Tag: Humor

Week-in-Review: Don’t Get Trampled By This Bull Market

Week-in-Review: Don’t Get Trampled By This Bull Market

Zinc, lead and tin all hit multiyear highs this week and the Organization of Petroleum Exporting Countries finally agreed on a production — with its own members and Russia — to cut back production so oil prices are up, too.

MetalMiner Price Benchmarking: Current and Historical Prices for the Metals You Buy

We were already in a metals and commodities bull market before the beginning of the week but it’s now more like a bull stampede. They’re even running in India. Lead Forecasting Analyst Raul de Frutos notes that this bull market is particularly unusual because it coincides with a strong U.S. dollar. Since commodities are valued in dollars it’s odd that they’re both up — and rising — at the same time.

MetalMiner co-founder and editor-at-large Stuart Burns also chimed in with vexing information, noting that tin is up while there seems to be abundant to robust supply of the stuff in the Earth’s crust with stable nations and reliable companies set to mine it.

[caption id="attachment_82202" align="aligncenter" width="550"]Bulls stampeding in a Madrid sculpture Don’t get stuck under these guys in the rush to get into this market. Source: Adobe Stock/Kyrien.[/caption]

So, supply and demand aren’t fueling tin’s rise and that’s likely true for other metals as well. “New money,” as they say, is flowing into metal markets as investors are excited about Chinese construction demand and the prospect of a still nebulous $1 trillion infrastructure plan here in the U.S. China is, once again, driving the demand boat as the U.S. consumes only about 8% of commodities worldwide and the People’s Republic consumes the most.

So, metal bulls are driving the price surge truck more than following it. The dollar and commodities will have to part ways at some point, but which one will fall? And when? We’ll let you know as soon as any credible signs form.

More Countries Hit With Steel Plate Duties

Meanwhile, more anti-dumping duties got imposed on imports of foreign cut-to-length steel plate, this time Brazil, Turkey and South Africa. Some of the dumping duties are as high as 94%.

It was an equally bad week for the U.S., though, when it comes to international trade. A subsidy paid by Washington state in the form of tax breaks to Boeing for keep an assembly plant there was found to be a countervailable subsidy by the World Trade Organization in an unusually high-profile dispute. The European Union rallied around Airbus in fighting the subsidy and appealed it all the way to the WTO. That pitted the powerful economic bloc and one its biggest corporations, Airbus, against an equally prosperous and powerful nation with just as many trade agreements in the U.S. and one its major employers, Boeing.

With President-elect Donald Trump promising to crack down on foreign corporations, illegally dumped products and jobs exported overseas, this could be just one of many future WTO spats where the big boy nations get out on the legal field and play rough. It was reported that Trump used the carrot of federal contracts, this week, to keep a Carrier plant in Indiana from taking its 1,000 jobs and moving to Mexico. Could such nudges be used as proof of subsidies in future WTO disputes? We’re about to set sail for interesting times.

We Love You, Free Trade! You’re Perfect… Now Change!

Welcome back to the MetalMiner Week-in-Review! As the week began we marveled at (and questioned) the latest GDP figures from China, as the People’s Republic is chugging along at 6.7% despite a slowdown pretty much everywhere else.

[caption id="attachment_81621" align="aligncenter" width="550"]Is it time to exit free trade pacts? Free trade, what is it good for? Source: Adobe Stock/Argus.[/caption]

This happened even as we received yet another warning that global steel overcapacity, particularly production in China, must change. This strange dichotomy of demanding that China change while also relying on her for growth to bolster the global economy seemed to haunt our coverage like a particularly effective Halloween ghost this week.

Anti-Dumping Duties for Overproduced Products

There were final tariffs for welded circular steel pipe, some as high as 113%, this week. Then vanadium from South Korea got the same treatment.

Free Download: The October 2016 MMI Report

The world seems more protectionist every day. It’s not just the U.S. The European Union is coming very close to scuttling its long-term trade agreement with Canada, the European and Canadian Comprehensive Economic and Trade Agreement, over the objections of a regional government in the German-speaking Wallonia area in Belgium.

