Friday, April 17, 2009
Raw Material Pricing - Party like it's 1999
I was dreamin' when I wrote this
Forgive me if it goes astray
But when I woke up this mornin'
Coulda sworn it was judgment day
As I was doing the research for this article, that tune kept going through my head. The events of the last 6 months do feel more like a dream than reality. Judgment day? We'll talk more about that later in the update series.
Raw materials are a large component of costs for metal stampers. So what has happened to the prices of the most commonly used raw materials?
Metal stampers care most about these input costs:
something to make the steel not rust (usually zinc or nickel)
For Copper, Aluminum, Zinc & Nickel, prices are back down to 2004 levels. In a few cases, even below 2004 levels. See these charts, courtesy of Kitcometals.com
Steel prices are down below 2007 levels.
So it's not 1999, but in a lot of ways, it's 2004 all over again.
What does this mean for stampers? Well, a major input cost has reverted to 5 years ago levels. Is that enough to ensure a return to profitability? Not usually. Stay tuned for the next part of the puzzle.
Sunday, June 01, 2008
Industrial metals lead, zinc and tin fell sharply on Thursday, hit by waning demand and rising stockpiles in warehouses.
While zinc is certainly down from recent highs (as much as $2 in December/January 06/7) to "only" a buck now, it was 50 cents 5 years ago. So we still have some adjusting to do to get back to historical levels.
The other metals are the same story. Copper was $4 recently, now it's "only" $3.67. But 5 years ago, less than a buck.
A year ago nickel touched $25 briefly. It's currently $10, but was $5 5 years ago.
Thursday, January 17, 2008
Copper drops, but not as much as you might think (or wish for)
But copper at $3 is a lot better than a year ago, when it was up to $4.
Likewise, zinc is still above "normal" levels, but has subsided recently to a buck (it had been $2 just over a year ago).
Nickel, having been close to $25 a year ago, is down around half that now. For a while, in late 2007, it was actually down under 12
Wednesday, August 01, 2007
Nickel prices moved lower in July as they fell further into their deep descent. The July monthly average is set to be around $US8,500 per tonne lower than June's figure. Values are now forecast to go below the psychological $US30,000 per tonne in August as stocks on the LME continue to rise. There is still the possibility for another severe drop in the cost of nickel. Stability should return to the market later this year as production cuts from stainless steel producers over the Summer months come to an end. New nickel capacity, due on stream later this year and in 2008, is expected to prevent values rising dramatically before the end of the forecast period.
Western stainless steel producers of strip mill products have temporarily abandoned their traditional basis plus surcharge mechanism for selling their material. Most EU and US mills are now quoting only transaction (effective) figures. This is, principally, to disguise the discounts necessary to obtain orders after the fall in the price of nickel since early June.
Technically, surcharges in July for grade 304 increased by around 5 and 3 percent in the EU and US, respectively. With the prospect of them falling over the next two months by almost €750 and $US1400 per tonne it is not surprising that customers are refusing to pay the current inflated figures. The alloy surcharge is almost meaningless in negotiations at this time.
Mill orders have dried up. Many producers have plans to cut output in the short term but are pushing material into stock and selling at substantially discounted levels to generate the limited business available.
Wednesday, July 11, 2007
At the end of May, there were reports of a fall in copper prices.
Well, yes and no.
Copper hit a high of about $3.75 US at the beginning of May, fell to a low of $3.20 in early June, but is as I write is back up to almost $3.60.
Other materials: zinc got up to $1.85 in the early days of May but is down to $1.55 at the moment.
Brass is an alloy of zinc and copper, so the price of brass will be a blend of the copper and zinc prices.
Nickel (the major component at the moment for stainless steel surcharges) has dropped from $24 in early May to a little over $15 now. However, I haven't seen the prices change much yet, probably because the service centers still have stock at the old prices. Hopefully that will change soon.
Thursday, May 31, 2007
Our experience with one these grades (409) was that it was less "stainless", and that it required different tool steels to cut and form.
The significant investment in new equipment by steel mills implies they believe the run-up in nickel prices is not going to be short-lived. They presumably know - they're in the business. But re-tooling decisions (if needed) of stamping jobs would be made with people with less experience forecasting the future. So it isn't clear if customers will be able to switch all that quickly.
The global stainless steel scene is changing rapidly. Customer backlash against the rising cost of nickel has been taken on board by the producers. Mills are now taking seriously market demand for low or non nickel grades.
Posco has launched a nickel free stainless steel into its portfolio. This follows similar actions earlier by Japanese producers. Outokumpu, which has traditionally been mainly a supplier of austenitic grades, is to increase its production of ferritic types. This has involved a significant investment in new equipment. Output of ferritic grades is also to be expanded from the new melting shop at Lianzhong, in China.
