When the Department of Commerce announced  last month that Secretary of Commerce Wilbur Ross had forwarded his Section 232 steel report (and the following week, aluminum) to President Donald Trump, the details of the report were not made public.

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That changed Friday, as the department released the reports outlining the potential strategies recommended to Trump (who met with lawmakers earlier this week to discuss potential tariffs on steel and aluminum imports).

“The United States is the world’s largest importer of steel,” Ross said during a briefing Friday morning. “Our imports are nearly four times our exports.”

Section 232 of the Trade Expansion Act of 1962 grants the president authority to limit or restrict imports that are determined to have an impact on national security. The last 232 investigation came in 2001, when the George W. Bush administration investigated semi-finished steel and iron ore imports. (The Department of Commerce ultimately determined the imports did not negatively impact national security.)

The U.S. currently has 169 anti-dumping and countervailing duty orders in place for steel, which some critics have argued has served as only a patchwork defense. Of those 169 orders, 29 are against China, Ross added.

Laying the background for the proposals, Ross cited findings of the report, including the global rise in steelmaking capacity, which is up to 2.4 billion metric tons (a jump of 127% since 2000). In addition, global excess capacity is 700 million tons, with China’s excess capacity exceeding the total U.S. steelmaking capacity, according to the report.

“Excessive steel imports have adversely impacted the steel industry,” the report states. “Numerous U.S. steel mill closures, a substantial decline in employment, lost domestic sales and market share, and marginal annual net income for U.S.-based steel companies illustrate the decline of the U.S. steel industry.”

Steel Recommendations Include 24% Tariff on All Products From All Countries

The 232 steel report lays out a trio of options, ranging from a blanket, all-encompassing tariff structure to more targeted approaches:

  1. A global tariff of at least 24% on all steel imports from all countries
  2. A tariff of at least 53% on all steel imports from 12 countries (Brazil, China, Costa Rica, Egypt, India, Malaysia, Republic of Korea, Russia, South Africa, Thailand, Turkey and Vietnam) with a quota by product on steel imports from all other countries equal to 100% of their 2017 exports to the United States
  3. A quota on all steel products from all countries equal to 63% of each country’s 2017 exports to the United States

When asked how the department created the list of 12 countries included in the second option, Ross said the selection process wasn’t “formulaic,” but they considered things like the rate of expansion of capacity in recent years and the nature of the products being shipped to the U.S., among other things.

“Anything in trade is very, very complex,” Ross said. “And therefore [there’s] not a single factor. The  rate of increase in exports to the U.S. was in each case a big factor.”

Administration Looks to Provide Jolt to Aluminum Industry

As for aluminum, the three recommendations were:

  1. A tariff of at least 7.7% on all aluminum exports from all countries
  2. A tariff of 23.6% on all products from China, Hong Kong, Russia, Venezuela and Vietnam, with all other countries be subject to quotas equal to 100% of their 2017 exports to the United States
  3. A quota on all imports from all countries equal to a maximum of 86.7% of their 2017 exports to the United States.

According to Ross during a Friday morning briefing, the goal is to up the domestic aluminum industry’s capacity, currently hovering around 48%, to 80%. According to the aluminum report, the U.S. imported five times as much tonnage of primary aluminum as it produced in 2016, with the import penetration level rising to 90% from 65% in 2012.

As with steel, the aluminum report pointed to Chinese excess capacity.

“China’s industrial policies encourage development and domination of the entire aluminum production chain,” the report states. “These policies are further intended to stimulate the export of aluminum processed into sheets, plates, rods, bars, foils and other semi-manufactures and to target development of increasingly sophisticated and high-value product sectors such as automotive and aerospace.”

According to Section 232, Trump has 90 days as of receipt of Ross’ report to act. In the case of steel, that makes for an April 11 deadline, with an April 19 deadline set for aluminum.

The Section 232 investigations were launched last April, after which it seemed as if the administration would be set to release its reports by the end of June. But, June came and went without an announcement, as did the remainder of the calendar year. During that year, steel imports rose 15.4% year over year, according to American Iron and Steel Institute report citing U.S. Census Bureau data, leading some domestic industry figures to point out the delay’s impact on import levels.

Ross admitted that timeline was overly ambitious.

“We were a little bit over-optimistic about how quickly such a complicated topic could be brought to a head,” Ross said. “Government tends to move slowly. It’s one of the many lessons I’ve learned coming down here.”

