- India has big plans to modernize its railway system, our Sohrab Darabshaw writes.
- In case you missed it, our November MMI report is out. You can download it here to catch up on news and trends affecting our 10 MMI sub-indexes.
- Electric vehicles are all the rage — but what about simply smaller vehicles when it comes to curbing emissions? Our Stuart Burns delved into the matter earlier this week.
- The recently released Panama Papers shined a light on the world of corporate finance, and, furthermore, tax-dodging methods.
- Prefer to get your metals news and analysis in audio format? You’re in luck, as we recently relaunched the MetalMiner Podcast! In case you missed it, check out the first episode with Michael Stumo, CEO of the Coalition for a Prosperous America.
- Investor interest in commodities has picked up — Burns touched on why that is on Wednesday.
- Aluminum has cooled down a bit, but it might be a temporary dip.
- Our Irene Martinez Canorea offered her own take on the surge in commodities interest, with reference to the CRB index.
- Chinese excess capacity has been a long-standing gripe of producers in the European Union and U.S. But circumvention of antidumping tariffs via third parties is also on the E.U. and U.S.’s radar, Burns writes.
This morning in metals news, Nucor announced a major project at its Bourbonnais, Illinois plant, Aleris has a new automotive sheet facility in Kentucky and Chinese automotive sales drop in October.
Nucor Announces Plant Expansion in Illinois
Nucor is building a merchant bar mill at its plant in Bourbonnais, Illinois plant, the company announced Wednesday.
The full-range merchant bar quality (MBQ) mill will have an annual capacity of 500,000 tons and is expected to cost $180 million, according to the Nucor release. The project will take approximately two years to complete.
“This new MBQ mill is right in line with our long-term strategy for profitable growth. It takes advantage of our position as a low-cost producer to displace tons currently being supplied by competitors outside the region. It also builds on our market leadership position by further enhancing our product offerings of merchant bar, light shapes and structural angle and channel in markets in the central U.S.,” said John Ferriola, chairman, CEO and president of Nucor.
“Combined with our other full-range bar mills, we are now strategically located to supply all markets with high-quality bar products and exceptional service.”
Aleris Announces New Automotive Sheet Facility
Aleris opened a new automotive body sheet facility in Lewisport, Kentucky, the company announced.
The project represents a $400 million investment, according to the Aleris release.
Chinese October Automotive Sales Fall
According to data from the Chinese Association of Automobile Manufacturers (CAAM), yearly sales are up, while sales for October dipped from the previous month.
According to CAAM, In October, the production and sales of automobiles in China reached 2,604,000 and 2,704,000 units, respectively, down 2.5% and 0.2% from September. Meanwhile, production and sales were up 0.7% and 2% year-on-year.
For the first 10 months of 2017, the production and sales of automobiles were 22,957,000 and 22,927,000 units, respectively, up 4.3% and 4.1% year-on-year.
This morning in metals news, U.S. Steel faces a potential lawsuit for dumping toxic materials into Lake Michigan, a Chinese aluminum producer cuts smelter capacity and NAFTA renegotiation talks resume.
U.S. Steel Could Face Lawsuit for Chromium Dumping
U.S. Steel faces a lawsuit after dumping toxic chromium in Lake Michigan, the Chicago Tribune reported.
According to the report, the 56.7 pounds of chromium released in late October by the company’s Midwest Plant was 89% higher than its water pollution permit allows over 24 hours.
Luoyang Xiangjiang Wanji Aluminium Cuts Back Smelter Capacity
Winter is coming, which means it’s time for those capacity cuts in China.
According to a report by Platts, China’s Luoyang Xiangjiang Wanji Aluminium, located in the Henan province, announced major capacity cuts. On Wednesday, the firm announced 30% cuts of aluminum and alumina capacity, running from today through March 15, 2018, according to the report.
Time For Another Round
Yet another round of talks focused on renegotiating the North American Free Trade Agreement (NAFTA) kicked off Wednesday in Mexico City.
Tensions have ramped up of late from all sides, according to the report, as the U.S. tries to push through a set of demands being balked at by China and Mexico.
Although the hope was that a deal could be reached by the end of the year, the teams agreed to extend talks into next year.
This morning in metals news, the CEO of Northam Platinum indicated the platinum price is due for upward movement, raw steel production in the U.S. last week was up significantly and Chinese aluminum production was down during October.
Platinum on the Rise?
As we’ve noted here in recent weeks, palladium has outdone platinum of late — normally, it’s the other way around.
