Freight rates for containers continue to recover. However, the price trend for ship rates in the Dry Ship Index has already returned in recent months.
(Values for April 2018 preliminary)
Overall, freight rates tend to indicate the achievement of a maximum, because as the transport of finished products increases, the demand for raw materials appears to be diminishing.
Aluminium prices rose enormously at the beginning of April due to announced punitive tariffs by the USA against Russia, but only two weeks later they fell again by 2/3.
Aluminium price in USD (FINANZEN.NET)
The Züricher Zeitung now explains this in an article. The US Treasury announced on Monday 23 April that it would lift the sanctions against the hard-hit and relevant company Rusal if its largest shareholder, Oleg Deripaska, sold his shares. And the Treasury has extended the deadline for trading with Rusal until 23 October without sanctions. Even for speculative investors, this is probably too long-term a basis. But it is also interesting that the prices had already dropped massively again days before this publication. And this despite Goldman Sachs analysts already seeing the price rise to $3,000 per tonne.
For the first time in four months, the 5 mm thick and 1200-1500 mm wide steel has become cheaper again in Germany, France and Benelux. As of 12 March 2018, it cost 566 euros per tonne. That was 4 euros less than on 26 February 2018.
A similar picture can be seen in the US market, however, at a higher level. Fears on the part of steel users that the Trump punitive tariffs could lead to hamster purchases and a significant price increase have proved true for the US steel market. The US hot-rolled strip price rose from USD 838 to USD 894 per tonne. At an euro exchange rate of 1.24 US dollars, this results in a steel price of 721 euros. That is 155 euros per tonne more than in Western Europe.
Commodity prices are currently torn between positive economic news from China and worrying rhetoric from the USA. Iron ore, steel and copper tended up this week after China released positive data on real estate and industrial production investments. See Article
After a year of only subdued growth, nickel production should pick up significantly again in 2018. This was stated by analysts from BMI Research in their recently published report. Experts expect nickel production to grow by 3.5% annually between 2018 and 2027, slightly less than between 2008 and 2017, with global nickel production expected to reach 2.9 million tonnes by 2027, according to the BMI. Indonesia should be the main producer of nickel. By 2017 Indonesia had already overtaken the Philippines.
The long-standing export ban in Indonesia was relaxed in January 2017, thus helping the industry to revive. BMI expects Indonesia to produce 480 kilotons of nickel in 2018. That would be an increase of 20% over the previous year.
Under the guise of national security, US President Donald Trump announced on 1 March 2018 that he would introduce protectionist measures against steel imports. It provides for a flat-rate ad valorem duty of 25 percent on all steel imports. This is happening at a time when global production is at a record level. Here are the figures for January 2018: 139.4 million tonnes of crude steel.
"The US is building a customs barrier to protect itself from steel imports from all over the world. This measure is clearly contrary to World Trade Organisation (WTO) rules. Now the EU must take consistent action against this with the instruments provided by the WTO," says Hans Jürgen Kerkhoff, President of the German Steel Industry Association.
The signals for global economic growth remain green. However, there are risks in the USA and the People's Republic of China. The IW traffic light shows that the good economic situation will continue in 2018. In recent months, the traffic lights have not even begun to allow red fields. There is a continuous green light, especially during production. It was not only industrial production that continued to grow, which is mainly a reflection of the continuing consolidation of the global economy. The orders from industrial companies and the purchasing plans of the managers are also showing a good start to the year. As a result, industry is once again becoming a key economic driver.
The development in Europe is particularly positive.
From now on, you have further raw material prices available. After positive analysis of sources observed for a long time, we now also offer some other alloying materials and operating materials for foundries and other raw materials. Our range of material prices now includes 50 raw materials, 14 plastics, 195 casting materials and 97 steel grades (partly in different half formats).
The complete data list can be found here: cost sets from February 2018.
Despite losing some ground in January, the Barometer continued in the same vein of form it displayed in the second half of 2017, making for an encouraging start to the New Year. The Barometer was up 28.3% on last January and at 65.7, stands above the H2 2017 average of 63.7.
Three of the five components that comprise the Barometer fell on the month. With only Employment and Supplier Deliveries notching up gains in January.
The steel group voestalpine AG has already achieved an operating result of € 1.41 billion after the first three quarters of 2017/18. With an increase of 32.5%, it has thus almost matched the previous year's result (€ 1.54 billion). According to the Group, the 32.5% increase in sales revenue was achieved due to strong demand from the most important customer segments, especially the European automotive industry.
However, higher raw material prices will also contribute to this.
The IW economic traffic light signals that a good economic situation will continue in 2018. The fields of the traffic light did not even begin to allow red spots in the last few months. There is a continuous green light, especially during production. It was not only industrial production that continued to grow, which is mainly a reflection of the continuing consolidation of the global economy. The orders from industrial companies and the purchasing plans of the managers also signal a good start to the new year. As a result, industry is once again becoming the central economic driver.
Developments in Europe are particularly positive.
In recent weeks, some metal prices have risen sharply. This is particularly true of nickel. On 24 January, the LME nickel price once again surpassed the USD 13,000 mark, a level last reached in May 2015.
For European customers, however, the strong euro has slowed the increase somewhat recently. Tungsten and vanadium have also seen particularly strong increases in recent months.
European flat and long product steel selling figures increased, in January. Local mills raised their offer prices in an attempt to recoup recent rises in raw material costs. Further escalation in steel prices is anticipated, in the short term. Consequently, the MEPS EU average all products composite selling figure is expected to rise to its highest level since April 2011.
The report states, among other things, that the use of standby power plants has doubled in the first three months of 2017 compared to 2016. The costs of the measures for redispatch and compensation payments amount to EUR 850 million in 2016.