The president does have the authority to revise any of the proposals and come to the table with a different policy solution.

“He will decide what he is going to do,” Ross said of Trump. “It’s not for me to speculate what action he might take. But I do reemphasize that he is not bound by these exact recommendations. He can do something totally different.”

In a release, Scott Paul, president of the Alliance for American Manufacturing, urged action.

“We believe the action must be broad, robust and comprehensive, and the Commerce Department report makes a compelling case for immediate action. Any exclusions deserve appropriate scrutiny. Otherwise, the Washington swamp will be filled with importers trying to undermine American jobs.

“American workers are counting on President Trump to stand up for them.”

In its own response to the release of the reports, the Aluminum Association reiterated past statements, chiefly to ask for a solution that specifically addresses China and does not harm market economy trading partners like Canada and the European Union.

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“We look forward to working with the president on a final decision that helps support continued growth in the U.S. aluminum industry,” said Heidi Brock, president and CEO of the Aluminum Association, in a prepared statement. “Ultimately, we favor a negotiated, enforceable government-to-government agreement with China on overcapacity.”

On the subject of retaliation and challenges to any potential trade action at the World Trade Organization, Ross pointed to other nations’ import barriers, citing the automobile tariffs among the U.S. (2.5%), E.U. (10%) and China (25%) as an example.

“There already are extreme protectionist measures,” he said. “I don’t believe there’s a country on the targeted list that we have that doesn’t have far more protective features on its industry than we do already.”

The full steel report is available on the Department of Commerce website, as is the full aluminum report.

The European Steel Association’s (EUROFER) recent steel market overview hailed 2017 as an “expansionary” year for the industry while also issuing positive sentiment about 2018 and 2019.

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The overview said apparent steel consumption in Q3 2017 rose 1.1% year over year in the European Union.

As for imports, it was a tale of two halves.

According to the report, imports rose 8% year over year in the first half of 2017. That reversed in the second half, however, and imports ultimately fell 14% for the year as a whole.

“This decline has occurred in the context of improving in global steel prices – largely driven by the Chinese market – which narrowed the gap between EU domestic prices and imports,” the Eurofer market overview states. “Other restraining factors include the moderation of imports, particularly from China, but also other countries affected by the imposition of anti-dumping and anti-subsidy measures by the European Commission. However, other third country suppliers have triggered increased exports to the EU, substituting for this drop.”

Eurofer estimated steel demand jumped by approximately 1.9% in 2017. The association indicated positive feelings that that upward momentum can continue in 2018 and 2019.

“Prospects for the continued recovery of EU steel demand are positive,” said Axel Eggert, director general of Eurofer. “The expected strength of most steel-using sectors bodes well for the demand side of the EU steel market. The supply side situation could, however, continue to be negatively affected by import distortions.”

Last year was an expansionary one for steel-using sectors, according to Eurofer, with notable growth in Central Europe, in particular.

“The outlook for 2018 and 2019 is positive, although activity in steel-using sectors will settle back into a more moderate pace of expansion owing to waning momentum in the tube sector and automotive industry,” the report states. “Underlying economic conditions remain supportive to a steady pace of expansion in other sectors.”

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The full market overview is available on Eurofer’s website.

India’s coal story is something that we at Metal Miner have tracked over the years. It’s no secret that of late, the world’s largest coal producer, Coal India Limited (CIL), has been facing some measure of criticism for not being able to meet certain targets.

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Now comes a document drawn up by the monolith itself which says CIL was “trailing global peers” in operating performance and technology adoption, while taxes & freight constitute 25% and 34%, respectively, of the cost consumers pay, undermining the monopoly’s competitiveness.

The document, titled “Vision 2030,” is quick to add that the cost structure of the Indian coal sector is still favorable and that cost of production is a concern for only about 10% of the output, according to the Economic Times.

CIL has pointed out that for coal transported over a distance up to 100 km, it received only 56% of the costs paid by consumers for procuring dry fuel. Taxes, duties and levies were about 34%, followed by freight at 10%. For transporting coal up to 500 km, Coal India received 41% of the total payments made by consumers while taxes, duties and levies constituted 25%, followed by railways at 34%.

CIL feels that although it produces coal at competitive rates, its own operating process was letting it down.

The report says there is a “significant gap” in productivity norms of similar class of equipment in mines in India and those around the world. For instance, similar class of shovels in international mines is operated 40-50% more hours annually than at CIL.

