Articles in Category: Manufacturing

Looks like the tide has finally turned.

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

Extending that metaphor is easier now than it’s ever been for us writing on this topic: the reshoring of American manufacturing from abroad — and specifically, the net gains in jobs that we’ve been seeing in 2016 and early 2017 as compared with the trends in the early 2000s.

(I envision the emigrating jobs huddled together for warmth on a seaworthy vessel, with Shanghai getting smaller in the distance as the Pacific waves toss the boat ever closer toward Long Beach… if only it were that poetic.)

Back to reality. The Reshoring Initiative has just released its 2016 Data Report, and the numbers seem to tell a rosy story. According to the report press release, “in comparison to 2000-2003, when the United States lost, net, about 220,000 manufacturing jobs per year to offshoring, 2016 achieved a net gain of 27,000.”

“The numbers demonstrate that reshoring and FDI are important contributing factors to the country’s rebounding manufacturing sector,” the release concluded.

But of course, it’s not that easy. Major policy changes will have to be made or improved to continue the reshoring trend (which is still in its early stages), according to Harry Moser, founder of the Reshoring Initiative.

In a way, the U.S. should aspire to host conditions like those in Germany, Moser told me, including a supportive government, VAT, low healthcare costs, and an appreciation of the benefit of local sourcing. Read more

Macro photo of a piece of lead ore

The International Lead and Zinc Study Group released its Spring 2017 Meetings/Forecasts, which found that global demand for refined lead metal will increase 2.3% this year to 11.39 million tons.

The main reason? Further development in Chinese usage, which is projected to grow 4.3%.

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 ILZSG report states: “After increasing by a robust 9.8% in 2016, usage of lead metal in Europe is expected to remain unchanged in 2017. A stable outlook is also foreseen in Japan and the Republic of Korea. In both India and the United States modest growth of 1.5% is predicted.”

Lead Supply Update

Furthermore, the ILZSG report states that global lead mine production is projected to increase 4.3% to 4.92 million tons this year, due in part to growth in China and increases in Canada, Mexico, India, Greece and Kazakhstan. Read more

Tin supply is tight on the London Metal Exchange, but is this an isolated issue or just one example of a more far-reaching dilemma?

Writing for Reuters, Andy Home cites LME tin at its lowest level in 20 years, but it’s important to look closer as any comparison to two decades in the past is null and void as the global metals market and LME’s place in it are so different now.

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!

Home writes: “Unsurprisingly, low inventory is once again generating tightness across short-dated time-spreads, extending a pattern that has been running for a couple of years now.”

He adds that tin price is underperforming as well, currently trading just under $20,000 per ton. This is a 5% decrease when compared to the start of the year, placing it with nickel as the worst performer among significant LME metals.

However, Home writes that there is now more tin inventory in Shanghai Futures Exchange warehouses than in the LME system. Read more

Regular readers of The Telegraph, arguably Britain’s only remaining decent broadsheet paper, will be familiar with the writings of Ambrose Evans Prichard, the international business editor.

It has to be said that he has a slightly sensationalist reporting style, but his articles are always liberally supported with facts and figures. Even though he seems to argue more often than not that markets about to drop off the edge of a cliff, he has, at times, been right. Yet an article this week titled “Commodities slump on China tremors and OPEC failure,” while making a plausible argument based on the facts and figures presented, could equally have an alternate explanation if one looks over a slightly longer timeframe.

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

Clyde Russel of Reuters takes just such an approach in an article posted just a day or so later, which all goes to underline the challenge for buyers in interpreting fundamental supply and demand data and extrapolating workable strategies.

Source: The Telegraph

The Telegraph looks at a gradually sinking Brent oil price coupled with falling Chinese crude oil imports, and it suggests that the former is in part a result of the latter. Reuters looks at the same data, and whilst the article acknowledges that imports are down in April, it goes on to look at the last 12 months trend line.

Reuters notes that in the first four months of 2017, crude oil imports were up 12.5% from the same period last year to around 8.46 million bpd. The article goes on to point out that this is also substantially higher than the 7.6 million bpd imports averaged for 2016, suggesting that China’s appetite for crude has jumped substantially so far this year, notwithstanding the pullback in April. Read more

Set of copper pipes of different diameter lying in one heap

Copper on the Shanghai market traded lower this week with investors choosing equities and oil, an area where a domestic rally was overflowing into Asian markets.

