Articles in Category: Commodities

China story steel production

Zhao Jiankang/AdobeStock

Before we head into the weekend, let’s take a look back at the week that was and the metals storylines here on MetalMiner:

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 in Review, April 5-9 (steel capacity utilization, European steel’s challenges and more)

Find more insight on MetalMiner’s LinkedIn.

Ford logo

Tobias Arhelger/Adobe Stock

This morning in metals news: Ford China announced its sales rose by 73.3% year over year; meanwhile, the Energy Information Administration (EIA) released its Short-Term Energy Outlook; and, lastly, Rio Tinto announced it had achieved battery-grade lithium at its Boron plant.

We’re offering timely emails with exclusive analyst commentary and some best practice advice. 

Ford China tallies fourth consecutive quarterly sales jump

Ford China reported its Q1 sales jumped 73.3% year over year.

The jump marked its fourth consecutive year-over-year quarterly sales increase.

Meanwhile, Ford China sales increased 30.3% year over year in Q4 2020.

EIA releases Short-Term Energy Outlook

The EIA forecast US retail gasoline prices this summer will average $2.78 per gallon.

Meanwhile, last summer’s average checked in at $2.07 per gallon.

“EIA expects U.S. gasoline consumption to rise in response to growing levels of GDP and employment,” the EIA said. “In addition, as COVID-19 vaccines are more widely distributed, we expect that driving will increase, causing gasoline consumption to rise.”

Furthermore, the EIA forecast US gasoline consumption will average 8.6 million barrels per day in 2021, up from 8.0 million barrels per day in 2020.

In addition, in its latest outlook, the EIA used projections of 5.6% GDP growth this year and 4.2% growth in 2022.

Rio Tinto achieves battery-grade lithium

Lastly, Rio Tinto announced it had achieved battery-grade lithium at its Boron plant in California.

“The demonstration plant is the next step in scaling up a breakthrough lithium production process developed at Boron, to recover the critical mineral and extract additional value out of waste piles from over 90 years of mining at the operation.

“An initial small-scale trial in 2019 successfully proved the process of roasting and leaching waste rock to recover high grades of lithium.”

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

In a surprise move last week, OPEC+ announced a further gradual relaxation of the group’s 2020 emergency 9.7 million barrels per day cut in oil output, causing the oil price to briefly retreat.

In December, OPEC+ had intended to ease the curb by about 500,000 barrels per day each month in 2021.

Brent crude oil price chart

SodelVladyslav/Adobe Stock

However, in the face of still weak demand, it postponed the easements.

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

Oil price and supply

Meanwhile, in January Saudi Arabia surprised the market and its OPEC+ partners. The kingdom announced a voluntary additional cut of 1 million barrels per day. As a result, its output went to just over 8 million barrels per day b/d from its quota of 9 million barrels per day.

But the Kingdom has now announced it intends to gradually bring that back. It will increase production by 250,000 in May, 350,000 in June and 400,000 in July.

Since last year the 9.7 million b/d of OPEC+ cuts have been reduced to about 7 million barrels per day.

Output, however, remains well below pre-pandemic levels.

The latest announcement stated producers will collectively increase output by 350,000 barrels per day in May. They will add another 350,000 barrels per day in June and around 441,000 barrels per day for July, according to a report in the Financial Times.

Combined, Saudi Arabia and OPEC+’s amount to some 2 million barrels per day in the run-up to the summer.

Subdued demand as third wave of lockdowns hits parts of Europe

Demand is recovering. However, large parts of Europe are in a third wave of lockdowns; demand there remains subdued.

OPEC appears sensitive to not spooking the market and keen to minimize too much damage to the oil price.

The move surprised markets that were expecting no change, but the Brent crude oil price continued to trade around the $63 mark. The price has been at around that level for the last three weeks.

Major oil consumers like India and China will likely welcome the move. Greater output will be seen as one less support mechanism for higher prices this year.

Oilprice.com reports the move by OPEC+ in bullish terms, saying the market sees it as a vote of confidence in rising demand and that constraints on the market remain.

