Articles in Category: Ferrous Metals

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This morning in metals news: US steel sector capacity utilization fell to 77.6% last week; US import prices rose in March; and the WTI crude price continues to hang steady.

The MetalMiner Best Practice Library offers a wealth of knowledge and tips to help buyers stay on top of metals markets and buying strategies.

US steel sector capacity utilization reaches 77.6%

US steel sector capacity utilization dipped to 77.6% for the week ending April 10, the American Iron and Steel Institute reported.

Capacity utilization fell from 77.9% the previous week.

Production during the week ending April 10 totaled 1.76 million net tons, or up 42% year over year. The total fell by 0.3% from the previous week.

US import prices rise

US import prices rose by 1.2% in March, the Bureau of Labor Statistics reported.

The increase follows jumps of 1.3% in February and 1.4% in January.

Import prices from December to March rose by 4.1%, the largest three-month rise in the index since rising 5.8% in May 2011.

Oil price remains steady

As MetalMiner’s Stuart Burns explained earlier this month, oil prices have settled into a relatively narrow band of late.

The WTI crude oil price closed Tuesday at $60.18 per barrel, according to the Energy Information Administration. The price marked an increase of $0.85 from the previous week.

Meanwhile, the price is up $37.77 per barrel from a year ago.

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The Stainless Monthly Metals Index (MMI) dropped by 10.4% for this month’s reading, as the ATI strike continues into its third week.

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ATI strike continues

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The United Steelworkers union’s strike at nine Allegheny Technologies Inc. (ATI) facilities continues into its third week this week.

As we noted late last month, the union announced the strike at nine facilities, citing “unfair labor practices.”

“We are willing to meet with management all day, every day, but ATI needs to engage with us to resolve the outstanding issues,” USW International Vice President David McCall said in a prepared statement March 29. “We will continue to bargain in good faith, and we strongly urge ATI to do start doing the same.

“Through generations of hard work and dedication, Steelworkers at ATI have earned and deserve the security of a union contract. We cannot allow the company to use the global pandemic as an excuse to reverse decades of collective bargaining progress.”

Meanwhile, ATI expressed disappointment in the move.

“Last night, ATI further improved our proposal in hopes of averting a work stoppage,” ATI spokesperson Natalie Gillespie wrote in an emailed statement. “With such a generous offer on the table — including 9% wage increases and premium-free health care — we are disappointed for this action, especially at such an economically challenging time for ATI.”

The Tribune-Review reported ATI has called for the union to allow workers to vote on the company’s contract offer.

Late last year, ATI announced plans to exit the standard stainless steel sheet market by mid-2021. As such, stainless buyers already had to develop alternative plans if they were ATI customers. The current ATI strike presents another point of disruption for buyers.

Katie Benchina Olsen, MetalMiner senior stainless analyst, indicated earlier this month that lost production from the strike would be difficult to fill.

“Neither NAS nor Outokumpu have the capacity to undertake filling in for the ATI strike,” she said. “My opinion is that we may see some manufacturers run out of metal or have to substitute with another stainless alloy or maybe even another metal.”

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Whether we agree with the rationale or not, the carbon footprint of everyday materials like steel and aluminum is becoming an increasingly important component of consumers’ purchasing decisions.

In the US, some states — like California — have mandated purchasing departments for state projects to report the carbon footprint or CO2 content of the products they buy. The move aims to measure and, if possible reduce, carbon content.

But in the US such moves are still patchy and largely state-led. Meanwhile, meaningful direction from the new Biden administration on the issue is still largely in development.

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Europe aims to reduce emissions

In Europe, the EU is coordinating moves to reduce greenhouse gas emission by the steel sector. The EU is providing funding for research and support in the form of infrastructure, such as hydrogen gas supply networks.

In a recent post, our ex-colleague Jeff Yoders wrote a fine piece on efforts by 2 to commercialize reductions in the carbon content of an initially small proportion of its output — just 2% or 600,000 tons per annum — by issuing certificates, which certify the reduction in carbon footprint of their steel that can be used by customers who need to report the carbon content of their supply chain or those that face carbon taxes.

The vouchers allow buyers to show an offset of Scope 3 emissions, which can come from anything in a company’s value chain.

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This morning in metals news: energy-related emissions from the US industrial sector fell by 8% in 2020; meanwhile, Chinese steel production remains strong despite production curbs in Tangshan; and, lastly, GlobalData forecast Chile’s copper production will rise by 3.7% this year.

