Industry News

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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:

Keep up to date on everything going on in the world of trade and tariffs via MetalMiner’s Trade Resource Center.

  • Global steel production contracted in October, according to the World Steel Association.
  • We looked back at some of the most-viewed MetalMiner stories from November.
  • Global aluminum production rose in October.
  • Earlier this week, we released our Monthly Metal Outlook forecast report.
  • General Motors and Isuzu are teaming up to build a new Ohio plant via their DMAX joint venture.
  • MetalMiner’s Belinda Fuller took a look at the relationship between gold prices and the U.S. dollar.

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Photo by Jeffrey Sauger for General Motors

General Motors is teaming up with Tokyo-headquartered Isuzu, with plans to invest $175 million toward a new plant in Ohio, the Detroit automaker recently announced.

Keep up to date on everything going on in the world of trade and tariffs via MetalMiner’s Trade Resource Center.

The investment will be made through its joint venture with Isuzu, called DMAX, which is 60% GM-owned.

“Due to the growing strength of GM’s all-new 2020 Chevrolet Silverado and GMC Sierra heavy-duty pickups, General Motors and Isuzu announced today a $175 million investment through its DMAX joint venture to build an all-new, diesel engine components plant in Brookville, Ohio,” General Motors said. “The new 251,000 square-foot facility would expand the production of critical engine components for the company’s current DMAX diesel engine manufacturing operation in Moraine, Ohio.”

According to GM, the new plant will create 100 manufacturing jobs.

As we’ve noted in previous articles, while much is made of the rise of electric vehicles, one thing is clear: the U.S. automotive consumer loves pickup trucks and SUVs. So much so that fellow Big Three automaker Ford last year announced plans to phase out its traditional sedan lineup.

Within the pickup truck segment, according to GM, heavy-duty trucks account for 25% of U.S. pickup sales.

GM sues Fiat Chrysler, alleging ‘multi-year pattern of corruption’

In other automotive news, GM is suing Fiat Chrysler, announcing late last month it had filed a RICO lawsuit against the rival automaker.

GM argued Fiat Chrysler had engaged in a “multi-year pattern of corruption” that was “used to undermine the integrity of the collective bargaining process and cause GM substantial damages.”

“This lawsuit is intended to hold FCA accountable for the harm its actions have caused our company and to ensure a level playing field going forward,” said Craig Glidden, GM executive vice president and general counsel.

In late October, GM concluded negotiations with the striking United Auto Workers (UAW) union, reaching a new four-year labor deal. The nationwide strike, GM’s first since 2007, resulted in two weeks of lost production in the third quarter and will ultimately cost the automaker around $4 billion this year.

The UAW is currently involved in negotiations with Fiat Chrysler.

“While we have had a few outside distractions since then, your negotiators have remained focused on resolving all your outstanding demands,” said Cindy Estrada, vice president and director of UAW’s Fiat Chrysler department.

“The National Parties have negotiated every day, and long hours since then. Much progress has been made but we still have some difficult issues to resolve. Your negotiators are committed to bargaining a pattern agreement that meets the needs of the membership and provides long term job security.”

GM alleges Fiat Chrysler has paid millions of dollars in bribes to UAW in an effort to unfairly impact the collective bargaining process.

“FCA was the clear sponsor of pervasive wrongdoing, paying millions of dollars in bribes to obtain benefits, concessions, and advantages in the negotiation, implementation, and administration of labor agreements over time,” GM said in a statement.

“FCA corrupted the implementation of the 2009 collective bargaining agreement. It also corrupted the negotiation, implementation, and administration of the 2011 and 2015 agreements.

“FCA’s manipulation of the collective bargaining process resulted in unfair labor costs and operational advantages, causing harm to GM.”

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Late last month, then-UAW President Gary Jones announced his resignation, as the union is under the spotlight due to an ongoing federal corruption probe.

In August, the Detroit Free Press reported the FBI and IRS raided Jones’ metro Detroit home (among raids of other union leaders’ homes).

U.S. President Donald Trump has tweeted that he will immediately restore tariffs on U.S. steel and aluminum imports from Brazil and Argentina, according to Reuters.