According to Spiegel, there was another undesirable side-effect of energy policy in 2017: Germany sells electricity to neighbouring countries - and pays additional money for the business. In 2008, this phenomenon occurred at 15 hours per year, compared with 146 hours in 2017 according to the Bundesnetzagentur. The costs for this are largely borne by the electricity consumers.
In the exploratory talks between CDU, CSU and SPD for a Grand Coalition, it became apparent that the goal pursued in German climate policy to reduce CO2 emissions by 40% by 2020 compared with 1990 was now being targeted for 2030. This could have an impact on the existing climate protection and energy turnaround measures.
This would take into account, among other things, the BDI's warning against Germany going it alone in energy and climate policy. Such national steps would shift production abroad and the electricity price would continue to rise. According to BDI President Dieter Kempf,"The guidelines of energy and climate policy should not include weakening, but rather strengthening industrial competitiveness.
The Institut der deutschen Wirtschaft (IW) surveyed 48 industry associations on their current situation and their expectations for 2018 (to the results). More than two-thirds of the associations expect their companies to produce more than 2017 next year, so it is understandable that 26 of the 48 associations are more optimistic about the current economic situation than a year ago. At the same time, the number of companies who rate the situation worse has been significantly reduced - from nine to two: the food industry is confronted with high competition and rising costs, the cooperative banks are suffering from low interest rates and low margins. However, the lack of skilled workers is becoming an increasingly common problem.
China's market share in magnesite, the raw material for magnesia, about 65%. The price for certain types of magnesia has more than doubled since July of this year.
The reason for this is a declining supply resulting from a series of measures taken by the Chinese government to reduce environmental impact and consolidate the market. China Magnesite Mining Co. Ltd. founded. The aim is to unite control over the mining, processing, sale and trading of magnesite. The state-controlled company controls about 80% of China's production and about 52% of the global market. In addition, the Chinese Ministry of Environmental Protection has been taking vigorous action against environmental pollution and illegal companies since the end of 2016. Production shutdowns and mine closures temporarily led to a 95% reduction in magnesia production in the most important province of Laoning.
Germany is the largest single importer of magnesia from China. The refractories and steel industries in particular depend on a secure supply of magnesia, and many market participants are now wondering where the future supply will come from if China no longer supplies the quantities required to date.
At this year's global metal industry summit at the London Metal Exchange, it became clear that electric mobility is driving demand for certain metals to unprecedented heights.
The LME already covers some of these metals via contracts, thus ensuring their availability and price transparency. This is done, for example, for aluminium, copper, nickel and cobalt. Now she is also working on new contracts for lithium and cobalt sulphate together with battery manufacturers and manufacturers of electric vehicles. According to the LME, however, lead remains the most important material for accumulators for years to come, and after the oversupply in 2015, a worldwide shortage is now becoming apparent until 2019. The same applies to nickel, which has also come under pressure in recent years.
The current data of the IW Köln show an increasing number of orders and a rising production. All production indicators have recently improved significantly - this traffic light is green.
Industry, which continues to be the driving force behind the German economy, has recently seen an increasing number of orders and an increase in production. After a prolonged period of stagnation, 2017 is likely to be a relatively good year of growth for German industry.
However, the increase in employment appears to be halting due to a lack of skilled workers. This means that structural problems are covering up the economic momentum - even though the demographic adjustment costs are still pending.
A survey conducted by the consulting firm Inverto among 91 managing directors, board members and purchasing managers from industrial companies in the DACH region shows that 90% of those responsible for purchasing expect a trend reversal in the prices of metals and plastics. These are the raw materials for which supply problems are expected to arise in the future (in percentages of respondents).
While China's demand for copper is causing a tense situation in the case of chemicals, it is hurricane "Harvey" and the subsequent flood in Houston that is causing the shortfall in production of chemicals. The production of some of the world market leaders will be down for months to come" estimates Bergauer, Managing Director of Inverto (to the article). In some cases, supply bottlenecks for raw materials are already noticeable. Only 10% of respondents are optimistic about the future and do not expect any problems in the acquisition of raw materials.
The foundry market has been experiencing rising raw material prices for binder materials for months (see Newsletter 6-2017). No-bake binder systems based on furan resins are particularly affected, as the high price increase for the basic material furfuryl alcohol (FA) has a direct impact.
Foundry suppliers are working on alternatives, as the ASK Chemicals report shows. Furfuryl alcohol is produced on the starting material Furfural. This substance is mainly produced in China.
The trend towards electric mobility is increasing demand for cobalt. Volkswagen tried to secure a price below the world market price for the next five years with the help of a call for tenders. This had to fail because the amount of bids was higher than the current world market supply. To the article
The global cobalt reserves are unhappyly distributed from the point of view of western industrialized countries. More than 60% of the world's demand is covered by the Democratic Republic of Congo (DRC). Due to the political conditions in the region, only a small group of mining and raw materials companies are active there. These include China Molybdenum, Eurasian Resources Group (ERG) and the Swiss Glencore Group.
The Mexican energy company Pemex has discovered an oil field in the state of Veracruz with an estimated 350 million barrels of extractable oil. At Pemex's current conveying capacity, this quantity corresponds to a production volume of six months. The Ixachi oil reservoir has a total volume of 1.5 billion barrels and can be tapped quickly as it is located in the vicinity of oil fields that are already in use. It is the largest oil discovery in Mexico in 15 years.
As early as July, oil reserves of 1.4 to 2 billion barrels were discovered off the coast of the state of Tabasco, according to the Mexican company Sierra Oil & Gas.
The Ifo Business Climate Index rose by 1.4 points to 116.7 points in October. The index is based on a monthly survey of 7,000 managers on the current business situation and expectations for the next six months. Economists had originally expected a stabilization at the previous month's level. However, new sentiment records were set in the manufacturing and construction sectors. The respondents assessed the business situation and the outlook for the next six months better than they have done in the past. "The German economy is running at full steam", said Ifo President Clemens Fuest about the results.
