Industry News

India’s steel story continues to grow in 2021. New plants are being commissioned and major steel companies are reporting growth in production, too.

India’s leading producer, Tata Steel, for example, has reported in the current quarter of fiscal year 2022, production of 4.62 million tons against 2.99 million in the same period last year.

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India’s steel highs and lows

India

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In March-April 2020, India’s steel capacity utilization plunged as a result of the nationwide lockdown imposed to curb the spread of COVID-19.

But now, things are changing for the better, according to production reports, uptake reports and analyst forecasts.

The World Steel Association (WSA) reported India’s production rose by almost 47% in May this year.

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This morning in metals news: U.S. fossil fuel consumption last year fell to its lowest level in nearly 30 years; nonfarm payroll employment rose by 850,000 in June; and, lastly, the American Iron and Steel Institute commented on the House’s INVEST in America Act.

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Fossil fuel consumption falls

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U.S. fossil fuel consumption fell to its lowest level in nearly 30 years, the Energy Information Administration reported.

Total U.S. consumption of fossil fuels fell to 72.9 quadrillion British thermal units in 2020. The total marked a 9% decline from 2019.

“Last year marked the largest annual decrease in U.S. fossil fuel consumption in both absolute and percentage terms since at least 1949, the earliest year in our annual data series,” the EIA said. “Economic responses to the COVID-19 pandemic in 2020, including a 15% decrease in energy consumption in the U.S. transportation sector, drove much of the decline. The United States also had relatively warmer weather in 2020, which reduced demand for heating fuels.”

Nonfarm payroll employment up by 850,000

Nonfarm payroll employment rose by 850,000 in June, the Bureau of Labor Statistics reported.

Meanwhile, the national unemployment rate remained at 5.9%.

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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.

This week, we touched on the USMCA (which turned 1 on Thursday), Stuart Burns covered the relationship between inventory levels and metals demand, and much more.

On the USMCA — which went into effect July 1, 2020, almost four years after NAFTA talks began — United States Trade Representative Katherine Tai offered some comments this week on the occasion.

“We should also celebrate the USMCA because of what it represents: a renewed commitment by our three countries to pursue negotiations that raise standards and create a race to the top,” she said.

Furthermore, USMCA trade ministers will meet in Mexico City on July 7 to commemorate the one-year anniversary of the trade agreement.

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Week of June 28-July 2 (USMCA, metal stock levels and more)

USMCA

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  • The global lead and zinc markets were in surplus through the first four months of 2021, the International Lead and Zinc Study Group said.
  • Meanwhile, GDP rose in all 50 states in the first quarter, the Bureau of Economic Analysis (BEA) reported.
  • In addition, Stuart Burns covered Russia’s plans to impose export taxes on key metals.
  • U.S. steel capacity utilization for the week ending June 26 reached 82.7%, the American Iron and Steel Institute reported.
  • The U.S. Court of International Trade made a ruling affirming duty levels set by the Department of Commerce with respect to heavy walled rectangular steel pipes and tubes from Korea.
  • Burns on the loss of support for the zinc price.
  • The E.U. voted to extend steel safeguards, originally imposed in 2018, for an additional three years.
  • The USMCA Labor Council convened for the first time, pursuant to the 1-year-old agreement’s chapter on labor.
  • Think stock levels are a reliable indicator of true metals demand? Think again.
  • Norsk Hydro has signed a letter of intent to build an aluminum recycling plant in Michigan.
  • Meanwhile, the United States-Mexico-Canada Agreement, or USMCA, hit the one-year mark this Thursday.
  • The U.S. goods and services deficit rose in May from the previous month.
  • Lastly, for subscribers, the MetalMiner Monthly Outlook for July is now available.

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This morning in metals news: the U.S. goods and services deficit rose by $2.2 billion in May; meanwhile, new orders for manufactured goods rose in May; and, lastly, Ford Motor Co. released its June sales results.

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US goods and services deficit increases in May

U.S. trade

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The U.S. goods and services deficit rose by $2.2 billion in May to $71.2 billion, the Census Bureau reported.

The deficit increased from $69.1 billion the previous month.

Furthermore, May exports reached $206.0 billion, or up $1.3 billion from the previous month. Meanwhile, May imports reached $277.3 billion, or up $3.5 billion.

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Back on July 1, 2020, the United States-Mexico-Canada Agreement (USMCA) went into effect.

The deal, reached during the Trump administration, began with negotiations aimed at the modernization of the 1994 North American Free Trade Agreement (NAFTA). Those negotiations kicked off in August 2017.

