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An article in The New York Times makes a compelling case for why we may be looking at zinc as an exciting technology metal in years to come (rather than its traditional image as the galvanizing metal that stops steel from rusting).

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The article reports on billionaire biotechnology entrepreneur Dr. Soon-Shiong’s NantEnergy, developers and manufacturers of zinc air storage batteries.

His energy company says it is the first to commercialize the use of zinc air batteries. Last week the company announced cost savings and technological improvements had achieved a storage cost of less than $100 per kilowatt-hour, said to be a game changer for renewable energy grid storage applications.

Limited prevailing lithium-ion storage is estimated, The New York Times says, to be about $300-$400 per kilowatt-hour, even before considerations of metal scarcity and supply chain vulnerability associated with lithium, cobalt and other trace elements used in the standard lithium-ion battery.

No one is suggesting zinc air batteries will take over in retail appliances, electric cars or drones. For these kinds of applications, weight is a critical factor and the power density of zinc air batteries is not the same as lithium-ion.

However, for static grid or off-grid storage, weight is inconsequential. Cost is the overriding factor and low-cost grid storage is currently the biggest drag on national or regional grids embracing more solar and wind power.

To be viable, both economically and in terms of service, renewable technologies need massive storage to even out generation and consumption flows.

While NantEnergy has undoubtedly made a successful start, it is far from alone in pioneering zinc air batteries.

An article early this year in Mining Journal quoted sources saying U.S.-based Eos Energy Storage “appears to have the highest traction in the space at present, and announced early last year it had started a collaboration with Germany’s Siemens on the integration, installation and servicing of energy storage systems.”

At that time, Eos was already offering its Znyth battery system for delivery in 2022 at a price of U.S. $95 per usable kWh contained in a single cycle of the battery. Such competition will help further drive innovation and, in turn, uptake of the technology. The same article put a figure of 19.8 million tons as the possible demand for the metal related to a zinc air battery rollout.

The article also cites research done by Stormcrow Capital on current and emerging global energy storage needs connected to nuclear and renewable capacity. The firm postulates demand for storage could run to 4,404 GWh, of which 3,904 GWh would be for renewables. The article reports Stormcrow’s research, which says, “The zinc metal demand from 4,404 GWh of zinc-air battery storage would be roughly 19,818,000 metric tons of metal,” or more than the 2016 mined production of zinc (estimated by the U.S. Geological Survey at 11.9 million tons).

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Thankfully, demand will ramp up only gradually as the technology proves itself and costs continue to fall. But zinc air has such a compelling case over lithium-ion that the technology is sure to be a key part of the solution for grid storage and will increasingly become a significant factor in global zinc demand over the next decade.

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The impact of the U.S.’s Section 232 steel and aluminum tariffs on its relationships with other countries has been well-documented — but what about Section 232 challenges at home?

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For domestic businesses seeking to win product exclusions from the tariffs that went into effect March 23, the process has been slow going, to say the least.

Even now, exclusion requests and objections continue to roll in every day.

In June, the Department of Commerce (DOC) announced its first responses to a small percentage of exclusion requests — which then hovered around 20,000 — granting 42 requests (from seven companies), while also denying 56 requests from a total of 11 different companies.

As of late last month, the DOC had received more than 38,000 exclusion requests and 17,000 filed objections — and the numbers continue to rise, with objections being filed this week.

Earlier this summer during a Senate Finance Committee hearing — during which Secretary of Commerce Wilbur Ross testified — committee members offered criticism of the exclusion request process, questioning if the DOC was prepared for the number of requests that have come in.

While some progress has been made since June, the DOC has still produced determinations for a relatively small percentage of the overall requests.

Naturally, with the exclusion request process under fire for its lack of pace, the DOC announced a change last week that it hopes will streamline the process.

According to a DOC release, it has implemented an updated rebuttal system, which is available to “all U.S. businesses which have not received a final determination.”

“The Department of Commerce and the Bureau of Industry and Security have made an unprecedented effort to ensure American businesses are not unduly harmed by Section 232 tariffs,” said Secretary of Commerce Wilbur Ross. “These updates will help perfect the process to ensure a fair hearing for all parties involved.”

The Bureau of Industry and Security published information in the Federal Register on an interim final rule governing the process, which went into effect Sept. 11.

“The revisions are informed by the comments received in response to the March 19 rule and the U.S. Department of Commerce’s (referred to henceforth as “the Department”) experience with managing the exclusion and objection process,” the rule document on the Federal Register states. “The Department understands the importance of having a transparent, fair and efficient exclusion and objection process. The publication of today’s rule should make significant improvements in all three respects, but due to the scope of this new process, BIS is publishing today’s rule as an interim final rule with request for comments.”

Per the DOC release, exclusion requesters have seven days to submit a rebuttal. Then, objectors will have seven days to submit a surrebuttal.

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“To further assist industry moving through the process, the Department of Commerce is also cataloging the Objection, Rebuttal, and Surrebuttal Identification Number associated with each Exclusion Request,” the DOC release states. “The Aluminum Rebuttal & Surrebuttal Finder and the Steel Rebuttal & Surrebuttal Finder will be uploaded each day at www.commerce.gov/232.”

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According to a World Steel Association report, global crude steel production in August was up 2.6% compared with production in August 2017.

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The 64 countries reporting production to the World Steel Association produced a total of 151.7 million tons in August, according to the report. Global production reached 147.9 million tons in August 2017.

China produced 80.3 million tons in August, up 2.7% from August 2017 (when it was 78.2 million tons). Chinese production growth has been on the decline since May, when it hit 8.9%. Chinese production growth was up 7.2% year over year in July.

Meanwhile, India saw its production rise 3.7% year over year, up to 8.8 million tons.

The U.S. produced 7.5 million tons of crude steel in August 2018, marking an increase of 5.1% compared to August 2017.

Japan produced 8.8 million tons, marking a 0.9% year-over-year increase. South Korea hit 6.1 Mt, holding flat from August 2017.

As for Europe, Spain’s production hit 1.2 million tons, up 6.6%. Italy’s production rose 6.0% to 1.2 million tons. France’s crude steel production was 0.9 million tons, marking a 16.8% year-over-year decline.

Turkey’s crude steel production hit 3.0 million tons, down by 5.7%.

Eyes on Overcapacity

On the overcapacity front, as we noted Monday, steel-producing nations met in Paris last week to discuss strategies to curb global overcapacity.

During the Global Forum on Steel Excess Capacity, nations discussed the way forward, continuing a dialogue on a subject after the November 2017 meeting in Berlin.

In addition, a European Commission went after the U.S., calling its Section 232 tariffs “unjustified.”

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“The EU currently has an unprecedented number of trade defence measures in place targeting unfair imports of steel products, with a total of 53 anti-dumping and anti-subsidy measures,” the statement said. “The EU has also activated all legal and political tools at its disposal to fight unjustified US 232 measures.”

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Overcapacity was the word of the day at the Global Forum on Steel Excess Capacity last week.

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The forum, which took place Sept. 20 in Paris, brought together the world’s biggest steel-producing nations.

“The global challenge of overcapacity has strained trade relations and the global trade architecture to its breaking point,” E.U. Trade Commissioner Cecilia Malmström said. “Progress in this Forum at this sensitive time demonstrates that multilateral cooperation is not only possible, but that it is actually the best tool to tackle global challenges. Putting this agreed package in place is something that the European Union will now follow closely. Our workforce and our industry depend on these commitments being carried out.”

Vice-President for Jobs, Growth, Investment and Competitiveness Jyrki Katainen added: “This sends a clear message: we will not repeat the costly mistakes of the past, and must tackle excess capacity and its root causes to avoid dire social, economic, trade and political consequences in the future. This will protect growth and jobs in an efficient, sustainable EU steel industry. A lot of work lies ahead though and all members of the Global Forum will have to continue implementing their commitments resolutely and report to G20 Leaders.”

The Paris meeting built on last year’s meeting in Berlin, during which members agreed to embark on a package of reforms to address global steel overcapacity.

According to the European Commission statement, the members will assess subsides contributing to overcapacity by the end of the year and “identify further reductions to be taken” in 2019.

In other steel news, the European Commission statement refers to the U.S.’s Section 232 tariffs, which impact steel and aluminum, calling them “unjustified.”

While a select few countries have negotiated exemptions and quotas with respect to the tariffs, the E.U. remains subject to the tariffs.

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“The Commission has acted among others through trade defence, imposing antidumping and anti-subsidy duties, to shield the EU’s steel industry from the effects of unfair trade,” the release stated. “The EU currently has an unprecedented number of trade defence measures in place targeting unfair imports of steel products, with a total of 53 anti-dumping and anti-subsidy measures. The EU has also activated all legal and political tools at its disposal to fight unjustified US 232 measures.”

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Well, that didn’t go very well, did it?

