New Steel Billet Caster in the Works

Longs producer British Steel has begun constructing a billet casting machine at its Scunthorpe works. It will be the second such machine built at the site, which lies in England’s East Midlands region.

On June 15^th, the company said that the continuous caster should come on stream in late 2022. Once in operation, it will produce square billet in 140x140mm, 155x155mm, and 180x180mm sizes.

“The new caster will produce billets of an even higher standard, with much better internal and surface qualities,” said Richard Longbottom, Technical Manager of Steelmaking Development. “We’ll also have a broader product range. This enables us to become more competitive and expand our offering to customers.”

Steel Billet Casting, 2022, Adobe Stock

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Spokespeople for the company added that Italian firm Danieli will supply the new equipment. However, they declined to say what the new casting machine’s capacity would be or how many strands it would have.

The existing eight-strand billet caster can cast an estimated 900,000 metric tons per year of semi-finished product. That includes 150x150mm and 180x180mm sizes made out of the crude steel produced on site.

The plant could originally produce about 4.5 million metric tons of crude steel per year via four on-site blast furnaces and three 300-metric ton converters. The spokesman noted, however, that the plant is no longer pouring those volumes. Billets act as a feedstock for rolling rebar, merchant bar sections as well as wire rod.

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British Steel Remains a Major Player in the Metals Market

The new caster is part of an £80 million ($98 million) upgrade project for Scunthorpe, in England’s East Midlands. Whilst the majority of that total is intended to finance the new billet caster at £48 million ($59 million), the remainder is to upgrade and reconfigure Scunthorpe’s wire rod mill.

“The product range will also offer customers considerably improved mechanical properties and enhanced options for supply condition,” the company stated. “[Examples include] normalized rolled and low-temperature rolled wire rod.”

The company also indicated that British Steel could produce up to 3 million metric tons per year of rolled long products. Besides wire rod in 5.5-17mm diameters, Scunthorpe rolls construction steels (sections) and rail. Meanwhile, the Teesside mill rolls construction steels and the Skinningrove works, which sites about 100 kilometers north of Scunthorpe, rolls special profiles.

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Other Scunthorpe Steel Capabilities

Scunthorpe can also cast blooms from a six-strand continuous caster as well as slab in 225mm- and 298mm-gauges from a two-strand casting machine. Each caster has a listed capacity of 1.2 million metric tons per year.

Billets from the new caster will also go to the British Steel’s FN Steel plant, in the Netherlands. Reports indicate that the facility can roll at least 350,000 metric tons per year of wire rod in 5.5-30mm diameters.

Applications for British Steel’s rolled wire rod include tire reinforcement, automotive spring and steels, as well as rail clips. Chinese steelmaking and chemicals conglomerate Jingye Group acquired British Steel in 2020. Greybull Capital originally formed British Steel in 2016 when it acquired the Long Products business from Tata Steel.

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For US President Joe Biden, it’s a Hobson’s choice on Chinese solar panel imports. His new move to pause tariffs on imported Chinese-made silicone solar panels for two years has been either hailed or criticized.

The announcement came in the middle of an on-going investigation by the US Commerce Department. Possible trade agreement violations are being discussed, which surprised many in this sector.

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Getting the U.S. Solar Panel Market on Track

The US has been one of the slowest nations with solar energy. The latter is the fastest-growing energy source in the US. Betting on it means a faster reduction in demand for fossil fuels.

2022, Adobe Stock

A US Dept. of Energy report recently pointed out that solar power has the potential to power 40% of the US’ electricity needs by 2035.

However, President Biden has a tough call to make. He could take more years to offer incentives to local manufacturers. This hesitation would mean a further delay in US solar projects. The other option would be to quickly go in for foreign manufacturers (read: largely Chinese). The maneuver would set up the required infrastructure in order to save time and get going.

Effect of Solar Panel Imports on American Manufacturers

Former President Donald Trump imposed a tariff on the import of solar panel to stop the influx of cheap goods. This consequently throttled the growth of the solar power sector. None of the follow up actions, like getting congress to appropriately fund American manufacturers have come through.

For example, President Biden has authorized the Defense Production Act (DPA) to accelerate domestic solar production. However, congress has not explicitly appropriated additional funding. As a result, the administration cannot use the DPA for solar projects.

