Articles in Category: Ferrous Metals

The U.S. steel sector notched a capacity utilization rate of 81.6% for the week ending Nov. 2, according to a recent American Iron and Steel Institute (AISI) report, as U.S. steel prices continue to plunge.

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U.S. steel production reached 1.89 million tons for the week ending Nov. 2, marking a 0.1% year-over-year increase over the week ending Nov. 2, 2018 (when production reached 1.88 million tons at a capacity utilization rate of 80.5%).

Meanwhile, production during the week increased 1.2% compared with the previous week ending Oct. 26, 2019, when production totaled 1.87 million tons at a rate of 80.7%.

For the year to date, production reached 81.60 million tons at a capacity utilization rate of 80.3%. Production during the period was up 2.5% compared with the 79.58 million tons produced during the same period in 2018 (when the capacity utilization rate checked in at 77.5%).

By region, production totals checked in at:

  • Northeast: 190,000 tons
  • Great Lakes: 676,000 tons
  • Midwest: 181,000 tons
  • Southern: 767,000 tons
  • Western: 74,000 tons

Steel’s Slide Continues

On the price side, October proved to be another downward month for U.S. steel prices.

U.S. hot-rolled coil was down to $483/st as of the start of the month — nearing MetalMiner’s short-term support level. The price declined 12.97% month over month.

U.S. cold-rolled coil fell to $684/st, down 7.69% month over month. U.S. hot-dip galvanized is down 7.21% month over month, having fallen to $746/st.

The plate price dropped 7.07% to $684/st.

Steelmakers continue to grapple with the reality of falling prices, now with over 18 months gone by since the Trump administration slapped a 25% tariff on imported steel.

U.S. Steel, for example, reported an adjusted net loss of $35 million in its third-quarter earnings announcement. Meanwhile, in 3Q 2018, the steelmaker reported adjusted net earnings of $321 million.

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For the first nine months of the year, U.S. Steel reported adjusted net earnings of $124 million, down 80.6% from the $640 million reported during the first nine months of 2018.

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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 coverage here on MetalMiner, which included a PwC report on mining and metal deals, global steel production, lead and zinc forecasts, and an automotive merger of PSA Groupe and Fiat Chrysler.

Keep up to date on everything going on in the world of trade and tariffs via MetalMiner’s Trade Resource Center.

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This morning in metals news, the Federal Reserve has cut interest rates for the third time this year, AK Steel released its third-quarter financials and 16 steel industry associations praised the work of the Global Forum on Steel Excess Capacity.

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Fed Cuts Rates Again

For the third time this year, the Federal Reserve announced a downward adjustment to its federal funds rate.

The Fed lowered its federal fund target rate range by one-quarter of a percentage point, down to 1.50-1.75%.

“Information received since the Federal Open Market Committee met in September indicates that the labor market remains strong and that economic activity has been rising at a moderate rate,” the Fed said in a release. “Job gains have been solid, on average, in recent months, and the unemployment rate has remained low. Although household spending has been rising at a strong pace, business fixed investment and exports remain weak. On a 12-month basis, overall inflation and inflation for items other than food and energy are running below 2 percent. Market-based measures of inflation compensation remain low; survey-based measures of longer-term inflation expectations are little changed.”

In a pair of tweets, President Donald Trump again criticized the Fed and its chairman, Jerome Powell.

“People are VERY disappointed in Jay Powell and the Federal Reserve,” Trump wrote. “The Fed has called it wrong from the beginning, too fast, too slow. They even tightened in the beginning. Others are running circles around them and laughing all the way to the bank. Dollar & Rates are hurting our manufacturers. We should have lower interest rates than Germany, Japan and all others. We are now, by far, the biggest and strongest Country, but the Fed puts us at a competitive disadvantage. China is not our problem, the Federal Reserve is! We will win anyway.”

AK Steel Releases 3Q Results

Ohio-based AK Steel announced adjusted EBITDA of $86.9 million in the third quarter, down from $160.8 million in 3Q 2018.

Net sales of $1.5 billion in the third quarter marked a 12% year-over-year decrease.

“Our third quarter results were essentially in line with our expectations despite a challenging environment,” CEO Roger K. Newport said. “We continued to make solid progress in our strategy to focus on higher-value business during the quarter. As we look to 2020, we are excited about our prospects, particularly in automotive where we expect meaningful market share growth.”

