Author Archives: Jeff Yoders

A glut of idled river barges is clogging Mississippi River shorelines from St. Louis to New Orleans is leaving U.S. barge companies that haul grain, coal, steel and other bulk goods counting their losses.

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Even with record-large exports of corn and soybeans, typically a boon for shippers that haul grain to Gulf Coast export terminals, the collapse of coal shipments to the lowest levels in decades has left the dry bulk barge fleet chasing too little cargo.

In pursuit of rising grain volumes since 2014, many shippers expanded their fleets too quickly.

Barge lease rates paid to companies like Archer Daniels Midland Co.’s American River Transportation Company, privately held Ingram Barge and a handful of smaller operators are at 1-1/2-month lows and more than 30 percent below the five-year average for February.

Trump Proposes $54 Billion Defense Spending Increase

President Trump will propose a federal budget that dramatically increases defense-related spending by $54 billion while cutting other federal agencies by the same amount, according to an administration official.

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The proposal represents a massive increase in federal spending related to national security, while other priorities, especially foreign aid, will see significant reductions. How quickly that increase will turn into downstream metals purchases for defense contractors remains to be seen.

When it comes to metal prices, is any one price really representative of the hundreds of transactions that happen every day? While market prices posted on exchanges are a good guide, isn’t it the transactions behind them actually move markets?

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Organizations have been tapping the potential of crowdsourcing, defined by the Tow Center for Digital Journalism as the act of specifically inviting a group of people to participate in a reporting task—such as newsgathering, data collection, or analysis—through a targeted, open call for input; personal experiences; documents; or other contributions.

The British Parliament used a primitive form of crowdsourcing in 1719 to find a way to measure a ship’s longitudinal position. The Crown offered the public a monetary prize to whoever came up with the best solution. In 1970 French amateur photo contest ‘C’était Paris en 1970’ (‘This Was Paris in 1970’) — sponsored by the city of Paris, France-Inter radio, and the Fnac — got 14,000 amateur photographers to produce 70,000 black-and-white prints and 30,000 color slides of the French capital to document the architectural changes of Paris. Photographs were donated to the Bibliothèque historique de la ville de Paris.

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The actual term crowdsourcing wouldn’t be coined until 2005 when Wired writer Jeff Howe used it. Some organizations have successfully mined its potential to create powerful e-businesses. Netflix used crowdsourcing to improve its recommendation engine by 10%, attracting over 44,000 submissions. Wikipedia’s content is entirely crowdsourced from contributors to create a “free-access, free content Internet encyclopedia. Wikipedia executives have said the non-profit service never could have worked without crowdsourcing.

MetalMiner Benchmark

We recently launched MetalMiner Benchmark. Source: MetalMiner.

Lego Ideas is a platform that lets individual Lego builders submit their ideas, like this Volkswagen Golf brick creation, to the company for production. Kickstarter, GoFundme and other platforms have branched out into crowdfunding, using crowdsourcing to solicit donations for specific projects or, as in the link above, even funding for zoo animals like giraffes.

What Does This Mean for Metal Buyers?

MetalMiner recently launched a new metal price benchmark service. You can currently use MetalMiner Benchmark to compare what you’re paying for raw materials against 31,384,272 price benchmarks from 1,232 companies in 22 Industries. By adding your prices to the MetalMiner Benchmark database, the crowdsourced price database will grow exponentially.

We will continue to offer the latest transactional price information to you, the metals buyer, to inform your decisions about several forms of carbon steel, stainless steel, aluminum, nickel alloy and alloy steel on our safe, secure and anonymous platform. All data entered is validated for its accuracy and then only used for price comparisons.

Flanked by some of the nation’s top manufacturing executives, President Donald Trump signed an executive order today directing federal agencies to each create task forces to identify burdensome regulations ready that could be removed, promising the end of “an impossible situation” for U.S. companies and new economic growth.

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The manufacturing CEOs also told Trump that while many of them have jobs that need to be filled, it’s still far too difficult for them to find skilled labor to fill those jobs.

ThyssenKrupp Sells Brazilian Venture, Ends Americas Investment

Thyssenkrupp AG has struck a deal to sell money-losing Brazilian steel mill CSA Cia Siderúrgica do Atlántico SA to Ternium SA for $1.3 billion (1.26 billion euros), ending a foray into the Americas that led to years of massive losses. Including debt, the deal gives CSA, the largest foreign investment project ever in Brazil, an enterprise value of $1.59 billion (15 billion euros).

