Articles in Category: Ferrous Metals

Before we head into the weekend, let’s take a look back at the week that was and the metals storylines here on MetalMiner, including aluminum prices, rising power costs and much more:

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Week of Oct. 11-15 (aluminum prices, power costs and more)

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• Anglo American is exploring the possibility of a “hydrogen valley” in a PGM-rich area of South Africa.
• Maria Rosa Gobitz reported on aluminum price trends and other industry developments.
• Steel prices have started to show signs of slowing down, even as raw materials prices rise.
• ArcelorMittal plans to add a €50 surcharge on long products in Europe.
• Both job openings and hires declined in August, the Bureau of Labor Statistics reported.
• Stuart Burns took a look at iron ore prices with an eye to turmoil in the Chinese real estate sector.
• Reporting from LME Week 2021, Christopher Rivituso covered comments by LME CEO Matthew Chamberlain on the future of low-carbon aluminum.
• The Stainless MMI declined this month.
• General Motors and GE Renewable Energy have signed a memorandum of understanding to explore the development of a supply chain for rare earths and other materials needed for electric vehicles and renewable energy.
• The Consumer Price Index ticked up by 0.4% in September.
• Sohrab Darabshaw on rising raw materials prices’ impact on steel prices in India.
• The gold price retraced last month as the U.S. dollar picked up steam.
• Natural gas prices are likely to remain elevated through the upcoming winter, the Energy Information Administration forecast.
• The International Energy Agency released a 386-page World Energy Outlook.
• Rising power costs are squeezing European metals producers.

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Steel prices in India have nearly doubled over the last year, reflective of rising steel prices across the globe.

But for India, several factors such as a steep rise in the prices of raw material like iron ore — and of late, coking coal — have contributed to the steep hike.

Due to China’s decision to cut steel production and exports, India is also experiencing a price increase. High domestic demand had led China to remove rebates and impose export taxes on certain steel products this year to discourage exports. Steel production is also set to be capped in order to reduce carbon dioxide emissions.

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Indian steel prices on the rise

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India’s steel industry has been impacted by the price hike in various ways.

For some major steel manufacturers, it has led to large profits. For many small and medium enterprises that manufacture steel and engineered products, it has led to losses.

Protests have been lodged with the Indian government due to the shortage of raw materials. After China, India is the world’s second-largest steel-producing country. The price escalation in India started in the second half of 2020-21 and has continued nearly unabated since then.

In June, for example, the wholesale price of hot rolled coils (HRC) shot up by approximately US $40 (Rs 3,000) to be approximately $1,533 (Rs 69,000) per ton. Cold rolled coils shot up by about $66 (Rs 5,000) to sell at approximately $1,146 (Rs 86,000) per ton. Prices of both HRC and CRC were nearly half in the same period in 2020. These forms of steel are used in the automobile, construction and transport sectors.

Domino effect

Because it is steel, the price hike has had a cascading effect on consumer goods, construction and other activities, too.

Steel plants in the country have hiked steel prices by around $80 (Rs 6,000) per ton in just the last eight days.

CNBC TV18 reported JP Morgan India was of the view that Indian steel prices were still about 15% discounted to imported steel prices. When the busy season post festivals, starts in India, post-festive season, demand could go up, leading to some increase in local steel prices.

The sudden rise in steel demand once the COVID lockdown had ended caught Indian steel companies off guard. The uptick in steel consumption along with a renewed focus on infrastructure and government initiatives (such as “Make in India”) have led to an increase in steel demand.

In 2017, as part of the national steel policy, the Indian government announced India would try to reach 300 million tons per year year of crude steel production capacity by 2030.

Coal crisis

Furthermore, a local coal crisis, which some experts predict could last for quarters, has hit the steel sector.

Like China, India is also staring at a power crisis due to coal shortage. Over 70% of India’s power still comes from coal-powered plants.

As of Oct. 6, 80% of India’s 135 coal-powered plants had less than eight days’ worth of supplies left, according to BloombergQuint.

There are several reasons for the coal shortage. Among them, India has reduced its investment in the fossil fuel as it gives priority to renewable energy to meet its climate change targets.

BloombergQuint cited JSW Steel Ltd. officials, who have gone on record to state that the coal shortage is likely to lead to steel price hikes for the next few quarters.

