Author Archives: Fouad Egbaria

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 whether oil prices can hit $100 per barrel this year, a potentially rapid recovery for aerospace aluminum demand and much more:

Brent crude oil price chart

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Week of Oct. 25-29 (China’s property market, oil prices and more)

  • Stuart Burns weighed in on the ongoing turmoil in China’s property market and the potential impact on commodities.
  • Chinese auto sales rose by 14.9% on a month-over-month basis in September, the China Association of Automobile Manufacturers reported.
  • A potential surge in aerospace aluminum demand, on top of recovering automotive demand, would spell bad news for other aluminum consumers looking to secure supply.
  • Global copper mine production increased by 3.6% through the first seven months of the year.
  • South African miner Sibanye-Stillwater announced plans to acquire copper and nickel mines in Brazil.
  • U.S. steel capacity utilization last week fell to 84.7%.
  • Nippon Steel has filed lawsuits against Toyota and Chinese steelmaking giant Baosteel, alleging patent infringement.
  • The U.S. trade deficit in September rose to $96.3 billion, up from $88.2 billion in August, the Census Bureau reported.
  • Oil prices have showed momentum over the last couple of months, leading Burns to wonder about the case for $100 per barrel by the end of the year.
  • Global crude steel production fell for the fourth straight month in September.
  • U.S. real GDP rose by 2.0% in the third quarter, according to an estimate released by the Bureau of Economic Analysis.
  • Novelis plans to invest $375 million to expand its automotive sheet production and recycling operations in China.

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This morning in metals news: Novelis announced it will invest $375 million to expand its automotive sheet production and recycling operations in China; Glencore released its Q3 production report; and, lastly, U.S. steel imports jumped by 16% month over month in September.

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Novelis announces $375M automotive sheet expansion

Novelis logo

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Novelis on Thursday announced investment of $375 million to expand its automotive sheet production and recycling operations in China.

“The expansion includes upgrades to the existing hot mill, a new cold mill, and a new recycling and casting center, which will allow the company to implement closed-loop recycling partnerships with automotive customers in Asia,” Novelis said. “Recycling aluminum uses 95% less energy than primary aluminum production and is a key component of Novelis’ sustainability commitment to reduce carbon emissions 30% by 2026 and become carbon neutral by 2050.”

Novelis said it expects to break ground on the project in early 2022 and complete it by mid-2024.

Glencore announces production results

In the year to date, Glencoe reported copper production of 895.5 kt, down 4% year over year.

Meanwhile, the miner tallied 23.4 kt of cobalt, good for an 8% year-over-year increase.

Zinc output held flat at 855.8 kt.

Steel imports rise in September

U.S. steel imports in September reached 2.9 million metric tons, the Census Bureau reported this week. The total increased from 2.5 million metric tons in August.

Imports of blooms, billets and slabs increased 15.4% to 695,029 metric tons. Rebar imports rose 69.7% to 143,950 metric tons.

Imports of oil country goods surged by 104.4% to 221,599 metric tons.

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This morning in metals news: real GDP increased by 2.0% in Q3 2021, according to an estimate from the Bureau of Economic Analysis; Ford Motor Co. released its Q3 results; and, lastly, several base metals prices have continued to retrace after surging earlier this month.

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BEA: real GDP up 2.0% in Q3

GDP graphic

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According to an estimate from the Bureau of Economic Analysis, U.S. real GDP increased by 2.0% in Q3 2021.

Meanwhile, real GDP increased by 6.7% in Q2 2021.

“The increase in real GDP in the third quarter reflected increases in private inventory investment, personal consumption expenditures (PCE), state and local government spending, and nonresidential fixed investment that were partly offset by decreases in residential fixed investment, federal government spending, and exports,” the BEA reported. “Imports, which are a subtraction in the calculation of GDP, increased.”

Disposable personal income fell by $29.4 billion, or 0.7%. Disposable personal income fell by 25.7% in Q2 2021.

