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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 the Airbus–Boeing subsidy saga, industrial production, Liberty Steel’s bid for German firm Thyssenkrupp’s steel division and much more.

The MetalMiner 2021 Annual Outlook consolidates our 12-month view and provides buying organizations with a complete understanding of the fundamental factors driving prices and a detailed forecast that can be used when sourcing metals for 2021 — including expected average prices, support and resistance levels.

Week of Oct. 19-23 (Airbus-Boeing saga, industrial production and more)

• Stuart Burns on the latest developments in the Airbus-Boeing saga over subsidies.
• Copper prices dipped to start the week.
• Industrial production in the U.S. fell in September, breaking a streak of four straight months of growth.
• Global aluminum production fell from August to September.
• Burns on Liberty Steel’s offer to buy German firm Thyssenkrupp’s steel division.
• Privately owned housing starts in the U.S. jumped 11.1% in September on a year-over-year basis.
• General Motors announced plans to invest $2 billion to repurpose its Spring Hill, Tennessee plant for the production of electric vehicles.
• India’s domestic steel demand is finally recovering.
• The ILZSG forecast global lead and zinc demand to decline this year before recovering in 2021.
• Global steel groups want governments to intensify efforts toward tackling the problem of excess capacity.
• Meanwhile, in South America, Burns weighed in on the Bolivian election results’ impact on the country’s mining sector.
• Although copper dipped to start the week, on a macroscopic level investors are bullish on copper and the metal’s fundamentals appear to be strong — how much more could Dr. Copper rise?
• Finally, Nucor and Cleveland-Cliffs released their Q3 financial results.

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This morning in metals news: Nucor Corporation released its Q3 2020 financials; Cleveland-Cliffs also unveiled its Q3 2020 results; and battery-storage costs in the U.S. dropped significantly from 2015-2018.

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Nucor Corporation reports Q3 financials

Nucor Corporation released its Q3 2020 financial results on Thursday, reporting earnings of $193.4 million.

The Q3 earnings total marked a decline from the $275.0 million reported in Q3 2019. Meanwhile, for the first nine months of the year, earnings reached $322.6 million. Through the first nine months of 2019, earnings reached $1.16 billion.

“Nonresidential construction market conditions remained strong throughout the quarter, while the automotive market’s recovery accelerated,” Nucor said in its Q3 report. “The results of the steel mills segment improved in the third quarter of 2020 as compared to the second quarter of 2020, led by Nucor’s bar and structural mills. Market conditions for the Company’s sheet and plate mills remained challenged.”

Cleveland-Cliffs reports Q3 results

In addition to Nucor Corporation, Cleveland-Cliffs reported Q3 net income of $2.2 million.

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What does Bolivia’s socialist Movimiento al Socialismo (Mas) party’s return to power mean for the country’s resource exploitation prospects?

The MetalMiner 2021 Annual Outlook consolidates our 12-month view and provides buying organizations with a complete understanding of the fundamental factors driving prices and a detailed forecast that can be used when sourcing metals for 2021 — including expected average prices, support and resistance levels.

Political background in Bolivia

In November 2019, a police-military coup overthrew then-Mas president Evo Morales. Afterward, it installed the right-wing evangelical Jeanine Áñez as president.

A year of repression and persecution of minorities followed. that destabilized the country and led many to believe democratic elections would never return.

But to the autocratic president Áñez’s credit, although twice delayed, elections were held this month. Furthermore, on Oct. 18, Luis Arce, finance minister during the Morales administration, was handed the position of president. In addition, his party retained its majorities in both houses of congress.

Ex-president Morales remains in exile in Argentina. He fled following allegations of voting fraud last year, allegations that have largely been disproved now. With the success of the party, Arce may herald Morales’ return at some stage soon.

Rich in resources

While rich in natural resources, Bolivia has struggled to develop to its potential over the years.

Will a return to a socialist party with a strong nationalist agenda hinder development compared with the outgoing interim neoliberal administration of Áñez?

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This morning in metals news: global steel groups renewed calls for the Global Forum on Steel Excess Capacity to continue its work targeting steel overcapacity; Freeport-McMoRan released its Q3 financial results; and, finally, U.S. natural gas exports to Mexico have increased.

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

Steel groups call for renewed emphasis on steel overcapacity

Groups around the world have asked governments to “intensify” their work with the Global Forum on Steel Excess Capacity.

