Commodities Roundup: Steel Plant Tragedy, Liberty House Looks to Buy and Iron Ore’s Resilience
10/19/2018
For the buyers and category managers out there, especially those of you deep in the weeds of buying and managing commodities, here’s a quick rundown of news and thoughts from particular commodity markets.
From price movements to policy decisions, we scour the landscape for what matters. This week:
Indian Steel Plant Fire Puts Safety Standards in Spotlights
Following a recent fire at an Indian steel plant — resulting in the deaths of nine workers and several more injuries — working conditions and safety standards in the country are again a subject of consideration.
MetalMiner’s Stuart Burns touched on the subject this week.
“Although the private sector in India is making significant strides in terms of both quality, safety and good governance, the state sector continues to lag behind,” Burns wrote.
“Last year, the British Safety Council estimated 48,000 people die annually in occupational accidents in India, often as a result of poor regulatory oversight, the Financial Times reports.”
Liberty House Looking to Buy
Speaking of India, Burns also covered Liberty House’s machinations toward acquiring another European asset.
As Burns notes, ArcelorMittal’s takeover of the struggling Ilva in Italy has prompted European competition regulators to order ArcelorMittal to divest itself of four other properties “to avoid an overly dominating position in the marketplace.”
That’s where Liberty House, owned by Sanjeev Gupta, comes in. Acquisition of the plants would significantly boost Liberty House’s portfolio.
“The acquisition will take Liberty to nearly 15 million tons per annum of capacity, encompassing a full range of finished steels that includes plate, hot-rolled coil, cold-rolled coil, galvanized sheet, tin plate, bar, wire rod and rail,” Burns wrote. “The plants already serve both domestic and wider European markets, including automotive, construction, industrial machinery, and the oil and gas sectors. These four plants will double Liberty’s capacity and push it into the big league of European producers.”
U.S. Probe Targets China Imports
The U.S. Department of Commerce launched anti-dumping and countervailing duty investigations of aluminum wire and cable imports from China.
Imports of the products from China in 2017 were valued at $157.2 million (up from $116.6 million in 2016).
The case will now move to the U.S. International Trade Commission, which is scheduled to make a preliminary determination by early November.
The Resilience of Iron Ore
Much has been said about this year’s significant trade headwinds and their resulting impact on prices, not just of metals but a wider variety of products.
When it comes to metals, sometimes forgotten is the price of raw materials, like iron ore, used in steel production.
Despite trade pressures, the price of iron ore has remained strong this year, MetalMiner’s Stuart Burns explained this week.
“As the primary ingredient in the most basic of manufacturing materials, steel, you may be forgiven for expecting demand would have been shaken by the prospects of tariff barriers stunting demand,” he wrote.
“However, a number of data points support the picture of continued strong iron ore mine output and demand.”
Of course, Chinese demand and steel production levels have a significant hand in the issue.
“Some have been expecting iron prices to fall as trade rhetoric has ramped up, but iron ore producers themselves believe China will revert to form and ramp up infrastructure spending to sustain the economy, rather than admit tariffs and trade barriers are causing it any pain or hurting GDP growth,” Burns explained.
“With steel inventories in China quite low going into the quieter winter months, if end-user demand remains as strong as expected, prices could actually rise further when steel mills return in the new year.”
World Steel Association: Global Demand to Grow 3.9% in 2018
The World Steel Association recently released its Short Range Outlook, detailing projections for global steel demand this year and next.
According to the report, global demand is expected to rise 3.9% in 2018 and 1.4% in 2019.
India’s Coal Shortage
India has recently struggled with a lack of sufficient supplies of coal, an issue MetalMiner’s Sohrab Darabshaw explained Thursday.
“For some years now, many parts of the country have been facing power cuts. Why? Because of a shortage of coal, which becomes even more acute in the monsoon season (which is just about ending in most parts of India),” Darabshaw wrote.
“Northern provinces, including the country’s capital, New Delhi, and those in the central part are susceptible to coal-linked power interruptions, forcing industries to halt temporarily and wreaking havoc on the lives of ordinary people.”
-
-
The challenge of external workers: How can a CEO turn a hidden workforce into a more flexible force?07/14/2020
-
-
-
-
-
The challenge of external workers: How can a CEO turn a hidden workforce into a more flexible force?07/14/2020
-
-
-