Articles in Category: Ferrous Metals

According to the Financial Times, China’s President Xi Jinping surprised the global community by announcing last month a hugely ambitious plan to improve China’s environment and make the country carbon-neutral by 2060.

In addition, he said the country’s emissions would peak before 2030.

But does this really mean anything? If it does, what impact will it have on the country’s massive steel industry? The steel industry, of course, is the source of a significant proportion of the country’s carbon emissions?

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China’s environment and emissions figures

Firstly, let’s look at the scale of the proposition.

China is the world’s largest emitter of greenhouse gases (such as carbon dioxide and methane).

Last year, China’s emissions accounted for roughly 27% of the global total. The country’s total accounted for more than the U.S., Europe and Japan combined, the Financial Times reported.

Furthermore, the country consumes more coal than the rest of the world put together. In addition, China continues to commission new coal power plants.

On the one hand, China also leads the world in the deployment of solar power, wind power and electric vehicles. Its energy-efficiency policies are ambitious and successful. Significantly, there are no known climate change deniers in the Chinese leadership.

But is the pledge meaningful?

It contrasts poorly with that made by almost 70 countries and the E.U. Those countries have already pledged to make their economies “net-zero” greenhouse gas emitters by mid-century, or 10 years earlier than China’s pledge.

And the 2030 peak emissions date is a rehash of a commitment made back in 2014, suggesting peak emissions could be reached well before 2030 and the authorities are simply back-sliding.

Difficult changes

The scale of the challenge vis-a-vis China’s environment and emissions is considerable.

More than 85% of China’s primary energy last year came from coal, oil, and natural gas, all of which produce carbon dioxide. This came despite massive investment in solar and wind.

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steel shipment

Hor/Adobe Stock

This morning in metals news: August 2020 steel shipments by U.S. steel mills fell 22.9% year over year; Norsk Hydro announced the termination of a memorandum of understanding; and, finally, the copper price made mid-week gains.

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.

August 2020 steel shipments

August 2020 steel shipments from U.S. mills fell by 22.9% on a year-over-year basis, the American Iron and Steel Institute (AISI) reported.

U.S. steel mills shipped 6.5 million net tons in August. The August total, however, marked an 8.2% increase from the previous month.

Furthermore, in the year to date, U.S. steel shipments reached 53.8 million net tons, down 17.0% compared with the first eight months of 2019.

Norsk Hydro terminates MOU

Norsk Hydro recently announced the termination of a memorandum of understanding (MOU) with Golar Power and CELBA.

The MOU included Hydro’s alumina refinery Alunorte, Golar Power Brasil Participações and Centrais Elétricas Barcarena (CELBA), with the ultimate goal of bringing liquified natural gas (LNG) to Hydro’s Alunorte refinery in Brazil.

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stainless steel

Maksym Yemelyanov/Adobe Stock

The Stainless Monthly Metals Index (MMI) decreased by 3.8% for this month’s index value, as U.S. stainless imports surged last month.

October 2020 Stainless MMI chart

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U.S. stainless imports rise 76%

The U.S. Department of Commerce reported the U.S. imported a total of 91,600 metric tons of all stainless products during September.

The September total marked a 76% year-over-year increase. In addition, the September total marked a 42% increase from the 2019 average of 64,600 metric tons.

The higher-than-usual import total is in line with the unexpected demand increase in major appliances, which use stainless steel sheets.

The U.S. market has a shortage in most appliances. This is due to customers storing larger amounts of food, plus shutdowns or personnel reduction manufacturers undertook for a few months. Additionally, manufacturers did not ramp up production to full capacity due to economic uncertainty.

These circumstances created a production backlog that might last well into 2021 and kickstart demand for stainless steel.

However, not all stainless products have recovered.

Outokumpu announced its intention to scale down its long products business, which includes wire rod, wire, bar, rebar and semi-finished long products.

The decision comes after the business made small net sales and negative adjusted EBITDAs. The scaledown measures include: personnel reduction, increasing operational efficiency and focusing on higher-value specialty grades.

E.U. imposes tariffs

Earlier we touched on U.S. stainless imports, which posted significant gains in September.

Meanwhile, the European Commission decided to impose import duties on hot-rolled stainless steel coil and sheets from China, Indonesia and Taiwan.

The tariffs from China are up to 19%. Meanwhile, they go up to 17.3% for Indonesian products and up to 7.5% from Taiwan. The tariffs kicked in Oct. 8.

The Commission made the decision after conducting an investigation. The probe ultimately determined the products were sold at artificially low prices, hurting producers from Belgium, Italy and Finland.

