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This week’s coverage included coverage ranging from the announced update to SIMA, iron ore price movements and the U.S.’s decision to rescind the recently reimposed 10% Canadian aluminum tariff.

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

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Week in Review, Sept. 14-18 (SIMA, steel prices and more)

• The Department of Commerce will release an updated, modernized Steel Import Monitoring and Analysis (SIMA) system.
• MetalMiner’s Stuart Burns on the Tata Group’s struggles in the U.K. and talks over a potential bailout.
• Maria Rosa Gobitz on the last month in aluminum market movements.
• Supply fears and strong Chinese demand have supported the copper price.
• The U.S. steel sector’s capacity utilization rose to 65.1% last week.
• The Renminbi has gained strength against the U.S. dollar.
• China is looking to strengthen its cobalt stockpile.
• U.S. steel prices ticked upward this past month.
• Just over a month after reimposing it, the U.S. this week removed the 10% tariff on some non-alloyed, unwrought Canadian aluminum.
• The silver price posted gains this summer but started to flatten out in the second half of August.
• Stainless steel surcharges moved up for the fourth month in a row.
• The United States International Trade Commission opted to maintain existing duties on steel rebar imported from Mexico and Turkey.
• The iron ore price has skyrocketed this year, but its ascent has slowed of late.

The MetalMiner 2021 Annual Outlook consolidates our 12-month view and provides buying organizations with a complete understanding of the fundamental factors driving prices and a detailed forecast that can be used when sourcing metals for 2021 — including expected average prices, support and resistance levels.

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This morning in metals news: steel prices have been making gains; the WTI crude price moved up; and Vale plans to increase its iron ore output.

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Steel prices rise

U.S. steel prices are on the rise, but that rise can be attributed more toward the supply side of the ledger than the demand side, according to Bloomberg.

U.S. Steel, for example, this week hiked its prices. The company raises prices on flat-rolled steel products by at least $60 per ton, according to the report.

WTI ticks up

In other commodities news, the WTI crude oil price closed Thursday $40.97 per barrel, per the Energy Information Administration.

Thursday closing price marked an increase of $3.97 from the prior week. However, the price was down $17.14 from the same point in 2019.

Vale eyes iron ore output target of 400M

Brazilian miner Vale hopes to produce 400 million tons of iron ore annual, mining.com reported.

Currently, Vale has capacity to produce to 318 million tons per year.

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This morning in metals news: the USITC voted to maintain existing duties on steel rebar from Mexico and Turkey; the U.S. Census Bureau released the latest housing starts data; and General Motors released more information on its next-generation electric vehicle models.

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USITC maintains rebar duties on Mexico, Turkey

The United States International Trade Commission this week voted to maintain existing anti-dumping and countervailing duties on steel rebar from Mexico and Turkey.

In its five-year sunset review, the USITC determined revoking the duties would likely lead to material injury “within a reasonably foreseeable time.”

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The Stainless Monthly Metals Index (MMI) increased by 11.3% for this month’s index value, as stainless steel surcharges rose for a fourth consecutive month.

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Stainless steel surcharges continue to increase

Stainless alloy surcharges are rising for the fourth month in a row.

Alloy surcharges for 304 in September will be $0.6231/lb, an increase of $0.0361/lb compared to August.

Over the past month, LME nickel prices increased approximately 12%, up to $15,442/mt by the end of August.

Chinese nickel price followed a similar trend, increasing to $17,590/mt (or CNY 120,750/mt).

U.S. demand recovery

Throughout July and August, the U.S. Department of Commerce reported the U.S. imported a total of 93,600 metric tons and 88,700 metric tons of all stainless products, respectively. The totals were twice as high as the year’s bottom of 46,800 metric tons back in May. Furthermore, the totals were much higher than the 2019 average of 64,600 metric tons.

Import levels reported match the expansionary track the U.S. has seen in the past four months.

August ISM PMI data came in at 56%, up 1.8 percentage points from July. Moreover, the ISM Manufacturing New Orders index came in at 67.6% in August compared to 61.5% in July.

Auto industry outlook

Besides consumer goods, the automotive industry is another major consumer of stainless steel.

As the U.S. presidential election approaches, both candidates have expressed their desire to boost the U.S. auto industry to create jobs.

A few particular differences could impact the price of stainless steel.

Read more

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This morning in metals news: the United States Trade Representative announced it would remove the 10% tariff on some Canadian aluminum products; China’s steel producers foresee growing demand throughout the remainder of the year; and iron ore prices are surging.

Are you under pressure to generate aluminum cost savings? Make sure you are following these five best practices!