Coming at a time when the state-run miner reported a 4.21% increase in its consolidated net profit for the quarter ending December 2017, beating street expectations, “Vision 2030” seems like a wonderfully self-deprecating piece of writing and self-actualization.

Production during the quarter stood at 152.04 MT, up from 147.73 MT in the same period the previous year. The one thing that seems to have worked in its favor was earnings from e-auctions, although fuel supply agreement (FSA) realizations were a drag.

This is all very fine, but the vexed problem of not enough coal reaching many of India’s power plants remains.

An assurance by Indian Coal and Railways Minister Piyush Goyal that the thermal power plants’ demand for coal will be met by adequate supplies in the next financial year is supposed to suffice for now. The Power Ministry has demanded 615 MT of coal and 288 rakes for thermal power plants in the next financial year. As of February 11, there were 52 thermal units that had less than seven days of coal stocks, according to data from the Central Electricity Authority.

The minister’s optimism stems from the fact that they would receive speedier environmental clearances for expanding coal mines in India. The Union Government is said to be tackling low coal stocks in over 50 power plants in the country.

To be fair to CIL, the recent emergence of renewable energy as a viable key substitute, and the promises made under the Paris Agreement have eaten into its revenue. Imported coal as a viable substitute is another challenge the company faces. Incidentally, one of the stipulated aims of CIL’s Vision 2030 was to assess the future demand scenario for the coal sector in India up to 2030.

While talking about emergence of renewable energy as a key substitute for coal, the study specifically delves into the massive growth of the Indian solar sector in last two years.

The total capacity addition in solar over the last two years has been more than 8 GW, an increase of approximately 200% in the installed capacity. “Efficient use of materials, improved manufacturing process, improvement in cell efficiency, and decrease in prices of solar inverters and other ancillary parts in the electrical system are expected to continue driving the competitiveness of solar,” the study noted.

The study estimates that the regulatory framework for access and extraction of coal will continue getting stricter, leading to increases in the cost of compliance. In 2015, India migrated to auction as a mechanism for allocation of coal resources for extraction.

About 50% of CIL’s total production comes from 15 opencast mines with a total production of 279 MTPA (million tons per annum). Remaining 452 CIL mines produce only 274 MTPA, or approximately 0.60 MTPA per mine.

India’s coal sector is regulated at several levels with the central government, provincial governments and various local agencies involved in supervising the industry.

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Much of what CIL said in its report is true. Power utilities in India are said to be already scouting abroad for coal mines, with some having met with success.

In fact, on a recent visit, Poland’s Deputy Minister Marek Magierowski said his country’s expertise in mining, especially in coal, could help boost collaboration with India. Magierowski, who was in India for the Bangla Business Conference and the Raisina Dialogue, spoke about bilateral relations, Europe’s Russia problem and Poland’s Europe problem. The Minister also pointed out that for both nations, coal would remain important to their energy needs “despite the problems posed by regulations that have to comply with climate change.”

The automobile frequently comes in for criticism for its role in environmental pollution, not just in contributing to Co2 levels but more often for the output of carcinogenic particulate matter emissions, sulphur dioxide and nitrogen dioxide, all of which contribute to an estimated 29,000 deaths in the U.K., according to Public Health England, 200,000 in the U.S. and some 4.2 million globally.

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Concerns have driven a rapid migration from previously very popular diesel engines to petrol and hybrid in Europe. Up to now, little or no attention has been given to that other major component of the transport industry: rail.

Electrification in the EEA

At the point of use, 53% of the rail network in the 33 countries in the European Economic Area (EEA) are electrified, but concentrations vary, with some, like France, in excess of 80% and others only 40% electrified (as in the U.K.). Electrified lines create no pollution, at least in stations and for people living near rail lines, but diesel emissions can be unacceptably high within large, enclosed terminus stations.

London’s Paddington station (one of four major terminus stations serving London) serves 38 million passengers a year, according to a report by Railway Technology, yet it is only the seventh-busiest station in the U.K. Up to 70% of the trains using the station are powered by diesel; as a result, Paddington experiences peak emission far exceeding European recommendations.

For some bizarre reason, which probably has everything to do with political expediency, U.K. railway stations are not required to comply with air quality standards imposed by the E.U., despite the fact that 8 million passengers pass through them every day. This exemption may have something to do with the fact British rolling stock has a mean age of 18 years, meaning a sizable portion was deployed 11 years before E.U. emissions regulations Stage 111A/B, most recently updated in 2012, took effect, and is therefore exempt.

