Articles in Category: Company News

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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:

Keep up to date on everything going on in the world of trade and tariffs via MetalMiner’s Trade Resource Center.

  • Global steel production contracted in October, according to the World Steel Association.
  • We looked back at some of the most-viewed MetalMiner stories from November.
  • Global aluminum production rose in October.
  • Earlier this week, we released our Monthly Metal Outlook forecast report.
  • General Motors and Isuzu are teaming up to build a new Ohio plant via their DMAX joint venture.
  • MetalMiner’s Belinda Fuller took a look at the relationship between gold prices and the U.S. dollar.

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Vertical integration may play well in classic corporate HBR (Harvard Business Review) circles, but steel industry observers may have a hard time envisioning the synergies Cliffs outlined in its merger announcement and presentation Dec. 3, creating a best-in-class, EBITDA-maximizing combined Cliffs-AK Steel entity!

Keep up to date on everything going on in the world of trade and tariffs via MetalMiner’s Trade Resource Center.

To us, the best rationale for the deal appears on slide 14, outlining AK Steel’s short-term debt position:

If you buy the notion that Cliffs can swallow AK and convert that company’s debts to its own and save on interest expense, then score one for the deal!

So why would Cliffs buy AK Steel?

A compelling reason appears on slide 11:

Despite AK Steel’s relatively improved financial performance under the leadership of CEO Roger Newport, if AK Steel represents ~30% of Cliff’s annual iron ore sales, Cliffs faces significant “customer concentration risk.” In other words, the health of AK Steel would significantly — negatively — impact Cliffs.

Forget about “renewal risk” — let’s just call it “customer risk.”

Cliffs would be hosed without a healthy AK Steel!

What about AK’s Ashland Works?

We continue to see different public announcements from AK Steel about the cost of Ashland Works. The Ashland Works facility today operates a hot-dipped galvanizing line (the blast furnace was idled nearly four years ago).

According to comments from AK Steel directly, “…the company announced it would close the ‘largely-idled’ Ashland Works facility by the end of 2019 to ‘increase utilization’ at its other U.S. operations. The plant employs 230 people and the closure would yield approximately $40 million in annual cost savings, according to the company.”

But by keeping it open, as detailed by Cliffs, the Ashland Facility, “Eliminates up to $60m of closure-related costs.” The Ashland facility will instead undergo a conversion, which it says, “Potentially provides a compelling, low-capex, high-return opportunity to be a significant merchant pig iron supplier in the Great Lakes.” (We presume U.S. Steel and ArcelorMittal will avail themselves of this compelling offering.)

So, we’re not sure if keeping Ashland Works open saves money or if closing it does.

We won’t pontificate over the “AK Steel best-in-class position in non-commoditized steel” for a variety of reasons that we have previously covered here in our GOES MMI series. (Or the fact that the rise of electric vehicles will start to make a dent in the need for the kinds of automotive exhaust grades, such as 439 and 441, produced by AK Steel.) We acknowledge AK does have a strong position in ultra-high-strength steels.

So, the real question comes down to the “synergies” outlined by Cliffs.

Does the margin Cliffs generates — approximately $30/$40 per short ton for every pellet produced and sold to AK — translate to an EBITDA jump of that same amount for steel products sold by AK, such that they leapfrog the EAF producers, as Cliffs suggests?

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Well, now isn’t that the $1.1 billion question?

Photo by Jeffrey Sauger for General Motors

General Motors is teaming up with Tokyo-headquartered Isuzu, with plans to invest $175 million toward a new plant in Ohio, the Detroit automaker recently announced.

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The investment will be made through its joint venture with Isuzu, called DMAX, which is 60% GM-owned.

“Due to the growing strength of GM’s all-new 2020 Chevrolet Silverado and GMC Sierra heavy-duty pickups, General Motors and Isuzu announced today a $175 million investment through its DMAX joint venture to build an all-new, diesel engine components plant in Brookville, Ohio,” General Motors said. “The new 251,000 square-foot facility would expand the production of critical engine components for the company’s current DMAX diesel engine manufacturing operation in Moraine, Ohio.”

According to GM, the new plant will create 100 manufacturing jobs.

As we’ve noted in previous articles, while much is made of the rise of electric vehicles, one thing is clear: the U.S. automotive consumer loves pickup trucks and SUVs. So much so that fellow Big Three automaker Ford last year announced plans to phase out its traditional sedan lineup.

Within the pickup truck segment, according to GM, heavy-duty trucks account for 25% of U.S. pickup sales.

