Commodities Roundup: Steel Production, Vale’s Dam Breach and Metals Tariffs

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 in particular commodity markets.

From price movements to policy decisions, we scour the landscape for what matters. This week:

Global Crude Steel Production

Global crude steel production jumped 4.6% year over year in 2018, according to a World Steel Association report.

China’s share of global production increased to 51.3% last year from 50.3% in 2017.

India moved past Japan and into the No. 2 spot of steel-producing countries (behind China, which churned out 928.3 million tons last year).

Vale Dam Breach Leaves Dozens Dead

A dam breach at a Vale S.A. iron ore mine in Brazil led to at least 60 deaths, according to media reports, and left hundreds missing.

The mine, Vale’s Corrego do Feijao mine, produced 8.5 million tons of iron ore last year. Brazil is the second-largest producer of iron ore in the world, behind Australia (which could get some additional iron ore business, as Vale deals with the aftermath of its second mine tragedy in just over three years).

Unsurprisingly, the price of iron ore has shot up in the wake of the dam breach and the subsequent market disruption.

Maker-to-User Trends

Much ink has been spilled about globalization and offshoring — but what about reshoring? And to what extent is it happening in the U.S.?

In its latest podcast, MetalMiner chatted with Harry Moser, of the Reshoring Initiative, about reshoring trends — that is, the bringing of jobs and manufacturing back to the U.S. — and where the U.S. manufacturing scene is going.

Check out the latest podcast installment here.

U.S. Steel Mills Move Over 80% Capacity Utilization

Per a recent report from the American Iron and Steel Institute (AISI), U.S. steel mills hit a capacity utilization rate of 80.3% for the year through Jan. 26.

A rate of 80% is generally considered to be the minimum level indicative of industry health.

Through Jan. 26, U.S. mills have produced 70.07 million tons of steel, up 10.9% from the same period last year.

AK Steel to Close Ashland Works

U.S. steelmaker A.K. Steel announced it would close its “largely-idled” Ashland Works plant in Kentucky by the end of the year.

“The company plans to increase its operating efficiency and lower its costs by completing the shutdown of the blast furnace and steelmaking operations within the next several months, and by working with its customers to transition products coated at Ashland Works to other AK Steel operations in the United States with available capacity before the end of this year,” the company stated in its Q4 and full-year 2018 report. “This will increase those operations’ utilization rates.”

Metals Tariffs

The U.S. and Canada have traded metals tariffs in the past year (despite being strong trade partners) — so, who is benefiting from the tariffs?

Per MetalMiner’s Stuart Burns, so far the Treasury departments of each country seem to have been the primary beneficiaries.

“Some progress has been made. Investments in new production capacity have arguably resulted from the imposition of tariffs, but likely not to the level hoped for. Our guess would be tariffs will hold through 2019 — but 2020?” Burns wrote.

“It seems hard to justify the cost to consumers and exporters of finished goods to make the tariffs permanent. However, in the meantime, the Treasury departments of Canada and the U.S. are reaping significant rewards.”