The Stainless Monthly Metals Index (MMI) increased by 2.1% for this month’s reading.

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Nickel pig iron replacement

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.

Are you prepared for your annual stainless steel contract negotiations? Be sure to check out our five best practices.

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.

Receive the latest short-term and long-term outlook for the full range of industrial metals (base and ferrous) at the annual MetalMiner Forecasting Workshop on Aug. 25. 

General Motors reports strong China sales in Q2

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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.”

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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.

Each month, MetalMiner hosts a webinar on a specific metals topic. Explore the upcoming webinars and sign up for each on the MetalMiner Events page.

US construction spending

U.S. construction spending came in at a seasonally adjusted annual rate of $1,545.3 billion in May, the Census Bureau reported earlier this 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.

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China’s steelmaking raw materials and finished steel markets are in a real state of flux at the moment.

Receive the latest short-term and long-term outlook for the full range of industrial metals (base and ferrous) at the annual MetalMiner Forecasting Workshop on Aug. 25. 

Recovery and a new dynamic impacting steel prices

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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.

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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.

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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, 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)

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• Stuart Burns on developments in Britain’s Brexit-era trade policy.
• U.S. fossil fuel consumption fell to its lowest level in nearly 30 years, the Energy Information Administration reported.
• Burns delved into the disagreement on oil output reductions between Saudi Arabia and the United Arab Emirates.
• MetalMiner contributor Sohrab Darabshaw on the Indian steel sector’s recovery.
• U.S. steel capacity utilization reached 83.0% last week, the American Iron and Steel Institute reported.
• European aluminum buyers are facing rising premiums and tight supply.
• U.S. automotive sales were strong in the second quarter.
• 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.
• Christopher Rivituso outlined the impacts of Russia’s imminent metal export tax.
• Maria Rosa Gobitz delved into the aluminum market in this month’s installment of the Aluminum MMI.
• The United Steelworkers union reached a tentative agreement with Allegheny Technologies Inc. (ATI) that would end a three-month strike at nine facilities.

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The Aluminum Monthly Metals Index (MMI) increased by 0.9% this month, as aluminum prices traded mostly sideways but remained historically high.

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Aluminum prices

Throughout June, LME aluminum prices cooled off. However, in the last week of the month, prices picked up and surpassed the $2,550/mt mark by the first week of July.

Trading volumes during the first week of July were lower than the June average of 14,426 metric tons. Volumes were heavier on days when the price went down, meaning there is no strong market signal.

Chinese prices trended differently from their LME counterpart. Chinese aluminum prices traded sideways throughout June and the first week of July. In June, trading volumes approximately tripled as the price went up but immediately declined, along with the price which could signal a bullish market.

Russia to impose export tax on metals

The economy minister of Russia, Maxim Reshetnikov, announced that the government was contemplating adding an export duty of at least 15% for steel, nickel, aluminum and copper, effective Aug. 1 through the end of the year.

The measure comes as an effort to protect its defense and construction industries as metal prices continue to rise globally.

However, these tariffs could have a particularly negative global implication for the aluminum market. Rusal controls about 10% of the global aluminum sector.

Moreover, Russia is the second-largest exporter of primary aluminum to the U.S. As such, the U.S. domestic aluminum market would feel an even bigger squeeze, causing further increases in the Midwest premium.

Tight supply

According to Bloomberg, buyers in Japan agreed to pay a premium of $185 per ton above LME prices for the coming quarter, the highest in six years.

This is a sign of a tight aluminum market. As the World Bureau of Metal Statistics reported this month, the aluminum market from January to April 2021 posted a deficit of 588,000 tons.

The deficit is due to a rapid turnaround in the economy. Demand slowed as travel declined early on during the pandemic but has since snapped back strongly.

The price rally has triggered several countries to take measures to help put a cap on price increases. Russia appears poised to implement export tax changes. Furthermore, China plans to release strategic reserves of the metal for the rest of the year.

New aluminum recycling plant

Norwegian industrial company Hydro Aluminum Metal signed a letter of intent to purchase a property in Cassopolis, Michigan, with the objective of building an aluminum recycling plant. The plant will produce aluminum extrusion ingot for use in critical automotive applications, in addition to other transportation and building systems.

The plant is estimated to cost a total of $120 million with a 120,000-metric ton capacity. The final product will be Hydro’s signature “Hydro CIRCAL® extrusion ingots, which contain at least 75% post-consumer scrap certified by third party auditors DNV GL.” The ingots have a CO2 footprint of 2.3 kg CO2e/kg aluminum, Hydro said.

