The Renewables Monthly Metals Index (MMI) held steady this month, coming in for a reading of 108 for the second straight month.

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Cobalt Prices

Cobalt prices are notorious for being both high and incredibly finicky given the relative scarcity of supply (not to mention the fact that the majority of the world’s cobalt is mined in the Democratic Republic of the Congo, which has been plagued by political instability, violence and concerns regarding supply-chain ethics).

With that in mind, it might be news to some that the cobalt price has drawn back from record highs of late.

According to one Bloomberg report, that is good news for those looking for an in to the market and, subsequently, a chance ride the electric vehicle (EV) demand boom.

Per the report, cobalt sulfate has dropped more than 20% since April.

As China continues its efforts to battle rampant pollution in the country, so, too, continues the EV demand apace. According to the report, the country already is responsible for more than half of global EV sales.

Vale Inks Deal With Canadian Firms to Sell Cobalt

Sticking with the cobalt theme, Reuters reported Brazilian miner Vale has reached a deal with two Canadian companies that will, ultimately, lead to the sale of the coveted metal from the Voisey’s Bay mine in Canada (in the province of Newfoundland and Labrador).

Vale inked separate agreements with Wheaton Precious Metals Corp and Cobalt 27 Capital Corp “to sell an aggregate total of 75% cobalt stream with reference to the cobalt by-product to be delivered from January 1st, 2021, which encompasses the ramp-down from the existing Voisey’s Bay mine (Voisey’s Bay) and from the Voisey’s Bay underground mine expansion project (VBME), for a total upfront payment of US$ 690 million plus additional payments of 20%, on average, of cobalt prices upon delivery.”

According to the deal, Vale will receive an initial cash payment of $390 million from Wheaton Precious Metals Corp and an additional $300 million from Cobalt 27 Capital Corp.

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Actual Metal Prices and Trends

Japanese steel plate fell 1.7% month over month to $722.52/mt. Korean steel plate rose 3.8% to $672.43/mt. Chinese steel plate dropped 2.5% to $739.87/mt.

U.S. steel plate, meanwhile, traded flat, sticking at $937/st.

U.S. grain-oriented electrical steel (GOES) coil surged 17.8% to $2,915.

Chinese cobalt cathodes fell 3.3% to $100,411/mt.

The Construction Monthly Metals Index (MMI) dropped two points, falling for a reading of 93 this month.

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U.S. Construction Spending

May construction spending rose 0.4% compared with the revised final estimate for April, according to Census Bureau data released this week.

Spending in May hit $1,309.5 billion, up from $1,304.5 billion in April.

The May spending estimate greatly exceeded the May 2017 total, rising 4.5% year over year.

Meanwhile, through the first five months of the year, spending increased 4.3% compared with the January-May period in 2017.

Private construction spending was $1,005.4 billion, or 0.3% above the revised April estimate of $1,002.3 billion. Within private construction, residential construction was $553.8 billion in May, up 0.8% from April. Nonresidential construction, on other hand, was $451.5 billion in May, down 0.3% from the previous month.

As for public construction, spending was $304.1 billion, up 0.7% from April. Within public spending, educational construction was at a seasonally adjusted annual rate of $74.3 billion, up 0.9% from April. Highway construction hit $94.6 billion, down 0.2% from April.

Billings Growth Continues

The Architecture Billings Index (ABI), put out monthly by the American Institute of Architects, once again showed growth in May.

The ABI hit 52.8 (anything above 50 indicates billings growth), up from 52.0 in April.

“Slightly more firms reported an increase in firm billings than in April, and May also marked the eighth consecutive month of billings growth,” the May ABI report states. “Inquiries into new projects and value of new design contracts also continued to grow at a steady pace, indicating ongoing interest from clients in starting new projects.”

This month’s report included survey data from architecture firms that were asked about productivity levels. According to the report, 55% of respondents said firm-wide productivity levels were up by either a little or a lot over the last few years. Meanwhile, only 20% said productivity levels were down in recent years.

In terms of realizing greater productivity, 40% of respondents said staff and/or staff training were the biggest factors in “determining changes in staff productivity.” In addition, 22% said the biggest factors were the economy or project workloads.

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Actual Metal Prices and Trends

Chinese rebar rose 0.9% to $625.11/metric ton, while Chinese H-beam steel jumped 1.0% to $644.74/mt.