The European Union is one of the twenty most critical raw materials for tungsten (W). These are materials that are indispensable for the European economy and society. Brussels has therefore set itself the task of securing access to these raw materials. However, with tungsten, this is not so easy because China controls the world market. More than 70 percent of the annual production comes from China and around 80 percent of the world's reserves are located there. Therefore, what happens in the Chinese tungsten industry has a major impact. This is also evident now. Since July, the price of metal has risen by 50% after having more or less come to the spot for over two years. Investors fear that China could limit production.
Tungsten production in 2016 by tons:
At the end of September, for the first time in 15 years, the price of palladium was higher than that of platinum.
While platinum is mainly used in diesel catalysts, palladium is mainly used in catalytic converters of gasoline engines. The diesel crisis and the resulting trend towards petrol engines are currently driving demand for palladium. In addition, the substitution of platinum by palladium in diesel catalysts is also having an impact on demand. For the palladium market, the special feature is that extraction takes place as a by-product of nickel (Russia) or platinum extraction (South Africa). Accordingly, palladium production can react to increasing demand with little elasticity.
In order to reduce winter smog, the Environmental Protection Agency of the Eastern Chinese province of Shan dong demands that the city of Linyi, among other things, shut down the steel and nickel production from November 15, 2017 to March 15, 2018. In addition, the steel mills in Shanxi Province must halve their production. The government of Xuzhou (Jiangsu) has been mandated to reduce steel production in the region by at least 30%. More information (german).
Shanxi's economy (south-west of Beijing) is focused on heavy industry and raw material production. Around 30% of China's coal deposits are located in the province and other raw materials are mined in Shanxi.
A general increase in raw material prices for coatings continues unabated. A current example is the announcement by Evonik Resource Efficiency GmbH that prices for the crosslinker marketed under the brand name Vestamin IPD will be increased by up to 10 percent worldwide as of November 1. Prices for polyurethane additives will also be increased. The company believes that price increases are unavoidable due to significantly higher costs due to geographic supply and demand imbalances.
Graphite electrodes are indispensable for secondary steel production in electric arc furnaces (EAF) and ladle furnace (LF) metallurgy, both in EAF and primary Blast Furnace Basic Oxygen Furnace (BF-BOF) production. The graphite electrodes are made of special needle coke. In recent months, bottlenecks and sharply rising prices have arisen for this petroleum coke. The worldwide shortage is caused by downtimes in global production capacities, followed by production losses recently imposed by the Chinese authorities due to additional environmental standards. According to Eurofer, the global market for carbon graphite electrodes is served by a few companies in a limited number of regions. Many manufacturers are located in China, others in India, USA, Japan and Europe. All of them depend heavily on the availability of needle coke. Since China is pushing needle coke and graphite out of the market, both materials are clearly in short supply.
In the EU, about 226 000 tonnes of electrodes are consumed annually. More than 60% of the smaller LF bars originate from China, so that both primary and secondary steel production could be severely affected by the continuing shortage and supply volatility. The prices for graphite electrodes (Hot Pressed 400 China) increased to approx. 16,000 USD/t in the course of this summer, which is eight times higher than in the previous year. Other sources even speak of prices up to 30,000 USD/t.
The IW economic traffic light summarizes several international economic reports and provides a clear colour representation of the overall economic situation for Germany, Europe, USA and China.
Red means worse, green means better and yellow means less movement.
In future, the IW Cologne will publish monthly economic data in the VDI nachrichten.
The Bundeskartellamt is investigating the Düsseldorf-based Wirtschaftsvereinigung Stahl, the economic policy interest group of the German steel industry. It is primarily concerned with possible agreements on prices and surcharges for heavy plate and flat steel. As early as January, the magazine reported that the business premises were searched for information in the course of an investigation against stainless steel manufacturers. At the beginning of last week, the antitrust authorities informed the association that the authority had extended its investigations with two further proceedings against the trade association and against individual steel producers. The President of the Association is also personally affected by the investigations. To the article
Container freight rates continue to recover. Accordingly, the price trend for the size classes in the Dry Ship Index is continuing. Overall, freight rates are pointing upwards and show a growing world trade.
Values August: provisional
ps.: at DatCos you get the above index values as monthly averages.
The container handling index of the RWI - Leibniz-Institut für Wirtschaftsforschung and the Institut für Seeverkehrswirtschaft und Logistik (ISL) increased again in July 2017 from 127.4 to 128.6. The figures for May have been slightly revised upwards and for June have been revised upwards. This indicates that global trade has meanwhile grown quite sharply.
The seasonally adjusted values are also available from the DatCos subscriber.
Raw material costs account for a major portion of the total cost of a powder coating, because of the 100% solids content, price increases have a strong impact on the material cost of the products. Titanium dioxide is used in powder lacquer formulations with up to 35 percent. Purchasing prices for titanium dioxide have risen by 50 to 60 percent. This is due to international limited production capacities with high and rising demand. Binders have also risen since 2016. The cost increases for the epoxy resins were particularly high, which were up by 20 percent more than in the previous year. Due to the shortage of polyester resin production of indispensable basic raw materials on the international markets, polyester resins also rose significantly and unexpectedly strongly. This increase of up to 30 percent, especially in the case of high-season festivals, is still rising today, according to VdL. Since the middle of 2016, the raw material costs for powder paints have been steadily rising and a relaxation of the price and delivery situation is not foreseeable from 2018 according to the Association VdL.
The purchasing managers' index for Germany and the Eurozone disappoint. The index for the manufacturing sector fell from 59.6 points to 58.3 points and remained below expectations. However, the mood index for France is striking.
