The U.S. Department of Commerce. qingwa/Adobe Stock
This morning in metals news: the American Iron and Steel Institute (AISI) offered positive comments on the heels of the confirmation of the secretary of commerce; UK unions worry about the potential loss of thousands of jobs; and the Biden administration is taking a step back in the process toward an Arizona copper mine.
AISI on new Secretary of Commerce
The Senate voted 84-15 in favor of confirmation of Gina Raimondo to the position of secretary of commerce.
“Strong enforcement of U.S. trade laws is a top priority for American steelmakers, particularly as foreign government subsidies and other market-distorting policies and practices have resulted in significant global steel overcapacity — the impacts of which have been exacerbated by the COVID-19 pandemic,” AISI President and CEO Kevin Dempsey said.
Dempsey emphasized the need for “full enforcement” of Section 232 remedies on steel products.
Raimondo had served as governor of Rhode Island since 2015.
Workers in the UK’s steel industry are expressing concern over potential job losses due to financial troubles within Sanjeev Gupta’s GFG Alliance, the BBC reported.
This morning in metals news: the March 2021 Monthly Metal Outlook (MMO) report is out; meanwhile, annual natural gas production declined in 2020; and, finally, pending home sales declined in January.
Natural gas production fell 1% in 2020, the Energy Information Administration (EIA) reported.
“U.S. natural gas production—as measured by gross withdrawals—averaged 111.2 billion cubic feet per day (Bcf/d) in 2020, down 0.9 billion Bcf/d from 2019 as result of a decline in drilling activity related to low natural gas and oil prices in 2020,” the EIA reported.
US steel mills churned out metal at a steel capacity utilization rate of 77.2% for the week ending Feb. 27, the American Iron and Steel Institute (AISI) reported.
Last week’s rate marked a slight increase from the previous week, when steel capacity utilization reached 77.0%.
Production last week reached 1.75 million net tons.
The production total marked a 7.0% decrease from the same period in the previous year. Furthermore, capacity utilization during the same period in 2020 reached 81.3%.
In addition, production for the week ending Feb. 27, 2021, increased 0.2% from the previous week. Production during the week ending Feb. 20, 2021, reached 1.745 million net tons at a steel capacity utilization rate of 77.0%.
Meanwhile, adjusted year-to-date production through Feb. 27, 2021, totaled 14.36 million net tons at a capacity utilization rate of 76.5%. Output is down 8.4% year over year.
At the same point last year, steel capacity utilization had reached 81.9%.
By region, production during the week ending Feb. 27, 2021, totaled:
Northeast: 155,000 net tons
Great Lakes: 624,000 net tons
Midwest: 181,000 net tons
Southern: 715,000 net tons
Western: 74,000 net tons
Steel prices
Steel prices continue to rise in the US, as buyers struggle to secure supply (even despite slowly gaining capacity utilization rates).
US hot rolled coil closed Monday at $1,204 per short ton, or up 9.65% from a month ago.
Meanwhile, US cold rolled coil rose 8.87% to $1,375 per short ton.
US hot dipped galvanized is up 7.12% to $1,475 per short ton.
Plate is up 9.77% to $1,079 per short ton.
Volatility is the name of the game. Do you have a steel buying strategy that can handle the ups and downs?
This morning in metals news: US construction spending picked up in January; meanwhile, the Federal Register published the text of President Joe Biden’s latest executive order; and, lastly, the copper price came back down to close last week.
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, including coverage of the copper price, how the Biden administration will handle the former Trump administration’s metals tariffs 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 Feb. 22-26 (copper price, aluminum tariff and much more)
This morning in metals news: the US international goods trade deficit moved up slightly from December to January; meanwhile, MetalMiner sister site SpendMatters took to LinkedIn for feedback on President Joe Biden’s executive order on supply chains; and, lastly, Sweden will be home to what will reportedly be the world’s largest “green hydrogen plant.”
The trade deficit increased from $83.2 billion in December.
The MetalMiner Best Practice Library offers a wealth of knowledge and tips to help buyers stay on top of metals markets and buying strategies.
Spend Matters analyst looks at Biden administration’s supply chain executive order
Speaking of the trade deficit and trade in general, in light of President Joe Biden signing an executive order to address US supply chain problems for semiconductor chips, large-capacity batteries for electric vehicles, rare earth minerals and pharmaceuticals, Spend Matters analyst Pierre Mitchell took to LinkedIn to get a conversation started.
“Hey, if a 78-year-old guy from Scranton gets it, maybe more C-level execs will finally now get serious about supply chain risk management,” Mitchell writes. “Actually, most do, especially after the pandemic, but it’s still depressing when so many wait until they get a major disruption. Is this finally a sea change … or ‘C-change’?”
According to the Aluminum Association, the Department of Commerce announced anti-dumping and countervailing duty margins “in connection with the first annual administrative review of the unfair trade orders on certain aluminum foil.”
