Articles in Category: Imports

The Chinese National Bureau of Statistics has reported that China’s crude steel output fell by 3% to 1.03 billion tons in 2021a. This marks its lowest level since 2016. China remains the largest steel-producing country in the world.

The production downturn brought on by curbs imposed to fight pollution, and a drop in steel prices also meant that iron ore imports into China fell in 2021 by 4.3% as compared to the previous year. China remains the world’s top iron ore consumer, and purchased 1.12 billion tons of the commodity last year, compared with 1.17 billion tons imported in 2020.

So, while China continues to reduce its steel output to meet its carbon neutrality target, global steel supply appears likely to fall.

China steel production drops in 2021

Clearly, as reported by MetalMiner, China’s drive in 2021 to lower its national crude steel output to reduce pollution levels, appears in the data officially released a few days ago. The 3% drop in production comes to about a 35-million-ton reduction.

According to the Bureau, China’s pig iron output in 2021 fell 4.3% on the year to 868.57 MMT, which also served as the first year-on-year decline in six years. In December last year, the country’s crude steel and pig iron production fell year-on-year, with crude steel production down 6.8% and pig iron production down 5.4%, respectively. Both, however, recovered strongly from November, which analysts say appeared in line with market expectations.

Will pig iron and crude steel output continue to increase?

But some analysts believe the country’s pig iron and crude steel output will continue to grow in Jan 2022, too, although electric arc furnace steelmakers have slowed production ahead of the Chinese New Year.  That may cap the growth percentage.

According to this report by Reuters, China, riding on the back of robust steel production, has consumed iron ore at a rapid rate in the first 5 months of 2021. But imports then started to contract on an annual basis as Chinese authorities directed steel mills to cut production to keep the annual target of crude steel output flat. In addition, the slowdown in construction activity meant less downstream demand for steel.

Riding on the back of news that the country’s steel production in 2021 dropped, the country’s largest steelmaker, China Steel Corp recently announced a price cut for its steel products by about 1.62% for domestic delivery next month. Several factors have contributed to the announcement: lower demand, global port congestion, and the appreciation of the new Taiwanese dollar.

Global steel production will likely take a hit in the days to come not only because of what’s happening in China but also because South Korea has also cut its steel manufacturing to curb carbon emissions. Just last month, South Korea’s Pohang Iron and Steel Co closed a furnace with a capacity of 1 million tons per year, China Steel said.

All of this could send global steel prices on a course correction after peaking last quarter, and could rebound after the New Year.

 

 

 

 

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 declining steel prices, a look at inflation’s impact on metals and much more:

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Week of Dec. 13-17 (steel prices, inflation impact and more)

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This morning in metals news: U.S. import prices gained in November; meanwhile, U.S. construction starts surged in November; and, lastly, the Energy Information Administration forecasts record monthly natural gas production in 2022.

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Import prices rise 0.7%

cargo trains

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According to the Bureau of Labor Statistics, U.S. import prices gained by 0.7% in November. The rise follows a 1.5% increase in October.

The index for U.S. imports rose by 11.7% over the last 12 months. Import fuel prices rose by 2.0% in November after a jump of 11.1% in October.

“Prices for nonagricultural industrial supplies and materials advanced 2.0 percent in November, driven by higher prices for fuel, nonferrous metals, and chemicals,”

Construction starts jump in November

U.S. privately owned construction starts reached a seasonally adjusted annual rate of 1,679,000 in November.

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This morning in metals news: OPEC held its 23rd ministerial meeting today amid falling oil prices; meanwhile, the United States International Trade Commission issued a ruling on import relief for the domestic crystalline silicon photovoltaic cell sector; and, lastly, the trade ministers of the U.S., Japan and the E.U. convened this week.

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OPEC meets as oil prices retreat

crude oil

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Rising oil prices have been yet another strain on consumers, whether commercial users or everyday motorists at the pump. Oil prices are also a key factor in MetalMiner’s commodity trends analysis.

In the U.S., pre-Thanksgiving gasoline prices reached their highest level this year since 2012.

However, oil prices this past week have lost ground quickly. The WTI crude price, for example, closed Wednesday at $65.57 per barrel, down $12.82 per barrel from the previous week, the Energy Information Administration reported.

OPEC, meanwhile, convened via videoconference today for its 23rd ministerial meeting, during which it agreed to maintain previously agreed output schedules. The group agreed to “reconfirm the production adjustment plan and the monthly production adjustment mechanism approved at the 19th ONOMM and the decision to adjust upward the monthly overall production by 0.4 mb/d for the month of January 2022, as per the attached schedule.”

USITC votes on import relief for PV cell makers

United States International Trade Commission (USITC) voted to keep import relief measures in place for domestic producers of crystalline silicon photovoltaic cells.

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This morning in metals news: Norsk Hydro plans to begin construction on its new aluminum recycling plant in Cassopolis, Michigan, in Q2 2022; meanwhile, U.S. utilities are spending more on electricity delivery; and, lastly, the United States International Trade Commission recently voted to continue investigations regarding imports of oil country tubular goods from Argentina, Mexico, Russia and South Korea.

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Construction to begin next year on Hydro’s new Michigan aluminum recycling plant

Norsk Hydro

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Norsk Hydro said it is on track to begin construction in Q2 2022 on its new aluminum recycling plant in Cassopolis, Michigan.

“The Cassopolis greenfield development will mark the first large-scale production of Hydro CIRCAL® extrusion ingot in North America. We look forward to bringing this high-quality, low-carbon product to our most demanding customers,” said Eivind Kallevik, executive vice president of Hydro Aluminium Metal.

