Articles in Category: Ferrous Metals

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This morning in metals news, iron ore made gains Friday, a Houston metal manufacturer plans to close and Nippon Steel plans to cut its capital spending by 10%.

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Iron Ore Prices Rise

Chinese iron ore futures rose 4% Friday on heightened restocking demand, Reuters reported.

The most-traded January 2020 Dalian Commodity Exchange contract picked up 4% to reach $85.65 per ton, according to the report.

Houston Metal Fabricator to Shutter

United Structures of America, a metal fabricator with locations in Houston and Portland, Tennessee, will shutter in September, the Houston Chronicle reported.

The report cites steel tariffs, a recent cyber attack and financial issues as factors underpinning the shuttering.

Nippon to Cut Capital Spending

Japan’s Nippon Steel plans to cut its capital spending by 10% through fiscal year 2020, the Nikkei Asian Review reported, impacted by a slowing steel market and the ongoing U.S.-China trade war.

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Nippon expects its profits to fall 55% this fiscal year compared with last year, according to the report.

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

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The U.K.’s Department for Business, Energy and Industrial Strategy (BEIS) has issued a call for evidence to help inform a planned £250 million Clean Steel Fund.

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According to the BEIS, the fund will “support the UK steel sector to move to a decarbonisation pathway compatible with net zero.”

The government is seeking evidence to help it develop the “detailed design” of the fund, including feedback regarding potential “barriers to realising clean steel ambitions” and “the opportunities to be gained in overcoming these.”

The U.K. has set a target to reduce greenhouse gas emissions by 100% — compared with 1990 levels — by 2050, pursuant to the Climate Change Act of 2008.

According to the BEIS, the primary goals of the proposed Clean Steel Fund are to help facilitate the transition to “lower carbon iron and steel production” to help the sector reach net zero emissions (per the Climate Change Act) and to maximize “longevity and resilience” in the sector by “building on longstanding expertise and skills and harnessing clean growth opportunities.”

“We also intend to establish a new £100 million Low Carbon Hydrogen Production Fund, to support the deployment of low carbon hydrogen production at scale,” the BEIS said. “This could enable a pathway to lower carbon steel production and support broader efforts to decarbonise industry.”

UK Steel, an industry group that champions U.K. steelmaking, responded positively to the call for evidence.

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“Today’s announcement of the Clean Steel Fund is extremely positive news for UK steelmakers and the whole of the UK’s decarbonisation efforts,” UK Steel Director General Gareth Stace said. “The fund is a vital step towards further reducing our carbon footprint here in the UK and will cement our position in a future low-carbon world.”

The BEIS’s 22-page call for evidence document can be found here.

This morning in metals news, thyssenkrupp may have to sell its elevator business, U.S. Steel plans to move forward with investments at Gary Works despite idlings and a zinc exploration company filed a bankable feasibility study.

Ups and Downs

thyssenkrupp may have to sell its successful elevator business to save the German firm’s other segments, according to sources cited by Reuters.

According to the sources, an IPO for the elevator business would not take place until at least early 2020.

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U.S. Steel to Move Forward with Investments

U.S. Steel plans to continue to move forward with planned investments at its Gary Works despite the recent idling of the plant’s Blast Furnace #8, the Times of Northwest Indiana reported.

Last year, U.S. Steel announced plans to invest a minimum of $750 million to “modernize and enhance” its Gary Works facility.

Superior Lake Announces Feasibility Study Results

Superior Lake Resources, a zinc development company, unveiled its bankable feasibility results for its zinc project, claiming a net present value of U.S. $157 million.

The Superior Lake mining property in Ontario, Canada, was first discovered in 1879.

“The purpose of this BFS was to validate Superior Lake becoming a viable zinc operation,” Superior Lake CEO David Woodall said in a prepared statement. “This was clearly achieved, as the Study demonstrates the Project will generate strong cash flow throughout the nine-year mine life. The driving factor for the result was the low AISC (LOM – US$0.47 / lb), which, if brought into production, would rank the Project in the lowest quartile of producers globally.

