Articles in Category: Manufacturing

Welcome to the (re)launch of the MetalMiner Podcast!

(We’re calling it a relaunch because, well, remember this?)

With everything that’s been happening on the international trade policy front over the past year, we wanted to give metal buying organizations more insight into the issues they may not be reading or hearing enough about — or at all — in the mainstream B2C media.

What better way to do so than go straight to the source — or sources — and interview some key movers and shakers on the manufacturing and policy fronts? So we’re starting a brand-new series called “Manufacturing Trade Policy Confidential.”

New Series: Manufacturing Trade Policy Confidential

In this first episode of the series, MetalMiner Executive Editor Lisa Reisman interviews Michael Stumo, CEO of the Coalition for a Prosperous America.

Stumo’s concerns, and those of his organization, cut across industry sectors and political leanings. In this conversation, Stumo outlines what he sees as the most crucial elements to consider in today’s trade environment, touching on everything from China to the German Mittelstand to Alexander Hamilton as economic visionary.

Manufacturing Trade Policy Confidential: Background

If you’ve visited MetalMiner’s digital pages over the past several months, you’re no stranger to the phrase “Section 232” — shorthand for the U.S. Department of Commerce investigation into whether certain steel imports constitute a national security risk, under the namesake section of the U.S. Trade Expansion Act of 1962.

The outcome of the investigation (findings from which were slated to come down last summer but have been delayed) could have significant effects on upstream and downstream manufacturing organizations, ranging from metal producers to buying organizations – even the mom-and-pops.

But Section 232 is only one small part. Trade circumvention, China’s non-market economy status, domestic uncertainty amidst proposed tax plans and many other issues have pushed us to start this new podcast series.

We’ll be publishing several more interviews in the coming weeks and months – stay tuned!

Follow the MetalMiner Podcast on SoundCloud.

Before we head into the weekend, let’s take a look back at the week that was. 

Benchmark Your Current Metal Price by Grade, Shape and Alloy: See How it Stacks Up

  • In case you missed it, our October MMI report is out. Make sure to check out the free PDF download for the rundown on the last month for our 10 MMI sub-indexes: Automotive, Construction, Aluminum, Copper, Renewables, Rare Earths, Raw Steels, Stainless Steels, GOES and Global Precious.
  • Also, our Annual Outlook is out, too. Check it out for a comprehensive look ahead to 2018.
  • Coal India Ltd. is looking to diversify beyond coal, Sohrab Darabshaw wrote earlier this week.
  • Aluminum officials are in “wait-and-see mode” when it comes to the ongoing Section 232 probe vis-a-vis aluminum imports. The investigations into the national security impact of aluminum and steel imports were launched in April and have a January statutory deadline; at that point, Secretary of Commerce Wilbur Ross must present President Donald Trump with a report and recommendations.
  • Glencore bet big on zinc — and won, our Stuart Burns writes.
  • Although oil prices are well below 2014 numbers, supply cuts in some cases have seen the price start to climb. Are more cuts on the way, further constraining global supply and driving up prices? Burns wrote about the subject and what OPEC Secretary General Mohammad Barkindo called a “rebalancing process.”
  • In big news, Kobe Steel is in hot water for a data falsification scandal, one which threatens the firm’s credibility among consumers and manufacturers. The scandal has already had major financial ramifications, as the company’s share price has been in free fall since the news hit.

Free Sample Report: Our Annual Metal Buying Outlook

Irina K./Adobe Stock

Steel Market Update’s 2017 Steel Summit kicked off in Atlanta this week and the topic on everyone’s minds was Hurricane Harvey and the far-reaching impact it will have on the Houston region.

The humanitarian impact of Harvey cannot be overstated, but the economic impact on Houston, an industrial hub in the southern United States, will be felt in both the short- and long-term, with freight transportation at a virtual standstill (Port Houston operations resumed today, according to an alert on the Port Houston website).

Want a short- and medium-term buying outlook for aluminum, copper, tin, lead, zinc, nickel and several forms of steel? Subscribe to our monthly buying outlook reports!

