Author Archives: Jeff Yoders

Editor’s note: We have restated the March Construction MMI to 80. An error in tabulation last month caused us to under-report it at 77. MetalMiner regrets the error.

U.S. developers opened up their wallets in February and construction spending increased to the highest level of spend in nearly 11 years, led by more building of homes, highways and schools.

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Our Construction MMI remained at its corrected score of 80 this month.

Construction MMI

Construction spending rose 0.8% to $1.19 trillion in February to the highest level since April 2006, after two months of declines, the Commerce Department said. New home sales remained strong despite a rather steady supply of newly constructed houses, apartments and condominiums coming onto the market.

Spending on new home building, as well as renovations, rose nearly 10% in the final three months of 2016, the most in a year.

The biggest move, though, came from government construction projects. State and local governments spent 0.9% more on construction, driven by roads, schools and recreational buildings.

The federal government actually cut construction spending for the second straight month and has cut back 9% from a year ago but that could soon change if an infrastructure plan emerges this year in Washington, D.C. President Donald Trump has pledged to boost infrastructure spending by $1 trillion over the next decade. Trump has focused on healthcare and now, apparently, tax reform.

Meanwhile, the Institute for Supply Management said its index of national factory activity fell to a reading of 57.2 last month from 57.7 in February, which was the highest since August 2014.

Any reading above 50 still indicates an expansion in manufacturing, which accounts for about 12% of the U.S. economy and construction materials such as steel framing and rebar are counted in ISM’s factory output numbers.

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17 Of the 18 manufacturing industries reported growth and no industry reported a contraction. Comments from factories were mostly upbeat, with machinery manufacturers saying that business was up 10 to 15%.

Optimism about relaxed regulation and the generally pro-business approach of the Trump administration still seems to be buoying both construction and consumer spending but if Trump cannot implement his agenda this optimism could quickly wane. An infrastructure plan that can make it through the Congress continues to be a necessary priority for metals manufacturers and the economy at large.

 

Last week, the Trump trade agenda finally took off as the Commerce Department, now officially led by billionaire Wilbur Ross, finalized new carbon and alloy steel plate anti-dumping duties and President Donald Trump had some choice words as he signed two new executive orders he says will level the international trade playing field for U.S. manufacturers.

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“There’s never been a systematic examination, country by country and major product by major product, of why do we have the deficit,” Ross said during an interview on “Sunday Morning Futures” on Fox News with Sandra Smith, who was sitting in for host Maria Bartiromo.

“There’s a lot that’s due to cheating, there’s a lot due to dumping, there’s a lot that’s due to subsidies that are illegal, lot to do with a lot of things that are not inherent in free trade,” he continued.

Ross cited entities, many of which were created purely to facilitate exports, that go out of business before duties are collected as one situation that leads to lax enforcement of existing anti-dumping and countervailing duties orders, what the other executive order instructed commerce to accomplish.

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The new executive orders come just as President Trump will meet this week with Chinese President Xi Jinging at Trump’s Mar-a-Lago resort in Florida. It’ll be Trump’s first face-to-face meeting with Xi, after a campaign that was highly critical of U.S. trade with China.

Carbon and Alloy Steel Plate Duties

Commerce had a busy week, announcing affirmative final determinations that steel producers in Austria, Belgium, France, Germany, Italy, Japan, the Republic of Korea (South Korea), and Taiwan are dumping imports of carbon and alloy steel plate in the U.S.

The U.S. is preparing a review of China’s bid for market-economy status in the World Trade Organization, the Wall Street Journal reported today. Finishing a busy day in trade, Trump also signed two executive orders designed to enhance enforcement of current trade pacts and promised to end “the theft of American prosperity.”

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The Trump administration appears ready to formalize China’s unfavorable status in trade cases, which means the country’s goods would be eligible for higher U.S. tariffs, the paper said, citing documents from the Commerce Department website. The review is expected to be announced as early as this week, it said.

The first of the two trade orders Trump signed today calls for completion of a large-scale report to identify “every form of trade abuse and every non-reciprocal practice that now contributes to the U.S. trade deficit,” Commerce Secretary Wilbur Ross told the Washington Post.