“Steel industries throughout the world expressed tremendous concern about the recent increase in steel overcapacity at a time when steel demand is severely depressed by the COVID-19 pandemic, reversing a trend of gradual decreases in overcapacity in the three years after the GFSEC was established (2016 – 2019),” the American Iron and Steel Institute (AISI) said in a release.

Among the action items suggested by the groups included development of “stronger disciplines” related to industrial subsidies. In addition, the groups called for upholding “effective trade remedies” in order to ensure a level playing field.

Freeport-McMoRan releases Q3 financials

Miner Freeport-McMoRan released its Q3 financials today, reporting net income of $329 million, up from a loss of $207 million in Q3 2019.

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The International Lead and Zinc Study Group (ILZSG) forecast global lead and zinc demand will decline by 6.5% and 5.3%, respectively, this year.

Meanwhile, ILZSG forecast lead and zinc demand will rise by 4.4% and 6.6%, respectively, in 2021.

The MetalMiner 2021 Annual Outlook consolidates our 12-month view and provides buying organizations with a complete understanding of the fundamental factors driving prices and a detailed forecast that can be used when sourcing metals for 2021 — including expected average prices, support and resistance levels.

Lead demand

The ILZSG forecast lead demand will fall to 11.39 million tonnes this year. Next year, ILZSG forecast demand will pick up to 11.89 million tonnes.

In China, the world’s largest automotive market, the group forecast lead usage will decline this year. The group forecast China’s usage will fall by 1.6% this year. A drop in automotive production will be partially outset by increasing production of e-bikes and lead-acid batteries.

Furthermore, the group forecast lead usage will decline by 9.7% in Europe this year. In the U.S., the ILZSG forecast usage will decline by 7.5%.

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After a period of negative news following the COVID-19 pandemic, there’s finally some cheer for India’s steel industry, particularly related to Indian domestic steel demand.

Domestic steel demand has bounced back to pre-COVID levels. Automotive and white goods sector demand have driven the steel demand recovery.

Are you on the hook for communicating the company’s steel performance to the executive team? See what should be in that report!

Indian domestic steel demand recovers

As per a report by financial firm Motilal Oswal, higher steel prices and lower coking coal prices ensured Indian primary steel producers’ margins remained strong. In addition, the report noted there were signs of domestic steel demand recovering gradually in the country.

The Motilal Oswal report also pointed out that India’s finished steel consumption, too, is recovering gradually. India’s finished steel consumption registered a drop of as much as 85% year over year in April 2020.

Chinese demand boosts Indian steel

What’s more, a renewed demand in the largest steel consuming market in China also boosted the bullish steel market in India.

Steel trade data by China shows demand remains strong there. China’s net steel exports declined to 10-year lows in September 2020. In addition, China saw a spurt in passenger car sales in September.

Because of these developments in China, its fallout was also seen in the Indian markets. Steel prices have also firmed up and have shown consistent increases over the last four months since July.

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This morning in metals news: General Motors will invest $2 billion to transition its Tennessee plant for the production of electric vehicles (EVs); Rio Tinto announced its Q3 2020 production results; and Norsk Hydro has made a deal to merge part of its hydropower generation with that of Lyse. 

The MetalMiner 2021 Annual Outlook consolidates our 12-month view and provides buying organizations with a complete understanding of the fundamental factors driving prices and a detailed forecast that can be used when sourcing metals for 2021 — including expected average prices, support and resistance levels.

General Motors to invest $2B to repurpose Tennessee plant for EVs

General Motors will invest $2 billion to transition its Spring Hill, Tennessee plant for the production of electric vehicles.

The plant will be GM’s third to transition to producing EVs, after Factory ZERO in Detroit and Hamtramck, Michigan, and Orion Assembly in Orion Township, Michigan.

Rio Tinto releases Q3 output figures

Miner Rio Tinto recently released its output results for Q3, reporting iron ore production of 86.4 million tons.

The Q3 production figure marked a 5% decline on a both a year-over-year and month-over-month basis.

Rio Tinto’s Q3 bauxite production totaled 14.5 million tons, up 5% year over year and down 1% from the previous quarter.

Aluminum output reached 797 kt, up 1% year over year and up 2% from the previous quarter. In addition, copper output reached 129.6 kt, down 18% year over year and down 2% from Q2 2020.

Hydro, Lyse to establish hydropower company

Meanwhile, Oslo-based Norsk Hydro announced it will merge part of its hydropower capacity with that of Lyse.

