Articles in Category: Company News
steel

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This morning in metals news: steel prices have been making gains; the WTI crude price moved up; and Vale plans to increase its iron ore output.

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Steel prices rise

U.S. steel prices are on the rise, but that rise can be attributed more toward the supply side of the ledger than the demand side, according to Bloomberg.

U.S. Steel, for example, this week hiked its prices. The company raises prices on flat-rolled steel products by at least $60 per ton, according to the report.

WTI ticks up

In other commodities news, the WTI crude oil price closed Thursday $40.97 per barrel, per the Energy Information Administration.

Thursday closing price marked an increase of $3.97 from the prior week. However, the price was down $17.14 from the same point in 2019.

Vale eyes iron ore output target of 400M

Brazilian miner Vale hopes to produce 400 million tons of iron ore annual, mining.com reported.

Currently, Vale has capacity to produce to 318 million tons per year.

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U.K. flag

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Despite talks of negotiations over a potential Tata Group bailout in the U.K., the Indian firm has proved itself a generally good steward of the businesses it has purchased in the U.K. over the years.

In hindsight, its purchase of Jaguar Land Rover from Ford for U.S. $2.3 billion in June 2008 was a steal. However, it was half what Ford had paid for the brands at the time, as JLR had an aging product range and a stodgy image.

Tata invested billions in product design and new model development. As a result, sales and profitability soared.

Tata’s purchase of Tetley Tea was also seen as buying into a mature market with limited growth prospects back in 2000. However, since then, the brand has grown into the second-largest tea brand in the world.

Stop obsessing about the actual forecasted steel price. It’s more important to spot the trend. See why.

Tata’s steel operations

Tata’s largest European acquisition, however, has not been so successful.

Corus Steel comprised an earlier merger of British Steel and Corus of the Netherlands.  Principally, the merger included the giant steelworks at Ijmuiden and British Steel’s Port Talbot Steel complex (the largest steel mill in the U.K.).

Combined with some smaller steel operations, this makes Tata Steel the third-largest steelmaker in Europe. Tata manages a workforce of 20,000 in Europe.

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Department of Commerce building

The U.S. Department of Commerce. qingwa/Adobe Stock

This morning in metals news: the Department of Commerce on Friday announced the rollout of an updated Steel Import Monitoring and Analysis (SIMA) system; Rio Tinto’s chief executive will step down; and, lastly, China’s steel exports are facing a growing number of anti-dumping probes.

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DOC to release updated Steel Import Monitoring and Analysis System

On Friday, the DOC announced the adoption of a rule to modernize its system for the monitoring of steel imports (SIMA).

The DOC will release the updated platform Oct. 13, 2020.

According to a DOC statement, the regulatory changes adopted by the final rule will:

  1. “require steel import license applicants to identify not only the country of origin, but also the country where steel used in the manufacture of the imported product was melted and poured, as defined in the final rule”
  2. “expand the scope of steel products subject to the import licensing requirement to include all products subject to Section 232 tariffs”
  3. “extend the SIMA system indefinitely”
  4. “codify the existing low-value license requirement for certain steel entries up to $5,000. Commerce received public comments on these regulatory changes, as published in a March 2020 proposed rule”

Executive shakeup at Rio Tinto

The fallout from Rio Tinto’s destruction of Juukan Gorge in May 2020 finally reached the executive level late last week.

The miner’s operations led to the destruction of rockshelters at Juukan Gorge, including two Aboriginal caves considered sacred. The destruction of the area was part of a mine expansion project.

As a result, CEO J-S Jacques will step down. Jacques will remain in the role until March 31, 2021, or until Rio Tinto finds a successor (whichever is earlier). Jacques has occupied the position since 2016.

“What happened at Juukan was wrong and we are determined to ensure that the destruction of a heritage site of such exceptional archaeological and cultural significance never occurs again at a Rio Tinto operation,” Rio Tinto chairman Simon Thompson said. “We are also determined to regain the trust of the Puutu Kunti Kurrama and Pinikura people and other Traditional Owners.”

Furthermore, Chris Salisbury will step down as chief executive of Rio’s iron ore division. In addition, Simone Niven will step down as group executive for corporate relations.

“We have listened to our stakeholders’ concerns that a lack of individual accountability undermines the Group’s ability to rebuild that trust and to move forward to implement the changes identified in the Board Review,” Thompson continued.

Countries take aim at Chinese steel exports

China’s steel exports are facing a rising number of anti-dumping inquiries around the world, the South China Morning Post reported.

There were 15 new anti-dumping investigations related to Chinese steel during the first nine months of 2020. Meanwhile, there were 13 such investigations in 2019.

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steel shipment

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This morning in metals news: July steel shipments fell by 25.6%; Nucor announced its 190th consecutive quarterly dividend; and the Energy Information Administration released its September Short-Term Energy Outlook.

