Industry News

In The Construction Monthly Metals Index (MMI) increased by 0.6% month over month.

US construction spending rose in 2021

U.S. construction spending reached a seasonally adjusted annual rate of $1,639.9 billion in December, the Census Bureau reported. The December rate marked a 0.2% increase from the revised rate November. Furthermore, the December figure jumped by 9.0% compared with December 2020.

For all of 2021, construction spending totaled $1,589.0 billion, up 8.2% year over year.

Private construction spending in December reached a rate of $1,292.9 billion, up 0.7% month over month. Within private construction, residential construction totaled $810.3 billion in December, up 1.1% from November. In addition, nonresidential construction remained virtually unchanged month over month. December’s spending totaled $482.6 billion from $482.7 billion in November.

At the same time, public construction reached $347.0 billion, down 1.6%. Educational construction checked in at $81.0 billion, down 1.4%. Highway construction rose by 0.1% to a rate of $103.5 billion.

MetalMiner covers the impact of these indicators on metal prices in our weekly email updates here.

Nonresidential construction activity remains strong

Meanwhile in the U.S., the Architecture Billings Index (ABI) remains in growth for the eleventh consecutive month. The index increased to 52 in December from 51 the month prior. Any reading greater than 50 indicates billings growth. With an approximate lead time of 9-12 months, the ABI serves as a forward-looking indicator for nonresidential construction.

In addition, design contracts likewise remained in growth as the measure held flat month-over-month at 55.8. Meanwhile, architecture firms continue to report a steady number of projects into the future. Both inquiries and the value of new contracts remain strong. Backlogs stand at an average of 6.5 months, near historical highs.  This suggests material demand from the sector will remain strong well into the year.

Housing starts rose in December

Meanwhile, in the housing market, U.S. housing starts reached a seasonally adjusted annual rate of 1.702 million in December, the Census Bureau reported. The December rate marked a 1.4% rise from the previous month and a 2.5% year-over-year rise.

Finally, single family housing starts fell 2.3% to a rate of 1.172 million. For units in buildings with five units or more, the rate reached 524,000. In total, 2021 saw an estimated 1.5951 million housing units started to reflect a 15.6% year-over-year rise.

Metal buying organizations can track a broad range of monthly price changes via the monthly MMI report.  

Lumber prices hit record highs 

As construction activity remains strong, lumber prices continue to climb on pace. Both 2020 and 2021 saw prices hit record highs. Furthermore, in 2020, framing lumber prices averaged around $550. By 2021, the average surged to $850, 17% above the 25-year average. Prices continue upward in 2022.

Moreover, in the early days of February, lumber prices jumped almost 30%. Lumber futures stood at $934.90 per thousand board feet on Feb. 1. By Feb. 9, futures prices hit $1,204.90 per thousand board feet. Although lumber prices remain historically high, prices sit beneath the record peak reached in May of 2021 of $1,711.

 Actual metals prices and trends

The Chinese rebar steel price rose 3.14% month over month to $768 per metric ton as of Feb. 1. Chinese H-beam steel rose by 6.1% to $790 per metric ton.

The U.S. shredded scrap steel price fell by 4.76% to $480 per short ton.

Finally, European 1050 commercial aluminum sheet rose by 6.82% to $4,832 per metric ton.

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

The Raw Steels Monthly Metals Index (MMI) fell by 4.6% month over month.

U.S. steel prices continue to fall, led by HRC. Plate prices moved sideways. Nonetheless, they remain beneath their peak.

U.S., Japan reach Section 232 tariff agreement

The U.S. and Japan reached an agreement regarding steel imports from Section 232 tariffs. Announced Feb. 7, the new deal will follow a similar tariff rate quota (TRQ) structure to the one established between the EU and U.S. Unlike the EU TRQ, however, aluminum will remain excluded. The quota remains well below the 3.3 million tons of steel annually permitted for the EU to the U.S.

Beginning April 1, as much as 1.25 million metric tons of steel can come tariff-free from Japan annually. The U.S. and Japan will continue to combat excess global steel capacity, namely from China. According to a joint statement, Japan will implement “appropriate domestic measures, such as antidumping, countervailing duty, and safeguard measures or other measures of at least equivalent effect” as part of the agreement. According to preliminary data, U.S steel imports of Japanese material reached roughly 989,000 metric tons in 2021. 

