Articles in Category: Environment

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This morning in metals news, global aluminum production jumped in September, Germany’s steel sector warns against an abrupt withdrawal from coal-fired electricity and Tokyo Steel’s prices hold steady again.

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Aluminum Output Rises

Global aluminum output jumped 2.5% year over year in September, according to an International Aluminum Institute (IAI) report.

September output hit 5.3 million metric tons.

MetalMiner’s Take: World aluminum production rose 2.5% in September, reaching 5.3 million metric tons. January-September production for the base metal is also up by 0.3%. While both Chinese aluminum production (up by 3.6% year over year) and European production (up 0.8% year over year) are rising, North American production is down 4.3% down on a year-over-year basis.

Therefore, buying organizations may continue seeing scarcity in the North American aluminum market, which will lead to a higher U.S. Midwest premium. North American companies are currently struggling with aluminum supply, despite the increase in world production.

However, one of the great failings of “fundamental analysis,” in particular the study of supply and demand fundamentals, involves statistics such as those recently released from the IAI highlighting rising primary production on a year-over-year basis.

Yet ask any U.S. buyer of semi-finished material if they think that rise in primary production has led to or will lead to the easing of supply for semi-finished materials and rest assured you won’t find a single supporter.

MetalMiner seeks to study and analyze the specific underlying metal price trends and exchange-traded volumes — along with trends in the broader industrial and commodities markets — to assess potential price direction for underlying metals.

Rising primary production levels have little to no correlation with material availability and, in some respects, even primary aluminum ingot prices.

Not So Fast

With respect to coal-fired electricity, Germany’s steel sector is arguing against an abrupt withdrawal from the power generation method, Reuters reported.

According to Hans Juergen Kerkhoff, the head of Germany’s steel association, withdrawal from the power source would result in an increase in electricity costs for steelmakers of at least $161 million per year, per the Reuters report.

MetalMiner’s Take: The German steel sector should protest from the mountaintops about the country’s withdrawal from coal-fired electricity. With the phaseout of nuclear power by 2022, the loss of coal-fired energy will make the largest economic power in the European Union even more dependent on natural gas and oil imports.

Besides Germany’s steel-producing sector, access to competitively priced energy units goes well beyond basic steelmaking industries. The irony of Germany’s move to curtail the production of coal-fired electricity is that steel consumers will need to source finished goods like steel elsewhere —  likely to countries with even poorer environmental track records.

Tokyo Steel Holds Prices Steady

Prices of Tokyo Steel products will hold steady for the ninth straight month, Reuters reported.

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The firm last altered its prices in February, according to the report.

The Renewables Monthly Metals Index (MMI) lost one point this month, falling for an October MMI reading of 103.

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Rare Earths Removed From Final Tariff List

The U.S. Trade Representative’s office announced a list of Chinese products worth $200 billion that would be targeted for tariffs, a list that included a number of important materials for high-tech applications (including cobalt, cobalt oxides, cobalt sulfates and cobalt chlorides).

The final list, however, which went into effect late last month, did not include a number of rare earths materials that showed up on the original list.

However, a number of cobalt products remained on the final list.

Harnessing the Power of the Sea

As interest and demand in renewable energy continues to grow, so, too, is innovation in the field.

Physics World recently reported on the development of a device that serves to triple the amplitude of a water wave.

According to the report, the circular device deploys vertical metal sheets to concentrate the wave in a shallow space.

Renewable Momentum

Speaking of interest in renewable energy, a Stratfor report surveys the rise in interest at the corporate level.

While listing corporations that have announced intentions to shift toward renewable energy (or have already done so), the report name drops a couple of metals industry players.

“For instance, metals giant Alcoa sources 75 percent of the energy required for its smelters from renewables, while mining giant Rio Tinto acquires just under half of its energy from such sources,” the report states.

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Actual Metal Prices and Trends

Japanese steel plate fell 2.1% to $755.73/mt. Korean steel plate fell 0.2% to $675.67/mt. Chinese steel plate also posted a slight drop, falling to $716.11/mt.

U.S. steel plate fell 0.5% to $992/mt.

U.S. grain-oriented electrical steel coil dropped 10.3% to $2,478.

Chinese neodymium fell 0.4% to $59,311.60/mt. Chinese silicon also fell, down to $1,499.17/mt. Chinese cobalt cathodes fell 0.4% to $96,790.80/mt.

