Articles in Category: Public Policy

China story steel production

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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:

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Week in Review, April 5-9 (steel capacity utilization, European steel’s challenges and more)

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This morning in metals news: the Aluminum Association this week called for reforms to the Section 232 exclusion process; meanwhile, Volvo Cars reported a record first quarter in sales; and, lastly, Chilean miner Codelco requested arbitration with Ecuador regarding the Llurimagua project.

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Aluminum Association calls for Section 232 exclusion reform

Aluminum production

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Just over three years ago, former President Donald Trump used Section 232 of the Trade Expansion Act of 1962 to institute tariffs on imported steel and aluminum.

However, in addition to quotas and waivers for certain countries, domestic consumers could file for tariff exclusions with the Department of Commerce.

Meanwhile, this week, the Aluminum Association called for reforms to the Section 232 exclusion process.

“Three years after the implementation of the Section 232 tariffs on most aluminum imports into the U.S., it is time to take a fresh look at trade policy to support a robust domestic aluminum industry,” said Tom Dobbins, president and CEO of the Aluminum Association. “The Biden administration and the new Congress have an opportunity to harness the growth potential for aluminum as a sustainable solution for the 21st century, and capitalize on the more than $3 billion of private U.S. aluminum investment over the past decade. The federal government can take action immediately to put American aluminum on an equal footing with overseas competitors.”

Volvo touts record first quarter

Volvo Cars reported its best-ever first quarter for global sales.

Volvo’s sales surged by 40.8% year over year.

“In Europe and the US, the company managed to improve sales compared to the first quarter last year, while managing to cope with the ongoing effects of the pandemic,” the automaker said. “China has by now recovered from the impact of the pandemic, which was peaked in Q1 2020.”

Furthermore, Volvo’s March sales jumped by 62.3% year over year.

Chile’s Codelco seeks arbitration with Ecuador over Llurimagua project

Lastly, Chilean copper giant Codelco said it is seeking arbitration at the International Chamber of Commerce with Ecuador.

Codelco said it is seeking compliance regarding agreements signed with the National Mining Company of Ecuador regarding the Llurimagua project. The project sits 80 kilometers from Ecuador’s capital, Quito.

In a release, Codelco said the parties agreed to definitive terms for the partnership in 2019. In addition, Codelco said it hoped the process will make it possible to reach an agreement for the “mutual benefit” of the parties.

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Greenland elections

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The Rare Earths Monthly Metals Index (MMI) fell by 1.9% for this month’s reading, as the Greenland elections this week could have significant ramifications for a rare earths project in the country.

April 2021 Rare Earths MMI chart

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Left-wing party against rare earths mine wins Greenland elections

Rare earths mining stood front and center in Greenland’s elections earlier this week.

The left-wing Inuit Ataqatigiit party emerged victorious with 37% of the vote, Reuters reported.

What does Greenland’s election have to do with rare earths? The prevailing party ran on opposition to a mining project at Kvanefjeld on the southern tip of the island.

On its website, Australia-based Greenland Minerals Ltd. says the complex could be the most significant source of rare earths in the Western world.

Kvanefjeld offers “massive bulk resources,” the firm indicates, in addition to access to year-round direct shipping.

However, the election result could prove to be a significant blow to the site’s prospects.

Reuters quoted party leader Mute Egede, who said the project “won’t happen.”

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This morning in metals news: the US Court of International Trade issued a Section 232-related ruling; General Motors announced the manufacturing locations of its first-ever Chevrolet Silverado electric pickup and GMC Hummer EV SUV; and, lastly, top copper producer Chile closed borders.

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USCIT rules in favor of plaintiff in Section 232 derivatives case

judge's gavel

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The US Court of International Trade (USCIT) has typically rejected challenges to former President Donald Trump’s Section 232 tariffs.

This week, however, the court ruled in favor of a plaintiff who contested Trump’s expansion of the tariffs to cover steel and aluminum derivatives.

With Proclamation 9980 on Jan. 24, 2020, Trump expanded the Section 232 duties to cover steel and aluminum derivatives.

In this case, PrimeSource Building Products Inc. contested the duties.