2022, Adobe Stock

The US requires a robust manufacturing capability to meet its clean energy goals. Right now, that’s not happening Biden supporters say. Manufacturing solar energy panels & other components requires the administration to offer financial incentives to US manufacturers. This helps offset higher domestic production costs, estimated to be about 40% over imports.

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U.S. Silicone Solar Panel Infrastructure Needs Stimulation

The US Congress continues to move in this direction, but it will take time to be implemented. For example, the house-passed Build Back Better Bill would extend the investment tax credit. The production tax credit would also encourage the production of solar panels. As a result, costs would go down down on overall production. An increase in manufacturing efficiency would also follow.

But time is something the US cannot no longer afford on green energy resources. Time constraints spurred Biden’s move to temporarily allow imports.

However, US companies and pro-US advocates are not amused and are crying foul.

This report tells a tale of caution to US solar firms. If the Commerce Dept. investigation rules that the Chinese dumped cheap goods, the US could impose retroactive tariffs up to 240%. This would drive up panel prices further. The ruling would also imperil half of planned solar projects on track for completion in the US this year.

Fluctuating Federal Policies Causing Industry Stress

A consultant with Solar Work’s Matt Smith speculated one way of avoiding Asian-related solar supply issues. One suggestion was to buy American source solar products from Canada. Another was to obtain products from a Norwegian firm distributed through Singapore.

2022, Adobe Stock

US manufacturers are trying to grapple with the ever-changing federal policy. This issue being further compounded by the COVID-19 pandemic. Difficulties convince investors to finance domestic solar projects have arisen.

The new two year rule has put China in a happy place. The country was expected to add between 75 to 90 gigawatts (GW) of solar power in 2022. These numbers are higher than a record increase in capacity last year.

Wang Bohua, honorary Chairman of the China Photovoltaic Industry Association (CPIA) recently told delegates at a conference that China could add 83 – 99 GW of new capacity each year from 2022 to 2025.

With President Biden’s new diktat, this figure could climb further by the time 2022 comes to an end.

U.S. steel prices continue to retreat. After consistent week-over-week declines, HRC prices now sit more than 15% beneath their late-April peak while plate prices continue to trade sideways as they remain just 6% beneath their all-time high.

The Raw Steels Monthly Metals Index (MMI) fell by 7.87% from May to June.

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U.S. Manufacturing PMI climbed, Consumer sentiment plummeted

The U.S. ISM Manufacturing PMI reached 56.1% in May. While the index climbed from April’s reading of 55.4, it marks the second-lowest reading since September of 2020. Domestic steel prices, particularly HRC, loosely mirrors the index trend. The index remains within a larger downtrend since it peaked in April of 2021.  

Of particular note, in spite of ongoing inflationary pressures, demand expanded as the New Orders Index grew from 53.5 in April to 55.1 in May. This data follows a 0.9% increase in consumer spending during April.

Meanwhile, according to preliminary data from the University of Michigan, consumer sentiment plunged to a record low between May and June. The index saw a 14% month-over-month decline, to hit its lowest recorded value at 50.2. June’s value compares to the low reached during the 1980 recession of 51.7 in May 1980. While overall consumer spending often diverges from sentiment, June’s consumer sentiment data may likely foreshadow a shift in spending trends toward necessities as consumers grapple with inflated prices. 

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Infrastructure funds could support steel prices in the longer term

According to the White House, states received more than $110 billion to fund projects related to the Bipartisan Infrastructure Law since the bill was signed into law 6 months ago. The released funds are earmarked for more than 4,300 specific projects, including those related to road, bridges, port and airport modernization and water infrastructure throughout the U.S. An additional $100 billion in requests for information and notices of funding availability have also been released. Spending related to the infrastructure bill will take place over the course of the next 5 years. 

In Fiscal Year 2022 alone, the U.S. Department of Transportation announced $52.5 billion in Federal Highway Apportionment and $246 million for the Appalachian Development Highway System.

Unlike other forms of steel, plate prices remain near record highs, albeit with modest declines since late April. HRC, CRC and HDG prices declined alongside falling mill lead times. While plate did not see the same increase in production capacity as other forms of steel, mill lead times have nonetheless retraced for plate which would indicate availability constraints no longer remain a driver in persistently high prices. Infrastructure spending has and will create steady demand for plate. Due to Buy America provisions, the plate market will likewise remain substantially insulated from lower-cost imports.    