The Federal Reserve is hinting at multiple short-term interest rate increases this year, a sign that the central bank expects the recent economic surge to continue and wants to limit the possible impact of inflation.

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Minutes from the Fed’s two-day meeting Jan. 31-Feb. 1 show that the tax cuts and spending proposals floated by the Trump administration continue to loom large over the central bank’s decisions. While the Fed chose to leave its interest rates unchanged at the meeting three weeks ago, investors widely expect two to three more rate hikes this year, perhaps as early as March, as the Fed continues on its path of gradually raising interest rates to combat gathering inflation.

Yet the central bank emphasized that it would adjust the pace of rate increases in line with the economy’s performance.

Fortescue Reports $1.2 Billion Profit

Australia’s Fortescue Metals Group Ltd. reported yesterday a 383% rise in interim net profit to $1.2 billion, surpassing the $319 million in the year-earlier period on the back of a surprise surge in iron ore prices… somehow this still fell short of market expectations.

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Analysts had forecast profit for the six months to Dec. 31 of about $1.5 billion, according to Thomson Reuters data.

The Department of Commerce placed preliminary countervailing duties on Turkish steel rebar imports today, the trade case is ongoing.

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Countervailing duties are placed on products found by Commerce to have been injuriously subsidized by foreign governments importing said products into the U.S. The definition of a countervailable subsidy is financial assistance from foreign governments that benefits the production of goods from foreign companies and is limited to specific enterprises or industries, or is contingent either upon export performance or upon the use of domestic goods over imported goods.

Commerce calculated a preliminary subsidy rate of 3.47% for the mandatory respondent Habaş Sinai ve Tibbi Gazlar Istihsal Endüstrisi A.Ş. (Habas).

There  an existing countervailing duty on rebar from the Republic of Turkey (79 Fed. Reg. 65,926 (Dep’t Commerce Nov. 6, 2014). This new countervailing duties investigation on rebar from Turkey covers only rebar produced and/or exported by those companies that are excluded from the 2014 Turkey order. Read more

President Donald Trump’s administration is mulling changes to how the U.S. calculates trade deficits. A change could be made that would show more movements of goods between free trade agreement countries, the Wall Street Journal reported recently citing people involved in the discussions.

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The leading idea under consideration would exclude from U.S. exports any goods first imported into the country, such as cars, and then transferred to a third country like Canada or Mexico unchanged, the sources told The Wall Street Journal. These would not be traditional transshipments, generally done to disguise a country of origin, but rather shipments that are manifested to include the country of origin but simply move goods through a trade agreement country.

Economists say that approach would cause trade deficit numbers to go up because it would typically count goods as imports when they come into the country but not count the same goods when they go back out, known as re-exports.

Trump has been highly critical of trade deals including the North American Free Trade Agreement (NAFTA) with Mexico and Canada. By using a metric that widens the trade deficit, it could give him political leverage to make sweeping changes, the newspaper reported.

If the government adopted the new method, the deficit with Mexico would be nearly twice as high.

The effect of such a change would be particularly stark on data involving countries that have free trade deals with the U.S., this person said—and in some cases the new methodology could even change a trade surplus into a trade deficit.

Trump trade officials said the idea is part of an early discussion and that they are examining various options. It is unclear whether the administration would adopt any new approach for measuring trade as part of official government data, or just use the higher deficit calculation to make the case for new trade deals.

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“We’re not even close to a decision on that yet,” Payne Griffin, the deputy chief of staff at the office of the U.S. Trade Representative told the Journal. “We had a meeting with the Commerce Department, and we said, ‘Would it be possible to collect those other statistics?’”

The Journal reported that career government employees at the USTR’s office complied with the request to prepare data using the new methodology but also noted their objections.

The showdown between global copper miner Freeport-McMoran, Inc. and the Indonesian government got a little hotter this week.

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Arizona-based Freeport majority-owns the world’s second-largest copper mine, Grasberg in Indonesia. The company has been trying to get a new permit from the Indonesian government to continue exporting copper concentrates for the last six months. On Monday Freeport said it would not accept terms of a deal the government offered that would allow it to resume shipments of copper concentrate that have been idled since January 12.

One More Year… Then Give Up Your Mine

Friday the Indonesian government offered Freeport a new, one-year deal that would allow the company to continue exports but only if it agrees to new rules requiring it to build a new copper smelter in Indonesia within the next five years and also agree to switch to an operating license, the terms of which would require Freeport to, eventually, give up control of Grasberg.