Meanwhile, negotiations between the U.S. and the U.K. continue. Unlike Japan, the U.K. imposed retaliatory tariffs on U.S. goods including whiskey, motorcycles, and jeans. South Korea also requested revisions to the tariffs. However, official negotiations have yet to begin. 

SDI Sinton comes online, Nucor to expand

Following numerous delays, Steel Dynamics’ Sinton, Texas flat-rolled mill melted its first coil. The mill, originally slated to begin operations in September of 2021, will continue to ramp up production to reach full capacity by Q4. At full capacity, the mill can produce 3 million short tons per year (250,000 short tons per month). The mill will produce hot rolled coil, cold rolled coil and hot-dipped galvanized. Current estimates place the mill’s 2022 output at roughly 2 million short tons.  

Meanwhile, Nucor plans to expand production at its Crawfordsville, Indiana sheet mill. Nucor will fund the expansion with a $290 million investment. Once started, construction will take around two years to complete. Nucor will expand “existing galvanizing and prepaint capabilities.” At completion, the construction grade continuous galvanizing line will boast an annual capacity of 300,000 tons. The prepaint line will reach 250,000 tons per year. The start of construction pends regulatory and permit approvals. Nucor’s announcement follows the gradual restart of its Gallatin County, Kentucky plant. The mill went offline late last year to integrate a new electric arc furnace. The mill will reach its full annual capacity of 3 million short tons in 2023. 

Steel prices continue to fall. Do your purchases generate steel cost savings? Check out our five best sourcing practices for steel.

China leans toward scrap, boosts iron ore production

A joint statement from China’s state planner and the Ministry of Industry and Information Technology (MIIT) announced China’s intentions to “significantly increase” iron ore output from mines. The statement also indicated increased usage of steel scrap. China’s moves are part of its larger ambitions to consolidate its steel sector and reduce overall carbon emissions.

By 2025, China expects more than 80% of national steel capacity to meet low-emissions targets. In addition, the country expects to collect more than 300 million tons of steel scrap per year. The advancement to scrap demand will feed increased production from electric arc furnaces (EAFs), projected to account for more than 15% of crude steel output by 2025. In 2020, EAFs represented roughly 10% of total steel production.

Actual metals prices and trends

Chinese slab prices rose by a mere 0.83% month-over-month to $782.26 per metric ton as of Feb. 1. Meanwhile, the Chinese billet price increased by 3.71% to $696.92 per metric ton.

Chinese coking coal prices rose by 2.52% to $469.01 metric ton.

U.S. three-month HRC futures declined 20.08% to $951 per short ton. While the spot price declined by 12.22% to $1,393 from $1,587 per short ton. U.S. shredded scrap steel prices fell by 4.76% to $480 per short ton.

MetalMiner has long held the belief that no super-cycle exists to drive commodities prices. The argument against the super cycle suggests a lack of a 10-year sustained growth trend of new demand to support such a cycle. And despite not having a sustained growth demand cycle, metal prices remain extremely volatile due to supply constraints. These constraints will likely continue throughout 2022.

What we are watching

For stainless steel buyers, MetalMiner has kept a close eye on a tariff exclusion request from A&T Stainless. The request would allow the joint venture between Allegheny Technologies and China’s Tsingshan to import hot rolled band from Indonesia to produce 304L and 316L.

In addition, according to MetalMiner’s own Katie Benchina Olsen, “If the exemption is granted, A&T Stainless would restart the Direct Roll Anneal and Pickle (DRAP) line in Midland, Pennsylvania. The line would produce about 20,000 tons a month of thicknesses .048″ and heavier. If the DOC approves the request, the DRAP line would take several weeks to start up.”

On Thursday, Jan 27 at 11:00am Katie Benchina Olsen will update MetalMiner readers on the ramifications of the exclusion request during our monthly webinar. Readers can sign up here to attend.

Moreover, not everyone will support the exclusion request. Specifically, other domestic mills will likely oppose it as they have customers on strict allocation.

Nickel prices rising on dwindling inventory levels

Concurrently, nickel has seen strong global demand amid falling LME warehouse stocks and renewed concerns over tight supply. LME warehouse stocks have plunged to their lowest levels since 2019 at 99,462 metric tons. They remain roughly half of where they stood just in August of last year. Many factors drive the current nickel market including strong stainless demand (although China demand is expected to cool down) and EV battery demand.