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April U.S. steel imports, production slide

U.S. steel imports and U.S. steel production started to soften. According to the U.S. Census Bureau, total U.S. imports of steel products saw an 11.68% decline from March to April. HRC, CRC, HDG and coiled plate imports saw respective 25.11%, 16.27%, 8.91% and 13.63% declines.

Meanwhile, according to the World Steel Association, crude steel production in the U.S. fell from roughly 7.0 million tons in March to 6.9 million tons in April. Further, April’s total reflects a 3.9% year-over-year decline. As steel supply both through imports and production slid on the back of continuous, across the board steel price declines (albeit modest for plate), this may likely prove to be an early indication of a downward trend for domestic steel demand in months to come. 

Actual steel prices and trends

Chinese slab prices increased by 8.11% month-over-month to $812 per metric ton as of June 1. Meanwhile, the Chinese billet price decreased by 4.71% to $667 per metric ton.

Chinese coking coal prices fell 2.23% to $524 metric ton.

U.S. three-month HRC futures fell 14.76% to $976 per short ton. While the spot price decreased by 8.92% to $1,338 from $1,469 per short ton. U.S. shredded scrap steel prices fell 5.91% to $525 per short ton.

NOTE: This story was updated on 6.7.22

The European Commission (EC) has extended its existing safeguard tariffs on steel to June 30, 2024, but with some adjustments. In a letter to the WTO,  the executive body for the 27-member group said the annual rate of liberalization is due to increase from 3% to 4% as of July 1. Liberalization is the degree by which the quota lowers. To that point, the EC also adopted a regulation to allow for temporary trade liberalization on Ukrainian steel.

In its June 3rd issue, the Official Journal of the European Union specifically noted Ukraine’s removal from the safeguards. This meant the changes would go into effect the very next day. It’s an important move in a lot of ways, as Ukraine’s economy is already suffering greatly under the weight of the Russian invasion.

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nikitos77/Adobe Stock

Ukrainian Steel Receives Special Consideration

Imports of Ukrainian steel into the bloc have largely ceased since Russia began its military invasion of the country on Feb. 24. Since that time, EC has levied several rounds of sanctions on the latter country. In its letter to the WTO, the EC noted, “This suggests that Ukraine is currently unable to produce and/or export these products in any meaningful volume to the Union market.”

“Under these circumstances,” the letter continued, “and having analyzed the quota use by other exporting countries subject to the measure, the Commission considered that there would be a risk of a potential shortage of supply for Union users in these categories if it did not take any action.”

The liberalization covers Ukrainian quarto plate as well as angles, shapes, and sections. Ukraine has used 63% of its quarto plate quota of 290,895 metric tons for Q1 2022 as of Feb. 21. It also used about 96% of its 61,159 metric ton quota on angles, shapes, and sections.

Ukraine also produces most of the raw materials used by steelmakers in Poland. Regardless of the new rules, that country is likely to experience production difficulties. That’s why it’s no surprise to see the EU looking elsewhere for product.

The EU Looks to the East

The EC also said that measures on Vietnamese-origin HDG will come into effect on July 1, though the letter did not indicate a tentative quota on that product. According to the European Steel Federation, estimated HDG imports in 2022 are due to total almost 1.35 million metric tons in 2022, up 37.8% from 979,205 metric tonnes.

Anti-COVID lockdown measures in Shanghai and other population centers within China caused a major shift in trade these past few months. In fact, insiders claim the change has prompted flats rollеrs in that part of the world to target European markets.

Meanwhile, China’s official GDP growth forecast for 2022 remains at 5%. However, Swiss-headquartered UBS slashed its own forecast down to 3% from 4.2% in late May. JPMorgan Chase & Co. cut its outlook from 4.3% to 3.7% the same week. It’s a sign that the world’s largest metal exporter might be in for a rough few quarters.

At the same time, producers in South Korea and Taiwan were offering hot rolled coil at €860-870 ($915-925) per metric ton cfr European port. Compare that with the minimum €940-950 ($1,010-1,020) exw in southern Europe. Meanwhile, mills in northern Europe were seeking prices of €1,010-1,050 ($1,085-1,130).