Global supplies of 300 series material have in the past formed 75 percent of total stainless deliveries. It is interesting to note that Thyssen Krupp recently announced that it may lift output of nickel free steel from the existing figure of 30 percent up to 35 percent. We have reports that an Arcelor Mittal senior executive sees the potential to push up production of non nickel grades to 70 percent in the long term.
Friday, May 11, 2007
Copper headed for its largest weekly decline in three months in London on speculation that demand growth will slow in China, the world's biggest user. Nickel and zinc rose.
China's copper imports probably slowed in April, said analysts including Kevin Norrish at Barclays Capital.
``The Chinese market is suffering temporary indigestion after the amount of material delivered into Shanghai in the first quarter,'' Norrish said today by phone from London. ``Some people expected them to buy this week when they returned to the market after the holiday, but that hasn't happened.''
Friday, April 27, 2007
Korean firm introduces nickel-free stainless steel
Posco, the world's fourth-largest steel maker, will raise output of a nickel-free stainless steel fivefold next year as the price of nickel has hit a record.
Posco plans to sell 10,000 tonnes a month of the steel, which it introduced this month, from 2,000 this year, the Pohang-based firm said yesterday. The steel, which uses chromium instead of nickel, is the equivalent of $2,762 (Canadian) a tonne, half the price of so-called 300-series cold-rolled coil steel.
Sunday, April 15, 2007
Zinc has now fallen from the $2 US/lb that it was late last year to about $1.50 US now. However, many platers buy zinc on contract, and so until their contracts run out, higher prices will prevail. By comparison, zinc was $0.50 in June of '05
Copper is again on the rise. It got down as far as $2.50 in February, but is up around $3.30 now. A year ago it was $4.00, so it's a bit off the peak, but not enough to feel comfortable.
Nickel is climbing and shows no sign of stopping. It's currently about $22.75, up from $16 at the year boundary, from $8 a year ago, and $3 five years ago.
Zinc is used in almost every method of rust-proofing steel (except stainless steel). Nickel is used in stainless steel. Brass is a combination of zinc and copper.
Saturday, March 24, 2007
Zinc, having hit $2, is down to $1.45, but there was a short run up a few weeks ago.
Nickel, which was $3 5 years ago, is now $22, more than 5 times the price of 5 years ago and shows no sign of slowing down.
You can see the historical charts yourself here: Copper, Zinc & Nickel
all courtesy of Kitco Metals.
Tuesday, March 06, 2007
Nickel and copper led a global slump in commodities Monday as tumbling share prices stoked concern that slowing Chinese and U.S. economic growth would curb demand for raw materials.
Nickel fell 3.7 percent, its biggest drop in a month, after stockpiles rose for a fourth consecutive session. Copper dropped 3 percent and oil fell almost 2 percent. Commodities climbed to record levels in May before ending lower last year.
Saturday, January 27, 2007
A penny costs about 1.73 cents these days, with the metals used, zinc and copper, accounting for 1.12 cents of production costs.
According to the latest U.S. Mint figures, a nickel costs the government 8.34 cents to make. The cost of the metals - copper and nickel - account for 6.99 cents.
Spurred to cogitation, a noted economist has just floated the idea of making pennies worth 5 cents, and ceasing production of nickels altogether.
A potential shortage of coins in the United States could mean all those pennies in your piggy bank could be worth five times their current value soon, says an economist at the Federal Reserve Bank of Chicago.
Sharply rising prices of metals such as copper and nickel have meant the face value of pennies and nickels are worth less than the material that they are made of, increasing the risk that speculators could melt the coins and sell them for a profit.
Such a risk spurred the U.S. Mint last month to issue regulations limiting melting and exporting of the coins.
Friday, December 22, 2006
In the short term we forecast stainless steel prices moving even higher, due to further nickel price rises on the LME during December. This gain will impact on transaction values into the second quarter of 2007. March should be the highest month with cold rolled 304 transaction figures reaching almost $US4,900 per tonne and grade 316 figures topping $US7,300 per tonne. In the longer term, we expect stainless selling values to decline as nickel prices reduce and the US economic slowdown begins to take its toll on stainless consumption in the US
Copper hit an eight-month low on Thursday as a build-up in stocks and worries about a slowdown in demand weighed on the market.
Copper dropped decisively below $3 US as I was battling my cold this week, closing Thursday at $2.878 US.
Zinc also dropped, perhaps in sympathy, in the last few days, but nowhere near as impressively - it's still close to record high levels.
Nickel doesn't seem to be dropping at all.
Just so's you know:
Zinc is used in electroplating and also in pre-galvanized steel stock. So basically, if you want your steel to not rust, one way or the other, you'll need zinc.
If your parts' made of brass, that's copper and zinc.
If your parts' made of stainless steel, a major price factor is nickel.
