Author Archives: Fouad Egbaria

2021 Annual Outlook reportThis is a crucial time of year in the world of metals: contracting season. It also means it’s time for something else: the MetalMiner 2021 Annual Outlook report.

This past year has been marked by volatility, a situation that is not likely to change over the coming year.

For industrial metal buying organizations, that means the task of procuring metals is even more challenging than ever.

Accessing the 2021 MetalMiner Annual Outlook report

The Annual Outlook report is available only to MetalMiner subscribers.

To inquire about a subscription and get access to this invaluable resource, visit the dedicated 2021 Annual Outlook landing page.

Price drivers, support and resistance, and average prices

This U.S.-centric annual buying guide consolidates MetalMiner’s 12-month view and provides buying organizations with a complete understanding of the fundamental factors driving prices.

The Annual Outlook also offers a detailed forecast that can be used when sourcing metals for 2021 — including expected average prices, and support and resistance levels.

The Annual Outlook report covers 10 key metals in detail: aluminum, copper, zinc, lead, tin, nickel, HRC, CRC, HDG and plate.

Buyers have to know how to time their buys and be aware of a wide variety of factors influencing prices. Among other factors, MetalMiner’s analysis gives specific attention to the Chinese economy, oil prices and the U.S. dollar.

In addition, buyers need to continue to monitor the coronavirus pandemic and its impact on commodity and industrial metal markets.

India

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This morning in metals news: India is looking to curb its imports of copper and aluminum; Rio Tinto and Turquoise Hill reached a financing agreement for the Oyu Tolgoi underground mine project; and Germany’s steel industry needs state aid.

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India targets copper, aluminum imports

India is looking to curb its imports of copper and aluminum, Reuters reported.

Per the report, India is particularly targeting imports from China and other Asian countries. Among the proposed measures is a requirement for importers to register with the government.

Rio Tinto, Turquoise Hill reach financing deal

Miner Rio Tinto and Turquoise Hill have reached a financing deal toward the completion of the Oyu Tolgoi underground mine in Mongolia.

“The MOU agreed today with TRQ provides a clear funding pathway for the completion of the Oyu Tolgoi Underground Project,” said Arnaud Soirat, Rio Tinto’s chief executive of copper and diamonds. “We will continue working with TRQ and the Government of Mongolia to progress the underground project, which has the potential to unlock the most valuable part of the mine for the benefit of all stakeholders.”

Rio Tinto has a 50.8% stake in Turquoise Hill.

With the current development schedule, Turquoise Hill expects the massive copper-gold mine will be the world’s third-largest copper producer at peak metal production in 2025.

IG Metall head says German steelmakers need state aid

2020 has been a difficult year for Europe’s steelmakers.

Already battling imports, European steelmakers have struggled on the heels of the coronavirus pandemic and its resulting impact on demand.

In Germany, IG Metall head Joerg Hofmann said the country’s steelmakers need state aid, Reuters reported. In addition, German steelmakers need to form alliances in order the facilitate the transition to greener fuels for blast furnaces, Hofmann argued.

Are you prepared for your annual steel contract negotiations? Be sure to check out our five best practices. 

After dipping two weeks ago, the U.S. steel sector’s capacity utilization rate for the week ending Sept. 5 bounced back.

Steel mills produced at a rate of 63.7% during the week ending Sept. 5, 2020, according to the American Iron and Steel Institute (AISI). The rate marked an increase from the 61.7% recorded the prior week (when it had fallen from 63.0% the week before that).

Upcoming negotiation on your steel buy? Make sure you know how your service centers will negotiate with you

Production hits 1.43M tons

Steel output for the week ending Sept. 5 totaled 1.43 million net tons.

The weekly production total marked a 21.2% decline compared to the week ending Sept. 5, 2019, when capacity utilization reached 78.0%.

Meanwhile, production last week marked a 3.3% increase from the week ending Aug. 29.

Year-to-date output down by one-fifth

Buoyed in part by a recovery in automotive demand, the steel capacity utilization rate has made gains in recent months.

However, for the year to date, the capacity rate and overall output remain down compared to 2019 levels.

Year-to-date steel output totaled 53.27 million net tons, down from 66.73 million net tons for the same period in 2019. The capacity utilization rate for the same period last year reached 80.6%.

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copper smelter

Bombardho/Adobe Stock

This morning in metals news: copper prices gained momentum Wednesday; the rival of German steelmaker Thyssenkrupp rejected the idea of an alliance; and a Pakistani steelmaker is looking to ramp up its output amid a construction spike in the country.

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Copper price momentum

The LME copper price bounced back Wednesday after falling Tuesday, Reuters reported.

The copper price gained 0.2% Wednesday, as stocks fell to a 15-year low, per the report.

As with other materials, recovering Chinese demand continues to support metals prices (including copper).

Salzgitter CEO says company not interested in Thyssenkrupp alliance

The rival of German firm Thyssenkrupp told Reuters it is not interested in an alliance.

Salzgitter CEO Heinz Joerg Fuhrmann said a merger of the two would not improve the company’s standing.

Last year, Stuart Burns delved into Thyssenkrupp’s struggles, including its departure from Germany’s blue-chip DAX index.

In August, Thyssenkrupp reported on the impact of the coronavirus pandemic on its finances (citing the automotive technology fallout, in particular).

Pakistani steel firm aims to augment steel capacity

Per Bloomberg, China-backed steel projects in Pakistan are looking to raise a lot of money and significantly augment their steel capacity.

Agha Steel Industries Ltd. aims to triple its capacity for gray steel bars, Bloomberg reported.

Furthermore, the company plans to raise between 3.6 billion and 5 billion rupees, according to the report.

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In this month’s Rare Earths Monthly Metals Index (MMI) news: Texas Congressmen introduced the RARE Act; the European Commission unveiled its own raw materials action plan; and Chinese rare earths to the U.S. could plunge this year.

The Rare Earths MMI gained 8.3% for this month’s MMI reading.

September 2020 Rare Earths MMI chart

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Texas Congressmen introduce bill aimed at curbing U.S. dependence on China for rare earths

Congressmen Lance Gooden (R-TX) and Vicente Gonzalez (D-TX) recently introduced the House’s version of a bill that seeks to decrease the U.S.’s dependence on China for rare earths.

The bill, dubbed the Reclaiming American Rare Earths (RARE) Act, aims to establish tax incentives for domestic production of rare earths.

“The United States is more dependent than ever on the importation of the resources that drive our economy, enable us to build advanced technology, and ensure our national security,” Gooden’s office said in a release. “Thirty-five of these rare earth minerals are designated by the Department of Interior as ‘critical’, and we source fourteen of them entirely from foreign suppliers. China is a leading supplier for twenty-two of the thirty-five. The RARE Act is specifically designed to change that.”

Earlier this year, Sen. Ted Cruz introduced similar legislation, dubbed the Onshoring Rare Earths Act of 2020, or ORE Act.

In late July, Australian rare earths firm Lynas Corporation announced it had signed a contract with the U.S. Department of Defense for Phase 1 work on a heavy rare earths separation facility in the U.S.

Like U.S. RARE Act, Europe presents critical minerals action plan

In a similar vein, the European Commission also recently announced its own action plan related to its raw materials supply security.

The plan also includes an updated list of those materials deemed critical.

The 2020 list includes heavy and light rare earths elements, in addition to raw materials like coking coal. New materials added to the 2020 list that were not on the 2017 list were titanium, lithium, bauxite and strontium.

The list contains 30 materials, up from the 11 materials included on the 2011 list.

“The supply of many critical raw materials is highly concentrated,” the European Commission said in a release. “For example, China provides 98 % of the EU’s supply of rare earth elements (REE), Turkey provides 98% of the EU’s supply of borate, and South Africa provides 71% of the EU’s needs for platinum and an even higher share of the platinum group metals iridium, rhodium, and ruthenium. The EU relies on single EU companies for its supply of hafnium and strontium.”

Chinese rare earths exports to the U.S. could be on the decline

The South China Morning Post reported China’s rare earths exports to the U.S. could fall by anywhere between one-fourth and one-third this year.