Purchasing Managers' Index for France until June 2017
Contrary to the forecast, iron ore prices are rising again and are trading at 64.74 USD per tonne (up 19% against the previous month). The reason for this is a high demand for iron ore from China. Experts believe that China will import more than one billion tonnes of iron ore as in the previous year. For 2017 imports of iron ore will be even higher. In the first six months, the country imported 539 million tons of iron ore, a strong plus of 9.3% over 2016.
China's metallurgical plants are very well utilized and benefit from rising steel prices. Steel production has steadily increased since the last few years. In May 2017, more than 72 million tonnes of steel were produced, representing approximately 50% of world production. To the article
The Guatemalan Supreme Court has suspended the license to operate the Escobal mine. Escobal is the third largest silver mine in the world, delivering 21.2 million ounces of concentrated silver last year. The mine started production in 2014 and Tahoe recently introduced an record result in cash flow for the first quarter of 2017. It is unlikely to restart production in 2017. The whole article
Norway plans to heavily regulate the use of fuel oil to meet the CO2 targets. To this end, a notification procedure has been launched at the European Union. The following uses of mineral oil in buildings fall outside the scope of the regulation:
• buildings used as small cabins/holiday homes and lighthouses without access to the power grid,
• district heating,
• heating of buildings if the main purpose of the combustion plant is to produce and/or process materials, substances or products.
An exception for use of mineral oil in the event of interruptions in the power grid is also included in the regulation.
OPEC's oil exports rose sharply in June. This is due to increased production volumes from Libya. The goal of a worldwide reduction in inventories is no longer achieved. The derogation for Libya and Nigeria has resulted in an increase of 0.78 million barrels of oil production in the cartel until the end of March 2018. The fact that oil demand in 2017 has remained significantly below expectations and that US shale oil production is booming again are other factors which are in favor of a rapidly occurring warehouse standardization. From Iran and Saudi Arabia, there have been attempts to talk about further intensifying steps. However, a clear rejection came from Moscow.
The price decline can also be seen in the prize chart for heating oil
On the other hand, Russia has invited the oil ministers of the OPEC and other major oil-exporting countries to a July 24 meeting in St. Petersburg. It will discuss and evaluate progress in the reduction of the world's oil stocks. The extent to which US shale oil production slows down the stabilization measures taken by OPEC are also to be questioned and discussed.
Mauritania is expected to export natural gas from 2021 onwards. BP plans to develop the Greater Tortue field of US $ 1bn. According to BP, the French total explorations ahead of the Mauritanian coast have also announced in May 2017. According to estimates, about 1.42 trillion cubic meters of gas and a trillion barrel of oil could be stored off the coast of Mauritania and Senegal below the sea on an area of more than 33,000 square kilometers. Approximately 425 trillion cubic meters of natural gas from the Greater Tortue Complex field are considered secured. "This is a considerable amount and is rich in commercialization in the context of a gas liquefaction project," said the managing director of the US exploration company Kosmos Energy, which is significantly involved in the discovery and development, in March 2016. The entry of BP in December 2016 reaffirms this statement.
The gas field is roughly equal to the Mauritanian and Senegalese coast. BP accounts for 62% of the natural gas field in Mauritania, 28% in Kosmos Energy and 10% of the capital in the Mauritanian oil company SMHPM.
ASK Chemicals has increased its sales prices for cold-box and no-bake binders in Europe from 1 June 2017. According to foundry practice, this is due to considerable price increases for methylene diphenyl isocyanates (MDI) and furfuryl alcohol (FA). At MDI, delivery delays due to technical problems are one additional issue. To the article.
The Chicago Purchasing Manager (MNI Chicago Business Barometer) for May rose to 59.4, after 58.3 in the previous month.
This is the highest level since November 2014 and shows an increasingly optimistic mood in the US economy.
In the case of many mineral raw materials, procurement risks have increased considerably in the past decade. This trend was also not stopped by falling commodity prices in 2013-2015.
Overall, DERA screening shows that around 40% of all mineral resources are affected by a strong supply concentration and high country risks (risk group 3). These include mining, for example, rare earths, platinum metals and antimony, as well as steel refiners such as niobium, vanadium and tungsten.
In order to identify procurement risks in the supply chain and secure the required raw material reference in the medium and long term, companies should develop suitable strategies and individual solutions. The DERA raw material list provides an orientation.
According to VDI Nachrichten, the Norwegian aluminum manufacturer Hydro quadruples his capacity at tGrevenbroich plant. A new 3rd line starts producing only for the automotive industry. It starts operation at the beginning of May. It mainly produces aluminum sheets of the qualities 6XXX. Hydro follows the trend towards lightweight construction in the automotive industry. Al-sheets are used as lightweight construction elements in the outer skin of the car body and were usually bonded onto the frame structure.
Good news for the aluminum manufacturer, because Al has already fallen below the zinc price in the price level, which does not meet the application possibilities and the technological performance of the material. However, the prices for Al will probably hardly remain at the current low level.
In a new report from Nikkei (Japan), UACJ, a large Japanese aluminum company, has announced that it will invest 3 billion yen (about US $ 26 million) in an aluminum parts production line bougth last year with the intention to support the Tesla's Model 3 production. Last year, UACJ also bought the SRS Industries located in Michigan, where parts for Teslas Model S were already manufactured. UACJ has now apparently been awarded a contract for Model 3, as the company announced that the new investments will support the production of "roof rails and frame supports" of the fully electric vehicle.
The company expects these investments will allow production capacities to be increased by about 50% by the end of the year. Follow the article
Raw material prices are welll known as economic barometer - many market observers regard rising prices as an indicator of an economic revival. Just as the relatively strong increase in the price of industrial metals has surprised many analysts since the second half of 2016, it is also difficult today to estimate future price movements. Overall, the experts' assessment of future price developments in many raw materials is in part very different.
Clearly, however, the demand for the specific raw materials for the lithium ion technology increases cobalt and lithium carbonate. The market prices for both materials are currently strong.
