The Renewables Monthly Metals Index (MMI) rose 2.7% this month, as Toronto-based First Cobalt signed multiple refinery feedstock agreements. (Editor’s note: This report also includes coverage of grain-oriented electrical steel, or GOES.)
First Cobalt signs refinery feedstock agreements
Toronto-based First Cobalt announced Tuesday it has achieved a “key milestone” with new refinery feedstock agreements reached with Glencore AG and IXM SA.
The cobalt hydroxide deals will see First Cobalt receive a total of 4,500 tonnes per year beginning in 2022. The feedstock will come from Glencore’s KCC mine and China Molybdenum Co.’s — parent company of IXM SA — Tenke Fungurume mine.
The agreements represent 90% of projected capacity for the Canadian refinery. Furthermore, the deals will yield “22,250 tonnes per year of battery grade cobalt sulfate,” per the company’s announcement.
“This is a pivotal moment for our North American cobalt refining strategy,” First Cobalt President and CEO Trent Mell said. “Our globally competitive cost structure and industry-leading ESG credentials put us in a strong position for a rapidly growing EV market. With feedstock arrangements in place, we can continue to advance our vision to create a new cobalt supply chain in North America.
“Electric vehicle sales in Europe were up more than 100% in 2020 and the U.S. will be the next large market to take off.”
In other company news, First Cobalt signed a letter of intent with Kuya Silver Corporation to sell “a portion of its silver and cobalt mineral exploration assets in the Canadian Cobalt Camp and form a joint venture to advance the remaining mineral assets.”
This morning in metals news: U.S. steel capacity utilization reached 75.4% for the week ending Jan. 9; General Motors announced the launch of BrightDrop; and Rusal America announced a new line of aluminum additive manufacturing powders.
Volatility is the name of the game. Do you have a steel buying strategy that can handle the ups and downs?
Steel capacity utilization reaches 75.4%
The U.S. steel sector’s capacity utilization rate reached 75.4% for the week ending Jan. 9, the American Iron and Steel Institute (AISI) reported.
The rate increased from 74.6% the previous week.
Production during the week ending Jan. 9 totaled 1.71 million net tons, up 3.6% from the previous week. However, output during the week declined 10.3% year over year.
General Motors launches new BrightDrop business
General Motors today announced the launch of a new business called BrightDrop, which it says will “offer an ecosystem of electric first-to-last-mile products, software and services to empower delivery and logistics companies to move goods more efficiently.”
Over the last year, COVID-19 restrictions have closed showrooms. Furthermore, Brexit has raised the prospect of trading tariffs with Europe. In addition, the government has repeatedly moved the goal posts on the sale of internal combustion engines toward the end of the decade.
A new trade deal with the E.U. allows tariff free access to the U.K.’s largest automotive export market. The announcement of the new deal on Christmas Eve proved a massive relief for the industry, according to Mike Hawes, chief executive of the Society of Motor Manufacturers and Traders (SMMT), an industry body, as quoted in the Financial Times.
However, tariff-free does not mean barrier-free. Additional safety certification and much more onerous paperwork involved in the movement of goods between the U.K. and the E.U. will increase complexity for a U.K. supply chain intimately entwined with the E.U.
New clarity in 2021 for U.K. automotive industry
Nevertheless, the U.K. automotive industry is at least starting 2021 with better clarity than it endured through much of last year.
But one looming crisis the SMMT identified is the incomplete nature of the U.K.’s electric vehicle supply chain.
Specifically, the FT reports, the U.K. is going to need far more battery factories if it is to sustain a switch to electric vehicles in the decade ahead.
This morning in metals news: Turquoise Hill Resources offered an update on the Oyu Tolgoi copper mine expansion project; renewable power generation will continue to rise this year in the U.S.; and the aluminum price has traded sideways over the last month.
The fate of the Oyu Tolgoi copper mine expansion project is up in the air, as it could face termination from the Mongolian government.
Turquoise Hill Resources, which is majority-owned by miner Rio Tinto, jointly owns the massive project with the Mongolian government. The parties reached a financing plan for the project in 2015.
However, the Mongolian government appears to be concerned about runaway costs for the project.
“In addition, the Government of Mongolia has advised Rio Tinto that it is dissatisfied with the results of the Definitive Estimate, which was completed and delivered by Rio Tinto and publicly announced by the Company on December 18, 2020, and is concerned that the significant increase in the development costs of the Oyu Tolgoi project has eroded the economic benefits it anticipated to receive therefrom,” Turquoise Hill said in a statement. “The Government of Mongolia has indicated that if the Oyu Tolgoi project is not economically beneficial to the country, it would be necessary to review and evaluate whether it can proceed.”
“According to the U.S. Energy Information Administration’s (EIA) latest inventory of electricity generators, developers and power plant owners plan for 39.7 gigawatts (GW) of new electricity generating capacity to start commercial operation in 2021,” the EIA reported. “Solar will account for the largest share of new capacity at 39%, followed by wind at 31%. About 3% of the new capacity will come from the new nuclear reactor at the Vogtle power plant in Georgia.”
Aluminum trends flat
After surging throughout most of the second half of 2020, the aluminum price has slowed down of late.
The LME three-month aluminum price is up just 0.22% over the last month. The price closed Friday at $2,032 per metric ton.
This morning in metals news: the Census Bureau and Bureau of Economic Analysis reported the U.S. goods and services deficit totaled $68.1 billion in November; the Brazilian state of Minas Gerais is hoping to win a compensation deal from miner Vale; and the American Iron and Steel Institute released steel import data for December.
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Brazilian state aims to win settlement from miner over 2019 dam disaster
The Brazilian state of Minas Gerais is in talks over a settlement deal with miner Vale vis-a-vis the fatal Brumadinho tailings dam collapse in 2019, Reuters reported.
Per Reuters, the state is seeking a settlement worth at least $5.3 billion.
Government and Vale officials were set to meet today, according to Reuters.
This morning in metals news: U.S. average gas prices fell to their lowest level since 2016 last year; the U.S. Treasury announced sanctions against Iran’s steel industry; and Ford Motor Co. released its Q4 2020 U.S. sales results.
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U.S. average gas price drops in 2020
As MetalMiner readers know, we keep tabs on commodities like oil insofar as they can be price drivers for metals. In short, oil price increases are often supportive of metals prices. (Readers can learn more about our analysis in the most recent update to our Annual Outlook.)
Unsurprisingly, given the slowdown in travel last year stemming from the onset of the COVID-19 pandemic in the U.S., the average gas price fell to its lowest level since 2016, the Energy Information Administration (EIA) reported.
Per the EIA, the average gas price dropped to $2.17 per gallon.
Meanwhile, in mid-March 2020, before the declaration of a national emergency, the average stood at $2.38 per gallon.
U.S. levies sanctions on ‘key actors’ in Iran’s steel sector
The U.S. Treasury on Tuesday announced sanctions on several firms in the Iranian steel sector, in addition to a Chinese supplier of graphite electrodes.
The Treasury announced sanctions on China’s Kaifeng Pingmei New Carbon Materials Technology Co., Ltd. (KFCC), which sold graphite electrodes to Pasargad Steel Complex, the Treasury said.
This morning in metals news: the American Iron and Steel Institute released its first report on U.S. raw steel production for 2021; Nippon Steel eyes its net-zero emissions goals; and, lastly, the U.S. hot-rolled coil price continues to surge.
AISI releases first raw steel production data of 2021
For the week ending Jan. 2, the U.S.’s raw steel production totaled 1.65 million net tons, AISI reported Monday afternoon.
Steel output for the week came at a capacity utilization rate of 74.6%. The rate jumped from 72.3% the previous week.
Nippon strives toward net-zero future
Aside from U.S. raw steel production, in a question-and-answer session with Nikkei Asia, Nippon Steel President Eiji Hashimoto discussed the company’s efforts toward reaching net-zero emissions.
Hashimoto told Nikkei the company aims to reach net-zero in the steelmaking process by 2050.
HRC continues rise
Speaking of steel production, U.S. HRC price shows no signs of slowing down, closing Monday at $983 per short ton.
Furthermore, the price is up 27.5% over the past month. The HRC price has more than doubled since mid-Q2 2020, when it fell to around $460 per short ton.
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This morning in metals news: Ford Motor Co. and Mahindra announced the mutual decision to end joint venture talks; the Energy Information Administration released its quarterly coal report; and, finally, the zinc price has retraced.
A previously announced joint venture between Ford Motor Co. and Mahindra will not be going through, the companies announced recently.
The two companies had reached a deal back in October 2019, with a long-term expiration date of Dec. 31, 2020.
“According to the companies, the outcome was driven by fundamental changes in global economic and business conditions – caused, in part, by the global pandemic – over the past 15 months,” Ford said in a prepared statement. “Those changes influenced separate decisions by Ford and Mahindra to reassess their respective capital allocation priorities.”
Meanwhile, Ford said its independent operations in India will continue “as is.”
EIA releases quarterly coal report
In addition to the Ford-Mahindra joint venture news, the EIA released its quarterly coal report, reporting Q3 2020 production of 135.8 million short tons.
The output total in Q3 marked an increase of 17.9% from the previous quarter. However, Q3 2020 output declined 25.2% year over year.
This morning in metals news: MetalMiner’s Maria Rosa Gobitz recaps movements in December metals prices; Steel Dynamics released its Q4 earnings guidance; and, finally, the United States International Trade Commission launched a Section 337 investigation relating to vehicle control systems.
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Recapping December 2020 metals prices
MetalMiner’s Maria Rosa Gobitz recapped the last two weeks in metals and oil as the year draws to a close.
“The U.S. oil market traded up over the past two weeks,” Gobitz explains. “The WTI oil price closed Thursday at $48.23/barrel, up from $46.57/barrel two weeks ago. According to the Energy Information Administration, U.S. crude oil inventories were at 499.5 million barrels by the week ending Dec. 18, an decrease of 0.7% from 503.2 million barrels compared to two weeks prior. Even though inventories increased this fortnight, they are still up about 11% from the five-year average for this time of year.”