According to SMU, FTR Transportation Intelligence reports up to 10% of U.S. truck capacity will be disrupted in the next two weeks.

“Look for spot prices to jump over the next several weeks with very strong effects in Texas and the South Central region, Noel Perry, partner at FTR, told SMU. “Spot pricing was already up strong, in double-digit territory. Market participants could easily add 5 percentage points to those numbers.”

Gas Prices Surge

In response to fuel supply disruptions from Hurricane Harvey, average national gasoline prices grew to $2.37 per gallon earlier this week, and continued to surge to $2.51 Friday morning, according to the AAA website.

“It’s still really early to tell what this is going to mean for long-term supply,” Denton Cinquegrana, chief oil analyst at Oil Price Information Service, told SMU. “If some of these refineries are flooded, it’s going to take weeks to get the water out of there and then get into damage assessment.”

How will steel and base metals fare in 2017? You can find a more in-depth steel price forecast and outlook in our brand-new Monthly Metal Buying Outlook report.

For a short- and long-term buying strategy with specific price thresholds:

Nickel prices maintained near nine-month highs mid-week, due in part to Chinese stainless steel mill demand and decreased supplies from the Philippines, a top exporter of ore.

According to a report from Reuters, nickel prices peaked earlier in the week to $11,885 a ton, its highest point since November 2016. Year-over-year, nickel prices are up more than 15%.

Want a short- and medium-term buying outlook for aluminum, copper, tin, lead, zinc, nickel and several forms of steel? Subscribe to our monthly buying outlook reports!

“Stainless steel demand in China and elsewhere has surprised on the upside and talk about nickel consumption in lithium-ion batteries has helped,” Societe Generale analyst Robin Bhar told the news source.

“Supplies have been under stress,” Bhar added. “The Philippines exported less for various reasons, including monsoon rains, mine inspections and shutdowns. Some NPI (nickel pig iron) capacity has been shut in China because of environmental inspections.”

Nickel Lagging Behind in the Bull Run

Our own Irene Martinez Canorea recently wrote that nickel, along with tin and lead, are more reticent to join the bull rush with aluminum, copper and zinc.

She writes: “Even though the industrial metal outlook remains bullish, lead and tin seem to be behaving on their own terms. Buying organizations will want to pay careful attention to trading volumes in the coming month.”

How will nickel and base metals fare in 2017? You can find a more in-depth nickel price forecast and outlook in our brand-new Monthly Metal Buying Outlook report.

For a short- and long-term buying strategy with specific price thresholds:

AdobeStock/vvoe

The International Lead and Zinc Study Group (ILZSG) released its August report, which found the global market for refined zinc metal was in deficit during the first half of the year. Total reported inventories declined over that time, as well.

Global production from zinc mines grew 5.4% compared to the first half of last year, mostly due to a boost in output from Peru, India and Eritrea.

Want a short- and medium-term buying outlook for aluminum, copper, tin, lead, zinc, nickel and several forms of steel? Subscribe to our monthly buying outlook reports!

Furthermore, zinc production suffered in places like Canada, Thailand, Peru and the Republic of Korea, leading to an overall worldwide increase of just 0.5% after factoring in growth in places like France, Brazil and India.

The ILZSG report stated: “Despite a decrease in Chinese apparent demand for refined zinc metal of 2.1%, global usage rose by a marginal 0.6%. This was mainly due to increases in the United States and Taiwan (China).”

Gauging the Zinc Price Ceiling

Our own Fouad Egbaria wrote just last week that zinc has really hit its stride, recently hitting its highest price point in more than a decade ($3,180.50).

Just how high can the zinc price fly? Reuters’ Andy Home states:

“But right now the LME zinc market is bubbling away with stocks falling and spreads tightening. Volatility seems assured but can zinc return to the heady days of late 2006/early 2007, when the price peaked out at $4,580?”

How will zinc and base metals fare in 2017? You can find a more in-depth zinc price forecast and outlook in our brand-new Monthly Metal Buying Outlook report.

For a short- and long-term buying strategy with specific price thresholds:

The lead price grew this week following a Chinese-issued ban on North Korean exports.