Thursday, December 21, 2006
In the short term, this is good for stampers. Stainless steel markets have been tight, forcing prices up. Also contributing to high stainless prices were nickel prices. If the markets loosen up a bit, because production goes up, this will bring stainless prices more back into historical line. However, in the long term, it's less clear. The pendulum is still swinging too much, and that means highly unpredictable raw material prices. Which leads to uncertainly back when material selection is made for stamped parts.
The world's stainless steel sector will record an unprecedented jump in crude production this year. We expect total output in 2006 to climb to 27.8 million tonnes - 3.4 million tonnes above the outturn in the previous twelve months.
Such a rate of increase is unsustainable. The long term growth in production has been around 5 percent per annum. This year, the figure will be nearer 14 percent.
A substantial rise in output will be recorded in the EU this year. The gain will be almost 12 percent. A significant increase was expected after the decline in 2005 but not a double digit percentage gain.
A noteworthy production rise will also be reported for the United States this year - expanding to an estimated 2.55 million tonnes from 2.2 million tonnes twelve months earlier. New capacity pushed the growth to above 15 percent.
Wednesday, December 13, 2006
In the short term we forecast stainless steel prices moving even higher – due mainly to an unprecedented hike in the price of nickel on the LME during October. This gain will impact on transaction prices in December and January.
We believe that the turn of the year will be the peak of the current cycle. In the longer term, we expect stainless selling values to decline, albeit at a much slower rate than the escalation this year.
Monday, October 02, 2006
Nickel prices at the time of writing, hovered around $US30,000 per tonne. This suggests that alloy surcharges on stainless steel will remain at their current unprecedented high levels for at least two months.
[...] Alloy surcharges have risen by more than 150 percent since January.
The LME price of nickel has doubled since March, and there is much controversy about the reasons for this. Users continue to claim that the nickel market is not under-supplied, and that the upsurge in prices is the result of speculation by financial investors. It is true that LME nickel stocks have been extremely low. And this tends to support the opinion of those who say there is a structural shortage.
The hike in nickel prices is increasing the supply of scrap onto the market. World trade in stainless scrap has risen by more than 1 million tonnes over the last four years. But so far this is not having a dampening effect on the price of nickel.
Saturday, September 02, 2006
A few of the words in the article need explanation. This article is written for a local audeince in Indiana. People who live in Indiana are called Hoosiers.
The Indianapolis Star
Indiana manufacturers are getting pinched as the cost of the basic ingredients of their products -- steel, aluminum, nickel, copper and other commodities -- have soared.
Auto supplier BorgWarner spent an extra $12 million in the first half of the year because of higher commodity prices, with aluminum contributing the biggest increases. Spot prices for aluminum, which BorgWarner uses to cast transmission parts, have shot up 32 percent in the last year.
So far, Hoosier consumers haven't taken a big hit from these higher commodity prices yet. That's because manufacturers have been able to offset some of the three-year price run-up with cuts elsewhere.
But such cuts often translate to fewer jobs and sometimes lower wages for Hoosier laborers.
Higher commodity prices are hitting the auto industry particularly hard. Because sales competition is so fierce between automakers, they will brook no price increases from their suppliers. So as commodity costs rise, the 90,000 Hoosiers employed at auto companies are under increasing pressure.
Among employees, BorgWarner has cut out overtime for some, asked for wage concessions from others, left vacant spots open and even laid off some workers. In Muncie, BorgWarner announced 76 layoffs last week. It employs more than 800 there making transfer cases.
Monday, July 31, 2006
Material substitution is always an option for a stamper, but it usually takes a lot of work with the customer designer and the supplier to negotiate a change in raw material. Not something one does lightly, but occasionally necessary when material prices go through the roof.
I know I've pointed this out before, but it was months ago ... it's worth mentioning again. I run a small metal stamping shop. We use slide forming machines to get our stamping done. Slide forming machines are more sparing of expensive materials because they, as a general rule, don't use a carrier strip to get their work done. So there's less scrap. To check out slideforming some more, follow this slideforming link.
MEPS - Stainless Steel Review
Nickel prices have retreated somewhat from the record high they reached earlier this month. Although the price drew back from crossing the $US30,000 per tonne mark, it remains at over $US27,000 (cash buyer price) at the time of writing. Such elevated prices are causing increasing concern to stainless producers and their customers.
As a result of nickelâ€™s price surge, stainless mills have already announced increased alloy surcharges for August sales. In Europe and North America, surcharges for type 304 flat products have almost doubled since January, and they seem certain to rise again in September. Along with hikes in basis figures, this has propelled transaction values for many nickel-bearing grades to record highs.
Therefore it is not surprising that users of austenitic grades are casting around for alternatives and examining whether they could cut costs by switching to other materials. Stainless producers say they have not witnessed much substitution so far. This is partly because the price of many replacement materials has also gone up significantly.
