Articles in Category: Environment

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India and the United States may be at loggerheads over the recently announced trade tariffs on the import of metals, but that has not stopped the two nations from talking cooperation in other fields like oil and gas or renewable energy.

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On Tuesday, U.S. Secretary of Energy Rick Perry and the Indian Minister of Petroleum and Natural Gas Dharmendra Pradhan co-chaired the inaugural meeting of the U.S.-India Strategic Energy Partnership in New Delhi. This was a meeting following up on the announcement of the tie-up by U.S. President Donald Trump and Indian Prime Minister Narendra Modi in June 2017, in Washington, D.C.

The two countries will jointly look at ways to increase energy security; expand energy and innovation linkages across respective energy sectors; bolster strategic alignment; and facilitate increased industry and stakeholder engagement in the energy sector, the government said in a statement.

The Indian minister was quoted by the news agency Press Trust of India (PTI) as saying that the U.S. and India will pursue four primary pillars of cooperation: oil and gas; power and energy efficiency; renewable energy and sustainable growth; and coal.

A joint statement issued after the meeting reaffirmed the commitment by both sides to an early and full implementation of their civil nuclear partnership, including the planned supply of six Westinghouse reactors for the proposed nuclear power station in the Indian province of Andhra Pradesh. The cooperation in nuclear energy is being pursued through relevant bilateral mechanisms, the Times of India reported.

According to the PTI report, Perry indicated that recognizing the significance of civilian nuclear energy for meeting the growing global energy demands in a cleaner and more efficient manner, India and the U.S. were engaged in the implementation of the 2008 agreement for cooperation concerning peaceful uses of nuclear energy. Read more

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This morning in metals news, aluminum prices have risen to a seven-year-high following the London Metal Exchange’s ban on Rusal metal, the EU pushes back against the U.S.’s steel and aluminum tariffs, and renewable energy takes center stage among major U.S. companies.

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A 7-Year High for Aluminum Prices

Aluminum prices surged to their highest levels since 2011 in midst of the scramble that has resulted from U.S. sanctions on Russian producer Rusal, the Financial Times reported. On Monday, the price of aluminum rose more than 5% to push past $2,400 per ton, a seven-year high. This marks the biggest one-day gain for aluminum prices since 2011.

The London Metal Exchange has banned Rusal metal produced or sold after April 6, and the ban comes into effect tomorrow.

EU Challenges U.S. Tariffs

Although the European Union has a temporary exemption from the U.S.’s Section 232 tariffs on steel and aluminum, it is demanding compensation at the World Trade Organization, Reuters reported.

The EU is arguing that the U.S. tariffs were imposed only to protect U.S. industry, rather than for security measures. Read more

Back in 2016, after nearly 30 years of asking, the International Maritime Organization (IMO) — the U.N. body that polices the marine industry — finally succumbed to collective outrage and announced a change to take effect from 2020 leading to an effort to clean up ship pollution.

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IMO rules currently allow ships to burn fuel containing up to 4.5% sulfur — that is 4,500 times more than is allowed in car fuel in the European Union. This high-sulfur fuel — or bunker fuel as it’s known — is the dirtiest residual combustible material left over in refineries. When burned, it releases plumes of black smoke, familiar to anyone in a port area watching a large container or cruise liner leaving a haze over the port area.

Unlike most environmental air pollution issues that talk of carbon emissions, the marine industry is still facing issues addressed on land back in the 1950s and 1960s. Pollution from particulate matter (PM), nitrogen oxides (NOx), unburned hydrocarbons (UHC), sulfur oxides (SOx), carbon monoxide (CO), as well as carbon dioxide (CO2).

A ship is said to emit around 50 times as much sulfur as a modern lorry per metric ton of cargo, while of total global air emissions, shipping accounts for 18 to 30% of the nitrogen oxide and 9% of the sulfur oxides, in addition to carbon dioxide and carbon particulate matter. One possibly alarmist article in the Daily Mail suggested the largest ships can each emit as much as 5,000 tons of sulfur in a year – the same as 50 million typical cars, each emitting an average of 100 grams of sulfur a year. With an estimated 800 million cars driving around the planet, the article suggests that means 16 super-ships can emit as much sulfur as the world fleet of cars.

So, overdue then for the IMO to take action, what happens now? Will ship owners fit scrubbers to clean up emissions, or will they switch to low-sulfur gas oil distillates, a form of low sulfur diesel?

A Financial Times article quotes the SEB, a Nordic research house, saying only 2,000 of the 18,000 vessels that carried crude, dry cargo and other container ships would have scrubbers installed by 2020. Together they consume close to 4 million barrels a day of what is known in the industry as high-sulfur fuel oil. So, the rest will seek to be fuel-compliant, switching to low-sulfur derivatives.

You may think that would be a problem for refiners — not so.

Almost all European and North American refineries can produce low-sulfur fuel oil and not be left with unsaleable waste. But refiners are not going to miss the opportunity to raise margins from the switch to higher grades; indeed, the process has already begun.

In the European Union, the rule change will raise refining margins by an average of 60 cents, to $8.10 per barrel in 2020, JPMorgan is quoted as saying by Bloomberg. The fuel shift is already starting to appear in futures prices. In Europe, the premium that low-sulfur fuel oil attracts over its dirtier counterpart in January 2020 has grown by 66% since the start of the year, according to Bloomberg.

The SEB, quoted by the Financial Times, agrees, reporting the 2020 high-sulfur fuel oil to gas oil price spread traded at $220/metric ton on a forward basis in the early autumn of 2017. Then it blew out to as much as $350 at the start of 2018 and SEB expects a further widening to $450 later this year. With half the variable costs of a shipping line taken up by fuel, this heralds a rise in global freight rates as we near 2020 and shipping lines are required to pay for low-sulfur fuel oil.

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That is, of course, if a trade war doesn’t derail global growth and the ocean freight market first.

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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 headlines here on MetalMiner:

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India’s trying to do an OPEC in solar energy, screamed some headlines in Indian newspapers after the founding ceremony of the International Solar Alliance (ISA) was held here recently, witnessed by Indian Prime Minister Narendra Modi and French President Emmanuel Macron.

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It was during former French President Francois Hollande’s visit to India in January 2016 that Hollande and Modi laid the foundation stone for the ISA headquarters in Gurugram district in northern India, adjacent to the National Institute of Solar Energy (NISE).

For the uninitiated, the ISA is a treaty-based alliance of over 120 countries, most of them being “sunshine countries,” which lie either completely or partly between the Tropic of Cancer and the Tropic of Capricorn. Its primary objective is to work for efficient exploitation of solar energy to reduce dependence on fossil fuels.

In addition to land, India has also contributed U.S. $27 million to build the ISA campus and has committed to meeting the operational expenditure of this body for the first five years.

Now comes the news that the French government will be committing €700 million in investment to this alliance.

Read more

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This morning in metals news, the extension of pollution-curbing efforts in China is offering a boost to iron ore and steel futures, an Australian steel company is nervous about the possibility of Section 232-related steel tariffs from the U.S., and Mexico fined a steel company for stock manipulation.

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Future is Bright for Iron Ore, Steel Futures

According to a report by the Financial Times, iron ore and steel prices rose to a year-to-date high after the announcement that winter capacity cuts in China’s top steelmaking region would continue.

Per the report, the local government of Tangshan, the biggest steelmaking city in China, announced Friday that cuts set to expire at the end of March will continue.

Australia’s BlueScope Awaits Section 232 Verdict as Turnbull Angles for Exemption

Despite assurances given last year by the U.S. that Australia would be exempted from Section 232-related tariffs, Prime Minister Malcolm Turnbull and some Australian companies might be getting concerned that those assurances won’t come to fruition.

Australian steelmaker BlueScope, for example, is one firm looking to secure assurances that it would be spared from possible hard-hitting tariffs, according to a report in The Sydney Morning Herald.

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Mexico Fined Steel Firm for Stock Manipulation

Mexican company Industrias CH was fined $159,764 in late November for stock manipulation, according to a Reuters report citing government data.

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This morning in metals, zinc and nickel dropped to their lowest prices in over a week, another country hints at retaliation vis-a-vis potential U.S. Section 232 tariffs and Chinese steel mills are looking to increase output before future cuts take hold.

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Nickel, Zinc Post Drops

Zinc and nickel prices posted their lowest prices in over a week as the Shanghai Futures Exchange opened back up for business on the heels of the Chinese New Year break, according to a Reuters report.