In its analysis, the DOC used sales information for Jiangsu Zhongji Lamination Materials Co., Ltd. and Xiamen Xiashun Aluminum Foil Co., Ltd.
“The Aluminum Association and its members are pleased that the Commerce Department continues to enforce vigorously the anti-dumping and countervailing duty orders on aluminum foil from China,” said Tom Dobbins, president and CEO of the Aluminum Association.
Dobbins said the unfair trade orders are “leveling the playing field.”
However, he also said it is “discouraging” that Chinese producers are exporting foil using unfair trade practices.
“Today’s announcement reinforces the need for continued vigilance to ensure that foil imports from China are competing fairly in the U.S. market,” he added.
The Department of Commerce calculated a combined anti-dumping and countervailing duty rate of 71.98% for Jiangsu Zhongji Lamination Materials.
Meanwhile, the DOC calculated a combined rate of 67.45% for Xiamen Xiashun Aluminum Foil Co.
The duties also apply to “other cooperative respondents” whose shipments the DOC did not analyze individually.
The calculations cover aluminum foil that came into the United States between Aug. 14, 2017 and March 31, 2019.
“The unfair trade orders on aluminum foil from China continue to be effective in ensuring fair competition with imports from China,” said John M. Herrmann, lead counsel to the domestic industry. “We will continue our efforts to ensure the effectiveness of these unfair trade orders, including aggressive efforts to identify and thwart schemes to evade enforcement of the orders.”
Other investigations
Meanwhile, the Department of Commerce late last year launched investigations related to aluminum foil imports from five other countries.
The DOC in October launched probes related to imports from Armenia, Brazi, Oman, Russia and Turkey.
The period of investigation runs from July 1, 2019, to June 30, 2020.
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This morning in metals news: J.D. Power and LMC Automotive released their joint forecast on February US auto sales; meanwhile, US steel imports fell by 23% in January; and, lastly, Ford’s CEO urged the US government to support the implementation of electric vehicle applications.
February US auto sales forecast to rise
New-vehicle retail sales in February are forecast to rise by 3.3% when adjusted for selling days, LMC Automotive and J.D. Power said.
“Despite challenges posed by inclement weather in most of the country, retail sales demand continues to be strong with the industry posting a second consecutive month of year-over-year gains,” said Thomas King, president of the data and analytics division at J.D. Power.
Meanwhile, the average manufacturer incentive is down. According to J.D. Power and LMC Automotive, the average incentive is on pace to be $3,562 per vehicle, or down $614 from a year ago.
Furthermore, as incentives decline, average transaction prices are going up. Per the report, the forecast calls for the average transaction price to rise 9.8% to $37,524, a February record.
President Joe Biden’s latest executive order seeks to secure a variety of important supply chains.
For example, in one higher-profile case, General Motorsrecently 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
Like other economic indicators, metals shipments in the US and Canada have come a long way since the bottoming out that occurred last spring (prompted by the onset of the coronavirus pandemic).
According to the Metals Service Center Institute (MSCI), shipments have recovered both in the US and Canada.
However, shipments in January still came in below January 2020 levels.
U.S. service center steel shipments in January 2021 decreased by 11.8% year over year, MSCI reported earlier this month.
Meanwhile, shipments of aluminum products decreased by 5.6% year over year.
Canadian shipments
Meanwhile, Canadian metals shipments reflect a similar situation.
Canadian service center steel shipments in January 2021 fell by 6.4% year over year.
On the other hand, aluminum product shipments increased by 3.9% from the same month in 2020.
MSCI on Section 232 tariffs, global overcapacity
In other news, as the MSCI noted, 50 members of the Congressional Steel Caucus sent a letter dated Feb. 1 to President Joe Biden urging him to maintain the Section 232 steel tariff imposed by former President Donald Trump.
The lawmakers argued the tariff action has led to “significant reductions” in imports.
“However, we remain concerned that the industry remains at risk due to the lingering effects of the pandemic,” the letter stated. “We know that as the U.S. economy begins to recover that it will be an attractive market for foreign producers to pursue. This is why we want to ensure that the existing tariffs and quotas remain in place to ensure that imports do not take a significant share of the U.S. market as the nation begins its economic recovery.”
Meanwhile, the MSCI reiterated its stance on the matter, underlining its focus on global overcapacity, particularly from China.
“To address this circumvention, in 2017 MSCI advised federal officials to provide relief for producers up and down the supply chain and to consider the consequences of any new trade policy, including: the economic impact of global overcapacity on the entire domestic metals supply chain; transition times and implementation rules to any new policy; availability of domestic metals to meet U.S. national security needs, as well as general industrial and consumer demand; and trade flows under current free trade agreements, including the United States Mexico Canada Agreement (USMCA),” MSCI said in a release. “MSCI also asked that Canada and Mexico be excluded from any trade penalties.”