GM sues Fiat Chrysler, alleging ‘multi-year pattern of corruption’

In other automotive news, GM is suing Fiat Chrysler, announcing late last month it had filed a RICO lawsuit against the rival automaker.

GM argued Fiat Chrysler had engaged in a “multi-year pattern of corruption” that was “used to undermine the integrity of the collective bargaining process and cause GM substantial damages.”

“This lawsuit is intended to hold FCA accountable for the harm its actions have caused our company and to ensure a level playing field going forward,” said Craig Glidden, GM executive vice president and general counsel.

In late October, GM concluded negotiations with the striking United Auto Workers (UAW) union, reaching a new four-year labor deal. The nationwide strike, GM’s first since 2007, resulted in two weeks of lost production in the third quarter and will ultimately cost the automaker around $4 billion this year.

The UAW is currently involved in negotiations with Fiat Chrysler.

“While we have had a few outside distractions since then, your negotiators have remained focused on resolving all your outstanding demands,” said Cindy Estrada, vice president and director of UAW’s Fiat Chrysler department.

“The National Parties have negotiated every day, and long hours since then. Much progress has been made but we still have some difficult issues to resolve. Your negotiators are committed to bargaining a pattern agreement that meets the needs of the membership and provides long term job security.”

GM alleges Fiat Chrysler has paid millions of dollars in bribes to UAW in an effort to unfairly impact the collective bargaining process.

“FCA was the clear sponsor of pervasive wrongdoing, paying millions of dollars in bribes to obtain benefits, concessions, and advantages in the negotiation, implementation, and administration of labor agreements over time,” GM said in a statement.

“FCA corrupted the implementation of the 2009 collective bargaining agreement. It also corrupted the negotiation, implementation, and administration of the 2011 and 2015 agreements.

“FCA’s manipulation of the collective bargaining process resulted in unfair labor costs and operational advantages, causing harm to GM.”

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Late last month, then-UAW President Gary Jones announced his resignation, as the union is under the spotlight due to an ongoing federal corruption probe.

In August, the Detroit Free Press reported the FBI and IRS raided Jones’ metro Detroit home (among raids of other union leaders’ homes).

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It has been a busy, busy year for metals, ranging from steel prices’ trajectory as we head toward 2020 to nickel prices’ reaction to Indonesia’s impending nickel ore export ban.

Keep up to date on everything going on in the world of trade and tariffs via MetalMiner’s Trade Resource Center.

While it’s hard to believe, the year is almost over — so before we jump into the final month of 2019, let’s take a look back at some of the most-viewed stories on MetalMiner from November:

  1. Amid Plunging U.S. Steel Prices, Has ‘Steelmageddon’ Arrived?

  2. What happened to the nickel supply shortfall?

  3. ICSG: Global copper market in deficit by 330K tons

  4. Freeport-McMorRan Uses AI to Optimize Production at Arizona Copper Mine

  5. ArcelorMittal Announces Shuttering of Plants in South Africa, Poland

  6. Chinese steel, raw material prices are on the rise

  7. This Morning in Metals: Automakers Await Trump’s Section 232 Auto Tariff Decision

  8. Metal manufacturers, users call for Section 232 sunset provision

  9. Aluminum Prices Rising Despite Weak Demand

  10. Goldman Sachs is Bullish on Oil Prices in the Long Term

Free Partial Sample Report: 2020 MetalMiner Annual Metals Outlook

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This morning in metals news, gas prices this Thanksgiving were similar to levels the previous two years, Tata Steel has confirmed job cuts in the U.K. and a partnership may form toward development of new copper projects in Peru.

Keep up to date on everything going on in the world of trade and tariffs via MetalMiner’s Trade Resource Center.

Gas prices hang at around $2.58 per gallon

For those who traveled this Thanksgiving season, average gas prices stood at levels similar to previous holiday seasons.

According to the Energy Information Administration (EIA), average gas prices in the U.S. as of Nov. 25 stood at $2.58 per gallon, compared with $2.61 per gallon in 2018 and $2.57 per gallon in 2017.

Tata Steel to cut U.K. jobs

Steelmaker Tata Steel has confirmed it will cuts 1,000 jobs in the U.K., the Financial Times reported.

The round of job cuts is part of a total 3,000 jobs being cut by the steelmaker, according to the report, as it deals with falling steel prices and rising raw material costs.

Possible copper project partnership in Peru

Reuters reported Canadian firm First Quantum is looking to team up with other companies  to develop copper projects in Peru.