LME benchmark nickel fell 1.9% in official open outcry trading to $13,580 a ton, according to the report, while LME zinc fell 1.7% to $3,482 a ton.

Turkey Warns of Retaliation to 232 Tariffs

Turkey is the latest country to allude to retaliatory plans should the U.S. enact steel tariffs, according to Turkish news source Ahval.

According to the report, Economy Minister Nihat Zeybekçi that if there are complaints from Turkish producers regarding future 232-related steel tariffs, the country will look into retaliatory measures.

Chinese Steel Mills Look to Get Output Up Before Next Round of Cuts

According to a Reuters report, Chinese steel mills are looking forward to an increase in their output once government-mandated winter cuts end in March.

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The cuts, instituted from Beijing, aimed to bring down pollution in the country. According to the report, the country shut down half of all steel production in 28 cities this winter.

New research has shown that India achieved an operational solar power capacity of 20 gigawatts (GW) by the end of 2017.

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Mercom India Research has claimed a record 9.5 GW of solar power capacity was likely added in 2017, taking the total solar power capacity operational in India to over 20 GWs. While there’s no official word from the Indian government yet, media reports said the figure did not match those released by the Ministry of New & Renewable Energy, but Mercom attributed the figures to its India Solar Project tracker.

If the new research is spot on, it shows, at least on paper, that the Indian government was well on its path of meeting revised capacity targets of 100 GW of installed solar power capacity by March 2022.

India has made a major push in the renewable energy sector, but ,according to some experts, it faces an uphill task vis-à-vis funding, since the plan will require U.S. $125 billion. The plan seeks to achieve an ambitious 175 GW renewable energy target by 2022.

For the solar projects alone, India will set up a U.S. $350 million fund, according to India’s Power Minister RK Singh.

The country, which receives twice as much sunshine as European nations, wants to make solar central to its renewable expansion. It expects renewable energy to make up 40% of installed power capacity by 2030, compared with 18.2% at the end of 2017.

The Power Minister told a gathering at an event organized recently by the International Solar Alliance in Abu Dhabi that India would achieve its target of 175 GW of installed renewable energy capacity well before 2020. The installed renewable power capacity was currently about 60 GW, and India planned to complete the bidding process by the end of 2019-20 to add a further 115 GW of installed renewable energy capacity by 2022, he added.

But a major hurdle that stands in the way of solar power expansion is the policy around the manufacturing of solar panels and their import.

While the Modi government has often emphasized the need to do away with protectionism in order to push solar power, one of the government’s ministries has proposed a 70% import duty on imported solar panels. While this was subsequently stayed by an order of a high court, sector experts have decried this kind of protectionism.

This lot points to the U.S., for example, saying that the country levies a safeguard tariff on imported solar modules and cells, starting at 30% in the first year, 25% in the second, 20% in the third, ending at 15% in the fourth.  They want the Indian government, too, to follow suit.

The government, on its part, does not seem averse to this, it would seem.

A news report said it was “weighing the option” of lowering the proposed 70% safeguard duty on imported solar modules and panels from China and Malaysia recommended by the Directorate-General of Safeguards.

The Standing Board on Safeguards, headed by the Commerce Secretary, which is currently examining the proposal, is yet to make its recommendation to the Finance Ministry as it is deliberating upon the appropriateness of the high duty proposed by DG Safeguards, a government official told the BusinessLine newspaper.

The government has to walk a tightrope, on this issue. While domestic manufacturers of solar panels would definitely benefit from a high safeguard duty. On the other hand, it would increase the cost of production for local power producers.

Overall, on the renewable energy front, India expects foreign capital to make up for the bulk of its investments to meet its target. But the lack of a concrete policy coupled with the fact that at least three ministries involved never seem to be on the same page vis-à-vis renewable energy, has ensured that only local banks and financial institutions have invested in these type of projects so far.

Just a couple of days ago, though, there was some cheer on the foreign investment front.

One of China’s biggest solar panel makers, LONGi Solar, announced it would invest nearly U.S. $309 million in India in the wake of U.S. protectionism and India’s anti-dumping measures threat. The company’s total investment will include $240 million in construction investment and $68 million in working capital, to double the capacity in Andhra Pradesh from 500 MW to 1 GW.