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July 2020 steel shipments fall

According to the American Iron and Steel Institute, U.S. steel shipments in July fell 25.6% year over year.

U.S. steel mills shipped 6.04 million net tons during the month, a 0.2% increase from the previous month. The July total marked a 25.6% decrease from July 2019, when U.S. mills shipped 8.12 million net tons.

For the year to date, shipments totaled 47.25 million net tons, down 16.1% from the same period in 2019.

Nucor announces quarterly dividend

Charlotte-based Nucor Corporation this week announced its 190th consecutive quarterly cash dividend.

The company announced a dividend of $0.4025 per share on Nucor’s common stock.

However, earlier this year steelmaker ArcelorMittal announced it would suspend dividend payments.

“Against the backdrop of significant cost savings measures being taken across the business, the Board determined it both appropriate and prudent to suspend dividend payments until such a time as the operating environment normalizes,” the company said in its quarterly earnings release earlier this year.

EIA releases Short-Term Energy Outlook

Earlier this week, the EIA released its September Short-Term Energy Outlook.

“Reduced economic activity related to the COVID-19 pandemic has caused changes in energy demand and supply patterns in 2020,” the report states. “This STEO assumes U.S. gross domestic product declined by 4.6% in the first half of 2020 from the same period a year ago and will rise beginning in the third quarter of 2020, with year-over-year growth of 3.1% in 2021.”

The Brent crude oil spot price reached an average of $45 per barrel in August, according to the EIA, up $2 per barrel from July.

The bump in the price comes on the heels of a significant decline in new inventories.

Per the EIA, global liquid fuels inventories rose by 7.2 million barrels per day in the second quarter. Meanwhile, inventories rose by 3.7 million barrels per day in the third quarter.

Consumption, on the other hand, declined in August compared with 2019 levels.

Per the EIA, global consumption of petroleum and liquid fuels reached 94.3 million barrels per day in August. The August total marked a decline of 8.2 million barrels per day from August 2019 consumption.

Still, consumption has recovered somewhat in recent months. For example, August consumption increased from the 93.3 million barrels per day consumed in July, the EIA reported.

See why technical analysis is a superior forecasting methodology over fundamental analysis and why it matters for your steel buy.

India

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This morning in metals news: India is looking to curb its imports of copper and aluminum; Rio Tinto and Turquoise Hill reached a financing agreement for the Oyu Tolgoi underground mine project; and Germany’s steel industry needs state aid.

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India targets copper, aluminum imports

India is looking to curb its imports of copper and aluminum, Reuters reported.

Per the report, India is particularly targeting imports from China and other Asian countries. Among the proposed measures is a requirement for importers to register with the government.

Rio Tinto, Turquoise Hill reach financing deal

Miner Rio Tinto and Turquoise Hill have reached a financing deal toward the completion of the Oyu Tolgoi underground mine in Mongolia.

“The MOU agreed today with TRQ provides a clear funding pathway for the completion of the Oyu Tolgoi Underground Project,” said Arnaud Soirat, Rio Tinto’s chief executive of copper and diamonds. “We will continue working with TRQ and the Government of Mongolia to progress the underground project, which has the potential to unlock the most valuable part of the mine for the benefit of all stakeholders.”

Rio Tinto has a 50.8% stake in Turquoise Hill.

With the current development schedule, Turquoise Hill expects the massive copper-gold mine will be the world’s third-largest copper producer at peak metal production in 2025.

IG Metall head says German steelmakers need state aid

2020 has been a difficult year for Europe’s steelmakers.

Already battling imports, European steelmakers have struggled on the heels of the coronavirus pandemic and its resulting impact on demand.

In Germany, IG Metall head Joerg Hofmann said the country’s steelmakers need state aid, Reuters reported. In addition, German steelmakers need to form alliances in order the facilitate the transition to greener fuels for blast furnaces, Hofmann argued.

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copper smelter

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This morning in metals news: copper prices gained momentum Wednesday; the rival of German steelmaker Thyssenkrupp rejected the idea of an alliance; and a Pakistani steelmaker is looking to ramp up its output amid a construction spike in the country.

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Copper price momentum

The LME copper price bounced back Wednesday after falling Tuesday, Reuters reported.

The copper price gained 0.2% Wednesday, as stocks fell to a 15-year low, per the report.

As with other materials, recovering Chinese demand continues to support metals prices (including copper).

Salzgitter CEO says company not interested in Thyssenkrupp alliance

The rival of German firm Thyssenkrupp told Reuters it is not interested in an alliance.

Salzgitter CEO Heinz Joerg Fuhrmann said a merger of the two would not improve the company’s standing.

Last year, Stuart Burns delved into Thyssenkrupp’s struggles, including its departure from Germany’s blue-chip DAX index.

In August, Thyssenkrupp reported on the impact of the coronavirus pandemic on its finances (citing the automotive technology fallout, in particular).

