Articles in Category: Ferrous Metals

China’s steel and aluminum market is undergoing a quiet revolution.

It’s not a revolution of investment or innovation.

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Peak aluminum, steel in China?

China aluminum

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According to Reuters, Beijing’s target of peak coal use by 2030 is asserting a dampening effect on new steel mill and aluminum smelter investment.

As such, the country could be at or near peak production. As Reuters’ Andy Home notes, the country’s rising output over the years as had a dampening effect on prices. That trend has led some Western producers to cease operations.

But a combination of harsher environmental legislation resulting in Beijing dissuading investment in new coal fired power projects, combined with Western markets’ meaningful action — after years of simply complaining — to block out Chinese exports of aluminum and steel products suggests the Chinese impetus to build capacity and the rest of the world’s willingness to buy product are both going through a transformational change.

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This morning in metals news: the United States International Trade Commission made determinations in a five-year sunset review covering imports of cut-to-length carbon steel plate; meanwhile, United States Trade Representative Katherine Tai will outline the Biden-Harris administration’s “worker-centered trade policy” today; and, lastly, the Consumer Price Index for All Urban Consumers rose by 0.6% in May.

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USITC rules on cut-to-length carbon steel plate imports

United States International Trade Commission

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The USITC recently made determinations in a five-year sunset review regarding an existing anti-dumping duty order on cut-to-length carbon steel plate from China and terminating suspended investigations on imports of the product from Russia and Ukraine.

In its vote, the USITC said revoking the anti-dumping duty order on the carbon steel plate from China “would be likely to lead to continuation or recurrence of material injury within a reasonably foreseeable time.”

It also voted to maintain existing suspension agreements for the imports from Russia and Ukraine.

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The Construction Monthly Metals Index (MMI) held flat for this month’s reading.

June 2021 Construction MMI chart

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US construction spending ticks up in April

housing starts

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U.S. construction spending reached a seasonally adjusted annual rate of $1,524.2 billion in April, the Census Bureau reported.

The estimated April rate marked a 0.2% increase from the previous month and a 9.8% increase on a year-over-year basis.

Construction spending amounted to $452.3 billion during the first four months of the year, or up 5.8% from the same period in 2020.

Meanwhile, private construction spending reached a seasonally adjusted annual rate of $1,180.7 billion, up 0.4% from March. Under the umbrella of private construction, residential construction increased by 1.0% to a rate of $729.2 billion in April. Nonresidential construction fell by 0.5% to $451.4 billion in April.

Public construction spending fell 0.6% to $343.5 billion. Educational construction spending fell 0.5% to $84.8 billion. Highway construction rose 0.6% to $99.8 billion.

Construction employment declines in May

On the labor side, employment in the construction sector fell by 20,000 in May, the Census Bureau reported. Employment in construction is down by 225,000 from February 2020.

The Associated General Contractors of America noted contractors continue to struggle with unpredictability with respect to securing materials.

“Steadily worsening production and delivery delays have exceeded even the record cost increases for numerous materials as the biggest headache for many nonresidential contractors,” said Ken Simonson, the association’s chief economist. “If they can’t get the materials, they can’t put employees to work.”

ABI posts growth for third consecutive month

For the third straight month, the Architecture Billings Index, released monthly by the American Institute of Architects, showed growth (meaning an index value greater than 50).

After the onset of the pandemic, the ABI had contracted each month for a year until the February 2021 reading.

For April, the ABI checked in at 57.9, up from 55.6 the previous month. The design contracts index reached 61.7, up from 55.7 the previous month.

The ABI marked its highest level since before the Great Recession.

“Interest in new projects remained extremely strong as well, with the Inquiries score rising to 70.8, and the value of new signed design contracts reaching 61.7, the highest score in that index since data collection started in late 2010,” the ABI report stated. “This means that not only are clients talking to architecture firms about starting new projects, but that they are also signing contracts to begin that work at a high rate.”

By region, the Midwest led the way with an ABI reading of 60.6. Trailing the Midwest were the South (58.3), Northeast (55.0) and West (52.4).

As we’ve noted in this space on a regular basis, shortages and delays in receiving materials have had a ripple effect. The sudden surge in demand throughout some sectors has produced a bullwhip effect.

The ABI report noted the 0.8% jump in the Consumer Price Index from March to April and the 4.2% jump from April 2020 to April 2021, which marked the largest increases since before the Great Recession.

“In addition, core inflation rose by 0.9% in April, the largest increase in that indicator since 1981,” the ABI report notes. “Rising consumer prices at this time are largely caused by supply constraints due to a shortage of key inputs subsequently leading to production delays, and by rising demands for services, particularly travel and hospitality.”

Pending home sales drop in April

Meanwhile, in the housing market, pending home sales fell by 4.4% in April, the National Association of Realtors (NAR) reported.

“Contract signings are approaching pre-pandemic levels after the big surge due to the lack of sufficient supply of affordable homes,” said Lawrence Yun, NAR’s chief economist. “The upper-end market is still moving sharply as inventory is more plentiful there.”

Actual metals prices and trends

The Chinese rebar price dipped 0.7% month over month to $802 per metric ton. Meanwhile, the Chinese H-beam steel price fell 2.3% to $815 per metric ton.

The U.S. shredded scrap steel price rose by 3.2% to $450 per short ton.

The European 1050 commercial aluminum sheet price rose by 0.4% to $3,577 per metric ton.

