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This morning in metals news: August 2020 steel shipments by U.S. steel mills fell 22.9% year over year; Norsk Hydro announced the termination of a memorandum of understanding; and, finally, the copper price made mid-week gains.

The MetalMiner 2021 Annual Outlook consolidates our 12-month view and provides buying organizations with a complete understanding of the fundamental factors driving prices and a detailed forecast that can be used when sourcing metals for 2021 — including expected average prices, support and resistance levels.

August 2020 steel shipments

August 2020 steel shipments from U.S. mills fell by 22.9% on a year-over-year basis, the American Iron and Steel Institute (AISI) reported.

U.S. steel mills shipped 6.5 million net tons in August. The August total, however, marked an 8.2% increase from the previous month.

Furthermore, in the year to date, U.S. steel shipments reached 53.8 million net tons, down 17.0% compared with the first eight months of 2019.

Norsk Hydro terminates MOU

Norsk Hydro recently announced the termination of a memorandum of understanding (MOU) with Golar Power and CELBA.

The MOU included Hydro’s alumina refinery Alunorte, Golar Power Brasil Participações and Centrais Elétricas Barcarena (CELBA), with the ultimate goal of bringing liquified natural gas (LNG) to Hydro’s Alunorte refinery in Brazil.

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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 coverage of: U.S. auto sales; potential Section 232 aluminum exemptions for the U.A.E. and Bahrain; oil majors’ struggles; and more.

The MetalMiner 2021 Annual Outlook consolidates our 12-month view and provides buying organizations with a complete understanding of the fundamental factors driving prices and a detailed forecast that can be used when sourcing metals for 2021 — including expected average prices, support and resistance levels.

Week of Oct. 5-9 (auto sales, potential Section 232 aluminum exemptions and more)

• The automotive sector at large has started to show positive signs of recovery, even as low inventories have capped sales to an extent.
• Brazilian iron ore exports surged in September.
• MetalMiner’s Stuart Burns delved into the possibility of Section 232 tariff exemptions for major aluminum producers Bahrain and the U.A.E.
• U.S. construction spending rose 1.4% in August, according to the U.S. Census Bureau.
• Global alumina production rose 2.7% in August on a year-over-year basis.
• Oil majors are facing both low demand and low prices.
• Last month, President Donald Trump issued an executive order aimed at strengthening the domestic mining sector.
• Job openings in August were relatively unchanged, according to the Bureau of Labor Statistics.
• India is considering the extension of duties on steel products from the U.S. and other countries.
• Precious metals took a fall earlier this week.
• Electric vehicle battery maker SVOLT will supply cobalt-free batteries to Chinese automaker Great Wall, Reuters reported.
• Finally, Moody’s upgraded its global steel outlook from “negative” to “stable.”

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This morning in metals news: the number of U.S. job openings showed little movement in August, the Bureau of Labor Statistics reported; U.S. Steel’s Keetac mine remains closed; and winter heating bills are likely to be a little higher than last year’s, per the Energy Information Administration.

The MetalMiner 2021 Annual Outlook consolidates our 12-month view and provides buying organizations with a complete understanding of the fundamental factors driving prices and a detailed forecast that can be used when sourcing metals for 2021 — including expected average prices, support and resistance levels.

Job openings unchanged in August

According to the Bureau of Labor Statistics, U.S. job openings were relatively unchanged in August.

Job openings stood at 6.5 million as of the last day of August. Job openings decreased by 68,000 within the construction sector.

Keetac mine remains idled

In late April, U.S. Steel announced it would idle its Keetac mine in Minnesota and lay off hundreds of workers.

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This morning in metals news: Brazil’s iron ore exports are on the rise; Outokumpu last week announced the initiation of a turnaround plans for its long products business area; and, finally, the world’s first marine superchargers will use recycled aluminum from Norsk Hydro.

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Brazil’s iron ore exports jump

According to mining.com, Brazil’s iron ore exports in September rose 18.5% on a year-over-year basis.

Citing the Ministry of Industry, Foreign Trade and Services, the report notes the September total marked Brazil’s highest export total since 2015.

Outokumpu aims to revitalize long products business

Finland-based Outokumpu last week said it launched a turnaround plan for its long products business area.

“The turnaround program will be started immediately with personnel measures that might lead to a reduction of approximately 100 positions,” the stainless steel producer said in a release. “Other turnaround actions include the implementation of Outokumpu’s manufacturing excellence methodology at the Long Products’ sites to increase operational efficiency.”

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The Automotive Monthly Metals Index (MMI) gained 2.2% for this month’s index value, as Q3 2020 automotive sales showcased some basis for optimism.

The MetalMiner 2021 Annual Outlook consolidates our 12-month view and provides buying organizations with a complete understanding of the fundamental factors driving prices and a detailed forecast that can be used when sourcing metals for 2021 — including expected average prices, support and resistance levels.

