China

stockquest/Adobe Stock

This morning in metals news, China ramped up its aluminum output in December, British police are looking into allegations of pension fraud against steelworkers and India considers a plan to have its steel ministry oversee iron ore and coal operations.

Want to see an Aluminum Price forecast? Take a free trial!

Chinese Aluminum Output in December

China upped its aluminum output to close 2017, jumping back up to its highest total since June 2017, Reuters reported.

According to the report, China produced 32.27 million tons of aluminum last, up 1.6% from 2016, per National Bureau of Statistic Data.

British Police Look Into Possible Pension Fraud

According to the Financial Times, police in south Wales are looking into allegations that some Port Talbot steelworkers have been victims of pension fraud.

The complaints were put forth by the British Steel Pension Scheme.

Iron Ore, Coking Coal Mining to Steel Ministry?

India is considering transferring control of iron ore and coking coal mining to its steel ministry, Bloomberg reported, in an effort to boost the country’s burgeoning steelmaking industry.

MetalMiner’s Annual Outlook provides 2018 buying strategies for carbon steel

A shift in regulatory oversight from the mines and coal ministries to the steel ministry requires approval from the prime minister’s office and the ministries, according to the report.

The U.S. Department of Commerce took another step forward in its investigation of steel flanges from China and India, announcing affirmative preliminary determinations in its countervailing duty (CVD) investigation on Wednesday evening.

Need buying strategies for steel? Try two free months of MetalMiner’s Outlook

In its release covering the announcement, the department once again touted its uptick in trade cases considered since President Trump took office.

“With a 58 percent increase in trade cases initiated since President Trump took office, this Administration has made it a clear priority to defend domestic businesses from unfair trade practices,” Secretary of Commerce Wilbur Ross said in the release. “Today’s preliminary decision allows U.S. producers to receive relief from the market-distorting effects of potential government subsidies while we continue our investigation.”

The department calculated countervailable subsidies of 174.73%, and from 5.00% to 239.61%, for China and India, respectively. A countervailable subsidy is “financial assistance from a foreign government that benefits the production of goods from foreign companies and is limited to specific enterprises or industries, or is contingent either upon export performance or upon the use of domestic goods over imported goods,” the department’s fact sheet on the case explains.

Imports of steel flanges in 2017 were estimated to be valued at a total of $48.4 million from the two countries, according to the release.

The domestic petitioners in the case are the Coalition of American Flange Producers and its individual members: Core Pipe Products, Inc. (of Carol Stream, Illinois) and Maass Flange Corporation (of Houston, Texas). The petitions were filed Aug. 16, 2017, and the Department of Commerce initiated its investigation Sept. 5. The U.S. International Trade Commission then delivered its preliminary determinations Sept. 30.

The Chinese respondents in the case were: Both Well (Jiangyan) Steel Fittings Co., Ltd., Hydro Fluid Controls Ltd., Jiangyin Shengda Brite Line Kasugai Flange Co., Ltd., and Qingdao I-Flow Co., Ltd.

According to the department, it calculated the countervailable subsidy rate based on “adverse facts available” due to the companies’ “failure to fully cooperate” in the investigation.

Commerce calculated a rate for the Indian respondents under similar circumstances.

“In the India investigation, Commerce has calculated a preliminary subsidy rate of 239.61 percent for mandatory respondent Bebitz Flanges Works, based on adverse facts available due to the company’s failure to fully cooperate in the investigation., and a preliminary subsidy rate of 5.00 percent for mandatory respondent Echjay Forgings Private Limited,” the department’s fact sheet states. “Commerce preliminarily determined a rate of 5.00 percent for all other Indian producers and exporters.”

MetalMiner’s Annual Outlook provides 2018 buying strategies for carbon steel

The Department of Commerce is scheduled to make a final CVD determination in the case against China on April 3, and May 29 for India.

stockquest/Adobe Stock

This morning in metals news, our own Lisa Reisman appeared on NPR’s “Marketplace” yesterday, President Trump said Wednesday that terminating the North American Free Trade Agreement (NAFTA) would lead to the best renegotiated deal and Alcoa reported its 2017 4Q and full-year earnings.

Buying Aluminum in 2018? Download MetalMiner’s free annual price outlook

Aluminum and China on NPR

Our very own Lisa Reisman, founder and executive editor of MetalMiner, made an appearance on NPR’s “Marketplace” yesterday morning to talk about the aluminum market.

To check out the segment, visit the Marketplace website (the segment starts at 2:28).

Trump Again Hints at Termination of NAFTA

As negotiating teams from the U.S., Canada and Mexico have met over several rounds of talks to revamp the 24-year-old trilateral trade deal, President Trump once again hinted at termination of the deal.

According to Reuters, Trump on Wednesday said the U.S. could get a better deal via termination.

“We’re renegotiating NAFTA now,” Trump told Reuters. “We’ll see what happens. I may terminate NAFTA.

“A lot of people are going to be unhappy if I terminate NAFTA. A lot of people don’t realize how good it would be to terminate NAFTA because the way you’re going to make the best deal is to terminate NAFTA. But people would like to see me not do that.”

Alcoa Reports 4Q, Full-Year 2017 Earnings

Alcoa released its earnings report for the final quarter of 2017, reporting a net loss of $196 million, or $1.06 per share.

For 2017 as a whole, Alcoa reported full-year 2017 net income of $217 million, or $1.16 per share and adjusted net income of $563 million, or $3.01 per share.

“Solid market fundamentals allowed us to deliver our strongest adjusted EBITDA quarter since our launch as an independent, publicly-traded company,” said Roy Harvey, president and CEO, in a release covering the earnings announcement. “With a series of operating and asset decisions, we also purposefully delivered against our strategic priorities. Our first full year has been truly remarkable.

“By continuously focusing on our strategic priorities, and supported by favorable markets, we’ve been able to accelerate our plan to strengthen Alcoa’s foundation for an even brighter tomorrow. As we enter 2018, we will continue to execute on our objectives and look forward to delivering more in the new year.”

Want to see an Aluminum Price forecast? Take a free trial!

Alcoa became an independent, publicly traded company Nov. 1, 2016.

The above headline is true, assuming the U.S.’s avowed aim is the health and future of the American steel industry and its workers.

Need buying strategies for steel in 2018? MetalMiner’s Annual Outlook has what you need

No one would dispute the idea that the world has too much steelmaking capacity. Many emerging markets and all mature markets are in agreement that excess steelmaking capacity depresses global prices and begats a beggar-thy-neighbor attitude to world trade.

Even taking the elephant in the room out of the assessment, The Economist estimates, by excluding China, global capacity use fell from 86% in 2004 to 69% in 2016, underlining how severe and widespread the problem is.

Source: The Economist

Recent cutbacks in China, recent research from Bank of America Merrill Lynch suggests, mean it is on track to use a full 88% of its capacity in 2018. Steel prices have rallied, mostly due to broad-based rising global growth.

While there are no guarantees that older, less environmentally friendly steel plants closed in the last 12 months will not be replaced by new, more efficient and less-polluting steel plants in the future, recent directives from Beijing suggest it is applying pressure to state governments to limit the permitting of new steel mills.

Read more

gui yong nian/Adobe Stock

This morning in metals news, two new vehicles made mostly with steel represent a victory for the steel industry, iron ore prices are down and the U.S. International Trade Commission (ITC) voted to continue its investigation into common alloy aluminum sheet from China.

Wondering how your stainless steel prices compare to the market? Benchmark with MetalMiner

New Ram Pickup, Chevy Silverado Made with Steel

As the steel industry battles to remain the dominant material in automotive construction, the news of two new models constitutes a win for the industry.

Fiat Chrysler‘s new Ram pickup and General Motors‘ new Chevrolet Silverado truck are made mostly with steel, Reuters reported. The announcements represent a big win for steel, which is seeing increasing competition from aluminum within the automotive industry.

As Reuters reported, in late 2014 Ford launched the all-aluminum body F-150. While the versatile metal offered improved fuel economy, it comes at a premium to steel. The interplay between steel and aluminum vis-a-vis automobile construction is something that will need to continue to be monitored going forward.

Iron Ore Prices Drop

As Chinese rebar steel futures fell, so too did prices of iron ore in the face of flagging demand, Reuters reported.

Iron ore on the Dalian Commodity Exchange dropped 2.3% to 535 yuan per ton, according to the report.

ITC Continues Aluminum Sheet Investigation

The U.S. ITC announced Friday that it voted to continue its investigation of common alloy aluminum sheet from China.

“The United States International Trade Commission (USITC) today determined that there is a reasonable indication that a U.S. industry is materially injured by reason of imports of common alloy aluminum sheet from China that are allegedly subsidized and sold in the United States at less than fair value,” the ITC release covering the announcement states.

Lower your aluminum spend – Take a free trial of MetalMiner’s Monthly Outlook!

Now, a preliminary countervailing duty determination is due Feb. 1 from the Department of Commerce.

The Renewable Monthly Metals Index (MMI) picked up a point for our January reading, rising from 78 to 79 (a 1.3% jump).

Need buying strategies for steel in 2018? MetalMiner’s Annual Outlook has what you need

Several of the heavier hitters in this basket of metals posted price increases this past month.

U.S. steel plate rose 4.0% and U.S. grain-oriented electrical steel (GOES) coil rose 3.8%. Korean steel plate also increased, rising by a whopping 8.9% for the recent monthly window.

Chinese silicon and cobalt cathodes also posted notable price jumps. Meanwhile, Chinese steel plate fell slightly, while Japanese steel plate posted a small price jump.