In recent years China’s steel sector — particularly the large, state-owned steel mills — have benefited from the enforced closure of capacity on environmental grounds during the winter heating season.

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Contrarian as it may at first sound, closure of private mills largely — on the basis they are unregulated  and are supposedly the most polluting steel mills — was a boost to larger competitors.

About 140 million tons of “illegal” production was closed last year, Reuters reports, only for capacity to be further restricted by Beijing’s war on smog during the winter heating season. The forced closure of steel mills in 26 cities around Beijing and Tianjin hit national output, accordig to the report, contributing to a year-on-year contraction in output during November and December last year.

Demand, however, remained buoyant. As a result, prices rose and exports, the relief valve for excess capacity, fell.

Source: Reuters

It should be no surprise that steel mills in the rest of the world all benefited from less competition and, as a result, higher prices (long before America’s 25% steel import tariffs lifted prices further). Indeed, cumulatively, strong domestic demand and state meddling on environmental grounds have allowed China’s steel sector to make good money and focus on the buoyant domestic market for the last two years.

That may be about to change.

Read more

The Renewables Monthly Metals Index (MMI) dropped one point this month, falling for a September reading of 104. 

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Making the Desert … Green?

Forms of renewable energy, like wind and solar, have gained momentum in recent years, both in practice and in popular support.

One place that could benefit from a renewable revolution? The Sahara Desert.

According to a BBC report, researchers claim installation of wind turbines and solar panels in the desert there could have the effect of doubling the amount of rainfall it receives, ultimately yielding more plants and life of all kinds.

The researchers published their study in the journal Science.

“In this study, we used a climate model with dynamic vegetation to show that large-scale installations of wind and solar farms covering the Sahara lead to a local temperature increase and more than a twofold precipitation increase, especially in the Sahel, through increased surface friction and reduced albedo,” the study’s abstract states. “The resulting increase in vegetation further enhances precipitation, creating a positive albedo–precipitation–vegetation feedback that contributes ~80% of the precipitation increase for wind farms. This local enhancement is scale dependent and is particular to the Sahara, with small impacts in other deserts.”

E.U. Lifts Ban on Solar Panels from China

The E.U. has opted to lift a restriction on imports of solar panels from China, the South China Morning Post reported.

The 28-member bloc initially imposed duties on the solar panels in 2013, but the European Commission announced it would not extend them. The duties expired at midnight on Sept. 3.

“After considering the needs of both producers and those using or importing solar panels the Commission decided it was in the best interests of the EU as a whole to let the measures lapse,” the European Commission release states. “This decision also takes into account the EU’s new renewable energy targets.”

Actual Metal Prices and Trends

Japanese steel plate rose 7.8% month over month to $54.01/mt. Korean steel plate fell 0.8% to $108.36/mt. Chinese steel plate rose 1.4% to $121.96/mt.

U.S. steel plate jumped 1.1% to $309.07/st.

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Chinese cobalt dropped 0.5% to $2,915.02/mt.

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This morning in metals news, customers reportedly are set to avoid Rusal during a crucial upcoming industry gathering in Berlin, Tata Steel announces a new sustainable steelmaking procedure and NAFTA negotiations pick up again today after a long Wednesday night of talks.

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Cold Shoulder

According to a Reuters report, customers plan to avoid Rusal during an upcoming industry gathering in Berlin, during which firms lock up 2019 aluminum supply deals.

The Russian aluminum giant was hit with U.S. sanctions in April, which sent the aluminum market into shock and yielded skyrocketing prices.

Prices came back down when the U.S. Treasury Department extended the deadline for firms to unwind business with Rusal by Oct. 23.

However, according to the Reuters report, some customers aren’t optimistic that that sanctions will in fact be lifted.

Sustainable Steelmaking

Tata Steel on Thursday announced a new steelmaking process that it claims will cut carbon dioxide emissions stemming from the steelmaking process by half, the Economic Times reported.

The firm conducted testing at its Ijmuiden site in the Netherlands, according to the report.

NAFTA Talks Resume

NAFTA renegotiation efforts are set to continue today after what was reportedly a long night of talks on Wednesday.

Canadian Prime Minister Justin Trudeau recently commented that “No NAFTA is better than a bad NAFTA deal.”

