Author Archives: Fouad Egbaria

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This morning in metals news, the Indonesian government is considering whether or not to extend the copper export contract with Freeport McMoRan, Reliance Steel and Aluminum announces its fourth quarter earnings.

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Indonesia Considers Copper Contract Extension

The Indonesian government will consider whether or not to extend a copper concentrate export contract with the Freeport McMoRan mine, Reuters reported.

According to the report, Freeport’s current export permit will expire Feb. 16.

Aluminum Tariffs Could Mean Pricier Beer?

President Trump has met with lawmakers this week to discuss potential tariffs on steel and aluminum imports.

One lawmaker, Wisconsin Republic Ron Johnson, pointed out tariffs on aluminum could have an impact on the price of beer, as tariffs could lead to a higher cost to can.

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Reliance Steel and Aluminum Announces Q4 Earnings

Reliance Steel and Aluminum released its Q4 earnings results this week. In Q4, revenue jumped 15.5% year over year to reach $2.38 billion.

The U.S. Department of Commerce. qingwa/Adobe Stock

The Department of Commerce announced it had reached a preliminary affirmative determination in its anti-dumping investigation of cast iron soil pipe fittings from China.

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“Though politics plays no role in antidumping investigations, President Trump made it clear that we will vigorously enforce our trade laws and provide U.S. industry relief from unfair trade practices,” Secretary of Commerce Wilbur Ross said in a department release. “Today’s decision allows U.S. producers of cast iron soil pipe fittings to receive relief from the market-distorting effects of potential dumping while we continue our investigation.”

The department determined China sold the pipe fittings at 68.37% to 109.95% less than fair value in the U.S.

Preliminary dumping rates by Chinese respondent. Source: U.S. Department of Commerce

The petitioner in the case is the Cast Iron Soil Pipe Institute, based in Mundelein, Illinois. The institute’s members span the country: AB&I Foundry (California), Charlotte Pipe & Foundry (North Carolina), and Tyler Pipe (Texas).

According to the Department of Commerce, imports of the cast iron soil pipe fittings in 2016 were valued at $8.6 million.

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The department is scheduled to make a final determination in the anti-dumping case around June 28. If the department makes an affirmative determination at that point, the International Trade Commission will then announce its own determination Aug. 20.

It’s that time — our latest Monthly Metals Index (MMI) report is in, covering the first month of 2018. 

Seven out of 10 MMIs posted increases this month. The Renewables MMI was the star of the month, as skyrocketing cobalt and steel plate prices helped push the sub-index up 21 points for a reading of 100.

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The Copper and GOES MMIs were the only ones to drop, and even those only lost a point apiece. The Construction MMI held at 94 for the second straight month.

This week, President Trump has met with lawmakers to discuss potential tariffs or quotas on aluminum and steel imports, stemming from the administration’s Section 232 investigations launched last April. The president has a statutory 90-day deadline as of the receipt of the Section 232 reports from Commerce Secretary Wilbur Ross, meaning Trump has to make decisions on the cases by mid-late April. As we’ve mentioned numerous times before, those decisions could have massive ramifications for the metals industry, up and down the value chain.

Another trend to monitor? After a roaring run to close 2017, metals like copper and aluminum retraced. The LME aluminum price, for example, dropped 2.8% last month. Copper, meanwhile, has dipped back below the $7,000 per ton mark. LME copper has shown some life early this week, picking up to $6,907/ton as of Feb. 13, but it remains to be seen whether these metals will continue to move upward or if they are due for a period of sideways or downward trading.

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You can read about all of the aforementioned — and much more — by downloading the February MMI report below.

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This morning in metals news, JFE Holdings Inc. in Japan plans to spend $6 billion on upgrades in the coming years, the Congressional Steel Caucus asked the administration for guidance on the Section 232 action timeline and Shanghai copper posted its biggest price jump since October.

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Japan’s JFE Holdings Looks to Lighter Steel

The parent company of Japan’s second-biggest steelmaker has plans to spend $6 billion to upgrade domestic facilities, according to a Reuters report.

JFE Holdings President Eiji Hayashida said the upgrades will focus on increased demand for lighter steel for the automotive industry, according to the report, in addition to materials for electric cars.

Congressional Steel Caucus Wants Clarity on 232 Timeline

On Monday, President Trump said he was “considering all options” on the Section 232 investigations of steel and aluminum imports.

According to the Northwest Indiana Times, the Congressional Steel Caucus has asked the administration to loop it in on a potential timeframe for 232-related action.

Shanghai Copper Posts Big Jump

The price of copper on the Shanghai Futures Exchange (ShFE) jumped by the biggest amount since October, Reuters reported.

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The most-traded April copper contract rose 1.8% to $8,323.87 per ton, according to the report.

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This morning in metals news, the U.S. Department of Commerce kicks off a new anti-dumping and countervailing duty probe, China urges the U.S. to exercise restraint when it comes to tariffs on steel imports and President Trump plans to meet with lawmakers to discuss tariffs on metals.

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New DOC Investigation Targets Pipe From Six Nations

The Department of Commerce today announced the initiation of an anti-dumping and countervailing duty investigation of large diameter welded pipe from Canada, Greece, China, India, Korea and Turkey.

“With an 81 percent increase in trade cases initiated since President Trump took office, this Administration has made it clear that we will vigorously administer antidumping and countervailing duty laws,” Secretary of Commerce Wilbur Ross said in a release. “When initiating a trade investigation, the Department of Commerce begins an open and transparent process that allows American companies and workers to gain relief from the market-distorting effects of injurious dumping and subsidization of imports.”

China Warns on Possible U.S. Tariffs

Chinese official on Tuesday urged the U.S. to show restraint when it comes to tariffs on steel, according to a Reuters report.

The official, Wang Hejun, who heads the Chinese Ministry of Commerce’s Trade Remedy and Investigation Bureau, said that protectionism would lead to a “vicious circle” of trade actions, according to the report.

Trump to Meet with Lawmakers to Talk Trade Tariffs

President Trump today is meeting with lawmakers to discuss potential tariffs on steel and aluminum imports and other trade issues, according to Bloomberg.

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Secretary of Commerce Wilbur Ross sent Trump his Section 232 recommendations for steel and aluminum last month. As of receipt of the reports, the president has 90 days to decide what to do.

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This morning in metals, several companies are looking to buy the distressed Essar Steel India Ltd., copper prices bounced back up and gold prices are up.

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Essar Steel on the Market

Companies like ArcelorMittal and VTB Group are vying for embattled Indian firm Essar Steel, according to a Bloomberg report.

Essar is the largest Indian firm going through the country’s insolvency proceedings, according to the report.

Copper Prices on the Way Up

Prices of the metal picked up Monday after hitting two-month lows last week, according to Reuters.

The price picked up on account of a weaker U.S. dollar and more stable global markets, according to the report.

Gold Prices Rise

Prices of the precious metal picked up on Monday, according to Reuters, but inflation data due Wednesday could put a lid on the rise.

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The spot gold price hit $1,318.54/ounce as of 1329 GMT on Monday, according to the report.

The Steel Market Development Institute (SMDI) presented results of a new study on steel’s lightweighting capabilities during the Chicago Auto Show on Thursday, Feb. 8, at McCormick Place in Chicago. Photo by Fouad Egbaria

Use of aluminum in automotive bodies has gained steam in recent years — and the metal’s rivalry with steel has heated up in the process.

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For example, Ford Motor Co. shook up the marketplace when it announced its all-aluminum body F-150 2015 model. Aluminum, despite being more costly than steel, is lauded for its lighter weight and, thus, ability to provide better fuel economy.

Not so fast on that front, according to a study presented by the Steel Market Development Institute (SMDI) on Thursday, Feb. 8, during the annual Chicago Auto Show.

SMDI, a business arm of the American Iron and Steel Institute (AISI), presented results of a study that concludes steel is a superior option to aluminum when it comes to lightweighting and curbing environmental impacts.

Tom Gibson, president and CEO of the American Iron and Steel Institute. Photo by Fouad Egbaria

Tom Gibson, president and CEO of AISI (and president of SMDI), touted the more than 60 steel-intensive vehicles debuted in the last year at auto shows in Detroit, Chicago, New York and Los Angeles.

“Steel continues to play an integral role in new vehicle debuts,” Gibson said. “In the last month, we’ve seen the 2019 Chevrolet Silverado, Ford Ranger, all-new Ram 1500, Toyota Avalon, Honda Accord and Kia Forte, all touting the benefits of advanced, high-strength steels.

“With the mix of materials available to designers and engineers today, no other material provides the complete package steel provides with performance, value and innovation, as well as being the most environmentally sound material for automakers and consumers.”

Jody Hall, vice president, automotive market, of SMDI, presented the Life Cycle Assessment (LCA) study findings, comparing steel with aluminum. The LCA study tested five different vehicles and went through a 10-month review, Hall said, and was validated by a “panel of experts” from Harvard University, Argonne National Laboratory, the Massachusetts Institute of Technology and consultancy firm thinkstep.

“The bottom line is, the result of this expert-validated study shows for the vehicles studied, lightweighting with advanced, high-strength steel produces lower greenhouse gas emissions than lightweighting with aluminum,” Hall said. “The difference comes, primarily, from the material production phase emissions of advanced high-strength steel and aluminum. These are emissions not captured when focusing only on tailpipe emissions under current EPA regulations.”

Hall further emphasized the case for steel, saying that if one lightweighted the five vehicles in the study with aluminum instead of steel, “the life cycle greenhouse gas emissions increase is estimated at 12 million tons of CO2 emissions. That’s the equivalent of the amount of electricity used to power 1.6 million homes.”

More details on the study, titled “Life Cycle Greenhouse Gas and Energy Study of Automotive Lightweighting,” and its methodology can be found at www.steelsustainability.org.

AK Steel CEO Roger Newport. Photo by Fouad Egbaria

During the presentation, AK Steel CEO Roger Newport also delivered some comments on the state of the steel industry vis-a-vis the automotive world. Newport said steel has evolved to meet changing consumer demands in recent decades, and noted there’s been a “remarkable change” in the importance of materials when it comes to automotive construction.

“Materials are front and center,” he said.

It remains to be seen how much market share aluminum can capture. In the meantime, the steel industry will no doubt continue to tout its virtues compared with aluminum.

“The SMDI along with AK Steel are very excited about the potential of new, innovative steel products,” Newport said. “We continue our efforts to support the changes in the automotive world.”

Odds and Ends from Day 1 at the Auto Show

A few other miscellaneous notes from the first day of the Chicago Auto Show on Thursday, Feb. 8:

Subaru Presents 50th Anniversary Lineup

Subaru presented its 50th anniversary lineup, composed of nine vehicles, during

Subaru’s 50th anniversary lineup of vehicles. Photo by Fouad Egbaria

an unveiling ceremony. Tom Doll, president and chief operating officer of Subaru of America, Inc., touted the automaker’s growth since 2008, a period during which its market share rose from 1.4% to 3.8%, he said, and has seen it become the seventh-best selling brand in the industry.

“We’re not that small, fledgling little car company anymore,” Doll said.

Production quantities will be limited to 1,050 for Crosstrek, Forester, Impreza, Legacy and Outback, while WRX, STI and BRZ will have a combined total of 1,050, according to a Subaru release.

Kia Stinger Wins MotorWeek’s Best of the Year Award

Thursday afternoon at the Grand Concourse media stage, MotorWeek presented its Best of the Year award, which this year went to the Kia Stinger.

MotorWeek’s John Davis (left) presents Michael Sprague, chief operating officer of Kia Motors America, with the publication’s Best of the Year award for the Kia Stinger. Photo by Fouad Egbaria

MotorWeek host and creator John Davis said they try to pick a vehicle each year that captures “that moment in the automotive landscape,” in addition to, simply, being fun to drive.

“Our Best of the Year for 2018 really is the perfect definition of our award,” Davis said. “It’s a lot of fun to drive but moreover it is the result of a brand setting and achieving a new bar of prowess that is on par with the world’s best.”

