This morning in metals news: ArcelorMittal said it plans to make its Sestao plant zero carbon emissions; meanwhile, the Producer Price Index for final demand increased by 1.0% in June; and, lastly, U.S. steel prices continue to rise.
ArcelorMittal announces aim to build zero-carbon-emissions Sestao steel plant
pvl/Adobe Stock
ArcelorMittal this week said it plans to make its steel plant in Sestao, Spain, the “world’s first full-scale zero carbon-emissions steel plant.”
“The development is the result of a memorandum of understanding signed today with the Government of Spain that will see an investment of €1 billion in the construction of a green hydrogen direct reduced iron (DRI) plant at its plant in Gijón, as well as a new hybrid electric arc furnace (EAF),” ArcelorMittal said.
The steelmaker said the new DRI plant will have capacity of 2.3 million metric tons. Of that total, 1 million metric tons would go to Sestao to be used as feedstocks in its electric arc furnaces (EAFs).
PPI up 1.0%
Elsewhere, the Producer Price Index (PPI) for final demand increased by 1.0% in June, the Bureau of Labor Statistics reported.
Rebar and hot rolled coil both hit peaks last seen on May 19, when the market last spiked only to crash after dire warnings from Beijing about speculative activity and the threat of action against excessive rises in commodity prices.
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Chinese steel price fall off, then bounce back
gui yong nian/Adobe Stock
Since prices came off they have been making a steady recovery. Beijing’s pressure to curb excess production capacity as part of wider environmental targets raises the prospect of material shortages in the face of still robust demand.
Late last week, the People’s Bank of China announced it would cut the bank’s reserve requirement ratio by 50 basis points, effective from July 15. It would release around 1 trillion yuan to underpin an economic recovery that Nasdaq reports is starting to lose momentum.
The move supported further price rises. However, in reality, it would take months for the PBOC’s relaxation of reserve requirements to filter though into any increase in construction activity and, hence, demand.
The Raw Steels Monthly Metals Index (MMI) rose by 6.6%, as U.S. steel prices continued their rally.
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Production, capability utilization rise
According to the World Steel Association, global crude steel production increased by 14.5% year over year for the first five months of 2021. North American steel production rose by 11.3% during that period, with a sharp 47.7% increase in May alone.
For the week of July 3, the American Iron and Steel Institute reported that domestic raw steel production totaled 1,842,000 net tons. The capability utilization rate reached 83.0%. There has been a slow but continuous increase since the week of Jan. 2, when the institute reported steel production was 1,650,000 net tons at a capability utilization rate of 74.6%.
Despite this increase, all forms of steel prices remain at an all-time high.
U.S. imports increase
The latest data from the Steel Import Monitoring and Analysis (SIMA) showed steel import permit applications for June increased by 12.4% compared to the previous month. Imports totaled 2,965,000 net tons.
Import permit tonnage for finished steel in June increased by 6.8% month over month to 1,982,000 net tons.
First shipment establishes new US-EU rare earths supply chain
Energy Fuels Inc. and Neo Performance Materials Inc.announced that they have executed the first shipment of mixed rare earth carbonate from a mill in Utah to a separation facility in Estonia.
On July 7, Energy Fuels announced the first shipment, containing approximately 20 metric tons of the mixed rare earth carbonate, from the White Mesa Mill in Utah. The material was en route to Neo Performance Materials’ rare earths separation facility.
The announcement represents the start of a fledgling U.S.-E.U. rare earths supply chain. Both the U.S. and the E.U. have long sought to mitigate dependence on China, which dominates an overwhelming majority of rare earths mining and refining.
The shipment marked the first of an expected 15 containers of carbonate to be sent to the Estonia facility, Energy Fuels said in the July 7 announcement.
“Additional shipments of RE Carbonate are expected as Energy Fuels continues to process natural monazite sand ore mined in Georgia (U.S.) by Chemours for both the rare earth elements and naturally occurring uranium that it contains,” Energy Fuels said.
Monazite is produced as a byproduct of existing heavy mineral sands mining, Energy Fuels said. The material also contains naturally occurring uranium that Energy Fuels recovers for use in the generation of carbon-free nuclear energy, the company added.
Furthermore, the companies announced the signing of a contract for a definitive supply agreement.
“Under the Agreement, Colorado-based Energy Fuels will ship all or a portion of its RE Carbonate to Neo’s Silmet rare earth separations facility,” Energy Fuels added. “Neo will then process Energy Fuels’ RE Carbonate into separated rare earth materials for use in rare earth permanent magnets and other rare earth-based advanced materials.”
As steel prices continue to rally, stainless steel producers in China seem to be saving costs by replacing refined nickel with nickel pig iron (NPI). NPI is a lower-nickel-content substitute for refined nickel.
Satellite service SAVANT, which tracks smelter activity, reported that nickel smelting activity was lower than seasonally expected. The company claimed global nickel activity for June was at its lowest in five years.
At the same time, NPI smelting activity in China grew significantly, making April and June the highest readings in the past five years.
Tentative agreement between ATI, USW
After a three-months strike, Allegheny Technologies Inc (ATI) and the United Steelworkers (USW) reached a tentative agreement on July 2.
The agreement includes onetime payments, wage increases and a premium-free health insurance plan for union members. As soon as the agreement is signed, USW members are expected to resume work.
The strike affected approximately 1,300 workers in specialty rolled products locations across nine locations: Brackenridge, Latrobe, Natrona Heights, Vandergrift, Washington (Pennsylvania), Lockport (New York), Louisville (Ohio), New Bedford (Massachusetts) and Waterbury (Connecticut).
