Author Archives: Fouad Egbaria

This morning in metals news: according to the Bureau of Economic Analysis, U.S. gross domestic product rose by an estimated 6.5% in the second quarter; meanwhile, the American Iron and Steel Institute (AISI) commented on the Biden administration’s infrastructure deal; and, lastly, copper prices have found some support this week.

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US GDP rises by 6.5% in Q2

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The Bureau of Economic Analysis released its advanced estimate for U.S. GDP this morning, reporting a jump of 6.5% in Q2 2021.

U.S. GDP had jumped by 6.3% in Q1 2021.

“The increase in second quarter GDP reflected the continued economic recovery, reopening of establishments, and continued government response related to the COVID-19 pandemic,” the BEA reported. “In the second quarter, government assistance payments in the form of loans to businesses and grants to state and local governments increased, while social benefits to households, such as the direct economic impact payments, declined.”

In addition, the price index for gross domestic purchases rose by 5.7% in Q2. Meanwhile, current-dollar personal income decreased by $1.32 trillion in Q2, or 22%.

AISI applauds infrastructure deal

The American Iron and Steel Institute (AISI) yesterday applauded the news of the Biden administration’s infrastructure deal with a bipartisan group of senators.

“This is a key development in the process to fix America’s deteriorating roads and bridges – and to use American steel to do so,” AISI President and CEO Kevin Dempsey said. “We also applaud the bill’s provisions to ensure that the steel products for water infrastructure projects be made in the U.S. This package ensures that American steel —which is the cleanest in the world — will be used to build back America. We urge the Congress to pass this critical legislation as soon as possible.”

Copper price gets support

After retracing from an all-time high May 10 and then trending sideways for several weeks, the LME copper price has shown some strength this week.

The LME three-month copper price closed Wednesday at $9,719 per metric ton. The price had fallen to $9,245 per metric ton a week ago.

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For those keeping an eye on monetary policy, for now the Federal Reserve is maintaining the status quo vis-á-vis federal funds rates.

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Federal Reserve holds funds rate at 0-0.25%

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As the U.S. continues its long-running recovery after last year’s COVID-fueled recession, the Federal Reserve indicated the economy is getting stronger.

In a statement Wednesday, the Federal Reserve said “indicators of economic activity and employment have continued to strengthen.”

“The sectors most adversely affected by the pandemic have shown improvement but have not fully recovered,” the Fed said. “Inflation has risen, largely reflecting transitory factors. Overall financial conditions remain accommodative, in part reflecting policy measures to support the economy and the flow of credit to U.S. households and businesses.”

As parts of the country face rising numbers of cases of the Delta variant, the Fed said the path of the economic recovery depends on the course of the virus.

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Walk down just about any major city in the United States and, eventually, you’ll walk past a city-installed garbage can.

Maybe you’ll see a classic black trash receptacle, with the black vertical paneling and open top. Or, maybe, you might see a trash receptacle with a top-side lid that opens and closes (like you might see down Chicago’s Magnificent Mile).

Whatever the case, at some point along the the line, the municipality procured those receptacles at a certain price.

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The question is: how much should a garbage can cost?

A recent bit of news out of San Francisco got the MetalMiner team thinking.

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San Francisco proposes paying up to $20K for trash can prototypes

As reported by San Francisco’s local CBS affiliate, the City of San Francisco’s Department of Public Works wants to replace 3,000 city garbage cans.

The catch? The prototype it is considering reportedly costs a whopping $20,000 per can.

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This morning in metals news: miner Rio Tinto said it had committed funding of $2.4 billion toward the Jadar lithium-borates project in Serbia; meanwhile, the U.S. international trade in goods deficit rose in June; and, finally, the United States International Trade Commission determined imports of metal lockers from China materially injure U.S. industry.

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Rio Tinto commits funding for Jadar lithium project

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Rio Tinto announced this week that it had committed $2.4 billion in funding toward the Jadar lithium-borates project in Serbia.

“The Jadar project would scale up Rio Tinto’s exposure to battery materials, and demonstrate the company’s commitment to investing capital in a disciplined manner to further strengthen its portfolio for the global energy transition,” the miner said.