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The Raw Steels Monthly Metals Index (MMI) increased 2.8% for this month’s index value amid a steel market recovery.

October 2020 Raw Steels MMI chart

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Steel market recovery

All U.S. forms of steel prices increased throughout September.

HRC, CRC and HDG prices increased rapidly by 20.4%, 16.4% and 15.4%, respectively. Meanwhile, the plate price increased 4.3%. The wire rod price increased by 1.5%.

However, the Chinese steel market showed the opposite trend or traded sideways.

The Chinese HRC price dropped by 4.4%. CRC increased by 0.22% and HDG had a 6.4% jump the first day of September but remained flat for the rest of the months and through the first two weeks of October.

The prices’ increase in the U.S. market were followed by an increase in capability utilization rate. By the week ending Oct. 3, raw steel production increased to 66.1%. As such, the year-to-date capability utilization rate rose to 66.2% according to the American Iron and Steel Institute.

Over in the Asian market, there are overcapacity concerns.

The South East Asia Iron and Steel Institute (SEAISI) reported that the region, particularly Chinese steelmakers and banks, might have overinvested in new basic oxygen furnace (BOF) integrated mills.

The region’s current capacity is approximately 151 million metric tons. The proposed investment could bring it up to 50 million metric tons, creating 60 million metric tons of overcapacity from BOF alone. It is important to note that BOF mills cannot operate at low capacity.

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Steel production

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This morning in metals news: the U.S. steel sector’s capacity utilization rate for the week ending Oct. 10 reached 67.9%; copper prices dropped Tuesday; and global liquid fuel outages increased in 2020, according to the Energy Information Administration.

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.

Steel sector capacity utilization rate reaches 67.9%

The U.S. steel sector’s capacity utilization rate rose to 67.9% for the week ending Oct. 10, the American Iron and Steel Institute (AISI) reported.

The rate increased from 66.6% the previous week but declined from the 78% posted during the same week in 2019.

Meanwhile, steel output for the week ending Oct. 10 totaled 1.50 million net tons, up 1.2% from the previous week. Output during the aforementioned week, however, declined 16.8% year over year.

Copper price falls

In addition to steel capacity utilization, the copper price slipped on Tuesday, Reuters reported.

LME three-month copper fell 0.5% on Tuesday to $6,705 per metric ton, according to Reuters.

Liquid fuel outages rise in 2020

Finally, according to the Energy Information Administration, the number of liquid fuel outages has increased in 2020.

“So far in 2020, monthly oil supply disruptions have averaged 4.6 million barrels per day (b/d) and reached 5.2 million b/d in June, the highest monthly levels since at least 2011, when the U.S. Energy Information Administration (EIA) began tracking monthly liquids production outages,” the EIA reported. “Global oil supply disruptions averaged 3.1 million b/d in 2019, and rising outages in Iran have been the main drivers of the year-on-year increase.”

Furthermore, Libya, Iran and Venezuela were the primary contributors to the outages, the EIA reported.

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steel shipment

Hor/Adobe Stock

This morning in metals news: U.S. steel prices have made significant gains in recent weeks; exports of liquefied natural gas (LNG) from two key Louisiana export terminals have resumed after Hurricane Laura; the coronavirus pandemic has impacted tin production in Bolivia.

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U.S. steel prices rise

U.S. steel prices have posted significant gains of late. HRC, for example, closed Wednesday at $589 per short ton, up 17.33% month over month.

Meanwhile, the CRC price closed Wednesday at $775 per short ton, up 15.5% month over month.

Finally, U.S. HDG closed Wednesday at $850 per short ton, up 12.73% month over month.

LNG exports resume from terminals hit by Hurricane Laura

Among other impacts, Hurricane Laura disrupted activities at two LNG export terminals in Louisiana.

However, on the heels of the hurricane, the Sabine Pass terminal resumed exports Sept. 11, per the Energy Information Administration. Sabine Pass is the largest LNG export facility in the U.S.

However, the resumption of activity at Cameron terminal did not occur until Oct. 5 due to persisting infrastructural damage at the facility.

Furthermore, the next hurricane on the way could lead to further damage.

“Currently, Hurricane Delta, a Category 4 storm in the Gulf of Mexico, is expected to make landfall in Louisiana on Friday, October 9,” the EIA reported. “Depending on the path of Hurricane Delta, Cameron and Sabine Pass may take precautionary measures and temporarily suspend operations as they did before Hurricane Laura.”