Tesla rumors on SDI false

Metal nerds know that the SDI plant going up in Sinton TX would not supply the Tesla Cybertruck (SDI produces steel and not stainless steel). The new Tesla Cybertruck will apparently make use of a stainless steel exoskeleton. Delorean fans might recall that car used 301 stainless.

Aluminum prices continue to move up

Meanwhile, the European energy crisis continues to roil Europe. With multiple smelter shutdowns due to surging energy prices and eroded profits, tight aluminum supply continues both in Europe as well as in China. The curtailed production there due to its own energy crisis and reduction of carbon emissions goals has led to a reduction in supply.

Join the MetalMiner team on Thursday, Jan 27 at 11:00am for additional information on all of these metals, carbon steels and how AI and advanced algorithmic modeling yields more accurate forecast results.

 

This morning in metals news: LME copper prices have ticked up; the U.S. monthly trade deficit increased from October to November; and, lastly, WTI crude prices made some gains this week.

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Copper prices rise

copper mine in Peru

Jose Luis Stephens/Adobe Stock

Copper prices had trended firmly in between MetalMiner support and resistance levels for much of Q4 2021.

However, copper prices have showed signs of upward momentum.

The LME three-month copper price closed Tuesday at $9,759 per metric ton. The price had increased 2.94% month over month, MetalMiner Insights data indicate.

US trade deficit reaches $80.2M in November

The U.S. trade deficit reached $80.2 billion in November, the Census Bureau and Bureau of Economic Analysis reported.

The deficit increased from $67.2 billion in October.

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India is trying to save some export bucks in the new year where specialty steel is concerned.

In 2022, India plans to focus on increasing per capita steel consumption enhancing steel raw material security.

All the metals intelligence you need in one user-friendly platform with unlimited usage — request a MetalMiner Insights platform demo

India seeks investors under PLI scheme for specialty steel

India

Zerophoto/Adobe Stock

In line with its announcement in mid-2021, the Government of India (GoI) recently invited applications from investors looking to invest under the production-linked incentive (PLI) scheme for specialty steel. The deadline for all submissions is March 29, 2022, as per the Ministry of Steel announcement. The incentive payout could well be over U.S. $840 million over five years for those companies participating in the scheme.

Specifically, specialty steel is a variety of the alloy that is enhanced by coating, plating, heat treatment, etc., to transform it into high-value steel for numerous strategic sectors, such as defense, space, power and automobiles, among others.

With the PLI scheme, India aims to become less dependent on special steel imports into India.

The PLI scheme aims to promote the manufacture of specialty steel grades in India. Furthermore, it seems to help the steel industry rise to the top of the value chain through technology development.

The broad five target categories for the scheme are: coated/plated products, high-strength/wear-resistant steel, specialty rails, alloy steel products and steel wires, and electrical steel.

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This morning in metals news: MetalMiner’s January 2022 Monthly Metal Outlook (MMO) report is now available; steel capacity utilization for the week ending Jan. 1, 2022, fell to 80.6%; and, lastly, U.S. job openings declined in November.

Request a 30-minute demo of the MetalMiner Insights platform now.

January 2022 MMO report

MetalMiner has kicked off the new year with its latest Monthly Metal Outlook (MMO) forecast report, available only to subscribers.

For more information, those interested can visit the MMO landing page.

Will the steel price cooldown continue? Will stainless buyers find any relief? How are surging energy prices impacting metal producers around the world?

Find all of the above and much more in this month’s forecast report.

Steel capacity utilization dips to 80.6%

U.S. steel capacity utilization for the week ending Jan. 1, 2022, fell to 80.6%, the American Iron and Steel Institute (AISI) reported.

Steel production during the week totaled 1.79 million tons, AISI reported. The total marked a 0.9% week-over-week decline but 9.5% jump year over year.

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This morning in metals news: energy costs surged in 2021; U.S. steel imports picked up in November; and, lastly, aluminum prices rose during the second half of December.

All the metals intelligence you need in one user-friendly platform with unlimited usage. Request a MetalMiner Insights platform demo.