On Monday, Trump also urged the Federal Reserve to prevent countries from taking advantage of a strong dollar by devaluing their currencies, reports Reuters.

Both countries’ imports would get hit with 10% tariffs on aluminum and 25% tariffs on steel.

MetalMiner Expert Flash Analysis: Here’s the story behind the story

In terms of the currency angle, political turmoil has indeed devalued both Brazil’s real and Argentina’s peso in relation to the U.S. dollar, and whereas the degree of the impact is debatable, this storyline holds together, according to Don Hauser, VP of Strategic Advisory for MetalMiner.

“This tariff re-implementation does two political things — which are the real drivers of the story,” said Hauser. “First, it gives the impression of helping the [U.S.] farmers. While we battle China over trade — which is impacting the farmers — President Trump is doing everything he can to help them in every other place in the world. The second thing is helping the steel industry. In theory, and in public light, this will limit foreign steel entering the market, help drive prices up to a ‘sustainable margin,’ and comes at a time when mills are wrapping up their big annual contracts.

“States with both steel industry presence and farmers are a crucial part of Trump’s voter base,” Hauser continued. “It’s time to start pulling levers to solidify his voters as he heads into an election year. Trade has been the political weapon of choice for this administration and will likely continue.”

For details on which steelmakers would likely be most affected, or for further advisory, contact MetalMiner here.

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It has been a busy, busy year for metals, ranging from steel prices’ trajectory as we head toward 2020 to nickel prices’ reaction to Indonesia’s impending nickel ore export ban.

Keep up to date on everything going on in the world of trade and tariffs via MetalMiner’s Trade Resource Center.

While it’s hard to believe, the year is almost over — so before we jump into the final month of 2019, let’s take a look back at some of the most-viewed stories on MetalMiner from November:

  1. Amid Plunging U.S. Steel Prices, Has ‘Steelmageddon’ Arrived?

  2. What happened to the nickel supply shortfall?

  3. ICSG: Global copper market in deficit by 330K tons

  4. Freeport-McMorRan Uses AI to Optimize Production at Arizona Copper Mine

  5. ArcelorMittal Announces Shuttering of Plants in South Africa, Poland

  6. Chinese steel, raw material prices are on the rise

  7. This Morning in Metals: Automakers Await Trump’s Section 232 Auto Tariff Decision

  8. Metal manufacturers, users call for Section 232 sunset provision

  9. Aluminum Prices Rising Despite Weak Demand

  10. Goldman Sachs is Bullish on Oil Prices in the Long Term

Free Partial Sample Report: 2020 MetalMiner Annual Metals Outlook

Global crude steel production took a fall in October, including in No. 1 steel producer China.

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According to statistics compiled by the World Steel Association — using data from 64 data-reporting countries — global steel production fell 2.8% in October on a year-over-year basis.

October production from the reporting countries totaled 151.5 million tons, down from the 155.8 million tons produced in October 2018.

China’s production contracts

China’s crude steel production for the month dropped 0.6% year over year to 81.5 million tons.

In September, China’s production growth reached 2.2% year over year, while August growth reached 9.3%.

With the Chinese winter heating season underway, it remains to be seen how much steel capacity is shuttered for the season.

As MetalMiner’s Stuart Burns recently noted, the government is taking a closer look at new capacity starts.

“Demand in top consumer China remains surprisingly robust, yet inventories are falling — suggesting producers are struggling to keep up with demand,” Burns wrote.

“If that were not enough, Reuters reported new starts are being more vigorously investigated and the approval process reviewed, leading the industry to think supply will be curbed further during the winter heating period this year.

“A notice jointly issued by the National Development and Reform Commission, Ministry of Industry and Information Technology (MIIT) and the National Bureau of Statistics urges local governments and the State-owned Assets Supervision and Administration Commission (SASAC) to verify the steel firms’ capacity, production and fixed-asset investments.”

No. 2, 3 producers see production declines

Meanwhile, No. 2 producer India put out 9.1 million tons, down 3.4% year over year. Japan produced 8.2 million tons, marking a 4.9% decline.

South Korean production reached 6.0 million tons, down 3.5% year over year.

U.S. production totaled 7.4 million tons, which marked a 2.0% decline compared with October 2018. The U.S. steel sector’s capacity utilization rate remains above the important 80% mark (identified as a marker of industry health when the Trump administration first rolled out Section 232 tariffs on imported steel and aluminum).