“To declare Proclamation 9980 invalid, we must find ‘a clear misconstruction of the governing statute, a significant procedural violation, or action outside delegated authority,'” the USCIT explained. “Because the President issued Proclamation 9980 after the congressionally-delegated authority to adjust imports of the  products addressed in that proclamation had expired, Proclamation 9980 was action outside of delegated authority.”

The USCIT awarded summary judgment to PrimeSource on the second count of its complaint.

“As relief on this claim, we will declare Proclamation 9980 invalid as contrary to law and, on that basis, direct that the entries affected by this litigation be liquidated without the assessment of duties pursuant to Proclamation 9980, with refund of any deposits for such duty liability that may have been collected pursuant to Proclamation 9980,” the court stated in its conclusion.

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wind and solar electricity generation

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This morning in metals news: US energy consumption fell by 7% in 2020; the United Steelworkers union commented on the details of President Joe Biden’s American Jobs Plan; and the aluminum price retraced last week.

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US energy consumption down 7% in 2020

Amid the impact of the COVID-19 pandemic, US energy consumption fell by 7% in 2020, the Energy Information Administration (EIA) reported.

“Last year marked the largest annual decrease in U.S. energy consumption in both percentage and absolute terms in our consumption data series that dates back to 1949,” the EIA said. “Much of the 2020 decrease in energy use is attributable to economic responses to the COVID-19 pandemic that began in the United States during the spring of 2020.”

USW on American Jobs Plan

As we noted last week, the United Steelworkers union last week announced a strike at nine Allegheny Technologies Inc. facilities. The move could have significant ramifications for stainless steel buyers, should it linger.

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E.U. flag

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The European steel industry faces three major challenges, following the impacts of the COVID-19 global and the 2008-09 financial crisis, management consultancy McKinsey & Company stated.

“European steel producers should consider making a series of short-term operational and medium- to long- term strategic moves to ensure economic and environmental sustainability going forward,”
McKinsey said in its March 15 report, “The future of the European steel industry.”

“These strategic moves could encompass restructuring steps aimed at capacity reduction, steps toward strengthening the position of steel companies by diversifying their capabilities and sustainability moves toward low- and no-carbon steel,” McKinsey added.

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European steel needs to address overcapacity

The first move the sector needs to address is the increase in structural overcapacity. That is particularly true after a demand loss of between 5 million and 10 million metric tons demand loss as a result of the pandemic, the group stated.

“European steel players need to adjust overcapacity to be in sync with next normal steel demand,” McKinsey said.

Adjusting for a greener future

Steelmakers also need a short-term response to compensate for higher costs with profitability improvements and incremental measures that will reduce CO2 emissions. For example, they can do so by increasing the scrap rate, the report added.

Meanwhile, producers need to make investments with a view to medium- and long-term decarbonizing of the steel industry. In short, they should tailor long-term plans and technology choices towards CO2 neutrality, McKinsey noted.

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infrastructure

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President Joe Biden released details of the so-called American Jobs Plan, which among its stated goals aims to modernize infrastructure, revitalize manufacturing and create what it says will be “millions” of jobs.

The proposal will include an investment of approximately $2 trillion over the next 15 years, the White House said Wednesday.

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Aluminum in infrastructure

On the heels of the announcement, domestic metals associations weighed in on the Biden administration’s wide-ranging proposal.

The Aluminum Association applauded the news in general terms, emphasizing aluminum’s role in infrastructure development.

“We are pleased to see the Biden administration and the Congress focusing on infrastructure investment as the national priority that it is,” Aluminum Association President and CEO Tom Dobbins said. “Aluminum is an essential element to America’s infrastructure future – used widely in the electric grid, solar panels, electric vehicle charging stations and buildings of all kinds. Major investment will also provide a once-in-a-generation opportunity to modernize the nation’s recycling infrastructure, vital to shoring up domestic aluminum supply chains and increasing manufacturing self-sufficiency.”

Dobbins added the Aluminum Association “stands ready to work with” the Biden administration and Congress on “investments that work for America’s vital aluminum manufacturing base.”

AISI supportive, but disagrees with funding

Meanwhile, in its own statement, the American Iron and Steel Institute (AISI) also praised the administration’s focus on infrastructure.