But according to Northam Platinum CEO Paul Dunne, platinum should be on its way back up.
“We have said for a number of years from various public platforms that you would see a phased recovery with palladium running first, then rhodium, and finally platinum,” Dunne said in a report by Mining MX. “Palladium has been off to the races over the past year and the rhodium price has now started to move in recent months rising around 50%.”
Raw Steel Production Up
According to data from the American Iron and Steel Institute (AISI), U.S. raw steel production was up 9.3% for the week ending Nov. 11 compared with the same week last year.
Domestic raw steel production was 1,739,000 net tons for that week, with a capability utilization rate of 74.6%.
Production for the week ending Nov. 11 was up 1.4% from the previous week, when production was 1,715,000 net tons and the rate of capability utilization was 73.6 percent.
Chinese Aluminum Production Drops in October
Primary aluminum production in China fell 2.3% in October from the previous month, according to a Reuters report citing government data.
According to the report, factors contributing to the drop include high costs and the closure of illegal capacity.
In August, all 10 of our MMIs saw upward movement. That changed the following month, when eight of 10 MMIs fell (albeit several of them fell by small amounts).
For our November MMI (tracking October’s activity), four of the MMIs moved up, five moved down and one held flat (the Automotive MMI).
Hitting some of the high points:
- It was a big month for stainless steel. The Stainless MMI surged by seven points, hitting 70, up from the October reading of 63.
- Aluminum also had another strong month, continuing what has been a very strong 2017 for the metal. The Aluminum MMI hit its highest reading, 99, in the history of the MMI series.
- The doctor was in the house this past month (Dr. Copper, that is). The Copper MMI jumped four points.
You can read about all of the aforementioned — and much more — by downloading the November MMI report below.
This morning in metals news, Japan’s aluminum industry is considering crafting a set of quality assurance guidelines (on the heels of the Kobe Steel quality data falsification scandal), LME copper move further away from last week’s one-month low and Kobe Steel blames its plant managers for the data scandal.
Changes to Aluminum Industry in Japan?
On the heels of Kobe Steel’s quality data falsification scandal, many in Japan are asking the same question: how can we prevent the same thing from happening again?
The scandal has rocked Kobe Steel, the third-largest steelmaker in Japan. As a result, the Japanese aluminum industry is considering building a new set of quality assurance guidelines, Reuters reported.
Copper Moves Up
London copper moved up Monday, Reuters reported, powered by strong demand and a lagging U.S. dollar.
Copper moved up 0.7% to $6,832.50 a ton by 0719 GMT, according to the report, up from a one-month low last week of $6,761.50 a ton.
Kobe Steel Plant Managers Get Blame for Scandal
As with any scandal, designation of blame is inevitable — and vis-a-vis Kobe Steel’s quality data falsification scandal, Kobe is blaming its plant managers, according to The New York Times.
According to an internal company report, plant managers were at the center of the issue — instead of scrapping products that fell below quality guidelines and manufacturing new ones, the plant managers signed off on the sub-standard metal products.
Before we head into the weekend, let’s take a look back at the week that was.
- In case, you missed it, our November MMI series is complete. You can read each piece at the following links:
- Oil prices, cobalt and electric vehicles — Stuart Burns touched on all of them in his post Wednesday.
- It’s been a tumultuous week, particularly in Saudi Arabia, as Crown Prince Mohammed bin Salman has made moves to consolidate his power while tensions with Lebanon are rising, per media reports. Burns touched on the political situation’s impact on the oil price — unsurprisingly, the price is going up. Political turmoil, however, isn’t the only thing sending prices upward.
This morning in metals news, U.S. imports of steel are up 19.4% through the first 10 months of the year, the European Union’s antitrust watchdog is eyeing ArcelorMittal’s bid to buy Ilva and London copper posted little movement Thursday.
Steel Import Market Share Hits 26% in October
According to data released by the American Iron and Steel Institute (AISI), for the first 10 months of 2017, total and finished steel imports were 32,841,000 net tons (NT) and 25,375,000 NT, up 19.4% and 15.1%, respectively, from the same period in 2016.
In addition, the estimated finished steel import market share in October was 26% and is 27% for the year to date.
EU to Look at ArcelorMittal’s Ilva Takeover Bid
The EU’s antitrust watchdog is taking a look at ArcelorMittal’s bid to buy Ilva, amid concerns that the purchase could stifle competition and lead to rising prices, the Associated Press reported.