Among stainless steelâ€™s rivals, copper prices have risen by almost 60 percent so far this year and also stand at record high levels. Galvanized steel sheet prices are currently about 40 percent above those of January, largely because of a 52 percent increase in the price of zinc.
Perhaps the most attractive alternative to stainless is aluminium, where the London Metal Exchange price in late July was a mere 3 percent up on its January figure.
They may be playing it down, but it is clear that some mills are concerned about long-term loss of market share. Stainless producers themselves are offering their customers a range of alternatives in an effort to prevent business being lost to non-ferrous or carbon steel materials. Such options include lower-nickel duplex grades and ferritic types. In the meantime, nickelâ€™s fluctuations will continue to create problems for the stainless industry worldwide.
Wednesday, July 05, 2006
Copper rose in London amid optimism that a possible pause in U.S. interest rate increases may help boost demand for metals. Nickel and zinc also advanced.
Nickel is used extensively in Stainless Steel. Some chinese produces of SS are cutting back. That may help in a while. The article contains more details.
Tuesday, June 27, 2006
Canadian mining companies Inco Ltd. and Falconbridge Ltd. have reached a three-way deal to merge with Phelps Dodge Corp. of Arizona in what would be the biggest takeover in Canadian corporate history.
The companies said Monday the union would create the world's largest nickel producer and largest publicly traded copper producer.
The new company will be named Phelps Dodge Inco Corp. Its corporate office and copper division will be headquartered in Phoenix, while Inco Nickel, the new company's nickel division, will be based in Toronto.
Wednesday, June 07, 2006
Rising nickel costs ensure that stainless steel transaction prices will increase over the next three months in all parts of the world. Expanding figures for ferrochrome and molybdenum over the same period are also a real prospect. We are bullish about stainless steel prices in the period to September, at least. We forecast a further 19 percent increase in our benchmark 304 cold rolled coil price over the next four months. Over that period, supply is likely to remain quite firm - at least in Western nations.
We have reservations about the prospect of this market continuing at the current level in the medium term. Production is starting to rise to meet current orders - a large proportion of which are speculation against rising raw material costs. As the third quarter develops, we expect to see a reduction in the volume of mill orders. This is likely to be followed by lower demand for nickel, chrome and molybdenum and a correction in their selling prices is anticipated in the final trimester or, perhaps, earlier.
Wednesday, May 24, 2006
See this paragraph excerpt from a larger document.
The recent roller-coaster ride in world commodity markets does not bode well for steel futures. Prices for non-ferrous metals have been driven up to record highs by pressures that have less to do with the basics of supply and demand, and more from speculation by investment funds. In mid-April the inevitable correction took place and metal prices tumbled â€“ for nickel and zinc by as much as 7 percent in a single day. This was attributed purely to â€śsentimentâ€?. Market fundamentals had not changed significantly. The world steel market measures more than 1,000 million tonnes. It would be absurd to have the price of this physical metal determined by dealings between financial speculators who have their own agenda.
Friday, May 12, 2006
Copper soared above $4 a pound for the first time and nickel and zinc rose to records on signs that higher prices have done nothing to curb demand. Gold climbed to a 26-year high and platinum jumped to the highest ever.
Stockpiles monitored by the London Metal Exchange fell the most in five weeks, as makers of wire and pipe tapped inventory to make up for a shortfall from mines. Strikes and declining ore grades in Mexico and Indonesia have cut copper output this year. Demand will climb 5.7 percent this year after rising 1.8 percent last year, according to Citigroup Inc.
[...] a London-based analyst said. ``Every day I'm stunned as prices keep going up.''
Friday, April 21, 2006
Bloomberg.com: Latin America
Copper headed for a sixth consecutive weekly gain in London, the longest period of rising prices since October, driven by supply disruption and speculation demand growth may accelerate. Nickel rose to the highest since at least 1987.
Production stoppages at Grupo Mexico SA, the world's seventh largest copper producer, continue at its zinc and copper operations. The company said this week it may not be able to deliver the metals to customers in May. Industrial production in China, the world's largest copper consumer, expanded 17.8 percent last month after gaining 20.1 percent in February.
And this, from Reuters, news that some additional capacity might be coming on-stream.
China's Xiangguang Copper Co. Ltd. aims to start production at its new copper plant in early July but has no time table to start work on its planned expansion, company officials said.
And finally, some speculation as to when Copper might fall again - hey, I made a joke - speculation seems to be becoming a factor in the Copper marketplace.
Copper won't defy gravity forever
The blistering rally in copper prices may start to cool later this year as new production finally comes on stream, but most analysts are not expecting a big correction anytime soon.
As miners from Chile to China ramp output to grab a piece of the commodities boom, supplies of copper could begin matching demand later this year and next.
Because of high demand for the industrial metal, thanks to the relatively robust world economy, copper has appeared resistant to any downside risk.
The world's big investment funds, who have no intention of ever taking delivery of the metal, have been piling in to grab big returns for their portfolios, and driving up the prices in the process.
