Author Archives: Fouad Egbaria

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 coverage of the semiconductor shortage, the Midwest Premium and more.

A fire at a Japanese chip-making plant last week has slammed automotive operations. General Motors, Ford and many other automakers have announced idling of production as a result of the shortage.

Meanwhile, on the supply side, Intel announced plans to invest $20 billion to build two new Arizona plants. Furthermore, Intel said it aims to “serve the incredible global demand for semiconductor manufacturing.”

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

Week of March 22-26 (semiconductor shortage, Midwest Premium and more)

semiconductor and automobile

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This morning in metals news: Ford Motor Co. will idle production of its F-150 truck at its Dearborn plant until Sunday; the blockage of the Suez Canal by container vessel Ever Given is having a massive impact on global trade; and, lastly, the UK government is looking at all options to prevent the collapse of Liberty Steel. 

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Ford to temporarily idle F-150 plant

Ford logo

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Ford Motor Co. yesterday said it will idle production of the F-150 at its plant in Dearborn, Michigan, through Sunday, Reuters reported.

The move is yet another idling stemming from the global semiconductor shortage. The shortage has been exacerbated by a fire that damaged a major chip-producing plant in Japan last week.

Intel announced plans to invest $20 billion to build two new factories for the manufacture of chips.

Suez Canal blockage continues

The blockage of the Suez Canal by massive container vessel Ever Given this week is exerting a widespread impact on global commerce.

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Three years have passed since former President Donald Trump imposed Section 232 tariffs on steel and aluminum.

The administration cited national security concerns when imposing the tariffs. In addition, it aimed to raise capacity utilization of the US steel and aluminum sectors. (For the week ending March 20, US mills reached a steel capacity utilization rate of 77.3%.)

steel tariff

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Some countries received exemptions and domestic buyers have been able to win exclusions, which have mitigated the strength of the tariffs.

Metals consumers have expressed their opposition to the tariffs. For example, the Coalition of American Metal Manufacturers and Users (CAMMU) called for an end to the tariffs last year, citing the negative economic impact of the COVID-19 pandemic.

However, a recent review of the tariffs offered a more positive view.

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

EPI: Section 232 tariffs produced ‘near-immediate benefits’

According to a recent report this week by the Economic Policy Institute (EPI), the Section 232 tariffs offered “near-immediate benefits.”

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gears featuring words reading sustainability, environment, society and economy

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This morning in metals news: U.S. Steel announced it will offer a new sustainable steel product line called verdeX™; meanwhile, Intel will invest $20 billion toward two new factories to serve the “incredible global demand for semiconductor manufacturing”; and, lastly, Century Aluminum announced a power contract in South Carolina for its Mt. Holly aluminum smelter.

Volatility is the name of the game. Do you have a steel buying strategy that can handle the ups and downs?

U.S. Steel unveils new sustainable steel

No matter the sector, sustainability is a concept that continues to gain traction — and not just from environmentally conscious individual consumers.

This week, during Ceres Conference 2021, U.S. Steel unveiled a new line of sustainable steel dubbed verdeX™.

“U. S. Steel is now capable of producing some of the most advanced high strength steels with only a quarter of the carbon dioxide emissions previously required,” the steelmaker said in a release. “The company is now partnering with customers to introduce U. S. Steel’s verdeX line of sustainable steel, so they can offer even more sustainable products to consumers.”

The steelmaker said it will release additional information about the sustainable steel line in the coming weeks.

Intel to invest in semiconductor manufacturing

The semiconductor shortage has led to the ringing of alarm bells around the world, particularly in the automotive sector.

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bull market

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Industrial metal buying organizations are in a difficult spot these days, as commodities are entrenched in a bull market.

After the initial demand hit that commodities took on at the end of Q1 2020 with the outset of the COVID-19 pandemic, materials prices have skyrocketed. Lead times have lengthened and demand for everything from automobiles to homes to electronics picked up around the middle of the year.

Since then, metals prices have been on a bullish run, putting pressure on buying organizations.

On Wednesday, March 24, MetalMiner hosted a webinar titled “When Will the Metals Bull Market End? (Am I Well Positioned to Get All of the Cost-Downs When Prices Fall?).” During the 30-minute session, MetalMiner CEO Lisa Reisman, Editor-at-large Stuart Burns and Vice President of Business Solutions Don Hauser walked buyers through the current state of commodities markets and strategies for how buyers should approach their metals spend in preparation for when prices eventually come down.

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

Bull market

To metals buyers’ chagrin, prices remain elevated and supply is tight.

When polled, 44% of webinar participants said carbon steel has been their most budget-busting metal this calendar year. Meanwhile, 24% said stainless steel, 20% said aluminum and 12% said copper.

In addition, 66% of participants indicated they are also seeing price increases for value-add items (for example, coatings, gauge and width adders, and additional processing).

US steel prices, for example, have been relentless in their rise. Hot rolled coil closed earlier this week at $1,271 per short ton, up nearly 9% from a month ago. After a modest recovery in May 2020, hot rolled coil dipped again, falling as low as $454 per short ton in late August.

The price has come a long way since then.