U.S. shredded scrap steel picked up a dollar to reach $371/short ton.

European commercial 1050 sheet aluminum fell 2.4% to $3,000.12/mt.

Chinese iron ore PB fines fell 3.3% to $79.27/dry metric ton.

faithie/Adobe Stock

Until a few years ago, Tata Steel was in the process of selling off most of its businesses in Europe because of the poor performance of steel globally.

A few days ago, though, the Indian steel major announced its joint venture (JV) with German company thyssenkrupp.

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Tata Steel Chief Financial Officer Koushik Chatterjee was quick to point out that the main reason for the deal was to establish three manufacturing bases in the U.K., the Netherlands and Germany.

In reply to a question by CNBC on why the need for a European presence now, the CFO explained that in 2015-2016, the steel industry globally was in a very difficult situation. Things had, however, changed externally, and also internally in Tata Steel, as the company had undertaken a series of portfolio restructuring moves.

What’s more, the signing of the deal is expected to spell relief for Tata Steel in India, with multimillion-dollar debt offloaded from its own books to the JV.

Tata Steel and thyssenkrupp signed a deal on Saturday after months of protracted negotiations to form Europe’s second-biggest steel company (behind ArcelorMittal) in which Tata and thyssenkrupp will have a 50:50 partnership.

Tata Steel Chairman N. Chandrasekaran told reporters at a press conference in Brussels on Monday that his company would be able to nearly double its capacity because of the JV.

Chandrasekaran and thyssenkrupp CEO Heinrich Hiesinger jointly addressed the conference. The deal will allow Tata Steel to transfer up to U.S. $3 billion (2.6 billion euros) of debt on its European business to the JV company. The chairman added Tata Steel aims to increase its capacity in India from 13 million tons per annum currently to 25 million tons, possibly within the next five years.

In the last few months, Tata Steel has been quite bullish in picking up distressed steel assets after a new bankruptcy code pushed several steel companies into debt resolution in India.

A few weeks ago, for example, it picked up the debt-ridden Bhushan Steel Ltd for about $5.12 billion (Rs 352.33 billion).

But the move does not seem to have gone down well with the stock markets in India. Brokerages gave a thumbs down to the JV, citing economic fallout and uncertainty in the short to mid term.

Most brokerages cut the target price of Tata Steel, citing concerns of a bloated balance sheet and a potential fall in economic interest in the partnership during an IPO.

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Both firms will have to hold a combined stake of at least 50% for at least six years, but at the time of the IPO upon conversion of warrants, thyssenkrupp’s stake will likely increase to 55%.

The U.S. Department of Commerce. qingwa/Adobe Stock

The Trump administration’s Department of Commerce announced in May that it would be using Section 232 once again, this time to investigate imports of automobiles and automotive components.

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Secretary of Commerce Wilbur Ross testified before the Senate Finance Committee on June 20, a hearing during which he was asked about the Trump administration’s trade policies, both enacted and proposed.

Members of the committee could not get much in terms of specifics out of Ross with respect to the relatively fresh Section 232 auto probe. Ross said it was still too early in the investigation to make definitive statements about tariffs (or anything else related to the case).

Of course, that does not mean that industry groups and brands aren’t lining up to share their opinions.

The Department of Commerce extended the deadline for public comments on the issue by one week, giving those interested until Friday, June 29 to submit their comments (public hearings are scheduled for July 19-20).

By Friday afternoon, over 2,100 comments had been submitted.

In a comment filed Friday, General Motors decried the negative impacts it argues broad tariffs would have on the company and its global status.

“If import tariffs on automobiles are not tailored to specifically advance the objectives of the economic and national security goals of the United States, increased import tariffs could lead to a smaller GM, a reduced presence at home and abroad for this iconic American company, and risk less—not more—U.S. jobs,” GM’s comment reads. “The threat of steep tariffs on vehicle and auto component imports risks undermining GM’s competitiveness against foreign auto producers by erecting broad brush trade barriers that increase our global costs, remove a key means of competing with manufacturers in lower-wage countries, and promote a trade environment in which we could be retaliated against in other markets.”

In addition, GM warned of the impact on the consumer, particularly when considered in tandem with the Section 232 steel and aluminum duties, plus the duties on Chinese goods related to the Section 301 investigation (the first round of tariffs worth $34 billion is scheduled to go into effect July 6).