Standardized pricing since 2009
By mid-April the price of coking coal was on a high-altitude flight and is currently moving at 260 USD/t. Responsible for the rapid price increase were supply reductions in China as well as low inventories combined with constantly high demand. The supply shortage was boosted by storms in Australia (Zyklon Debbie). Railways in Queensland have been damaged and are impassable. This has resulted in an export decline of Australian coking coal. It was originally expected that 12-13 million tonnes of metallurgical coal from Australia could be shipped to China, India or Japan. However, Aurizon, the largest Australian railway company, said last week that up to 21 million tons of the problems were affected.
Raw materials experts therefore expect the coking coal price to fall significantly again by the end of 2017. The main reason for the expected price decline is the long-term high supply of power coal. China will increase production again, which should increase the supply. Australian producers of coking coal could be forced to lower raw material prices in order to keep their production volume constant. To the article.
A 43 day strike in the world's largest copper mine, the Escondida mine of the Australian-British commodity group BHP Billiton, drove Chile's copper sector down by 17 percent in February. Experts fear this historically long strike one of the economically strongest nations of Latin America for the first time since the global financial crisis plunging into a recession. The strike was terminated by workers on the basis of Article 369 of the Chilean Labor Code without reaching a concrete conclusion. Employees continue to demand a 7% increase in wages and a bonus of approximately USD 38,000, while BHP has only promised bonuses of approximately USD 15,000 without a pay increase. It is now expected that Chile, which accounts for more than 30% of the world's copper supply, will produce 5.4 million tonnes of metal this year, slightly less than the 5.5 million tonnes achieved in 2016. However, funding should increase noticeably again in the future.
Against this backdrop, the copper price is likely to remain in the price range between USD 5400 and USD 5900 per tonne (LME cash on 21th of April: USD 5601 /t).
In 2015, Germany imported raw materials worth € 106.8 billion. While imported crude oil, natural gas and coal imports rose by 6.9%, their cost declined due to low prices.
Value shares of Germany 's raw material imports in 2015
Despite market consolidation by a shipowner dying with a rather good market development, the business is with the rental of ships on the ground. Hapag Lloyd was only able to make a small profit in 2016 despite strong savings. Worldwide there is a capacity of about 100 container ships of class 10,000 TEU on the chain. At present, this expensive purchased supply shortage results in strongly rising ship freight rates.
Nevertheless, too many ships have been built and financed and 2017 the fleet is to grow by further 5%. So this does not seem to be a trend change, especially since the USA is taking action against collusion and increasingly trade hurdles are threatening world trade. Read here the hole article
Copper is traded worldwide on exchanges. For this purpose, the LME (London Metal Exchange) provides warehouses with physical copper for local delivery. The LME prices are based on these duty-free warehouses. Prices are therefore very similar across the world, as local market fluctuations lead to an equilibrium trade (arbitrage). For the USA the more local orientated CME (Chicago Metal Exchange) is an important trading place too. While the prices at these places have only slightly deviated in the last few years, prices for deliveries in 2018 are now agreed between 100-130 USD/t higher at CME.
The striking high risk premium is mainly based to the expected import tariff on raw copper in the US. To the LME article.
The ESM shows a growing sentiment among the industrial producers in the USA. It's actual value is 16.4. Actual report
The NY Empire State production index shows the mood in the manufacturing industry and is determined by a survey among 200 companies in the state of New York. A value above zero indicates a positive position and assessment of the sector, while values below zero indicate a rather poor framework. It is comparable to the IFO Business Climate Index.
In 2016, metal raw material prices rose by an average of 34%, which is far higher than expected by the DB analysts. DB does not consider metal prices to be more favorable than they are for the most part much higher than their long-term average and, in most cases, higher than their marginal costs. Investors themselves are positioned "long".
The metal demand in China is determined by the Chinese government which will continue to invest in infrastructure. Demand in this region should therefore continue, but at lower growth rates than in previous years.
The basic metal subsidies should be tightened starting from 2018 and then lead to an increase in the metal supply.
For the next two years, Deutsche Bank analysts are forecasting a 7% increase in their forecasts for metals, mainly because the nightmare momentum remains high. Fundamentally, nickel, zinc, palladium and coking coal are among the favorites of the DB Research team.
Although analysts in 2017 expect increased demand for steel in the world, DB believes in a sideways movement at iron ore. An increased iron ore production should lead to a slight supply overhang.
After 2 years at a price level of 1500 USD/t, raw rubber prices have recently risen to over 2,500 USD/t. Last time such a rapid price development was seen in 2010 to 2011. As a result Goodyear has increased its prices already by 1 March, 8%, Pirelli up to 9%, Continental gradually increases with each dealer, Hancock will increase their prices by April by 4-5% .
Price for RSS-3 (ribbon smoked sheet) for the last 17 years (source: Reuters / Resinex)
Raw material prices for elastomers such as natural rubber and rubber materials are now available. After a positive analysis of material prices and sources that have been observed for some time now, we are also offering more alloying metals, scrap types and basic materials in the field of new technologies. Here we have extended our range with lithium, some rare earths and minerals. Here you can find all cost sets from April 2017
The concern for an oversized offer has sent down oil prices. Over a week, prices for US oil and North Sea oil fell by nearly ten percent. New data on output in the important Opec state of Saudi Arabia had impacted prices. According to the Opec report published on 14 March, Saudi Arabia reported an increase in the production volume to over 10 million barrels a day in February, thus reversing a third of the previous month's reduction.
For the current stop of the price decline, reports are now being held about reduced US inventories. In the lunch trade of 15.3. A barrel of the North Sea Brent for May delivery costs already again 51,91 US dollar. Overall, the pricing of crude oil is currently very speculative.
The zinc prices are rising already for 13 months. An end to the price rise is currently not in sight as there are signs of an ongoing drop in supply and an increase in demand.