A Carrot-and-Stick Approach

Now many would argue rail, along with waterways, are some of the most environmentally friendly forms of transport we have. The report states they were the only modes that recorded an absolute decrease in energy consumption between 1990 and 2013 within the 33 member countries of the EEA.

Even so, change has been slow and the British government is not alone in seeking a carrot-and-stick approach to encouraging faster innovation and greater investment.

According to The Telegraph, article Britain’s Rail Minister Jo Johnson will announce a plan to drastically cut pollution on Britain’s rail network. Citing the switch automotive is making from diesel to cleaner fuels, the minister set an ambitious target of removing all diesel trains from U.K. tracks by 2040 and in their place he signaled his ambition to see a wave of environmentally friendly hydrogen trains. The first of those trains is expected to be trialed as early as 2021, while battery trains are already undergoing trials in the U.K.

Elsewhere in Europe

Germany has already signed a deal with France’s Alstom, Europe’s leader in hydrogen train technology to operate 14 zero-emission hydrogen trains in Lower Saxony, Germany. According to the Times, the Coradia iLint train can cover up to 620 miles at a time and reach a maximum speed of 87 mph.

Users are raising concerns about who is going to pay for the U.K. to upgrade from diesel to battery and hydrogen locomotives. Cost aside, this clearly represents a massive investment opportunity.

Setting the Table

With a government framework in place, manufacturers would be more willing to invest in facilities within the U.K. to meet the long-term upgrade demand; without clear guidelines, the industry is more likely to buy piecemeal from foreign manufacturers.

British governments of all colors have a habit of setting targets or voicing aspirations and then stepping back and letting the market get on with it. They seem not to learn that investors need a framework and timeframe to give them the confidence to invest.

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This time may be no different.

New research has shown that India achieved an operational solar power capacity of 20 gigawatts (GW) by the end of 2017.

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Mercom India Research has claimed a record 9.5 GW of solar power capacity was likely added in 2017, taking the total solar power capacity operational in India to over 20 GWs. While there’s no official word from the Indian government yet, media reports said the figure did not match those released by the Ministry of New & Renewable Energy, but Mercom attributed the figures to its India Solar Project tracker.

If the new research is spot on, it shows, at least on paper, that the Indian government was well on its path of meeting revised capacity targets of 100 GW of installed solar power capacity by March 2022.

India has made a major push in the renewable energy sector, but ,according to some experts, it faces an uphill task vis-à-vis funding, since the plan will require U.S. $125 billion. The plan seeks to achieve an ambitious 175 GW renewable energy target by 2022.

For the solar projects alone, India will set up a U.S. $350 million fund, according to India’s Power Minister RK Singh.

The country, which receives twice as much sunshine as European nations, wants to make solar central to its renewable expansion. It expects renewable energy to make up 40% of installed power capacity by 2030, compared with 18.2% at the end of 2017.

The Power Minister told a gathering at an event organized recently by the International Solar Alliance in Abu Dhabi that India would achieve its target of 175 GW of installed renewable energy capacity well before 2020. The installed renewable power capacity was currently about 60 GW, and India planned to complete the bidding process by the end of 2019-20 to add a further 115 GW of installed renewable energy capacity by 2022, he added.

But a major hurdle that stands in the way of solar power expansion is the policy around the manufacturing of solar panels and their import.

While the Modi government has often emphasized the need to do away with protectionism in order to push solar power, one of the government’s ministries has proposed a 70% import duty on imported solar panels. While this was subsequently stayed by an order of a high court, sector experts have decried this kind of protectionism.

This lot points to the U.S., for example, saying that the country levies a safeguard tariff on imported solar modules and cells, starting at 30% in the first year, 25% in the second, 20% in the third, ending at 15% in the fourth.  They want the Indian government, too, to follow suit.

The government, on its part, does not seem averse to this, it would seem.

A news report said it was “weighing the option” of lowering the proposed 70% safeguard duty on imported solar modules and panels from China and Malaysia recommended by the Directorate-General of Safeguards.

The Standing Board on Safeguards, headed by the Commerce Secretary, which is currently examining the proposal, is yet to make its recommendation to the Finance Ministry as it is deliberating upon the appropriateness of the high duty proposed by DG Safeguards, a government official told the BusinessLine newspaper.

The government has to walk a tightrope, on this issue. While domestic manufacturers of solar panels would definitely benefit from a high safeguard duty. On the other hand, it would increase the cost of production for local power producers.