Hot rolled coil serves as feedstock to produce cold rolled coil, and subsequently hot-dipped galvanized sheet. The product has applications in the auto and construction sectors as well as in street furniture.

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It’s still touch-and-go for the steel sector in China despite the sprouting of the first shoots of a possible manufacturing recovery. However, last Monday, benchmark iron ore prices in the country gained a surprising 7%. This is the biggest daily rise in two-and-a-half months. Is it a sign that we should be more optimistic, or is this just a dead cat bounce?

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masterskuz55, 2022, AdobeStock

China’s Slow Road to Recovery

Chinese manufacturing activity has thus far been down in 2022 due to a fresh COVID-19 outbreak. However, since mid-May, the market has shown some signs of recovery, particularly in the country’s economic hub of Shanghai. Nevertheless, experts expect steel demand to remain lackluster until manufacturing production returns to normal in June.

S&P Global Commodity Insights reported that China’s manufacturing production index for steel consumption fell by 28 points from 2021 and 16 points from 2020. These aren’t exactly hopeful numbers, and experts are concerned about the pace of recovery despite the stimulus package.

India Playing Hard Ball on Tariffs with Iron Ore

The aforementioned 7% rise in iron ore futures is puzzling. Firstly, it comes on the heels of India raising export duties on some commodities to rein in inflationary pressures. Specifically, the country increased duties for iron ore and steel intermediates. This included raising new iron ores and concentrates tariffs from 30% to 50%. On the other hand, pellet duties went from zero to 45%. According to a report in the Financial Post, tariffs on coking coal and coke were removed altogether.

This week, the most-traded iron ore futures on the Dalian Commodity Exchange (for September delivery) were up 4.4% at $129.18 (864 yuan) a ton. This was after a surge of as much as 6.9%, the highest since May 6^th. Some experts believe India’s move may not impact China’s iron ore inventories as much as initially thought. After all, it only represented about 3% of China’s total imports in 2021. The same goes for the first four months of this year. Overall, Chain’s purchase rate from the subcontinent has stayed low due to increasing demand in India & the falling iron ore prices.

Iron Ore Prices in China are up

News agency Reuters recently reported that we could see a new rally of iron ore prices. They specifically cited the Chinese government’s decision to cut its benchmark interest rate for mortgages by an unexpectedly wide margin. Prices reacted rather quickly to this news.

According to Argus, spot 62% iron ore for delivery to northern China was up to $135.90 a ton on May 20th. That’s an increase of 5.7% from the previous day, and the best close since May 6th. Domestic iron ore futures on the Dalian Commodity Exchange were also stronger. However, they were up by a much more modest 3.4% to end at $123.62 (827 yuan) a ton on May 20th.

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China lowered the five-year loan prime rate by 15 basis points to 4.45% on May 20th. This represented the biggest reduction since the country revamped its interest rate mechanism in 2019. Analysts felt this new move was largely an attempt to prop up the property and construction sectors. These sectors account for about 25% of the country’s economy. In addition, Chinese premier Li Keqiang said Beijing would step up policy adjustments to return the world’s second-biggest economy to “normal growth.”

According to the same report cited earlier, some experts believe a rally around iron ore prices was in the cards. After all, such measures had clear implications for iron ore and steel demand. Moreover, initial signs suggest China was already on its way to increasing steel output after the winding down of winter pollution curbs and the removal of some of the COVID-19 restrictions.

All in all, April output rose 5.1% from the prior month to 92.78 million tons. However, it’s worth noting that this was 5.2% below April 2021’s numbers. The period from June onward will be crucial if we really want to get a sense of where Chinese iron ore and steel prices are heading.

China is Also Making Moves Regarding Supply

In the meantime, Channel News Asia reports that the Cameroonian government had inked a deal with Sinosteel Corporation Limited to mine high-grade iron ore for about US $676 million (420 billion CFA francs). It’s part of the country’s bid to find new sources for the steel-making ingredient.

Under the 20-year mining agreement, Sinosteel Cam S.A., a Cameroonian subsidiary of state-owned Chinese mining firm Sinosteel, will develop the central African nation’s Lobe iron ore mine. It’s part of China’s ongoing effort to diversify its ore supply beyond Australia (where it is currently engaged in a trade war) and Brazil.

The deal would result in 4 million tons of ore, with 60% of iron content being produced and shipped. The higher-grade iron ore would also help reduce Chinese carbon emissions from the steel-making process.