USTR reverses course on Canadian aluminum tariff

Add yet another twist to the story of the U.S.’s 10% tariff on Canadian aluminum.

After reimposing the 10% tariff on some Canadian aluminum in early August, the United States Trade Representative announced Tuesday it is once again removing the tariff.

The U.S. originally imposed the tariff via Section 232 in early 2018, albeit initially exempting Canada (and Mexico). However, after the initial exemption period expired, the U.S. began slapping the tariff on imports from Canada.

In May 2019, the U.S. rescinded the tariff as part of ongoing negotiations over the successor to NAFTA. That agreement eventually came to be the United States-Mexico-Canada Agreement (USMCA), which went into effect July 1.

Last month, the U.S. announced it would reimpose the 10% tariff on unwrought, non-alloyed Canadian aluminum — or P1020. The administration cited a rise in imports when announcing the reimposition.

“After consultations with the Canadian government, the United States has determined that trade in non-alloyed, unwrought aluminum is likely to normalize in the last four months of 2020, with imports declining sharply from the surges experienced earlier in the year,” the USTR said in a release Tuesday. “Average monthly imports are expected to decline 50 percent from the monthly average in the period of January through July.”

The U.S.’s Aluminum Association applauded the reversal.

“Removing these disruptive and unnecessary tariffs on Canadian aluminum was the right decision for the U.S. aluminum industry and its 162,000 workers,” said Tom Dobbins, Aluminum Association CEO and president. “The Aluminum Association and its members support tariff and quota free trade within North America consistent with the recently implemented U.S.-Mexico-Canada Agreement (USMCA).”

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The Raw Steels Monthly Metals Index (MMI) increased by 4.3% for this month’s value. 

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U.S. steel prices start increasing

HRC prices increased by over 5.4% throughout August, closing at $486/st. During the first two weeks of September, the price rallied up to $521/st.

Meanwhile, Chinese HRC prices mostly traded sideways during August and the first two weeks of September.

The recovery of the U.S. auto industry might be driving the steel price increases.

U.S. auto production continued to improve. Producers such as General Motors, Ford and Fiat Chrysler ramped up their assembly plants.

However, supply has not quite caught up with demand. As such, U.S. auto inventory continues to tighten.

By the end of June, vehicle inventory fell to 2.6 million, or 33% fewer units year over year. Pundits suggest U.S. auto sales will reach an annualized 13.5 million unit rate for 2020, with stronger demand coming in 2021.

The aforementioned factors have not only supported the U.S. HRC price; HDG prices also surged.

The U.S. HDG price only increased by 5.6% throughout August, reaching $736/st, but found further support during the first two weeks of September. By the end of the second week of September, HDG broke resistance to $788/st.

Chinese steel market

After record imports in July, China’s iron ore imports in August fell 10.9%.

The General Administration of Customs reported China imported 100.36 million tons of iron ore throughout August, while consumers bought 112.65 million tons in July. However, imports increased 5.8% year over year.

According to Tang Binghua, of Founder CIFCO Futures, imports slowed in August partly due to port congestion from coronavirus-related restrictions. In addition, fewer shipments came from Australia as it closed its financial year.

Read more

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This morning in metals news: U.S. steel capacity utilization reached 65.1% for the week ending Sept. 12, the World Trade Organization released a report covering the U.S.’s Section 301 tariffs on Chinese goods; and the copper price approached a two-year high.

Does your company have an aluminum buying strategy based on current steel price trends?

U.S. steel capacity utilization rises to 65.1%

The U.S. steel sector’s capacity utilization rate reached 65.1% for the week ending Sept. 12, the American Iron and Steel Institute (AISI) reported.

Production during the week totaled 1.46 million net tons, down 19% year over year but up 2.2% from the previous week. Capacity utilization for the week ending Sept. 5 reached 63.7%.

However, production for the same week in 2019 reached 1.80 million net tons.

WTO releases report on U.S.’s China tariffs

The WTO this week released a report of its findings related to the U.S.’s Section 301 tariffs on Chinese goods, which amounted to hundreds of billions of dollars.

The report comes more than two years after China requested consultations — in April 2018 — related to the U.S. tariffs.

Read more

Iakov Kalinin/Adobe Stock

Despite talks of negotiations over a potential Tata Group bailout in the U.K., the Indian firm has proved itself a generally good steward of the businesses it has purchased in the U.K. over the years.

In hindsight, its purchase of Jaguar Land Rover from Ford for U.S. $2.3 billion in June 2008 was a steal. However, it was half what Ford had paid for the brands at the time, as JLR had an aging product range and a stodgy image.