Volatility is the name of the game. Do you have a steel buying strategy that can handle the ups and downs?

This morning in metals news: The Consumer Price Index (CPI) rose by 0.4% in September; meanwhile, U.S. steel capacity utilization fell to 84.2%; and, lastly, the Energy Information Administration forecasts U.S. households will spend more on energy this winter.

Each month, MetalMiner hosts a webinar on a specific metals topic. Explore the upcoming webinars and sign up for each on the MetalMiner Events page. Sign up for the next webinar scheduled for Thursday, Oct. 27. 

Consumer Price Index gains again

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The Consumer Price Index for All Urban Consumers rose by 0.4% in September, the Bureau of Labor Statistics reported.

The jump follows an increase of 0.3% in August.

Meanwhile, the index increased by 5.4% over the last 12 months (up from 5.3% for the 12-month period ending in August).

U.S. steel capacity utilization falls to 84.2%

U.S. steel capacity utilization fell to 84.2% for the week ending Oct. 9, down from 84.8% the previous week, the American Iron and Steel Institute reported.

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The Stainless Monthly Metals Index (MMI) fell by 1.9% for this month’s reading.

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Base price and surcharge increases

North American Stainless (NAS) increased 304, 304L and 316L effective Oct. 1 by reducing the discount by two points. For 304, this is an increase of approximately $0.0350/lb.

NAS increased 430 and other 200 and 300 series by reducing the discount by three points. Non-430 ferritics will increase by $0.04/lb, which makes for a total increase in 2021 of $0.31/lb.

Furthermore, alloy surcharges are increasing in October. NAS’ October alloy surcharge for 304 is $1.0641/lb, a decrease of $0.0038/lb compared to September.

U.S. imports

U.S. stainless steel imports decreased by 6.7% from a value of $343.6 million to $320.5 million, according to US Census Bureau data from July to August.

While most forms of stainless steel imports declined, wire rods imports nearly doubled. Imports jumped by 57.6% to a value of $4.4 million during the same period.

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Chinese iron ore prices have certainly been on a roller coaster ride this year, hitting a record high in value terms after a period in which the price had risen and fallen sharply.

Futures on the Dalian exchange for delivery in January 2022 are now trading at RMB 777 per ton. That compares with about RMB 1,221 in May. However, prices are on the rise again, with futures climbing 50% in just the last three weeks.

Each month, MetalMiner hosts a webinar on a specific metals topic. Explore the upcoming webinars and sign up for each on the MetalMiner Events page. The next webinar is scheduled for 11:30 a.m. CDT, Thursday, Oct. 28. 

Complicated iron ore dynamics

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The market is facing all kinds of contrarian dynamics.

On the one hand, steel production is rising in many provinces following power and environmental shutdowns over the summer.

On the other hand, debt-laden property group Evergrande is just the (admittedly very large) tip of the iceberg that is the Chinese property market. That is a market Beijing is clearly intending to curb and bend to its will.

While arguably overdue, the fact remains, construction absorbs some 25% of Chinese steel production. A slowdown in the sector will have a profound impact on Chinese domestic steel demand.

Price uncertainty

Huge uncertainty surrounds where prices are likely to go.

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This morning in metals news: job openings and new hires fell in August, the Census Bureau reported; steel producers in the U.K. are warning of an energy-related crisis; and, lastly, Liberty Steel received a £50 million boost that it says will preserve about 660 jobs.

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Job opening, hires slump in August

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Both job openings and hires declined in August, the Census Bureau reported today.

Job openings fell to 10.4 million as of the last business day of August. Meanwhile, hires decreased to 6.3 million.

U.K. steel sector sounds alarm over energy prices

As MetalMiner’s Stuart Burns covered in a series of posts last week, energy prices are a mounting concern all over the world.

The U.K. steel sector is warning that rising energy costs could become a crisis for the industry. Surging costs for natural gas and other commodities threaten the continuity of their operations, they argue.

“These extortionate prices are forcing some UK steelmakers to suspend their operations during periods when the cost of energy is quoted in the thousands per megawatt hour; last year, prices were roughly £50 per megawatt hour,” UK Steel Director General Gareth Stace said last month. “Even with the global steel market as buoyant as it is, these eye-watering prices are making it impossible to profitably make steel at certain times of the day and night.”