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Steel prices and gas are the primary topics of conversation today. It seems that steel traders in China are seeking more buyers abroad for their finished steel products. Meanwhile, Russia is mulling cutting gas supplies to the EU. Gas prices have an enormous impact on steel prices.

China: Lockdowns at Home, Low Demand Abroad

The news comes hot on the heels of reports detailing reduced consumption in Europe and ongoing COVID-19 lockdowns throughout China. Indeed, China’s latest anti-Coronavirus measures have resulted in a 2.9% industrial output drop year on year for April. At the same time, reports indicate that retail sales were off 11.1%. Steel price offers from Taiwan and South Korea were €860 ($910) per metric ton cfr Europe, also down from €1,080 ($1,140) cfr Europe from Southern and East Asia.

As one trader told MetalMiner, “Energy costs are hitting people hard. There are more defaults on energy bills.” He added that “The whole world wants to sell to Europe.” However, with inflation hitting record highs and the war in Ukraine charging onward, the market is anything but ripe for the picking.

Another trader pointed out that summer holidays in the Northern Hemisphere (normally in June, July, and August) will also mean lower building activity and lower demand. This is sure to put further downward pressure on steel.

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cil86/Adobe Stock

Russia: War, Sanctions, and Rubles

Uncertainty about whether or not Russia could cut gas supplies to the EU over European Commission sanctions has created volatility in prices for that hydrocarbon. Steelmakers can rely on natural gas for ironmaking in blast furnaces as well as for steelmaking in electric arc furnaces.

In 2021, the European Union imported 155 billion cubic meters of natural gas from Russia. This accounted for around 45% of total imports and close to 40% of its total gas consumption.

Another possible factor contributing to the ongoing volatility is the possibility that buyers might refuse to pay for Russian gas in rubles. In late March, Russian President Vladimir Putin issued an order demanding that “hostile countries” pay for their gas supply in their currency by opening accounts at Gazprombank. Indeed, Russia has already cut off gas supplies to Poland and Bulgaria over their refusal to comply with the demand. This immediately sparked concerns over what might happen if other countries followed suit.

The European Commission, the executive body for the European Union, has since softened its stance against buyers of Russian gas opening accounts at Gazprombank. They even stated that buyers could make payments in dollars or euros. However, the organization said nothing about operators opening a second account in ruble-based payments, which several have reportedly done.

The benchmark Dutch TTF price for the hydrocarbon commodity was €95.50 ($100) per megawatt hour on May 17, up 2.84% on the day from €92.86 ($97.93). The price achieved a high of €227.20 ($239.68) back in March.

PhotocreoBednarek/Adobe Stock

Steel Prices and Gas Still Closely Intertwined

On April 29, the European Statistical Office reported that month’s outlook for inflation was 7.5% year on year in the 19 states that have adopted the euro as their currency. The organization also noted that energy was likely to have the highest annual rate in that outlook at 38%.

Of course, the EU has been trying to lessen its dependence on Russian oil and gas since the country invaded Ukraine in February. So far, their efforts include ramping up renewable energy products, lowering energy consumption, and diversifying sources.

However, many industry watchers have difficulty believing that Europe will be able to achieve that goal. “How is Europe going to back off from Russian gas?” one analyst asked. “I simply can’t see how they’re going to get away from it.”

A second source noted that it would be possible to reduce dependency on Russian gas by sourcing it from North Africa. Of course, this would require the construction of new infrastructure such as pipelines and terminals. He also said that whilst other countries have tried to diversify their gas supply, others like Germany have not. “It was comfortable for the Germans,” he said of the country’s gas transmission infrastructure.

One option for some steel plants would be to use gas produced from coking ovens to help fire blast furnaces. However, results would be inconsistent, as not every steel plant is so equipped.

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The Construction Monthly Metals Index (MMI) fell by 2.9% from April to May, with construction spending averaging a very minor increase.

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Labor, Supply Chain Drag U.S. Non-Residential Construction Spending in March

According to the U.S. Census Bureau, non-residential construction spending fell 1.2% from February to March. Overall construction spending still managed a 0.1% increase, however, as residential construction rose 1% in March. Meanwhile, public construction spending continues to move sideways, showing a modest 0.2% decline. Public construction is getting a boost from the U.S. Infrastructure Bill, which is expected to lift spending over the course of the next 5 years. While other U.S. steel prices substantially declined from last year’s peaks, the bill and its Buy American provisions have held plate prices near all-time highs. Even so, plate prices have dropped considerably over the past week.