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copper mine

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Despite significant drops in output earlier in 2020 at the outset of the COVID-19 pandemic, global copper mine production last year came in unchanged compared with the previous year.

According to the International Copper Study Group, the global copper market posted an apparent deficit of 560,000 tons in 2020.

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

ICSG: copper mine production flat in 2020

Copper mine production around the world took a dive in the first half of 2020, as the pandemic disrupted operations and metals demand patterns. Mine output dropped by 3.5% year over year in April-May 2020.

However, the second-half recovery, paced by China, saw production break even for the year.

Peru, the second-largest producer, saw mine production fall 12.5% in 2020. Top producer Chile, meanwhile, saw its output drop just 1%.

Elsewhere, after the transition of two mines to different ore zones, Indonesian output rose by 39%.

“COVID-19 related constraints and other operational issues also resulted in declines in production in other major copper mine producing countries, most notably Australia, Mexico and the United States,” the ICSG added.

Refined production up 1.5%

However, refined copper production rose by 1.5% year over year in 2020.

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battery energy storage

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This morning in metals news: the Energy Information Administration forecasts a “significant number” of battery energy storage systems will come onto the US electricity grid; meanwhile, miner Rio Tinto announced a partnership with renewable energy technology company Heliogen; and, lastly, global copper mine production levels came in about flat compared with 2020.

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EIA forecasts increase in battery energy storage

The Energy Information Administration (EIA) today projected an increase in battery energy storage systems on the US power grid.

In its Annual Energy Outlook 2021, the EIA projected 59 GW of battery storage will serve the US power grid in 2050.

“Battery storage systems store electricity produced by generators or pulled directly from the grid, and they redistribute that electricity later,” the EIA noted. “They typically charge, or store, electricity during hours of the day with relatively high energy supply, low energy demand, and low power prices. The batteries are then available to discharge electricity during hours with low supply, high demand, high power prices, or when the grid needs backup capacity for reliability.”

Rio Tinto reaches agreement with Heliogen

Miner Rio Tinto announced it had reached an agreement with renewable energy technology company Heliogen.

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capacity utilization

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The US steel sector’s capacity utilization rate has consistently posted gains since a trough last spring at the outset of the COVID-19 pandemic.

This past week, however, the capacity utilization rate fell slightly.

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Capacity utilization dips to 77.3%

The US steel sector’s capacity utilization rate fell to 77.3% for the week ending March 20, the American Iron and Steel Institute reported this week.

Steel output during the week totaled 1.75 million net tons. The figure marked an increase of 0.7% year over year. Meanwhile, output declined 0.5% from the previous week, when capacity utilization reached 77.7%.

As for the year to date, production reached 19.6 million net tons. Capacity utilization during the period reached 76.8%. Production during the period fell 6.2% from the same time frame in 2020, when the rate reached 79.6%.

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British Steel Scunthorpe

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This morning in metals news: British Steel delivered its first rails to Europe under its new ownership group; meanwhile, Alcoa said it will supply low-carbon aluminum for the wheels of Audi’s first electric sports car; and, lastly, the race is on to repair a fire-damaged automotive chip factory in Japan.

Don’t miss the MetalMiner analyst team tomorrow, March 24, at 10 a.m CDT for a 30-minute metals market forecast and strategies to deploy in falling markets: https://zoom.us/webinar/register/WN_6J8wAyYySfihVk3ZUH9yMA. 

British Steel delivers first rails to Europe under new ownership

China’s Jingye Group officially took over British Steel in March 2020.

Now, a year later, British Steel announced it has delivered its first flat-bottomed rail to Europe under the new ownership.

British Steel sent 5,000 metric tons of flat-bottomed rail to the Finnish Transport Infrastructure Agency.

“This is an important contract for us in a very competitive marketplace,” Commercial Director Craig Harvey said in a release. “Although we have supplied the Finnish network previously, this is the first time a European national rail operator has received rail directly from a contract arranged through our Scunthorpe office.”

The first delivery of rails went out in January, Harvey added. The next delivery is due in May.

Alcoa to supply aluminum for new Audi EV

In addition to the British Steel supply news, Alcoa announced it will supply low-carbon aluminum to Audi for its first electric sports car, the e-tron GT.

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Ford logo

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This morning in metals news: the global semiconductor shortage continues to impact automotive operations; the oil price tracked back over the past week; and Katherine Tai, the recently confirmed United States Trade Representative, addressed staff on her first day in office.

Don’t miss the MetalMiner analyst team on March 24 at 10 a.m. CDT for a 30-minute metals market forecast and strategies to deploy in falling markets: https://zoom.us/webinar/register/WN_6J8wAyYySfihVk3ZUH9yMA.

Semiconductor shortage hits Stellantis, Ford

As we’ve noted previously, the global semiconductor shortage has impacted the automotive sector in a significant way.

General Motors and Honda have announced disruptions to their operations related to the semiconductor shortage.

Now, according to Reuters, Stellantis — the recently formed merger of Groupe PSA and Fiat Chrysler — and Ford are also experiencing negative impacts.

Stellantis said it will build and hold trucks built at its Michigan and Mexico plants until semiconductors are available, Reuters reported. Meanwhile, Ford said it will idle its Ohio assembly plant, the report stated.

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