Aluminum

merger and acquisition

bas121/Adobe Stock

This morning in metals news: U.S. Steel today announced it will acquire the remaining equity of Big River Steel for $774 million; meanwhile, the U.S. steel sector’s capacity utilization rate for the week ended Dec. 5 reached 71.4%; and, finally, the Aluminum Association recently penned a letter to Secretary of Commerce Wilbur Ross criticizing the Section 232 aluminum exclusion process.

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U.S. Steel to acquire remaining equity of Big River Steel

U.S. Steel announced today it will acquire the remaining equity in Big River Steel for $774 million.

“For months, I’ve said that we can’t get to the future fast enough. Today, I can say the future is now. We are acquiring Big River Steel, the cornerstone of our ‘Best of Both’ strategy,” U.S. Steel President and CEO David B. Burritt said in a release. “With Big River Steel, we can offer customers the high performance, innovative steel products they expect from U. S. Steel’s scientists and application engineers made through a state-of-the-art, environmentally sustainable and efficient mini mill process.”

Steel capacity utilization reaches 71.4%

Meanwhile, the U.S. steel sector posted a capacity utilization rate of 71.4% during the week ended Dec. 5, the American Iron and Steel Institute (AISI) reported.

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electric car battery

Electric car lithium battery pack. (Nischaporn/Adobe Stock)

In the coming months, metal prices could be buoyed by policies of the next U.S. presidential administration, Reuters reports.

President-elect Joe Biden plans to spend $2 trillion on infrastructure and promote green policies, which require the use of more batteries and solar panels — both of which rely heavily on metals.

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Aluminum

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This edition of week in review will also include a preview. MetalMiner’s Monthly Metals Index kicked off Thursday with a look at aluminum, and the MMI series will continue with an examination of developments in the copper market on Monday, with posts about steel, construction, automobiles and other MMI topics to follow.

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Week of Nov. 30 to Dec. 4

Now, let’s look at some of this week’s coverage from MetalMiner’s Stuart Burns, Christopher Rivituso, Sohrab Darabshaw and Fouad Egbaria:

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This month the Aluminum Monthly Metals Index (MMI) rose by 7.9%.

aluminum price breach

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Aluminum prices continue uptrend

During November, LME aluminum prices increased by 10.9%, closing at $2,023/mt. This means that since its April low, the price recovered 38.5% and even reached a two-year high.

The price increase appears supported by a few factors:

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As the World Bureau of Metal Statistics (WBMS) will tell you, the global aluminum market reached a surplus of 1,603 kt in the January to September 2020 period.

That tripled the surplus of 480 kt recorded for the whole of 2019.

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Global aluminum market sees rising production

Production continued to rise in China. In addition, production made a strong comeback in North America, where it rose 4.3% year over year, according to Capital Economics, largely due to the recovery of Alcoa’s Becancour smelter in Canada.

Chinese output grew 3.8% to nearly 31 million tons in the January to October period. Even so, demand still outstripped supply. The country imported some 766 kt of primary metal, according to Reuters.

Despite Chinese demand — or maybe because of it — an estimated 3.2-million-ton global surplus will build this year, according to CRU estimates. Some 2.9 million tons of that tonnage will occur outside of China.

Aluminum stocks and demand

Yet if ever there was an example of how exchange stocks are no indication of demand, LME inventory levels actually fell this year (down by 53 kt so far).

Surplus production has a way of disappearing off the radar in the aluminum market. The stock and finance trade soaks up excess production and profitably stores it away on the back of a strong LME forward price curve.

The portion that is visible via the LME’s off-warrant reporting structure doubled from 730 kt in February to 1.56 million tons by September. That figured has continued to climb since.

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As we noted yesterday, aluminum prices have continued to rise — this in spite of increasing global aluminum production.

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Global aluminum production rises 3.5%

According to the latest data from the International Aluminum Institute, global aluminum production rose 3.5% in October from the previous month.

October output reached 5.59 million metric tons, up from 5.40 million metric tons in September.

Global aluminum production rose 4.5% year over year from 5.35 million metric tons in October 2019.

China output chugs along

Meanwhile, aluminum production in China totaled an estimated 3.23 million metric tons in October, up from 3.13 million metric tons the previous month.