Actual metals prices and trends

LME three-month aluminum increased by 4.1% month over month to $2,535 per metric ton as of July 1.

Chinese primary cash aluminum decreased by 2.0% to $2,901 per metric ton. Chinese aluminum scrap declined by 1.3% to $2,060 per metric ton. Meanwhile, Chinese aluminum billet went down by 1.3% to $2,380 per metric ton.

European 1050 aluminum sheet increased by 2.0% to $3,649 per metric ton.

Indian primary cash declined by 2.2% to $2.266 per kilogram.

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The Automotive Monthly Metals Index (MMI) slipped by 0.7% for this month’s index reading, as U.S. auto sales surged in June and Q2.

Each month, MetalMiner hosts a webinar on a specific metals topic. Explore the upcoming webinars and sign up for each on the MetalMiner Events page.

US auto sales

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Among the top automakers, General Motors reported its Q2 sales in the U.S. market jumped by 40% year over year.

GM reported sales of 688,236 vehicles in the quarter.

The automaker touted continued robust demand but also noted the ongoing strain on supply stemming from the global semiconductor shortage.

“The U.S. economy is accelerating, consumer spending is robust and jobs are plentiful,” said Elaine Buckberg, GM chief economist. “Consumer demand for vehicles is also strong, but constrained by very tight inventories. We expect continued high demand in the second half of this year and into 2022.”

Meanwhile, Ford Motor Co. reported retail sales fell by 32.5% in June. Retail truck sales dropped by 34.4%, while SUV sales dipped by 17.8%.

Ford’s electric vehicle sales rose by 117% in June. Furthermore, illustrative of strong demand and constrained supply, Ford said average transaction prices are up by $6,400 from a year ago to $47,800.

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India’s steel story continues to grow in 2021. New plants are being commissioned and major steel companies are reporting growth in production, too.

India’s leading producer, Tata Steel, for example, has reported in the current quarter of fiscal year 2022, production of 4.62 million tons against 2.99 million in the same period last year.

Are you prepared for your annual steel contract negotiations? Be sure to check out our five best practices.

India’s steel highs and lows

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In March-April 2020, India’s steel capacity utilization plunged as a result of the nationwide lockdown imposed to curb the spread of COVID-19.

But now, things are changing for the better, according to production reports, uptake reports and analyst forecasts.

The World Steel Association (WSA) reported India’s production rose by almost 47% in May this year.

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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.

This week, we touched on the USMCA (which turned 1 on Thursday), Stuart Burns covered the relationship between inventory levels and metals demand, and much more.

On the USMCA — which went into effect July 1, 2020, almost four years after NAFTA talks began — United States Trade Representative Katherine Tai offered some comments this week on the occasion.

“We should also celebrate the USMCA because of what it represents: a renewed commitment by our three countries to pursue negotiations that raise standards and create a race to the top,” she said.

Furthermore, USMCA trade ministers will meet in Mexico City on July 7 to commemorate the one-year anniversary of the trade agreement.

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Week of June 28-July 2 (USMCA, metal stock levels and more)

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• The global lead and zinc markets were in surplus through the first four months of 2021, the International Lead and Zinc Study Group said.
• Meanwhile, GDP rose in all 50 states in the first quarter, the Bureau of Economic Analysis (BEA) reported.
• In addition, Stuart Burns covered Russia’s plans to impose export taxes on key metals.
• U.S. steel capacity utilization for the week ending June 26 reached 82.7%, the American Iron and Steel Institute reported.
• The U.S. Court of International Trade made a ruling affirming duty levels set by the Department of Commerce with respect to heavy walled rectangular steel pipes and tubes from Korea.
• Burns on the loss of support for the zinc price.
• The E.U. voted to extend steel safeguards, originally imposed in 2018, for an additional three years.
• The USMCA Labor Council convened for the first time, pursuant to the 1-year-old agreement’s chapter on labor.
• Think stock levels are a reliable indicator of true metals demand? Think again.
• Norsk Hydro has signed a letter of intent to build an aluminum recycling plant in Michigan.
• Meanwhile, the United States-Mexico-Canada Agreement, or USMCA, hit the one-year mark this Thursday.
• The U.S. goods and services deficit rose in May from the previous month.
• Lastly, for subscribers, the MetalMiner Monthly Outlook for July is now available.

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