Overall, on the renewable energy front, India expects foreign capital to make up for the bulk of its investments to meet its target. But the lack of a concrete policy coupled with the fact that at least three ministries involved never seem to be on the same page vis-à-vis renewable energy, has ensured that only local banks and financial institutions have invested in these type of projects so far.

Just a couple of days ago, though, there was some cheer on the foreign investment front.

One of China’s biggest solar panel makers, LONGi Solar, announced it would invest nearly U.S. $309 million in India in the wake of U.S. protectionism and India’s anti-dumping measures threat. The company’s total investment will include $240 million in construction investment and $68 million in working capital, to double the capacity in Andhra Pradesh from 500 MW to 1 GW.

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This could be the start of a new wave of investments, some experts hope. In 2017, India imported 24.1% solar products from China. China produced a total of 76 GW of solar modules and 68 GW of solar photovoltaic cells, up over 33% from the previous year. LONGi’s investment is expected to lower costs.

The Stainless Steel MMI (Monthly Metals Index) jumped four points again this month for a February reading of 75.

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In January, skyrocketing LME nickel prices drove the Stainless Steel MMI. Nickel prices have climbed above the $13,000/mt level. 304 and 316 surcharges increased this month, returning to their previous levels.

LME Nickel

Nickel prices increased sharply during January. However, prices decreased slightly in early  February. As reported previously by MetalMiner, nickel price volatility has increased over the past few months. Therefore, nickel prices may prove quite tumultuous from a short-term perspective and are trading within the orange-dotted band in the chart below.

Source: MetalMiner analysis of FastMarkets

The long-term nickel price uptrend also remains strong. Prices have moved toward June 2015 levels and already breached our October 2017 long-term resistance levels, as per our Annual Outlook. Therefore, nickel prices remain in a strong uptrend and could continue increasing in the coming months.

Domestic Stainless Steel Market

Following the recovery in stainless steel momentum, domestic stainless steel surcharges increased this month. Surcharges remain above last year’s lows (under $0.4/pound); they remain in an uptrend, even if their pace has slowed. However, buying organizations may want to look at surcharges closely to reduce risks, either via forward buys or hedging.

Source: MetalMiner data from MetalMiner IndX(™)

FerroChrome vs. Chrome Metal

Two months ago, MetalMiner reported on the anomaly between ferrochrome and chrome metal prices.

Source: MetalMiner data from MetalMiner IndX(™)

Ferrochrome (FeCr) is a chromium and iron alloy containing 50% to 70% chromium by weight. Historically, Ferrochrome and chrome prices correlate tightly but the high iron ore prices caused ferrochrome to spike. However, both prices (ferrochrome and chrome) have fallen back to their historical trading pattern of moving together.

What This Means for Industrial Buyers

Stainless steel momentum appears in recovery, similar to all the other forms of steel. As both steel and nickel remain in a bull market, buying organizations may want to follow the market closely for opportunities to buy on the dips. To understand how to adapt buying strategies to your specific needs on a monthly basis, take a free trial of our Monthly Outlook now.

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The Steel Market Development Institute (SMDI) presented results of a new study on steel’s lightweighting capabilities during the Chicago Auto Show on Thursday, Feb. 8, at McCormick Place in Chicago. Photo by Fouad Egbaria

Use of aluminum in automotive bodies has gained steam in recent years — and the metal’s rivalry with steel has heated up in the process.

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For example, Ford Motor Co. shook up the marketplace when it announced its all-aluminum body F-150 2015 model. Aluminum, despite being more costly than steel, is lauded for its lighter weight and, thus, ability to provide better fuel economy.

Not so fast on that front, according to a study presented by the Steel Market Development Institute (SMDI) on Thursday, Feb. 8, during the annual Chicago Auto Show.

SMDI, a business arm of the American Iron and Steel Institute (AISI), presented results of a study that concludes steel is a superior option to aluminum when it comes to lightweighting and curbing environmental impacts.

Tom Gibson, president and CEO of the American Iron and Steel Institute. Photo by Fouad Egbaria

Tom Gibson, president and CEO of AISI (and president of SMDI), touted the more than 60 steel-intensive vehicles debuted in the last year at auto shows in Detroit, Chicago, New York and Los Angeles.

“Steel continues to play an integral role in new vehicle debuts,” Gibson said. “In the last month, we’ve seen the 2019 Chevrolet Silverado, Ford Ranger, all-new Ram 1500, Toyota Avalon, Honda Accord and Kia Forte, all touting the benefits of advanced, high-strength steels.

