Articles in Category: Manufacturing
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%.

Nickel prices reached a 10-month low this week due in part to concern over demand from China, a top consumer of the metal.

According to a report from Reuters, these concerns were supported by Chinese trade data, indicating falling imports on the alloying material used to make stainless steel.

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!

Nickel traded on the London Metal Exchange ended Wednesday at $9,225 per metric ton, its lowest mark since June of last year.

John Meyer, SP Angel analyst, told the news source he anticipates nickel to be supported by concern over supplies of ore from the Philippines, which recently announced the ordered closure of more than half its mines in order to protect water sources.

“There is still a lot of stock for the market to burn,” Meyer told Reuters.

Nickel Trailing Other Industrial Metals

Our own Raul de Frutos wrote earlier this month of the downward pressure seen on nickel prices during Q1, which is in stark contrast to other industrial metals that have rallied during that same time.

Wrote de Frutos: “Nickel prices are struggling to make headway this year. Nickel’s supply narrative is rather complex and it’s exposed to significant changes depending on what policy makers in Indonesia and The Philippines do next. On the other hand, stainless buyers should continue to monitor their price risk exposure. Investors’ sentiment on industrial metals remains bullish and that could still trigger unexpected prices swings on the upside.”

How will nickel 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:

Americans for Prosperity and Freedom Partners recently released a report on the prospect of a Border Adjustment Tax being included as a piece of major tax reform, a framework of which is expected to be released today by the Trump administration. AFP and FP are not fans of a BAT.

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

The free-market group with ties to conservative billionaires Charles and David Koch said in its report that “It is impossible to predict the real world impact of the BAT because something like this has never been done before. This proposed system is unlike anything in existence and there is a tremendous amount of risk surrounding its implementation.”

Going to BAT

A BAT would certainly be unprecedented. We have previously written about the scheme and how the novel approach to corporate taxes could possibly deliver similar export benefits to those of a value-added tax without actually imposing a national sales tax on every single transaction that American citizens make. A BAT would, rather, tax companies on their imports as part of the corporate tax code rather than impose a sales tax on transactions. Read more

The MetalMiner analyst team alerted subscribers and trialers last week to significant movement on the zinc front. Prices for the non-ferrous metal have pulled back over the past several weeks, and are now trading near key support levels.

Wrote our own Raul de Frutos: “The price weakness seems to come from longs exiting their positions rather than shorts coming to the market. This suggests that sentiment hasn’t shifted to bearish for now. This could be a good opportunity to time purchases (3-5 months’ worth of demand) while prices trade near $2,500/mt.”

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!

While many may panic and see this price decline as the end of zinc’s bull run, de Frutos sees this movement as an ideal opportunity to make purchases at an attractive price.

de Frutos added: “After doubling in price since the beginning of 2016, prices are now struggling in the $3,000 per metric ton level. However, the price weakness seems to come from long position buyers exiting those positions rather than shorts coming to the market. This suggests that sentiment hasn’t shifted to bearish for now. At the same time, we see strong support near $2,500/mt, which could provide a good opportunity to time purchases.”

How will zinc 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:

Lead ore. Source: Adobestock.

Lead prices, along with tin, lost some ground on the non-ferrous metals market on April 18, due in part to stockists selling as the result of subdued demand in the user industries.

According to a report from the Business Standard, lead fell slightly lower than tin with copper dropping by an even smaller margin.

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!

Elsewhere in the realm of non-ferrous metals, lead’s sister metal zinc has seen its prices fall off sharply over the past several weeks.

Our own Raul de Frutos warns that now is the time to buy, although it’s important not to panic and view this as the end of zinc’s bull run. In fact, this is nothing more than a great opportunity to purchase the metal at an attractive price.

de Frutos wrote: “After doubling in price since the beginning of 2016, prices are now struggling in the $3,000 per metric ton level. However, the price weakness seems to come from long position buyers exiting those positions rather than shorts coming to the market. This suggests that sentiment hasn’t shifted to bearish for now. At the same time, we see strong support near $2,500/mt, which could provide a good opportunity to time purchases.”

Lead Price Outlook for 2017

How will lead 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:

Think of Indian automotive manufacturing and you may think of a Japanese auto parts hub for the southeast Asia region, like Thailand only less successful. Or, you may think of failed projects like the home grown Tata Nano, but one sector that has been a rip roaring success story is motorcycles.

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

According to the Financial Times, more than 16 million motorcycles and scooters were sold in India during the 2016 financial year, far more than in any other country and nearly six times the number of passenger cars sold. For many people, the motorcycle is their first and often only form of motorized transportation.

It’s a motorcycle or nothing. A car is still too much of a financial stretch for millions. So, a strong home market is to be expected but it is the growth of domestic brands and manufacturers that is the most encouraging. Those same manufacturers have been far more successful than their automotive peers in export markets. Indian motorcycle exports in that same 2016 period reached 2.5 million, up from 1.5 million five years before.