Kennecott Copper Mine

Open pit copper mines such as Rio Tinto’s Kennecott in Utah could increase production and increase sales if Grasberg stays closed. Source: Adobe Stock/Photofly.

Freeport CEO Richard Adkerson, naturally, turned down that offer and said the company is unwilling to revisit the terms of its 30-year contract to mine at Grasberg, which accounts for about a third of Freeport’s annual copper production and 40 to 50% of its worldwide assets. He also said Freeport would consider going to arbitration if it can’t settle this dispute within 120 days. Read more

Leading Republican lawmakers said over the weekend proposals for a new Trump-administration-backed infrastructure bill could be introduced as early as the coming weeks.

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Senate Majority Leader Mitch McConnell (R. Ky.) told reporters he expects to receive “some kind of recommendation on an infrastructure bill, a subject that we frequently handle on a bipartisan basis,” but gave no details or timing.

He has previously voiced concern over adding to budget deficits with a new injection of federal funds for road, bridge and other construction projects like the ones President Barack Obama secured from Congress in 2009, especially after a major highway funding law was enacted about a year ago.

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During the campaign, Trump said he would push for a $1 trillion infrastructure program to rebuild roads, bridges, airports and other public works projects. He said he wanted action during the first 100 days of his administration, which now seems unlikely.

This week President Donald Trump began to deliver on his campaign promises to deregulate industry and unshackle American manufacturing, using the Congressional Review Act, a 1996 law that empowers Congress to review, by means of an expedited legislative process, new federal regulations issued by government agencies and, by passage of a joint resolution, to overrule the regulation.

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First up, Congress passed a law under the CRA that rolled back an Obama administration rule that would have required oil, gas and mineral extraction companies to disclose payments made to governments. The Securities and Exchange Commission rule never went into effect and exploration companies and industry organizations such as the American Petroleum Institute, said it put natural resource companies at a competitive disadvantage to foreign firms by disclosing too much of their contract terms.

Iron ore mine

Deregulation via the CRA will help minerals mining and exploration. Source: Adobe Stock/nikitos77.

Metals producers and other companies dependent on minerals to make their products generally supported the repeal. Another potent input for the creation of metals is coal and Trump followed up the CRA action by signing a bill that quashed the Office of Surface Mining’s Stream Protection Rule, a regulation to protect waterways from coal mining waste that officials finalized in December. Regulators spent most of Obama’s administration eight years writing the Stream Protection Rule and it was effectively wiped away with the stroke of Trump’s pen thanks to the CRA.

The House has passed several CRA resolutions, and the Senate has so far sent three of them to President Trump so far, but there are at least 10 CRA bills still moving through the House and Senate. Until now, only one CRA resolution had ever been passed and signed into law: the Occupational Health and Safety Administration’s workplace ergonomics rules, in 2001.

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If Trump and the republican Congress continue to use the CRA to roll back rules, they could potently erase much of the regulation that business organizations have said hamstrung them for the last eight years.

Using the CRA to roll back regulations would certainly make it easier for Trump to deliver on his promises of smarter, better regulations for industries such as manufacturing and mining. Using it also helps the Congress keep up a commitment from an early Trump executive order that it must repeal two regulations for every new one. We could see a slew of deregulation actions to allow Congress to “bank” new regulations if it needs to pass a law to, perhaps, create a new definition of what a countervailable subsidy is for companies to petition the Commerce Department to allow it to place duties on foreign imports.

All work has stopped at Freeport-McMoran‘s giant Grasberg copper mine in Indonesia, just over a month after the country halted exports of copper concentrate to boost domestic industries.

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Freeport had said the suspension would require the mine to slash output by 60% to approximately 70 million pounds of metal per month if it did not get an export permit by mid-February, due to limited storage. A strike at Freeport’s sole domestic taker of copper concentrate, PT Smelting is expected to last at least until March and has limited Freeport’s output options as Grasberg’s storage sites are now full.

Nippon Exec: Chinese Steel Prices Will Hold Firm

Nippon Steel & Sumitomo Metal Corp., Japan’s biggest steelmaker, expects steel prices in top consumer China to hold firm at least until its Communist Party congress late this year, amid solid demand that is underpinning coking coal and iron ore markets.

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Chinese futures contracts for steel rebar used in construction have already risen 17% in 2017, on top of a gain of more than 60% last year