“With the mix of materials available to designers and engineers today, no other material provides the complete package steel provides with performance, value and innovation, as well as being the most environmentally sound material for automakers and consumers.”

Jody Hall, vice president, automotive market, of SMDI, presented the Life Cycle Assessment (LCA) study findings, comparing steel with aluminum. The LCA study tested five different vehicles and went through a 10-month review, Hall said, and was validated by a “panel of experts” from Harvard University, Argonne National Laboratory, the Massachusetts Institute of Technology and consultancy firm thinkstep.

“The bottom line is, the result of this expert-validated study shows for the vehicles studied, lightweighting with advanced, high-strength steel produces lower greenhouse gas emissions than lightweighting with aluminum,” Hall said. “The difference comes, primarily, from the material production phase emissions of advanced high-strength steel and aluminum. These are emissions not captured when focusing only on tailpipe emissions under current EPA regulations.”

Hall further emphasized the case for steel, saying that if one lightweighted the five vehicles in the study with aluminum instead of steel, “the life cycle greenhouse gas emissions increase is estimated at 12 million tons of CO2 emissions. That’s the equivalent of the amount of electricity used to power 1.6 million homes.”

More details on the study, titled “Life Cycle Greenhouse Gas and Energy Study of Automotive Lightweighting,” and its methodology can be found at www.steelsustainability.org.

AK Steel CEO Roger Newport. Photo by Fouad Egbaria

During the presentation, AK Steel CEO Roger Newport also delivered some comments on the state of the steel industry vis-a-vis the automotive world. Newport said steel has evolved to meet changing consumer demands in recent decades, and noted there’s been a “remarkable change” in the importance of materials when it comes to automotive construction.

“Materials are front and center,” he said.

It remains to be seen how much market share aluminum can capture. In the meantime, the steel industry will no doubt continue to tout its virtues compared with aluminum.

“The SMDI along with AK Steel are very excited about the potential of new, innovative steel products,” Newport said. “We continue our efforts to support the changes in the automotive world.”

Odds and Ends from Day 1 at the Auto Show

A few other miscellaneous notes from the first day of the Chicago Auto Show on Thursday, Feb. 8:

Subaru Presents 50th Anniversary Lineup

Subaru presented its 50th anniversary lineup, composed of nine vehicles, during

Subaru’s 50th anniversary lineup of vehicles. Photo by Fouad Egbaria

an unveiling ceremony. Tom Doll, president and chief operating officer of Subaru of America, Inc., touted the automaker’s growth since 2008, a period during which its market share rose from 1.4% to 3.8%, he said, and has seen it become the seventh-best selling brand in the industry.

“We’re not that small, fledgling little car company anymore,” Doll said.

Production quantities will be limited to 1,050 for Crosstrek, Forester, Impreza, Legacy and Outback, while WRX, STI and BRZ will have a combined total of 1,050, according to a Subaru release.

Kia Stinger Wins MotorWeek’s Best of the Year Award

Thursday afternoon at the Grand Concourse media stage, MotorWeek presented its Best of the Year award, which this year went to the Kia Stinger.

MotorWeek’s John Davis (left) presents Michael Sprague, chief operating officer of Kia Motors America, with the publication’s Best of the Year award for the Kia Stinger. Photo by Fouad Egbaria

MotorWeek host and creator John Davis said they try to pick a vehicle each year that captures “that moment in the automotive landscape,” in addition to, simply, being fun to drive.

“Our Best of the Year for 2018 really is the perfect definition of our award,” Davis said. “It’s a lot of fun to drive but moreover it is the result of a brand setting and achieving a new bar of prowess that is on par with the world’s best.”

The vehicle has a 3.3-liter twin turbo V6, an 8-speed automatic transmission and available performance-oriented all-wheel-drive system.

Michael Sprague, chief operating officer of Kia Motors America, accepted the award from Davis.

“It was introduced back in 2011 at the Frankfort Auto Show as a concept vehicle,” Sprague said. “Many people here in the audience told us ‘you have to build this car.'”

Klairmont Kollections Brings Retro Vibe

You won’t see too many cars like these on the streets today, but Klairmont Kollections took drivers down memory lane during its first ride as an exhibitor at the Chicago Auto Show.