For instance, Adamas Intelligence forecast global consumption of NdFeB alloys could fall by as much as 9.3% this year. The figure comes on the heels of growth at a CAGR of 6.4% from 2015-2019.

However, Adamas did offer a silver lining.

“However, with the ongoing re-opening of key demand markets through the end of 2020 and into 2021, we expect demand for most end-uses and applications to rebound strongly in 2021 and 2022 and thereafter rise steadily through the end of the decade and beyond,” the research firm said.

Actual metals prices and trends

The Chinese yttrium price rose 1.8% month over month to $32.83 per kilogram as of Sept. 1. Terbium oxide 9.0% to $722.31 per kilogram.

Neodymium oxide surged 16.1% to $52,896.23 per metric ton.

Europium oxide fell 2.7% to $31.37 per kilogram. Dysprosium oxide fell 2.3% to $259.74 per kilogram.

Want more from MetalMiner? We offer exclusive analyst commentary in our weekly, monthly, or quarterly updates – all metals, no sales fluff. 

Photo by Jeffrey Sauger for General Motors

This morning in metals news: General Motors announced a partnership with Nikola Corporation; U.S. manufacturing corporations saw their profits plunge in Q2 2020; and Chile’s copper shipments fell in August.

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GM announces partnership with Nikola

General Motors on Monday announced plans to partner with Nikola Corporation, a partnership that would see the Detroit automaker manufacture the Nikola Badger.

“As part of the agreement, Nikola will utilize General Motors’ Ultium battery system and Hydrotec fuel cell technology, representing a key commercialization milestone for General Motors,” GM said in a release.

Manufacturing profits decline

To no one’s surprise, manufacturing profits declined significantly in Q2 2020.

After-tax profits for U.S. manufacturing corporations reached $47.2 billion in Q2, according to the U.S. Census Bureau. The quarterly total marked a decline from the $113.0 billion in Q1 2020 and the $136.3 billion in Q2 2019.

Chile’s copper shipments fall in August

According to Bloomberg, No. 1 copper producer Chile saw a decline in the value of its copper shipments last month.

Per data released by the Chilean government today and cited by Bloomberg, Chile’s copper exports totaled $2.76 billion in August, marking an 11% decline from the previous month.

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September 2020 Construction MMI chartThe Construction Monthly Metals Index (MMI) gained 2.6% for this month’s MMI reading.

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U.S. construction spending

U.S. construction spending in July checked in at a seasonally adjusted annual rate of $1,364.6 billion, the Census Bureau reported.

The July rate was up 0.1% from the previous month, when it reached $1,362.8 billion. However, the July figure marked a 0.1% decrease from the July 2019 estimate of $1,366.0 billion.

During the first seven months of 2020, construction spending totaled $792.6 billion, or up 4.0% year over year.

As for private construction, spending reached a seasonally adjusted annual rate of $1,013.5 billion, or up 0.6% from the previous month.

Within private construction, residential construction reached $546.6 billion in July, or up 2.1%. Nonresidential construction reached a seasonally adjusted annual rate of $466.9 billion in July, or down 1.0%.

Meanwhile, public construction spending reached an estimated seasonally adjusted annual rate of $351.1 billion, which marked a 1.3% decline. Educational construction fell 3.0% to $82.2 billion. Highway construction reached a seasonally adjusted annual rate of $99.0 billion, or down 3.1%.

ABI holds at 40.0

For another month, the Architecture Billings Index (ABI) held flat for a reading of 40.0.

The index, put out monthly by the American Institute of Architects, measures billings growth (any reading less than 50 indicates billings contraction).

“Inquiries into new projects continued to show just a modest decline, but more seriously, the value of new signed design contracts slipped from its June level,” the latest ABI report notes. “Unfortunately, with the continued resurgence in COVID-19 cases in many areas of the country, clients may be interested in starting new projects, but remain reluctant to sign on the dotted line.”

By region, the West posted the strongest reading, checking in at 40.9. Trailing the West were the South (40.7), the Midwest (40.1) and the Northeast 36.8).

This month’s ABI survey asked architecture firms about their experience with the federal Payroll Protection Program (PPP).