Steel Associations Applaud GFSEC Members’ Work on Excess Capacity

A group of 16 steel industry associations around the world released a statement praising the work of members involved in the Global Forum on Steel Excess Capacity and asking for that work to continue.

In addition, the associations “called upon the few dissenting members to reconsider their current position as quickly as possible.”

“According to the latest OECD information, there are 440 million metric tons of steel excess capacity in the world today. This is an increase of 6.5 percent over last year,” the groups said in a joint statement. “Governments of steelmaking economies worldwide must redouble their efforts to address this persistent global excess capacity in the steel sector, eliminating the support measures that cause it, and implementing strong rules and remedies that reduce excess capacity. We call on governments to continue the work on the issue of steel excess capacity without delay.”

China has been critical of the forum, arguing that it has done enough to work toward addressing the issue of steel excess capacity, the South China Morning Post reported.

The U.S. has also been critical of the forum, claiming it has not been effective.

“The decision by a vast majority of Global Forum members to continue the work of the Forum beyond 2019 is a recognition that severe excess capacity is a continuing crisis,” the Office of the United States Trade Representative said Saturday. “The Global Forum’s policy prescriptions and information-sharing process will not alone resolve the crisis of excess capacity in the global steel sector. This will only happen when those that have created the problem take concrete steps toward true market-based reform. Participation in the Global Forum process is a signal of each member government’s commitment to adhere to principles intended to ensure market-based outcomes.”

In 2017, the USTR said the forum “has not made meaningful progress yet on the root causes of steel excess capacity.”

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The groups issuing the call for continued action were: Steel Manufacturers Association (SMA), American Iron and Steel Institute (AISI), EUROFER (the European Steel Association), Canadian Steel Producers Association (CSPA), CANACERO (the Mexican Steel Association), Alacero (the Latin American Steel Association), Brazil Steel Institute, The Japan Iron and Steel Federation (JISF), European Steel Tube Association (ESTA), Specialty Steel Industry of North America (SSINA), South African Iron and Steel Institute (SAISI), The Cold Finished Steel Bar Institute (CFSBI), Indian Steel Association, Association of Enterprises UKRMETALURGPROM (Ukraine), Russian Steel Association, and The Committee on Pipe and Tube Imports (CPTI).

Global steel production contracted in September, according to the most recent monthly data from the World Steel Association.

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In September, steel production from the 64 countries reporting data to the World Steel Association totaled 151.5 million tons, down 0.3% on a year-over-year basis.

For the first nine months of the year, production reached 1,391.2 million tons, up 3.9% compared with the first nine months of 2018.

Asian production reached 1,000.1 million tons through the first nine months of the year, up 6.3% from the first nine months of 2019.

Production in the E.U. reached 122.5 million tons, down 2.8% compared with the first nine months of 2018.

North American crude steel production in the first nine months of 2019 increased 0.3% to 90.6 million tons, while the Commonwealth of Independent States produced 76.0 million tons, down by 0.1% year over year.

Meanwhile, China’s September 2019 production reached 82.8 million tons, up 2.2% compared to September 2018. September production marked a decline in terms of relative year-over-year growth, as August 2019 year-over-year growth registered at 9.3%.

India’s production reached 9.0 million tons, marking a 1.6% increase. Japan produced 8.0 million tons, decreasing 4.5% year over year. South Korea’s crude steel production hit 5.7 million tons in September, marking a 2.7% year-over-year decline.

In the E.U., Germany churned out 3.4 million tons of crude steel, which marked a 4.0% year-over-year decrease. Italy’s production increased 1.1% to 2.2 million tons. France’s production fell 10.2% to 1.2 million tons, while Spain’s production also hit 1.2 million tons (marking a 1.0% decline).

U.S. production totaled 7.1 million tons, down 2.5% year over year (although year-to-date production remains higher than for the same period in 2018).

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Elsewhere, September production totals in Brazil, Turkey and Ukraine were down by 22.0%. 6.9% and 2.3%, respectively, on a year-over-year basis.

AdobeStock/Stephen Coburn

Before we head into the weekend, let’s take a look back at the week that was and some of the metals coverage here on MetalMiner, which included stories on: steel production and the falling steel price; a dip in aluminum production and the flagging aluminum price; U.S. oil exports; and a survey of U.S. electronics manufacturers regarding tariffs.

