Articles in Category: Commodities

This morning in metals news: the U.S. consumed a record amount of renewable energy in 2020; U.S. housing starts jumped in May; and the copper price has been on the decline since peaking last month.

Each month, MetalMiner hosts a webinar on a specific metals topic. Explore the upcoming webinars and sign up for each on the MetalMiner Events page.

US hits renewable energy consumption record

renewables

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The U.S. consumed a record amount of renewable energy in 2020, the Energy Information Administration (EIA) reported.

“In 2020, consumption of renewable energy in the United States grew for the fifth year in a row, reaching a record high of 11.6 quadrillion British thermal units (Btu), or 12% of total U.S. energy consumption,” the EIA said. “Renewable energy was the only source of U.S. energy consumption that increased in 2020 from 2019; fossil fuel and nuclear consumption declined.”

Housing starts gain in May

Meanwhile, U.S. housing starts picked up in May from the previous month, the Census Bureau reported.

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The perennially bullish Goldman Sachs is not alone in predicting a higher oil price.

A recent report by the Boston Consulting Group asks the question, “are we on the cusp of a new supercycle?”

In BCG’s opinion? We are.

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Bullish on the oil price

Brent crude oil price chart

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Hedge funds on the whole agree.

By a factor of 6-to-1, bullish long petroleum positions outnumbered bearish short ones on the NYMEX and ICE WTI contracts, according to Reuters.

Net long positions climbed to 919 million barrels, the highest since January 2020, before the pandemic took hold, and prior to that October 2018, before the trade war between the United States and China intensified, the post reports. Demand exceeds supply, which is constrained by OPEC discipline and a subdued US shale market.

In previous oil price rises, shale production has responded rapidly, lifting drilling within months and output inside of a year. However, this time around, those producers that survived the last crunch have chosen to repair their balance sheets rather than borrow and burrow.

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This morning in metals news: China auto sales cooled in May, according to the China Association of Automobile Manufacturers; production of crude oil and natural gas in New Mexico reached a record high in March; and, lastly, labor productivity fell in 13 of 29 service-providing industries in the U.S. last year.

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China auto sales drop

cars on the road in Shanghai, China

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China auto sales dropped in May on a year-over-year basis for the first time since March 2020.

Auto sales in China fell by 3.1% year over year in May 2021, the China Association of Automobile Manufacturers reported this month.

Furthermore, May sales declined by 5.5% month over month. May sales reached 2.13 million vehicles. For the January-May period, sales reached 10.88 million vehicles, up 36.6% year over year.

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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, including steel sector news, the Biden administration’s release of a 250-page supply chain report and much more:

steelmaking in an EAF

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Week of June 7-11 (steel sector news, Biden administration’s supply chain review and more)

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The Rare Earths Monthly Metals Index (MMI) fell by 19.6% this month, as China has loosened rare earths production quotas and the Biden administration could possibly launch a Section 232 investigation for neodymium magnets.

June 2021 Rare Earths MMI chart

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US to consider neodymium Section 232 probe

As noted in yesterday’s morning roundup, the Biden administration released the findings of its 100-day review of critical U.S. supply chains.

Earlier this year, President Joe Biden called for various agency heads to execute 100-day reviews of critical U.S. supply chains. Specifically, the president’s order referenced supply chains for critical minerals, in addition to large-capacity batteries, semiconductors and pharmaceutical products.

The report stemming from that review notes the possibility of launching a Section 232 investigation for neodymium magnets. Former President Donald Trump used Section 232 to impose tariffs on steel and aluminum.

In a section summarizing recommendations, the report called for strengthening international trade rules and trade enforcement mechanisms. The review calls for evaluation of whether or not a Section 232 investigation for neodymium magnets is warranted.

“Neodymium (NdFeB) permanent magnets play a key role in motors and other devices, and are important to both defense and civilian industrial uses,” the report states. “Yet the U.S. is heavily dependent on imports for this critical product. We recommend that the Department of Commerce evaluate whether to initiate an investigation into neodymium permanent magnets under Section 232 of the Trade Expansion Act of 1962.”

NdFeB magnets are used in computer hard disk drives, magnetic resonance imaging (MRI), precision guided munitions, automotive motors and wind turbines.

Prices fall as China relaxes rare earths production quotas

As MetalMiner’s Stuart Burns explained earlier this month, the Chinese government recently relaxed production quotas for rare earths.

Consequently, prices for rare earth oxides took a fall.

“Market prices remain volatile, though,” Burns explained. “A half yearly quota set by government officials is not the optimal system to match supply, demand and prices. As the economy bounced back last year, the rare earths market was caught on the hop and prices rose strongly.

“Some light rare earths, like praseodymium-neodymium (PrNd) oxide, reached multiyear highs.”

However, Beijing relaxed the quota from 66,000 tons to 84,000 tons.

Furthermore, the Rare Earths MMI has fallen for the third straight month.

“This suggests the MIIT’s loosening of production limits has had the desired impact and availability is proving sufficient to meet demand,” Burns added.

Lynas plant in Malaysia continues to operate

Lynas Rare Earths Ltd. offered an update last month on its Malaysian plant.

The Malaysian government issued a movement control order May 12, which is in effect until June 7.

“The MCO, which is in effect for the period from 12 May 2021 until 7 June 2021, permits all economic sectors to continue to operate during the period of the MCO,” Lynas said in a statement. “Consistent with the MCO and previous updates, the Lynas Malaysia plant continues to operate with Standard Operating Procedures (SOPs) in place. Lynas Malaysia has already implemented strict health and hygiene protocols that meet and exceed the Ministry of Health’s requirements. Products produced at the Lynas Malaysia plant are essential to the manufacturing supply chains for critical industries including automotive, medical devices, oil refining and machinery & equipment.”

Actual metals prices and trends

The Chinese yttrium price rose by 1.6% month over month to $33.75 per kilogram as of June 1. The terbium oxide price fell by 17.1% to $1,044 per kilogram.

The neodymium oxide price fell by 8.5% to $77,706 per metric ton.

The Europium oxide fell by 3.3% to $30.61 per kilogram. Meanwhile, the dysprosium oxide price dropped by 11.7% to $385 per kilogram.

Each month, MetalMiner hosts a webinar on a specific metals topic. Explore the upcoming webinars and sign up for each on the MetalMiner Events page.

This morning in metals news: as the U.S. economy reopened, job openings hit a record high in April; meanwhile, steel prices continue to rise; and, lastly, emissions from the electric power sector have declined as it has shifted from coal to natural gas.

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Job openings hit record high in April

job openings

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U.S job openings reached a record high of 9.3 million on the last business day of April, the U.S. Census Bureau reported.

Hires, meanwhile, reached 6.1 million, little changed from the previous month.

“Total separations increased to 5.8 million,” the Census Bureau added. “Within separations, the quits rate reached a series high of 2.7 percent while the layoffs and discharges rate decreased to a series low of 1.0 percent.”

In durable goods manufacturing, separations increased by 7,000.

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This morning in metals news: Nucor Corporation today announced it will acquire Cornerstone Building Brands‘ insulated metal panels business; the oil price approached $70 per barrel to close last week; and the aluminum price has retraced over the last month.

Each month, MetalMiner hosts a webinar on a specific metals topic. Explore the upcoming webinars and sign up for each on the MetalMiner Events page.

Nucor to acquire insulated metal panels business

mergers and acquisitions

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Nucor announced today that it plans to acquire the insulated metal panels business of Cornerstone Building Brands.

The acquisition comes at a cash purchase price of $1 billion. Nucor said it expects the transaction to close later this year, pending regulatory approvals.

“Today’s announcement accelerates our vision to broaden value-added solutions that Nucor provides to our targeted end markets. Additionally, it enhances our strong financial position with attractive free cash flow conversion rates and accretive EBITDA margins,” Nucor President and CEO Leon Topalian said. “We are excited about this opportunity to acquire a historical leader and innovator in the quickly growing IMP product category serving the non-residential market.”

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Before we head into the weekend, let’s take a look back at the week that was and the metals news here on MetalMiner, including iron ore volatility, rare earths production quotas in China and much more:

bulk cargo iron ore

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Week of May 31-June 4 (iron ore volatility, rare earths quotas and more)

Each month, MetalMiner hosts a webinar on a specific metals topic. Explore the upcoming webinars and sign up for each on the MetalMiner Events page.

This morning in metals news: General Motors says it will increase vehicle deliveries to customers in the US and Canada; US nonfarm business sector labor productivity rose by 5.4% in the first quarter; and crude oil prices continue to rise.

Each month, MetalMiner hosts a webinar on a specific metals topic. Explore the upcoming webinars and sign up for each on the MetalMiner Events page.

General Motors to increase deliveries to US, Canada

General Motors headquarters in Detroit, Michigan

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General Motors announced plans to increase vehicle deliveries to customers in the US and Canada.

The automaker cited “strong demand” for Chevrolet, Buick, GMC and Cadillac vehicles.

Production of the Chevrolet Silverado HD and GMC Sierra HD full-size pickups will increase by about 1,000 trucks per month, General Motors said, beginning in mid-July. In addition, shipments of Chevrolet Colorado and GMC Canyon mid-size pickups will increase by about 30,000 total units from mid-May through the week of July 5.

“As announced in May, GM will return full-size pickup production to Oshawa Assembly in Canada during the fourth quarter of 2021,” the automaker added. “The new accelerated timeline and incremental volume are expected to make an impact in 2022, as production ramps up.”

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This morning in metals news: the US steel capacity utilization rate reached 81.5% last week; meanwhile, miner Glencore announced a new liquefied natural gas supply agreement; and, lastly, G7 trade ministers issued a joint communiqué covering market and trade distortions by state enterprises.

Each month, MetalMiner hosts a webinar on a specific metals topic. Explore the upcoming webinars and sign up for each on the MetalMiner Events page.

US steel capacity utilization rate rises to 81.5%

steelmaking in an EAF

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US steel capacity utilization for the week ending May 29 reached 81.5%, the American Iron and Steel Institute (AISI) reported.

Output during the week reached 1,836,000 net tons, AISI reported, up 50.1% year over year. In the previous week, the capacity utilization rate settled at 79.0%.

Meanwhile, the output total marked an increase of 2.4% from the previous week.

For the year to date, production reached 35,913,000 net tons. The capacity utilization rate for the period checked in at 78.1%. Year-to-date output is up 9.5% from the same period in 2020, when the capacity utilization rate reached 69.9%.

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