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According to the report, the Canadian firm is looking for partners to help it develop new copper projects in the country, with CEO Philip Pascall citing Rio Tinto as a potential partner for a joint venture.

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This morning in metals news, U.S. steel imports were down 16% through the first 10 months of the year, steel companies are raising their prices and protests continue in the world’s top copper-producing country.

Keep up to date on everything going on in the world of trade and tariffs via MetalMiner’s Trade Resource Center.

Steel imports drop 16% through October

U.S. imports of steel through the first 10 months of the year were down 16% on a year-over-year basis, the American Iron and Steel Institute (AISI) reported this week.

Steel imports through the end of October totaled 24.78 million tons, according to the report.

Meanwhile, U.S. steel imports for totaled 2.18 million tons in October, which marked a 14.5% increase compared with the September import total.

Steel companies raise prices

Amid slumping steel prices, companies like U.S. Steel and ArcelorMittal are raising prices for their products, the Times of Northwest Indiana reported.

According to the Times’ report, the steelmakers have raised their prices for flat-rolled steel three times in less than a month.

Chile protests continue

Widespread protests erupted in Chile in October, at first over a proposed metro fare hike; since then, the protests have expanded to encompass more widespread, systemic ills that are being called out by the protesters in the streets of Santiago and other cities.

Chile is the world’s No. 1 copper producer. Bloomberg reports the country’s recent protests could in fact threaten the status of the country’s major state-owned producer as the world’s No. 1 producer.

According to the report, state-owned Codelco — the world’s top copper producer — had been planning to spend $20 billion in Chile over a decade to modernize its mines.

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However, Bloomberg notes, demands raised by protesters in Chile could be at odds with government funding Codelco had looked for toward that aforementioned modernization. As a result, Codelco may fall from its No. 1 spot, according to Colin Hamilton of BMO Capital Markets, as cited by Bloomberg.

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This morning in metals news, steelmaker ArcelorMittal is engaged in negotiations over its prior plans to take over Italy’s troubled Ilva plant, Norsk Hydro sold one of its plants in Spain and copper prices made gains Monday.

Keep up to date on everything going on in the world of trade and tariffs via MetalMiner’s Trade Resource Center.

ArcelorMittal, Italy’s government in talks over Ilva

ArcelorMittal’s plans to take over the troubled Ilva steel plant in Italy fell apart earlier this year, as the steelmaker sent a notice of the withdrawal and termination of the lease and purchase agreement. The steelmaker argued new environmental laws in the country impact the plant’s ability to operate.

The Associated Press reported Italy’s prime minister Giuseppe Conte said the government is in talks with ArcelorMittal over the possibility of negotiating a solution and saving jobs at the plant.

Hydro sells Santa Oliva plant

Norwegian firm Norsk Hydro is selling its Santa Oliva plant in Spain, the firm said last week.

“The decision to divest is part of the overall review in Extruded Solutions, aiming to optimize and streamline the portfolio,” Hydro said. “The transaction is expected to be completed in Q4 2019.

“The Santa Oliva plant is part of the Extruded Solutions business area and has around 50 employees.”

Copper Prices Rise

Copper prices made gains Monday on positive trade news and declining LME stocks, Reuters reported.

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LME copper jumped 0.7% to $5,895.50 per ton, according to Reuters.

Ford’s all-electric Mustang Mach-E. Source: Ford Motor Co.

For the first time in over half a century, Ford’s Mustang lineup is getting an addition.

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The electric vehicle revolution continues to build as legacy automakers are making their moves.

At the L.A. Auto Show, Ford unveiled its new all-electric 2021 Mustang Mach-E to its lineup, waxing poetic in noting the vehicle embodies the “Mustang spirit” with its “sleek silhouette and muscular curves.”

“At the first-ever Detroit auto show, Henry Ford said he was working on something that would strike like forked lightning,” Executive Chairman Bill Ford said. “That was the Model T. Today, the Ford Motor Company is proud to unveil a car that strikes like forked lightning all over again. The all-new, all-electric Mustang Mach-E. It’s fast. It’s fun. It’s freedom. For a new generation of Mustang owners.”

According to Ford, the new SUV model will be available with standard- and extended-range battery options, with either rear-wheel or all-wheel drive options.

Ford says the Mach-E has an EPA-estimated range of over 300 miles, based on a full charge (final range estimates will be available in 2020, the automaker noted).

“In extended-range all-wheel-drive configurations, Mach-E is targeting 332 horsepower and 417 lb.-ft. of torque – with the standard all-wheel-drive variation targeting quicker times to 60 mph than the base Porsche Macan series,” the automaker said.

