Articles in Category: Sourcing Strategies

This morning in metals news: consultancy GlobalData forecast copper production from the top 10 copper mining companies will rise by up to 3.8% this year; meanwhile, the US Senate Committee on Homeland Security and Governmental Affairs advanced a bill that aims to strengthen Buy American requirements; and, lastly, US import prices rose in April.

The MetalMiner Best Practice Library offers a wealth of knowledge and tips to help buyers stay on top of metals markets and buying strategies.

GlobalData: copper production from top 10 companies to rise by up to 3.8% in 2021

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Amid a run of record copper prices, increased copper production this year could take some of the steam out of the market.

According to London-based consultancy GlobalData, copper production from the top 10 copper mining companies in the world could rise by up to 3.8% this year.

Meanwhile, output from the 10 companies — which includes Glencore, Antofagasta, BHP and Freeport-McMoRan — fell by 0.2% in 2021, GlobalData reported Thursday.

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Source: Temperance Beer Co.

A little over a year has come and gone since the COVID-19 pandemic took hold in the US.

In addition to the immense human toll, the pandemic has changed the way many people live their lives. Work situations have changed, as many have switched out commutes to the office for a morning commute to their living rooms or home office spaces.

Furthermore, consumption habits have changed, too.

In the early days of the pandemic, many stocked up on masks, hand sanitizer and toilet paper.

The pandemic also changed consumers’ habits in other areas. One example? Beverages, namely where they are consumed — that is, not in bars — and in what type of container.

Whereas patrons may have consumed draught beer poured from kegs at a bar, many switched to drinking out of aluminum cans at home.

Naturally, this led to a run on aluminum cans and what has seemed to be a continuous can shortage that persists even now, over a year later.

We chatted recently with Josh Gilbert, owner and founder of local brewery Temperance Beer Co., located at 2000 Dempster St. in Evanston, Illinois.

We talked about what the last year has been like for the business, the shift in consumer habits, the resulting shift in the brewery’s procurement and his outlook for the rest of 2021.

Do you know the five best practices of sourcing metals, including aluminum?

COVID-19 pandemic impact — from keg to aluminum can

For brewers, the COVID-19 pandemic has shaken up their businesses in a number of ways.

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A recent Telegraph article suggests the West is sleepwalking into missing the next industrial revolution as China voraciously buys up raw material assets around the world. Those assets include securing its future supplies of cobalt, copper, lithium and other metals. The aforementioned comes in addition to its current domination of rare earth metals.

The MetalMiner Best Practice Library offers a wealth of knowledge and tips to help buyers stay on top of metals markets and buying strategies.

China leads in race for raw materials

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Although the Telegraph article focuses on the UK, the UK is not alone.

Other European countries, and even the US, are only just catching on to the perilous state of most Western economies’ reliance on very limited, and often hostile, supply sources for raw materials.

As the article reports, it takes seven years to plan and build a mine. In the last four years, China Molybdenum has plowed into the Democratic Republic of Congo’s 350 kilometer copper belt. The firm paid $2.6 billion (£2 billion) four years ago for the Tenke Fungurume mine from Freeport McMoRan.

It then expanded its empire in December, paying another $550 million for Freeport’s nearby Kisanfu mine. The mine gave it access to a further 6.3 million metric tons of copper. In addition, the mine offers access to 3.1 million metric tons of cobalt.

Chinese companies now dominate mining in the central African country that produces 70% of the world’s cobalt.

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As the days went by and the disruption from the blockage of the Suez Canal by the container vessel Ever Given increased, the implications became more and more severe.

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Not all of those 360 vessels backed up waiting for the vessels to be freed are containing washing machines and laptops.

Suez Canal disruption

Some have live cargoes on board. Others have have ripening fruit. Lost cargoes will be significant, but may be worse for manufacturers will be the ongoing disruption.

ShippingWatch estimates it will take a week or more to clear the vessels back up into the Red Sea and Mediterranean.