In the last few months, several large zinc mines have been closed worldwide, among them some of the largest commodity trading company Glencore. The zinc stock volume at the London Metal Exchange has fallen below 400,000 tonnes for the first time since 2009. In addition, the demand for the raw material, especially from China, should increase again after the New Year holidays, which should also lead to further rising prices. Background article
Shandong Iron & Steel Group Co. Ltd., Rizhao, China, has awarded the SMS group the order for a continuous casting plant for ultra-wide slabs. The single-pass casting plant is designed for an annual production of 1.5 million tonnes of steel slabs with widths of up to 3,250 millimeters and 150 millimeters in thickness. It is worth mentioning that the molds are treated with a plasmacemic coating, which shall increases the lifetime of the molds by a factor of four. Production start is scheduled in the end of 2018. Go to Article
Chinese crude steel production has also risen in 2016. The announced consolidation of the Chinese steel industry is therefore only hesitant, according to Hans Jürgen Kerkhoff, President of WV Stahl. The net capacities, which had been dismantled for the first time in 2016, were mainly outdated assets that had already been decommissioned. On the other hand, the capacities on the market were probably unchanged. This also explains why Chinese steel exports in 2016 have declined only marginally.
At the same time, ArcelorMittal was able to increase its operating profit by more than 50% in the fourth quarter of 2016, and a profit before tax, interest and depreciation of USD 6.3 billion for 2016. 2016 was a year of progress for the company, characterized by an improved market environment, so Group CEO Lakshmi Mittal.
The container handling index, determined by RWI and ISL in Essen, rose to 124.3 in December 2016. After the fourth increase in a row it surpassed the previous peak value of February 2015. The value from December is still provisional as it is based on only 38 out of 81 ports to be consulted.
The RWI / ISL container index can be obtained from DatCos via our data service, or it can be found at the institute. Here is the full press release for December.
Cobalt has hitherto mainly been used as a steel refiner. Relatively new and strongly increasing is its use as an electrode material for Li-Ion batteries. If you look closer to this raw material, you will encounter at least three major risks. First Cobalt is a rare material which is often obtained as a by-product in the production of copper and nickel. Its share of the world is only 0.004%. So global resources are limited. 2. approximately 60% are funded in the Republic of the Congo. A trading partner that is very uncertain because of his unstable political situation. And 3. about 10% of world trade comes from unregulated sources of funding, which can neither exclude child labor nor comply with minimum safety standards. Here is the article with details (german).
Freight rates for bulk cargo at sea have more than doubled in the course of 2016 (Baltic Dry Index). The corresponding index for container transports (Harpex Index), on the other hand, is still declining.
How long ship owners and investors can endure this ruinous price situation remains questionable.
In fact, the currently very strong material prices are still at a historically low level. Here the price development of metals for steel making.
Indexed values with basis 100 in year 2000.
The J.P. Morgan global manufacturing PMI signalled a slight improvement in growth of the global manufacturing sector, as the PMI rose to 52.1 in November, up from 52.0 in October. The increase was driven by improvement in new orders, while the rate of growth in production slowed.
In the US the manufacturing PMI posted 53.2 in November, up from 51.9 in October. The increase was brought on by improvements in the production and new orders sub-indices. For the Eurozone the Markit eurozone Manufacturing PMI rose to a 34-month high of 53.7 in November (plus 0.2).
The chinese steel production in the first 10 months of 2016 is 1% above the last year level. According to Fitch Ratings, Chinese steel exports are expected to remain at a high level in 2017 as well. Since the internal market will not need these volumes, a very strong price pressure on the steel market is expected for 2017 as well. The Chinese currency, which is devaluing against the USD, will further exacerbate this situation.
For the first time since 2006 an oversupply of copper is expected at the world market. According to the consulting group CRU, there will be a supply surplus of 421,000 t copper in 2017.
While prices of most industrial metals have increased for several months, the price of copper leaves behind them. The world's largest copper producer, Codelco in Chile, has offered China substantial discounts for 2017. Goldman Sachs also expects this situation to be continued up to 2020.
The US Department of Commerce charges provisional import duties on steel from European and Asian production. This anti-dumping action concerns Dillinger Hüttenwerke AG in Saarland, Voestalpine in Austria and other companies in Belgium, France, Italy, China, Taiwan and South Korea. Trigger are the American Nucor as well as Acelor Mittal and SSAB.
Chinese steel exports declined by 15% to 7.7 million tonnes in October. This corresponds to approximately 12% of the monthly crude steel output of Chinese producers. The focus of Chinese steel exporters is increasingly shifting to the Asian region, especially in Southeast Asian countries (37%).
So far, the Indian tax system is characterized by regionally different taxes, intransparents and inefficient tax laws and a high complexity. A reform of this tax situation was urgently required as India central government and the federal states are financed by indirect taxes and taxes on goods and services are levied by municipalities also. As early as August, the House of Representatives of the Indian Parliament approved the introduction of a uniform tax on goods and services, the GST. Simplification and better planability alone should generate an economic growth of between 0.9 and 2%.
Modi's government can thus be an important step in transforming India into a central state and a powerful economic grow. (to Article, german)
Crude steel production for the 66 countries reporting to worldsteel has increased in August 2016 compared with the previous month by 1.9% to 134.1 million tonnes. The Chinese crude steel production increased in comparison with August 2015 by 3% to 68.6 million tonnes. The global capacity utilization rate in August 2016 68.5% (August 2015: 68%).
Zinc was always the cheaper alternative to weight-saving miracle aluminum. Meanwhile, this situation has changed. While the price of aluminum fell continuously in recent month, the zinc market against this trend held up well. Recently the price of zinc is even a massive uptrend.
There are many reasons: Aluminium scored as weight saver rapidly growing competitors through high-tech fiber composites and the steel industry is proper to retake terrain by modern thin-walled sheets and the belonging processing method.