Pakistani steel firm aims to augment steel capacity

Per Bloomberg, China-backed steel projects in Pakistan are looking to raise a lot of money and significantly augment their steel capacity.

Agha Steel Industries Ltd. aims to triple its capacity for gray steel bars, Bloomberg reported.

Furthermore, the company plans to raise between 3.6 billion and 5 billion rupees, according to the report.

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Photo by Jeffrey Sauger for General Motors

This morning in metals news: General Motors announced a partnership with Nikola Corporation; U.S. manufacturing corporations saw their profits plunge in Q2 2020; and Chile’s copper shipments fell in August.

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GM announces partnership with Nikola

General Motors on Monday announced plans to partner with Nikola Corporation, a partnership that would see the Detroit automaker manufacture the Nikola Badger.

“As part of the agreement, Nikola will utilize General Motors’ Ultium battery system and Hydrotec fuel cell technology, representing a key commercialization milestone for General Motors,” GM said in a release.

Manufacturing profits decline

To no one’s surprise, manufacturing profits declined significantly in Q2 2020.

After-tax profits for U.S. manufacturing corporations reached $47.2 billion in Q2, according to the U.S. Census Bureau. The quarterly total marked a decline from the $113.0 billion in Q1 2020 and the $136.3 billion in Q2 2019.

Chile’s copper shipments fall in August

According to Bloomberg, No. 1 copper producer Chile saw a decline in the value of its copper shipments last month.

Per data released by the Chilean government today and cited by Bloomberg, Chile’s copper exports totaled $2.76 billion in August, marking an 11% decline from the previous month.

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cars on the road in Shanghai, China

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Before we head into the long Labor Day weekend, let’s take a look back at the week that was in the world of metals.

Automakers released August sales reports, mostly showing sales remain down compared with 2019 levels.

Meanwhile, for the week ending Aug. 29, U.S. steel mills’ capacity utilization fell compared with the previous week, interrupting an extended stretch of weekly capacity increases.

In other news, President Donald Trump took aim at steel imports from Brazil and Mexico. With respect to Brazil, Trump opted to cut Brazil’s semi-finished steel quota for the remainder of the year down to 60,000 tons from 350,000 tons.

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Week of Aug. 31-Sept. 4

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steel

gui yong nian/Adobe Stock

This morning in metals news: steelmaker Nucor will open a new steel plant in Florida by the end of this year; U.S. gasoline prices are low heading into the Labor Day weekend; and Chinese demand continues to power high iron ore prices.

5 Mistakes Buyers Can Make When Sourcing Steel

Nucor to open steel plant by end of 2020

Nucor will open its new steel plant in Frostproof, Florida, by the end of this year, The Ledger reported.

Employment at the plant is expected to reach approximately 250 workers next year, The Ledger reported.

U.S. gas prices at lowest since 2004

For those getting in the car and traveling over Labor Day weekend, there’s good news.

According to the Energy Information Administration, U.S. gasoline prices are at their lowest since 2004. 

As of this Monday, the U.S. average price stood at $2.22 per gallon.

“U.S. gasoline prices are relatively low because of continued low demand for gasoline since mid-March, when travel demand fell because of efforts to limit the spread of coronavirus,” the EIA said.

Iron ore rises to six-year high

On the other hand, demand for steelmaking raw material iron ore remains high in China.

Per mining.com, Chinese demand has helped push the iron ore price to a six-year high.

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phonlamaiphoto/Adobe Stock

This morning in metals news: the U.S.’s levels of exports and imports were approximately equal in May, according to the Energy Information Administration; Vale offered an update on emergency protocols at two of its dikes; and the U.S. has seen elevated levels of imports of standard pipe and tin plate in recent months.

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Energy exports, imports even in May

Per the Energy Information Administration, the U.S.’s energy exports and imports came in approximately even in May.

“The United States had been a net exporter of energy in several months of the past year,” the EIA reported. “Changes in domestic production and declines in global demand for energy since mid-March in response to COVID-19 have shifted energy trade balances back in the direction of net imports, especially for U.S. crude oil and petroleum products.”

Vale updates on Paracatu, Patrimônio dikes

Brazilian miner Vale offered updates on ongoing emergency protocols related to two of its dikes.

The Paracatu and Patrimônio dikes, it reported, both received negative Stability Condition Declarations.

Furthermore, Vale reported negative declarations for four other sites.

Standard pipe from Thailand up 378%

According to steel import trends reported by the Steel Import Monitoring and Analysis system, U.S. imports of several steel products have surged over the May-July 2020 period.

Imports of standard pipe from Thailand, for example, jumped 378% during the May-July period compared with the August 2019-April 2020 period.

In addition, tin plate imports from China jumped 365%.

Does your company have a steel buying strategy based on current steel price trends?