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Here at MetalMiner, we occasionally write about our favorite TV shows, especially when they shed light on the metals and other commodity markets that we cover in depth today.

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Never could there be a better examination of how commodities and commerce changed the New World, with a hand from new technology, than the Starz drama, “Black Sails,” which ends its fourth season and its series run Sunday night.

Black Sails courtesy of Starz network

What’s a pirate show without Blackbeard? Image courtesy of Starz.

What does a dark and very adult prequel to Robert Louis Stevenson’s “Treasure Island” have to do with metals, you might ask? Just that the prices of the metals we track today are the same type of information that buccaneers based in the Caribbean in the 18th Century tracked for rum, tea and other shipments marked for plunder in the new world.

Commerce Creates Disruption

The series stars Toby Stephens as Captain Flint, a former British naval officer turned pirate who leads a crew based out of New Providence Island in the Bahamas. His co-star, Luke Arnold, plays young Quartermaster Long John Silver whose adventures begin 20 years before the events of “Treasure Island” and centuries before his name would ever grace a chain of fast food restaurants known for battered fish. Read more

The Department of Commerce today announced its affirmative final determinations that steel producers in Austria, Belgium, France, Germany, Italy, Japan, the Republic of Korea (South Korea), and Taiwan are dumping imports of carbon and alloy steel plate in the U.S.

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Margins in the dumping investigations ranged from 3.62% to 148.02%, and were, in certain instances, based on adverse findings against non-cooperative responding parties. Commerce also determined that critical circumstances exist in three investigations, allowing for collection of duties for a retroactive period of 90 days before the preliminary determination, spanning back to August 16. Commerce also found that South Korea is providing unfair subsidies to its producers of steel plate at a countervailable duty rate of 4.31%. As a result of these final affirmative determinations, Commerce will instruct Customs and Border Protection to collect cash deposits based on these final rates. Read more

Dean A. Pinkert is a partner in Hughes Hubbard’s International Trade practice. He is a former Commissioner of the U.S. International Trade Commission. Pinkert was nominated by President Bush and confirmed by the Senate in 2007, and was designated Vice Chairman by President Obama in 2014.

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As a commissioner, Pinkert participated in numerous anti-dumping, countervailing duty, and safeguard investigations, including the special safeguard investigation of passenger tires that resulted in import relief for the domestic tire industry and was upheld by the World Trade Organization. He participated in an unprecedented number of final determinations in Section 337 investigations during his tenure, notably dissenting in an electronic devices case that went to President for policy review. President Obama, relying on many of the factors cited in the dissent, overruled the commission for the first time since 1987.

Dean Pinkert

Former ITC Vice Chair A. Dean Pinkert. Source: Hughes Hubbard.

Pinkert spoke with MetalMiner Editor Jeff Yoders by phone about several issues facing metals producers and manufacturers, including global steel and aluminum overcapacity and how the new Trump administration can approach trade and overcapacity issues. This is part one of our discussion.

Jeff Yoders: Do you feel that the current tools being used to regulate trade are effective in dealing with global steel overcapacity? And global overcapacity for other metals?

Dean Pinkert: If you go back a year now, to the G20 decision to look at the overcapacity situation regarding steel, there has been a lot discussion, and there will be more, but, eventually, they will be able to figure out a way to proceed with a plan to reduce worldwide overcapacity. I just saw today that some of the aluminum interests around the world are looking to initiate that same type of process with regard to aluminum production.

That tells you that there’s a sense that there is progress being made on the steel side and the aluminum producers feel that they’re in a similar worldwide overcapacity issue and they want to see if that G20 process, intended to get the amount of product produced worldwide, down could be successful. Read more

Ford Motor Company will invest $1 billion to upgrade and expand capacity at two assembly plants and $200 million to build a data center in Michigan. President Trump praised the move, which was part of a 2015 negotiation between the company and the auto union.

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The investments represent two strategies going forward: a traditional game plan that looks to create new models of high-demand trucks and SUVs; and a more forward-looking investment in the self-driving and connected vehicles that Ford and other companies are betting will drive the future.