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US industrial sector energy-related CO2 emissions fell 8% in 2020

Energy-related CO2 emissions in the US fell by 11% in 2020, the Energy Information Administration reported.

Furthermore, energy-related CO2 emissions fell for every end-use sector for the first time since 2012.

In addition, energy-related CO2 emissions from the industrial sector fell by 8%.

Chinese steel production remains strong despite curbs

Despite production cutbacks in China’s steelmaking hub of Tangshan, steel production in the country continues at a robust rate, the South China Morning Post reported.

According to the report, China’s blast furnace capacity utilization rate is at 87% after a slight increase.

GlobalData: Chile copper output to rise 3.7% in 2021

After an up-and-down 2020, Chile’s copper output is likely to pick back up this year.

GlobalData forecast Chile, the world’s top copper producer, will see output rise by 3.7% this year.

“Chile’s copper production is estimated to have declined by 0.7% in 2020,” said Vinneth Bajaj, associate project manager at GlobalData, in a release. “While the country’s mining sector avoided a full-scale lockdown as seen in neighboring Peru, operational restrictions and rising cases impacted the progress of various developments. For example, Codelco had to halt on-site construction activities at Chuquicamata and El Teniente, with rising cases leading to mounting pressure from workers and the temporary shutdown of Chuquicamata at the end of June 2020.”

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Before we head into the weekend, let’s take a look back at the week that was and the metals storylines here on MetalMiner:

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Week in Review, April 5-9 (steel capacity utilization, European steel’s challenges and more)

• MetalMiner contributor Christopher Rivituso took a look at a recent McKinsey report on the challenges ahead for the European steel sector.
• US energy consumption fell by 7% in 2020.
• Automakers posted strong Q1 sales results in the US market.
• US construction spending fell in February, as did pending home sales.
• US steel capacity utilization reached 77.9% last week.
• China’s relaxation of its copper scrap import regulations is shifting the copper market.
• Stuart Burns on oil prices on the heels of the latest supply-side news from OPEC.
• China is ahead of the game when it comes to securing raw materials for the next industrial revolution.
• The US Court of International Trade ruled in favor of a plaintiff contesting former President Donald Trump’s proclamation that expanded the Section 232 metals tariffs to steel and aluminum derivatives.
• In the Greenland elections, a left-wing party’s victory could be a roadblock to development of a rare earths mine project.
• Three years after the forced closure of its Tamil Nadu copper smelter, Vedanta aims to start up a new site in India.
• Ford China reported its Q1 sales jumped by 73.3%.
• Burns checked in on the state of rising aluminum physical delivery premiums.
• The gold price trended sideways last month but has shown some life through the first week of April.
• The Aluminum Association called for reform of the Section 232 tariff exclusion process.

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This morning in metals news: the US steel capacity utilization rate ticked up to 77.9% last week; Novelis announced new sustainability targets; and the United States International Trade Commission (USITC) issued a ruling on seamless carbon and alloy steel standard, line and pressure pipe.

Cut-to-length adders. Width and gauge adders. Coatings. Feel confident in knowing what you should be paying for metal with MetalMiner should-cost models.

US steel capacity utilization hits 77.9%

US steel capacity utilization rose to 77.9% for the week ending April 3, the American Iron and Steel Institute (AISI) reported. Steel capacity utilization for the previous week reached 77.6%.

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Production during the week totaled 1.77 million net tons. The output marked an increase of 15.7% year over year. Furthermore, production increased by 0.3% from the previous week.

Novelis announces new sustainability targets

Aluminum sheet manufacturer Novelis announced new sustainability targets and a pledge to reach net-zero carbon emissions by 2050.

Furthermore, Novelis said it aims to reduce its carbon emissions by 30% by 2026.

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The Construction Monthly Metals Index (MMI) ticked up 1.0% for this month’s reading, as US construction spending dipped in February.

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US construction spending

Construction spending in February reached a seasonally adjusted annual rate of $1,516.9 billion, or 0.8% below the revised January estimate of $1,529.0 billion, the Census Bureau reported.

Meanwhile, the February rate marked an increase of 5.3% year over year.

Furthermore, spending the first two months of 2021 totaled $213.2 billion, or up 4.9% year over year.

In the private sector, spending reached a rate of $1,165.7 billion, or down 0.5% from January. Under private construction, residential construction fell 0.2% to $717.9 billion. Nonresidential construction spending fell 1.0% to $447.8 billion.

