Tag: electrical steel price

GOES M3 Spot Market Price Index Tapers Off

MetalMiner’s September spot market GOES M3-grade price index held nearly steady from a month ago dropping by only 1%. However, in a closely watched transaction, buying power just got a lot stronger as the EU recently approved the acquisition of Alstom’s energy business by GE.

GOES_Chart_September_2015_FNLAlthough authorities rightfully focused on potential anti-trust issues, back over on the purchasing side, the combined entity makes GE a formidable power buyer, no pun intended.

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The acquisition has been cleared for go, pending the sale of Alstom’s turbine business to Ansaldo, an Italian turbine manufacturer.

Powerful New Player

From a global sourcing perspective, we’d expect GE to become a price maker in terms of the company gaining significant European GOES buying power from Alstom as well as the ability to leverage opportunities for any/all global GOES contracts going forward.

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The European GOES producers have a reprieve on imports due to the anti-dumping case. Whether or not they can achieve price hikes with a more powerful GE remains to be seen.

Another New GOES Market Player

Meanwhile, Big River Steel confirmed their intent to allocate $600 million in capital for a phase 2 silicon steel-finishing mill for GOES FP and NOES (non-oriented electrical steel) FP at a recent Steel Market Update conference. Allegheny Technologies, Inc. has entered its fourth week of a lockout for steel workers. Thus far, all plants impacted remain operational.

In future follow-up posts we will examine China as a market-based economy and, in particular, China’s role in GOES markets.

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Renewables Index Falls To Another New Low After Chinese Demand Wanes

Renewable energy sector metals and materials inputs fell again this month as Chinese demand has fallen with the second-largest economy in the world’s stock market.

Renewables_Chart_September-2015_FNLThe monthly Renewables MMI® registered a value of 54 in September, a decrease of 5.3% from 57 in August, another all-time low.

Prices Keep Falling

Steel plate, cathodes and silicon could not increase much in value this month and even grain-oriented electrical steel (GOES), the standout performer of our renewables metals, looks to have fallen. (More on that later this week.)

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Without strong demand from Europe and China for end-use products such as silicon photovoltaic solar panels and wind turbines, it’s difficult to foresee a price turnaround for these metals in the near future. One would think that prices falling so low would eventually increase demand and spur on bargain purchasing, but demand has not picked up, particularly in China where all markets are falling.

European Market Maturity

The problem in Europe is that much of the renewable energy generation market is already mature and won’t expand much anytime soon.

Around 80% of the electricity demand in Germany on a sunny Sunday last month was covered by photovoltaic and wind power. According to the evaluation by the German forum “Together against interim storage, and for responsible energy politics,” the photovoltaic plants at noon produced more than 24 gigawatts of solar power. Much of Europe is now a replacement market and not a building market. This is not the case with the emerging markets that panel and turbine manufacturers depend on.

Despite massive solar energy generation projects in India and China, the emerging markets are still moving slowly toward the technology. India’s “Solar Parks” are not slated for completion until 2022 and delays beyond that look possible.

Chinese Power Generation

Fixed government payments to Chinese solar power generation companies are determined partially by electricity consumption within the country. So with Chinese demand waning on the consumer side, solar power investments by utilities are decelerating with the rest of China’s economy. These firms’ revenues will likely fall as well. This could push China’s ruling communist party to move funding from solar companies back to the dirty coal-fired plants that Beijing has only recently admitted need to be shut down.

Despite the lack of demand, renewables prices have not broken out of the range we’ve seen for most of this year and are only marginally lower than they were before that, so most buyers should be able to wait to make their purchases without any great threat of missing out on a bargain.

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If Only Free Markets Prevailed For Grain-Oriented Electrical Steel…

Any outside observer (or inside observer for that matter) may struggle to keep up with the continuous stream of trade complaints filed by practically everyone involved in the global trade of grain-oriented electrical steel.

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Consider the following:

  1. US producers AK Steel and Allegheny Technologies filed (and lost) a trade case against multiple producers from multiple geographies and in a stunning decision last year, the domestic producers were found not to have been “materially injured” by foreign imports of GOES produced by Japan, Germany and Poland.
  2. Back in May, European GOES producers asked the European Commission to investigate dumping by producers from several countries including: Russia, USA, Japan, Korea and the People’s Republic of China.
  3. China appears to be working on its second anti-dumping case in a year – the first against imports from the US (in which the WTO recently ruled against China) and a new case against producers in Japan, South Korea and the EU.
  4. Please note who has not filed trade cases – producers from Japan and South Korea. We will come to why in a moment.