“At some point, this tariff impact will be felt by customers,” the GM comment states. “Based on historical experience, if cost is passed on to the consumer via higher vehicle prices, demand for new vehicles could be impacted. Moreover, it is likely that some of the vehicles that will be hardest hit by tariff-driven price increases—in the thousands of dollars—are often purchased by customers who can least afford to absorb a higher vehicle price point. The correlation between a decline in vehicle sales in the United States and the negative impact on our workforce here, which, in turn threatens jobs in the supply base and surrounding communities, cannot be ignored.”

GM’s full comment — in addition to the thousands of other comments — can be viewed by visiting regulations.gov and searching DOC-2018-0002-0001.

Other automakers submitting comments included Toyota, Mitsubishi and Volvo.

“Volvo Cars strongly believes that imports of automobiles and auto parts do not pose a threat to the U.S. national security,” Volvo’s comment said. “Section 232 is intended to ensure that the U.S, military can obtain resources and products in a timely fashion. Importers of automobiles or automotive parts like Volvo Cars cannot reasonably be viewed as threatening U.S. national security.”

OFII Says Auto Probe is ‘Misguided and Unnecessary’

The Organization for International Investment (OFII) on Friday released its letter to the administration, in which it criticized the idea of auto tariffs against key allies and challenged the notion that international automakers’ products pose a threat to the U.S.’s national security.

“The Department’s Section 232 investigation into whether, ‘imports of automobiles, including SUVs, vans and light trucks, and automotive parts into the United States threaten to impair [U.S.] national security,’ is misguided and unnecessary,” OFII’s formal comment to the Department of Commerce reads.

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OFII represents international business subsidiaries headquartered outside the U.S.

Source: Laurentiu Lordache/Adobe Stock

Not long ago, we mentioned that copper prices had been plunging of late — but the so-called “Dr. Copper” isn’t the only one on hard times.

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Zinc has also been trending down this year. LME primary cash zinc opened the calendar year at $3,288/mt, but was down to $2,895/mt as of Wednesday, June 27 according to MetalMiner IndX data, good for a 12% decline through the nearly halfway point of the year.

Still, the zinc price remains in a long-term uptrend that dates back to December 2015.

The LME zinc price has dropped 12% so far this year, but is still in a long-term uptrend. Source: LME

A Global Surplus in Q1

First, we must look at basic supply and demand. According to the International Lead and Zinc Study Group (ILZSG), the global refined zinc market boasted a 25 kt surplus in Q1 2018. In addition, reported inventories rose by 118 kt in Q1.

Zinc mine production, however, barely budged in Q1 compared with Q1 2017. In Q1 of this year, mine production was 3,086,000 tons, compared with 3,082,000 tons in Q1 2017.

Meanwhile, refined zinc metal production globally jumped 1.7% year over year in Q1 2018, as production in Australia, Belgium, China, Norway and Peru helped cancel out decreases in India and China, according to ILSZG.

As for actual usage, that only increased by 0.4%, driven by demand from China and India, according to the report.

U.S. Dollar

The U.S. dollar correlates inversely with zinc, as it does with other base metals.

As such, it’s important to note the firming of the U.S. dollar over the past few months. The index is up 5.74% compared with three months ago, according to MarketWatch data.

Chinese Smelter Cut Gives Price a Boost

The zinc price did get a boost on Thursday, June 27, as Chinese smelters plan to cut production by 10% on account of low prices, according to a Reuters report.

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The LME zinc price moved up 0.8% on Thursday, moving off of a 10-month low, according to the report.

Andrey Kuzmin/Adobe Stack

As even casual watchers of world affairs and international commerce might have caught on to by now, protectionism — or, at minimum, complaints of protectionism — has been on the rise.

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The current of protectionism has blown in many directions, from the U.S. Section 232 tariffs to the proposed tariffs on Chinese imports, not to mention the flurry of counter-tariffs (both proposed and actuated).

The European Union struck back against the U.S. steel and aluminum tariffs this past week, imposing import tariffs on a variety of American goods, from steel and aluminum products to Harley-Davidson motorcycles. (The tariffs went into effect on Friday, June 22.)

Nonetheless, the European Commission touted a new report this week that claims it “has eliminated the highest number ever of trade barriers faced by EU companies doing business abroad.”