According to the Associated General Contractors of America (AGC), a shortage of skilled workers and the disrupted supply chain have held back the construction these past few months. AGC’s Chief Economist noted, “contractors continue to report strong demand for most types of structures, with few owners canceling or postponing planned projects. But worker shortages and supply-chain problems, from lockdowns in China to the war in Ukraine, are slowing down project completions.”

Construction Sector Adds Jobs But Non-Residential Construction Employment Falls

Construction industry employment data appears to mirror industry spending trends. According to preliminary data from the U.S. Bureau of Labor Statistics, the construction sector added 2,000 jobs from March to April as the unemployment rate within the sector fell to 4.6%. However, employment for non-residential specialty trade contractors fell by 6,400 jobs. This suggests that the constraints brought on by a lack of skilled labor within non-residential construction will continue into the next month.

According to Anirban Basu, Chief Economist of the Associated Builders and Contractors (ABC), “For now, the labor market remains strong as contractors and other employers compete for scarce skill sets.” He went on to note that “many construction firms report operating at full capacity. Hiring is a mechanism to expand that capacity. But with the cost of capital, materials, and labor rising, demand for private construction services could soften next year. The risk of recession continues to rise.”

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ABI Growth Remains Strong

While concerns over future construction demand persist, the Architecture Billings Index (ABI) hit one of its highest scores since the beginning of the economic recovery. The ABI is a leading indicator of non-residential construction activity. March’s score of 58 suggests demand remains robust despite the ongoing complications of labor constraints, supply chain disruptions, and historically high inflation. Looking ahead, backlogs hit a new all-time high, averaging 7.2 months. Meanwhile, the value of new design contracts increased from a score of 55.2 in February to 60.5 in March.

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Actual Metals Prices and Trends

• Chinese rebar steel prices fell 5.6% month over month to $746.27 per metric ton as of May 1. Chinese H-beam steel decreased by 4.1% to $753.70 per metric ton.
• U.S. shredded scrap steel prices rose 1% to $606 per short ton.
• Finally, European 1050 commercial aluminum sheet rose by 13.6% to $4,473.38 per metric ton.

The ascent for U.S. steel prices faltered as HRC, CRC, and HDG prices began to fall in early May. Plate prices also took a big dip.   

All in all, the Raw Steels Monthly Metals Index (MMI) fell by 8.9% from April to May.

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Iron Ore Slumps to 4-Month Low on Demand Concerns

Iron ore prices fell to a 4-month low on mounting demand concerns due to China’s ongoing lockdowns. Meanwhile, iron ore fines fell to $131.90 on May 10, the lowest since Jan 31 and a 12.6% decline since the close of March. 

According to data from the National Bureau of Statistics (NBS), Chinese steel output dropped more than 6% year over year in March. On top of lockdowns and restrictions due to COVID outbreaks, Chinese steel production faced several other curbs in recent months. Among them were Olympics-related cuts, which expired in March, and China’s specific intentions to reduce crude steel production in 2022.

China’s property sector also remains a point of concern. Property developer Sunac missed a recent bond payment in early May, becoming the latest property developer to fall into default. According to the company, “liquidity issues” played a significant role in their missing payment. Additionally, sales were “significantly affected by the COVID-19 outbreak.” Indeed, there was a 65% drop in sales from March to April. Before Sunac’s default, Zhenro Properties attributed its own default in April to the “unforeseen scale and duration” of lockdowns in Shanghai.

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Whirlpool Trims Sales Forecast as Steel Prices Dip

Domestically, Whirlpool started to see a slowdown in demand, which caused it to narrow projected sales for 2022. Following an 8.2% year-over-year drop in sales during the first quarter, the North American appliance sector stated it would remain level during 2022. This is a major change from its previous forecast of 3% growth. Industry wide, North American volumes fell 4% year over year during the first quarter, although they nonetheless stand 24% above 2019 levels.