But First: What the August 2015 GOES Price Index Did

Based on the latest M3-grade pricing, MetalMiner’s monthly GOES MMI® registered a value of 190 in August, a decrease of 3.5% from 197 in July:

GOES_Chart_August_2015_FNL_1

metaltalk signAre you new to the GOES market and trends? Listen to our recent podcast in which I give listeners a “GOES Market 101.”

Back to trade: If we go back in time, we’d see that electrical steel serves as one of the most popular metals involved in all metal trade-related cases.

If Only Free Markets Prevailed

One might think all of these trade cases actually helped producers, but we are coming to the conclusion that they are all likely an enormous waste of time and taxpayer dollars. Here in the US, GOES prices have largely traded sideways and certainly well off 2011 highs. Global transformer and power equipment producers shifted their transformer production to both Canada and Mexico in anticipation of a favorable trade ruling.

Moreover, the battle really centers on which producers can make the highest-performing grain-oriented electrical steels around a few parameters – high permeability, low core loss and low magnetostriction.

Here, the Japanese, Germans and South Koreans rule the day. For their capability in producing the higher-performing materials, they have earned handsome price increases for the second half of this year, according to TEX Reports (in the $700-$1,000/mt range).

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The balance of the producers taking their case to the streets in the form of dumping cases do not have suitable high-end products to fill the “growth” portion of the market and have, instead, only received “lower” prices for their efforts.

Meanwhile, New Government Policies…

The US government has upped the ante by implementing a range of regulations and rules that require these transformer and power equipment producers to adhere to new more stringent efficiency standards. The new EPA Clean Power Plan final rule will also put pressure on power producers to make pollution cuts and become more efficient – driving more demand for transformers and power equipment using higher-performing raw materials.

If I were Big River Steel, I’d be seriously looking at how to create my GOES lines to compete head-on with the Japanese producers. In fact, it makes little sense that AK Steel and Allegheny Technologies haven’t done that already. It’s clear that playing at the low- and mid-ends of the markets yields poor price realization.

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The GOES MMI® collects and weights 1 global grain-oriented electrical steel price point to provide a unique view into price trends over a 30-day period. For more information on the GOES MMI®, how it’s calculated or how your company can use the index, please drop us a note at: info (at) agmetalminer (dot) com.

Renewables MMI® Jumps on the All-Time Low Bandwagon

The monthly Renewables MMI® registered a value of 57 in August, a decrease of 1.7% from 58 in July. Like many other metals that we track, this is an all-time low.

Renewables August 2015

Unlike some of the other metals we track, though, fundamentals haven’t really changed that much for silicon, cobalt cathodes and most of the renewable metals we track. The fact that the index fell only 1.7% — a pittance when compared to the steep drops of other indexes — it shows this is a low created by ongoing tepid demand and the bearish environment affecting all commodities.

The Steady, Slow Fall of Renewables

The slow fall of renewables may have more to do with the continually falling commodity prices of oil, liquid natural gas and other competing energy products. Uncertainty over the possibility of Iranian oil hitting the global market is only making crude potentially more competitive with solar panels, wind turbines and other renewable energy investments, too.

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We have long lamented the subsidized nature of renewable energy investments in the developed world and how those subsidies disconnect infrastructure investment costs from actual payback in the form of lower energy prices, but that’s something that won’t change anytime soon or help renewable energy inputs in the short term. Sorry, Milton, but prices will be just one part of the renewable energy information puzzle for the foreseeable future. We wish it wasn’t so, but it’s the reality. There is, however, no reason why they shouldn’t be a bigger part of that equation.

Subsidies Distort Payback Picture

If renewable energy investments were judged by how much solar panels on your house or, say, wind farms for a utility company, would cost to install and how long it would take lower energy bill prices to pay back those installation costs, we would likely see more US adoption and fewer poor investments in low-wind or solar areas. As it is, though, government incentives artificially distort those costs and create high-adoption areas, such as California, where there are incentives and high adoption and no incentives and low adoption, thanks to low oil and LNG prices, in places without the natural advantages.

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Prices for renewable inputs such as silicon are fairly stagnant in high-adoption countries such as Germany, too. The bearish commodity environment has hit low demand sectors as hard as the higher demand ones.

The Renewables MMI® collects and weights 8 metal price points used extensively within the renewable energy industry to provide a unique view into renewable energy metal price trends over a 30-day period. For more information on the Renewables MMI®, how it’s calculated or how your company can use the index, please drop us a note at: info (at) agmetalminer (dot) com.

GOES M3 Price, Index Jumps Despite Bearish Market

Niche markets like grain-oriented electrical steel (GOES) tend to develop their own set of pricing trends.