“As the world’s largest and most accessible market, the EU is determined to ensure that foreign markets remain equally open to our firms and products, E.U. Trade Commissioner Cecilia Malmström said. “Given the recent rise in protectionism in many parts of the world, our daily work to remove trade barriers has become even more important. Ensuring that our companies have access to foreign markets is at the heart of our trade policy. Today’s report also underlines that effective solutions can be found within the international rulebook. As protectionism grows, EU enforcement of the rules must follow suit.”

According to the release, “45 obstacles were lifted fully or in part in 2017 – more than twice as many as in 2016.”

“The barriers removed spanned across 13 key EU export and investment sectors, including aircraft, automotive, ceramics, ICT & electronics, machinery, pharma, medical devices, textiles, leather, agri-food, steel, paper, and services,” the statement reads. “Overall, this brings the number of barriers eliminated under the Juncker Commission to 88.”

E.U. companies exported an additional €4.8 billion in 2017 as a result of the removal of barriers from 2014-2016. Among those barriers removed were, according to the report:

  • Recognition of safety standards used by the EU machinery industry in Brazil’s new safety legislation;
  • Elimination of administrative barriers for services in Argentina;
  • Removal of restrictions on copper and aluminium scrap, and paper in Turkey;
  • Removal of animal and plant health and hygiene barriers related to bovine exports from some EU Member States to China, Saudi Arabia and Taiwan;
  • Elimination of certain restrictions on poultry exports from some EU Member States to Saudi Arabia and the United Arab Emirates.

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The full Trade and Investment Barriers Report can be read here.

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U.S. imports of steel dropped 23.2% in May compared to the previous month, according to an American Iron and Steel Institute (AISI) report citing U.S. Census Bureau data.

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The U.S. imported a total of 2,887,000 net tons of steel in May.

The finished steel market share hit 25%, just under the 26% for the year to date.

Germany led the way with 140,000 NT, up 16% from April. Trailing Germany were: Japan (120,000 NT, up 22%), South Korea (110,000 NT, down 77%), Turkey (92,000 NT, down 37%) and Taiwan (77,000 NT, down 33%).

Meanwhile, for the first five months of the year, South Korea led the way with 1,532,000 NT, down 1% versus the same period in 2017), followed by: Japan (612,000 NT, down 7%), Turkey (567,000 NT, down 50%), Germany (549,000 NT, up 13%) and Taiwan (467,000 NT, down 6%).

Imports of wire rods increased 61% from April to May.

In the year to date, other products posting increases compared with the same period in 2017 were: hot rolled sheets (up 38%), plates in coils (up 36%), mechanical tubing (up 23%), line pipe (up 20%) and oil country goods (up 19%).

Of course, the U.S. imposed tariffs of 25% on steel and 10% on aluminum for most countries back in March, with exemptions having been negotiated for a small group of countries. Notably, the European Union, Canada and Mexico were not exempted long term, as the U.S. announced at the end of May that it would not extend the short-term exemption for the trio.

Raw Steel Production

For the week ending June 23, U.S. raw steel production inched up 1.4% from the same week in 2017, and jumped 1.8% for the week ending June 16, according to AISI data.

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The capacity utilization rate was 75.6% for the week.


Global crude steel production in May rose 6.6% compared with production in May 2017, according to a World Steel Association report released Monday.

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Global production for the month hit 154.9 million tons (MT), according to the report.

Several Asian nations saw significant upticks in production last month.

Chinese production hit 81.1 MT, up 8.9% from May 2017. India produced 8.8 MT, up 7.6% year over year, while Japan’s 9.1 MT marked a 1.8% increase. South Korea produced 6.2 MT, up 3.0%.

Meanwhile, in Europe, Italy produced 2.2 MT of crude steel, up 3.7% year over year. Spain produced 1.3 MT of crude steel, up by 7.0%. France also produced 1.3 MT of crude steel, which marked a decrease of 6.5%.

Elsewhere, Turkey’s crude steel production was 3.3 Mt, up by 0.5%. Ukraine hit 1.7 MT, up 2.9%.

The U.S. produced 7.1 MT of crude steel, marking an increase of 3.0%.

Brazil’s crude steel production, however, took a dive last month. Production hit 2.7 MT, down by 8.6% year over year.