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“The development of the Project has been completed with the future in mind, as the decline will be in close proximity to each of the major geophysical anomalies that were identified in the 2019 exploration program, all of which are expected to be tested in the near future. A discovery at any of these anomalies would significantly change the parameters of the Project both in terms of mine life as well as production profile. In the coming months, the Company will focus on finalising off-take, equity and debt financing as well as completing an Optimisation Study whereupon a decision to mine will be made.”

According to a recent American Iron and Steel Institute (AISI) report, the U.S. steel industry operated at a capacity utilization rate of 81.0% for the year through Aug. 24.

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Adjusted year-to-date steel production reached 63.55 million tons, according to AISI, up 4.4% from the 60.86 million tons produced during the same period in 2018. The 2019 capacity utilization rate of 81.0% marked an increase from the 77.3% posted during the same time frame in 2018.

In a more constricted window, production for the week ending Aug. 24, production totaled 1.88 million tons at a capacity utilization rate of 80.6%, up 0.9% from the 1.86 million tons and 79.4% posted during the same week in 2018.

Meanwhile, production for the week ending Aug. 24, 2019, increased 1.1% from the previous week, when production reached 1.86 million net tons at a capacity utilization rate of 79.8%.

Broken down by region for the week ending Aug. 24, 2019, production totaled:

  • Northeast: 202,000 tons
  • Great Lakes: 681,000 tons
  • Midwest: 204,000 tons
  • Southern: 719,000 tons
  • Western: 71,000 tons

Meanwhile, according to another AISI report, U.S. imports of steel for the year through July fell 10.6% on a year-over-year basis. Imports totaled 18.67 million tons through the first seven months of the year. Annualized steel imports come in at an estimated 32.0 million tons, which would mark a 5.1% decline compared with 2018 import levels.

However, in July, imports totaled 3.03 million tons, marking a 48.3% increase compared with the previous month.

Finished steel import market share came in at an estimated 19% in July and stands at 21% for the first seven months of the year.

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According to the AISI report, individual steel products with notable increases in import levels in July compared with June included: cut lengths plates (up 55%), line pipe (up 29%), hot rolled bars (up 24%), plates in coils (up 23%), standard pipe (up 21%), hot rolled sheets (up 19%), sheets and strip hot dipped galvanized (18%), wire rods (up 16%), mechanical tubing (up 16%), sheets and strip all other metallic coatings (up 11%), and heavy structural shapes (up 10%). 

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Global crude steel production in July grew, but the rate of growth slowed considerably last month.

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Production from the 64 countries reporting to the World Steel Association totaled 156.7 million tons in July, up 1.7% compared with July 2018.

The production growth in July marked a decline from the previous month, when year-over-year production growth reached 4.6%. Meanwhile, year-over-year production growth in July 2018 reached 5.3%.

Source: World Steel Association

China’s steel production has also dropped significantly.

After reaching year-over-year production growth of 12.7% in April, growth dropped to 10% for May and June. In July, however, growth plummeted to 5%.

China’s crude steel production for July 2019 totaled 85.2 million tons. No. 2 producer India produced 9.2 million tons of crude steel in July 2019, marking a 1.7% increase compared to July 2018.

Japan’s production 8.4 million tons of crude steel marked a 0.4% decline from July 2018. South Korea tallied crude steel production of 6.0 million tons, down 2.1% from July 2018.

U.S. production reached 7.5 million tons, up 1.8% compared to July 2018.

According to the American Iron and Steel Institute, U.S. steel production for the year through Aug. 24 increased 4.4% compared with the same period of 2018. Production for the period this year totaled 63.5 million tons.

The U.S. steel sector’s capacity utilization rate for the period reached 81.0%, up from 77.3% for the same period in 2018. By region, production during the week ending Aug. 24 reached:

  • Northeast: 202,000 tons
  • Great Lakes: 681,000 tons
  • Midwest: 204,000 tons
  • Southern: 719,000 tons
  • Western: 71,000 tons

Elsewhere, Brazil’s crude steel production in July plunged 20.7% to 2.4 million tons, while Turkey’s production fell 10.6% to 2.9 million tons.

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Crude steel production in Ukraine fell 1.7% to 1.8 million tons.