Tin output in Bolivia

The coronavirus pandemic has impacted tin production in Bolivia, the International Tin Association (ITA) reported this week.

Tin concentrate production in the first quarter of the year fell 30% year over year.

In addition, coronavirus-related closures prevented production 2,600 tonnes of refined ton in Q2, the ITA estimated.

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globe

natali_mis/Adobe Stock

This morning in metals news: investor service Moody’s upgraded its global steel sector outlook from negative to stable; the E.U. slapped duties on stainless steel from China, Indonesia and Taiwan; and the American Iron and Steel Institute reported September import market share in the U.S. reached 16%.

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

Moody’s steel outlook

Moody’s upgraded its steel outlook from negative to stable, the investor service said Wednesday.

“Demand is improving from lows on easing of coronavirus lockdowns, production resumption in key end markets such as automotive, and stronger economic data — particularly in China,” Moody’s said in a release. “Improving second half conditions and our expectation of acceleration from low levels in 2021 underpin the outlook, although risks remain should there be a resurgence of the virus.”

Rising prices and capacity utilization rates, plus stronger demand, powered the move back up to stable for the U.S. steel sector, Moody’s noted.

E.U. adds duties on imported stainless

Meanwhile, the E.U. has imposed duties on stainless steel imported from China, Indonesia and Taiwan, Reuters reported.

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mergers and acquisitions

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Before we head into the weekend, let’s take a look back at the week that was and some of the metals storylines here on MetalMiner, including: Cleveland-Cliffs’ acquisition of ArcelorMittal USA; a breakdown of the British automotive manufacturing sector’s struggles; the PSAFiat Chrysler merger; primary aluminum production; the U.S. steel capacity utilization rate; and Hurricane Laura’s impact on Gulf of Mexico crude oil production.

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Week of Sept. 28-Oct. 2 (Cleveland-Cliffs’ acquisition, primary aluminum production and more)

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.

crude oil

phonlamaiphoto/Adobe Stock

This morning in metals news: Hurricane Laura had the largest effect on Gulf of Mexico crude oil production of any hurricane since 2008, according to the Energy Information Administration (EIA); U.S. imports of standard pipe and tin plate from Thailand and China, respectively, surged from May-July; and tech companies could call the site of the former Etna steel mill their new home.

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.

Hurricane Laura leads to 14.4M-barrel reduction in Gulf of Mexico oil output

Hurricane Laura had the largest impact on Gulf of Mexico oil production of any storm since 2008, the Energy Information Administration (EIA) reported.

The EIA reported, citing estimates from the U.S. Bureau of Safety and Environmental Enforcement (BSEE), the hurricane reduced crude oil production by 14.4 million barrels over a period of 15 days.

At its peak, Hurricane Laura forced the evacuation of all 16 dynamically positioned drilling rigs, the EIA reported. Meanwhile, the hurricane forced evacuation of 11 of the 12 nondynamically positioned drilling rigs and nearly half of the 643 offshore production platforms operating in the Federal Offshore Gulf of Mexico.

The hurricane battered Louisiana in late August. The Associated Press reported Sept. 24 that New Orleans-based utility Energy Corp. said damage stemming from the hurricane had reached a cost of $1.4 billion.

U.S. standard pipe, tin plate imports surge

U.S. imports of standard pipe from Thailand and tin plate from China surged over the summer, according to Steel Import Monitoring and Analysis (SIMA) system trends data.

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The U.S. steel sector’s capacity utilization rate rose to 66.1% for the week ending Sept. 26, the American Iron and Steel Institute (AISI) reported.

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U.S. steel capacity utilization gains

The rate marked a 1.6 percentage point jump from the previous week, when it reached 64.5%.

Output during the week ending Sept. 26 totaled 1.48 million tons, up 2.4% from the previous week.

However, the weekly output total marked a 17.4% year-over-year decline. Output during the same week in 2019 totaled 1.80 million net tons at a capacity utilization rate of 77.4%.

YTD output down 20.1%

Meanwhile, aside from the U.S. steel capacity utilization rate, adjusted year-to-date production totaled 57.65 million net tons at a capacity utilization rate of 65.8%.

The year-to-date output total marked a 20.1% decline from the 72.13 million net tons produced during the same period last year. During that time frame in 2019, the capacity utilization rate reached 80.3%.

Output by region

Meanwhile, steel output for the week ending Sept. 26 by region totaled:

  • Northeast: 128,000 net tons
  • Great Lakes: 526,000 net tons
  • Midwest: 163,000 net tons
  • Southern: 590,000 net tons
  • Western: 73,000 net tons

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