The US shale industry will likely see a further erosion of output this year, according to BloombergNEF last week. Output may shrink by another 485,000 barrels per day by the end of 2021 as producers focus on debt reduction and dividends over growth, according to the report.

For now, OPEC’s feared resurgence of shale oil has not materialized.

But as the battered and bruised fracking industry recovers, don’t count it out.

If the oil price remains at $60 per barrel or above, shale oil is profitable. One thing we do know about the industry is that, sooner or later, profit will justify a return of investment and growth.

You want more MetalMiner on your terms. Sign up for weekly email updates.

Suez Canal

MenaraGrafis/Adobe Stock

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 the Suez Canal blockage, the April 2021 MMO, Western European hot rolled coil prices and much more:

Sign up today for Gunpowder, MetalMiner’s free, biweekly e-newsletter featuring news, analysis and more.

Week of March 29-April 2 (Suez Canal retrospective, HRC in Western Europe, April MMO report and more)

Stay up to date on MetalMiner with weekly updates – without the sales pitch. 

steel tubes

Maksym Yemelyanov/Adobe Stock

This morning in metals news: Nucor Corporation announced plans to build a new tube mill in Kentucky; meanwhile, US retail gasoline prices have been on the rise; and, lastly, unemployment rates in February fell in 23 states.

You want more MetalMiner on your terms. Sign up for weekly email updates.

Nucor to build new tube mill

Nucor recently announced plans to build a new tube mill in Kentucky near its Gallatin sheet mill.

The steelmaker said it will invest $164 million into the project, which will be operational in 2023.

“The new tube mill will have the capacity to produce approximately 250,000 tons of hollow structural section (HSS) steel tubing, mechanical steel tubing and galvanized solar torque tube,” Nucor said. “The Kentucky location puts the new tube mill near expanding solar markets in the U.S. and the largest consuming regions for HSS steel tubing.”

Retail gas prices on the rise

To the chagrin of motorists heading to the pump, retail gas prices have continued to rise.

US retail gasoline prices averaged $2.85 per gallon as of Monday, the Energy Information Administration reported.

Read more

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

Maxim_Kazmin/Adobe Stock

Stay up to date on MetalMiner with weekly updates – without the sales pitch. Sign up now.

Tangshan steel plant

junrong/Adobe Stock

The recent curbs on steel making by the local government in one of China’s largest steel-producing cities, Tangshan, may have a cascading effect on steel procurement & demand, as well on iron ore supplies, some experts believe.

The Tangshan restrictions are in effect from March 20 to Dec. 31, 2021. Among other things, the restrictions penalize steel mills there that fail to meet emission control regulations.

Do you know the five best practices of sourcing metals, including steel?

Tangshan part of countrywide effort

The curbs are in line with China’s fresh efforts to cut emissions meet carbon-neutrality targets. China aims to reach carbon neutrality by 2060.

Already, iron ore prices felt effects from the restrictions. Meanwhile, the long-term effect on the import-export of steel from China remains to be seen.

Daily iron ore consumption in Tangshan is also likely to drop drastically. The restrictions had led to the drop in iron ore futures but boosted hot-rolled coil (HRC) futures.

Read more

nickel price

leszekglasner/Adobe Stock

Before we head into the weekend, let’s take a look back at the week that was and some of the metals storylines of the week here on MetalMiner, including coverage of the nickel price, oil prices, housing starts and more.

Overall, steel prices continue to rise. Meanwhile, after experiencing significant price declines, lead and nickel have steadied of late. Aluminum continues to be on an upward trajectory, while copper has steadied after dropping from a Feb. 25 peak.

The MetalMiner team will be presenting a commodity forecast for copper, aluminum, stainless and carbon steel on Wednesday, March 24, at 10 a.m. CDT: https://zoom.us/webinar/register/WN_6J8wAyYySfihVk3ZUH9yMA

Week of March 15-19 (nickel price steadies, Honda announces temporary production suspension and more)

Sign up today for Gunpowder, MetalMiner’s free, biweekly e-newsletter featuring news, analysis and more.

iron ore stockpile

John/Adobe Stock

Seaborne iron ore prices hit a 10-year high this month at $178 per ton before profit taking. Investors bet on strong steel demand and robust consumption in top consumer China.