The American Iron and Steel Institute (AISI) recently reported the U.S. steel sector’s capacity utilization rate for the year through Nov. 23 reached 80.3%, having now held at that level over the past month and a half.

In the E.U., Germany produced 3.3 million tons, marking a year-over-year decline of 6.8%, as overall recession concerns loom in the E.U.’s industrial stalwart.

Italy produced 2.2 million tons, down by 3.7%. France’s production fell 10.6% to 1.2 million tons, while Spain’s fell 7.6% to 1.2 million tons.

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October steel production in Brazil, Turkey and Ukraine was all down by double-digit percentages in each country — 19.4%, 15.0% and 12.7%, respectively.

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This morning in metals news, gas prices this Thanksgiving were similar to levels the previous two years, Tata Steel has confirmed job cuts in the U.K. and a partnership may form toward development of new copper projects in Peru.

Keep up to date on everything going on in the world of trade and tariffs via MetalMiner’s Trade Resource Center.

Gas prices hang at around $2.58 per gallon

For those who traveled this Thanksgiving season, average gas prices stood at levels similar to previous holiday seasons.

According to the Energy Information Administration (EIA), average gas prices in the U.S. as of Nov. 25 stood at $2.58 per gallon, compared with $2.61 per gallon in 2018 and $2.57 per gallon in 2017.

Tata Steel to cut U.K. jobs

Steelmaker Tata Steel has confirmed it will cuts 1,000 jobs in the U.K., the Financial Times reported.

The round of job cuts is part of a total 3,000 jobs being cut by the steelmaker, according to the report, as it deals with falling steel prices and rising raw material costs.

Possible copper project partnership in Peru

Reuters reported Canadian firm First Quantum is looking to team up with other companies  to develop copper projects in Peru.

Looking for metal price forecasting and data analysis in one easy-to-use platform? Inquire about MetalMiner Insights today!

According to the report, the Canadian firm is looking for partners to help it develop new copper projects in the country, with CEO Philip Pascall citing Rio Tinto as a potential partner for a joint venture.

Happy Thanksgiving from MetalMiner!

On this day, we wish our MetalMiner readers a very Happy Thanksgiving.

While you may be busy putting the finishing touches on your Thanksgiving spread and, subsequently, taking a turkey-induced nap, you might find some time to revisit some of the most-read MetalMiner posts of the month so far.

Take a look and revisit some of the November posts below that caught readers’ attention:

  1. Amid Plunging U.S. Steel Prices, Has ‘Steelmageddon’ Arrived?

  2. What happened to the nickel supply shortfall?

  3. Freeport-McMorRan Uses AI to Optimize Production at Arizona Copper Mine

  4. ArcelorMittal Announces Shuttering of Plants in South Africa, Poland

  5. This Morning in Metals: Automakers Await Trump’s Section 232 Auto Tariff Decision

We’re off today and will resume regular coverage tomorrow.

But for now, we wish you a Happy Thanksgiving, MetalMiner readers!

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This morning in metals news, U.S. steel imports were down 16% through the first 10 months of the year, steel companies are raising their prices and protests continue in the world’s top copper-producing country.

Keep up to date on everything going on in the world of trade and tariffs via MetalMiner’s Trade Resource Center.

Steel imports drop 16% through October

U.S. imports of steel through the first 10 months of the year were down 16% on a year-over-year basis, the American Iron and Steel Institute (AISI) reported this week.

Steel imports through the end of October totaled 24.78 million tons, according to the report.

Meanwhile, U.S. steel imports for totaled 2.18 million tons in October, which marked a 14.5% increase compared with the September import total.

Steel companies raise prices

Amid slumping steel prices, companies like U.S. Steel and ArcelorMittal are raising prices for their products, the Times of Northwest Indiana reported.

According to the Times’ report, the steelmakers have raised their prices for flat-rolled steel three times in less than a month.

Chile protests continue

Widespread protests erupted in Chile in October, at first over a proposed metro fare hike; since then, the protests have expanded to encompass more widespread, systemic ills that are being called out by the protesters in the streets of Santiago and other cities.