No Free Love for Free Trade

So our love-hate relationship with global trade continues. We need China and the Republic of Korea’s products, but we also need their markets for the finished products that U.S. and European manufacturers make. ThyssenKrupp AG found itself in a particularly rough place, recently, when it supported E.U. steel tariffs to protect its steel industry, while its other division that produces and sells elevators to foreign markets saw its products hit with the duties.

We Love You, Free Trade. You’re Perfect. Now Change.

Our own Stuart Burns wrote that, “Within any free trade agreement there are always winners and losers. When the government to government FTAs are negotiated and agreed, a balanced judgement is made as to whether the agreement has overall benefits for each party.”

MetalMiner Price Benchmarking: Current and Historical Prices for the Metals You Buy

With today’s 24-hour news and analysis cycle, never have more industries and stakeholders been able to KNOW who the winners and losers will be. It’s how a Wallonia can know that places such as Berlin and Ontario will benefit far more from CETA than it will. In the U.S., this would be akin to Western Pennsylvania getting a veto over NAFTA in 1994. Transparency is a good thing in trade and government but that transparent information can be a cudgel or a veto pen. You still can’t help but think, shouldn’t the potential winners have the same amount of votes as the potential losers?

Week-in-Review: Rising Prices and a Campaign We Hope Will Finally End

As oil prices flirted with $55/barrel this week, U.S. shale drillers expanded production and most metals saw their prices rise as energy and transportation costs went up, too. What a better week to report strong price increases in the October MetalMiner IndX? But it wasn’t all climbing prices.

MetalMiner Price Benchmarking: Current and Historical Prices for the Metals You Buy

The breakout metals star this year, zinc, has started to fall. Our own Raul de Frutos warns that it’s nothing to be worried about. Don’t expect zinc to turn bearish or anything. Meanwhile, in China, manufacturing provinces have found a way to curtail power costs, no matter what the price.

[caption id="attachment_81470" align="aligncenter" width="550"]Liquid Molten Steel Industry Why sell parts manufacturers boring ol’ formed products when you can sell them liquid aluminum that they can make into anything they want? Source: Adobe Stock/kybele.[/caption]

As MetalMiner co-founder Stuart Burns explained, Chinese aluminum smelters are taking advantage of close proximity to manufacturers there to make molten aluminum — no refiring — their, umm, hottest product.

Our coverage of China this week went beyond aluminum, too. MetalMiner Managing Editor Taras Berezowsky sat down with the American Iron and Steel Institute’s SVP and General Counsel, Kevin Dempsey about what China’s ambitions to achieve market economy status would mean to the U.S. steel industry. Dempsey was actually one of the attorneys who worked on China’s initial acceptance into the WTO. Yep, he’d know.

While AISI and the entire North American steel industry are staunchly against China achieving market economy status, they’re also very much for the North American Free Trade Agreement in its current form. No changes, they say. Sorry, Mr. Trump.

Free Download: The October 2016 MMI Report

We talked with AISI a lot this week. During the steel industry group’s media conference call this week, AISI President and CEO Thomas J. Gibson said the group 100% supports NAFTA, despite the protestations of the Republican Presidential Nominee and even unions such as the United Steelworkers. Only a few more weeks until we can all put this election behind us and people from Ohio can watch TV without being bombarded by campaign ads. Oh, you’re not alone, Ohio.

As Divorce/Brexit Looms, Both Sides Are Claiming the Wine Cellar

In a hilarious article, the Financial Times likens British government officials eying up of the European Union’s assets to divorce lawyers circling their client’s ex-half’s possessions in an attempt to secure the best settlement.

MetalMiner Price Benchmarking: Current and Historical Prices for the Metals You Buy

In the case of the E.U., the claims are substantial, the paper contends. Any exit deal must settle complex liabilities including the U.K. share of guarantees on €60 billion of Eurocrat pensions and almost €20 billion of European Investment Bank loans. At a minimum, the U.K. will continue to pay into the E.U. budget until it leaves in the Spring of 2019, but Brussels is pressing the payments to continue long after 2019, saying commitments to fund projects with longer dates should be honored.

[caption id="attachment_81311" align="aligncenter" width="550"]AdobeStock_martialred_brexit_550_100816 Divorce/Brexit can be so hard… especially dividing up your stuff! Source: Adobe Stock/MartialRed.[/caption]

Apart from snapping shut the checkbook, you might think the U.K. doesn’t have a whole lot of leverage… not so, U.K. officials say!