According to a report from Reuters, three-month copper on the London Metal Exchange did find some support, trading 1.1% higher, which offset losses from the previous session.

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!

However, the Reuters report also stated that LME copper stayed close to the four-month lows reached earlier this week as the market suffered from weak demand stemming from China and falling imports.

The most popular copper contract on the Shanghai Futures Exchange slipped to $6,558 a ton, Reuters reported, a decline of 0.71%.

Copper Bears Take Over

Just this week our own Raul de Frutos wrote of the commodity outlook shifting for copper buyers, as well as buyers of aluminum, steel and tin, and that the bears are taking over:

de Frutos wrote: “About a month ago I noted that while industrial metals were on the rise, commodities were range-bound, a sign of sluggish global demand. As I had written, ‘a healthy bull market in base metals should be accompanied by a bull market in other commodity markets.’ Commodities not only have struggled to make new headway but in the past few days they weakened significantly. Recent moves in China have caused a significant shift of sentiment in financial markets.”

de Frutos cited several issues, including oil prices taking a dip and China curbing its credit, to signal that the bull market for commodities might be coming to an end.

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:

Aluminum Rod

Goldman Sachs is bullish on aluminum, projecting it to rise following China’s supply-side reforms.

According to a recent report from CNBC, Goldman expects aluminum prices to hit the $2,000 per metric ton point in six months and $2,100 per ton in a year.

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!

Year-to-date, aluminum prices have outperformed other industrial metals, climbing roughly 15% compared to steel and 3% compared to copper, the news source stated.

“In our view, this strong performance has reflected an increase in the potential for aluminum to be the next target of supply-side reform in China, a tightening ex-China balance, and rising costs of production,” wrote the bank’s analysts. “Further, global political developments may also be supportive of capacity and production cuts, given the two leaders of the U.S. and China launched a 100-day (trade) plan on April 7. These developments support our existing view that aluminum is the next target for supply-side reform in China,” they added. Read more

This is the second in a two-part interview with Paul Noel, senior vice president of procurement solutions at Ivalua, Inc. Missed Part 1? Read it here.

MetalMiner: How do you see procurement and supply chain applications overlapping (or not) from a technology perspective in manufacturing? What is “the line” between them (if there is one anymore)?

Paul Noel: Procurement and supply chain applications traditionally overlap. Both these applications have the following:

  • Supplier master data and item master data
  • New product introduction data, such as BOM, designs, specifications and project plans
  • Product quality data, such as initial reviews, quality certs, first article inspection data, APQP reviews and data
  • Supply chain and supplier risk data
  • Supplier performance, KPIs and error data, along with improvement plan data
  • Assets and tooling data, including supplier loaned and leased assets
  • Inventory data, such as central, in-factory stock-rooms, vendor managed inventory data, etc.

Our view is that procurement applications are developing and innovating at a more rapid pace than supply chain applications when it comes to affecting core business operations, expanding their functional footprint into the supply chain, and in some cases, becoming the primary master source of record (e.g. in case of supplier master and risk data). As an analogy, procurement applications today represent multiple “garage bands” — some in the process of becoming rock stars — of the business, while supply chain is a conductor, orchestrating activity deep within the supply base. Both are different — and needed.

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

Supply chain is, however, continuing to orchestrate activity.

MetalMiner: What is your view on commodity price volatility? What are you hearing from your customers?

Paul Noel: The most current information is key, of course. That means that when you are buying volatile commodities, you need to have a facility to quickly perform item validations with contracted vendors to ensure you are seeing the best price for the current market. In some industries, it needs to be a lights-out operation that reminds suppliers of their commitments and solicits their re-bids on a schedule. This isn’t just asking for the latest price, but also changes in packaging, lead time, ship-from information and so forth. Read more

MetalMiner’s sister site, Spend Matters, recently put out a series of questions to a range of experts at technology vendors. Our line of questioning centered on the technology renaissance, which is in its early days of taking shape, as more firms take advantage of specialized manufacturing-centric procurement technology. We will feature this series on MetalMiner in the coming weeks and hope you look forward to it as much as we do.