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A year on: USTR remarks on USMCA

USMCA

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Fast forward a year after the USMCA went into effect July 1, 2020, and United States Trade Representative Katherine Tai offered remarks on the trade deal.

“For years, there was broad consensus that the NAFTA needed to be updated and remedied to meet the needs of the 21st century and correct for flaws and breakdowns in the agreement that developed over time,” Tai said. “That view was shared by the business community, labor unions, and Members of Congress from both parties.

“The USMCA as originally negotiated made some important strides towards achieving the goals of updating and remedying the NAFTA, but still fell short of the standards required to win Congressional support. Only with close partnership with businesses and labor organizations, and after a most unlikely ‘collaboration’ between congressional Democrats and the Trump Administration, did the re-negotiated USMCA emerge as a better deal for workers and a new model for trade agreements able to secure a broad base of support.”

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This morning in metals news: Norsk Hydro today announced it signed a letter of intent to build a new aluminum recycling plant in Cassopolis, Michigan; the Census Bureau released construction spending data; and, lastly, the zinc price posted some gains this week.

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Norsk Hydro to build aluminum recycling plant in Michigan

Norsk Hydro

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Oslo-based Norsk Hydro has signed a letter of intent to build an aluminum recycling plant in Michigan.

The plant will produce aluminum extrusion ingot for automotive applications. Norsk Hydro said it aims to build the plant by 2025.

“The LoI between Hydro Aluminium Metal and landowner Midwest Energy and Communications (MEC) is based on Hydro’s intention to build a facility in Cassopolis producing 120,000 metric tonnes per year from 2023 with around 70 direct employees,” Norsk Hydro said. “The total project investment is currently estimated to be around $120 million, depending on final facility design, market conditions and macroeconomic development.”

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This morning in metals news: as laid out in the United States-Mexico-Canada Agreement (USMCA), the USMCA Labor Council convened for the first time; meanwhile, the Energy Information Administration reported on potential electricity disruptions this summer; and, lastly, Rio Tinto declared force majeure at one of its operations.

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USMCA Labor Council convenes

USMCA

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Approval of the United States-Mexico-Canada Agreement (USMCA) included a provision for the formation of a Labor Council.

“The Parties hereby establish a Labor Council composed of senior governmental representatives at the ministerial or other level from trade and labor ministries, as designated by each Party,” the USMCA text states in Article 23.14.

Furthermore, the parties were scheduled to convene the Labor Council no later than one year after the agreement went into force (which it did July 1, 2020).

“Developing a worker-centered trade policy involves giving workers a seat at the table and utilizing all of our tools to ensure that trade agreements are more than just words on paper,” Acting Assistant U.S. Trade Representative Joshua Kagan said in a USTR statement Wednesday. “This first meeting of the USMCA Labor Council, including the public session, demonstrates our collaboration with Mexico and Canada to achieve shared goals and our commitment to holding each other accountable to the agreement.”

In a joint statement, the parties said they discussed “ongoing implementation of Mexico’s recent historic labor law reform.” In addition, the joint statement said the parties covered:

  • The agreement’s requirement that each party prohibit the importation of goods into its territory from other sources produced in whole or in part by forced or compulsory labor
  • Key labor policies for migrant workers
  • Areas for ongoing and future cooperation and technical capacity building

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In an anticipated move, the European Union has published its decision to extend its steel safeguards for three more years.

EU members voted on the extension June 18 and it published the implementing regulation June 28.

The safeguards will extend from July 1, 2021, to June 30, 2024.

E.U. flag

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“The initial safeguard measure was introduced in July 2018 to protect the Union steel market against trade diversion, following the US decision to impose, under its Section 232 legislation, duties on imports of steel into the US market,” the E.U. said in a statement. “The US Section 232 measures are still in force.”

Furthermore, the E.U. said that, in line with World Trade Organization (WTO) rules, duty-free steel import quotas will increase by 3% annually.

“The Commission will also initiate a review if the US introduces significant changes to its ‘Section 232’ measure on steel,” the E.U. added.

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EU steel safeguards to 2024

The EU steel safeguards first rolled out in provisional form in July 2018.

The European Steel Association welcomed the decision.

“We welcome that the EU steel safeguard regime has been extended,” said Axel Eggert, Director General of the European Steel Association (EUROFER). “The conditions that required the launch of the safeguard initially are still very much present – including global steel overcapacity and US Section 232.”