According to the report, the EU Commission said Wednesday that it fears “the merger may reduce competition for a number of flat carbon steel products.”
London Copper Doesn’t Budge
It was a quiet Thursday for LME copper, as the metal traded just above the previous one-month low, Reuters reported.
With light volumes, LME copper held at $6,856 a ton by 1:27 GMT, marking a 0.4% gain from the previous session, per the report.
This morning in metals news, Tata Steel announces a big investment, Chinese steel shipments have continued to drop and the U.S. International Trade Commission (ITC) will expedite a five-year sunset clause review of carbon and alloy steel standard, line, and pressure (CASSLP) pipe from Germany.
Tata Steel Makes Big Port Talbot Steel Investment
Tata Steel announced it is investing £30 million in its Port Talbot steelworks, the BBC reported.
According to the report, the Indian firm will install a 500-ton steelmaking vessel at the plant, in addition to other upgrades.
Dropping Chinese Steel Shipments
President Donald Trump kicked off his tour of Asia this week; while North Korea draws much of the headlines, China’s steel industry is also among the list of items in the spotlight.
Bloomberg notes that dropping steel shipments from China, the world’s top steel producer, undercut the Trump administration’s rhetoric calling out China’s excess steel capacity.
“Exports from the country that accounts for half of global production dropped to 4.98 million tons last month, down from September’s 5.14 million, and the lowest since 2014, according to customs figures,” Bloomberg’s report reads. “That’s a far cry from the monthly peak in late 2015, when they exceeded 11 million tons.”
U.S. ITC Expedites Review of CASSLP Pipe From Germany
The U.S. ITC announced Monday that it voted to expedite its five-year sunset review concerning the antidumping duty order on seamless CASSLP pipe from Germany.
“As a result of the vote, the Commission will conduct an expedited review to determine whether revocation of the order would be likely to lead to continuation or recurrence of material injury within a reasonably foreseeable time,” the ITC release about the vote reads.
The Rare Earths MMI dropped for the second consecutive month, losing a point to hit 21. The November reading of 21 marks the lowest reading since June, when it also hit 21.
This basket of metals, dominated by China, featured heavier hitters like yttrium and dysprosium oxide posting price increases.
However, europium oxide, terbium oxide and terbium metal all dropped for the month. The biggest drop of the bunch came from neodymium oxide, which fell 14.1%.
Rare-earth metals are used in a number of high-tech capacities: smartphone, laptops and electric vehicle (EV) batteries, among other things.
Cobalt, which is drawing increasing demand in the EVs sector, is one of those metals. As our Stuart Burns reported earlier today, the metal is heating up.
“Plug-in vehicle sales grew 20 times faster than the overall market, justifiably causing concern that cobalt supply could be strained by this one market application,” Burns wrote. “Worryingly for cobalt, the fastest-growing market is also the largest.
“Driven by government subsidies, the Chinese market, at some 351,000 units last year, also grew at 84% over 2015. The switch to EV and PHEV cars is part of Beijing’s drive against pollution, so incentives are not likely to be relaxed anytime soon. Growth of this magnitude dwarfs the 13% and 36% growth rates in Europe and the U.S., respectively.”
Growth of the U.S. Market
While it is indeed true that China overwhelmingly dominates the global rare-earths market, the U.S. is working to increase its presence in the global market vis-a-vis rare earths.
According to a Wards Auto report, research at Purdue University could boost U.S. extraction of rare-earth elements (REEs) while also recycling the U.S.’s 1.5 billion tons of accumulated coal ash.
“REEs have many important applications in things such as permanent magnets in power generation and electric cars, batteries, petroleum refining catalysts, phosphors in color televisions, and many electronics including cellphones,” said Linda Wang, inventor of the technology and Purdue’s Maxine Spencer Nichols Professor of Chemical Engineering, in a Purdue University release. “The demand for REEs is predicted to grow dramatically over the next several decades. REEs used in the U.S. are primarily imported from China, which controls over 90 percent of the supply, with wide implications on the U.S. economy and national security.”
Wang underscored the importance of developing the domestic market as a means of weathering the volatile rare-earths market.
“For example, after China reduced the export quotas in 2010, the costs of rare earth magnets for one wind turbine increased from $80,000 to $500,000,” she added. “After China relaxed the export restrictions 18 months later, the prices returned to lower levels than in 2010. It’s highly desirable to develop the capacity to produce REEs in the U.S. and to become independent of foreign suppliers.”