Battery Metals

Japanese special steel producer Sanyo Special Steel said Friday it has raised its stainless bar prices by 10% from July contracts.

Himeji-based Sanyo does not disclose its list prices, but current market prices for SUS304 bars (25-100 mm diameter) in Tokyo are Yen 530,000/mt ($4,711/mt) and for SUS403 bars (13 chrome) are Yen 380,000/mt, sources said.
The company last lifted its stainless bar prices by 10% from February contracts. A Tokyo-based stainless distributor said that increase had not kept pace with rising input costs.

“Also demand for stainless bars has been firm and the company remains at full production, so these conditions were also considered when it decided to lift prices,” he said.

Demand for stainless bars was strong for infrastructure works such as water treatment facilities, and from the semiconductor and auto sectors, he said.

Daido Steel, another major stainless producer in Japan, in early July raised its stainless bars and section prices by 10% for July contracts to reflect higher alloy costs.

Production cuts in China’s mammoth steel sector will vary from mill to mill next autumn and winter, said an environmental ministry official, as the country shifts away from a ‘one size fits all’ approach to fighting pollution.

That comes after the nation’s state council earlier this month said the 82 cities required to take special anti-smog measures over autumn and winter would be able to draw up their own bespoke plans for those steps.

“This year, production curbs (in the steel industry) will definitely be differentiated based on the emission level at each steel mill,” Liu Bingjiang, director of the air environmental management department at the Ministry of Environment and Ecology (MEE), said at a conference on Saturday.

Industrial plants in the steel, cement and primary aluminum sectors in 28 northern cities were last winter ordered to cut as much as 50 percent of their production capacity as part of the government’s years-long ‘war on pollution’.

But some local officials simply imposed blanket production suspensions on all industrial enterprises regardless of their emission levels, stoking some public discontent.

The MEE said in May that it planned to end the ‘one size fits all’ approach to fighting pollution and promised to give local regulators enough time to make their own plan rather than imposing orders from above.

“Differentiated measures will give companies more incentives to improve their emission levels,” Wu Jianjun, director of the air pollution department at the Tangshan Environmental Bureau, said on the sidelines of the conference.

Tangshan, China’s top steelmaking city, will hire a third-party institute to assess emission levels at mills and will implement curbs based on those results, Wu said.

Detailed production restriction plans for winter have not been issued in Tangshan, in the province of Hebei, but the rates are expected to be higher than last year, according to Wu.

“Environmental measures will be more and more stringent until at least 2020.”

A new steel manufacturing site is expected to be up and running later this year in Rock Hill, bringing 180 new jobs and a $9 million investment to the area.

Schuff Steel Company will update an existing 148,000-square-foot fabrication site at 1345 Spencer Hall Road. The 45-acre site adds to a nationwide footprint for Schuff Steel, at more than 1.47 million square feet.

Hiring is expected to start during the third quarter of this year, which begins this month.

“Expanding our manufacturing operations to York County will enhance Schuff Steel’s fabrication capabilities and capacity in the eastern region of the United States,” parent company DBM Global CEO Rustin Roach said in a statement from the South Carolina Department of Commerce.

Roach said county and state efforts to bring the company here, which include economic incentives like the fee agreement York County Council voted in favor of on Monday night, were key.

“We expect to be an active employer in Rock Hill and look forward to becoming part of the community,” Roach said.

At Monday’s meeting, a company representative said sites in other parts of South Carolina and in other states were considered, but the fee-in-lieu of tax and special source revenue credits offered here made the deal happen. Similar packages accompany most of the larger businesses relocating to or expanding into the county.

York County Council Chairman Britt Blackwell thanked the company for bringing jobs and said it’s “extremely exciting” having the new company in the county.

“This announcement takes the metal working presence in our area to a new level,” Blackwell said.

According to the Department of Commerce, Schuff Steel is consistently ranked as the top steel erector in the country by Engineering News-Record magazine. It’s one of the largest and most experienced structural steel fabricators and erectors in North America.

“It’s no secret that South Carolina is having great success in the manufacturing sector,” said Bobby Hitt, state Secretary of Commerce. “I’m proud that industry leaders, like Schuff Steel Company, are recognizing this and deciding to invest in our state.”

Gov. Henry McMaster said the company adds to a diverse workforce.

“Schuff Steel Company is South Carolina’s latest partner in an increasingly diverse economy,” McMaster said. “The 180 jobs this investment will create will change the lives of South Carolinians and for that, we are extremely grateful.”

Nucor (NUE) kicked off the steel earnings season by reporting a surge in second-quarter profit, thanks to a boost from Trump tariffs on steel imports. But after Nucor raised its earnings guidance in mid-June, the steelmaker fell just short of Wall Street’s raised profit expectations on Thursday morning

Nucor earnings vaulted 107% to $2.07 a share, as revenue grew 25% to $6.461 billion. Wall Street had expected earnings of $2.10 a share on revenue of $6.493 billion, according to Zacks Investment Research.

Nucor said it sees sustainable strength in steel markets and expects Q3 earnings to “further improve” on record earnings in Q2. Before the report, the consensus estimate was for $2.15 per share for the third quarter.