The new firm, Lyse Kraft DA, will have annual power production capacity of 9.5 TWh. Hydro will own 25.6% of Lyse Kraft DA, while Lyse will own 74.4%.

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September 2020 housing starts in the U.S. got a big boost on a year-over-year basis, the Census Bureau and Department of Housing and Urban Development reported.

Privately owned housing starts increased 11.1% in September 2020 compared with September 2019.

The MetalMiner 2021 Annual Outlook consolidates our 12-month view and provides buying organizations with a complete understanding of the fundamental factors driving prices and a detailed forecast that can be used when sourcing metals for 2021 — including expected average prices, support and resistance levels.

September 2020 housing starts up 1.9% from August

Furthermore, September 2020 housing starts gained 1.9% month over month.

Starts reached a seasonally adjusted annual rate of 1,415,000 in September.

Meanwhile, single-family housing starts in September hit at a rate of 1,108,000, or up 8.5% from August. In addition, the September rate for units in buildings with five units or more reached 295,000.

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Sanjeev Gupta’s GFG Alliance and, in particular, its steel and aluminum subsidiary Liberty Steel, is rarely out of the news, it seems.

The firm’s insatiable appetite for bankrupt or struggling metals assets has the market split. One the one hand, boosters are cheering its entrepreneurial spirit. On the other, naysayers are questioning the opaque funding structure and apparently high levels of expensive debt underpinning what they see as a potential house of cards.

Does your company have an steel buying strategy based on current steel price trends?

Liberty Steel eyes Thyssenkrupp’s steel business

We are more interested in the implications for the steel market.

Liberty’s latest foray into acquisitions would create a potentially disruptive behemoth in a crowded European market. That market is facing intense foreign competition and declining demand as a result of a pandemic-induced slowdown in manufacturing.

That Thyssenkrupp is desperate to sell its loss-making steel business is not new news.

The steel division has been a major drag on the group. According to the Financial Times, the group is likely lose €1 billion ($855 million) this year.

This year, Thyssenkrupp sold its elevator business for $17 billion in an effort to shore up its finances. The firm has been in talks with other steelmakers, including Sweden’s SSAB and India’s Tata, the Financial Times reported.

So far, however, Thyssenkrupp hasn’t found a buyer that would pass competitions scrutiny.

Which raises the question: will Liberty?

Liberty’s bid

Liberty runs plants and mines across North America, Australia, and India. The firm has global revenues of $15 billion and a workforce of 30,000.

Thyssenkrupp’s beleaguered Steel Europe unit generates sales of approximately €9 billion with 27,000 employees. Together, the firms would become the second-largest steelmaker in Europe, behind only ArcelorMittal.

Logic says in a market suffering poor capacity utilization, rationalization would be one recipe for turning the group around. However, unions and state governments are likely to fiercely resist widespread redundancies.

The German union IG Metall has held demonstrations to oppose job losses and demand government bailouts. Brussels previously denied a Thyssen-Tata merger over fears it would reduce competition. As such, it remains to be seen how it will view a Liberty-Thyssen takeover.

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This morning in metals news: the International Aluminum Institute released global aluminum production totals for September; the U.S. International Trade Commission (USITC) made duty determinations in the investigations related to imports of prestressed concrete steel wire strand; and September unemployment rates fell in 30 states.

The MetalMiner 2021 Annual Outlook consolidates our 12-month view and provides buying organizations with a complete understanding of the fundamental factors driving prices and a detailed forecast that can be used when sourcing metals for 2021 — including expected average prices, support and resistance levels.

Global aluminum production hits 5.42M tons in September

Global aluminum production reached 5.42 million tons in September, the International Aluminum Institute reported.

The total marked a decline from 5.52 million tons in August.

Chinese production totaled an estimated 3.15 million tons last month, down from 3.18 million tons the previous month.

USITC opts to maintain steel wire strand duties

In a five-year sunset review, the USITC voted to maintain existing duties covering imports of prestressed concrete steel wire strand.

The duties cover imports of the products from Brazil, India, Japan, Korea, Mexico and Thailand.

“The U.S. International Trade Commission (USITC) today determined that revoking the existing antidumping and countervailing duty orders on imports of prestressed concrete steel wire strand from Brazil, India, Japan, Korea, Mexico, and Thailand would be likely to lead to continuation or recurrence of material injury within a reasonably foreseeable time,” the USITC said in a prepared statement.

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