While some see Whirlpool’s slowdown as a warning of what’s to come, U.S. demand through March appeared strong. In fact, according to the U.S. Census Bureau, new orders for manufactured durable goods saw 0.8% growth in March. Consumer spending likewise rose 1.1%. Both of these factors serve as strong economic health indicators. Manufacturing, in particular, makes up roughly 12% of the U.S. economy.

_{Manufacturers’ New Orders: Durable Goods}

^{Source: U.S. Census Bureau}

Arcelormittal Expects Up to 1% Drop In Global Steel Demand in 2022

ArcelorMittal SA recently lowered its estimates for global steel demand. The world’s second-largest steelmaker now expects demand to fall up to 1% in 2022. They cite the war in Ukraine and China’s zero-COVID policy, which are slowing the global economic recovery and increasing inflationary pressures. This is a big change from their forecast of 1% growth prior to the Russian invasion.

The European Steel Association (Eurofer) also narrowed its outlook for EU steel consumption in 2022. Thus far, Europe has experienced the brunt of the economic impact from the war in Ukraine. Alongside supply chain disruptions and a “worsening energy crisis,” Eurofer now expects consumption to fall 1.9% in 2022. All this after consumption rebounded by 15.2% in 2021. However, the organization remains optimistic for 2023, projecting an overall 5.1% increase.

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Steel Prices: Actual Metals Prices and Trends

• Chinese slab prices fell by 5.03% month-over-month to $767 per metric ton as of May 1. Meanwhile, the Chinese billet price decreased by 7.96% to $699.92 per metric ton.
• Chinese coking coal prices rose 7.63% to $535.64 per metric ton.
• U.S. three-month HRC futures fell 24.42% to $1,145 per short ton. While the spot price increased by 4.56% to $1,405 from $1,405 per short ton. U.S. shredded scrap steel prices rose by a mere 1% to $606 per short ton.

The Renewables Monthly Metals Index (MMI) fell 6.4% with notable drops in steel prices, particularly for plate.

Source: MetalMiner Insights

Biden’s Plan for a More Renewable US

Breaking news in the US Green Energy push. The Biden Administration has released an “action plan” intended to accelerate permitting on new green projects. The goal is to loosen the administrative red tape that keeps infrastructure investments from hitting their time and budget goals. The move is part of the $1.2 trillion Bipartisan Infrastructure Law. So far, this has proved to be one of the administration’s only “wins.”

Back in mid-April, MetalMiner reported that Biden had implemented the Defense Production Act again. This time, it was to boost US production of materials related to large capacity batteries, semiconductors, and critical minerals. The Cold War-era act has so far been used three times by the Biden administration to increase the production of protective equipment, vaccines, and fire hoses.

From Utah: The Desert “Goes Green”

The Advanced Clean Energy Storage Project plans to be the world’s largest industrial green hydrogen facility. The site will be located near Delta, a small town near Central Utah’s Sevier River. This particular part of the state is already home to a hybrid plant combining geothermal and hydropower energy. It is also rich with solar fields, wind farms, and even hog manure natural gas plants.

The Advanced Clean Energy Storage Project will produce and store green hydrogen, which has significantly lower carbon emissions than traditional hydrogen. It is produced by using green energy to power water electrolysis, making it far superior to fossil fuels. In mid-April, the organization received a $500 Million conditional commitment from the US Department of Energy.

The UK is Seeking a New Source of Solar Power: Outer Space

Over in the UK, the green energy conversation is taking a turn towards science fiction. More than 50 British tech organizations, including Airbus, SSTL, and Cambridge University, are currently working with the UK Space Energy Initiative to develop a space-based solar power plant.

The group believes that beaming electricity from space will help the UK meet its greenhouse gas emission targets by the middle of the century. Spokespersons for the project state that all of the technology necessary for such a power plant already exists. The problem, they say, is how to combine them into a project of this size and scope.

While Space.come has already produced a compelling video of what this process might look like, experts say we’re still years away from a workable solution.

The world is moving toward green energy, which necessitates a wide range of valuable metals. Keep yoursTelf informed on all the latest news and information by signing up for our weekly MetalMiner newsletter here. 

Grain Oriented Electrical Steel Prices Jump 14%.

The GOES MMI, the index for grain-oriented electrical steel, rose 14.1% from April to May.