They are lining up a list of assets they say the U.K.’s financial contributions over 42 years have helped build up. In total, they may not go anywhere near meeting the financial value the E.U. is claiming the UK meets, but they may have far more significance for the E.U.’s politicos than mere taxpayer money.

Who Gets to Keep the Fancy Wine? And the Art?

At the top of the list is claiming a share of the E.U.’s 42,000-bottle cellar of wine, cognac and other spirits, a share of its art collection and its $9.7 billion (€8.7 billion) property portfolio. Just working on the basis that Britain makes around an eighth of net E.U. budget contributions, the paper claims would cover roughly 5,000 bottles of fine wine, 250 bottles of spirits — including the finest French cognac no doubt—, and $2.5 million (€2.25 million) worth of art from the European Parliament’s collection. That would leave a few blank walls.

The U.K. is also and around $11.16 million (€10 million) from the book value of the European Court of Justice building, all likely to really upset Brussells’ notorious high rollers. What, no aluminum stockpiles?

The E.U.’s official property list is huge. Along with extensive properties in Luxembourg and Strasbourg, the E.U. maintains a network of agencies, delegations and offices around Europe, with prized buildings such as its Paris representation on Boulevard Saint-Germain. Duplicating embassies and diplomatic offices long held by its member countries around the world, the E.U. has built its own network of more than 300 properties in 138 countries. A fifth of which are owned by the bloc and hence, technically, an asset the U.K. could demand a share of.

Spirits of Brexit

But it is the wine and spirits cellar that may prove the most difficult for the E.U. Council’s president Jean-Claude Juncker to stomach. His reputation for liking a glass or five of the fine stuff is legion, so much so that highly regarded Dutch finance minister Jeroen Dijsselbloem, President of the Ecofin Eurogroup of finance ministers, is said to have been twice blocked by Juncker from a role as an E.U. commissioner because he once let slip that Juncker is an “inveterate drinker” and called into question his suitability for the role.

Two-Month Trial: Metal Buying Outlook

If there is one skill set we Brits are well respected for it is the depth of legal expertise in the City of London. With the imminent loss of the European market staring them in the face, you can bet the sharpest and brightest among the square mile’s lawyers will be lining up for a piece of Britain’s divorce battle with Europe. Bring on the Chateau Laffite!

Week-in-Review: Metal Warehouse Shenanigans Return

Week-in-Review: Metal Warehouse Shenanigans Return

This week, the ugly issue of metals sitting around in a warehouse and warranted owners possibly losing out on profits from their metals due to long load-out queues returned.

Free Download: The June 2016 MMI Report

U.S. investors swung and missed with a lawsuit over aluminum wait times against several banks who also trade metals, but now they’ve seemingly hit paydirt with a similar lawsuit over zinc storage. Glencore‘s Pacorini warehouse operations business will have to defend the suit as there are seemingly falsified documents at the center of the gripes from customers.

Unlike our previous coverage of warehouse shenanigans, the Pacorini lawsuit has little to do with premiums. In fact, premiums have been acting remarkably normal this year. My colleague, Stuart Burns, explained how London Metal Exchange policies and simply better performance has reduced the queues almost everywhere.

Nope, the zinc lawsuit deals with falsified orders designed to conceal when and where metal entered the warehouse complex.

Two-Month Trial: Metal Buying Outlook

While premiums are, mercifully, now acting more normally, some unexplainable market weirdness continues. The LME warehouse in Vlissingen, Netherlands, is behaving as oddly as ever. After dropping to “just” 116 days in February it has since ballooned out again to 336 days following the cancellation from warrant of 656,000 mt in late March and April.

Perhaps, warehouse shenanigans are here to stay.

Week-in-Review: British Steel and Heavy Metal, a Love Affair Rekindled

This week saw the return of British Steel, thanks to a sale of some of its U.K. Assets by Tata Steel to Greybull Capital. British Steel is back, and it’s not just one of the greatest steel company names, but also the title of heavy metal band Judas Priest’s best-selling album.

