Author Archives: Fouad Egbaria

This morning in metals news: the Energy Information Administration forecasts natural gas prices will remain elevated this winter; meanwhile, Rio Tinto said it is working on new technology for the production of low-carbon steel; and, lastly, miner BHP and South Korean steelmaker POSCO signed a memorandum of understanding to explore the reduction of greenhouse gas emissions in the steelmaking process.

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Natural gas prices to remain elevated this winter

natural gas tap

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To the chagrin of industrial users and residential consumers alike, natural gas prices are likely to remain high this winter, the Energy Information Administration says.

“In our October Short-Term Energy Outlook (STEO), we forecast that natural gas spot prices at the U.S. benchmark Henry Hub will average $5.67 per million British thermal units (MMBtu) between October and March, the highest winter price since 2007–2008,” the EIA said. “The increase in Henry Hub prices in recent months and in our forecast reflect below-average storage levels heading into the winter heating season and strong demand for U.S. liquefied natural gas (LNG), even though we’ve seen relatively slow growth in U.S. natural gas production.”

However, the EIA forecasts Henry Hub prices will decline after Q1 2022.

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The Global Precious Monthly Metals Index (MMI) lost ground this month, dropping by 12.9% as the gold price declined and the dollar strengthened last month.

October 2021 Global Precious MMI

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Gold slides, dollar gains

The U.S. gold bullion price fell in September, dropping from $1,814 per ounce as of Sept. 1 to $1,757 on Oct. 1, a 3.1% drop.

Meanwhile, gold historically correlates inversely with the U.S. dollar. Unsurprisingly, the U.S. dollar showed strength in September.

Last month, the Federal Reserve indicated it could soon finally begin tapering asset purchases, which is supportive for the dollar.

After closing Sept. 1 at 92.45, the U.S. dollar index closed Oct. 1 at 94.03.

Fed could begin tapering

As mentioned, the Federal Reserve last month indicated it could be set to begin tapering asset purchases.

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This morning in metals news: The Consumer Price Index (CPI) rose by 0.4% in September; meanwhile, U.S. steel capacity utilization fell to 84.2%; and, lastly, the Energy Information Administration forecasts U.S. households will spend more on energy this winter.

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Consumer Price Index gains again

Consumer Price Index

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The Consumer Price Index for All Urban Consumers rose by 0.4% in September, the Bureau of Labor Statistics reported.

The jump follows an increase of 0.3% in August.

Meanwhile, the index increased by 5.4% over the last 12 months (up from 5.3% for the 12-month period ending in August).

U.S. steel capacity utilization falls to 84.2%

U.S. steel capacity utilization fell to 84.2% for the week ending Oct. 9, down from 84.8% the previous week, the American Iron and Steel Institute reported.

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The Rare Earths Monthly Metals Index (MMI) bounced back, rising by 11.6% this month.

October 2021 Rare Earths MMI chart

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GM, GE Renewable Energy aim to develop rare earths supply chain

Automaker General Motors and GE Renewable Energy have signed a memorandum of understanding through which they will seek to develop a supply chain for rare earths and other materials needed for electric vehicles and renewable energy.

The parties will “evaluate opportunities to improve supplies of heavy and light rare earth materials and magnets, copper and electrical steel used for manufacturing of electric vehicles and renewable energy equipment,” GM said earlier this month.

Initially, they will focus on a Europe- and North America-based supply chain for vertically integrated magnet manufacturing.

“A secure, sustainable and resilient local supply chain for electric vehicle materials is critical to the execution of GM’s vision of an all-electric future,” said Shilpan Amin, GM vice president for Global Purchasing and Supply Chain. “Motors are one of the most important components of our Ultium Platform, and the heavy and light rare earth materials are an essential ingredient in our motor magnets. The combined scale of GM and GE will enable us to unlock the potential for securing low-carbon footprint, ESG-friendly, secure and cost competitive materials.”

Furthermore, the parties will evaluate “potential cooperation to support the development of new technologies and processes for both automotive and renewable power generation applications.”

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This morning in metals news: job openings and new hires fell in August, the Census Bureau reported; steel producers in the U.K. are warning of an energy-related crisis; and, lastly, Liberty Steel received a £50 million boost that it says will preserve about 660 jobs.

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Job opening, hires slump in August

manufacturing worker

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Both job openings and hires declined in August, the Census Bureau reported today.

Job openings fell to 10.4 million as of the last business day of August. Meanwhile, hires decreased to 6.3 million.

U.K. steel sector sounds alarm over energy prices

As MetalMiner’s Stuart Burns covered in a series of posts last week, energy prices are a mounting concern all over the world.

The U.K. steel sector is warning that rising energy costs could become a crisis for the industry. Surging costs for natural gas and other commodities threaten the continuity of their operations, they argue.

“These extortionate prices are forcing some UK steelmakers to suspend their operations during periods when the cost of energy is quoted in the thousands per megawatt hour; last year, prices were roughly £50 per megawatt hour,” UK Steel Director General Gareth Stace said last month. “Even with the global steel market as buoyant as it is, these eye-watering prices are making it impossible to profitably make steel at certain times of the day and night.”

Reuters reported UK Steel is asking the British government for help, saying that without aid the consequences for the industry will be “dire.”