The extrusion ingot will be used in automotive, construction and consumer applications, in addition to building systems. The plant will have annual capacity of 120,000 tons per year.

Utilities pay more for electricity delivery

U.S. utilities are paying for more electricity delivery but less for power production, the Energy Information Administration reported today.

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

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stainless steel rods

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Week of Nov. 15-19 (stainless steel base prices, infrastructure bill and more)

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This morning in metals news: the European Commission this week announced anti-dumping duties for stainless steel cold-rolled flat products from India and Indonesia; the Energy Information Administration forecast crude oil prices will decline in 2022; and, lastly, U.S. housing starts declined in October.

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European Commission imposes AD duties on stainless from India, Indonesia

E.U. flag

Andrey Kuzmin/Adobe Stack

On Thursday, the European Commission announced it is imposing anti-dumping duties on stainless steel cold-rolled flat products from India and Indonesia.

The duties range from 13.9-35.3% for the exporting producers from India. Meanwhile, the duties range from 10.2-20.2% for the exporting producers from Indonesia.

“This sector is critically important to the EU because it is a high value added product, with EU consumption totalling almost €7 billion,” the European Commission said Thursday.

The duties will protect 13,500 direct E.U. jobs in the stainless steel cold-rolled flat sector, the European Commission claimed.

EIA: crude oil prices to come down in 2022

Providing some relief, the Energy Information Administration forecast crude oil prices will soften in 2022.

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This morning in metals news: Merchants Fleet will expand its purchases of BrightDrop electric vehicles to 18,000; meanwhile, the Producer Price Index for metals and metal products increased in October; and, finally, the United States International Trade Commission issued a vote on freight rail coupler systems from China.

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Merchants Fleet to expand EV orders from GM’s BrightDrop

electric vehicle charging

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Fleet management company Merchants Fleet will expand its orders of BrightDrop electric vehicles to 18,000.

BrightDrop, a General Motors company, focuses on electrifying the commercial delivery and logistics industry.

“BrightDrop, the technology startup helping decarbonize last-mile deliveries, today announced that Merchants Fleet, the nation’s fastest growing fleet management company, plans to expand its purchase order to 18,000 BrightDrop electric vehicles with the addition of 5,400 EV410s – the recently unveiled mid-size electric light commercial vehicle (eLCV),” GM said in a release.

“The EV410 order adds to the 12,600 EV600s slated to be integrated into the company’s fleet starting in 2023.”

PPI for metals, metal products rises

The Producer Price Index for metals and metal products reached 323.7 in October, according to Federal Reserve Economic Data (FRED).

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Inflation is currently a hot topic on Wall Street and in Washington. For many, it’s a much more immediate issue than other major issues, like the impact of climate change.

A recent Financial Times post in the paper’s Trade Secrets newsletter posed a somewhat controversial but not inappropriate question: could removing tariffs be the answer to lowering inflation?

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Inflation and tariffs

inflation definition highlighted

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Tariffs are certainly in the spotlight, the Financial Times suggests.

U.S. Trade Representative Katherine Tai was apparently asked by reporters in a roundtable last week if removing the Trump-era tariffs on Chinese imports was now under consideration. The U.S. Consumer Price Index showed a 6.2% gain in October from the previous year, its fastest increase since 1990. Treasury Secretary Janet Yellen, the former Federal Reserve chair, acknowledged this week that removing the tariffs would provide a one-off supply chain cost reduction that would “make some difference.”

Inflation is clearly a concern. However, why would you conflate one issue – protecting domestic intermediate product manufacturing – with the separate issue of wider economic inflation?

Then and now

There is little evidence that the original Trump tariffs resulted in inflation in the wider economy. Certainly, within the metals supply chain costs were passed directly down the line. Costs filtered down from either importers or by domestic mills opportunistically raising prices to the level of imports. But the impact proved relatively minor on the cost of a finished washing machine or an earth mover, the Financial Times reported, citing research results.

In our currently much more supply chain constrained and inflationary economic environment, removing the tariffs would result in a one-off modest drop in prices for many goods. The post makes an observation that savings rates remain high. The public has not spent all the savings accumulated during the lockdowns. Furthermore, the inflationary global logistics constraints abated. As such, demand in a constrained environment is likely to persist for some time.

In short, inflation isn’t going away any time soon.

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This morning in metals news: U.S. President Joe Biden signed the over $1 trillion infrastructure bill into law Monday; meanwhile, import prices rose by 1.2% in October, the Bureau of Labor Statistics reported today; and, lastly, manufacturers’ and trade inventories increased in September.

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Biden signs infrastructure bill

city skyline

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In a ceremony Monday, President Joe Biden signed the infrastructure bill most recently passed by the House of Representatives on Nov. 5.

The bill, the Infrastructure Investment and Jobs Act, includes $550 million for infrastructure improvements, from roads and bridges to electric grid improvements.

“This law makes this the most significant investment in roads and bridges in the past 70 years,” Biden said during remarks on the South Lawn on Monday. “It makes the most significant investment in passenger rail in the past 50 years and in public transit ever.

“So, what — what that means is you’re going to be safer, and you’re going to get there faster, and we’re going to have a whole hell of a lot pollution — less pollution in the air.

“The bipartisan law will modernize our ports, our airports, our freight rail to make it easier for companies to get goods to market; reduce supply chain bottlenecks, as we’re experiencing now; and lower cost for you and your family.”

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