Keep up to date on everything going on in the world of trade and tariffs via MetalMiner’s Trade Resource Center.

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This morning in metals news, the U.S.’s imports of steel are down 13.7% in the year to date, miner Glencore is partnering with other companies at the World Economic Forum on responsible sourcing and the Aluminum Association supported a bipartisan letter to Congress lobbying for an aluminum import monitoring program.

Keep up to date on everything going on in the world of trade and tariffs via MetalMiner’s Trade Resource Center.

Steel Imports Down 13.7%

U.S. imports of steel fell 13.7% through the first nine months of the year, according to the American Iron and Steel Institute (AISI).

The U.S. imported 22.6 million tons during the nine-month period this year.

In September, the U.S. imported 1.9 million tons of steel, down 6.2% compared with the August import total.

Glencore to Partner on Responsible Sourcing

Along with other companies, miner Glencore announced it will work on responsible sourcing initiatives with the World Economic Forum.

Glencore will participate in the Mining and Metals Blockchain Initiative, which will “explore the building of a blockchain platform to address transparency, the track and tracing of materials, the reporting of carbon emissions or increasing efficiency.”

Other companies participating in the initiative are: Antofagasta Minerals, Eurasian Resources Group Sàrl, Klöckner & Co, Minsur SA, Tata Steel Limited and Anglo American/De Beers (Tracr).

Aluminum Association Applauds Letter on Import Monitoring

The Aluminum Association on Thursday applauded a letter sent by members of Congress advocating for an aluminum import monitoring program.

“On behalf of the 162,000 Americans working in aluminum, we appreciate this bipartisan effort to shore up trade enforcement in our sector,” said Joe Quinn, vice president of public affairs at the Aluminum Association, in a release. “An aluminum import monitoring system is a necessary step to ensure that all aluminum producers are operating on a level playing field in a fair, rules-based global trading system.”

The letter, co-authored by the chairs of the Congressional Aluminum Caucus and addressed to Secretary of Commerce Wilbur Ross, cites China’s aluminum production growth.

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“A monitoring program would give the U.S. government — and the aluminum manufacturing sector — new tools to identify trends and trade flows to determine if there is circumvention or evasion of the industry’s AD/CVD orders and to swiftly address illegal activity,” the letter states. “Notably, Canada recently expanded its import monitoring system to include aluminum and aluminum products.”

A recent Platts report offers a worrying picture of overcapacity in the Chinese steel market, which could have ramifications for steel prices worldwide.

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When Europe or the U.S. has an overcapacity issue, domestic producers suffer and domestic prices are depressed, but the effects rarely ripple much beyond the region’s borders.

But in part because of China’s dominance in the steel sector — producing over half the world’s steel — and in part because Chinese producers use exports to dump excess production when the country produces more than it consumes, the rest of the world feels the impact through increased exports of low-cost steel products.

China has been engaged in a multiyear program to shutter outdated, more polluting steel capacity. New additions have been authorized only on a replacement basis, but Platts’ analysis suggests plants that have been closed for some years but not pulled down have been allowed to count towards the construction of new, far more efficient steel plants.

Specifically, the report states China’s net crude steel capacity expansion will total 37.65 million mt per year over 2019-23, of which 34.88 million mt per year is due to come online in 2019. This will take China’s total crude steel capacity to around 1.2 billion mt per year by the end of this year.

In the September-October period of this year alone, China approved eight steel capacity replacement projects, Platts reports, which will see 17.18 million mt per year of pig iron and 13.56 million mt per year of crude steel capacity commissioned in the next 3-4 years.

The new projects are predicated on closures of 19.52 million mt per year of pig iron and 15.21 million mt per year of crude steel capacity (5.18 million mt per year of pig iron and 2.16 million mt per year of crude steel capacity were already closed before the end of 2018).

This means there will be just 14.39 million mt per year of pig iron and 13.04 million mt per year of crude steel capacity closed during 2020-23, resulting in a net increase of 2.79 million mt per year of pig iron and 0.51 million mt per year of crude steel capacity over the period.

The problem is further exacerbated by actual output from new facilities being even higher than headline capacity, Platts reports. The new facilities can produce up to 20% more than the stated installed capacity, possible through improved production technologies — by adding more scrap into the iron and steelmaking process — and by using higher-grade iron ore, the article states.

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Steel demand in China, at least from the construction sector, has been robust this year.