Furthermore, China’s production reached 2.98 million metric tons in October 2019.

Despite gains in output, the aluminum price has continued to rise. Since the LME three-month price’s April trough, aluminum is up 37%.

As MetalMiner’s Stuart Burns explained last week, China’s metals demand has supported prices this year, even as other economies are not quite as far along in their respective economic recoveries.

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aluminum price

Grispb/Adobe Stock

This morning in metals news: the LME three-month aluminum price has continued to rise in the leadup to the Thanksgiving holiday; Rio Tinto signed a new agreement to strengthen its partnership with China’s Tsinghua University; and, lastly, New York state is one of the U.S. leaders in renewable energy generation.

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LME three-month aluminum prices gains

Like other metals, the LME three-month aluminum price has showed significant upward momentum this year.

The LME-three month aluminum price closed last week at $1,995 per metric ton. Aluminum is up 8.22% from the previous month.

Furthermore, since its April trough, the price has increased 37%.

Rio Tinto strengthens partnership with Tsinghua University

Miner Rio Tinto announced it is strengthening its partnership with China’s Tsinghua University.

The firm said it is committing an additional 30 million yuan ($4.5 million) over the next five years to support research projects at the Tsinghua-Rio Tinto Joint Research Centre for Resources, Energy and Sustainable Development.

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This month the Aluminum Monthly Metals Index (MMI) rose by 3.5%, as the aluminum price made gains in October.

November 2020 Aluminum MMI chart

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Aluminum prices and demand increase

The LME aluminum price reached a 17-month high on Oct. 16 at $1,863.50/mt. The price has increased over 27% since its pandemic low of $1,459.50/mt. Prices dropped the last week of October but have since recovered sharply.

The aluminum price continues to rise along with demand.

According to the JP Morgan Global Manufacturing PMI, global manufacturing activity increased to 53.0 in October. The October reading marked the PMI’s best in 29 months. In the the North American market, the U.S. and Canada saw increases in new orders and production, along with Germany.

In Asia, manufacturing rose rapidly in China, India and South Korea.

The recent sharp increase in coronavirus cases — and consequent lockdowns — could be a risk to the improving manufacturing sector, particularly in Europe.

In the manufacturing sector, aluminum is used for construction, packaging and transport.

Strong demand in China

China continues to show signs of strong aluminum demand.

Unwrought aluminum and aluminum product imports remained high at 355,999 metric tons during September despite decreasing compared to 426,469 metric tons in August.

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hot rolled steel

niteenrk/Adobe Stock

This morning in metals news: the U.S. steel sector’s capacity utilization rate for the week ended Oct. 31 jumped to 70.4%; Cleveland-Cliffs said the Trump administration will take action under Section 232 vis-a-vis imports of laminations and imported grain-oriented electrical steel (GOES); and, finally, the LME three-month primary aluminum price picked up to start the week.

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.

Steel capacity utilization rises to 70.4%

The U.S. steel sector’s capacity utilization rate continued to make incremental gains last week, according to the American Iron and Steel Institute (AISI).

U.S. steel mills tallied a capacity utilization rate of 70.4% during the week ended Oct. 31, up from 69.7% the previous week.

Production during the week ended Oct. 31 reached 1.56 million net tons, up 1.0% from the previous week. The weekly total, however, marked a 13.7% year-over-year decline.

Cleveland-Cliffs praises Trump administration for Section 232 action

Earlier this year, the Trump administration launched a Section 232 probe covering laminations and wound cores.

On Monday, Cleveland-Cliffs praised the Trump administration, saying it planned to take action using Section 232.

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aluminum price

Grispb/Adobe Stock

This morning in metals news:

  • The aluminum price retraced this week
  • General Iron is building a new metal shredding home in Chicago
  • Finally, the United States Geological Survey (USGS) reported estimates on undiscovered Gulf Coast Basin oil reserves

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.

Aluminum price falls below $1,800/mt

The LME aluminum price closed Thursday at $1,795 per metric ton.

The price reached a 2020 high earlier in October, touching just over $1,863 per metric ton.

Meanwhile, the LME three-month price reached a 2020 low in early April, reaching around $1,460 per metric ton.

General Iron begins construction on new Chicago home

General Iron has started construction on its new metal shredding home in Chicago, the Chicago Sun-Times reported.

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