Photo by Fouad Egbaria

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The collection of unique vehicles, some dating back to the early 1900s, is based in Chicago and owned by World War II veteran and Highland Park, Illinois resident Larry Klairmont.

The Copper MMI (Monthly Metals Index) traded lower this month, falling one point for a February reading of 87. The fall was driven by a slight retracement of copper prices, which had skyrocketed in December. In January, LME copper prices fell by 1.21%.

Despite the price retracement, LME copper prices held above the $7,000/mt level at the beginning of February, and fell below this level during the second week. Trading volumes still support the uptrend. Copper prices could continue their rally.

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Source: MetalMiner analysis of FastMarkets

Labor Disputes Could Threaten Copper Supply

Mine strikes continually threaten copper supply. BHP’s Escondida mine, the world’s largest copper mine, failed to develop a new labor agreement in advance of formal negotiations, scheduled for June. Last year, a 43-day strike at the Escondida mine impacted copper supply.

Since BHP’s Escondida copper mine produces around 5% of the world’s copper, it’s easy to see the impact of strikes on LME copper prices.

Meanwhile, Glencore forecasts its own copper output to increase by 150,000 tons at its Katanga mine in the Democratic Republic of Congo.

U.S. Dollar, Copper Back to Negative Correlation

Copper and the U.S. dollar maintain a strong negative correlation. The negative correlation gives the direction of the trends; when the U.S. dollar is weaker (downtrend), copper prices are stronger (uptrend).

The negative correlation did not hold during the first six months of 2017, nor did it hold for commodities and the U.S. dollar. However, the historical negative correlation has reappeared, as copper prices and the U.S. dollar now trade in opposition to one another.

The U.S. dollar in black. Copper spot prices in purple. Source: MetalMiner analysis of StockCharts

The U.S. dollar traded sideways during Q3 2017. Many analysts (not MetalMiner) started to believe  the U.S. dollar had reached a bottom.

MetalMiner, however, remained more bearish on the U.S. dollar, as the dollar did not give any clear signs of a trend reversal. The distinction between a short-term trend that could impact prices in one to three months, versus a long-term trend, which could actually impact a buying strategy becomes important. The fact remains, the U.S. dollar has fallen to a more than three-year low.

Copper Scrap vs. LME Copper

In January, copper scrap prices did not move with the LME copper price. LME copper prices fell  slightly, while copper scrap prices increased by 2%. Therefore, the spread between the two decreased slightly this month. We can expect these types of divergences in the short term, although the two tend to trade together over the longer term.

Source: MetalMiner data from MetalMiner IndX(™)

In January, several Chinese copper scrap restrictions went into effect. The Ministry of Environmental Protection announced that only end-users and copper scrap processors will be allowed to import. This restriction in effect removes Chinese traders from the copper scrap market.

What This Means for Industrial Buyers

In January, buying organizations had some opportunities to buy some volume. The weak U.S. dollar and strength of other base metals support the bull narrative for copper. As long as copper prices remain bullish, buying organizations may want to “buy on the dips.”  For those who want to understand how to reduce risks, take a free trial now to the MetalMiner Monthly Outlook.

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After last month’s sharp increase, the February Aluminum MMI (Monthly Metals Index) inched up one point.

The basket of metals increased despite the slight retracement of LME aluminum prices.The current Aluminum MMI index reads 99 points, 1.0% higher than in January.

In January, MetalMiner anticipated a possible retracement in aluminum prices, as aluminum — and, generally, all base metals — increased sharply at the end of the month. LME aluminum prices fell by 2.8% in January from the previous 2-year high closing price in December.

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Source: MetalMiner analysis of FastMarkets

Aluminum prices inched lower during the first few days of February. Aluminum prices broke out of  their previous sideways trend back in August, providing a strong buying signal. As prices may continue to increase, buying organizations may want to understand how to better purchase aluminum, reducing both risks and costs.

U.S. Domestic Aluminum Market

The U.S. Department of Commerce sent the Section 232 report for aluminum products to President Trump in January. President Trump has 90 days (from January 22) to review and announce actions regarding the probe for aluminum products.

Meanwhile, domestic aluminum demand received a boost from stronger U.S. automotive and aerospace sectors.

Despite the fall in U.S. auto sales in January, aluminum producers see increased demand. Demand has increased so significantly that Novelis Inc., the biggest flat-rolled products maker, announced the investment of a new plant in Kentucky to support growing automotive demand.