Venu Srinivasan, chairman of TVS, a particularly innovative and successful Chennai-based manufacturer, is quoted by the FT as saying “We’re hoping that within the next three years, exports should be 35 to 40% of our sales,” up from 20% today.

Image courtesy of www.bikepanthi.com.

Siddartha Lal — chairman of Eicher Motors, owner of motorbike producer Royal Enfield — has overseen the opening of showrooms in London, Paris and Madrid, hoping to capitalize on the retro appeal of the world’s oldest surviving motorcycle brand. The first Royal Enfield motorcycle was made in the U.K. in 1901, and while production in the U.K. ceased in 1970, it thankfully continued at the company’s Indian joint venture.

Royal Enfield image courtesy of www.motorivista.com.

Royal Enfield’s international ambitions have been fueled by surging sales at home of its relatively expensive (by Indian standards) bikes. The popular Classic 350 retails for about $2,000 (Rs130,000), compared with the even-less-expensive Hero Motocorp Splendor, the Indian market leader. Royal Enfield sold 60,113 motorcycles last month, compared with fewer than 52,000 in the whole of 2009. As the technology used in Royal Enfields improves, particularly the reliability of the electric motorcycles, the iconic brand is appealing to retro buyers in mature markets looking for something different, as much as poorer buyers looking for a rugged if simple motorcycle.

Two-Month Trial: Metal Buying Outlook

But the TVS range is appealing to an altogether different buyer. Price is key, but in order to compete with its more sophisticated Japanese competitors, such as Honda Motor Co. and Yamaha, in its home market TVS has invested heavily in product development, outsourcing design to the U.K. and made extensive use of robots on the production line. Even BMW has outsourced production to TVS for motorcycles to be sold under the BMW brand in Europe. That’s confirmation, if any was required, that motorcycles are becoming one of an increasing number of industries in which India is making its mark as a global, not just domestic, player.

Lithium Australia is making inroads to Germany for a joint venture with Deutsche Rohstoff, parent company of Tin International, in an attempt to uncover lithium in the region for production purposes.

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 recent report from Business News, the key piece in the venture is Tin International’s Sadisdorf Tin deposit, a globally renowned Altenberg mine, which has been dormant since 1991 following 500 years of production. The mine is believed to contain a lithium-rich mica that is suited for Lithium Australia’s proprietary extraction means.

Adrian Griffin, managing director at Lithium Australia said, “The joint venture with Tin International provides Lithium Australia with a low-cost entry into an established JORC resource, albeit originally established for tin.”

“There is little doubt that a substantial Lithium inventory also exists and the focus of the joint venture is to fast-rack the project to feasibility,” he added. “The experience provided by Tin International will be a key element in expediting the evaluation process and we are pleased to have them as a partner.”

Your Tin Price Outlook for 2017

How will tin 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:

Set of copper pipes of different diameter lying in one heap

The copper industry is still reeling from its crisis of plummeting prices, but hope is on the horizon and a recovery is underway albeit a gradual one.

According to a recent report from Reuters, falling prices led to a reduction in output, but industry executives announced this week in a meeting in Chile, a top producer nation of the metal, that any recovery will be a slow one.

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 market seems to have left behind its worst moment, although it’s very premature to anticipate a new cycle of high prices,” Chilean Mining Minister Aurora Williams told the conference, according to Reuters.

Arnaud Soirat, copper and diamonds unit chief at Rio Tinto added that copper prices could receive support from external factors, including pending mine closures and ore grade decline.

“Copper’s long-term fundamentals are quite positive, and we expect to see further demand growth from emerging markets,” he told Reuters, forecasting a small deficit this year.

Copper Prices on Upward Trajectory?

Reuters also reported that copper consultancy CRU is projecting copper prices to trend upward over the next 3-4 years.

Said Vanessa Davidson, director of copper research: “We expect pressure on costs to continue…but we see copper prices rising faster than operating costs, ensuring that profit margins increase.”

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:

Liquid metal

The Chinese aluminum industry has been able to cut costs by essentially selling liquid metal to nearby product manufacturers. Source: Adobe Stock/Kybele.

The head of aluminum for Rio Tinto Group is making a bold prediction: prices for the metal are heading for an “extremely” volatile crossroads.

According to a recent report from Bloomberg, Alfredo Barrios cites uncertainty with the timing of China curbing production, which will further serve to keep investors on the edge of their seats.

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!

“That’s really where the uncertainty is at the moment,” Barrios told Bloomberg in an interview at their Toronto office. “There’s no doubt that if you look at the supply side, if you look at the environmental issues, sooner or later that will change. But when is a question mark.”

China continues its fight against pollution by ordering to reduce steel and aluminum output in more than two dozen northern cities.

Aluminum Price Impacted by Overcapacity, High Inventory

Barrios added that overcapacity and high inventory could impact aluminum price increases in the near future.

“There’s a number of factors which will dampen any price increase if it goes too far,” he told the news source. “If you look at what are the fundamental reasons behind why prices are where they are, and how different they are from a year ago, it’s sometimes very difficult to see what has made aluminum be higher at all. What’s changed so radically in the last year?”

How will aluminum 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: