Articles in Category: Green

This morning in metals news: Steel Dynamics Inc. released its second-quarter results, during which it tallied $4.5 billion in net sales; Nucor Corporation also released its Q2 results; and, lastly, miner Rio Tinto signed a renewable energy agreement in Madagascar.

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Steel Dynamics records Q2 net income of $702M

earnings sign

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Steel Dynamics reported Q2 net income of $702 million, up from $75 million in Q2 2020.

“During the second quarter, steel demand remained robust as shipments and product pricing continued their positive momentum across our entire steel platform,” said Mark Millett, chairman and CEO. “Higher steel selling values drove significant metal spread expansion across the entire platform and were most prominent within the flat roll steel operations, as continued demand strength and historically low customer inventories persisted throughout the supply chain and supported prices. Domestic steel consumption was strong from the automotive, construction, and industrial sectors, while the energy sector continued to show signs of rebounding.”

The company recorded Q2 2021 net sales of $4.5 billion, up from $2.1 billion in Q2 2020.

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Reducing carbon emissions seems to be on the top of everybody’s agenda at the moment.

A recent post in The New York Times reports on proposals being discussed in the European Union to drive the region’s pivot away from fossil fuels over the next nine years.

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Tariffs for exporters with weaker carbon emissions regulations

carbon emissions

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According to the report, the most radical and possibly contentious proposal would impose tariffs on certain imports from countries with less-stringent climate protection rules.

The proposals would also include eliminating the sales of new petrol- and diesel-powered cars in just 14 years. They also call for a 55% reduction in greenhouse gas emissions by 2030 (compared with 1990 levels).

According to The New York Times, at the heart of the European road map is increased prices for carbon.

Nearly every sector of the economy would have to pay a price for the emissions it produces. In turn, that would affect things like cement in construction and fuel for cruise ships.

Proposed tariffs on imports of goods made outside the European Union, in countries with less-stringent climate policies, could invite disputes at the World Trade Organization. The cross-border carbon tax proposal could have the greatest impact on goods from Russia and Turkey, mainly iron, steel and aluminum.

We covered that topic recently following howls of protest by European steel and aluminum producers that overseas supplier could simply direct low-carbon production to Europe and sell their higher-carbon content production elsewhere. That would leave a net-zero reduction in global carbon emissions. Furthermore, it would damage European manufacturers’ home markets by allowing in low-tariff imports from producers they deem to be cheating the system.

The US perspective

The good news for U.S. exports to Europe is any impact would be far smaller.

Little in the way of raw material is shipped from the U.S. to the E.U.

Anyway, Democrats are looking at a similar tax, termed the “polluters tax” intended to have a similar impact.

The proposals, if passed, would see the last gasoline or diesel cars sold in the European Union by 2035. According to the post, they would require that 38.5% of all energy be from renewables by 2030. The proposals also call for a significant increase in the price charged for carbon emitted to make the use of fossil fuels increasingly expensive.

Role of China

China is the world’s largest polluter. However, it faces some unique challenges.

Its power generation industry is one of the youngest among major economies, with numerous new power stations coming onstream every month. To switch from that overwhelmingly coal-based capacity would entail eye-watering capital losses.

Ahead of the upcoming Glasgow-hosted COP-26 climate talks later this year, China has just announced it will launch its long-awaited carbon market. According to The New York Times, it would be the world’s largest by volume of emissions.

As with all carbon markets, though, its efficacy will in part be down to how generous Beijing’s get- out-of-jail-free cards it issues to polluters in the form of carbon credits.

Nonetheless, it would be a start.

Political process

Politically, this has some way to go.

It is estimated it will take two years for the European Union’s policies to be debated, negotiated and finally agreed across the E.U.’s 27 national governments and with Brussels.

Views differ widely as to priorities. Some countries, like Denmark, are already well on the way in the process of a huge switch to renewables. Others, like Poland and Germany, still rely heavily on coal for power generation. Hence, their industrial base would face substantial implications — unless carbon credits were so generous they would make the proposals meaningless.

Someone has to pay for such a colossal shift. It is always, in the end, the consumer.

Politicians at the local level are well aware of this and will to varying degrees look to push the consequences as far into the future as possible — if not for when they are no longer in power then at least when they are in different ministerial roles. Then, it’s someone else’s problem.