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After a couple of weeks scurrying around European capitals and intense lobbying directly to E.U. leaders, Britain’s Prime Minster Theresa May received short shrift at an E.U. conference in Salzburg, Austria last week.

May sacrificed a lot internally in the run-up to the conference. She faced intense opposition from her own hard right against her so called Chequers plan (termed thus because it was presented at the prime minister’s grace-and-favor residence Chequers in the summer), she lost two cabinet colleagues who resigned over it and has faced opposition from just about everyone, inside her party and out.

May had hoped it would form the basis of a negotiated exit agreement encompassing a free trade deal on goods but not services, plus much more with the E.U.

The E.U., meanwhile, has problems of its own — granting the U.K. any kind of conciliatory deal would make matters much worse.

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I know, it’s not really a metals topic — my editor will no doubt berate me for wandering off the reservation — but it has to be said the current speculation about which car Bond will drive in the next movie has got to be of the topic of the month, hasn’t it?

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According to the Financial Times, there is a battle royal developing between Aston Martin – long considered the only authentic wheels for our hero — and upstart Lotus, provider of Bond’s principal transport on two occasions (“The Spy Who Loved Me” in 1976 and in the 1981 film “For Your Eyes Only”).

We are not suggesting Lotus does not make fine cars, although arguably their road cars never quite lived up to the promise of their track record. From their racing debut in the late 1950s, a series of iconic drivers and Colin Chapman’s magic combined to create a dream team that competed at the highest level in the 1960s, ’70s and ’80s.

Drivers like Graham Hill, Jochen Rindt, Emerson Fittipaldi and Mario Andretti, not to forget possibly the greatest of them all Jim Clark (winner of two F1 titles for Lotus), firmly established the mark as an innovative and exciting brand that, from its humble origins in Norfolk, took on the might of Ferrari, Renault, Honda and other famous British teams, like Brabham and BRM.

There is no question Lotus has a fine racing pedigree. As a road car, however, they have never attained the same suave mix of power, prestige and understated competence that is and always has been Aston Martin.

Bond, though, is quintessentially British, and following a brief ownership by Ford, Aston Martin Lagonda has been privately held for over 10 years by a consortium including British and Kuwaiti investors. Soon to go public via an IPO, you too could buy a slice of history when it goes public later this year.

Not so for Lotus which, along with Swedish Volvo and British-based London cab company London Electric Vehicle Company is owned by Chinese Geely. To be fair, much like Volvo, Geely is a good steward of Lotus, allowing the firm to create its own direction and innovation while providing ample funding when needed. Still, diehards would argue it dilutes the Britishness of the brand.

Featuring in a Bond movie, though, would certainly help revitalize lackluster sales at Lotus and may create other one-off opportunities.

For example, Aston recently produced a series of 25 DB5 models — the same as used in “Goldfinger” — made at the car’s original home in Newport Pagnell, the company will sell the specials for £2.75 million apiece. Styling and design for the movies can, like technology developed for racing, feed back into road cars, according to the Financial Times. Much of the engineering for the DB10 car, a model created exclusively for the most recent Bond film “Spectre,” went into the company’s latest models (the DB11 and the Vantage).

Some argue that Bond should go back to Bentley, the brand used in his first film and in Ian Fleming’s books. A brand that in the heyday of the Bond series became a “poor man’s” Rolls Royce – if the buyer of a Bentley could ever be termed a “poor man.”

But in this decade, Bentley has emerged as a fine builder of high-powered executive saloons — maybe not quite what they were in Bentley’s own racing days, but that was well before F1.

No, for 50 years Bond and Aston Martin have been indivisible. Every attempt at substitution – Lotus, BMW, Ford, once a Lincoln convertible for goodness sake – has fallen flat.

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There really is no substitute — please, EON Productions, just don’t be tempted to make it electric.

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Moody’s Investors Service has said India will be the brightest spot for the steel sector over the next 12-18 months, according to a report by the Hindu Business Line.

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Moody’s pointed out that India’s steel consumption was rising at least 5.5%-6% every year, tracking strong GDP growth of 7.3%-7.5%.

It said rated Indian steel producers had only marginal exposure to the U.S. Moody’s has estimated that their indirect exposure may also be limited, given most of their sales were to domestic automotive and manufacturing companies.

In fact, on Tuesday the Indian Steel Ministry, perhaps buoyed by sentiments such as those expressed by Moody’s, issued a statement saying it was hopeful of occupying the second slot in global steel output (after China), while the government has also taken steps to encourage secondary steel producers to boost performance.