Nucor stock sank 1.4% to 64.68 on the stock market today. Shares rose 1.5% on Wednesday to 65.61, 7% below the 10-year high hit in early January. Since that time, Nucor stock has been consolidating. Its relative strength line, which tracks a stock’s performance vs. the S&P 500 index, has been in a downtrend since late 2016.

Steel stocks have been stock market laggards. The Steel-Producers group is ranked 166 out of 197 industry groups based on price performance. Nucor stock is ranked No. 2 in the group by IBD Stock Checkup based on earnings, sales, margin and stock price trends. Steel Dynamics (STLD) is ranked No. 1.

On Thursday, Steel Dynamics stock, U.S. Steel (X) and AK Steel (AKS) fell 2.6%, 2.2% and 1.6%, respectively.

The relative underperformance of steel stocks this year may reflect uncertainty over whether the 25% Trump tariff on steel imports is sustainable. The Trump tariffs are being challenged by trading partners at the World Trade Organization. The Trump administration initially granted exemptions from the steel tariffs to Canada, Mexico and the European Union, before reversing course on June 1. But those exemptions might be renewed if President Trump can win concessions on trade in autos and NAFTA rules.

We live in a time of tariffs. In the wake of US tariffs on steel and aluminum, the EU has made several counter moves. The latest sees the bloc placing tariffs on steel imports which exceed quotas set at existing levels.

The European Union has announced that it will impose tariffs on steel imports into the bloc as part of its response to the US imposition of tariffs on steel and aluminum products.

The 25 percent tariffs will not be levied on all steel imports but rather will come into effect once import levels across a range of steel categories exceed a certain quota, set at the average import level of the past three years.

This system, known as a tariff rate quota, is designed to guard against a surge of steel imports into the bloc that would otherwise have been headed for the US market were it not for the recent imposition of tariffs by US President Donald Trump.

The European Commission says the EU has seen an increase in steel products reaching its market since the Trump tariffs came into effect in the United States. The 28-member bloc wants to protect its own manufacturers from cheaper steel flooding in from other global markets.

EU Trade Commissioner Cecilia Malmstrom said the bloc has “no other choice” but to introduce measures to protect the domestic steel industries of its member states, already suffering due to global overcapacity.

“The US tariffs on steel products are causing trade diversion, which may result in serious harm to EU steelmakers and workers in this industry,” Malmstrom said.

Steeling a march

The main exporters of steel to the EU currently are China, India, Russia, South Korea, Turkey and Ukraine. Cheap Chinese steel has in particular caused turbulence within the EU steel market, leading to consolidating mergers such as that which recently took place between Thyssenkrupp and Indian steel giant Tata.

The Commission says the EU steel industry is “in a fragile situation and vulnerable to a further increase in imports”. The fact that the US market is no longer appealing for European steel manufacturers as a result of the tariffs there is a further blow.

The new quota and tariff system will come into effect on Thursday, July 19, with 23 steel product categories to come under its sphere of influence.

The measures are the third part of the EU’s response to recently imposed US tariffs. It has already placed tariffs on €2.8 billion ($3.3 billion) of US imports, such as bourbon and motor bikes, and has also launched a legal challenge at the World Trade Organization.

A new era dawns

Malmstrom said she believes the latest measures “strike the right balance between the interest of EU producers and users of steel, like the automotive industry and the construction sector, who rely on imports.”

However, a lobby group for European carmakers — the European Automobile Manufacturers Association (ACEA) — was critical of the EU decision.

“These measures will be damaging to our competitiveness, as they will lead to steel price increases in the EU market, where prices are already very high,” said ACEA chief Erik Jonnaert.

The European steelmakers body Eurofer welcomed the move — initially a provisional one which can be in place for up to 200 days — but said they expected a glut of imports as steelmakers look to fill the quotas, which will be handled on a first-come, first-served basis by the EU.

The news came on the same day as confirmation that the EU will impose duties from Thursday on Chinese electric bicycles, which like the steel tariffs, are aimed at preventing a flood of cheap imports into the European market.

Australian miner South32 Ltd beat its coking coal output guidance for fiscal 2018 on Thursday, boosted by better than expected production at its Illawarra project even as fourth-quarter output dipped 24 percent.

Coking coal production fell to 1.1 million tonnes in the June quarter from 1.4 million tonnes a year earlier, but was ahead of a UBS estimate of 818,000 tonnes.

South32, made up of non-core assets spun off by mining giant BHP in 2015, posted full-year coking coal output of 3.2 million tonnes. The miner had forecast full-year coking coal production of 3 million tonnes.

South32 added that it expects to record one-off charges of about $60 million in its full-year 2018 results on account of a reorganization. The miner is scheduled to report its annual results on August 23.

The world No. 1 manganese producer posted a 2.1 rise in quarterly manganese ore production, while annual manganese output rose 10 percent amid stronger demand and pricing.

In April, South32 bid $1.3 billion to take full control of Arizona Mining, offering a hefty premium for the Toronto-listed firm which is developing zinc, lead, manganese and silver assets.