Articles in Category: Public Policy

executive order

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This morning in metals news: President Joe Biden on Monday signed an executive order aimed at boosting U.S. manufacturing; the U.S. steel sector’s capacity utilization rate during the week ending Jan. 23 reached 75.7%; and the Energy Information Administration expects energy-related carbon dioxide emissions to tick back up once again in 2021 and 2022 after declining in 2020.

Biden signs executive order to boost federal procurement of U.S.-made goods

President Joe Biden on Monday signed an executive order that aims to boost U.S. manufacturing by increasing federal procurement of U.S.-made materials.

“‘Made in America Laws’ means all statutes, regulations, rules, and Executive Orders relating to Federal financial assistance awards or Federal procurement, including those that refer to ‘Buy America’ or ‘Buy American,’ that require, or provide a preference for, the purchase or acquisition of goods, products, or materials produced in the United States, including iron, steel, and manufactured goods offered in the United States,” the executive order states.

Agencies can, however, seek to acquire waivers for exemption from the laws.

“To the extent permitted by law, before granting a waiver in the public interest, the relevant granting agency shall assess whether a significant portion of the cost advantage of a foreign-sourced product is the result of the use of dumped steel, iron, or manufactured goods or the use of injuriously subsidized steel, iron, or manufactured goods,” Section 5 of the executive order states. “The granting agency may consult with the International Trade Administration in making this assessment if the granting agency deems such consultation to be helpful.”

A director will lead the so-called Made in America Office. Furthermore, the director of the Office of Budget and Management will appoint the director of the Made in America Office.

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Steel capacity utilization hits 75.7%

Speaking of the executive order and U.S.-made products, the U.S. steel sector’s capacity utilization rate for the week ending Jan. 23 hit 75.7%, down from 76.7% the previous week, the American Iron and Steel Institute reported.

Meanwhile, output during the week totaled 1.72 million tons, or down 1.2% from the previous week. Furthermore, output decreased 9.9% year over year.

 CO2 emissions to rise in 2021, 2022

Per the Energy Information Administration, energy-related carbon dioxide emissions in the U.S. will likely increase this year and next after declining in 2020.

“Economic growth and the lessening of pandemic-related restrictions result in more energy consumption and associated CO2 emissions,” the EIA reported. “EIA expects total energy-related CO2 emissions to increase to 4.8 billion metric tons in 2021 and 4.9 billion metric tons in 2022.”

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India iron ore barge

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A chorus of protests against Indian iron-ore exports — with associations of sponge iron and steel-forgings manufacturers making common cause with the India Steel Association (ISA) — has brought pressure on ministers to ban exports of iron ore.

Of those exports, 90% goes to China.

The groups are protesting in a bid to support domestic steel mills from rising raw material costs.

Ministers have refrained from taking action, arguing they would rather the market decide when it makes sense to export and when to import.

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Iron ore export ban?

However, a ban hardly seems necessary.

A massive 30% export tax kicks in this quarter on the lower Fe grade material between 58 to 62%. That is expected to decimate exports this quarter, the Business Standard reports.

In an effort to improve supply, the authorities have taken action against underused mining leases.

According to the New Indian Express, production declined during 2020. Comparing the two years January to September 2019 to the same period in 2020, iron ore production totaled 110.95 million metric tons in 2019. Meanwhile, output reached 76.01 million metric tons in 2020, marking a 31.5% drop.

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imports

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This morning in metals news: U.S. import prices rose in December; the Aluminum Association commented on potential changes to the Section 232 aluminum tariff program; and November steel shipments dropped by 11.9%.

U.S. import prices gain by 0.9% in December

U.S. import prices jumped by 0.9% in December, per the Bureau of Labor Statistics. Furthermore, the December increase marked the largest jump in import prices since August.

Meanwhile, U.S. export prices rose by 1.1% after rising by 0.7% in November.

Aluminum Association calls for ‘targeted, multilateral’ approach

We previously noted several industry groups’ recent call for the incoming Biden administration to maintain existing steel tariffs and quotas.

In that vein, the Aluminum Association offered its own comments on the Section 232 aluminum tariff program.

“The Aluminum Association continues to favor a targeted approach to trade enforcement,” Aluminum Association President and CEO Tom Dobbins said in a prepared statement. “Across-the-board tariffs have failed to dent the non-market-based structural subsidies that drive overcapacity and hurt U.S. aluminum producers and workers. We look forward to working with President-elect Biden’s trade team on new, creative approaches to combat this perennial challenge, including renewed cooperation with traditional trading partners and allies.”