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This morning in metals news: as the U.S. economy reopened, job openings hit a record high in April; meanwhile, steel prices continue to rise; and, lastly, emissions from the electric power sector have declined as it has shifted from coal to natural gas.

The MetalMiner Best Practice Library offers a wealth of knowledge and tips to help buyers stay on top of metals markets and buying strategies.

Job openings hit record high in April

job openings

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U.S job openings reached a record high of 9.3 million on the last business day of April, the U.S. Census Bureau reported.

Hires, meanwhile, reached 6.1 million, little changed from the previous month.

“Total separations increased to 5.8 million,” the Census Bureau added. “Within separations, the quits rate reached a series high of 2.7 percent while the layoffs and discharges rate decreased to a series low of 1.0 percent.”

In durable goods manufacturing, separations increased by 7,000.

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This morning in metals news: the Biden administration today released a 250-page report detailing the findings of its 100-day supply chain review; meanwhile, the US steel capacity utilization rate ticked up to 82.3%; and, lastly, the U.S. goods and services deficit fell in April compared with the previous month.

Each month, MetalMiner hosts a webinar on a specific metals topic. Explore the upcoming webinars and sign up for each on the MetalMiner Events page.

Biden administration releases 100-day supply chain review

supply chain chart

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Earlier this year, President Joe Biden signed an executive order calling for 100-day reviews of critical U.S. supply chains. The reviews in question included those for things like critical minerals, semiconductors and high-capacity batteries.

The 100-day period has come and gone. Today, the administration released a 250-page report detailing its findings.

“The COVID-19 pandemic and resulting economic dislocation revealed long-standing vulnerabilities in our supply chains,” the report’s introduction states. “The pandemic’s drastic impacts on demand patterns for a range of medical products including essential medicines wreaked havoc on the U.S. healthcare system. As the world shifted to work and learn from home, it created a global semiconductor chip shortage impacting automotive, industrial, and communications products, among others.”

In addition to its deeper analysis, the report included six broad recommendations for strengthening U.S. supply chains:

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Before we head into the weekend, let’s take a look back at the week that was and the metals news here on MetalMiner, including iron ore volatility, rare earths production quotas in China and much more:

bulk cargo iron ore

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Week of May 31-June 4 (iron ore volatility, rare earths quotas and more)

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Hot rolled coil prices in Western Europe have not slowed their upward trek over the past month. Demand continues to outstrip supply for the flat-rolled product, industry watchers said June 1.

“It has everything to do with high demand in Europe and the United States,” one trader told MetalMiner.

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Rising hot rolled coil prices

hot-rolled coil steel

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Sources confirmed prices for hot rolled coil at €1,120-1,130 ($1,370-1,385) per metric ton exw for rolling and delivery into Q4. That compares with hot rolled coil prices of €1,000-1,020 ($1,225-1,250) in May.

Cold rolled coil is now carrying a premium of €125 ($150) per ton over HRC, sources indicated.

The auto and construction sectors are behind the high demand, one source said.

New registrations for passenger vehicles within the European Union rose by 218.6% year over year in April to approximately 862,226 units from 270,651 units, the European Automobile Manufacturers’ Association (ACEA) stated on May 19.

Restrictions from the COVID-19 pandemic in April 2020 were the main reason behind the increase, however, the association noted.

“Indeed, despite this big percentage increase, last month’s sales volume was almost 300,000 units lower than that recorded in April 2019,” ACEA added.

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China’s increased appetite for iron ore has become a problem for neighbor India.

In the first four months of 2021, ore exports from India increased by 66% to 22.42 million tons (MT). As much as 90% of this went to China, according to Business Today.

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India’s iron ore problem

India iron ore barge

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China is the largest consumer of iron ore. The country imports about 70% of the world’s production. Last year, it imported a record 1.17 billion tons.

The spike in iron ore exports is becoming a problem for Indian steelmakers, as they are struggling to get this critical raw material. Some have now demanded that the government ban iron ore exports from India.

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Before we head into the weekend, let’s take a look back at the week that was here on MetalMiner, which included coverage of the Section 232 tariffs, the recent metals price pullback, China’s warning to commodity speculators and much more:

Each month, MetalMiner hosts a webinar on a specific metals topic. Explore the upcoming webinars and sign up for each on the MetalMiner Events page.

Week of May 24-28 (Section 232 tariffs, price pullback and more)

tariffs overlaid on US currency

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The MetalMiner Best Practice Library offers a wealth of knowledge and tips to help buyers stay on top of metals markets and buying strategies.

Global crude steel production dipped to 169.5 million metric tons in April, down slightly from the previous month, the World Steel Association reported this month.

Production in March had reached 170.1 million metric tons. Meanwhile, April output increased 23.3% year over year, up from 137.5 million metric tons in April 2020.

Each month, MetalMiner hosts a webinar on a specific metals topic. Explore the upcoming webinars and sign up for each on the MetalMiner Events page.

Chinese steel production rises

Steel production

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Although global steel production backtracked slightly in April from the previous month, Chinese steel production increased.

The Chinese steel sector churned out 97.9 million metric tons, up from 94 million metric tons in March. Meanwhile, April output increased by 13.4% year over year.

Steel producers in China — and around the world — have benefited from soaring prices. Furthermore, earlier this month, Chinese steelmakers bumped up prices to account for significant rises in iron ore prices.

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