Ford releases Q3 results

Automaker Ford Motor Co. reported Q3 net income of $1.8 billion, down from $2.4 billion in Q3 2020.

Read more

Global crude steel production declined in September, marking the fourth straight month of month-over-month declines.

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Global crude steel production falls to 144.4 MT

Western European steel factory

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September global crude steel production fell to 144.4 million metric tons, the World Steel Association reported this week.

Metals producers around the world have felt the burden of rising energy costs, as we’ve noted in previous articles. Zinc prices, for example, have since retraced but earlier this month soared to 14-year highs. Belgian zinc producer Nyrstar said it would slash production in response to rising energy costs.

As for steel, September output declined from 154.4 million metric tons the previous month. Meanwhile, output declined by 8.9% on a year-over-year basis.

Top producer China saw its output fall from 83.2 million metric tons to 73.8 million metric tons in September.

The China Iron and Steel Association overviewed the sector’s third-quarter performance on Monday.

“The steel industry has actively responded to changes in domestic and international demand and made efforts to overcome difficulties such as high raw and fuel material prices and rising pressure on ‘double carbon’ environmental protection,” CISA said. “The overall operation trend in the first three quarters was good, making outstanding contributions to meeting the steel demand of downstream industries and ensuring the sustainable recovery of the national economy. However, it also faces challenges such as a more complex market environment and difficulty in reducing costs and increasing efficiency.”

India, the second-largest steel producer, churned out 9.5 million metric tons amid a coal crisis of its own. The total marked a 7.2% year-over-year increase. However, output declined from August’s 9.9 million metric tons.

Meanwhile, Japanese output reached 8.1 million metric tons, or up 25.6% year over year.

E.U. production totaled 12.7 million metric tons, or up 15.6% year over year.

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This morning in metals news: the U.S. trade deficit in September jumped 9.2% from the previous month; meanwhile, Rio Tinto is partnering with Carbfix on carbon capture and storage technology; and, lastly, Norsk Hydro is investing in a new automotive extrusion press in China.

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US trade deficit rises in September

U.S. trade

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The U.S. trade deficit jumped to $96.3 billion in September, the Census Bureau reported.

The September figure jumped from $88.2 billion in August.

Meanwhile, wholesale inventories reached $739.5 billion at the end of September, up 1.1% month over month. The September total increased 12.7% year over year.

Rio Tinto partners on carbon capture, storage

Miner Rio Tinto said it is partnering with Carbfix on technology for carbon capture and storage.

They plan to collaborate on carbon storage underneath the ISAL aluminum smelter in Iceland.

Read more

The U.S. steel capacity utilization rate dipped to 84.7% last week, the American Iron and Steel Institute (AISI) reported Monday.

The rate declined from 85.3% the previous week.

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U.S. steel output dips

steel production

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Production last week totaled 1.87 million net tons, AISI reported. The weekly total marked a drop of 0.6% from the previous week. However, output increased by 20.7% from the same week in 2020.

For the year to date (i.e., through Oct. 23), production reached 77.0 million net tons. Capacity utilization during that period reached 81.3%.

The total marked a 20.3% year-over-year jump from 64.0 million net tons. The capacity utilization rate reached 67.1% during the same period in 2020.

Steel prices flatten

As we’ve noted in recent weeks, steel prices’ over yearlong ascent appears to have at least, for now, slowed down.

The U.S. hot-rolled coil price closed last week at $1,922 per short ton, down 0.16% month over month, according to MetalMiner Insights data. Meanwhile, the hot-dipped galvanized price closed at $2,208 per short ton, down 2.39% month over month.

In addition, the cold-rolled coil price closed last week at $2,131 per short ton, or down 0.98%.

Plate prices have bucked the trend, however, reflecting the runup in oil prices. U.S. steel plate closed last week at $1,829 per short ton, up 7.46% month over month.

AISI advocates for infrastructure bill

Earlier this month, House Speaker Nancy Pelosi indicated intentions to vote by the end of October on the infrastructure package under consideration.