Meanwhile, the largest grid operator in Texas asked residents to conserve energy during the current heat wave. The directive asked for homes to be set at 78 degrees or higher from 3-8pm over the weekend as well as to lay off the use of heavy appliances. Six power plants tripped offline at one time, costing the grid the energy to power 600,000 homes.

More on Steel Prices: Aperam Takes a Beating from Zacks IR

Back in early May, Zacks Investment Research cut shares of Aperam from “hold” to “sell.” This triggered a brief sell-off that was quickly recovered the next day as investors looked to grab up discounted shares. In the week since, however, the company has seen a steady decline, closing out this Friday at $35.85 a share. This is just shy of the 52-week low of $34.61 and well below the year high of $65.

Aperam S.A. manufactures and markets Stainless steel throughout South America and Europe. It produces both GOES and non-grain-oriented electrical steel and nickel alloys. Other major research firms have maintained the company’s “hold” rating, but price targets are already starting to slip.

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The Automotive MMI (Monthly Metals Index) held flat from April to May. This was largely the result of a number of factors working in concert. Below, we’ll dig deeper into the automotive marketplace to see if we can determine what to expect for the rest of 2022.

Automotive MMI: China Auto Sales, Production Plunge In April

Source: China Association of Automobile Manufacturers

The data resulting from China’s COVID-zero policies continues to look grim. According to the China Association of Automobile Manufacturers, auto sales and production plunged in April. Specifically, the latter index dropped 46.2% month over month, while overall auto sales fell 47.1%

Shockingly, Tesla saw sales throughout mainland China plummet 98% from March. Meanwhile, production for the automaker also took a substantial hit, with Chinese output falling 81% from 55,462 automobiles to 10,757. As lockdowns and other strict policies remain ongoing, experts predict that much of the impact witnessed in April will bleed into May.

There is some good news on the horizon, however. For instance, COVID-19 case counts in Shanghai continue to fall. According to data released on May 11, daily infections managed to drop beneath 1,500 cases, an 18-day low. Meanwhile, around 612,500 people have tested positive for the virus since March 1.

The stark drop in daily infections signals the possibility of an end to lockdowns within the city. However, officials over in Beijing continue to ramp up pressure on the populace. Aside from closing businesses and schools, all residents are now required to work from home.

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Semiconductor Shortage May Not End Until 2024

According to Intel CEO, Pat Gelsinger, the ongoing semiconductor chip shortage will likely persist until at least 2024. This is a tragic prediction considering how much the current shortage is impacting equipment manufacturing.

Gelsinger previously expected the shortage to resolve by 2023. However, in an interview with CNBC’s TechCheck, she revised her estimate, stating, “that’s part of the reason we believe the overall semiconductor shortage will now drift into 2024 from our earlier estimates in 2023. More shortages now hit equipment, and some of those factory ramps will be more challenged.”

So far, the semiconductor shortage has severely impacted global auto production, especially given the slew of other factors at work. In response, AutoForecast Solutions once again lowered its production estimates for 2022.

The company now expects production in North America and the Asia-Pacific region to fall by 2% to 14.82 million and 46.68 million units, respectively. In Europe, Western and Eastern  production estimates now stand at 11.16 million and 6.26 million.

UK Imposes 35% Duty on Russian Palladium, Platinum

Both palladium and platinum prices saw a modest lift following the UK government’s announcement of a new round of sanctions on Russia and Belarus. As part of the package, the UK will raise tariffs on products including platinum and palladium by 35%.

Russia produces around 40% of global mined palladium and almost 16% of global platinum. This makes the country the world’s largest and second-largest producer with respect to both precious metals. As such, the ongoing war in Ukraine and its effects stand as a leading driver for most of this year’s price fluctuations.

Indeed, both metals previously jumped in early April following a decision by the London Platinum and Palladium Market to suspend two major Russian-government-owned refiners.

MetalMiner’s free weekly newsletter provides up-to-date metal price intelligence on the impact of the war in Ukraine on metal prices and the Automotive MMI.

Actual metals prices and trends

• The US scrap steel price rose 1% month over month to $606 per short ton as of May 1. Meanwhile, the US HDG price picked up by 2.36% to $1,906 per short ton.
• US palladium bars rose 2.32% to $2,254 per ounce month over month. Platinum fell 5.25% to $938 per ounce.
• The Korean 5052 coil premium over 1050 declined 4.83% to $4.53 per kilogram.