According to a report from Reuters, lead’s sister metals also rebounded, in response to once-rising geopolitical tension easing up a bit and Chinese data, a top metals consumer, coming in higher than expected.

Want a short- and medium-term buying outlook for aluminum, copper, tin, lead, zinc, nickel and several forms of steel? Subscribe to our monthly buying outlook reports!

“Those Chinese numbers (on Monday) were quite soft … I suppose the only glimmer of light came in the new yuan loans, which beat consensus, and maybe that suggests that things will remain stable as we go forwards,” Robin Bhar, head of metals research at Societe Generale in London, told Reuters.

“The metals seem well poised. After a period of consolidation this week perhaps we’ll have another push towards those (recent) highs going forward,” Bhar added.

Lead Price Movement in August

Earlier this month, our own Fouad Egbaria reported that Chinese primary lead posted a price increase, growing 3.3% to $2,694.90/metric ton.

How will lead and base metals fare in 2017? You can find a more in-depth lead price forecast and outlook in our brand-new Monthly Metal Buying Outlook report.

For a short- and long-term buying strategy with specific price thresholds:

A once abandoned U.K. mine with a rich tin mining history may get another shot at resurrection thanks to a Canadian company.

The South Crofty tin mine in Cornwall has been shut down for nearly two decades, but Canada-based Strongbow Exploration is well on its way to reopening the mine still rich in tin.

Want a short- and medium-term buying outlook for aluminum, copper, tin, lead, zinc, nickel and several forms of steel? Subscribe to our monthly buying outlook reports!

According to a report from The Telegraph, the South Crofty mine didn’t shut down because its tin bounty depleted — in fact, it shut down because of falling tin prices.

The news source states that if all things go according to plan, the mine could be reopened by 2020. The hope is that the continual recovery of tin prices will buoy the mine’s resurgence.

“It’s going to be a modern mine in the location of an old mine,” Richard Williams, Strongbow Exploration’s chief executive officer, told The Telegraph.

Once operational, the mine could employ as many as 300 individuals, not counting suppliers.

“We know there’s a resource there, we can identify it with new technology and make the project economic,” Peter Wale, its director, told the The Telegraph.

Once it opens again, the South Crofty mine will be one of just several functioning mines in the U.K., joining Wolf Minerals and ICL, the news source stated.

Tin Price Movement in 2017

How will tin and base metals fare in 2017? You can find a more in-depth tin price forecast and outlook in our brand-new Monthly Metal Buying Outlook report.

For a short- and long-term buying strategy with specific price thresholds:

With the oil price under pressure from excess supply and a growing percentage of the North American market’s oil and natural gas demand being met from domestic sources, the last thing you would expect is a surge in oil and natural gas tanker construction.

Benchmark Your Current Metal Price by Grade, Shape and Alloy: See How it Stacks Up

But according to the Financial Times, that is exactly what Hyundai Heavy Industries (HHI), the world’s largest shipbuilder, is experiencing.

HHI has reported a 70% jump in first-half operating profit, to Won 315 billion ($280 million) in the first six months of this year from Won 186 billion a year earlier.

Even more impressive is the surge in the order book.

The group won orders to build 81 vessels worth $4.5 billion so far this year, compared with 16 vessels worth $1.7 billion in the same period last year led by a rebound in oil tankers and gas carriers, the Financial Times reports.

Source: Financial Times

It may be counterintuitive that shipping demand is surging so dramatically. Demand is positive but hardly growing robustly.

One explanation is as older vessels are retired for oil storage, stimulated by the current relatively low oil price environment, demand is increasing for more efficient, new vessels to replace them.

Apparently, both Samsung Heavy Industries and Daewoo Shipbuilding and Marine Engineering are going through a similar uptick in demand.

Samsung Heavy’s first-half operating profit swung to Won 48 billion from an operating loss of Won 277.6 billion a year earlier. Daewoo Shipbuilding is also expected to report an operating profit of up to Won 800 billion for the first half after narrowly avoiding bankruptcy in April on a $2.6 billion bailout by state-run lenders, the Financial Times reports.