Reuters reported UK Steel is asking the British government for help, saying that without aid the consequences for the industry will be “dire.”

Liberty Steel says £50M will preserve 660 jobs

Lastly, sticking with the U.K., embattled steelmaker Liberty Steel says an infusion of £50 million will help preserve 660 jobs at Rotherham, the BBC reported.

The £50 million injection comes as part of parent group GFG Alliance’s restructuring following the collapse of its primary backer, Greensill Capital.

“GFG will inject £50 million of new funding into LIBERTY Steel UK (LSUK) to enable the restart of LSUK’s core Rotherham electric arc furnace,” GFG said in a release. “The provision of funding will set the platform to refinance LSUK operations in full, create a leading long-term GREENSTEEL hub, and support the RTC’s work of creating a profitable, restructured and focused business.”

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ArcelorMittal plans to introduce a €50 ($58) surcharge on all of its long products in Europe in order to account for sharply rising energy prices, an official with the Luxembourg-headquartered group said.

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ArcelorMittal introduces new surcharge

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“The price rise is temporary and primarily in response to the record rise we have seen in energy prices,” a spokesperson for the group said in a statement to MetalMiner.

The source did not say when exactly the surcharge would come into effect, except that it would “pretty soon.”

He also did not indicate how long the surcharge would last, saying that it would depend on energy prices.

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The Raw Steels Monthly Metals Index (MMI) dropped by 2.4%, as most forms of steel around the world declined, despite coking coal prices being at all-time highs.

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Global steel production

According to the World Steel Association, global steel production declined for the fourth consecutive month in August.

The 64 reporting countries to World Steel produced a total of 156.8 million tons (5.06 million tons per day) for August, compared to 171.3 million tons (5.71 million tons per day) in April, which was the highest monthly production of the year on a tons-per-day basis.

China continues as the world’s top producer by eight times more than the second-largest producer, India. Chinese production during August reached 83.2 million tons (2.68 million tons per day), over 50% of global production.

China, however, posted a fourth consecutive month of production declines on a tons-per-day basis. Since April, China’s daily steel production fell by 17.8%.

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This morning in metals news: miner Anglo American announced the results of a feasibility exploring the potential for hydrogen in the South African economy; General Motors last week announced plans to double its revenue; and, lastly, steel prices have showed signs of flatlining of late.

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Anglo American explores role of hydrogen in South Africa

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In collaboration with several parties, miner Anglo American recently conducted a feasibility study “to explore the potential for a hydrogen valley anchored in the platinum group metals-rich Bushveld geological area, along the industrial and commercial corridor to Johannesburg and to the south coast at Durban.”

“The opportunity to create new engines of economic activity through hydrogen has been validated through this feasibility study with our partners,” said Natascha Viljoen, CEO of Anglo American’s PGMs business. “As a leading producer of platinum group metals (PGMs), we have for some years been working towards establishing the right ecosystem to successfully develop, scale-up and deploy hydrogen-fuelled solutions.”

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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:

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Week of Oct. 4-8

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• Stuart Burns on the energy crisis in China.
• New orders for manufactured goods rose in August, the Census Bureau reported.
• China’s rare earths production is set to rise this year.
• Building on the energy theme, Burns zeroed in on India, particularly its coal crisis.
• Cleveland-Cliffs and the union representing workers at Rockport Works have reached a three-year labor deal.
• According to a recent report, Southeast Asia needs to invest approximately $2 trillion in renewable energy, electric vehicles and waste management.
• U.S. construction spending finished virtually unchanged from the previous month in August.
• Steel capacity utilization fell to 84.8% last week, the American Iron and Steel Institute (AISI) reported.
• The ongoing semiconductor shortage and resulting low inventories dented automotive sales in the third quarter.
• Nucor announced it is launching a new line of net-zero carbon steel products.
• Europe is also facing energy-related challenges.
• Thyssenkrupp Steel is restarting a blast furnace at its Duisburg plant.
• Copper demand doubts are weighing on prices for the red metal.
• Nonfarm payroll employment in the U.S. rose by 194,000 jobs in September.

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