Oil Traders Expect OPEC Cuts to Continue

Major oil traders gathered in Switzerland this week said they expected Organization of Petroleum Exporting Countries and non-OPEC producer-nations to extend their pact to curb output in the second half of this year, providing that main non-OPEC producer-nation Russia complies.

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“I think the surprise so far this year is how quickly shale came back on a relatively modest price rebound,” Gunvor CEO Torbjorn Tornqvist told a panel at the FT Commodities Global Summit in Lausanne.

The American Iron and Steel Institute praised the executive action taken by President Donald Trump today to, among other things, essentially undo the Environmental Protection Agency‘s Clean Power Plan.

The AISI said in a statement that today’s executive orders will begin the process of “revising and overturning several onerous environmental regulations designed in the previous administration that could adversely impact the competitiveness of domestic steelmakers,” the trade organization said.

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It directs the EPA to review and revise regulations of greenhouse gas emissions from electricity generating utilities. The Clean Power Plan was challenged in court and it has not yet gone into effect but it would have required utilities to cut emissions.

“The domestic steel industry has made substantial gains in reducing our energy usage as well as our environmental footprint, and we remain committed to our sustainable performance,” said Thomas J. Gibson, president and CEO of AISI. “However, these burdensome regulations could harm the international competitiveness of energy-intensive, trade-exposed U.S. industries like steel.’

President Trump will use an executive order today to dismantle the Obama administration’s climate change agenda, according to Environmental Protection Agency Administrator Scott Pruitt.

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The order will compel the EPA to review the Obama administration’s chief climate rule for power plant emissions, the 2015 Clean Power Plan, Pruitt said.

“We’ve made tremendous progress on our environment, and we can be both pro-jobs and pro-environment,” Pruitt told ABC’s George Stephanopoulos on “This Week.” “And the executive order’s going to address the past administration’s effort to kill jobs across this country through the Clean Power Plan.”

The action will order several other federal agencies to undo the Obama administration’s climate change work: It will tell the Interior Department to end a moratorium on new coal leasing on federal land, the official said, and the Obama administration’s assault on methane emissions — outlined in early 2014 and overseen by Interior and EPA — will be ended, too.

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A major hydraulic fracturing regulation from the Bureau of Land Management will be reviewed under the order. It will also end President Obama’s climate action plan, the main 2013 directive outlining the federal government’s response to climate change.

NioCorp Developments Ltd. has successfully produced high-purity 99.9% commercial grade Scandium Trioxide from its Elk Creek, Ne., Superalloy Materials Project and the company has finalized plans for a proposed scandium purification circuit there.

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Niocorp also announced that it anticipates public release of the results of its Elk Creek Feasibility Study in the second calendar quarter of 2017. Following the release of the study, the company intends to intensify efforts to secure government permits and obtain project financing to prepare for the launch of construction operations in Nebraska.

NioCorp’s successful production of a high-purity commercial grade scandium, an element used to make superstrong and light alloys used in both the automotive and aerospace industries, was conducted at SGS Mineral Services lab in Lakefield, Ont., Canada. This is a major milestone in Niocorp’s plans to become one of the world’s largest producers of the high-value metal. A 99.9% purity level, otherwise known as 3Ns or “three nines” scandium, meets or exceeds the purity needed for the additive’s use in virtually all of its mainstream commercial applications, including ultra-high-performance aluminum-scandium alloys for the aerospace and automotive industries, in the solid oxide fuel cell industry, and in other defense and non-defense applications.

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NioCorp said in a news release that the test showed its scandium product meets or exceeds the purity specifications of all potential customers with whom it has been in discussions.

OPEC Output Cut Threatened: Saudi Arabia Demands Iranian Cut

Saudi Arabia may demand that Iran, which is allowed a slight rise in output under the Organization of Petroleum Exporting Countries’ deal with member-states and non-members such as Russia, commit to an output reduction as a condition of continuing the cuts, people familiar with the kingdom’s thinking told S&P Global Platts.