Two-Month Trial: Metal Buying Outlook

1980’s “British Steel” brought us Rob Halford-sung anthems such as “Living After Midnight,” “Breaking the Law” and “Metal Gods.” It’s one of many albums that takes a bit of a narrow view of the musical term heavy metal in specifying steel as the metal it pays tribute to.

[caption id="attachment_79100" align="aligncenter" width="550"]CBS_British_steel_550_060316 Greybull Capital and CBS Records should seriously get together and work on a new logo. Album Cover Image: CBS Records.[/caption]

That got us at the MetalMiner week-in-review thinking: What other great heavy metal bands, albums and songs celebrate steel? Or were inspired by it? There’s certainly glam-rock tribute band Steel Panther.

Steel Towns and Heavy Metal

All of the original members of Def Leppard famously hail from the then-steel-producing town of Sheffield, England. Sweden brought us, simple and to the point, Steel.

Halford’s replacement in Judas Priest from 1996 to 2003, Chris “Ripper” Owens hails from renowned steel town Pittsburgh, Pa. ’80s Pittsburgh also brought us the story of a certain welder/dancer. Owens also played in a Judas Priest tribute band before being selected to replace Halford. The entire story was fictionalized in the Mark Wahlberg film “Rock Star.” The name of that cover band? Yep, British Steel.

Free Download: The May 2016 MMI Report

The relationship between steel and heavy metal is still strong. So good to have British Steel back. Here’s to hoping some enterprising musicians find a way to work it into their songs.

Week-in-Review: Oil Prices Up, So is Silver; Circular Aluminum Firing Squad Forms

Week-in-Review: Oil Prices Up, So is Silver; Circular Aluminum Firing Squad Forms

This week we saw oil prices climb back above $40 a barrel and that triggered higher prices for most of our metals, too.

Free Download: The April 2016 MMI Report

There’s a big meeting of the Organization of Petroleum Exporting Countries this weekend and all signs point to a continued freeze in production, at least among major producers Russia and Saudi Arabia so many speculators and market watchers are becoming bullish on oil. Oh, how quickly they turn!

Oil and Inflation

A direct knock-off of this oil mini surge is price inflation of everything that oil is used to produce, whether as a base material or for transport and production costs. What’s our favorite industrial metal that also has investment potential and is still considered so downright precious?

That’s right, silver! Despite being mined with just about every other metal in the world silver is still a precious metal and its industrial uses combined this week with investors grabbing it up to create a sweet spot for the gray metal. As of this writing it’s riding a 10-month high and looking to gain even more.

Aluminum Still Lags

However, not all metals are enjoying a healthy rebound. Alcoa, Inc. reported first quarter results this week and things weren’t so good for the aluminum smelter. How bad was it? Profits fell 92%. So, yeah, pretty bad.

Our own Stuart Burns put virtual pen to paper and explained that, thanks to Chinese overproduction and stockpiling, smelting aluminum simply isn’t a good business to be in right now. He even called it “an industry on the cusp of shooting itself in the foot.”

Free Sample Report: Our April Metal Buying Outlook

If there’s a better example of why Alcoa will soon split itself into two and CEO Klaus Kleinfeld will join the new aerospace, titanium and value-added products half, I haven’t seen it.

Copper Loses All its Gains

My colleague Raul de Frutos also examined why copper has underachieved this year, even amidst the Q1 base metals rally. Dr. Copper is apparently only starting on the back nine and didn’t do any real work in Q1. We’ll monitor the situation with the rest of the base metals in Q2.

Week-in-Review: Steel Prices Rally, Shutdowns and Anti-Dumping Actions Continue

Week-in-Review: Steel Prices Rally, Shutdowns and Anti-Dumping Actions Continue

This week saw metal prices, particularly hot-rolled coil and cold-rolled coil steel, rally even as major steelmaker Tata Steel announced it was abandoning the U.K. market because of regulations and low prices.

Free Download: The March 2016 MMI Report

Markets can sometimes appear paradoxical that way. Steel-Insight’s James May elaborated that it’s actually curtailed supply that has helped prices increase here in the U.S. Bye, bye, oversupply!

Steel Prices Rally, Speculators Arrive

Another factor, at least for steel ingredient iron ore, was more trading activity in China as investors are looking for short-term returns rather than investing in iron ore long-term there.