Continuation of Steel Plate Tariffs on the Table

U.S. Rep. Pete Visclosky (D-Merrillville, Indiana) testified before the International Trade Commission recently on the subject of extending 18-year-old duties on cut-to-length carbon-quality steel plate from India, Indonesia and South Korea, the Northwest Indiana Times reported.

Northwest Indiana, where Merrillville sits, is home to significant domestic steel industry activity, including by ArcelorMittal, which produces steel plate at its Burns Harbor Plate Mill — located in Gary, Indiana — the paper reported.

“As a representative and resident of Northwest Indiana, I am acutely aware of the challenges facing the American steel industry due to the onslaught of illegal steel imports,” the Times quoted Visclosky as saying during testimony at a hearing in Washington, D.C. “The ArcelorMittal facility at Burns Harbor in Northwest Indiana makes cut-to-length carbon-quality steel plate, and every one of those dedicated workers deserve to be able to continue to fairly compete and make the best steel to the best of their ability in our global economy.”

Of course, the issue is one of many metals-related trade issues before U.S. trade bodies (the most headline-grabbing being the Section 232 probes into steel and aluminum imports, for which a ruling is expected this month).

Like the Section 232 probes, which seek to determine whether those imports negatively impact the country’s national security, Visclosky also cited national security concerns vis-a-vis steel plate imports.

“It is essential for both our national defense and our national economy, and we cannot afford to threaten our production capabilities,” the paper quoted Visnosky as saying.

GOES Gets a Boost

As reported by our Lisa Reisman yesterday, grain-oriented electrical steel (GOES) got a boost this past month.

GOES prices, as Reisman noted, usually don’t move in tandem with other forms of steel — but it didn’t play out that way in December.

Import levels, however, are something to monitor going forward.

“In addition to prices moving in a similar direction, import levels also followed similar patterns, although GOES imports showed a dramatically higher increase whereas finished steel imports grew by 14.5% on an annualized basis according to the American Iron and Steel Institute (AISI),” Reisman added.

While China is often the subject of much discussion regarding a flood of imports into the U.S., when it comes to GOES, Japan is actually the leader in exports to the U.S.

Source: International Trade Administration and MetalMiner analysis

Japan owns about two-thirds of the U.S. GOES import market share, rising significantly despite a drop in overall finished steel sent to the U.S.

The explanation for that disparity?

“Increased domestic efficiency standards have led to the development of higher performance electrical steels (HB), which have taken share away from the more conventional grades produced by the sole U.S. producer,” Reisman wrote. “With no U.S. producer of these grades, the market has become more reliant on exports from Japan.”

Actual Metal Prices and Trends

For full access to this MetalMiner membership content:
Log In |

gui yong nian/Adobe Stock

This morning in metals news, China has issued stricter rules on building new steel capacity, Chinese steel production is expected to slow down in 2018 and LME copper rises as the dollar loses ground.

Benchmark Your Current Metal Price by Grade, Shape and Alloy: See How it Stacks Up

New Rules to Put the Squeeze on New Capacity in China

China has new, stricter rules on building new steel capacity, the Ministry of Industry and Information Technology said on Monday, Reuters reported.

According to the report, the rules dictate that China will allow one ton of new capacity to be built for a minimum of 1.25 tons of old capacity closed in environmentally sensitive regions.

Chinese Steel Production to Slow in 2018

 In the same vein, Chinese steel production is expected to slacken this year, the Financial Times reported.
According to a poll of analysts, steel output is expected to rise by just 0.6% this year, the Financial Times reported.

Copper Rises as Dollar Falls

London copper picked up some momentum Tuesday as the U.S. dollar fell, Reuters reported.

Free Sample Report: Our Annual Metal Buying Outlook

That dynamic came on the heels of the metal hitting a two-week low overnight, in tandem with a previous upward run by the dollar.

Before we come to the end of the first business week of 2018, let’s look back at some of the stories on MetalMiner so far this year:

Benchmark Your Current Metal Price by Grade, Shape and Alloy: See How it Stacks Up

  • Chinese supply-side reforms generally have a big impact on metal prices — such was the case for copper, as our Stuart Burns wrote early this week.
  • In case you missed it, the fourth episode of our podcast series, Manufacturing Trade Policy Confidential, dropped this week. This time, we spoke with Heidi Brock, CEO of the Aluminum Association.
  • With 2018 just under way, many publications are making predictions for the year with respect to the markets and how they will perform (among other things). Burns rounded up some of the predictions being made for the year, ranging from the political to the economic.
  • After a solid 2017, Tata Steel has big plans for 2018, Sohrab Darabshaw writes.
  • Speaking of supply-side actions, Burns touched on oil output cuts led by OPEC.
  • We kicked off our monthly round of Monthly Metals Index (MMI) posts with the Automotive MMI.
  • Gold and Bitcoin, in terms of finance, sit on opposite ends of the spectrum, with the former representing tradition and the latter representing the rise of modern cryptocurrencies. However, their relative fortunes are more connected than you might think, Burns writes.
  • For our second MMI post, we surveyed the month in construction trends and prices.