Fast forward to the last week of the month and there has still not been a vote.

This week, AISI indicated its support for passage of the Infrastructure Investment and Jobs Act.

“The ability of our nation to proceed on a path to economic recovery depends on reliable, safe and efficient modes of transportation,” AISI said. “Our industry like so many others rely on the nation’s roads, rail and water transportation to move raw materials and finished products. Since 2018, American steelmakers have invested $16 billion dollars in modern, state-of-the- art, environmentally responsible steel production to meet our nation’s infrastructure needs.”

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This morning in metals news: Sibanye-Stillwater will acquire copper and nickel mines in Brazil for $1 billion; meanwhile, General Motors announced plans to expand access to electric vehicle charging stations; and, lastly, sales of single-family homes increased in September.

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Sibanye-Stillwater to acquire copper, nickel mines

mine mining

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South African miner Sibanye-Stillwater said it will acquire a pair of nickel and copper mines in Brazil.

The miner will purchase the sites for a total of $1 billion.

Sibanye-Stillwater plans to acquire the Santa Rita nickel mine and the Serrote copper mine.

“In line with Sibanye-Stillwater’s strategy to build an operating portfolio of green metals and related technologies, this Transaction is a further meaningful step – adding two low-cost, producing assets to its green metals portfolio,” the firm said in a release today. “Both assets have been substantially pre-capitalised and as a result the Transaction will be immediately accretive to Sibanye-Stillwater’s cash flow and earnings.

“Santa Rita is one of the largest nickel-cobalt sulphide open pit mines in the world, located in the State of Bahia, Brazil and includes a preliminary economic assessment (PEA)-stage underground project. The mine produces a sulphide concentrate suitable for downstream processing to produce battery precursors and has outstanding infrastructure resulting from significant historical investment.

“Serrote is a producing open pit copper mine, currently in ramp up, located in the State of Alagoas, Brazil and developed at a cost of US$195 million.”

GM to expand EV charging station access

Meanwhile, automaker General Motors announced plans to install up to 40,000 new Level 2 electric vehicle chargers in the U.S. and Canada.

Read more

Although not accounting for more recent supply concerns, global copper mine production increased by 3.6% through the first seven months of the year, the International Copper Study Group reported.

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Global copper production rises through seven months

copper mine in Peru

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Copper concentrate production increased by 5.5% during the seven-month period. Meanwhile, solvent extraction-electrowinning declined by 4.3%.

Chile, the top copper producer, saw its output fall by 1% during the period. However, Peru, the second-largest copper producer, saw its output rise by 11%.

Elsewhere, Indonesia’s output rose by 61%.

Refined copper production rose by 2.6% during the period. Electrolytic production rose by 1.8% and secondary production from scrap increased by 7%.

Copper supply fears

However, more recently, the copper supply picture has not been as rosy.

As Stuart Burns outlined earlier this week, the copper market is showing signs of duress.

Read more

This morning in metals news: Chinese auto sales picked up in September on a month-over-month basis; the Energy Information Administration forecast a significant jump in natural gas prices this winter; and, lastly, U.K. steel manufacturers are asking for government intervention in the ongoing energy crisis.

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Chinese auto sales rise

cars on the road in Shanghai, China

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Chinese auto sales rose by 14.9% in September on a month-over-month basis, the China Association of Automobile Manufacturers reported this month.

Sales reached 2.07 million vehicles in September. Meanwhile, the September total marked a 19.6% year-over-year decline.

For the year to date, sales reached 18.62 million vehicles, or up 8.7% year over year.

EIA: Natural gas bills could rise 30% this winter

The Energy Information Administration forecast natural gas bills this winter will come in 30% higher than last winter’s bills.

The EIA forecast households that primarily use natural gas for heating will spend an average of $746 this winter, or up 30% from last year.

Read more

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. 18-22 (steel demand, aluminum alloys and more)

Chinese steel factory

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