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This morning in metals news, U.S. raw steel production for the year through Aug. 24 is up 4.4%, Beijing’s Chalco reported profits declined in the first half of the year and India’s steel demand is slowing.

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Raw Steel Production Jumps 4.4%

The American Iron and Steel Institute reported U.S. raw steel production for the year through Aug. 24 increased 4.4% on a year-over-year basis.

Production for the year to date reached 63.5 million net tons at a capability utilization rate of 81.0%.

Chalco 1H 2019 Profits Drop

First half profits for Aluminum Corp of China Ltd dropped 14.1% on a year-over-year basis, Reuters reported.

The firm’s second quarter profits fell 52.7% year over year, according to Reuters.

India’s Steel Demand Lags

India is on pace for a slowdown in steel consumption this year, paced by a slowdown in downstream demand, the Hellenic Shipping News reported.

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For the April-July period, steel consumption growth of 6.6% marked a decline from the 9.7% growth posted during the same period in 2018.

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This morning in metals news, U.S. imports of steel are down 10.6% for the first seven months of the year, U.S. Steel plans to idle its East Chicago plant, and China will raise tariffs on imports of copper scrap and aluminum scrap from the U.S.

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Steel Imports Down 10.6%

U.S. imports of steel dropped 11% during the first seven months of the year compared with the first seven months of 2018, the American Iron and Steel Institute (AISI) reported.

The U.S. imported an estimated 3.03 million tons of steel in July, which marked a 48.3% increase from the previous month.

For the first seven months of the year, imports totaled 18.67 million tons, down 10.6% from import levels for the first seven months of 2018.

U.S. Steel to Idle East Chicago Plant

U.S. Steel announced it will idle its East Chicago plant by mid-November, CNBC reported, which could lead to 150 layoffs.

Shares of U.S. Steel fell 5.3% on Friday, according to the report.

China to Raise Tariffs on Copper, Aluminum Scrap

As trade tensions between the U.S. and China drag on with no apparent end in sight, China announced it will raise its tariffs on imports of U.S. copper scrap and aluminum scrap, Reuters reported.

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China will add an extra 5% to existing tariffs on the scrap metals effective Dec. 15, according to Reuters.

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

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All indicators seem to show that India may end up being a net importer of steel for the second consecutive year in fiscal year 2020, according to sector experts and ratings agencies.

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The reasons underpinning this development are many.

In a desperate attempt to quell the import tide, the Indian government is said to be actively looking at imposing even more safeguard duties on steel imports. These are reported to be at an advanced stage at India’s Directorate General of Trade Remedies (DGTR), the government body in charge of recommending safeguard duties. In addition, the government is being pressured by the Indian steel lobby (which is led by the large representative body of steel companies, the Indian Steel Association).

The first signs of India continuing to be a net importer this year, too, came from figures out for the April-July period of this fiscal year.

A report by CARE Ratings showed the imports of finished steel products exceeded exports by 1 million tons, according to the Business Standard. Steel exports from India in the period under review declined by 23.4% to 1.5 million tons. Despite a 6% fall, imports of finished steel products remained high at 2.5 million tons, per the Business Standard.

According to another research agency, India Ratings and Research (IRR), the fundamentals of the domestic steel sector are likely to weaken in the current 2019-20 fiscal year (ending March 31, 2020), which includes the risk of softening of prices, elevated raw material prices and weak demand, Argus reported.

Experts say additional safeguard measures imposed on imported steel products by the European Union (E.U.) have dented Indian exports to the trading bloc. E.U. nations like Italy, Belgium and Spain accounted for 5-12% share in India’s total finished steel exports in fiscal year 2019.

In fiscal year 2019, India imported around 3.1 million tons of steel from the Republic of South Korea, followed by 1.8 million tons from China and 1.2 million tons from Japan.

One more worry for Indian steel companies is the plummeting of global iron ore prices. From a five-year high of $121 per ton in July, spot iron ore prices have fallen to $93; iron ore prices are expected to fall further.

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According to the IRR, one area to watch out for is the auction of local ore mines scheduled for March 2020. If there is any delay in the auction schedule, it would lead to a disruption of local steel production.