U.S. Q3 2020 automotive sales

Despite the May restarts of automotive manufacturers, U.S. showrooms faced low inventories this summer, putting a cap on sales despite solid demand.

“Available inventory is far below last year’s levels, yet sales continue to show surprising strength,” said Charlie Chesbrough, senior economist at Cox Automotive. “Going into the fourth quarter, the key question is: Can this continue? Clearly new vehicle buyers haven’t been hit as hard as other consumers during this recession, so demand is likely to remain stable over the near-term.”

General Motors, for example, reported Q3 2020 automotive sales fell 10% year over year to 665,192 vehicles.

“In a sign of a recovering industry, sales improved sequentially each month within the quarter,” GM said in a release. “Industry and GM sales rebounded significantly in September, finishing the month with year-over-year sales increases.”

Meanwhile, Ford reported Q3 2020 sales fell 4.9% year over year. Ford truck sales, however, showed growth. Total truck sales jumped 0.6%, while retail sales gained 8.3%. The quarter marked Ford’s best third quarter for truck sales since 2005, the automaker reported.

FCA US sales dropped 10% year over year in the third quarter. However, third-quarter sales rose 38% compared with the previous quarter.

Similarly, while Honda’s Q3 2020 sales fell 9.5% year over year, sales in September alone rose 11.5%.

“September marks a high-water mark for Honda sales this year with double-digit gains and our first month in positive territory since the pandemic began,” said Dave Gardner, executive vice president of National Operations at American Honda.

Nissan sales fell 32.4% in the third quarter on a year-over-year basis.

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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: Cleveland-Cliffs’ acquisition of ArcelorMittal USA; a breakdown of the British automotive manufacturing sector’s struggles; the PSA–Fiat Chrysler merger; primary aluminum production; the U.S. steel capacity utilization rate; and Hurricane Laura’s impact on Gulf of Mexico crude oil production.

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Week of Sept. 28-Oct. 2 (Cleveland-Cliffs’ acquisition, primary aluminum production and more)

• The U.K.’s car manufacturing sector is at a crossroads, explains MetalMiner’s Stuart Burns.
• U.S. steel imports fell by more than half from July to August.
• On Monday, Cleveland-Cliffs’ acquisition of ArcelorMittal USA dominated headlines.
• In other M&A news, Burns weighed in on the merger of automotive giants Fiat Chrysler and PSA.
• Like U.K. automakers, European steelmakers also face challenging economic realities.
• What does the current pandemic and the circumstances it has brought about mean for globalization?
• Primary aluminum production rose on a year-over-year basis in August.
• Circling back to Cleveland-Cliffs, the MetalMiner team broke down the announcement of Cleveland-Cliffs’ acquisition of ArcelorMittal USA, including what it might mean for steel prices.
• A U.S.-based company is entering the Indian renewable energy storage market.
• President Donald Trump this week signed an executive order aimed at boosting the domestic mining industry.
• As India has sent more and more of its metals output abroad, Burns speculated if the country could be headed for resistance in the form of duties.
• As for steel, U.S. steel capacity utilization rate jumped to 66.1% last week.
• Lastly, Hurricane Laura exerted the most significant impact on Gulf of Mexico oil production of any storm since 2008, according to the Energy Information Administration.

The MetalMiner 2021 Annual Outlook consolidates our 12-month view and provides buying organizations with a complete understanding of the fundamental factors driving prices and a detailed forecast that can be used when sourcing metals for 2021 — including expected average prices, support and resistance levels.

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This morning in metals news: Hurricane Laura had the largest effect on Gulf of Mexico crude oil production of any hurricane since 2008, according to the Energy Information Administration (EIA); U.S. imports of standard pipe and tin plate from Thailand and China, respectively, surged from May-July; and tech companies could call the site of the former Etna steel mill their new home.

The MetalMiner 2021 Annual Outlook consolidates our 12-month view and provides buying organizations with a complete understanding of the fundamental factors driving prices and a detailed forecast that can be used when sourcing metals for 2021 — including expected average prices, support and resistance levels.

Hurricane Laura leads to 14.4M-barrel reduction in Gulf of Mexico oil output

Hurricane Laura had the largest impact on Gulf of Mexico oil production of any storm since 2008, the Energy Information Administration (EIA) reported.

The EIA reported, citing estimates from the U.S. Bureau of Safety and Environmental Enforcement (BSEE), the hurricane reduced crude oil production by 14.4 million barrels over a period of 15 days.

At its peak, Hurricane Laura forced the evacuation of all 16 dynamically positioned drilling rigs, the EIA reported. Meanwhile, the hurricane forced evacuation of 11 of the 12 nondynamically positioned drilling rigs and nearly half of the 643 offshore production platforms operating in the Federal Offshore Gulf of Mexico.