Energy costs rise in 2021

wind power and solar power installations generation

lovelyday12/Adobe Stock

Energy costs surged in 2021, putting the squeeze on residential consumers and industrial users alike (including metal producers).

According to the Energy Information Administration, energy prices used in the S&P Goldman Sachs Commodity Index (GSCI) finished 2021 up by 59% from the first trading day of the year.

“Price increases were largely driven by increased demand from the initial phase of global economic recovery from the COVID-19 pandemic,” the EIA reported. “By comparison, most other commodity indexes included in the GSCI increased by about 20%. The precious metals index was the only one to decline. The energy index of the GSCI increased more than twice as much as the industrial metals index on a percentage basis during 2021, the next highest commodity index group price change.”

Steel imports rise in November

U.S. steel imports rose to an estimated 2.8 million metric tons in November, the Census Bureau reported, up from 2.5 million metric tons.

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This morning in metals news: copper prices have moved sideways to close 2021; meanwhile, the U.S. construction sector added jobs in November; and, finally, Northvolt said it had produced the first lithium-ion battery cell at its gigafactory in Sweden.

MetalMiner should-cost models: Give your organization levers to pull for more price transparency, from service centers, producers and part suppliers. Explore the models now.

Copper prices trend sideways

copper mine

Gary Whitton/Adobe Stock

Copper prices have consolidated and trended sideways to close the year.

The LME three-month price surged to nearly $10,300 per metric ton level in October, according to MetalMiner Insights data. The price proceeded to slide to close that month and has since trended sideways.

LME three-month copper closed Tuesday at $9,620 per metric ton, or up 0.1% month over month.

Construction employment rises

Construction employment picked up in November in a majority of U.S. metro areas, the Associated General Contractors of America reported.

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Continuing our review of 2021 — we previously recapped the most-viewed carbon steel, aluminum and stainless steel articles of the year — today we’ll take a look at the copper and copper price stories of the year.

copper stored in warehouse

Sitthichai/Adobe Stock

Request a 30-minute demo of the MetalMiner Insights platform now.

Most-viewed copper stories of the year on MetalMiner

  1. Copper MMI: Copper demand likely to remain strong well into 2021
  2. Copper price rises as the metal’s bull story continues

  3. Copper price eases, but for how long?

  4. Copper prices to see out 2021 at lower levels — but higher prices coming in meantime

  5. Copper MMI: Traders take profits after copper price surges to 10-year high

  6. Copper prices continue to surge — is the market in danger of overheating?

  7. Copper MMI: Copper price cools in second half of May after reaching all-time high

  8. Copper MMI: Tight copper market sees high prices

  9. Copper MMI: Copper price soars to record high amid tightness, dollar’s slide

  10. What do China’s surging copper imports tell us about the economy for 2021?

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One of the world’s largest steelmakers, ArcelorMittal Nippon Steel, will invest ₹1 trillion (approx. U.S. $13 billion) to put up a 24 million ton per annum (MTPA) integrated greenfield steel facility in India’s eastern province of Odisha, India Today reported.

The project will generate 16,000 direct employment opportunities and other related indirect employment jobs through ancillary and downstream industries and services, as per a statement released by the Odisha government.

See why technical analysis is a superior forecasting methodology over fundamental analysis and why it matters for your steel buy.

Largest project in the country

India

Zerophoto/Adobe Stock

The new plant will be India’s largest project in the manufacturing sector, the government said. Several international equipment manufacturers will be stakeholders in this project, likely to be finished in seven years.

The project at Kendrapara in Odisha will eventually make various grades of steel with its “green” steelmaking technology. In addition, it would also have cement capacity of 18.75 MTPA.

When completed, the steel and cement facilities would both be India’s largest single location greenfield projects.

AM/NS has also acquired two iron ore mines in Odisha by winning bids in auctions. ArcelorMittal has a 60% stake in AM/NS India. Meanwhile, Japan’s Nippon Steel holds the rest.

To avoid any delay in implementation of the project, the provincial government will form a committee to monitor time-bound clearances for logistics infrastructure and utilities required for the project.

ArcelorMittal will also develop a downstream industry park to promote micro-, small- and medium-sized enterprises and help import substitution. A large number of ancillary manufacturing firms are expected to set up units in the region to support the steel plant.

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