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.

Iron ore price and pollution in China

But following the release of details in China’s new Five-Year Plan calling for wide-ranging and ambitious targets to reduce environmental pollution, iron ore prices experienced a sharp sell-off. Investors took profits at the prospect that steel production could be restricted by Beijing in an effort to reduce pollution.

Steelmaking is a major source of pollution in China. The steelmaking process is estimated to account for about 15% of the country’s total emissions.

So it is hardly surprising investors took profits at the prospect of the steel industry potentially facing significant environmental controls and increased efforts by Beijing to close excess steel production.

EAF acceleration

What the Five-Year Plan may well accelerate is adoption of electric arc furnace (EAF) steelmaking as blast furnace operators switch to scrap consumption to reduce pollution.

EAFs are a significantly less polluting production method than traditional blast furnaces. However, that is only the case if the electric energy source is not totally from coal. Unfortunately, much of China’s still is.

Still, if pollution is measured at the point of production rather than mine to finished product, EAF will be a winner.

Beijing has already reclassified and eased steel scrap imports late last year, possibly with an eye on encouraging adoption of such less-polluting technologies.

Higher-purity iron ore

There will likely also be greater use of high-purity iron ore and pellets, with Fe purity percentages in the mid- and upper-60s. Both offer a route for blast furnace operators to reduce their pollution levels. For more modern, efficient mills they can mitigate penalties or meet threshold targets.

The premium for high-grade iron ore is already a record above low-purity material. This is in part because supply sources are limited. Those with the highest purity resources are charging a premium. One reason why imported iron ore volumes are so high — domestic production is generally of low Fe purity material, which consumers have shunned more and more.

Peak iron ore price?

For the time being, mills are making good money and can afford the cost.

However, if steel demand were to drop this year, iron ore prices could see further falls.

As such, have we reached peak iron ore?

The short answer? Maybe. Much will depend on how enthusiastically (and how quickly) Beijing and state governments apply the edicts of the new Five-Year Plan. In addition, it will depend on how quickly last year’s stimulus measures begin to lose their impact on the economy.

China’s bounce-back has been impressive. Beijing, however, is doing a lot behind the scenes to slow the growth of debt and give the property market a gentle landing.

For the first time in decades, the US could have a higher rate of growth this year than China.

But the US is not a market for seaborne iron ore, so China remains the principal driver of price direction.

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

crude oil

phonlamaiphoto/Adobe Stock

Oil prices have been on the rise for months and, according to the Energy Information Administration (EIA), they appear likely to remain elevated in April.

“The sustained OPEC+ production curtailment through April suggests that supply will remain constrained in the near term, even as demand continues to increase,” the EIA explained Wednesday.

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

Short-term oil price gains

In its March Short-Term Energy Outlook (STEO), the EIA reported it expects Brent crude will average $64 per barrel in Q2 2021. Then, it forecasts a fall to less than $60 per barrel through the end of 2022.

“Higher crude oil prices in March and April are primarily a result of lower crude oil production from members of the Organization of the Petroleum Exporting Countries (OPEC) and partner countries (OPEC+), as announced at their March 4 meeting.,” the EIA reported.

Last week, Stuart Burns weighed in on the oil price and its potential trajectory.

“Demand, however, remains subject to economic recovery,” he wrote. “The market would take any significant increase in output negatively, some analysts suggest. That could result in a sell-off.

“Recent price strength notwithstanding, the market still looks somewhat fragile. That condition no doubt explains the Saudis’ reluctance to increase output.

“Meanwhile, pressure will build with many producers at or around budgetary break-even at current levels.

“The next crunch point is the April OPEC meeting. The market is watching.”

On Tuesday, the OPEC daily basket price — a weighted average of 13 crudes — stood at $66.89 per barrel. The basket price opened the year at $59.60 per barrel. Meanwhile, the basket price had plunged as low as $17.66 per barrel in April 2020.

Read more

1 2 3 444