However, the industry group expressed its disagreement with the funding mechanisms in the proposal.

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American jobs

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This morning in metals news: President Joe Biden unveiled details of the $2 trillion investment toward the American Jobs Plan; meanwhile, J.D. Power and LMC Automotive recently released their automotive sales forecast for March; and, lastly, Ford yesterday announced its first-ever integrated sustainability and financial report.

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Biden reveals details of American Jobs Plan

This week, President Joe Biden unveiled details of his American Jobs Plan, which will include an investment of $2 trillion.

Furthermore, the plan seeks to revitalize the manufacturing sector, improve US infrastructure, and modernize water delivery systems and electrical grids, among other goals.

“The American Jobs Plan is an investment in America that will create millions of good jobs, rebuild our country’s infrastructure, and position the United States to out-compete China,” the White House said. “Public domestic investment as a share of the economy has fallen by more than 40 percent since the 1960s. The American Jobs Plan will invest in America in a way we have not invested since we built the interstate highways and won the Space Race.”

We have covered the various supply chain and shipping issues that have hampered operations over the last year. Part of the Biden plan calls for improvement of US ports, waterways and airports, including $25 billion for airports.

J.D. Power, LMC Automotive release March sales forecast

Automotive intelligence firms J.D. Power and LMC Automotive recently forecast US automotive retail sales in March would finish up 70.7% compared with March 2020. Furthermore, sales would be up 9.2% compared with March 2019.

In addition, the firms forecast new-vehicle retail sales in Q1 2021 would reach 3.16 million units. That figure would mark an increase of 20.5% from Q1 2020 and 4.7% from Q1 2019.

Ford releases first integrated financial, sustainability report

As electrification continues, many automakers are touting steps taken along the way.

This week, Ford Motor Co. announced the release of its first-ever integrated financial and sustainability report.

Furthermore, the automaker also announced new “science-based targets” toward its goal of carbon neutrality by 2050.

“The targets – to reduce Scope 1 and 2 greenhouse gas emissions from operations 76% from 2017, and Scope 3 GHGs from use of the company’s products 50% from 2019, both by 2035 – were recently approved by the Science Based Targets initiative,” Ford said in a release.

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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 the semiconductor shortage, the Midwest Premium and more.

A fire at a Japanese chip-making plant last week has slammed automotive operations. General Motors, Ford and many other automakers have announced idling of production as a result of the shortage.

Meanwhile, on the supply side, Intel announced plans to invest $20 billion to build two new Arizona plants. Furthermore, Intel said it aims to “serve the incredible global demand for semiconductor manufacturing.”

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Week of March 22-26 (semiconductor shortage, Midwest Premium and more)

semiconductor and automobile

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electric vehicle charging

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Most carmakers had a pretty torrid first half of 2020, with factories disrupted, show rooms closed and consumers bunkered down in their homes. Sales plummeted across Europe and North America.

However, the second half of last year and, particularly, the first quarter of this year have seen carmakers’ prospects come roaring back.

The MetalMiner team will present a commodity forecast for copper, aluminum, stainless and carbon steel on Wednesday, March 24, at 10 a.m. CDT https://zoom.us/webinar/register/WN_6J8wAyYySfihVk3ZUH9yMA.

The move to electric vehicles

Yet, the turmoil being experienced by the industry is much more about the stop-go of last year.

Rather than cause a retrenchment, the pandemic has helped accelerate the move to electrification.

The greatest spur, however, has undoubtedly been government legislation.

EU penalties on carmakers that fail to meet emission reduction targets are driving a mass migration from internal combustion engines (ICE) to hybrids and fully electric vehicles. After a slow start, European carmakers are adopting aggressive transition plans.

Volkswagen goes all in on electric vehicles

Just this past week, Volkswagen announced — to the joy of its shareholders, who piled in to push shares up 20% — that the German automaker aims to become the global leader in electric cars by 2025. The automaker is placing heavy bets on next-generation lithium-ion batteries, the Financial Times reported.

Volkswagen says it will sell 1 million electric or hybrid cars this year, a tenfold increase from 2019, with half being fully electric vehicles and the rest plug-in hybrids.

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