The hurricane battered Louisiana in late August. The Associated Press reported Sept. 24 that New Orleans-based utility Energy Corp. said damage stemming from the hurricane had reached a cost of $1.4 billion.

U.S. standard pipe, tin plate imports surge

U.S. imports of standard pipe from Thailand and tin plate from China surged over the summer, according to Steel Import Monitoring and Analysis (SIMA) system trends data.

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This morning in metals news: President Donald Trump signed an executive order declaring a national emergency for the mining industry; Vale this week announced the suspension of one of its iron ore operations; and the site of an old steel plant in Chicago is getting a new look.

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Trump signs executive order to boost mining

President Trump announced the signing of an executive order that declares a mining industry national emergency.

“Today, President Trump is signing an Executive Order and declaring a National Emergency to expand the domestic mining industry, support mining jobs, alleviate unnecessary permitting delays, and reduce our Nation’s dependence on China for critical minerals,” the executive order reads.

The order sets the stage for the Department of the Interior to use the Defense Production Act to fund mineral processing.

Furthermore, the action will cut down on “unnecessary delays in permitting actions,” the order says.

In 2017, Trump signed an order laying out a federal strategy to ensure the U.S.’s supply of critical minerals.

The U.S. has long sought to curb its dependence on China for a wide variety of critical minerals. China, for example, dominates the global rare earths mining and processing sectors. More than 80% of global rare earths output comes from China.

Vale suspends Viga operations

In addition to Trump’s executive order, Earlier this week, Brazilian miner Vale announced the suspension of operations at its Viga concentration plant.

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India’s renewable energy sector, the fourth-most attractive renewable energy market in the world today, is all set to get a new player.

U.S.-based ArcVera Renewables, which specializes in consulting and technical services, has announced its entry into India’s solar, wind and hybrid energy storage market.

ArcVera has opened up an office in Bengaluru in the southern part of India. From there, it will deliver its expertise to project developers, lenders and investors — not only in India but also neighboring Southeast Asia and Pacific Rim countries.

The MetalMiner 2021 Annual Outlook consolidates our 12-month view and provides buying organizations with a complete understanding of the fundamental factors driving prices and a detailed forecast that can be used when sourcing metals for 2021 — including expected average prices, support and resistance levels.

ArcVera joins the fray in India’s renewable energy sector

The Colorado-based ArcVera Renewables has over 40 years of global experience. The firm is now providing expert technical, financial and independent engineering services for stand-alone energy storage or hybrid projects.

Gregory S. Poulos, CEO of ArcVera Renewables, told the Indian media a combination of factors had made the company take this decision to expand. He said, on the one hand, India is a large and rapidly growing renewables market. With the entry of energy tenders and hybrid project requirements, the country presents an even more complex and competitive market.

On the other hand, a competitor departure from the Indian wind market left a vacuum that ArcVera is ideally positioned to fill, Poulos added.

What also drove ArcVera’s decision is the fact that Indian developers and investors are on the lookout for technical expertise to lower project risk and raise project value.

ArcVera’s services cover the full project life cycle. That cycle includes: finance-grade resource assessments, project design, technology assessments, financing, M&A, due diligence, construction, operations and repowering.

The company has atmospheric scientists, engineers, and data analysts.

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As we noted earlier this week, the Cleveland-Cliffs acquisition of ArcelorMittal USA came at a price tag of $1.4 billion.

This comes after Cleveland-Cliffs acquired AK Steel earlier this year (among other things, AK Steel is the lone remaining U.S. producer of electrical steel).

The deal includes nearly all of the ArcelorMittal subsidiary’s North American facilities (with a few exceptions, as we will elaborate on shortly). Cleveland-Cliffs expects to close the deal in Q4 2020.

Since the announcement, Cleveland-Cliffs shares are up over 12%.

So, what does the merger mean for the North American metals scene and relevant sectors, like automotive?

Are you prepared for your annual steel contract negotiations? Be sure to check out our five best practices. 

Initial reaction to Cleveland-Cliffs acquisition of ArcelorMittal USA

Overall, this seems to be a solid move for everyone involved.

ArcelorMittal offloads old assets that have a high cost structure for producing steel while still maintaining a mill with one of the lowest cost structures in the country.

On the other hand, Cliffs gains a large auto book of business with good margins. Furthermore, the steel market will see old, expensive capacity taken out. As such, that will make room for new capacity scheduled to come online in the near future.

Strengthening auto position

As noted previously, the acquisition makes Cleveland-Cliffs the largest flat-rolled steel producer in North America. The deal will also make Cleveland-Cliffs — the oldest iron ore mining company in the country — the largest iron ore pellet producer in North America, with 28 million long tons of capacity.

The deal further strengthens the company’s position in the automotive sector. The company likely controls 60%-65% of exposed auto sheet supply (think the steel used on the outside of a car).

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