Gobitz rounded up the world of metals over the last two weeks in bullet form:
Over the last two weeks, the Thomson Reuters/CoreCommodity CRB increased to 165.55 from 161.25. The oil price rose by 3.6% over the same period.
Prices for almost all steel forms increased during the past two weeks. U.S. HRC steel prices continued to increase. By Dec. 25, the price reached $917/st, up 12.4% over the past two weeks. Similarly, the CRC and HDG prices increased by 5.8% and 6.1%, respectively, over the past two weeks to $1,022/st and $1,141/st. The plate price increased by 12.3% to $812/st.
However, wire rod prices remained flat over the past two weeks at $29.39/cwt. Capacity utilization for the week ending Dec. 11 reached 73.2%, up from 71.4% for the week ending Dec. 5.
The dollar index closed at 90.41 on Dec. 23, slightly down from 90.98 on Dec. 11. The dollar reached its lowest point — 89.82 — in the year to date Dec. 17.
Aluminum prices traded sideways. The price closed last week at $2,025/mt (down from $2,034/mt).
The LME three-month copper price increased slightly by 0.7% over the past two weeks, closing last week at $7,811.5/mt.
In the past two weeks, nickel prices breached the resistance level of $17,230/mt but later retraced. The LME three-month nickel price closed last week at $17,013/mt, down from $17,254/mt two weeks prior.
Meanwhile, the tin price closed last week at $20,100/mt, up from $19,505/mt two weeks prior.
Lastly, the zinc price traded sideways over the past two weeks, closing at $2,845/mt from $2,838/mt on Dec. 11.
Steel prices
“Steel prices remain strong as they continued to increase over the last two weeks (as they have since mid-August),” Gobitz added. “We also saw capacity utilization increase as mills extend their lead times. All base metals traded sideways over the past two weeks. Markets seem to have slowed down ahead of the holidays. However, buying organizations should continue to pay close attention to prices.”
Steel Dynamics announces Q4 earnings guidance
Meanwhile, Steel Dynamics announced Q4 earnings guidance, calling for adjusted earnings of between $0.80 and $0.84 per diluted share.
By comparison, Q3 adjusted earnings reached $0.51 per diluted share.
USITC launches Section 337 investigation
The USITC has invoked Section 337 of the Trade Act of 1930 to investigate imports of “certain vehicle control systems, vehicles containing the same, and components thereof.”
“Unfair import (a.k.a., Section 337) investigations conducted by the U.S. International Trade Commission most often involve claims regarding intellectual property rights, including allegations of patent infringement and trademark infringement by imported goods,” The UISTC explains on its website regarding the scope of Section 337.
In November, Jaguar Land Rover Limited (of Coventry, United Kingdom), and Jaguar Land Rover North America, LLC (of Mahwah, New Jersey), filed a complaint alleging violation of Section 337. The complaint alleges unfair importation of “certain vehicle control systems, vehicles containing the same, and components thereof” that infringes a patent.
In addition, respondents in the investigation are:
Dr. Ing. h.c.F. Porsche AG, d/b/a Porsche AG, of Stuttgart, Germany
Porsche Cars North America, Inc., of Atlanta, GA
Automobili Lamborghini S.p.A. of Sant’Agata Bolognese, Italy
Automobili Lamborghini America, LLC, of Herndon, VA
Volkswagen AG of Wolfsburg, Germany
Volkswagen Group of America, Inc., of Herndon, VA
Audi AG of Ingolstadt, Germany
Audi of America, LLC, of Herndon, VA.
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This morning in metals news: U.S. Steel sold the Keystone Industrial Port Complex for $160 million; ArcelorMittal and Nippon Steel will build a new electric arc furnace at their joint venture in Alabama; and, finally, the aluminum price has retraced slightly in December.
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U.S. Steel sells Keystone Industrial Port Complex
U.S. Steel recently announced it has closed on the sale of its Keystone Port Industrial Complex in Fairness Hills, Pennsylvania.
The sales of the “non-core real estate asset” comes for $160 million.
The steelmaker it expects production to begin in the first half of 2023.
The Calvert facility is a 50:50 joint venture of the two firms.
“Calvert currently produces steel sheet products by processing semi-finished products (slabs) procured from domestic and overseas suppliers,” Nippon Steel said in a Dec. 22 announcement. “With the newly-built EAF, Calvert will be able to manufacture by itself part of slabs necessary to produce its steel sheet products and will strive for further strengthening its competitiveness through advantages of the self-manufacture, such as shortening lead time in slab procurement, improving its productivity through utilization of self-manufactured high temperature slabs, and increasing the domestic procurement ratio of slabs.”
Aluminum pulls back
Like many metals, aluminum has been on a steady rise since May.
However, in December, aluminum has pulled back a little bit.
The LME three-month aluminum price remains up 2.2% month over month after closing last week at $2,025 per metric ton. Meanwhile, the metal started the month just north of $2,060 per metric ton.