[caption id="attachment_77830" align="aligncenter" width="550"]This steel plant at Port Talbot in South Wales, U.K., could close if Tata Steel can't find a buyer. Even as steel prices increased last week. Source: Adobe Stock/Petert2 This steel plant at Port Talbot in South Wales, U.K., could close if Tata Steel can’t find a buyer. Even as steel prices increased last week. Source: Adobe Stock/Petert2.[/caption]

Back here in the U.S., steelmakers are cautiously increasing prices of rebar and other products as the construction season begins in earnest in the East and Midwest, testing the waters of recent commodity price increases.

So, speculative buying, price increases despite demand levels that are still relatively flat and more supply shutdowns are all happening. Is it any wonder that Barclays is warning investors that commodities, overall, could experience a “rush for the exits?”

They’re not the only ones saying Q2 could be bad, either. Our own Raul de Frutos wrote that markets could change direction, big-time, in the next quarter.

Anti-Dumping 2: Electric Boogaloo

It also wouldn’t be a day ending on y, these days, either without mentioning dumping, dumpling. Was that too friendly? Sorry.

Free Sample Report: Our March Metal Buying Outlook

My colleague, Raul, explained the effects anti-dumping duties have had on hot-rolled coil, cold-rolled coil and hot-dipped galvanized steel prices here in the U.S. Another investigation into phosphorous copper from South Korea was opened this week, too.

If you wanted an eventful week in steel, you got it.

Week-in-Review: Market Turmoil! Negative Interest Rates! No Need to Panic

Week-in-Review: Market Turmoil! Negative Interest Rates! No Need to Panic

This week, the Bank of Japan introduced negative interest rates in the latest attempt to goose the Pacific nation’s stalled economy.

Free Sample Report: Our February Metal Buying Outlook

Essentially penalizing people for saving money seems like a curious thing to do to try to turn around a struggling economy, but it’s not the first time banks have gotten a push to force them to lend. The European Union has done it, too, in recent memory.

[caption id="attachment_75928" align="aligncenter" width="550"]Shorter supply chains for in-demand products could benefit retailers around the holidays. Source: Adobe Stock/cacaroot. Boy does Toyota Motor Corp. ever wish it had a bigger supply chain this week. Source: Adobe Stock/cacaroot.[/caption]

My colleague and metal price analyst Raul de Frutos wrote that, “negative interest rates mean that depositors must pay regularly to keep their money in the bank. This measure encourages people and businesses to spend, invest and lend money rather than pay a fee to save it and keep it safe.”

Let’s extend this argument to the bearish metals markets. In the spirit of negative reinforcement, why not some negative storage rates from warehouse operators and other metal owners just sitting on low-value stock hoping they can one day sell it for what they paid for it?

Many of our commenters, particularly in the scrap markets, have shared stories about sitting on their metal until things improve.

[caption id="attachment_75243" align="aligncenter" width="550"]I am the oversupply. Fear me. What about penalties for storing metal and not selling it? Such as the penalties the Bank of Japan is imposing on depositors? What’s good for the goose… Source: iStock[/caption]

“Small, very small recycler. Storing my supply in a pole barn that is getting very full. Won’t take it in until at least a $100 a ton. Right now in Kansas City (it’s) about $40 a ton,” wrote MetalMiner commenter Patrick Cooney in December.

It, somehow, seems to me that punishing the small recyclers and, in the case of Japan, smaller depositors just trying to save won’t have the desired effect, but we’ll leave this to the experts. If rumors are to be believed, even the Federal Reserve is interested in negative rates.

The Fabled Commodities Turnaround

There might be some good news for metal producers and surplus owners later this year, anyway, as Reuters is predicting most metals will hit bottom this year.

My colleague and MetalMiner Co-Founder Stuart Burns wrote, “Indeed, the median view is copper prices could fall further in the first quarter with an average of $4,512.50 per mt with recovery only coming later in the year and into next. Others such as nickel, zinc and tin have more upside and could start to move by the second quarter, but Reuters was at pains to point out that it’s generally going to be a long, hard grind and consumers are not in danger of a sudden and dramatic market rebound.”

Hmmm, long and hard grind. Maybe that’s not such good news, after all.