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In some respects, GOES appears more volatile than most of the other metals we track. In some cases prices bump up $350 per metric ton in a month and in others they fall nearly $200/mt. MetalMiner’s monthly M3 index moved up significantly with a 15.2% jump:

GOES_Chart_July_2015_FNL

In the case of the domestic market, we essentially have an oligopoly controlled by a small handful of players who [sort of] set the domestic price.

We say sort of because the customer base for GOES is highly concentrated. In many cases the buying power does indeed rest with the buyer. Despite the volatility, GOES also remains in a bearish trend as well.

Did the Anti-Dumping Case Change Anything?

Last fall, we released a compilation report of multiple GOES stories we ran, covering primarily the US domestic producer anti-dumping filing. For those in the industry who have followed developments closely, the story ended before the Department of Commerce ultimately ruled against the domestic producers.

We say the story ended because large electrical power equipment manufacturers moved their supply chains to alternative locations, primarily Canada and Mexico in anticipation of an unfavorable anti-dumping ruling that would have added duties to the cost of imports.

However, the duties never came, but the proverbial procurement “Plan B” went into effect all the same.

Lamentations About Laminations

In January of this year, the International Trade Commission created several new HTS codes to track product movement for laminations for incorporation to stacked cores (HTS code: 8504.90.9534) and transformer parts (HTS Code: 8504.90.9546).

Imports of transformer parts continue to ratchet up as the latest trade data from Zepol shows:

[caption id="attachment_71337" align="alignnone" width="551"]Source: Zepol Source: Zepol[/caption]

Notably, Japan has taken the second-place spot in terms of dollar value of imports. We can only surmise that some domestic buyers require the more demanding GOES materials only produced by the Japanese, and the Japanese may be more comfortable shipping a semi-finished product to the US market vs. actual grain-oriented electrical steel.

Imports for laminations for stacked cores remain small in comparison.

The Actual GOES M3 Price

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Renewables MMI® Holds Steady as Solar Prices Start to Resemble Reality

Renewables MMI® Holds Steady as Solar Prices Start to Resemble Reality

After months of rancorous trade battles, a funny thing happened to the crystalline silicon solar photovoltaic panel market. Prices in market leader Europe suddenly went up. For the first time in a decade.

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Prices for solar panels in the European spot market have risen by about 6% so far this year, according to pvXchange, a solar market consultancy based in Bremen, Germany.

Renewables_Chart_July-2015_FNLFlat is the New Up!

Our monthly Renewables MMI® doesn’t track panel prices per se, only the silicon raw material that goes into them, but still registered a value of 58 in July, on par with June’s value. Flat is the new up in this bearish commodity market.

Despite the modesty of the increase, it’s a huge turning point for European solar as the increase represents an abrupt reversal of historical trends. In 2011, the average price of a solar panel in Europe fell by nearly one-third compared to the previous year. In 2012, solar panel prices in Europe plunged by nearly another third. Just last year, the price of a solar panel in Europe fell by more than 14% compared to the previous year.

What’s even more astounding is that this increase could have been caused by the real price of silicon finally being quoted in a majority of European retailers. We have long lamented that government subsidies for both silicon exports in China and for local solar installation in destination markets have artificially eroded the price of silicon.

Tariffs to the Rescue?

A trade war was waged in the US largely between Germany’s Solarworld, Inc., and small Chinese manufacturers who received government support for silicon exports at home and possible kickbacks abroad from installers who specified their thin-film products over higher-quality silicon products from companies such as SolarWorld. The real price fight, though, was always in Europe where solar could make up 12% of power generation by 2030.

The European Commission renewed their own tariffs on Chinese silicon recently and it looks like those duties were finally enough to keep the cheap imports out of their markets. A robust European solar market is good news for silicon refiners and producers such as Solarworld as higher prices mean more profitability for them.

It’s too early to tell if this turnaround will ever be felt in the highly subsidized the US market, but it’s certainly a good sign.

The Renewables MMI® collects and weights 8 metal price points used extensively within the renewable energy industry to provide a unique view into renewable energy metal price trends over a 30-day period. For more information on the Renewables MMI®, how it’s calculated or how your company can use the index, please drop us a note at: info (at) agmetalminer (dot) com.

Renewables MMI®: Solar Silicon Price Jumps, Tariffs Finally Working?

Renewables MMI®: Solar Silicon Price Jumps, Tariffs Finally Working?

Silicon is essentially sand. But for use in semiconductors and solar panels it needs to be refined to a purity of 99.99999 %. This makes the second-most abundant resource in the world a commodity as its availability is limited by worldwide refining capacity.

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We have long lamented the trade war going on over refined silicon over the last few years. Big companies such as German-based multinational Solarworld, Inc., want higher prices, saying their panels are of higher quality than those offered by smaller, mostly Chinese, producers.

