is a superior forecasting methodology over fundamental analysis and why it matters for your steel buy.

U.S. steel sector continues capacity gains

For the week ending Oct. 17, the U.S. steel sector’s capacity utilization rate rose to 69.4%, producing 1.54 million tons in the process.

The weekly output marked a 15.0% year-over-year decline. Output during the week ending Oct. 17, 2019, totaled 1.81 million tons at a capacity utilization rate of 78.0%.

Meanwhile, production for the week ending Oct. 17, 2020, rose 2.2% from the previous week. For the week ending Oct. 10, 2020, production reached 1.50 million net tons at a capacity utilization rate of 67.9%.

YTD output down 19.4%

Adjusted year-to-date production through Oct. 17 reached 62.48 million net tons. Capacity utilization rate during the period reached 66.3%.

The year-to-date output is down 19.4% from the 77.55 million net tons during the same period last year. The capacity utilization rate during that period reached 80.1%.

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automotive production

Anastasiia Usoltceva/Adobe Stock

The Federal Reserve reported September 2020 industrial production slipped 0.6% in September.

While not a precipitous drop, the September drop broke a streak of four straight months of gains.

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September 2020 industrial production still below pre-pandemic levels

According to the Fed, industrial production has to date recovered more than half of its decline from February to April.

Nonetheless, the September industrial production level remained down 7.1% from its pre-pandemic level in February.

“Manufacturing output decreased 0.3 percent in September and was 6.4 percent below February’s level,” the Fed reported. “The output of utilities dropped 5.6 percent, as demand for air conditioning fell by more than usual in September. Mining production increased 1.7 percent in September; even so, it was 14.8 percent below a year earlier.”

Capacity utilization drops

Meanwhile, the industrial sector’s capacity utilization fell by 0.5 percentage point in September, down to 71.5%.

The rate marked an 8.3-percentage-point decline from the long-run average (i.e., 1972-2019).

However, the September rate is up 7.3 percentage points from its low in April, the Fed reported.

The numbers by market group

Broken down by market group, the index for consumer goods fell 1.6%.

Within consumer goods, the indexes for automotive products and consumer energy products fell by more than 4%.

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copper smelter

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This morning in metals news: LME copper gained Monday while SHFE copper retraced; the Pilbara Ports Authority recently released September shipping figures; and top copper producer Chile marks the one-year anniversary of widespread protests.

The MetalMiner 2021 Annual Outlook consolidates our 12-month view and provides buying organizations with a complete understanding of the fundamental factors driving prices and a detailed forecast that can be used when sourcing metals for 2021 — including expected average prices, support and resistance levels.

SHFE copper price slips

The SHFE copper price fell 0.4% on Monday, Kitco reported, down to CNY 51,280 ($7,653.16) per tonne.

Meanwhile, LME copper ticked up 0.2% to $6,753 per tonne.

PPA releases shipping data

Australia’s Pilbara Ports Authority recently reported it delivered a monthly throughput of 61.3 million tonnes in September 2020.

The September throughput marked a 8% year-over-year increase.

Meanwhile, at the critical iron ore terminal of the Port of Port Hedland, monthly throughput reached 46.1 million tonnes. Furthermore, of that total, iron ore exports accounted for 45.6 million tonnes. The monthly throughput from Port Hedland marked a 9% year-over-year increase.

Chile marks anniversary of October 2019 protests

Lastly, Reuters reported thousands gathered in the capital city of Santiago, Chile, to commemorate the one-year anniversary of protests in the country.

The protests last year led to over 30 deaths and thousands of injuries, Reuters reported.

Chile is the world’s No. 1 copper producer. Copper market watchers will want to keep an eye on developments in the country and monitor any potential supply disruptions.

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Ford Motor Co.

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This morning in metals news: Ford’s China sales posted their largest year-over-year increase in Q3 since 2016; overall automotive sales in China gained 12.8% year over year; and Liberty Steel Group announced it has made an offer to acquire German firm Thyssenkrupp’s steel business.

Does your company have an aluminum buying strategy based on current aluminum price trends?

Ford’s China sales rise 25.4%

Ford’s China sales rose 25.4% on a year-over-year basis in the third quarter, the automaker reported.

The year-over-year gain in China marked Ford’s strongest sales gain in the market since 2016.

“Ford is strengthening its sales momentum in China by building on growing consumer preference for our iconic brand and favorable product mix of luxury and near-premium utility vehicles,” said Anning Chen, president and CEO of Ford China. “Our localization strategy to produce in China world-class Ford and Lincoln vehicles, including the newly launched Ford Explorer, Lincoln Corsair and Lincoln Aviator, has further enhanced our competitiveness in delivering the best products and services that Chinese consumers are looking for.”

Auto sales in China up again

Meanwhile, overall automotive sales were up in China for a fifth straight month.

Auto sales in the country rose 12.8% year over year in September, according to the China Association of Automobile Manufacturers.

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nickel

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Before we head into the weekend, let’s take a look back at the week that was and the metals storylines here on MetalMiner, including: the nickel market; aluminum prices on the SHFE and LME; China’s metals rebound; and much more.

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Week in Review, Oct. 12-16 (nickel market, China’s metals rebound and more)

The MetalMiner 2021 Annual Outlook consolidates our 12-month view and provides buying organizations with a complete understanding of the fundamental factors driving prices and a detailed forecast that can be used when sourcing metals for 2021 — including expected average prices, support and resistance levels.