U.S. Total Vehicle Sales. Source: TradingEconomics

Chinese Aluminum Market

SHFE aluminum prices currently trade lower than LME prices. Although the trends appear to be similar, SHFE aluminum prices fell further in January. Lower SHFE prices relative to LME aluminum prices lead to increased Chinese exports to Asia.

Source: MetalMiner analysis of FastMarkets

According to the latest Chinese customs data, Chinese exports of unwrought aluminum and aluminum products increased by 12.8% in December compared to December 2016 data. December exports also increased on a monthly basis by 15.8% over November’s figures.

Aluminum Premiums

U.S. Midwest aluminum premiums moved again at the beginning of February, and currently trade at $0.12/pound. The Section 232 investigation and uncertainty around the outcome has increased the volatility in the U.S. Midwest premium.

Other aluminum delivery premiums also increased this month. The CIF Japanese spot premium increased 12% over January, to $98.50-$110/mt from the previous $90-96/mt. The European duty-unpaid premium jumped by 8.1%, while the Brazil CIF duty-unpaid premium increased by 3%.

What This Means for Industrial Buyers

As expected after last month’s sharp increase, aluminum prices retraced in January. In bullish markets, buying organizations still have many opportunities to forward buy. Therefore, adapting the “right” buying strategy becomes crucial to reduce risks.

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Actual Aluminum Prices and Trends

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The Construction MMI stood pat this past month, holding at 94 for our February reading.

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Within the basketball of metals, Chinese rebar dropped 6.6%, while Chinese H-beam steel rose 3.3%.

U.S. shredded scrap steel jumped 7.7%. European 1050 sheet aluminum dropped marginally (by 0.05%), while the Chinese aluminum bar price jumped 1.7%.

U.S. Construction Spending

According to the most recently available Census Bureau data, U.S. construction spending in December 2017 amounted to $1,253.3 billion, up 0.7% from the revised November estimate of $1,245.1 billion.

December 2017 spending was up 2.7% year over year, compared with the $1,221.6 billion spent in December 2016.

By value, the value of construction in 2017 was $1,230.6 billion, up 3.8% from $1,185.7 billion in 2016.

Private construction spending grew more than its public counterpart. Private construction spending jumped 0.8% from the previous month to $963.2 billion, Within that umbrella, residential and nonresidential spending jumped 0.5% and 1.1%, respectively.

The value of private construction in 2017 was $950.7 billion, up 5.8% from the $898.7 billion spent in 2016. Residential construction in 2017 was $515.9 billion, up 10.6% from the 2016 figure of $466.6 billion and nonresidential construction was $434.8 billion, up 0.6% from the $432.1 billion in 2016.

Meanwhile, public construction spending jumped 0.3% to $290 billion in December 2017 from the previous month. Educational construction spending jumped 1.6% from November, while highway construction picked up a 0.3% spending gain.

Home Sales Down in December but Up for the Year

According to the National Association of Realtors, existing-home sales dropped in December but were up 1.1% for 2017.

The 5.51 million sales executed in 2017 marked the highest total since 2006 (6.48 million).

“Existing sales concluded the year on a softer note, but they were guided higher these last 12 months by a multi-year streak of exceptional job growth, which ignited buyer demand,” said Lawrence Yun, the NAR’s chief economist, in a prepared statement. “At the same time, market conditions were far from perfect. New listings struggled to keep up with what was sold very quickly, and buying became less affordable in a large swath of the country. These two factors ultimately muted what should have been a stronger sales pace.”

New housing starts, however, were down significantly in December.

According to jointly released data from the Census Bureau and the U.S. Department of Housing and Urban Development, new home starts in December dropped 8.2% compared with November totals. The 1,192,000 housing starts in December also marked a drop compared with December 2016, falling by 6.0%.

The Future of Construction

According to an article in Forbes, three trends could have a significant impact on the construction industry: robotics, drone imagery and digital project collaboration tools.

“Construction will benefit from robotics in work that is dangerous, is repetitive, and where heavy lifting is required,” Zak Podkaminer, of Construction Robotics, told Forbes. “[In] high precision work such as complex designs and patterns, robotics will provide a significant time savings allowing for more digital fabrication and provide architects more creative flexibility.”

Drone imagery, meanwhile, will serve to produce more accurate site analysis, the article argues, while digital collaboration tools will help streamline a construction process that still uses a number of traditional forms of communication and data storage — fax machines, physical binders, etc. — and make the transfer of information more seamless.

Actual Metal Prices and Trends

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