Free Sample Report: Our Annual Metal Buying Outlook

Everyone loves a forecast, a prediction, even a few ideas on what the future holds, and we become particularly obsessed with such ideas at the start of a new year.

So, we thought it would be fun to review a few sources’ suggestions on what 2018 may hold, some as specific predictions like those in the Financial Times, and some as possible standout black swan events that could catch us off guard, such as those in The Telegraph newspaper.

Benchmark Your Current Metal Price by Grade, Shape and Alloy: See How it Stacks Up

Firstly, some of the Financial Times’s suggestions. They came up with 20 of them, but many are political and somewhat niche for our readership, like whether or not Britain’s Prime Minister Theresa May still be in power by the end of 2018. It’s a topic only the Brits are obsessed with and as it’s not exactly going to roil international markets one way or the other, we will ignore it here, as will non metal-market issues, like whether the AT&T-Time Warner merger will go through without big changes to both.

However, of more interest are questions like “Will Trump trigger a trade war with China?” Yes, in the FT’s opinion. The paper believes Trump will deliver on his protectionist campaign rhetoric and take punitive actions against China in 2018, resulting in China either imposing retaliatory measures or taking America to the World Trade Organization (WTO). (While on the Trump train of thought, another ditty from the FT is “Will the president will be impeached in 2018?” — or, at least, whether or not proceedings will be brought against him by the end of the year.)

Back to China, the driver for metal markets will be Chinese demand and Chinese GDP growth. At least officially, growth will continue to headline at 6.5% throughout 2018, the FT believes, although it clearly does not believe the official figures and makes the point real growth will be somewhat lower. Emerging market growth overall is expected to rise above 5% through 2018 despite the U.S. Federal Reserve increasing rates, which could spark taper tantrum spoilers (as in 2013). Even so, emerging market growth is expected to remain robust, aided by ongoing strong growth in the U.S. and Europe.

Political Turmoil Shakes Things Up Worldwide

Politically, 2018 could be an interesting year.

Read more

Now that the New Year has begun, we’re getting ever closer (hopefully) to the Commerce Department’s final recommendations on the Section 232 investigation.

Today we continue our podcast series that we’re calling “Manufacturing Trade Policy Confidential,” in which we turn our focus to the aluminum industry. Our guest is Heidi Brock, the president and CEO of the Aluminum Association, whom we spoke with just before the winter holidays. She works tirelessly on behalf of the association’s members, which span the entire value chain. Heidi does find moments, however, to take a step back and see the bigger picture.

Recently, she got to see the newly commissioned USS Gabrielle Giffords, a warship named after the former Arizona congresswoman, and it left her with a sense of awe. “I just can’t tell you what an amazing experience it was,” she said.

To hear more on what a strong domestic aluminum sector has to do with national security, and how the aluminum sector views other hot trade issues of the moment and why, listen in to Lisa Reisman’s conversation with Heidi Brock.

Here’s Heidi in front of the U.S. Navy littoral combat ship USS Gabrielle Giffords:

Courtesy of Heidi Brock

For an additional sense of scale, here’s an “aerial view of the ship during its launch sequence at the Austal USA shipyard, Mobile, Alabama,” according to Wikipedia, from a photo provided by the U.S. Navy:

Source: U.S. Navy/Wikipedia

Manufacturing Trade Policy Confidential: Background

With everything that’s been happening on the international trade policy front over the past year, we wanted to give metal buying organizations more insight into the issues they may not be reading or hearing enough about — or at all — in the mainstream B2C media.

What better way to do so than go straight to the source — or sources — and interview some key movers and shakers on the manufacturing and policy fronts? So we’ve started a brand-new series called “Manufacturing Trade Policy Confidential.”

If you’ve visited MetalMiner’s digital pages over the past several months, you’re no stranger to the phrase “Section 232” — shorthand for the U.S. Department of Commerce investigation into whether certain steel imports constitute a national security risk, under the namesake section of the U.S. Trade Expansion Act of 1962.

The outcome of the investigation (findings from which were slated to come down last summer but have been delayed) could have significant effects on upstream and downstream manufacturing organizations, ranging from metal producers to buying organizations – even the mom-and-pops.

But Section 232 is only one small part. Trade circumvention, China’s non-market economy status, domestic uncertainty amidst proposed tax plans and many other issues have pushed us to start this new podcast series.

We’ll be publishing several more interviews in the coming weeks and months – stay tuned!

Listen to more episodes and follow the MetalMiner Podcast on SoundCloud.