All the same, the flow of history is clear. Where governments fail, the market may well lead. Many firms, from automakers to electronics, are already seeing marketing opportunities in zero-carbon products. Those firms are shifting supply chains to be able to deliver that claim to market.

Politicians’ rhetoric on the issue is widely supported by the majority of the public (at least in Europe).

But that may change as the costs begin to bite.

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This morning in metals news: Chinese steel exports surged in June, according to General Administration of Customs data; meanwhile, the average cost for U.S. solar power construction continued to decline in 2019; and, lastly, Cleveland-Cliffs released its Sustainability Report 2020.

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Chinese steel exports jump in June

China map

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Chinese steel exports jumped by 23% to 6.49 million tons in June, the General Administration of Customs reported this week.

The country reported steel exports 5.27 million tons in May.

Meanwhile, exports of unwrought aluminum and aluminum products reached 454,397 tons in June, up from 439,097 tons in May.

In addition, exports of rare earths fell from 4,171 tons in May to 4,012 tons in June.

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The Renewables Monthly Metals Index (MMI) dropped by 0.8% for this month’s reading.

July 2021 Renewables MMI chart

(Editor’s note: This report also includes the MMI for grain-oriented electrical steel, or GOES.)

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Cobalt price bounces back

Last month, we noted a plunge in the cobalt price through the first two months of the second quarter.

In June, however, the cobalt price bounced back.

According to pricing information on the LME website, the LME cobalt price fell as low as $42,500 per metric ton in June before recovering. The price has settled in around $50,500 per metric ton over the last week.

Among other materials, cobalt goes into electric vehicle batteries, making it an object of increasingly higher demand. As automakers augment their electric vehicle offerings and announce long-term emissions targets, cobalt demand will increase.

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This morning in metals news: miner Rio Tinto and POSCO, South Korea’s largest steel producer, have signed a memorandum of understanding (MoU) to work toward a low-carbon-emission steel value chain; meanwhile, Steel Dynamics announced plans to reach carbon neutrality by 2050; and, lastly, U.S. job openings were little changed in May from the previous month.

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Rio Tinto, POSCO sign climate MoU

Rio Tinto sign

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Rio Tinto and South Korea’s largest steel producer, POSCO, have signed an MoU aimed at a greener steel value chain.

“The partnership will explore a range of technologies for decarbonisation across the entire steel value chain from iron ore mining to steelmaking, including integrating Rio Tinto’s iron ore processing technology and POSCO’s steelmaking technology,” Rio Tinto said in a release.

Both companies aim to reach net-zero carbon emissions by 2050.

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This morning in metals news: Norsk Hydro today announced it signed a letter of intent to build a new aluminum recycling plant in Cassopolis, Michigan; the Census Bureau released construction spending data; and, lastly, the zinc price posted some gains this week.

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Norsk Hydro to build aluminum recycling plant in Michigan

Norsk Hydro

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Oslo-based Norsk Hydro has signed a letter of intent to build an aluminum recycling plant in Michigan.

The plant will produce aluminum extrusion ingot for automotive applications. Norsk Hydro said it aims to build the plant by 2025.

“The LoI between Hydro Aluminium Metal and landowner Midwest Energy and Communications (MEC) is based on Hydro’s intention to build a facility in Cassopolis producing 120,000 metric tonnes per year from 2023 with around 70 direct employees,” Norsk Hydro said. “The total project investment is currently estimated to be around $120 million, depending on final facility design, market conditions and macroeconomic development.”

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This morning in metals news: Rio Tinto and Schneider Electric have signed a memorandum of understanding to “develop a circular and sustainable market ecosystem for both companies and their customers”; meanwhile, Norilsk Nickel announced it has begun production of carbon-neutral nickel; and, lastly, the city of Savannah, Georgia, is attempting an aluminum cup pilot program.

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Rio Tinto, Schneider Electric sign MoU

gears featuring words reading sustainability, environment, society and economy

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Rio Tinto has signed a memorandum of understanding (MoU) with Schneider Electric, a collaboration that will see them aim to “develop a circular and sustainable market ecosystem for both companies and their customers.”