Meanwhile, public construction spending reached a rate of $351.2 billion, or down 1.7% from January. Educational construction fell 3.2% to $86.9 billion. Highway construction reached $102.3 billion, or down 0.6% from January.

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The Automotive Monthly Metals Index (MMI) rose by 2.5% for this month’s reading, as Q1 2021 auto sales surged.

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US automotive sales

The first quarter is in the rear-view mirror.

General Motors reported Q1 retail sales jumped by 19%, as the automaker tallied 642,250 vehicle deliveries.

“Over the last year, our dealers, supply chain and manufacturing teams have gone above and beyond to satisfy customers as demand for GM products rose sharply,” said Steve Carlisle, GM executive vice president and president for North America. “The great teamwork continues. Sales are off to a strong start in 2021, we are operating our truck and full-size SUV plants at full capacity and we plan to recover lost car and crossover production in the second half of the year where possible.”

Meanwhile, Ford Motor Co. reported Q1 retail sales surged by 23.1% year over year. Total sales rose by 1%. Retail truck and SUV sales rose by 27.6% and 34.4%, respectively.

Ford also touted an uptick in electric vehicle sales, which jumped by 74.1% to 24,590 vehicles sold.

FCA US reported US sales jumped by 25%.

“In spite of what started out as a strong start last year, before COVID shocked us all, this quarter was a very strong rebound for retail sales year over year,” U.S. Head of Sales Jeff Kommor said. “The consumer demand for our brands and our products was extremely strong throughout the quarter.”

Similarly, Nissan reported its Q1 2021 auto sales surged by 10.8% year over year.

Meanwhile, March 2021 auto sales for Honda surged by 16.2% year over year. Honda saw its light truck sales jump by 132% in the month.

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The European steel industry faces three major challenges, following the impacts of the COVID-19 global and the 2008-09 financial crisis, management consultancy McKinsey & Company stated.

“European steel producers should consider making a series of short-term operational and medium- to long- term strategic moves to ensure economic and environmental sustainability going forward,”
McKinsey said in its March 15 report, “The future of the European steel industry.”

“These strategic moves could encompass restructuring steps aimed at capacity reduction, steps toward strengthening the position of steel companies by diversifying their capabilities and sustainability moves toward low- and no-carbon steel,” McKinsey added.

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European steel needs to address overcapacity

The first move the sector needs to address is the increase in structural overcapacity. That is particularly true after a demand loss of between 5 million and 10 million metric tons demand loss as a result of the pandemic, the group stated.

“European steel players need to adjust overcapacity to be in sync with next normal steel demand,” McKinsey said.

Adjusting for a greener future

Steelmakers also need a short-term response to compensate for higher costs with profitability improvements and incremental measures that will reduce CO2 emissions. For example, they can do so by increasing the scrap rate, the report added.

Meanwhile, producers need to make investments with a view to medium- and long-term decarbonizing of the steel industry. In short, they should tailor long-term plans and technology choices towards CO2 neutrality, McKinsey noted.

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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 the Suez Canal blockage, the April 2021 MMO, Western European hot rolled coil prices and much more:

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Week of March 29-April 2 (Suez Canal retrospective, HRC in Western Europe, April MMO report and more)

• US steel imports fell in February from the previous month.
• This week, the MetalMiner Monthly Metal Outlook (MMO) report went out to subscribers.
• Workers at the Bradken steel manufacturing plant in Atchison, Kansas, went on strike.
• Meanwhile, MetalMiner’s Stuart Burns again checked in on the existential crisis at Liberty Steel.
• Although the container vessel Ever Given is no longer blocking the Suez Canal, the weeklong disruption will have lingering effects.
• Nucor Corporation announced plans to invest $164 million to build a new tube mill near its Gallatin, Kentucky plant.
• The United Steelworkers union this week announced a strike at nine Allegheny Technologies Inc. facilities.
• Hot rolled coil prices continue to rise in Western Europe.
• Meanwhile, Chile’s industrial output and copper extraction fell in February, the country’s National Statistics Institute reported.
• Circling back to the Suez Canal, Burns expounded on how China and Russia could view the blockage as an opportunity to push alternatives.
• US steel capacity utilization ticked up to 77.6% last week, the American Iron and Steel Institute (AISI) reported.
• This week, President Joe Biden released details of his American Jobs Plan.
• Domestic metals industry groups offered up initial reactions to the American Jobs Plan details.
• Lastly, Rio Tinto announced it has joined Japan’s Green Value Chain Platform Network, which aims to lead transparency in decarbonization efforts in the country.

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