Indeed on Thursday, precious metals suffered a correction with gold sliding 4 percent and silver losing 14 percent. But while copper wobbled, it ended the day only a fraction lower and by Friday was up $54 at the bid price of $6,350 a tonne.
But most market players don't believe copper can defy gravity forever.
Wednesday, February 22, 2006
AK Steel said the price hikes take effect April 1 and will be added to the company's current pricing extras for all aluminized carbon and stainless steel products.
Here are some cute update-themselves graphs of aluminum pricing:
Unfortunately, it won't produce cute charts of longer terms, but you can see them by clicking this link.
As you can see from the longer term graphs (follow the link above), aluminum prices have doubled since 2002. This trend, repeated in copper, steel and nickel prices, shows that we can no longer take for granted the plentiful and cheap availability of these metals. The underlying factors in all cases is a wide-scale (delayed) industrial revolution in large areas of what we once called the third world. This has the ability to outstrip mining efforts for these metals and, at least in the short term and perhaps for a good long time to come, will drive up demand and therefore prices.
Now the good news, at least for aluminum, is that recycling is relatively cheap, aluminum is a low-melting point element, but even still, the scrap is worth a small fraction of the original price. Better not to make scrap at all.
In this way, certain less-wasteful processes, like slide forming, will likely become more prominent in the next few years, as the true costs of waste metal becomes increasingly obvious.
Wednesday, February 01, 2006
Stainless steel producers from Japan in the east to Kentucky in the west seem to have decided that they have had enough of falling prices and are acting to reverse the downward trend. The first few weeks of 2006 have seen a flurry of announcements of intended selling price rises.
It is quite unusual for producers in Asia, Europe and America to go for price hikes all at the same time. Three factors have prompted this unusual unanimity. First, price weakness has affected all major markets. Second, Chinese production of cold rolled stainless is lower than had been forecast â€“ thus reducing fears of excess supply. Third, alloy costs are on the rise.
Between January and December last year, basis prices for grade 304 cold rolled stainless coil (excluding raw material surcharges) fell in many of the worldâ€™s principal markets. The drop was relatively minor in the US. However, in Europe the price went down by 25 percent.
Last yearâ€™s cuts in production seem to have brought a bit more balance to the supply-demand picture. We estimate that crude stainless output in the second half of last year slipped by at least 12 percent in Europe and the Americas. Output also appears to have fallen in Asia, though more modestly.
The prospect of rising alloy surcharges next month has encouraged buyers to come back into the market to rebuild their depleted stocks. Mills, therefore, seized the opportunity. Among the first to move was Arcelorâ€™s subsidiary Ugine & ALZ, which is proposing a â‚¬50 per tonne basis price increase from February and another â‚¬50 per tonne rise in March. Other European mills are following a similar line.
In the Americas it was NAS which led the upward move â€“ announcing plans to raise basis prices by about 3 percent effective March 1. This is the first such attempt in 18 months, and was followed by other major producers.
In Europe and America the mills will have the challenge of pushing through basis price hikes at the same time as alloy surcharges are rising. This is a practical proposition if the cost of nickel continues to increase for several months. However, this latest order burst could be short lived if nickel prices start to retreat once again
Thursday, January 05, 2006
Researchers at Ames Laboratory's Materials Preparation Center will produce about 400 pounds of an aluminum-yttrium-nickel alloy over the next few months that will serve as a benchmark for testing and to help refine commercial production techniques. The material is being developed [...] to replace heavier or costlier components in the "cool" sections of jet engines. The material also could be used in other parts of an aircraft such as wing spars.
If the new material performs up to expectations, it could have a dramatic impact on the performance and efficiency of both commercial and military aircraft. Jones said that Pratt & Whitney engineers estimated that replacing various components in one particular jet engine with the Al-Y-Ni alloy could potentially lighten the engine by 350 pounds. That's an astronomical weight reduction in aircraft design, where engineers are typically happy to reduce the weight of components by a few pounds here or there.
"It means being able to carry significantly more fuel or payload," Jones said. "It could also mean lower production costs," pointing out that a bulkhead currently milled from a solid block of titanium for the JSF takes months to fabricate.
Wednesday, November 23, 2005
You know Cobalt? Artists have a colour they call Cobalt Blue, because Cobalt is an ancient ingredient in some pigments.
Cobalt may just be the new copper. Or aluminum. Or steel. Possessing neither the glamour of precious metals like gold nor the industrial muscle of iron, this silver-white by-product of copper or nickel mining has always been considered a minor element on the world trading markets.
But cobalt is suddenly in vogue, thanks to surging demand for products that contain it. Known since at least 2000 B.C. as a coloring agent that produces a rich blue hue to glass, the metal now is an integral part of orthopedic implants, rechargeable batteries for hybrid cars and cameras, and aircraft engines and armor systems.