But the damage has already been done.

Due to the non-arrival of vessels in both Europe and Asia, there will be trips out of both regions that are already being canceled (so-called blank sailings), because the container ships do not reach the ports on time and cannot unload and get new cargoes on board.

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US steel imports in February — and through the first two months of the year — are down compared with 2020, the Census Bureau reported.

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Do you know the five best practices of sourcing metals, including steel?

US steel imports in February down 22% from previous month

US steel imports reached 1.71 million metric tons in February, according to preliminary data from the Census Bureau.

Imports fell from 2.20 million metric tons in January.

Meanwhile, February 2021 imports were up from the 1.37 million metric tons imported in February 2020.

Furthermore, imports were down over 7% in the year to date compared with the first two months of 2020.

According to the American Iron and Steel Institute (AISI), finished steel import market share reached an estimated 18% in February. Meanwhile, through the first two months of the year, import market share reached 17%.

In addition, after reaching 35% in 2017, steel import penetration fell to 26% by 2019, according to the Economic Policy Institute.

Tin plate, cold rolled sheet imports surge

February saw a surge in imports of tin plate and cold rolled sheets, among other steel products.

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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.”

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

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• Hot rolled coil prices in Western Europe have continued to rise, Christopher Rivituso explained earlier this week.
• The semiconductor shortage has impacted the automotive sector, leading to a number of manufacturers idling production.
• Sticking with the automotive market, Europe’s automotive sector continues its electrification drive, MetalMiner’s Stuart Burns explained.
• Burns on China’s aluminum sector and what efforts to curb pollution could mean for the aluminum market.
• British Steel recently announced its first delivery of rails to Europe under new owner Jingye Group.
• Sohrab Darabshaw on the Chinese steelmaking hub of Tangshan and what efforts to curb pollution could mean for steel, iron ore and more.
• US steel capacity utilization dipped to 77.3% last week, according to the American Iron and Steel Institute.
• The US’s adoption of battery energy storage will continue to rise, the Energy Information Administration reported.
• After a heavily disrupted first half of the year, global copper mine production in 2020 ultimately finished unchanged relative to 2019 production.
• In a webinar earlier this week, MetalMiner experts overviewed market conditions and buying strategies for what is currently a bullish commodities market.
• U.S. Steel recently unveiled what it called a new sustainable steel product line dubbed verdeX™.
• The rising Midwest Premium reflects an exceedingly tight US aluminum market.
• According to the Economic Policy Institute, the former Trump administration’s Section 232 tariffs on steel and aluminum produced “near-immediate benefits.”
• Lastly, circling back to the semiconductor shortage, Ford said it will temporarily idle production of the F-150 at its Dearborn, Michigan plant.

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Industrial metal buying organizations are in a difficult spot these days, as commodities are entrenched in a bull market.

After the initial demand hit that commodities took on at the end of Q1 2020 with the outset of the COVID-19 pandemic, materials prices have skyrocketed. Lead times have lengthened and demand for everything from automobiles to homes to electronics picked up around the middle of the year.

Since then, metals prices have been on a bullish run, putting pressure on buying organizations.

On Wednesday, March 24, MetalMiner hosted a webinar titled “When Will the Metals Bull Market End? (Am I Well Positioned to Get All of the Cost-Downs When Prices Fall?).” During the 30-minute session, MetalMiner CEO Lisa Reisman, Editor-at-large Stuart Burns and Vice President of Business Solutions Don Hauser walked buyers through the current state of commodities markets and strategies for how buyers should approach their metals spend in preparation for when prices eventually come down.

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Bull market

To metals buyers’ chagrin, prices remain elevated and supply is tight.

When polled, 44% of webinar participants said carbon steel has been their most budget-busting metal this calendar year. Meanwhile, 24% said stainless steel, 20% said aluminum and 12% said copper.