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The Rare Earths Monthly Metals Index (MMI) gained 18.2% for this month’s index value.

January 2021 Rare Earths MMI chart

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$2.3T pandemic aid, government spending package includes rare earths research funds

Late last year, President Donald Trump signed a $2.3 trillion pandemic aid and government funding package that included more than $800 million in funds for rare earths research and development.

Trump signed an executive order in September 2020 calling out the threat to dependence on foreign sources of critical minerals. The president also signed a similar executive order in 2017 that called for the secretary of the interior to identify critical minerals. Ultimately, the process produced a list of 35 critical minerals.

Section 7001 of the 5,593-page bill outlines funding related to critical minerals.

The bill text calls for the secretary of energy to “develop and assess advanced separation technologies for the extraction and recovery 17 of rare earth elements and other critical materials from coal and coal byproducts” and “determine if there are, and mitigate, 20 any potential environmental or public health im21 pacts that could arise from the recovery of rare 22 earth elements from coal-based resources.”

The bill called for authorization to appropriate $23 million for the aforementioned efforts in fiscal years 2021 and 2022.

MP Materials revenue rises 52%

In late November, California-based MP Materials released its Q3 and year-to-date financial results.

The firm announced Q3 revenue of $41 million, marking a 52% year-over-year increase.

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gas station pump

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This morning in metals news: U.S. average gas prices fell to their lowest level since 2016 last year; the U.S. Treasury announced sanctions against Iran’s steel industry; and Ford Motor Co. released its Q4 2020 U.S. sales results.

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U.S. average gas price drops in 2020

As MetalMiner readers know, we keep tabs on commodities like oil insofar as they can be price drivers for metals. In short, oil price increases are often supportive of metals prices. (Readers can learn more about our analysis in the most recent update to our Annual Outlook.)

Unsurprisingly, given the slowdown in travel last year stemming from the onset of the COVID-19 pandemic in the U.S., the average gas price fell to its lowest level since 2016, the Energy Information Administration (EIA) reported.

Per the EIA, the average gas price dropped to $2.17 per gallon.

Meanwhile, in mid-March 2020, before the declaration of a national emergency, the average stood at $2.38 per gallon.

U.S. levies sanctions on ‘key actors’ in Iran’s steel sector

The U.S. Treasury on Tuesday announced sanctions on several firms in the Iranian steel sector, in addition to a Chinese supplier of graphite electrodes.

The Treasury announced sanctions on China’s Kaifeng Pingmei New Carbon Materials Technology Co., Ltd. (KFCC), which sold graphite electrodes to Pasargad Steel Complex, the Treasury said.

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Brexit

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After four and a half years and unprecedented social and political discord, it has finally happened: the United Kingdom has left the European Union with the bare bones of a free trade agreement.

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Bare bones free trade agreement

It took until Christmas Eve — ahead of the Dec. 31 deadline exit date for both sides to make the final compromises necessary to reach an agreement.

However, to Prime Minister Boris Johnson’s credit, after all of the lies and disinformation around the benefits of leaving the E.U., he did finally get it done. Even the normally neutral and sober Financial Times acknowledges it is but the bare bones of a deal, with much left uncovered and much still to be agreed.

The deal covers goods, exports to the E.U. of which make up just 8% of U.K. GDP. However, the deal leaves out services. According to The Guardian, services account for around 80% of the U.K.’s economic activity and about 50% of its exports by value to the E.U.

There will be a lengthy process of ongoing negotiation around how much access the City of London is allowed to E.U. business. Similarly, there will be discussions regarding what constitutes the required “equivalence” for which the E.U. is looking.

This means the previous passporting agreement allowing automatic access to the E.U. is replaced by so-called equivalence. That is, each side unilaterally permits companies from the other to conduct certain financial activities in its territory.

That’s hardly a stable position. E.U. countries like France and Germany have made no secret of their desire to challenge the U.K.’s historical dominance in financial services post-Brexit.

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sanctions

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Aluminum buyers will have read a recent announcement in Bloomberg with a sense of panic, if not déjà vu, as the specter of Rusal sanctions reportedly looms again.

“Aluminum Surges on Concern U.S. May Reapply Rusal Sanctions” ran the headline, reminding buyers of the chaos that ensued in 2018. At that time, the Trump administration applied sanctions against Oleg Deripaska, owner of En+ and, therefore, Rusal Aluminium. The decision effectively banned Rusal metal from the U.S. market. Furthermore, it banned, by extension, metal from any suppliers of product based on Rusal primary metal – much of Europe and parts of Asia.