“Jadar will produce battery-grade lithium carbonate, a critical mineral used in large scale batteries for electric vehicles and storing renewable energy, and position Rio Tinto as the largest source of lithium supply in Europe for at least the next 15 years. In addition, Jadar will produce borates, which are used in solar panels and wind turbines.”

US trade deficit rises in June

According to Census Bureau figures released today, the U.S. international trade deficit rose 3.5% from May to June.

The deficit reached an estimated $91.2 billion last month.

June exports came in at a value of $145.5 billion. Meanwhile, imports came in at a value of $236.7 billion.

USITC votes on metal lockers from China

Lastly, the United States International Trade Commission (USITC) yesterday determined imports of metal lockers from China materially injure domestic industry.

“The United States International Trade Commission (USITC) today determined that a U.S. industry is materially injured by reason of imports of metal lockers from China that the U.S. Department of Commerce (Commerce) has determined are subsidized by the government of China and sold in the United States at less than fair value,” the USITC said in a release.

As a result, the Department of Commerce will issue antidumping and countervailing duty orders for the product.

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While global steel production levels remain well ahead of levels seen at the same time last year — when the COVID-19 was still only in its early days and demand had not yet had a chance to bounce back — output levels in June did fall compared with the previous month.

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According to the World Steel Association’s latest monthly report, global crude steel production totaled 167.9 million net tons in June.

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Steel production falls month over month

Global steel production dropped 4.0% from May’s 174.8 million net tons.

However, global output rose by 11.6% on a year-over-year basis. June 2020 production totaled 150.4 million net tons.

Chinese steel production drops

Top steel producer China also saw its steel production fall in June compared with the previous month.

China, which has moved to curb steel production in efforts to meet emissions targets, produced 93.9 million tons in June. The total marked a 5.6% decline from 99.5 million tons in May.

MetalMiner’s Stuart Burns weighed in on the recent steel price rally in China and the impact of production cut mandates from Beijing.

“Since prices came off they have been making a steady recovery,” he wrote. “Beijing’s pressure to curb excess production capacity as part of wider environmental targets raises the prospect of material shortages in the face of still robust demand.”

The Chinese cold rolled coil price surged above $1,100 per metric ton in May before plunging after Beijing’s attempt to curb prices by issuing a warning to speculators. The price proceeded to drop to around $930 per ton but has since recovered. The Chinese CRC price closed Monday at $996 per metric ton.

Chinese hot rolled coil has followed a similar trajectory, closing Monday at $915 per metric ton.

Around the world

No. 2 steel producer India churned out 9.4 million tons in June, up 21.4% year over year.

Meanwhile, Japan’s output rose 44.4% year over year to 8.1 million tons.

In addition, U.S. production rose 44.4% to 7.1 million tons. Estimated Russian production reached 6.4 million tons, or up 11.4% year over year.

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This morning in metals news: the U.S. steel capacity utilization rate rose further to 84.6% last week; miner BHP announced a nickel supply agreement with Tesla; and, lastly, crude oil imports have been on the rise over the last four weeks.

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

Steel capacity utilization hits 84.6%

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Steel capacity utilization in the U.S. steel sector reached 84.6% for the week ending July 24, the American Iron and Steel Institute reported.

The rate increased from 84.1% the previous week and from 60.3% during the same week in 2020.

Steel production during the week ending July 24 totaled 1.87 million net tons, or up 0.5% from the previous week. Furthermore, output increased 38.4% on a year-over-year basis.

BHP announces nickel supply deal with Tesla

Miner BHP announced a new nickel supply deal with electric vehicle maker Tesla.

BHP will supply the EV maker with nickel from its Nickel West asset in Western Australia.

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Tin prices have soared to a record high on the LME, closing last week at $34,177 per metric ton.

The closing price marked an increase of 12.56% month over month.

As we’ve noted in previous reports, increasing consumer demand for electronics has supported the tin price. Tin is also used a solder for joining pipes and electric circuits.

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

Balanced market as tin prices rise

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Prices have surged amid a balanced global tin market.

According to the World Bureau of Metal Statistics (WBMS), the global tin market posted a minuscule deficit of 1,400 tons from January to May.

Furthermore, global reported production of refined metal rose by 35,000 tons year over year, WBMS reported. Apparent demand in China surged by 28% year over year during the five-month period.

Global tin demand during January to May 2021 reached 176,900 tons, or up 14% year over year. Meanwhile, Japan’s tin demand totaled 11,600 tons, up 23% year over year.

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U.S. steel imports reached an estimated 2.6 million metric tons in June, the Census Bureau reported today.

The total marked a jump of 13% from the 2.3 million metric tons the U.S. imported in May.

US steel imports rise

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Furthermore, through May, U.S. steel imports totaled 10.7 million metric tons, up 7% from 10.0 million through the first five months of 2020.

Pacing the June rise was a jump in imports of blooms, billets and slabs. Imports of the category reached 795,863 metric tons in June, up 31.7% from 604,340 metric tons in May. Meanwhile, the June total rose a whopping 1,000% compared with June 2020.

Imports of oil country goods jumped 35.2% from May to 154,073 metric tons in June.

In addition, imports of hot rolled sheets jumped by 50.7% to 311,461 metric tons in June. Imports of steel rebar rose 12.0% to 94,915 metric tons.

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This morning in metals news: Steel Dynamics Inc. released its second-quarter results, during which it tallied $4.5 billion in net sales; Nucor Corporation also released its Q2 results; and, lastly, miner Rio Tinto signed a renewable energy agreement in Madagascar.

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

Steel Dynamics records Q2 net income of $702M

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Steel Dynamics reported Q2 net income of $702 million, up from $75 million in Q2 2020.

“During the second quarter, steel demand remained robust as shipments and product pricing continued their positive momentum across our entire steel platform,” said Mark Millett, chairman and CEO. “Higher steel selling values drove significant metal spread expansion across the entire platform and were most prominent within the flat roll steel operations, as continued demand strength and historically low customer inventories persisted throughout the supply chain and supported prices. Domestic steel consumption was strong from the automotive, construction, and industrial sectors, while the energy sector continued to show signs of rebounding.”

The company recorded Q2 2021 net sales of $4.5 billion, up from $2.1 billion in Q2 2020.

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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 competition between the COMEX and LME vis-á-vis electrification, consolidating copper prices, the upcoming MetalMiner 2020 Forecasting Workshop and much 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.

Week of July 19-23 (electrification, hot rolled coil prices in Western Europe and much more)

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• Stuart Burns on Europe’s environmental efforts, including proposals for tariffs on products from countries with less-stringent environmental regulations.
• Miner Rio Tinto reported its second-quarter production results.
• Russian steel group NLMK’s first-half steel production jumped by 10.8% year over year.
• Hot rolled coil prices in Western Europe have started to cool down.
• U.S. steel capacity utilization rose to 84.1% last week.
• The CME’s COMEX and the London Metal Exchange (LME) are preparing for the electrification revolution.
• Meanwhile, despite the the aforementioned electrification revolution and China’s own pledge to reach carbon neutrality by 2060, China plans to add to its coal production capacity in the second half of this year.
• Global aluminum production picked up in June.
• MetalMiner’s Lisa Reisman and Don Hauser joined ROTH Capital Partners earlier this month in a wide-ranging webinar covering oil, macroeconomic indicators and metals markets.
• The annual MetalMiner Forecasting Workshop is coming up next month. In addition, MetalMiner is hosting a webinar next week during which participants can get a sneak peak of the workshop.
• Copper prices have stabilized in recent weeks.
• Meanwhile, the Midwest aluminum premium has soared to a record high, as U.S. and European buyers continue to face aluminum market tightness.
• Lastly, South Korean steelmaker POSCO posted robust Q2 2021 financial results.

Receive the latest short-term and long-term outlook for the full range of industrial metals (base and ferrous) at the annual MetalMiner Forecasting Workshop on Aug. 25.