For the big three, this turnaround must be very welcome after years of losses and poor sales. The news will also bolster Korean steelmakers and the rest of the shipbuilders’ supply chain.

The only country building much the last few years has been China, a shipbuilding market served almost exclusively by its domestic steel mills.

However, Korean steel mills have a well-established positon as producers of high-quality, shipbuilding-grade steel.

According to Clarksons, the Financial Times reports new orders for ships worldwide rose more than 40% in the first half of this year, with South Korea taking  one-third of them, closely trailing behind China. Continued strength into next year will depend on global growth continuing in a broadly positive direction and the longer-term trend of greater reliance on liquefied natural gas for power and chemicals feedstock.

Free Sample Report: Our Annual Metal Buying Outlook

Liquefied natural gas shipbuilding construction has been a speciality of the Korean shipyards and should remain a core offering, despite growing competition from China’s shipyards.

TTstudio/Adobe Stock

Copper prices are on the ascent, thanks in part to the latest Chinese trade data and genuine excitement among investors over worldwide growth and capacity cuts.

According to a recent report from The Wall Street Journal, China’s debt crackdown earlier this year led to an adverse effect on metal prices and general worry from investors.

That worry has turned to elation, with copper prices up 7% due to capacity cuts in China. Meanwhile, iron ore prices are up more than 20% since the end of June.

Want a short- and medium-term buying outlook for aluminum, copper, tin, lead, zinc, nickel and several forms of steel? Subscribe to our monthly buying outlook reports!

The most recent Chinese trade data, representing July, painted a different picture with year-over-year growth of Chinese imports of copper concentrate slowing from June’s growth.

Nathaniel Taplin wrote for the Wall Street Journal: “Overall import and export growth also slowed, hinting that the lift to China from rebounding global trade may be close to its peak.”

The takeaway for copper investors impressed with Q2 Chinese growth? Not to get too excited until the whole story is revealed as China’s demand for metals, specifically copper, is weaker than expected.

Copper Prices Still Experiencing a Stellar 2017

Our own Irene Martinez Canorea wrote earlier this week that copper is outperforming all other base metals this month with copper traded on the London Metal Exchange up 7.8% in July.

She wrote: “The sharp increase in copper prices came after an announcement of a possible ban of copper scrap in China by the end of the year. The increase in copper prices was accompanied by heavy volume, which may signal a stronger uptrend.”

How will copper and base metals fare in 2017? You can find a more in-depth copper price forecast and outlook in our brand-new Monthly Metal Buying Outlook report.

For a short- and long-term buying strategy with specific price thresholds:

China’s continued regulation of its bloated aluminum industry is having a far-reaching impact on the growing share price of its major producers, thus adding to a tighter global market and rising prices.

According to a recent report from Reuters, China represents nearly 60% of worldwide aluminum output with analysts estimating up to 4 million tons of capacity closing this year, accounting for one-tenth of the Far East nation’s total, putting added pressure on the global aluminum market.

Want a short- and medium-term buying outlook for aluminum, copper, tin, lead, zinc, nickel and several forms of steel? Subscribe to our monthly buying outlook reports!

Aluminum Corp of China (Chalco) shares, a state-run entity, increased 47% since the start of last month.

“Chalco is the market leader, so if (competitors) are closing down their capacity, they are able to expand their production,” analyst Helen Lau, of Argonaut Securities in Hong Kong, told Reuters.

Aluminum Prices on the Run

While aluminum prices are on the rise, they may have further to go, analysts tell Reuters. Shanghai aluminum is up around 11% so far this year while benchmark aluminum on the London Metal Exchange is up 14%.

“The trend is definitely towards a much tighter market balance – there is an upshot to prices here definitely,” London-based WoodMackenzie analyst Ami Shivka, told Reuters. “The China market is in a surplus so any closures in China will whittle away the little bit of surplus that we have in China, and put the global market in a deficit.”

How will aluminum and base metals fare in 2017? You can find a more in-depth aluminum price forecast and outlook in our brand-new Monthly Metal Buying Outlook report.

For a short- and long-term buying strategy with specific price thresholds: