Industry News

AM/NS Calvert plant

Exterior of the AM/NS Calvert plant. Source: ArcelorMittal

This morning in metals news: ArcelorMittal announced plans to build an electric arc furnace at its joint venture steelmaking facility in Calvert, Alabama; the state of Alabama is kicking in some incentives for the project; and China churned out a record amount of crude steel in July.

Stop obsessing about the actual forecasted steel price. It’s more important to spot the trend. See why.

ArcelorMittal, Nippon to build EAF at Calvert plant

ArcelorMittal announced it plans to build a new electric arc furnace at the AM/NS Calvert plant in Alabama.

AM/NS is a 50:50 joint venture between ArcelorMittal and Nippon Steel.

“The addition of an EAF at AM/NS Calvert presents a transformational opportunity for what is already widely considered to be the world’s most advanced steel finishing facility,” said Brad Davey, CEO of ArcelorMittal North America. “This is a logical next step in optimizing AM/NS Calvert’s supply chain.”

German firm Thyssenkrupp originally built the Calvert plant. ArcelorMittal and Nippon Steel acquired the facility in 2014.

The plant came with an original price tag of approximately $4 billion. ArcelorMittal said the joint venture has invested approximately $200 million in the plant to date.

The Calvert plant boasts an annual capacity of 5.3 million tons of flat-rolled carbon steel products.

Alabama offers steel incentives

Sticking with the AM/NS Calvert plant, al.com reported the state of Alabama could offer at least $29 million in incentives for the steel expansion project.

Angela Till, deputy secretary of the Alabama Department of Commerce, told al.com the state is “still negotiating the terms of the state project agreement.”

Chinese steel production soars in July

China’s crude steel production hit 93.36 million tonnes in July, Reuters reported, up 1.9% year over year.

Production of hot-rolled and cold-rolled coil at major mills jumped 28% in July from the previous month, Reuters reported.

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U.S. and Canada

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This past week’s metals news covered everything from silver price movements to the copper price rise’s slowdown to the reimposition of tariffs on some Canadian aluminum.

We also broke down President Donald Trump’s recent proclamation with respect to reimposing the Section 232 tariff on some Canadian aluminum. MetalMiner’s Stuart Burns delved into the concern expressed by Ontario Premier Doug Ford: could Trump target Canadian steel next?

As our readers know well by now, Trump imposed Section 232 tariffs on imported steel and aluminum of 25% and 10%, respectively, in 2018. During the course of negotiations with Canada and Mexico over the United States-Mexico-Canada Agreement (USMCA) — the successor to NAFTA — the U.S. rescinded the tariffs in May 2019.

Now, at least for unalloyed aluminum from Canada, the tariff is back.

The Aluminum Association called the tariffs the “wrong approach.”

Furthermore, the tariff comes in a time when beverage makers are struggling with an aluminum can shortage.

For the buyers out there, if you are under pressure to generate cost savings in aluminum, steel or anything else, make sure you are following these five best practices.

But the tariff storyline is but one thread in the world of metals.

Before we head into the weekend, let’s take a look back at the week that was:

MetalMiner Week in Review, Aug. 10-14

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currency

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This morning in metals news: Thyssenkrupp’s steel unit is facing heavy losses this year; zinc prices have gained despite elevated stocks; and copper dipped Thursday.

Thyssenkrupp faces major losses

Thyssenkrupp, which last year left Germany’s DAX index, faces a potential 1 billion euros in losses this year, Reuters reported.

Earlier this year, the German firm spun off its profitable elevator unit for €17.2 billion.

The company said it expects a stabilization to occur in the fourth quarter of the current fiscal year after a difficult first nine months. Thyssenkrupp’s steel unit, in particular, has faced significant headwinds.

“The performance of Steel Europe was again characterized by the extremely challenging situation in the steel sector,” the company said Thursday. “Demand from the auto industry, which was already noticeably lower in March, slumped further in the course of the 3rd quarter, also due to declining order volumes from other industrial customers.”

Despite the general forecast of Q4 stabilization, steel could still struggle.