Mining companies are responding by stepping up production. Canada's Inco will develop a nickel-cobalt mine in the French Pacific territory of New Caledonia, while U.S. copper giant Phelps Dodge just acquired a controlling stake in a vast copper-cobalt deposit in Democratic Congo.
Monday, July 18, 2005
Late breaking news ... Whirlpool will be holding a conference call at 11AM this morning.
[next morning] the Toronto Globe & Mail had this take on the issue:
Whirlpool offer for Maytag seen as bid to block Chinese
Whirlpool Corp. has proposed a $1.35-billion (U.S.) bid for Maytag Corp., a move that will help wring out costs by buying the iconic American brand known for washers -- and keep it out of the hands of a low-cost Chinese rival.
But some observers yesterday suggested Whirlpool's move, which would give it almost 50 per cent of the U.S. appliance market, is a defensive tactic.
Analysts see Whirlpool trying to keep Haier from increasing its share in North America by buying the strong Maytag name and combining it with low-wage manufacturing.
But the best comment is buried in here:
David Silver [an analyst] expects Haier to outbid Whirlpool. "I think it [the winning bid] is going to be upwards to $19 a share.," he said.
"Haier can definitely afford to do so," Mr. Silver said. "They are the largest producer of appliances in China, and the Chinese are not as demanding as American investors in that it doesn't have to be every quarter that they see a profit. They are willing to take a loss in one or two quarters to see a large gain in the future."
It's been said before but bears repeating: the (North) American expectation that a company show profit and issue dividents every quarter does not work well for certain types of very long investment ventures, especially heavy industries like steel (and maybe even some medium industries like big stampers). It makes for decisions which are too short term. Ultimately, investor climates where they think longer term (China, Japan) will have an advantage over North America unless we smarten up.
On the drive in to work today, I heard this on the radio ...
Switzerland-based Xstrata may bid for Toronto-based Inco after failing to buy WMC Resources Ltd., Australia's The Age newspaper said today, citing people it didn't name.
Inco spokesman Steve Mitchell said he wasn't aware of the story and declined to comment on the issue. Xstrata also declined to comment.
Nickel prices on the London Metal Exchange averaged $14,715 a metric ton in the past 12 months, compared with $9,578 a ton in the previous five years, on surging demand from China, the world's fastest growing major economy.
Inco, of course, is a major player in the nickel marketplace, and nickel is a major component (cost and otherwise) of stainless steel.
The Xstrata web site says, about themselves, Xstrata maintains a meaningful position in six major international commodity markets: copper, coking coal, thermal coal, ferrochrome, vanadium and zinc, with additional exposures to gold, lead and silver.
Saturday, May 28, 2005
Inco Ltd. will close its Copper Cliff refinery in Sudbury in northern Ontario by the end of the year, the Toronto-based company said on Friday.
'We have made the decision final to close the copper refinery,' Inco spokesman Cory McPhee said.
He said the decision to shut the small, aging and high-cost plant will affect 140 employees, but no one will be laid off. Jobs will be found for workers in other Inco operations in the area.
The United Steelworkers of America, the union representing workers at the refinery, as well as several other Inco sites, is strongly opposed to the plant's closure.
The union has warned that labor negotiations later this year at Inco's Manitoba nickel operations will be tense if the refinery is shut.
McPhee said that about 80 of the 140 employees were near retirement age.
Like other miners, Inco has suffered from escalating costs at its operations due to higher energy and other mine input costs. But at the same time, it has been enjoying the best nickel and copper prices for more than a decade.
Tuesday, May 17, 2005
Inco Ltd., the world's second-largest nickel producer, expects Chinese demand for stainless steel to double in five years as the nation's economic growth brings more prosperity and demand for products containing the metal.
``China's growth is transforming the world economy,'' and will help sustain rising demand for nickel and other metals, Peter Jones, president of Toronto-based Inco, said today during a presentation to investors in New York. ``The fact is that 1.3 billion people want a better life, and that means higher nickel consumption.''
Chinese demand for nickel, the metal used to harden stainless steel, rose more than 75 percent in the first quarter from a year earlier, Jones said. Stainless steel demand in the Asian nation is expected to rise 800,000 metric tons above the 4.5 million tons sought last year, Inco estimates.
Demand will only increase as more Chinese gain affluence and greater spending power, Jones said. Some 300 million Chinese now earn more than $2,000 a year, a level that has historically accelerated stainless steel demand in other nations, he said.
``China could be consuming 10 million tons of stainless steel per year by 2010,'' Jones said.
Apparently money canâ€™t buy happiness between Inco Ltd. and its largest union.
Despite company profits of $800 million (US) in 2004 and unionized workers sharing the largest nickel bonus cheques in history, the relationship between Local 6500 of the United Steelworkers of America (USWA) and Inco management is at its lowest point in almost 30 years, says Local 6500 president John Fera and USWA regional co-ordinator Dan Oâ€™Reilly.