Like many other commodities is also the price for nickel is on at an historic lows. However, the LME market reports strikingly high inventories. Obviously, the investors of the LME continued to re-rising prices.
This is also the message of Commerzbank, the Philippine government would be sure to close pronounced 20 other mines, particularly nickel mines. The nickel mines concerned would represent 55% of the electricity produced in the last year of the Philippines nickel ore totaling 32 million tonnes. This corresponds to more than half of Philippine nickel mine production.
The world fleet of container ships consists of about 6000 ships with capacity of more than 16 million standard containers (TEU). The insolvent South Korean shipping company Hanjin Container holds a stake of around half a million TEU and is the seventh largest shipping company with total of 141 ships. The cargo on the 80 now blocked vessels has at least a value of 14 billion dollars. Delays in its delivery has a significant conflict potential. According to the Shanghai Stock Exchange the freight rates between Asia and North Europe reacts with increases by 40%. This can be regarded as a welcome correction for the last 8 years extremely low freight rates, however.
Until 25 November, the manager of the shipping company must create a rescue plan. We should therefore expect temporarily rising freight rates.
After the Danish minority cabinet has decided in autumn 2015 to reduce the tax breaks for electric cars gradually, she now wants to gradually emphasize the apportionment system to finance green energy projects, the so-called Public Service Obligation (PSO) by the year 2021st.
Even before the possible elimination of PSO came from for the solar subsidies to the 60th / 40th program which photovoltaic (FV) plant operators for their solar power a fixed price of 0.60 dkr/kWh for the first ten years and 0.40 dkr/kWh for the next ten years into the future. These fees were previously financed by the PSO.
In the law - is essentially about changing the compensation of renewable energy - is now also available for sectors of Schedule 1 (including foundries) stipulates that a limitation already from an electricity intensity of 14% takes place, limiting the amount obtained from 17% remains (CAP and Super-CAP) and Companies get below 17% a 20% limit.
This rule applies not only to companies that already had a limit sooner or in, 2014. You now applies to ALL companies in the sector list 1. Even foundries, who have no limitation, therefore, can make an application for limitation of the EEG surcharge for the 14% threshold is exceeded.
According to calculations of RWI Institute steelworks are operating at only 65% worldwide. German manufacturers such as ThyssenKrupp and Salzgitter are doing relatively well with 89%. China is responsible for half of the world production of steel and two-thirds of global overcapacity. "The structural problems of the country are so dumped on world markets," says Hans Jürgen Kerkhoff from the German Steel Federation.
Looking at the global steel production it runs exactly the same level as in 2015.
Since the beginning of the year prices for Zinc know only one direction, upstairs. LME stocks have fallen by 70% since its all-time high in early 2013 and are located at the level of early 2010.
The chart analysis would rather expect further growth in zinc prices. The price level of 2015 is achieved again. A further rise seems conceivable only from an ongoing stock reduction.
The fall in prices in recent months on the commodity market has left its mark at the rare earths. The trend for future technologies brings the issue security of the supply of raw materials again into focus. The German Mineral Resources Agency DERA presented an ISI study about the trends and the market especially of lithium and some effected rare earths.
Link to the DERA study
In Q2 2016, the European steel market, according to Salzgitter has stabilized noticeably. One reason is the unexpectedly sharp decline of Chinese dumping imports. Salzgitter AG now raised its earnings forecast for the fiscal year and now expects a pre-tax profit between EUR 30 and 60 million.
Britain is the largest net importer of steel-containing goods in the EU and for the German steel processors, the main market - ahead of the USA and France. If the Proposed referendum on United Kingdom membership of the European Union affecting negatively on them, this will concern mainly steelmakers in Germany, Hans Jürgen Kerkhoff, President of the German Steel. It is still too early to foresee the consequences for the company, as a ThyssenKrupp spokesman. Voestalpine CEO Wolfgang Eder, who is also president of worldsteel, expect the impact of the British withdrawal in Europe mainly in the financial market and not in the industry.
In Germany about 11 TWh of electricity is produced in the steel industry through the sustainable use of blast furnace gas. This practice was previously freed rightly from the EEG surcharge. But there is a discussion to change this in the EEG.
Feralpi in Riesa is the only steel plant in Germany, that is using resulting water vapor for power generation and to sell it. "If we had to pay a renewable energy surcharge for own use electricity, we would degrade the system and install it in a non-German country," said Frank Jürgen Schaefer, CEO of Feralpi Steel.
Until now, the index of the shipped containers only saw only a trend upward. In recent months, this trend has stopped now.
The container handling is measured by the Institute of Shipping Economics and Logistics (ISL) in Essen at 81 international ports and can be regarded as an indicator for international trade. The base is 2010.
A barrel of Brent crude for delivery in August cost $ 50.93 in the late afternoon. The price of a barrel of West Texas Intermediate (WTI) climbed in the meantime over 50 dollars up to $ 50.37. Both prices reached its highest level in seven months. Experts attribute the price increase back to the weakened dollar. A weak dollar makes the most actively traded in dollars traded oil cheaper for many investors, thereby strengthening demand.
The planned expansion of LNG production in the western Canadian province of British Columbia will be delayed. In almost 20 projects is an annual output of 300 million tonnes of LNG planned. Due to the low gas prices and delays in the approval process, only a handful of projects are completed on schedule. Nevertheless, experts predict annual investment of up to 10 billion Canadian dollars.
Futures contracts for steel and iron ore produced in China marked new lows in May and since their launch in 2009 or 2013, it has never been as low as at present, writes the Financial Times. The futures price of steel fell in May by 28 percent, while those for iron ore declined by approximately 24 percent. Against the general trend, the price of crude oil in May continued to rise. The prices of Brent and WTI fluctuate around $ 50 per barrel after they had tasted in January and February well below 30 dollars per barrel.