“Depending on the speed at which production is restarted by our customers, thyssenkrupp expects almost all businesses, with the possible exception of Steel Europe, to report a stable performance or a slight quarter-on quarter improvement in the 4th quarter,” the company said.

Whether you’re sourcing from Germany or elsewhere, make sure you are following the five best practices of sourcing steel

Zinc prices gains

Despite elevated stock levels on the LME, the zinc price has showed strength.

Stocks at LME warehouses have surged from just over 120,000 tons to over 200,000 tons over the last month. Opening stock on Thursday totaled 212,750 tons.

Despite this, zinc prices have gained 7.69% over the last month. The LME three-month zinc price closed Wednesday at $2,394/mt, per MetalMiner Insights data.

Copper price falls

Meanwhile, the copper price slipped Thursday, Reuters reported, based on weaker Chinese demand and an easing of supply concerns in South America.

LME three-month copper fell 1% to $6,373/mt on Thursday, Reuters reported.

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Steel production

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This morning in metals news: MetalMiner’s 2021 Forecasting Workshop is tomorrow; steel shipments from U.S. mills dropped 22% in June; and the European Steel Association outlined the impact of the COVID-19 pandemic on the European steel sector.

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Last chance to sign up for 2021 Forecasting Workshop

MetalMiner’s annual Forecasting Workshop is tomorrow — don’t miss your chance to participate.

This year’s workshop will take place virtually via Zoom and is scheduled to begin at 10 a.m. (CDT), Thursday, Aug. 13.

The workshop will offer invaluable insights for metals buyers, including short- and long-term forecasts, beta testing of MetalMiner “should-cost” models and much more.

Steel shipments drop 22%

The American Iron and Steel Institute reported U.S. steel shipments fell 22% in June on a year-over-year basis.

June shipments totaled 6.02 million net tons, which marked a 10.3% increase from the previous month.

COVID-19 pandemic hits European steel hard

The European Steel Association (EUROFER) recently outlined the impacts of the coronavirus pandemic on the continent’s steel sector.

“The coronavirus pandemic has cut the legs out from under the European steel industry, causing severe damage to the whole sector and its value chains,” said Axel Eggert, director general of the European Steel Association (EUROFER). “The data now available confirm that the downturn that had begun in 2019 has been compounded by the crisis – with the sector now in a state of emergency.”

E.U. steel consumption fell in the first quarter for the fifth consecutive quarter, dropping 12% year over year.

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Steel production

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This morning in metals news:

  • The U.S. steel sector posted another incremental increase in capacity utilization.
  • Meanwhile, the Aluminum Association applauded a Department of Commerce decision regarding subsidies of imported aluminum sheet.
  • Lastly, Alcoa criticized the Trump administration’s decision to reimpose the Section 232 aluminum tariff on imports from Canada.

Steel sector capacity utilization rises to 60.4%

The U.S. steel sector’s capacity utilization rate rose to 60.4% for the week ending Aug. 8, according to the American Iron and Steel Institute (AISI).

The rate marked an increase from 59.3% the previous week. Even so, the rate marked a steep decline from the previous year, when it reached 79.1%.

Production for the week ending Aug. 8 totaled 1.35 million net tons, up 2.0% from the previous week. However, production for the week fell 26.5% year over year.

Furthermore, production for the year through Aug. 8 fell 20.1% year over year.

Do you know which market conditions are best with different steel contracting mechanisms? Check out our best practices on this topic.

DOC issues preliminary determination in aluminum sheet subsidy probe

The Aluminum Association applauded the Department of Commerce’s preliminary determination in its subsidy probe related to imports of aluminum sheet from Bahrain, Brazil, India and Turkey.

According to the Aluminum Association, the DOC calculated preliminary subsidy margins of:

  • Bahrain: 9.49%
  • Brazil: 0.76-1.32%
  • India: 4.55-34.84%
  • Turkey: 0.07-3.15%

Next, the DOC will announce preliminary antidumping determinations by Oct. 7, 2020.

Alcoa critical of reimposition of Section 232 aluminum tariff

In a statement to the Pittsburgh Post-Gazette, aluminum maker Alcoa criticized President Donald Trump’s decision to reimpose the 10% Section 232 tariff on some imports of Canadian aluminum.

In March 2018, the U.S. initially imposed Section 232 steel and aluminum tariffs. Then, in May 2019, the U.S. rescinded the tariffs for imports from Canada and Mexico.

However, late last week, Trump announced the reimposition of the tariff for some aluminum coming from Canada.

Alcoa told the Post-Gazette the move would “cause unnecessary disruption” and “further distort the market.”

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MetalMiner 2021 Forecasting WorkshopWe are only two days away from 2021’s MetalMiner Budget and Forecast Workshop on Thursday, Aug. 13, 2020. Many metal buyers are about to lock themselves into pricing for the next 12 months – in a very, very, very unsteady world.

If 2020 has taught us anything, it’s that flexibility is key.

Going into negotiations, buyers have a lot on their minds. A looming recession? Supply and demand all over the place? Will my suppliers stay in business? What will prices do? How will the presidential election potentially affect all of this?

How the heck do I even begin to think about all of the things I don’t know about what’s to come?

Take a deep breath. We can do this together.

Here’s how we plan to help

  • A bummer, but we’re virtual this year to keep things safe. So, you’ll be able to work from the comfort of your own home.
  • Don Hauser, our vice president of business solutions, comes to us after more than a decade of steel buying for John Deere. He’s bought a LOT of steel. Don will be leading some strategy discussions, including walking through some of his John Deere secret sauce. Steel buyers: get excited. 
  • Maria Rosa Gobitz, our new senior research analyst, comes to us from Wood Mackenzie. As a copper, gold and zinc analyst, she’ll lend some interesting insights that we’ve never had before. Copper buyers, you’ll be happy to hear her shed some light on 2021.
  • We know very well how much every dollar counts right now. With that in mind, we’re planning a rigorous discussion around how best to work with service centers and mills for cost savings.
  • We’re launching should-cost models. They’re good, and we can’t wait to show them to you.

As of publication, we only have seven spots left in the live session. It’s FREE for corporate MetalMiner Outlook and MetalMiner Insights subscribers, and $99 for non-subscribers. 

Lastly, if you have questions, feel free to reach out. If not, be sure to register now before seats fill up.

Canada

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This morning in metals news: Ontario Premier Doug Ford said the U.S. may follow up its reinstatement of aluminum tariffs with tariffs on Canadian steel; utility-scale battery storage continues to become more prevalent; and China imported a record amount of iron ore in July.

We’re offering timely emails with exclusive analyst commentary and some best practice advice – and you choose how often you receive it. 

Ontario premier readies for potential steel tariffs

Late last week, President Donald Trump signed a proclamation reinstating tariffs on some Canadian aluminum. The U.S. rescinded its Section 232 steel and aluminum tariffs for Canada and Mexico in May 2019.

Ontario Premier Doug Ford speculated steel tariffs might follow.

Utility-scale battery storage on the rise

According to the Energy Information Administration, installation of utility-scale battery storage continues to rise in the U.S.

“In 2010, the United States had seven operational battery storage systems, which accounted for 59 megawatts (MW) of power capacity (the maximum amount of power output a battery can provide in any instant) and 21 megawatthours (MWh) of energy capacity (the total amount of energy that can be stored or discharged by a battery),” the EIA reported.

China iron ore imports soar in July

China’s iron ore imports surged to a record high in July, Reuters reported.

According to General Administration of Customs Data cited by Reuters, iron ore imports totaled 112.65 million tonnes in July. The July monthly import total marked a 10.8% increase from the previous month, according to Reuters.

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As a followup from a piece we posted last month about container logistics in the current pandemic environment, we thought an update may be appropriate.

In that vein, the dynamics at play in global supply chains remain highly volatile.

Read more

tariff

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This morning in metals news: President Donald Trump on Thursday signed a proclamation to reimpose tariffs on some Canadian aluminum; China’s copper imports surged in July; and the Bureau of Labor Statistics released its latest jobs report Friday morning.

Read more

It was another busy week in the world of metals and metal-using sectors.

Among this week’s major developments were an executive shakeup at Ford, aluminum prices on the rise in China and a U.S. steel sector seeing capacity utilization gains week by week.

Read more