The specialty rolled products include a variety of stainless steel sheets, specialty coils, cold rolled stainless steel, and stainless and specialty alloy plates. More specifically, these plants produce: light gauge cold rolled stainless steel strip; titanium strip and sheet; nickel; precision rolled strip; cold rolled stainless; and alloys, such as high-temperature, corrosion-resistant, nickel-based and duplex.
As MetalMiner previously reported, the ATI strikes constrained U.S. stainless flat-rolled supply. For months, industrial metal buying organizations faced serious challenges in purchasing metal, not only due to the supply constraint but also because stainless steel prices are at an all-time high. In addition, soaring freight rates have also made imports a costly proposition.
Base price consolidates
After U.S. mills announced their fourth base price increase of the year in June, no further increases were announced for July.
U.S. mills have increased prices on products, which reduce available production capacity. Alloys other than 304, 304L and 316L have been subject to greater increases. Non-standard widths and light gauge extras have risen several times in the last six months.
Buyers should expect additional extras increases as mills continue to optimize their product mix to maximize volume.
Alloy surcharges are increasing in July. NAS’ July alloy surcharge for 304 is $0.9930/lb, an increase of $0.0318/lb compared to June.
Actual metals prices and trends
The Allegheny Ludlum 304 stainless surcharge ticked up by 3.0% month over month to $1.02 per pound this month. Meanwhile, the Allegheny Ludlum 316 surcharge surged to $1.45 per pound.
Chinese 316 cold rolled coil dropped 0.6% to $3,903 per metric ton as of July 1. Meanwhile, 304 cold rolled coil climbed 2.5% to $2,865 per metric ton. Chinese primary nickel surged by 0.5% to $21,093 per metric ton.
LME three-month nickel jumped 3.3% to $18,440 per metric ton.
Indian primary nickel declined by 1.4% to $18.20 per kilogram.
This morning in metals news: General Motors reported strong Q2 sales in China; miner Anglo American said it had completed its first maritime biofuel trial; and, lastly, the copper price has trended sideways so far in July.
General Motors reported its Q2 sales with its joint ventures in China rose by 5.2%.
The automaker said vehicle deliveries totaled more than 750,000.
“The growth was driven by luxury and premium vehicles, midsize/large SUVs and MPVs, including the Cadillac CT5 and XT6, and Buick LaCrosse, Enclave and GL8 family,” GM said. “Sales of new energy vehicles (NEVs) across GM’s brands also posted a strong performance.”
GM also touted the expansion of its Ultium platform to China.
“In addition to offering popular EVs underpinned by SAIC-GM-Wuling’s locally developed GSEV platform, GM is bringing to China its advanced global EV platform – Ultium – which will empower a range of multi-brand and multi-segment EVs,” GM said. “The first Ultium-based model for China, the Cadillac LYRIQ all-electric SUV, made its global public debut at Auto Shanghai 2021, before it goes on sale early next year.”
The Construction Monthly Metals Index (MMI) rose by 0.9% for this month’s index reading, as U.S. construction spending fell by 0.3% in May from the previous month.
The May rate marked a 0.3% decline from April. However, the rate marked a 7.5% increase from May 2020.
In addition, during the first five months of the year, construction spending totaled $594.8 billion, or up 4.6% year over year.
Private construction spending reached a seasonally adjusted annual rate of $1,203.3 billion, or down 0.3% from April. Meanwhile, residential construction reached a rate of $751.7 billion in May, or up 0.2%. Nonresidential construction fell 1.1% to $451.6 billion in May.
As for public construction, estimated spending reached $342.0 billion, or down 0.2%. Educational construction fell 1.9% to $82.0 billion. Highway construction rose 1.4% to $98.6 billion.
On the one hand, a robust recovery from the pandemic has supported rapid price increases, both in raw materials such as iron ore and coking coal. Finished steel prices, such as rebar and HR coil, have also increased.
But Beijing’s recent policy initiatives around curbing steel output and controlling greenhouse gas emissions have created a new dynamic that should be supporting steel prices in the expectation of reduced output, yet depressing raw material prices in the expectation of reduced raw material demand.
The Copper Monthly Metals Index (MMI) decreased by 7.3% for this month’s reading, as copper prices declined.
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Copper stock
Since the beginning of the year, there have been concerns over copper production levels and stock availability.
LME on-warrant tonnages were at the 100,000/mt level, averaging 84,654 metric tons between January and June. However, throughout June, stock tonnage nearly doubled. Stock tonnage started the month at 97,975 tons and closed at 198,275 tons.
This could be a signal that speculative demand has adjusted. This is particularly true after China attempted to remove excessive speculation by issuing stern warnings to the domestic market, along with the recent release of state stock.
China’s efforts had a strong effect on the copper market. The country represents approximately 50% of global copper consumption.
Before we head into the weekend, let’s take a look back at the week that was and the metals storylines here on MetalMiner, including coverage of aluminum prices, U.S. auto sales, a Saudi-Emirati oil output spat and much more:
The MetalMiner Best Practice Library offers a wealth of knowledge and tips to help buyers stay on top of metals markets and buying strategies.
Week of July 5-9 (aluminum prices, U.S. auto sales and much more)
Miner Rio Tinto and South Korean steelmaker POSCO signed a memorandum of understanding through which they will work toward lower carbon emissions in the steel value chain.
The United Steelworkers union reached a tentative agreement with Allegheny Technologies Inc. (ATI) that would end a three-month strike at nine facilities.