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This could be the start of a new wave of investments, some experts hope. In 2017, India imported 24.1% solar products from China. China produced a total of 76 GW of solar modules and 68 GW of solar photovoltaic cells, up over 33% from the previous year. LONGi’s investment is expected to lower costs.

The Steel Market Development Institute (SMDI) presented results of a new study on steel’s lightweighting capabilities during the Chicago Auto Show on Thursday, Feb. 8, at McCormick Place in Chicago. Photo by Fouad Egbaria

Use of aluminum in automotive bodies has gained steam in recent years — and the metal’s rivalry with steel has heated up in the process.

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For example, Ford Motor Co. shook up the marketplace when it announced its all-aluminum body F-150 2015 model. Aluminum, despite being more costly than steel, is lauded for its lighter weight and, thus, ability to provide better fuel economy.

Not so fast on that front, according to a study presented by the Steel Market Development Institute (SMDI) on Thursday, Feb. 8, during the annual Chicago Auto Show.

SMDI, a business arm of the American Iron and Steel Institute (AISI), presented results of a study that concludes steel is a superior option to aluminum when it comes to lightweighting and curbing environmental impacts.

Tom Gibson, president and CEO of the American Iron and Steel Institute. Photo by Fouad Egbaria

Tom Gibson, president and CEO of AISI (and president of SMDI), touted the more than 60 steel-intensive vehicles debuted in the last year at auto shows in Detroit, Chicago, New York and Los Angeles.

“Steel continues to play an integral role in new vehicle debuts,” Gibson said. “In the last month, we’ve seen the 2019 Chevrolet Silverado, Ford Ranger, all-new Ram 1500, Toyota Avalon, Honda Accord and Kia Forte, all touting the benefits of advanced, high-strength steels.

“With the mix of materials available to designers and engineers today, no other material provides the complete package steel provides with performance, value and innovation, as well as being the most environmentally sound material for automakers and consumers.”

Jody Hall, vice president, automotive market, of SMDI, presented the Life Cycle Assessment (LCA) study findings, comparing steel with aluminum. The LCA study tested five different vehicles and went through a 10-month review, Hall said, and was validated by a “panel of experts” from Harvard University, Argonne National Laboratory, the Massachusetts Institute of Technology and consultancy firm thinkstep.

“The bottom line is, the result of this expert-validated study shows for the vehicles studied, lightweighting with advanced, high-strength steel produces lower greenhouse gas emissions than lightweighting with aluminum,” Hall said. “The difference comes, primarily, from the material production phase emissions of advanced high-strength steel and aluminum. These are emissions not captured when focusing only on tailpipe emissions under current EPA regulations.”

Hall further emphasized the case for steel, saying that if one lightweighted the five vehicles in the study with aluminum instead of steel, “the life cycle greenhouse gas emissions increase is estimated at 12 million tons of CO2 emissions. That’s the equivalent of the amount of electricity used to power 1.6 million homes.”

More details on the study, titled “Life Cycle Greenhouse Gas and Energy Study of Automotive Lightweighting,” and its methodology can be found at www.steelsustainability.org.

AK Steel CEO Roger Newport. Photo by Fouad Egbaria

During the presentation, AK Steel CEO Roger Newport also delivered some comments on the state of the steel industry vis-a-vis the automotive world. Newport said steel has evolved to meet changing consumer demands in recent decades, and noted there’s been a “remarkable change” in the importance of materials when it comes to automotive construction.

“Materials are front and center,” he said.

It remains to be seen how much market share aluminum can capture. In the meantime, the steel industry will no doubt continue to tout its virtues compared with aluminum.

“The SMDI along with AK Steel are very excited about the potential of new, innovative steel products,” Newport said. “We continue our efforts to support the changes in the automotive world.”

Odds and Ends from Day 1 at the Auto Show

A few other miscellaneous notes from the first day of the Chicago Auto Show on Thursday, Feb. 8:

Subaru Presents 50th Anniversary Lineup

Subaru presented its 50th anniversary lineup, composed of nine vehicles, during

Subaru’s 50th anniversary lineup of vehicles. Photo by Fouad Egbaria

an unveiling ceremony. Tom Doll, president and chief operating officer of Subaru of America, Inc., touted the automaker’s growth since 2008, a period during which its market share rose from 1.4% to 3.8%, he said, and has seen it become the seventh-best selling brand in the industry.

“We’re not that small, fledgling little car company anymore,” Doll said.

Production quantities will be limited to 1,050 for Crosstrek, Forester, Impreza, Legacy and Outback, while WRX, STI and BRZ will have a combined total of 1,050, according to a Subaru release.

Kia Stinger Wins MotorWeek’s Best of the Year Award

Thursday afternoon at the Grand Concourse media stage, MotorWeek presented its Best of the Year award, which this year went to the Kia Stinger.

MotorWeek’s John Davis (left) presents Michael Sprague, chief operating officer of Kia Motors America, with the publication’s Best of the Year award for the Kia Stinger. Photo by Fouad Egbaria

MotorWeek host and creator John Davis said they try to pick a vehicle each year that captures “that moment in the automotive landscape,” in addition to, simply, being fun to drive.

“Our Best of the Year for 2018 really is the perfect definition of our award,” Davis said. “It’s a lot of fun to drive but moreover it is the result of a brand setting and achieving a new bar of prowess that is on par with the world’s best.”

The vehicle has a 3.3-liter twin turbo V6, an 8-speed automatic transmission and available performance-oriented all-wheel-drive system.

Michael Sprague, chief operating officer of Kia Motors America, accepted the award from Davis.

“It was introduced back in 2011 at the Frankfort Auto Show as a concept vehicle,” Sprague said. “Many people here in the audience told us ‘you have to build this car.'”

Klairmont Kollections Brings Retro Vibe

You won’t see too many cars like these on the streets today, but Klairmont Kollections took drivers down memory lane during its first ride as an exhibitor at the Chicago Auto Show.

Photo by Fouad Egbaria

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The collection of unique vehicles, some dating back to the early 1900s, is based in Chicago and owned by World War II veteran and Highland Park, Illinois resident Larry Klairmont.

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If you thought China’s environmental crackdown on polluting industries during this winter heating period was a one-off effort, think again.

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Liu Youbin, a spokesman at the Ministry of Environmental Protection, is quoted by Reuters as saying that Beijing intends to extend its policy over the 2018-2022 period.

“The new three-year plan will continue to make Beijing-Tianjin-Hebei its key focus but it will also focus on other major regions like the Yangtze river delta, the northeast and Chengdu-Chongqing,” he is quoted as saying.

China’s previous effort, covering 2013-2017, was a largely unmitigated disaster.

Concentrations of hazardous particles known as PM2.5 were supposed to be reduced by 25%, Reuters reports, but with near-record PM2.5 readings in January and February last year, it was clear more drastic action was required.

Northern China only managed to meet 2013-2017 air quality targets by the end of 2017, largely thanks to a campaign that forced polluting factories in 28 cities to reduce output over the winter, Reuters reports. The resulting clampdown on the worst offenders among steel mills, coke plants and aluminum smelters has had a profound impact on supply, demand and prices in those markets. So, news that Beijing intends to roll out the program to include the Yangtze and Pearl River deltas further south, in addition to regions in the northeast, means the story has much further to go.

Concentrations of PM2.5 have fallen by up to 70% to 36 micrograms per cubic meter, almost meeting the state standard of 35 micrograms. Readings in the Yangtze and Pearl River regions, which include Shanghai and Guangzhou, actually increased. As a result, readings for the whole of China only dropped by 20% for the month of January to an average of 65 micrograms, underlying the scale of the challenge ahead.

Still, where there is a centralized will there is a centralized way. You can be sure Beijing will prosecute this campaign with considerable vigor in 2018.

When the current heating period ends in late March, controls will be relaxed but the indications are it will not be business as usual. Although the low-hanging fruit of coal-fired domestic and small commercial premises will be the primary target, greater attention will also be given to larger enterprises and, indeed, whole industries.

China continues to need steel, aluminum, zinc and a range of other energy-intensive metals, so the most likely outcome is tighter regulations and investment in more advanced, and, hence, cleaner technology.

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That is admirable, of course, but it will also encourage a more rapid move up the value chain for producers looking to get payback on their new kit.