Tuesday, May 10, 2005
Nickel futures rose to a seven-month high in London as demand from stainless steel producers, the largest users of the metal, caused a shortage.
Prices for immediate delivery traded $1,000 higher than the three-month price, the largest gap since 1989, according to Standard Bank London. In a market with adequate supply, forward prices exceed nearby prices due to storage and interest costs.
``There won't be much new production until 2007 and stainless steel production is increasing very quickly in China,'' Philip Joly, the spokesman of Eramet SLN, said by phone from Paris. Eramet is the world's largest producer of ferronickel.
Nickel for delivery in three months on the London Metal Exchange rose as much as 2.8 percent today to a seven-month high
Tuesday, April 19, 2005
BEIJING (AFX) - China's State Council has approved a proposal to reduce the tax rebate for exports of steel products to 11 pct from 13 pct, the China Business News reported.
The tax rebate reduction will take effect on May 1, the report said, citing an unidentified official from the Ministry of Finance.
Analysts said lowering the rebate will slow Chinese exports of steel products and ease domestic steel shortages.
The move follows the cancellation of a 13 pct tax rebate for billet steel exports which took effect on April 1, the report added.
In an attempt to deal with its shortage of metal resources, China started abolishing or reducing tax rebates for exports of copper, aluminium and nickel in the fourth quarter last year.
China also abolished an eight pct tax rebate for electrolytic aluminum and alloy iron on Jan 1 this year.
Saturday, February 05, 2005
Daido Steel Corp., Japan's largest maker of specialty steel, asked automakers and other customers to pay 20 percent more for steel products because of soaring costs for raw materials such as nickel and molybdenum.
Nickel prices averaged 53 percent higher in 2004, while molybdenum rose fourfold last year, boosting costs at Nagoya- based Daido Steel, which gets about 70 percent of its revenue selling auto parts to companies including Nissan Motor Co. Daido Steel uses more of the metals than other steelmakers.
Sunday, December 05, 2004
As with nickel, copper and zinc before it, Canada's coal is fodder for China's seemingly endless appetite for raw materials to feed its booming economy. [...Coal] is used to make steel and cement, and to fire power stations.
'We come out of an extended period of extremely low commodity prices. The weaker producers were forced out of the business, no significant new supplies have come on and suddenly we are facing new demand,' said Robin Goad, president and chief executive of Fortune Minerals, the owner of a large anthracite deposit in British Columbia.
'The world has a tendency of overproducing and the pendulum will swing back. But certainly for the next few years, I anticipate that we will have very strong prices,' Goad said.
Behind Australia, Canada is the world's second-biggest exporter of metallurgical, or coking, coal, which is heated to melt iron ore in steelmaking. About two-thirds of steel production is dependent on this combustible black rock.
Analysts predict that Canada's producers could get $100 or more a tonne for their coal in 2005, double what they got this year, as China's steel output, now in its fourth year of 20 percent growth, shows few signs of slowing.
"Demand remains strong and the structural supply constraints faced by all producers are unlikely to be rectified within two to three years," said Chris Lancaster, an analyst at RBC Capital Markets.
"The Canadian producers are literally 'maxed' out. They have sold everything that they can produce," said Jason Hayes, an analyst at the Coal Association of Canada.
"They're attempting to ramp up production to meet demand but production is related to capital expenditures on equipment. To buy a truck or shovel is not a small investment and takes time," he said.
Tuesday, November 30, 2004
Nickel demand will exceed production by 29,000 metric tons this year, said Mitchell, a consultant at the Addlestone, England- based company. The deficit will narrow to 2,000 tons next year as more stainless steel scrap becomes available before widening to 16,000 tons in 2006 as new mills start in China and Finland.
Stainless steel production may only increase by 3.5 percent a year until 2010 amid a lack of raw material. Some producers may produce Series 200 stainless steel, which contain less nickel than traditional austenitic grades of stainless. "
Wednesday, October 13, 2004
``London Metal Exchange prices will remain historically high well into next year,'' London-based analyst Stephen Briggs said in the SG Commodities Research report. The LME is the world's largest metals bourse, handling $2 trillion a year in trades.
Prices will fall about 5 percent after this year's 40 percent gain, Briggs forecast. Copper last week closed at a 15-year high on the LME, aluminum reached a nine-year peak and lead climbed to a record. Demand for those metals, along with nickel, zinc and tin, will rise 6.5 percent this year, he said.
China's growth in demand is slowing to 15 percent this year from 20 percent last year, Briggs said. China, the world's largest user of copper and aluminum, will spend at least $560 billion on power plants and transmission lines by 2010, requiring 500,000 tons of copper, according to Ingrid Sternby, an analyst at Barclays Capital in London. "
Speaking from London, Mr Michelmore said copper and nickel markets remained very strong going into 2005."