Chile is the world’s No. 1 copper producer. Bloomberg reports the country’s recent protests could in fact threaten the status of the country’s major state-owned producer as the world’s No. 1 producer.

According to the report, state-owned Codelco — the world’s top copper producer — had been planning to spend $20 billion in Chile over a decade to modernize its mines.

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However, Bloomberg notes, demands raised by protesters in Chile could be at odds with government funding Codelco had looked for toward that aforementioned modernization. As a result, Codelco may fall from its No. 1 spot, according to Colin Hamilton of BMO Capital Markets, as cited by Bloomberg.

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Despite the plunge in temperatures, housing activity around the country heated up in October.

Keep up to date on everything going on in the world of trade and tariffs via MetalMiner’s Trade Resource Center.

Housing starts rise in October

According to the U.S. Census Bureau and the Department of Housing and Urban Development, privately owned housing starts in October reached a seasonally adjusted annual rate of 1.31 million, up 3.8% from the revised September estimate of 1.27 million.

The October number was also up 8.5% from the October 2018 total of 1.21 million.

Meanwhile, single-family starts for the month reached a seasonally adjusted annual rate of 936,000, marking a 2.0% increase from September. Starts for units in buildings with five units or more reached an adjusted annual rate of 362,000.

Permits up 5.0%

Meanwhile, privately owned housing units authorized by permits reached a seasonally adjusted annual rate of 1.46 million units, which marked a 5.0% increase from the September total and a 14.1% increase compared with October 2018.

Meanwhile, permits for single-family authorizations reached an adjusted annual rate of 909,000, up 3.2% from September. Permits for units in buildings with five units or more reached an adjusted annual rate of 505,000.

Housing completions rise 10.3%

Housing completions in October reached a seasonally adjusted annual rate of 1.26 million, which marked a 10.3% increase compared with September. The October total was also up 12.4% on a year-over-year basis.

Single-family housing completions reached a seasonally adjusted annual rate of 897,000, up 4.5% from September. Completions of units in buildings with five units or more reached an adjusted annual rate of 354,000.

Existing-home sales rise in October

The National Association of Realtors (NAR) earlier this month reported existing-home sales increased in October.

Existing-home sales increased 1.9% over September levels, the NAR reported.

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“Historically-low interest rates, continuing job expansion, higher weekly earnings and low mortgage rates are undoubtedly contributing to these higher numbers,” said Lawrence Yun, NAR’s chief economist. “We will likely continue to see sales climb as long as potential buyers are presented with an adequate supply of inventory.”

The median existing-home price in October reached $270,900, up 6.2% on a year-over-year basis. Meanwhile, housing inventory as of the end of October reached 1.77 million units, which marked a 2.7% decline from September and a 4.3% decline from October 2018.

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This morning in metals news, the U.S. Census Bureau reported October steel imports increased from the previous month, U.S.-China trade talks continue and industrial production declined in October.

Keep up to date on everything going on in the world of trade and tariffs via MetalMiner’s Trade Resource Center.

Steel imports rise

According to the U.S. Census Bureau, U.S. imports of steel totaled 2.0 million metric tons in October, up from 1.7 million metric tons imported in September.

The value of October imports reached $1.8 billion, up from $1.6 billion the previous month.

U.S.-China talks continue

According to media reports, the Chinese government has indicated it is willing to negotiate in terms of intellectual property theft, which has been a primary gripe of the U.S.

Yahoo Finance reported the Chinese government released a statement saying it will work to curb intellectual property violations.

Among Chinese trade practices about which the U.S. has called foul has been forced technology transfer and intellectual property theft. The two sides are working toward an initial trade deal, from which it is hoped the economic superpowers can build momentum toward a wider trade deal.

Industrial production slips in October

According to the Federal Reserve earlier this month, industrial production fell 0.8% in October following a 0.3% decline in September.

In addition, manufacturing production fell 0.6% in October.

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“Much of this decline was due to a drop of 7.1 percent in the output of motor vehicles and parts that resulted from a strike at a major manufacturer of motor vehicles,” the Fed said. “The decreases for total industrial production, manufacturing, and motor vehicles and parts were their largest since May 2018, April 2019, and January 2019, respectively.”