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The US government has confirmed preliminary duties on Chinese dumped imports of cold rolled flat steel in the amount of 266%. They also increased the provisional anti-subsidy duties on Chinese steel imports from 227 to 256%. On 06/30/16 will to the decision of the International Trade Commission (USITC) published.
The global steel demand is expected to reduce in 2016 by 0.8% to 1.488 billion t (2015: -0.3%). 2017 it shall rise again by 0.4% to 1.494 billion tonnes. On the other hand in the EU, demand for steel will grow by 1.4% in 2016, and in 2017 by 1.7%. Higher increases around 3% are expected for North America.
This is a temporary reversal of the trend of the recent years.
The global casting production grew in 2014 by 2.3% to almost 2.4 million tonnes. Looking at Europe, there are large differences by country. Portugal, Ukraine and Turkey to grow by about 10%. Poland and the Nordics lose about 5%.
Arrium, one of the 2 largest steel producer in Australia with 7,000 foreign workers, is struggling to survive. A possible rescue of the indebted steel company (USD 909 million) by GSO Capital, a subsidiary of Blackstone, was rejected by their investors. The company was placed under administration and suspended trading its shares on the stock exchange.
Federal Labor leader Bill Shorten: "A nation that doesn't make its own steel loses a lot of its economic firepower."
With Mapudo another online store launches in the steel trade. While all sizes steel distributors build their own web shops will Mapudo a webshop for smaller steel traders offer that your own shop can not afford faint or want. The top dogs the field of digitized vertriebs is thus left not so simple. Here is the article (german):
www.rp-online.de/wirtschaft/mapudo-will-stahlhandel-digitalisieren
With Regulation (Notification No 38/2015 to 2020), with effect from 2th of may 2016, the Indian government has fixed minimum prices from 341 to 752 USD / t CIF for imports of steel products from 173 HS chapters 72nd. Exceptions exist for certain products for use in the manufacture of pipes for oil and gas pipelines, and goods in special customs procedures of authorized assets refining duty-free (Advance Authorisation Scheme). The minimum prices apply for an initial period of six months.
ArcelorMittal has closed its plant in Point Lisas (Trinidad and Tobago). 644 employees have been dismissed. The plant has generated a loss of $ 281 million in 2015. This is due to a rise in steel imports from China and Turkey to the Caribbean. Meanwhile seeks ArcelorMittal to a capital increase of USD 3 billion and offers to its investors a discount of 35.3% to.
Despite the expected growth of 3-4% in 2016 the aluminum market is suffering under an oversupply, mainly from China. On the world market for primary aluminum of about 58 million t keeps the Chinese industry more than 50%. This also because in the past 5 years alone 14 million tonnes of new capacity in China emerged. 6 Chinese aluminum companies have now announced to take 15 million tonnes Al out the market. They reduced alredy by 9.1 million tons of their capacity.
The LME AL stock are coming back from their highs since almost 2 years. Should additional capacity be omitted a reactions in Al-Price can be expected already midyear.
India remains despite its great potential still below its capacity.
Inflation is currently at below 6%, the prime rate is at 6.75% at its lowest level since March 2011th. A 17% share of manufacturing in GDP is against Germany with 22.2% still low. With the initiative "MAKE IN INDIA" the government wants to encourage foreign investment in industries. The exchange rate against the euro is volatile. For long-term contracts currency risks should be considered.
All figures relate to the Indian financial year from 1.4 - 31.3. Countries data as above and some more are available for 40 countries at www.seuta.de.
Germans exports to Asia and the Pacific grew in 2015 by 1.6%. While China, the biggest buyer, in 2015 4.2% fewer goods imported from Germany, the deliveries to South Korea grow by 14.6% and to India by 9.7%. Even Australia imported 8.1% more goods from Germany. The export-oriented German economy thus shows once again how flexible she responsed to global economic change.
However, this only applies to an invoice in euros. In USD of export decreased by 15.1% to this region.
The ESM-Index is at -19.37:
The Empire State Manufacturing Index is a monthly basis determined by the Federal Reserve Bank of New York. He gives a look at employment and price trends as well as developments of the general activity of the processing industry in New York State. The index provides a good insight into the currently-perceived situation and expectations for six months, the manufacturer in New York. In addition, he is regarded as the sign for the time later appearing ISM index. An index level above zero is considered a positive sign for the overall business, whereas a value below zero is considered as an indication of poor performance.
A year ago, PwC went from an annual growth of the steel market from 3.3% to 2025 show the changes taking place in the steel industry that this approach is no longer tenable. The raw material and steel prices have fallen sharply and China floods the western regions with their quality steels.
Therefore european manufacturers are pushing for months and now the EU Commission tackles the price dumping of steel with punitive tariffs against China. This may mitigate the consequences, it is the overall situation of extremely low prices but little justice. The demand is in no healthy relationship with the world supply. The steel industry in Europe is facing major changes.
Gas power plants were previously despite their relatively environmentally-friendly combustion as a loser during the conversion of power plants in response to the German energy turnaround. Now Bloomberg reports, however, that it currently looks pretty good for gas power plants.
The cause is the decline in prices on the commodity markets. There, the gas price fell more than the coal. The currently somewhat higher CO2 prices are good for gas power plants, although they also emit climate-damaging greenhouse gases, but significantly less than the coal-fired competitors. Currently the CO2 certificates are still cheap at around 6.50 euros per tonne, but far from the historic lows of recent years. In France, according to the report are even some gas power plants that run around the clock, cheaper than nuclear power. Catering Engie have doubled the production of four gas-fired plants in the past year and again raised a temporarily idle plant in Fos-sur-Mer near Marseille.
"There are again more gas power plants in the money," said analyst Omar Ramdani of RheinEnergie Trading told Bloomberg. For gas-fired plants, which work on the day to operate profitably even with a few hours, "now look all pretty good."