Thursday, June 17, 2004
Increasing Chinese demand for commodities, lack of new metals supply and consolidation in the industry provided 'an opportune environment to review our options' to increase value for Brascan and Noranda shareholders, said Bruce Flatt, Brascan chief executive.
Brascan made clear two years ago that it wished to sell its stake in Noranda to focus on real estate, power generation and asset management. Brascan said yesterday it was 'supportive' of Noranda's efforts to find a buyer. "
Tuesday, April 27, 2004
Wednesday, April 21, 2004
Friday, March 12, 2004
Monday, March 08, 2004
Tuesday, March 02, 2004
As it turns out, the same is now true for the Canadian Nickel. It wasn't always so, though.
Gerard, 57, started his career at 18 in a fiery nickel smelter in Sudbury, Ontario.
ISG shrank union job categories from 32 to five, freeing the company from rigid limits on redeploying workers. But the contract approved last February also required ISG to cut layers of management between the chief executive and the shop floor from seven to three.
Increased flexibility allowed ISG to cut the employee hours required to produce a ton of steel from 2 1/2 to one. The union gained more control over day-to-day operation of the mills.
A few years back, such togetherness was unthinkable. The perilous state of the industry changed that. "
Saturday, February 28, 2004
Hand tools, Drilling tools
Water-tube boilers, Steam engines, Refrigerators, Various types of electrical machinery, Nuclear reactors
Ferro-nickel alloys, Nonalloy ingots, Flat hot rolled steel"
[just out of curiousity, what's an electronic steam engine? ... mw]
Monday, February 23, 2004
Industry analysts expect the global shortage of nickel to continue until at least 2006, when new capacity is scheduled to come on stream in Canada and New Caledonia.
"Actual consumption this year will not be sufficient to meet underlying demand for nickel, especially from booming stainless steel production in China," AME's Barkas said.
Sunday, February 22, 2004
Saturday, February 21, 2004
Wednesday, February 11, 2004
Sunday, February 08, 2004
Falconbridge Sudbury operations are part of the Company's Integrated Nickel Operations (INO). The operations employ over 1,500 people and consist of four underground mines, a mill and a smelter. Approximately 1,050 production and maintenance workers are represented by Sudbury Mine, Mill and Smelter Workers Union Local 598 (CAW). The strike began on February 1, 2004.
Falconbridge Limited is a leading producer of nickel, copper, cobalt and platinum group metals. "
Thursday, February 05, 2004
Wednesday, February 04, 2004
Tuesday, February 03, 2004
Falconbridge officials said there were no immediate plans to declare force majeure as the firm had enough nickel stocks to meet supply commitments for the next four to six weeks.
Firms declare force majeure when they cannot meet supply contracts due to unforeseen circumstances. "
Monday, February 02, 2004
Metals markets have been on tenterhooks about a strike at the Canadian operation as it comes at a time when the world is forecast to need 30,000 tonnes more nickel than can be supplied. Nickel is a key ingredient in stainless steel.
The work stoppage comes just four months after a supply-crippling, 13-week strike ended at Toronto-based Inco Ltd, the world No. 2 producer.
A shutdown of the Sudbury mine, milling and smelting site will deplete world supplies by more than 4,000 tonnes a month. Smaller quantities of copper, cobalt and precious metals, which are mined as by-products of nickel, will also be lost.
Nickel prices more than doubled last year on supply worries and were expected to continue to rise with a Sudbury shutdown."
Sunday, February 01, 2004
'There will be a strike,' said Tom Datillo, an official with the Canadian Auto Workers "
and then a few hours later .... Yahoo! News - Strike, Lock-Out Hit Falconbridge Nickel Site: "operations at Falconbridge Ltd.'s Sudbury site were halted on Sunday after the company and union failed to agree a new labor contract. "
Metals markets have been on tenterhooks about a strike at the northern Ontario operation, as it would coincide with an already worrisome shortage of nickel. The work stoppage would come just four months after a supply-crippling, 13-week strike ended at Inco Ltd, the world No.2 producer.
Analysts expect the market to be short of 30,000 tonnes of nickel both this year and next year, creating problems for producers of stainless steel, of which the silvery white metal is a key ingredient.
... Well, there goes the price of stainless steel. While some of the possibility of this strike was priced into stainless steel surcharges, the actual strike happening will undoubtedly cause stainless prices to rise some more.
What can you, our customers, do about it? Well, get your orders in now for any stainless parts. There may still be stainless supply at the slitters, and at least some of them don't pass surcharges through on steel they bought in the pre-surcharge era.
If you're not willing to commit to an order for parts, sign an authority to purchase raw material, and we'll get the raw material laid in at the old price. Of course, there were already some surcharges posted as in effect for February, but they're very likely to get worse now before they get better.