Meanwhile, on Saturday President Trump tweeted: “There is no political necessity to keep Canada in the new NAFTA deal. If we don’t make a fair deal for the U.S. after decades of abuse, Canada will be out. Congress should not interfere w/ these negotiations or I will simply terminate NAFTA entirely & we will be far better off…”

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The U.S. and Mexico have already reached an agreement in principle on certain provisions of NAFTA; following that, the U.S. and Canada picked up talks last week in an effort to bring the latter into the fold.

Who would have thought wind’s transformation from subsidy-supported to self-financing power source would happen so quickly – not this publication, that’s for sure.

Apart from diehard environmentalists, most consumers have been opposed to renewables on the basis they cost significantly more and turbines are an eyesore on the landscape.

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But in the span of less than 10 years, public opposition has declined. Opposition has not gone away entirely, but it has softened as we have become more familiar with the sight of slowly rotating turbine blades on the horizon and with the realization that its costs are falling dramatically.

A recent article in The Telegraph reports on how the cost of power production from onshore wind farms has dropped so far it undercuts conventional coal, natural gas and nuclear options.

The below graph from 2015 shows onshore wind as the cheapest option; costs have come down further since then.

Source: Wikipedia

Calling it the “subsidy-free revolution,” the Telegraph article reflects our own surprise at how quickly the change has taken place.

To be fair, offshore power still requires some subsidy because of the greater cost of installation and maintenance. Even here, costs continue to fall and subsidy is a route the authorities prefer to entertain because of public opposition to what was seen as the blight of onshore turbines dotting the landscape.

In large part, this is because turbine sizes have increased and, as a result, efficiencies have increased.

Source: The Telegraph

The industry is seeing it as a major investment opportunity, generating jobs while at the same time reducing the country’s overall carbon emissions.

A figure of £20 billion covering both onshore wind and solar over the next 10 years is mooted, all of which would be subsidy-free.

The latest figures are sounding the death knell for nuclear power in the U.K., but as usual the government hasn’t caught up with the numbers.

Nuclear power is costing a massive £92.50 per megawatt hour and is partly justified on the basis that a base load of power is always required to fill in renewables variability.

However, battery parks like Glassenbury in Kent are springing up that can meet gaps in demand, but nothing like a 2 GW nuclear power plant; still, a few MW here and there is slowly adding up.

But, like renewables, costs will need to come down for investment to flow into battery parks. That is, they’ll need to come down to the extent required to negate the need for quick fireup of conventional power sources to fill in gaps during cold snaps or, as renewables rise, as a percentage of the whole to fill in for periods of low wind or at night for solar.

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Still, a low-carbon future, at lower power costs and with the benefit of economic growth from investments – what’s not to like?

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This morning in metals news, Tata Steel completed its buy of the bankrupt Bhushan Steel, Chinese steel mills are turning to scrap and Turkey is preparing to respond over the U.S. tariffs on aluminum and steel.

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Tata Steel Buys Bhushan Steel

Indian firm Tata Steel completed its purchase of the bankrupt Bhushan Steel for $5.2 billion, Reuters reported.

Bhushan has an annual steelmaking capacity of 5.6 million tons, according to the report.

Scrapping Plans

Amid environmental rules, Chinese steel mills are looking to use more scrap, according to a report by the South China Morning Post.

The recycling of material comes as the government continues to crack down on “smoke-stack industries,” according to the report.

Turkey Plans Response on Section 232 Tariffs

Turkey is among the many countries not to have won an exemption from the U.S.’s Section 232 tariffs on steel and aluminum; unsurprisingly, Turkey is planning a response, according to one report.

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Turkey plans to impose tariffs worth about $266.5 million on U.S. products, including coal, paper, walnuts, almonds, tobacco and unprocessed rice, among other items, according to a report by the Hurriyet Daily News.

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Full disclosure – I am an owner of an iPhone, iPad and Macbook — and I don’t mind admitting it, a  longtime fan of Apple’s products — but even I cringe when the firm claims to have “worked with other metal companies to develop the proprietary technique, which allows for the generation of ‘green’ aluminium for the first ever time.”

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The claim follows the announcement late last week that at its Pittsburgh research center, Alcoa has developed a replacement for the carbon anodes used in the smelting of alumina to aluminium.