Two-Month Trial: Metal Buying Outlook

The first interview (divided into two parts) features Paul Noel, who serves as senior vice president of procurement solutions at Ivalua, Inc., a procurement technology provider that works with leading manufacturers such as Meritor, Whirlpool, Michelin, Faurecia, Valeo, Thales and PSA Peugeot Citroën.

MetalMiner: Why are we hearing about a “direct procurement” renaissance of sorts in terms of procurement technology. What has changed?

Paul Noel: The rise of interest in procurement technology for direct procurement is due to the confluence of four trends.

First, the current economic climate is characterized by slow global growth, a retreat from global trade to nationalist economic policies and interest rate and tax policy uncertainty that have the potential to re-draw supply chains. In this environment, manufacturers that account for the bulk of “direct procurement” cannot fully control their top line. However, they do have control over their bottom line, and procurement technology is one of the key levers to reduce direct spend.

Second, since the early 2000s, manufacturing executives have focused more on managing indirect procurement and less on direct procurement — as indirect spend was then the biggest untapped opportunity. Enterprises have done a great job getting a handle on indirect spend, partly due to successful adoption of procurement technology. Direct spend now represents a big untapped opportunity from a procurement technology investment standpoint, given past under-investment.

Third, procurement technology that’s relevant for direct spend — partly owing to similar success in indirect spend — has developed at a rapid pace in recent years. When e-procurement first came out, direct materials was already pretty much set with MRP demand communicated over EDI. Why would you need human-centric e-procurement with that in place? Today, however, if you look at teams of direct materials procurement people, you realize there is a need to help them deal with the volume of exceptions thrown every week by MRP. Spot bids, expedites, last minute part changes. All of these need human intervention, and those humans need technology.

And fourth, with the success of both procurement and supply chain leaders in large global companies, these functions have become even more centralized across direct/operations and indirect, as well as globally across regions. With this organizational shift, these leaders want to adopt procurement suites that can address both indirect and direct spend in a single suite — hence extending their indirect procurement technology suite to address also direct procurement. Read more

Port Talbot steel plant

Source: Adobe Stock/Petert2

Pittsburgh-based U.S. Steel saw its market value reduced by 27% from investors following a surprising first quarter loss.

According to a recent report from the Pittsburgh Post-Gazette, U.S. Steel also announced plans to spend more than $1 billion in upgrades to plants in Mon Valley and beyond.

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!

“This is not a quarter-to-quarter play,” David Burritt, president and chief operating officer, told investors, concerning investment in the mills. “We’re in this for the long haul. It takes more than a little bit of courage to take this action right now.”

Analysts are encouraged by the investment, but they are also concerned the time frame for the project will prevent U.S. Steel from taking advantage of the surging demand in steel that many are expecting on the heels of President Donald Trump’s promises to support the steel industry.

Chinese Demand for Steel Growing?

Our own Raul de Frutos recently wrote about the current industrial metals bull market and whether or not he still sees an upside. Pertaining to steel specifically, de Frutos wrote that China’s government recently announced plans to build a new urban metropolis from the ground up, which would significantly boost the demand for steel and other metals.

De Frutos wrote: “This growth translates into solid demand for industrial metals at the same time as China applies stricter anti-pollution rules and supply-side reforms designed to cut capacity in energy-intensive sectors like steel and aluminum. Overall, while we continue to see strength in Chinese markets, we are not ready to call peak in this industrial metals bull market.”

How will steel 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:

Treasury Secretary Steve Mnuchin confirmed Wednesday that the Trump administration aims to lower business tax rates to 15%, saying a forthcoming proposal will constitute the “biggest tax cut” for Americans in history.

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

“This is going to be the biggest tax cut and the largest tax reform in the history of our country,” Mnuchin said, as administration officials prepare to outline Wednesday afternoon what he described as “principles” of their tax plan.

Mnuchin, speaking at a Washington forum, would not reveal many specifics but confirmed that they want to lower the business rate to 15%.

“I will confirm that the business tax is going to be 15%,” he said. “[Trump] thinks that’s absolutely critical to drive growth.”

Two-Month Trial: Metal Buying Outlook

He indicated that the rate for small businesses and the corporate tax would both drop to 15%. The top small business rate is 39.6%; the current corporate tax is 35%.