The vehicle has a 3.3-liter twin turbo V6, an 8-speed automatic transmission and available performance-oriented all-wheel-drive system.

Michael Sprague, chief operating officer of Kia Motors America, accepted the award from Davis.

“It was introduced back in 2011 at the Frankfort Auto Show as a concept vehicle,” Sprague said. “Many people here in the audience told us ‘you have to build this car.'”

Klairmont Kollections Brings Retro Vibe

You won’t see too many cars like these on the streets today, but Klairmont Kollections took drivers down memory lane during its first ride as an exhibitor at the Chicago Auto Show.

Photo by Fouad Egbaria

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The collection of unique vehicles, some dating back to the early 1900s, is based in Chicago and owned by World War II veteran and Highland Park, Illinois resident Larry Klairmont.

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This morning in metals news, aluminum industry officials testified to the U.S. International Trade Commission regarding the ongoing aluminum foil investigation, Mexico’s economy minister says automotive rules of origin will change as part of the ongoing renegotiation talks surrounding the North American Free Trade Agreement (NAFTA) and copper is on track for its biggest weekly drop in two months.

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Aluminum Industry Testifies to ITC

Representatives of the aluminum industry in the U.S. testified before the ITC earlier today as part of the final phase of an investigation of aluminum foil imports.

“The relief we seek will help ensure that the U.S. aluminum foil industry can compete fairly in the U.S. market,” Aluminum Association CEO and President Heidi Brock said in her testimony. “The Aluminum Association is committed to combating unfair trade practices that impact our industry while we strive for a level playing field. The U.S. government must enforce its trade rules so that companies can continue to innovate, invest and grow with confidence in the United States.”

Brock’s full testimony can be read here.

Rules of the Road

Renegotiation talks surrounding NAFTA, the 24-year-old trilateral trade deal, have been contentious at times. The U.S. negotiating team has sought to win concessions from Canada and Mexico, among them including tighter automotive rules of origin.

On Thursday, Mexico’s Economy Minister Ildefonso Guajardo said the rules of origin will change, Reuters reported.

Copper Continues Down Week

In good news for copper buyers, the price of the metal has dipped significantly this week amid significant market volatility.

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According to Reuters, copper is on track to post its biggest weekly loss since early December. London copper dipped below the $7,000 mark yesterday, closing at $6,837 per ton.

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This morning in metals news, the American Iron and Steel Institute (AISI) reported finished steel imports accounted for 26% of the U.S. market, analysts expect the index that measures market volatility to come back down and General Motors reported strong 2017 earnings.

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Steel Import Market Share 26% in January

According to the Commerce Department’s most recent Steel Import Monitoring and Analysis (SIMA) data, steel import permit applications for January totaled 2.914 million net tons (NT), up from  17.7% from the 2.475 million permit tons recorded in December, according to an AISI report. It was up 18.9% from the December final imports total of 2.45 million NT.

According to AISI, finished steel imports occupied 26% of the market share in January.

Analysts Expect VIX Index to Drop After Early-Week Spike

The CBOE VIX index — the index which measures market volatility — spiked early this week as a massive selloff sent the Dow Jones plunging on Monday and Tuesday.

According to a Bloomberg report, however, analysts expect the index to come back down — albeit not as low as previous lows — indicating relatively low volatility.

GM Reports Strong 2017 Earnings

General Motors had a strong 2017, following on the heels of the a strong 2016, according to a company release this week.

The automaker reported full-year 2017 EBIT-adjusted of $12.8 billion.

“Results were driven by strong performance in North America, improvement in GM International led by strong equity income in China and a return to profitability in South America, sustained growth of GM Financial and an intense focus on costs,” the release stated.

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For the fourth quarter, GM posted EBIT-adjusted of $3.1 billion, up 18.7% year over year.

The Global Precious MMI (Monthly Metals Index) picked up one points this month, rising to 92 for our February reading. Need buying strategies for steel in 2018? MetalMiner’s Annual Outlook has what you need Within the basket of metals, Chinese gold bullion and U.S. silver ingot/bars picked up in price. Palladium, which has bucked the historical trend by…

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