The carbon anode has the important role of delivering a strong electric current through the melt, but in the process carbon is converted to carbon dioxide and considerable levels of greenhouse gas emissions are produced.

But although Apple is said to be investing C$13 million (U.S. $10 million) in the joint venture called Elysis, it is a drop in the ocean compared to the C$120 million of funding from the governments of Canada and Quebec and, further, the C$55 million invested by Alcoa and Rio Tinto in order to achieve commercialization of the technology over the next five years.

Indeed, Alcoa and Rio each have a 48% stake in the JV, with the rest owned by the government of Quebec, so quite how Apple can claim any fame in this venture is hard to see.

OK, Apple’s hubris aside: is this a step forward in lowering aluminum’s carbon footprint?

Read more

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There’s a new trend on the solar energy harnessing front in India.

Like in China and a few of the Southeast Asian nations, India is seeing a spurt in what are called “floating solar plants.”

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In late 2017, the country inaugurated its largest such floating plant, a 500 kw (kilowatt peak) by the Kerala State Electricity Board (KSEB). This one floats on 1.25 acres of water surface of a reservoir, and has 1,938 solar panels, which have been installed on 18 ferro cement floaters with hollow insides. The project uses high-efficiency solar panels and a floating substation has been set up on the reservoir itself to convert the output into 11 kV.

While the concept of floating solar plants in India is old — it was first mooted by Tata Power way back in 2011 – they caught the fancy of energy developers only now. The Tata plant is on the backwaters of a dam located close to Tata’s hydro-electricity plant.

A second pilot project was started on the banks of the Sabarmati river in the province of Gujarat in 2012. It was awarded to SunEdison at a cost of about U.S. $2.7 million. The pilot project was developed by Gujarat State Electricity Corporation (GSECL) with support from Sardar Sarovar Narmada Nigam Ltd. (SSNNL).

But it’s only in the last few months that the activity has picked up. The government has floated eight floating solar power projects of capacities ranging between 2 MW to 1,000 MW.

The floating plants tie in with the Indian Government’s overall, rather ambitious, renewable energy plan.

India and China are both leading in this race. In 2017, Asia accounted for nearly two-thirds of the worldwide increase in renewable energy generating capacity, according to a report published in April by the International Renewable Energy Agency. Renewable energy capacity has nearly doubled over the past five years, reaching 918GW in 2017.

According to media reports, renewable energy firm Avaada Power is now in talks with various provincial governments in India to set up floating solar projects.

The company wants to increase its installed solar capacity to 5,000 megawatts (MW) in the next four years, from 1,000 MW at present, and a major chunk will come from solar energy. The floating solar segment has a potential to generate 300 gigawatts (GW) of power across the country.

Many provincial governments are also expected to call for tenders in this space soon. Also, India’s National Hydroelectric Power Corporation (NHPC) has announced its plans to set up 600 MW of floating solar capacity at the 1,960-MW Koyna hydel power project in the State of Maharashtra.

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Experts are optimistic that with India’s large network of water bodies, this trend of floating solar plants will become the norm soon, though care has to be taken while setting them up so that they do not affect marine life.

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This morning in metals, steel mills in China’s second-biggest steelmaking province are shutting down, U.S. Steel reports its Q1 financials and Ecuadorian officials are engaging in talks to potentially bring a copper refinery to the country.

Chinese Mills Shut Down in Pollution-Curbing Measure

Several steel mills in the Chinese city of Xuzhou have been shut down in a pollution crackdown effort, Reuters reported.

According to the report, at least three mills have been shut down until they meet anti-pollution rules.

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The three mills have a combined annual steel capacity of 4.25 million tons, according to the report.

U.S. Steel Brings in $18M in Q1

U.S. Steel made $18 million in Q1, the Northwest Indiana Times reported, a far cry from the $180 million loss it posted in Q1 2017.

According to the report, U.S. Steel reported its stronger balance sheet was aided by investment at its mills in addition to the Section 232 measures from the Trump administration last month.

Potential Copper Refinery in Ecuador

According to a Bloomberg report, Ecuadorian officials are in talks with foreign companies with respect to building a copper refinery in the country.

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According to the report, Rebeca Illescas, the Ecuadorian mining minister, said Chinese and Japanese companies might be interested in the project, in addition to Glencore.