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Rusal sanctions Part 2?

By way of context, Rusal is the largest aluminum producer in the world outside of China. The company accounts for some 6% of global supply.

The firm is the largest supplier in Europe and still retains the position of being in the top five to the U.S. market.

Back in 2018, when Rusal stood on the outside looking into the Western world’s metal markets. Physical delivery premiums, particularly the Midwest Premium, skyrocketed to nearly $500 per metric ton. (Although, it has to be said, the Midwest Premium was already somewhat elevated before the Rusal sanctions by earlier, more Chinese-focused tariff action.)

There appears to be a number of factors at play this time around.

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imports

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This morning in metals news: U.S. import prices rose slightly in November, according to the Bureau of Labor Statistics; the Pilbara Ports Authority reported November shipping data;  and, finally, there is speculation the U.S. could reimpose sanctions on Russian aluminum giant Rusal, Bloomberg reported.

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Import prices rise in November

Import prices picked up by 0.1% in November, the Bureau of Labor Statistics (BLS) reported.

Higher fuel prices made imports more expensive last month.

“Prices for import fuel increased 4.3 percent in November following a 0.9-percent decline in October and a 4.7-percent drop in September,” the BLS reported. “Higher prices for both natural gas and petroleum contributed to the November advance.”

Meanwhile, export prices gained 0.6% after rising by 0.2% and 0.6% the previous two months.

Pilbara Ports Authority reports November shipping data

Australia’s Pilbara Ports Authority reported November throughput of 57.4 million tonnes, down 3% year over year.

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renewables

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This morning in metals news: Nucor Corporation has signed a power purchase agreement with EDF Renewables North America; the Pilbara Ports Authority reported an 11% year-over-year increase in throughput in October; and, lastly, Minnesota’s mining rules are getting another look.

The MetalMiner 2021 Annual Outlook consolidates our 12-month view and provides buying organizations with a complete understanding of the fundamental factors driving prices and a detailed forecast that can be used when sourcing metals for 2021 — including expected average prices, support and resistance levels.

Nucor signs power purchase agreement with renewables firm

Steelmaker Nucor has signed a power purchase agreement with EDF Renewables for 250 megawatts of new solar energy in Texas.

The agreement is for 15 years.

“Nucor is one of the most efficient and cleanest steel producers in the world, and we are always looking for ways to reduce our carbon footprint. That is why we are proud to make our production process even cleaner by supporting the development of this solar energy project,” said Leon Topalian, president and CEO of Nucor Corporation. “We are already North America’s largest recycler, and supporting the addition of more clean power to the regional grid via this agreement further demonstrates Nucor’s commitment to sustainable steelmaking.”

Pilbara Ports Authority reports October activity

The Pilbara Ports Authority reported monthly throughput of 62.5 million tonnes in October.

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The Rare Earths Monthly Metals Index (MMI) held flat once again this month.

November 2020 Rare Earths MMI chart

The MetalMiner 2021 Annual Outlook consolidates our 12-month view and provides buying organizations with a complete understanding of the fundamental factors driving prices and a detailed forecast that can be used when sourcing metals for 2021 — including expected average prices, support and resistance levels.

China export control law to take effect Dec. 1

China’s legislature last month approved a new export control law that will go into effect Dec. 1, the state-run Xinhua news agency reported last month.

“China may take countermeasures against any country or region that abuses export-control measures and poses a threat to China’s national security and interests, according to the law,” Xinhua reported.

“The law also clarifies that technical documentation related to the items covered by the law is also subject to export-control stipulations.”

The law could impact exports of rare earths, for which China overwhelmingly dominates the global market.

As we have noted in this column before, the U.S. — especially the Pentagon — has long sought to diversify its rare earths supply chain. The U.S. earlier this year approved Phase 1 contracts with MP Materials and Lynas Corporation for work to develop rare earths separation facilities in the U.S.

South Korean-Australian joint project produces praseodymium, neodymium

Continuing the theme of various countries’ efforts to wean themselves off of rare earths dependence on China, Forbes recently reported on a joint venture between South Korea and Australia that has showed some promise.

The joint mineral processing project, Forbes notes, has so far produced neodymium and praseodymium. The two elements are used in permanent magnets in electric vehicles and, for praseodymium, renewable energy apparatus, like wind turbines.

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