Ford was quick to tout the vehicle’s aesthetics and drivability — in other words, it’s not just a gas-saver.

“The Mustang Mach-E wholeheartedly rejects the notion that electric vehicles are only good at reducing gas consumption,” said Hau Thai-Tang, Ford’s chief product development and purchasing officer. “People want a car that’s thrilling to drive, that looks gorgeous and that can easily adapt to their lifestyle – and the Mustang Mach-E delivers all of this in unmatched style.”

In October, Ford reported its third-quarter U.S. sales were down 4.9% on a year-over-year basis, while its truck sales increased 8.8%. Ford’s truck and SUV mix accounted for 87% of sales in the quarter, the automaker said, up from 82% in 2018. Meanwhile, Ford’s average transaction price jumped by $2,200 to $37,900.

Ford shares closed up 2.07% on Friday.

Ford’s unveiling of its new Mach-E at the L.A. Auto Show was followed by Tesla’s own announcement of its new “Cybertruck,” which features a stainless steel body.

While some may be skeptical of the hype around electric vehicles and their narrative of rapid ascent toward market domination, competition is certainly picking up in the market. (MetalMiner’s Stuart Burns, however, last month offered somewhat of a counter to the EVs narrative, noting growth in EV sales is being outstripped by those for “fuel-guzzling SUVs.”)

In a report earlier this year, BloombergNEF forecast electric vehicle sales are on track to command 57% of global passenger car sales by 2040.

Of course, there’s a long way to go until 2040, so it remains to be seen if that and other similar forecasts will come true.

With that said, it’s undeniably true that automakers don’t want to be caught without a plan for electrification and options for consumers looking to make the transition away from the traditional internal combustion engine.

MetalMiner’s Annual Outlook provides 2019 buying strategies for carbon steel

Speaking of consumers, EV affordability is another issue entirely — but, of course, for now it’s one step at a time.

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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 our coverage of: ArcelorMittal’s plant closure in South Africa, the oil price outlook, U.S. steel capacity utilization and steel prices, CAMMU’s call for a Section 232 sunset provision, and more.

Looking for metal price forecasting and data analysis in one easy-to-use platform? Inquire about MetalMiner Insights today!

Free Partial Sample Report: 2020 MetalMiner Annual Metals Outlook

Tesla’s Cybertruck. Source: Tesla

This morning in metals news, automaker Tesla this week showed its new Cybertruck, Chinese President Xi Jinping said he wants to reach an initial trade deal with the U.S. and the CEO of Ace Hardware said the Trump administration’s tariffs are “manageable.”

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Tesla unveils stainless steel body Cybertruck

To much fanfare, Elon Musk and Tesla unveiled a new Tesla truck, dubbed the “Cybertruck,” at the L.A. Auto Show this week.

A single-motor, rear-wheel drive Cybertruck will come with a price tag of $39,900. Meanwhile, a dual-motor all-wheel drive truck checks in at $49,900; the tri-motor all-wheel drive model checks in at $69,900.

According to the Tesla website, production on the vehicles is expected to begin in late 2021.

“Cybertruck is designed to have the utility of a truck and the performance of a sports car,” the Tesla website notes. “The vehicle is built to be durable, versatile and capable, with exceptional performance both on-road and off-road.”

The vehicle body is constructed of cold-rolled stainless steel.

“If there was something better, we’d use it,” Tesla says on its Cybertruck specs page.

Xi hopes for deal; ready to ‘fight back’

The world continues to wait for the much-discussed “phase one” trade deal between the U.S. and China.

Reuters reported Chinese President Xi Jinping indicated he wants to reach an initial agreement and avoid a trade war but that he will “fight back” if necessary.

“When necessary we will fight back, but we have been working actively to try not to have a trade war. We did not initiate this trade war and this is not something we want,” Xi was quoted by Reuters as saying during a forum in Beijing.

Ace CEO says U.S. tariffs ‘manageable’

During a CNBC interview this week, Ace Hardware CEO John Venhuizen said the Trump administration’s tariffs are “pesky” and “frustrating” but “manageable.”

Keep up to date on everything going on in the world of trade and tariffs via MetalMiner’s Trade Resource Center.

According to the CNBC report, Venhuizen earlier this year estimated approximately 12-15% of the hardware company’s business was impacted by the escalating trade conflict between the U.S. and China (which has resulted in hundreds of billions worth of tariffs in both directions).