According to Moody’s, with minimal new steel capacity expected to be commissioned until 2021 in India, robust steel demand — especially from the construction, infrastructure and automotive sectors — would keep end-product prices high, even as rising costs for key inputs, like coking coal and iron ore, put pressure on profitability.

Moody’s also noted the outlook for the Asian steel industry was stable, reflecting the consideration that the profitability of rated producers will increase moderately over the next 12 months against the backdrop of overall steady regional demand.

The robust steel demand, especially from the domestic construction, infrastructure and automotive sectors would keep end-product prices high, even as rising costs for key inputs, coking coal and iron ore pressure profitability.

The Indian Government believes that, in conjunction with the primary steel sector, the secondary steel sector holds enormous potential for growth and opportunities.

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“Strong performance of the secondary steel sector has added muscle to India’s steel production. Encouraged by the overall potential, the Government of India has taken various initiatives to improve the performance of this sector. Based on the present growth pattern, it is expected that India will rise to the second position after China,” the statement said.

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Some commentators were calling the imminent collapse of the aluminum price last month — certainly, it tested the bottom of its recent range, at just below $2,000 per metric ton on the LME.

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But the price has since rallied and is currently range bound between $2,000-$2,075, seemingly suppressed by a strong dollar and the general depression of commodity prices by fears of a trade war. Yet, it is supported by the net deficit position the Western world’s aluminum market has been in last year and this year.

One dynamic that has not featured greatly — but is fast becoming a major concern — is the alumina price.

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The Raw Steels Monthly Metals Index (MMI) traded sideways this month, driven by slower domestic steel price momentum. The current Raw Steels MMI fell to May 2018 levels.

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Domestic steel prices have started to fall slightly. Prices traded lower in August, showing some downward momentum. Buying organizations may want to remember that this year domestic steel prices have remained at more than seven-year highs.

Source: MetalMiner data from MetalMiner IndX(™)

All forms of steel decreased in August. HRC, CRC and HDG showed weaker momentum. Meanwhile, plate prices held stronger in August. Plate prices had the support of low metal availability. However, plate prices lost momentum at the end of August and prices decreased. So far in September, prices for all steel forms declined.

The recent slowdown in steel prices may comes down to historical steel price cyclicality. Domestic steel prices have remained in a sharp uptrend since January 2018. Prices have started to come off slightly but remain higher than last year’s average.

Chinese Steel Prices

So far in September, Chinese steel prices have increased. Chinese steel prices increased in August, recovering price momentum. Chinese steel prices appear to be in a recovery and have started an uptrend, after a slight downtrend since the beginning of the year. Higher Chinese domestic demand has supported prices.

Source: MetalMiner data from MetalMiner IndX(™)

Chinese steel prices tend to drive U.S. domestic steel prices. Therefore, buying organizations may want to keep a close eye on pricing.

The Spread

The hot-rolled coil and cold-rolled coil spread seems to be weaker than historical pricing.

The spread has been historically around the +/- $100/st level. However, the spread started a divergence back in November 2015, reaching around $200/st. 

The current spread now stands at $79/st. This means that CRC and HRC prices have become closer than anticipated. Market anomalies sometimes create divergences in prices. However, this may correct soon.

What This Means for Industrial Buyers

Since steel prices remain high, buying organizations may want to follow price movements closely to decide when to commit to mid- and long-term purchases. Adapting the right buying strategy becomes crucial to reducing risks.

Only the MetalMiner monthly outlooks provide a continually updated snapshot of the market from which buying organizations can determine when and how much to buy of the underlying metal. Click here for more information on how to mitigate price risk year-round and request your two-month free trial.

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

Actual Raw Steel Prices and Trends

The U.S. Midwest HRC 3-month futures price fell this month by 3.68%, falling to $785/st.

Chinese steel billet prices increased sharply this month by 11.56%, while Chinese slab prices increased just by 1.17%, moving to $634/mt.

The U.S. shredded scrap price closed the month at $354/st, decreasing from last month.

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MetalMiner’s Global Precious Monthly Metals Index (MMI) — tracking a basket of platinum, palladium, gold and silver prices in several geographies across the globe — continues its trek downward.

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The Global Precious MMI clocked a value of 81 for its September 2018 reading, down 1.2% from 82 last month — and reaching a low not seen since January 2017.

Here’s What Happened

Both U.S. platinum and U.S. gold took sizable hits this month.

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