Tata invested billions in product design and new model development. As a result, sales and profitability soared.

Tata’s purchase of Tetley Tea was also seen as buying into a mature market with limited growth prospects back in 2000. However, since then, the brand has grown into the second-largest tea brand in the world.

Stop obsessing about the actual forecasted steel price. It’s more important to spot the trend. See why.

Tata’s steel operations

Tata’s largest European acquisition, however, has not been so successful.

Corus Steel comprised an earlier merger of British Steel and Corus of the Netherlands.  Principally, the merger included the giant steelworks at Ijmuiden and British Steel’s Port Talbot Steel complex (the largest steel mill in the U.K.).

Combined with some smaller steel operations, this makes Tata Steel the third-largest steelmaker in Europe. Tata manages a workforce of 20,000 in Europe.

Read more

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It was another action-packed week in the world of metals, including coverage from Stuart Burns on the rising copper price, developments in the rare earths sector and the release of the MetalMiner 2021 Annual Outlook report.

The 2021 Annual Outlook is an invaluable resource for metals buyers preparing to set their spend for the year ahead. The Annual Outlook includes analysis of key price drivers, support and resistance levels, and average prices. In addition, the report features detailed analysis of 10 key metals.

For more information on how to subscribe to gain access to this year’s report, visit the dedicated landing page for the 2021 Annual Outlook.

Before we head into the weekend, let’s take a look back at the week that was:

Week in Review, Sept. 7-11 (rising copper price, RARE Act and more)

• U.S. construction spending in July came in about flat compared with the previous month.
• Two Texas Congressmen earlier this month introduced the Reclaiming American Rare Earths (RARE) Act.
• Stuart Burns on India’s economic and coronavirus struggles.
• Speaking of India, Sohrab Darabshaw delved into the state of the country’s aluminum sector.
• The U.S. steel sector’s capacity utilization rate jumped by two percentage points last week.
• Copper has outperformed other metals this year — but are its fundamentals really as strong as they seem?
• MetalMiner released its 2021 Annual Outlook report, offering a comprehensive and detailed analysis of metals markets as buyers make budgeting decisions for the year ahead.

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This morning in metals news: July steel shipments fell by 25.6%; Nucor announced its 190th consecutive quarterly dividend; and the Energy Information Administration released its September Short-Term Energy Outlook.

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July 2020 steel shipments fall

According to the American Iron and Steel Institute, U.S. steel shipments in July fell 25.6% year over year.

U.S. steel mills shipped 6.04 million net tons during the month, a 0.2% increase from the previous month. The July total marked a 25.6% decrease from July 2019, when U.S. mills shipped 8.12 million net tons.

For the year to date, shipments totaled 47.25 million net tons, down 16.1% from the same period in 2019.

Nucor announces quarterly dividend

Charlotte-based Nucor Corporation this week announced its 190th consecutive quarterly cash dividend.

The company announced a dividend of $0.4025 per share on Nucor’s common stock.

However, earlier this year steelmaker ArcelorMittal announced it would suspend dividend payments.

“Against the backdrop of significant cost savings measures being taken across the business, the Board determined it both appropriate and prudent to suspend dividend payments until such a time as the operating environment normalizes,” the company said in its quarterly earnings release earlier this year.

EIA releases Short-Term Energy Outlook

Earlier this week, the EIA released its September Short-Term Energy Outlook.

“Reduced economic activity related to the COVID-19 pandemic has caused changes in energy demand and supply patterns in 2020,” the report states. “This STEO assumes U.S. gross domestic product declined by 4.6% in the first half of 2020 from the same period a year ago and will rise beginning in the third quarter of 2020, with year-over-year growth of 3.1% in 2021.”

The Brent crude oil spot price reached an average of $45 per barrel in August, according to the EIA, up $2 per barrel from July.

The bump in the price comes on the heels of a significant decline in new inventories.

Per the EIA, global liquid fuels inventories rose by 7.2 million barrels per day in the second quarter. Meanwhile, inventories rose by 3.7 million barrels per day in the third quarter.

Consumption, on the other hand, declined in August compared with 2019 levels.

Per the EIA, global consumption of petroleum and liquid fuels reached 94.3 million barrels per day in August. The August total marked a decline of 8.2 million barrels per day from August 2019 consumption.

Still, consumption has recovered somewhat in recent months. For example, August consumption increased from the 93.3 million barrels per day consumed in July, the EIA reported.

See why technical analysis is a superior forecasting methodology over fundamental analysis and why it matters for your steel buy.