Toyota Could Use Some Supply

But if metals, particularly high-grade steel, are so oversupplied then why is it entirely possible that the world’s best-selling automaker, Toyota Motor Corp., could conceivably run out of the stuff after an explosion at one of its suppliers’ plants earlier this week?

Isn’t steel just sitting around waiting for the taking? Does Toyota know about Patrick? Can we make some introductions?

MetalMiner Co-Founder and Executive Editor, Lisa Reisman and Spendmatters Chief Research Officer Pierre Mitchell wrote that Toyota’s revered production system, “does help drive out waste and improve product quality. Yet it’s “necessary but not sufficient” in running an end-to-end supply chain.”

There are also 5 good lessons to learn from Toyota’s troubles in that SpendMatters post. Lessons about managing your own supply chain.

So, after another chaotic week we caution metal buyers to remember that the sky isn’t falling. No matter what the Fed does. Toyota might have some supply chain problems, but cars and trucks will eventually get built. Japan will keep throwing growth-spurring ideas at the wall until something finally sticks. No matter where prices go, we’ll be here to help you make sense of them with products such as our comprehensive industrial metals outlook and the new Metal Price Report, which arrives next week.

Free Download: The January 2016 MMI Report

We’re here for ya, buyers and procurement professionals. Always.

Week-in-Review: How to Battle Cheap Steel Imports? Ban Them!

Week-in-Review: How to Battle Cheap Steel Imports? Ban Them!

This week in metals, the US Census Bureau reported initial numbers for imports of steel into the US last year.

Free Download: The January 2016 MMI Report

The finished steel import market share was an estimated 26% in December and is estimated at 29% for the full year. If the 29% figure holds up, it will be a record for the proportion of finished steel imports coming into the US from elsewhere in one year.

[caption id="attachment_74797" align="aligncenter" width="550"]How to combat steel imports? Why not just ban them all? How to combat steel imports? Why not just ban them all? Source: Jeff Yoders[/caption]

For all of 2015, US steel production hit 86,843,000 net tons, or about 71% of capacity. That’s down 9.3% from the 95,706,000 net tons in 2014 when the industry ran at nearly 78% capacity.

As anti-dumping measures continue to address cheap imports, particularly from China, one bold US Representative has stepped forward with a radical plan. Banning all Chinese steel imports. All of them. For five years.

Rep. Rick Nolan (D-Minn.) represents Minnesota’s iron range, a major iron ore producing region, and he calls for a five-year ban on all steel imports. The federal government currently imposes 157 anti-dumping and countervailing tariffs against foreign-made steel, but they’re often too low, and the trade agreements are too riddled with loopholes for them to matter, Nolan argues.

Not much of a free-trader, is he?

Still, most key finished steel products saw significant import increases in December compared to November. Wire rod was up 77%, tin plate was up 71%, cut-length plates were up 65%, heavy structural shapes were up 46%, hot-rolled bars were up 20% and cold-rolled sheets were 19%. Major products with significant import increases in 2015 vs. the prior year include rebar were up 38% and standard pipe were up 13%.

Imports Killing EU Steel, Too

In the EU, the problem with the reaction to cheap imports is the exact opposite of Nolan’s radical 100% ban. My colleague, Stuart Burns, writes that the questions is whether EU politicians have the stomach for a fight with China over steel imports.

Burns also wrote that Europe suffers from some of the highest power and environmental costs in the world “as politicians try to outdo each other with their green credentials.”

We in the US aren’t immune from such politicians and regulations. The EPA seeks to put similar conditions on energy providers with its Clean Power Plan. States asked the Supreme Court to stay the new rules, which would require utilities and power plants to reduce production of greenhouse gases which the White House says contributes to climate change.

The rules are in effect, right now, as 29 states challenge them in court.

Oil Back Over $30

The goal of reducing our dependence on fossil fuels such as oil, natural gas and coal is certainly a laudable one, but the problem that plagues many utilities and power companies is that their grids still aren’t set up to save and transmit power from renewable sources such as solar and wind.

Free Sample Report: Our January Metal Buying Outlook

Low oil prices are not encouraging a faster change-over, either. Of course, oil climbed back above $30 a barrel this week so, perhaps, peak oil is closer than we’ve been led to believe.

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