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The crude steel capacity utilization ratio of the 64 countries in May 2018 was 77.7%, which is 4.2 percentage points higher than May 2017 and 1.0 percentage point higher than in April 2018.

Source: World Steel Association

The ratio has climbed each month since February, when it stood at 69.4%.

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For the first time in years, India’s iron ore production crossed the 200 million tons per annum (MTPA) milestone.

For 2017-18, output touched 210 MT, mostly on increased production in the provinces of Odisha and Karnataka, which was 9% higher than the 192 MT produced in 2016-17. This was also the first time crossing that threshold since the crackdown on illegal mining throughout the country. India had produced more than 200 MT in 2010-11 at the height of a mineral boom.

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One of the contributing factors for higher ore output was the Supreme Court of India’s relaxations of the cap on iron ore excavations for Category A and B mines. The court shifted the cap from 30 MT to 35 MT in December 2017. State-owned National Mineral Development Corporation (NMDC), however, had a flat growth rate in iron ore output at 35 MT in the last financial year.

All that may be cause for jubilation — but not every development on the iron ore front has not been good of late.

Take, for instance, the standoff between iron ore producers and steel plant owners in Karnataka over the high prices of the raw material. Miners are said to be contemplating moving the Supreme Court of India to seek permission to export iron ore for lack of buyers.

On the other hand, Vedanta Resources is reported to be considering options, including layoffs for some of the 2,000 employees of its iron ore business in the tourist State of Goa after operations were shut down following a court order. A Reuters report quoted two unnamed sources close to Vedanta as saying mining was unlikely to resume in Goa in the next three years at least, as the state would have to conduct a fresh survey of its iron ore reserves before auctioning mines and seeking environmental clearances to operate them.

The company, which is the biggest miner in Goa with an annual production of around 5.5 MT, said it spends $1.7 million (Rs 120 million) a month on salaries for its employees in the state. Although Vedanta is not known for sacking employees, and would rather relocate them, of late the company has been dealing with a series of setbacks in India.

In Karnataka, steel producers have accused the government-owned NMDC, along with others, of fleecing them where price of the ore was concerned, and demanded that the ore miners should lower domestic prices instead of being allowed to export the ore.

Ever since the differential pricing for iron ore between various Indian states was introduced in 2016, NMDC has charged a premium in Karnataka. Steel companies have made representations to NMDC, but said the latter had not responded to any of them.

The price difference of Karnataka ore compared with that of other states has gone above $12, which is why steel companies are now protesting. Also, in the e-auction system that Karnataka follows for selling iron ore, the price goes even higher. So, steel companies find it preferable to transport ore from neighboring states, like Odisha.

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Meanwhile, there could be a new state joining the list of top iron-ore-producing states in India, as the Indian Environment ministry recently announced a plan on “sustainable iron ore mining” in the Jharkhand province. It has also accepted an annual cap of 64 MTPA there, based on the expert report of the Indian Council of Forestry Research and Education.

The U.S. Department of Commerce. qingwa/Adobe Stock

The U.S. Department of Commerce last week announced it had launched a new anti-dumping probe with respect to steel propane cylinders from China, Taiwan and Thailand. The DOC also launched a countervailing duty probe of the steel propane cylinders from China.

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The DOC calculated dumping margins of:

  • 55.41-108.60% for China
  • 27.19-66.20% for Taiwan
  • 47.67-122.48% for Thailand
“There are 18 alleged subsidy programs for China (two loan programs, three export credit/guarantee programs, five tax programs, three provision of goods for less than adequate remuneration programs, and five grant programs),” the DOC release covering the announcement states.
According to the DOC, the value of 2017 imports of the product from China, Taiwan, and Thailand were valued at an estimated $89.8 million, $10.1 million, and $14.1 million, respectively.
Petitions in the case were filed May 22 by Worthington Industries (of Columbus, Ohio) and Manchester Tank & Equipment Co. (of Franklin, Tennessee).

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Imports of the cylinders from the countries in question surged last year.

According to Census Bureau data included in the DOC fact sheet, imports from China in 2017 were up to 4,006,413 units from 2016’s 1,613,360 units. Imports from Taiwan and Thailand also increased significantly year over year.

The next step in the case is a preliminary ruling by the U.S. International Trade Commission, which is due to make a preliminary decision by July 6.

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