But worrying signs are appearing that supply is exceeding demand.

Rebar margins have fallen to just $29/mt during July-September from $159/mt in the same period last year.

Manufacturing is depressed, particularly in the automotive sector. The property sector is expected to weaken next year as new plants come onstream looking to run at 100% capacity to recoup investment; increased exports may be the inevitable result.

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U.S. raw steel production for the week ending Oct. 19 slowed, with the sector’s capacity utilization rate checking in just below the important 80% mark, all coming as steel prices continue to fall — in some cases, to late 2016 levels.

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Capacity utilization for the U.S. steel sector during the week ending Oct. 19 checked in at 79.6%, according to the American Iron and Steel Institute (AISI).

Production for the week reached 1.84 million tons, down from the 1.88 million tons produced during the equivalent week in 2018 (at a capacity utilization rate of 80.1%).

Meanwhile, production during the week ending Oct. 19 picked up 1.1% from the previous week, when production reached 1.82 million net tons at a capacity utilization rate of 78.7%.

Production for the year through Oct. 19 checked in at 77.9 million net tons, at a capacity utilization rate of 80.3%. The year-to-date production marks a 2.8% increase compared with the same period in 2018, when the rate was 77.5%.

The steel capacity utilization rate remains above the 80% mark for the year, but it has been sliding in recent weeks.

U.S. steel price have showed no signs their slide is nearing an end.

The U.S. HRC price is down 12.63% over the last month, reaching $498/st — dropping below the $500/st mark for the first time since late 2016.

The U.S. CRC price is down 8.99% over the last month, down to $688/st, also its lowest since late 2016.

U.S. HDG is down 9.26% to $745/st.

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Meanwhile, plate, which recently lagged behind the other forms of steel, has showed a more moderate decline over the past month. The U.S. plate price is down 1.49% to $727/st, bringing it down to January 2018 levels.

The World Steel Association is set to report September steel production figures later this week.

In its recently released October Short Range Outlook, the World Steel Association forecast global steel demand would rise 3.9% this year, but just 1.0% next year amid slowing overall growth, trade uncertainty and weakness in the automotive sector.

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This morning in metals news, this week’s MetalMiner-Avetta webinar is fast approaching, global steel industry groups demand action on steel excess capacity, and Anglo American released its third-quarter production results and full-year guidance revisions.

Keep up to date on everything going on in the world of trade and tariffs via MetalMiner’s Trade Resource Center.

Sign Up for Thursday’s MetalMiner-Avetta Webinar

MetalMiner and Avetta are hosting a free webinar this Thursday, Oct. 24, on manufacturing and the sector’s challenges vis-a-vis finding the right talent in today’s  labor climate.

The event is free to attend, but registration is required — reserve your spot now.

Steel Groups Rally Against Excess Capacity

Amid a backdrop of sliding steel prices, steel industry groups around the world renewed a call asking for new efforts aimed at tackling steel excess capacity.

“We are grateful for the efforts made to date by the G20 and OECD governments to address excess capacity, and to support a level playing field at the G20 Global Forum on Steel Excess Capacity and OECD Steel Committee,” the industry groups said. “Unfortunately, effective reductions in capacity and concrete actions to remove government measures that distort markets, including raw materials markets, have not been adequate to date. Efforts by governments to eliminate practices that lead to excess capacity should be redoubled.

“We are hopeful that the diligent efforts of Japan, the current G20 Chair, are successful in extending the G20 Global Forum on Steel Excess Capacity beyond 2019, and we urge all G20 and OECD steelmaking economies to pursue all vigorous means to obtain substantive results on the critical problem of steel excess capacity.”

Anglo American Releases 3Q Results, ’19 Guidance

Miner Anglo American revised its 2019 copper guidance downward, down to a range of 630,000 tons to 650,000 tons (from a range of 630,000 tons to 660,000 tons), partially as a result of drought conditions in central Chile.

Third-quarter copper production reached 159,000 tons, down 8% from 172,000 tons in Q3 2018. For the year to date, the firm’s copper production dipped 1% to 479,000 tons.

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Palladium production in the third quarter was flat on a year-over-year basis, while platinum production fell 1% to 527,000 ounces.

The October 2019 Monthly Metals Index (MMI) report is in the books.

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This month, just one of the Monthly Metals Indexes (MMIs) increased, while six declined and three held flat.

Some highlights from this month’s MMIs:

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