US Factory Capacity Increasing

Installers in US markets are reaping a windfall by using the cheaper panels for installations that are subsidized by states such as California and the low cost of the cheap imports. While it was kind of funny to see Solarworld wrap itself in the flag when it successfully petitioned the Commerce Dept. for tariffs on Chinese panels, and then Chinese silicon, itself, Solarworld has simultaneously stepped up its US presence and seems to be willing to fight for the US market.

Meanwhile, Elon Musk’s SolarCity, an entirely American-owned operation, is building a massive $5 billion
“gigafactory” in Buffalo, NY. When the silicon solar panel factory is completed and running full-tilt (projections within two years), it will be the biggest solar panel plant in North America. To run at full speed, the plant will need an elaborate network of suppliers and service firms to support it.

Is Domestic Demand There Yet?

Is there enough solar demand for companies like SolarCity and SolarWorld to get their prices increases AND see sales grow? A significant price spike in silicon in the renewables MMI this week is certainly a step in the right direction. The tariffs placed on Chinese panels and silicon seem to be having the desired effect, as well. The European Union renewed similar duties this week, essentially stifling Chinese exports to the West with high tariffs in both markets.

Price Drops While High-Grade GOES Faces a Supply Shortage, Anti-Dumping Duties

As reported last month, the European Commission had not released the provisional dumping margins on US GOES producers along with producers from Russia, China, Japan and Korea. However, those provisional duties have since been released ranging from 21.6% to 35.9%.

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Eurofer, the European Steel Association subsequently released a second press release on May 28, defending the European steel producers against a backlash of criticism from manufacturers and buying organizations. And whether or not you “buy” the Eurofer arguments supporting the claims, we have direct evidence here in the US of what happens when buying organizations face higher prices – they adjust their supply chains!

Manufacturers Moving

In the US case, these electrical power equipment manufacturers moved their operations to more favorable manufacturing locations (e.g. Mexico and Canada). Check out the latest import data from Zepol in terms of the growth of that market:

[caption id="attachment_70218" align="aligncenter" width="550"]GOES_chart_060115 Source: Zepol[/caption]

Regardless, trade cases remain the headline story for grain-oriented electrical steel.

New Anti-Dumping Allegations

Six US steel producers filed an anti-dumping case against China and other countries for galvanized, aluminized and galvalume products as well as pre-painted steels. And though this case does not include GOES, the flood of steel imports has everybody screaming anti-dumping.

Nobody doubts the world faces a glut of steel. Of course the grain-oriented electrical steel market behaves differently from other steel markets where some segments of the GOES market remain in an over-supply situation and the high performance end of the market faces a global supply squeeze.

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And therein lies the rub – domestic M3 prices have dropped from last month.

Renewables Fall to a New Low as Rare Earths, Silicon Support Fades

The renewables market lost ground again this month, going from being an unspectacular but steady market to just an unspectacular one. It’s even now from the range it had been hovering in since last November.

Renewables_Chart_June-2015_FNL

The monthly Renewables MMI® registered a value of 58 in June, a decrease of 3.3% from 60 in May.

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What’s concerning is that while we certainly didn’t expect renewables to break out and hit new highs this year, they’ve actually lost significant ground compared to late 2014 when the range hovered between 60 and 70. 58 is a new all-time low. We can only chalk this drop up to more incentives for end-use products using silicon in the solar market and the overall weakness in the rare earths market for neodymium.

In California this month, a state cap-and-trade program is now giving away crystalline silicon photovoltaic panels to low-income homeowners. While this will certainly help adoption, it won’t do any favors to companies such as SolarWorld, Inc. which are trying to bring prices of the panels, and silicon itself, up to achieve higher profit margins.

Silicon will also inevitably feel the pinch from a wave of mergers in the semiconductor industry that will force the involved companies to adopt better procurement and lean operations principles.

The more interesting renewable market is that of grain-oriented electrical steel. While the US GOES price actually went up this month, the GOES M3 price, a much better indicator of actual purchasing activity, went down. More on that tomorrow.

Renewables MMI®: California Tries Giving Away Silicon Solar Panels

Thanks to fees from its state cap-and-trade law, Northern California homeowners will soon start receiving completely free crystalline silicon photovoltaic solar panels.

Why Manufacturers Need to Ditch Purchase Price Variance

Oakland nonprofit Grid Alternatives is using $14.7 million raised through the state’s cap-and-trade system to install the panels in lower income neighborhoods for free. The fees were paid by industries whose emissions exceeded the state “cap” set by the new law. The fees were donated by state to Grid and the money came out of the Greenhouse Gas Reduction Fund (GGRF), also established by the cap-and-trade law.

Silicon was the biggest mover this week on our renewables MMI, as well.

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