Eggert added that disruption of the market from the COVID-19 pandemic is not related to the safeguard measure.

“The current state of demand-supply disruption in the global steel industry – and in many other sectors – follows in the wake of the COVID crisis,” Eggert said. “However, it has nothing to do with the safeguard. Instead, the recovery of steel demand and the wider economic rebound has inspired a rush for material after the countercyclical destocking seen during the downturn.”

E.U.-U.S. trade relations

Trade tensions between the E.U. and U.S. rose throughout the Trump administration, which included the imposition of the Section 232 tariffs on steel and aluminum in 2018. Furthermore, tensions rose over the long-running Boeing-Airbus subsidy saga.

However, the two sides appear to be attempting to cool their jets vis-a-vis the dispute, which saw the WTO authorize billions of dollars in tariffs on both sides. Recently, the sides agreed to a suspension of the tariffs (albeit with the caveat that they could go back into effect if U.S. companies are not able to “compete fairly” in Europe).

As for Section 232, the Biden administration could look to further ease tensions.

“Nor will the widely reported probable removal of Section 232 tariffs on European mills this year have much impact on metal supply to U.S. consumers,” Stuart Burns wrote earlier this month. “Europe is almost as tight as the U.S. and simply doesn’t have much capacity to supply the U.S. market in 2021.

“The Biden administration is looking to relax the Section 232 tariffs, at least as far as Europe is concerned.”

Each month, MetalMiner hosts a webinar on a specific metals topic. Explore the upcoming webinars and sign up for each on the MetalMiner Events page.

This morning in metals news: the U.S. Court of International Trade voted to affirm the duty levels set by the Department of Commerce with respect to heavy walled rectangular steel pipes and tubes from Korea; meanwhile, U.S. distillate demand returned more quickly than gasoline and jet fuel demand; and, lastly, the copper price has bounced back this past week.

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USCIT affirms duties on Korean pipe, tube

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The U.S. Court of International Trade recently ruled to maintain a Department of Commerce determination on anti-dumping duty levels on heavy walled rectangular steel and pipe from Korea.

Korean firms Dong-A Steel Company and Kukje Steel Co., Ltd. were the plaintiffs in the case.

The Department of Commerce had previously determined a weighted-average dumping margin for DOSCO of 11.00% and 7.89% for Kukje.

Distillate demand speeds ahead

U.S. distillate demand has recovered to 2019 levels faster than gasoline and jet fuel demand, the Energy Information Administration reported.

“The combination of increases in both travel and economic activity in the United States has contributed to more demand for gasoline, distillate, and jet fuel, as reflected in the product supplied data of our Weekly Petroleum Status Report (WPSR),” the EIA reported. “Although demand has increased for all three of these products from their 2020 lows, the extent of the demand growth has differed by product.”

For the week ending June 18, the four-week average demand for gasoline reached 94% of the four-week average for the same week in 2019, the EIA reported. Meanwhile, distillate reached 98%, with jet fuel at 74%.

Copper price makes gains

Meanwhile, after an approximately six-week decline after hitting an all-time high, the copper price has made some gains over the last week.

The LME three-month copper price closed Monday at $9,460 per metric ton. The price had fallen to $9,070 per metric ton the previous Monday, June 21.

However, the price remains down 6.99% month over month.

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The metals markets received a jolt late last week with the news that Russia is considering applying export tariffs to steel, aluminium, copper, nickel and ferro alloys from this August through to at least the end of the year in order to ease metal supply and prices for domestic consumers.

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Russia metals tariffs to cover copper, aluminum, nickel and others

tariff

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According to Bloomberg, the plans include a base duty rate across all products covered by the duties of 15%. However, it includes a specific minimum tariff for each metal, varying from $1,226 a ton for copper, $2,321 for nickel and $254 for primary aluminum. In addition, each steel grade would incur its own rate, starting with HRC at $115 per ton.

As Bloomberg states, the taxes could have far-reaching implications for global metals markets.

That is particularly true at a time of tight supply for products such as aluminum.

Rusal controls about 10% of the global aluminium sector. Meanwhile, Norilsk Nickel produces about 20% of the world’s nickel. Russia is the third-biggest steel exporter, with most sales going to Europe.

Just under 10% of the European market is serviced by primary aluminum imports from Russia. Europe is not alone, either. The U.S. and consumers in the Far East all receive primary aluminum supplies. Therefore, the tariff will have an impact on physical delivery premiums in the U.S., Europe and Japan.

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