“This multi-product partnership will see Schneider Electric use responsibly sourced materials produced by Rio Tinto,” Rio Tinto said in a release. “These include low-carbon aluminium and copper produced with renewable power, iron ore, and borates.”

In addition, Rio Tinto will use energy and industrial services from Schneider Electric.

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This morning in metals news: the U.S. Court of International Trade granted defendants’ motion for partial dismissal of a challenge to the U.S.’s Section 232 duties on Canadian steel; the Midwest is the heart of U.S. wind capacity; and, lastly, U.S. Steel released its second-quarter guidance.

Each month, MetalMiner hosts a webinar on a specific metals topic. Explore the upcoming webinars — including the next one scheduled for Thursday, June 24 — and sign up for each on the MetalMiner Events page.

Court of International Trade rejects Section 232 challenge

U.S. trade

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The U.S. Court of International Trade on Tuesday rejected a challenge to the Section 232 duties on Canadian steel.

Maple Leaf Marketing, based in Midland, Texas, filed the complaint. The company is the U.S. agent for EndurAlloy™ production tubing for Calgary-based Endurance Technologies Inc.

Maple Leaf challenged the “constitutionality and lawfulness of duties imposed on re-imported steel tubing” pursuant to Section 232. 

Midwest wind

Since 2011, most U.S. wind capacity has been built in the Midwest, the Energy Information Administration reported.

“The Texas, Midwest, and Central regions—home to some of the country’s most prolific wind resources—combined accounted for the largest share of U.S. wind capacity growth from 2011 to 2020 with 73% of additions,” the EIA reported. “At the beginning of 2011, the Texas region (which covers the area served by ERCOT) had 9.4 GW of wind capacity; by the end of 2020, capacity had grown to 27.9 GW.”

Furthermore, Midwest wind capacity tripled, from 8.6 GW in 2011 to 26.9 GW in 2020.

Meanwhile, in 2011, the Central region had about half the wind capacity of the Texas and Midwest regions, the EIA added. The Central region added 20.5 GW of wind capacity over the last decade, more than any other region.

U.S. Steel releases Q2 guidance

U.S. Steel released its Q2 guidance, estimating adjusted EBITDA of $1.2 billion.

In addition, the steelmaker projected net income of $880 million.

“Higher steel prices and strong flat-rolled steel demand coupled with well-run operations are expected to deliver adjusted EBITDA that more than doubles our first quarter performance,” U. S. Steel President and CEO David B. Burritt said. “Continued strong demand and low steel inventories are empowering today’s ongoing market improvements. These market fundamentals are showing no signs of slowing down and have us increasingly confident of another strong year in 2022.”

See why technical analysis is a superior forecasting methodology over fundamental analysis and why it matters for your steel buy.

Before we head into the weekend, let’s take a look back at the week that was and the metals storylines here on MetalMiner:

Stop obsessing about the actual forecasted nickel price. It’s more important to spot the trend. See why.

Week of June 14-18 (Boeing-Airbus dispute, copper prices and much more)

Airbus plane

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Each month, MetalMiner hosts a webinar on a specific metals topic. Explore the upcoming webinars and sign up for each on the MetalMiner Events page.

By the end of this month, Central Asia’s largest wind farm, located in Kazakhstan, will become fully operational.

In the process, it will also stamp China’s authority of being a green energy powerhouse in the region.

Each month, MetalMiner hosts a webinar on a specific metals topic. Explore the upcoming webinars and sign up for each on the MetalMiner Events page.

Wind farm to come online in Kazakhstan

wind power and solar power installations generation

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According to a news report by Chinese state-run news agency Xinhua, the wind farm located in South Kazakhstan near the city of Zhanatas is an example of how the Belt and Road initiative is transforming Kazakhstan’s energy supply. The Belt and Road initiative, which China launched in 2013 is a global infrastructure project that sweeps over 70 countries around the world.

Construction of the plant started in 2019. The fact that the pandemic did not slow down the project marked a commendable feat, said Guo Qiang, the plant’s general director.

The wind farm has a 100 megawatts capacity. Furthermore, it will power 1 million homes with clean electricity when all 40 wind turbines come online.

Each turbine tower weighs over 300 tons and is nearly 150 meters tall, comparable to a 50-story building.

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