“Overall, 85% of responding firms reported that they applied for, and received, a PPP loan,” the report states. “Just 1% applied for a loan but did not receive one, while the remaining 14% did not apply for a loan at all. Firms with an institutional specialization were most likely to report receiving a PPP loan (89%), followed by firms with a commercial/industrial specialization (81%), and firms with a multifamily residential specialization (75%).”

Housing starts surge

In positive economic indicators, last month we noted U.S. housing starts in July jumped back up to pre-pandemic levels.

July starts reached a seasonally adjusted annual rate of 1.496 million units, according to data from the Census Bureau and the Department of Housing and Urban Development.

The July start rate marked a 22.6% increase from the previous month and a 23.4% increase year over year.

Actual metals prices and trends

The Chinese rebar price increased 3.5% month over month to $536.99 per metric ton as of Sept. 1. Chinese H-beam steel rose 0.7% to $535.53 per metric ton.

The U.S. shredded scrap steel price rose 4.2% to $248 per short ton.

The European commercial 1050 aluminum sheet price rose 5.4% to $2,582.27 per metric ton.

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

goodluz/Adobe Stock

To our U.S. readers, MetalMiner wishes everyone a happy and safe Labor Day weekend.

The next several days will be busy ones here at MetalMiner.

Keep an eye out for the release of our big Annual Outlook report, which offers a more expansive view of the various metals categories tracked in our Monthly Metal Outlook (MMO).

On top of all that, also keep an eye out for our usual Monthly Metals Index (MMI) reports, which will continue this week.

With the official end of summer drawing near, let’s take a look back at the most popular posts of the summer season (for the purposes of this list, that’s June-August):

  1. Silver’s recovery has been dramatic — but how high can it go?
  2. Aluminum price is pulled this way and that on rising trader interest, supply glut
  3. Aluminum MMI: Aluminum price makes gains, index rises 6.7%
  4. Chinese construction steel prices dip amid cluster of new coronavirus cases
  5. Copper MMI: Copper price rally continues, rises to pre-coronavirus levels
  6. Copper MMI: Will the copper price continue in its V-shaped recovery?
  7. Aluminum MMI: Aluminum price climbs despite overwhelming supply
  8. Rare Earths MMI: DoD reverses decision to fund two U.S. rare earths separation facilities
  9. U.S. aims to break rare earths dependence on China with Lynas project
  10. Stainless MMI: LME nickel prices contradict market fundamentals

cars on the road in Shanghai, China

eyetronic/Adobe Stock

Before we head into the long Labor Day weekend, let’s take a look back at the week that was in the world of metals.

Automakers released August sales reports, mostly showing sales remain down compared with 2019 levels.

Meanwhile, for the week ending Aug. 29, U.S. steel mills’ capacity utilization fell compared with the previous week, interrupting an extended stretch of weekly capacity increases.

In other news, President Donald Trump took aim at steel imports from Brazil and Mexico. With respect to Brazil, Trump opted to cut Brazil’s semi-finished steel quota for the remainder of the year down to 60,000 tons from 350,000 tons.

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Week of Aug. 31-Sept. 4

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steel

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This morning in metals news: steelmaker Nucor will open a new steel plant in Florida by the end of this year; U.S. gasoline prices are low heading into the Labor Day weekend; and Chinese demand continues to power high iron ore prices.

5 Mistakes Buyers Can Make When Sourcing Steel

Nucor to open steel plant by end of 2020

Nucor will open its new steel plant in Frostproof, Florida, by the end of this year, The Ledger reported.

Employment at the plant is expected to reach approximately 250 workers next year, The Ledger reported.

U.S. gas prices at lowest since 2004

For those getting in the car and traveling over Labor Day weekend, there’s good news.

According to the Energy Information Administration, U.S. gasoline prices are at their lowest since 2004. 

As of this Monday, the U.S. average price stood at $2.22 per gallon.

“U.S. gasoline prices are relatively low because of continued low demand for gasoline since mid-March, when travel demand fell because of efforts to limit the spread of coronavirus,” the EIA said.

Iron ore rises to six-year high

On the other hand, demand for steelmaking raw material iron ore remains high in China.

Per mining.com, Chinese demand has helped push the iron ore price to a six-year high.

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