Liberty Steel says £50M will preserve 660 jobs

Lastly, sticking with the U.K., embattled steelmaker Liberty Steel says an infusion of £50 million will help preserve 660 jobs at Rotherham, the BBC reported.

The £50 million injection comes as part of parent group GFG Alliance’s restructuring following the collapse of its primary backer, Greensill Capital.

“GFG will inject £50 million of new funding into LIBERTY Steel UK (LSUK) to enable the restart of LSUK’s core Rotherham electric arc furnace,” GFG said in a release. “The provision of funding will set the platform to refinance LSUK operations in full, create a leading long-term GREENSTEEL hub, and support the RTC’s work of creating a profitable, restructured and focused business.”

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This morning in metals news: miner Anglo American announced the results of a feasibility exploring the potential for hydrogen in the South African economy; General Motors last week announced plans to double its revenue; and, lastly, steel prices have showed signs of flatlining of late.

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Anglo American explores role of hydrogen in South Africa

green hydrogen

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In collaboration with several parties, miner Anglo American recently conducted a feasibility study “to explore the potential for a hydrogen valley anchored in the platinum group metals-rich Bushveld geological area, along the industrial and commercial corridor to Johannesburg and to the south coast at Durban.”

“The opportunity to create new engines of economic activity through hydrogen has been validated through this feasibility study with our partners,” said Natascha Viljoen, CEO of Anglo American’s PGMs business. “As a leading producer of platinum group metals (PGMs), we have for some years been working towards establishing the right ecosystem to successfully develop, scale-up and deploy hydrogen-fuelled solutions.”

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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:

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Week of Oct. 4-8

coal pile

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The MetalMiner Annual Outlook consolidates our 12-month view and provides buying organizations with a complete understanding of the fundamental factors driving prices and a detailed forecast that can be used when sourcing metals for 2022.

This morning in metals news: U.S. nonfarm payroll employment rose by 194,000 jobs in September; meanwhile, U.S. Steel had another spill from a plant in Northwest Indiana; and, finally, U.S. gasoline exports reached seasonal highs in May, June and July.

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Nonfarm payroll employment rises

nonfarm payrolls

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Nonfarm payroll employment in the U.S. rose by 194,000 jobs in September, the Bureau of Labor Statistics reported.

The national unemployment rate fell by 0.4 percentage point to 4.8%.

Construction employment picked up by 22,000 in September. However, construction employment is down by 201,000 compared to its February 2020 level.

Meanwhile, manufacturing employment rose by 26,000 in September. Fabricated metal products rose by 8,000. However, motor vehicles and parts jobs fell by 6,000. Overall, manufacturing employment is down by 353,000 from February 2020.

Second spill at U.S. Steel plant

Less than two weeks after a spill from a U.S. Steel plant led to nearby beach closures, another spill occurred this week, the Northwest Indiana Times reported.

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This morning in metals news: Nucor Corporation announced the launch of a line of net-zero carbon steel products; meanwhile, the American Iron and Steel Institute released September import permit application data; and, finally, average U.S. home mortgage rates continue to hover around 3%.

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Nucor announces new line of net-zero carbon steel

Nucor logo

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Nucor announced it is launching a new line of net-zero carbon steel products.

The steelmaker said General Motors will be the first recipient of the new Econiq™ line of net-zero carbon steel products.

“General Motors will receive the Econiq net-zero steel beginning in Q1 2022, and it is projected that all steel purchased by GM from Nucor will be net carbon neutral by the end of 2022,” Nucor said.

Steel import permit applications jump in September

U.S. steel permit import applications for September surged by 8.8% from August to September, the American Iron and Steel Institute reported.

September import permit application tonnage totaled 2.87 million net tons.

Furthermore, estimated finished steel import market share reached 22% in September, up from 20% for the year to date.

Home mortgage rates remain around 3%

U.S. mortgage rates dipped slightly this week, mortgage loan company Freddie Mac reported.

The average 30-year fixed rate mortgage this week dipped to 2.99%, down by 0.02 percentage point from the previous week. The 15-year rate fell to 2.23%.

“Mortgage rates continue to hover at around three percent again this week due to rising economic and financial market uncertainties,” Freddie Mac noted. “Unfortunately, with the expectation that both mortgage rates and home prices will continue to rise, competition remains high and housing affordability is declining.”

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The Automotive Monthly Metals Index (MMI) held flat for this month’s reading, as U.S. auto sales slumped in Q3.

October 2021 Automotive MMI chart

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US auto sales slip in Q3

General Motors reported its third-quarter sales fell from 665,192 vehicles in Q3 2020 to 446,997 vehicles in Q3 2021, a 32.8% drop.

The automaker cited semiconductor supply chain disruptions and “historically low inventories.”

“During the quarter, GM provided an update for investors that its wholesale volumes in North America in the second half of 2021 would be down about 200,000 units from the first half, largely because of supply chain disruptions in Malaysia caused by COVID-19, with most of the impact occurring during the third quarter,” the automaker said. “GM’s financial outlook is still expected to be within the calendar year guidance range previously provided as the company continues to develop solutions to mitigate the impacts of the semiconductor shortage and Chevrolet Bolt EV recall.”

Meanwhile, Ford reported total sales in the U.S. fell 17.7% in September. Unlike its truck and car segments, Ford SUV sales jumped by 3.4%.

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