In addition, 66% of participants indicated they are also seeing price increases for value-add items (for example, coatings, gauge and width adders, and additional processing).

US steel prices, for example, have been relentless in their rise. Hot rolled coil closed earlier this week at $1,271 per short ton, up nearly 9% from a month ago. After a modest recovery in May 2020, hot rolled coil dipped again, falling as low as $454 per short ton in late August.

The price has come a long way since then.

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President Joe Biden’s latest executive order seeks to secure a variety of important supply chains.

For example, in one higher-profile case, General Motors recently announced it would extend downtimes at several plants as a result of a semiconductor shortage.

As we’ve noted in our Rare Earths Monthly Metals Index (MMI) series, rare earths supply has long been a point of concern for the US, particularly the Pentagon. (Recently, MetalMiner’s Stuart Burns delved into China’s overwhelming control of the rare earths processing market and indications Beijing is considering tighter rare earths export regulations.)

In that vein, the president’s latest executive order — his 33rd in just over a month in office, which the White House said he would sign Wednesday — aims to secure those critical supply chains.

The White House said the order focuses on six key areas:

• the defense industrial base
• the public health and biological preparedness industrial base
• the information and communications technology (ICT) industrial base
• the energy sector industrial base
• the transportation industrial base
• supply chains for agricultural commodities and food production

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This morning in metals news: officials held a groundbreaking ceremony at the AM/NS Calvert mill earlier this month; President Joe Biden is expected to sign an executive order that calls for assessments of several critical supply chains; and US housing starts fell in January.

AM/NS Calvert officials hail expansion project

Officials celebrated the imminent expansion project at the AM/NS Calvert mill in Alabama with a groundbreaking ceremony earlier this month, al.com reported.

The Alabama mill is a 50/50 joint venture of ArcelorMittal and Nippon Steel. In December, ArcelorMittal completed the sale of most of its North American assets to Cleveland-Cliffs.

However, the AM/NS Calvert mill is one of the few assets not included in the sale.

Last August, ArcelorMittal announced its intention to build an electric arc furnace at the mill.

The MetalMiner Best Practice Library offers a wealth of knowledge and tips to help buyers stay on top of metals markets and buying strategies.

Biden to sign executive order for supply chain assessments

President Joe Biden will sign an executive order calling for assessments of various US supply chains, Yahoo News reported.

The order will call for assessments of supply chains for semiconductors, medical supplies, rare earths and electric car batteries.

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In just over two weeks, President Joe Biden has signed 28 executive orders aimed at a wide variety of issues.

The orders range from Medicaid to the country’s pandemic response to augmenting public health supply chains.

Relevant to metals, Biden signed two orders aimed at increasing domestic content in federal procurement and the climate crisis.

“Both President Biden and President Trump, as part of their initial rounds of Executive Orders, each prioritized ‘Buy American’ type provisions — a notable point of similarity between two very different administrations,” said Alex Hontos, partner at international law firm Dorsey & Whitney.  “Indeed, aspects of President Biden’s Executive Order are very similar to President Trump’s 2017 Executive Order. However, President Biden’s Executive Order contains more directives than Trump’s BA Executive Order did.”

Biden’s ‘Buy American’ plan

Government plans seeking to increase purchases of domestically produced goods are nothing new.

In July 2019, Trump signed an executive order titled “Maximizing Use of American-Made Goods, Products, and Materials.” In the order, Trump said his administration would “enforce the Buy American Act to the greatest extent permitted by law.”

The order called for the Federal Acquisition Regulatory (FAR) Council to consider proposing an amendment to provisions in the Federal Acquisition Regulation regarding classification of items as being of foreign origin.

For iron and steel products, that meant “the cost of foreign iron and steel used in such iron and steel end products constitutes 5 percent or more of the cost of all the products used in such iron and steel end products.”

For all other end products, the percentage would increase to 45%.

Fast forward to 2021 — what does Biden’s executive order on the issue of promoting domestic content in federal procurement?

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