The Automotive MMI (Monthly Metals Index) held flat from April to May. This was largely the result of a number of factors working in concert. Below, we’ll dig deeper into the automotive marketplace to see if we can determine what to expect for the rest of 2022.

Source: China Association of Automobile Manufacturers

The data resulting from China’s COVID-zero policies continues to look grim. According to the China Association of Automobile Manufacturers, auto sales and production plunged in April. Specifically, the latter index dropped 46.2% month over month, while overall auto sales fell 47.1%

Shockingly, Tesla saw sales throughout mainland China plummet 98% from March. Meanwhile, production for the automaker also took a substantial hit, with Chinese output falling 81% from 55,462 automobiles to 10,757. As lockdowns and other strict policies remain ongoing, experts predict that much of the impact witnessed in April will bleed into May.

There is some good news on the horizon, however. For instance, COVID-19 case counts in Shanghai continue to fall. According to data released on May 11, daily infections managed to drop beneath 1,500 cases, an 18-day low. Meanwhile, around 612,500 people have tested positive for the virus since March 1.

The stark drop in daily infections signals the possibility of an end to lockdowns within the city. However, officials over in Beijing continue to ramp up pressure on the populace. Aside from closing businesses and schools, all residents are now required to work from home.

Are you under pressure to generate metal cost savings? Make sure you are following these five best practices.

According to Intel CEO, Pat Gelsinger, the ongoing semiconductor chip shortage will likely persist until at least 2024. This is a tragic prediction considering how much the current shortage is impacting equipment manufacturing.

Gelsinger previously expected the shortage to resolve by 2023. However, in an interview with CNBC’s TechCheck, she revised her estimate, stating, “that’s part of the reason we believe the overall semiconductor shortage will now drift into 2024 from our earlier estimates in 2023. More shortages now hit equipment, and some of those factory ramps will be more challenged.”

So far, the semiconductor shortage has severely impacted global auto production, especially given the slew of other factors at work. In response, AutoForecast Solutions once again lowered its production estimates for 2022.

The company now expects production in North America and the Asia-Pacific region to fall by 2% to 14.82 million and 46.68 million units, respectively. In Europe, Western and Eastern  production estimates now stand at 11.16 million and 6.26 million.

Both palladium and platinum prices saw a modest lift following the UK government’s announcement of a new round of sanctions on Russia and Belarus. As part of the package, the UK will raise tariffs on products including platinum and palladium by 35%.

Russia produces around 40% of global mined palladium and almost 16% of global platinum. This makes the country the world’s largest and second-largest producer with respect to both precious metals. As such, the ongoing war in Ukraine and its effects stand as a leading driver for most of this year’s price fluctuations.

Indeed, both metals previously jumped in early April following a decision by the London Platinum and Palladium Market to suspend two major Russian-government-owned refiners.

MetalMiner’s free weekly newsletter provides up-to-date metal price intelligence on the impact of the war in Ukraine on metal prices and the Automotive MMI.

The UK government recently announced an asset freeze on London-headquartered metal and mining group Evraz. Authorities claim that Evraz is receiving benefits or support from the Russian government to conduct business in strategic and economic sectors. True or not, the freeze has broad implications for global steel production.

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NIZHNY TAGIL, RUSSIA – JANUARY 01, 2014: Night view of the main entrance of the plant NTMK company Evraz. NTMK plant is the main enterprise of the city of Nizhny Tagil

HM Treasury’s Office of Financial Sanctions Implementation (OFSI) went public with the move against Evraz on Thursday, May 5. As in similar situations, the action was filed under the Sanctions and Anti-Money Laundering Act of 2018.

This specific law allows governments to freeze funds and economic resources of problematic persons, entities, or bodies. In this case, it refers to those involved in destabilizing Ukraine or undermining/threatening the country’s territorial integrity, sovereignty, or independence.

Evraz has steel making assets in Russia that include the Nizhniy Tagil (NTMK) and Western Siberia (Zapsib) plants. The OFSI also noted that the company controls coking coal mines in Raspadskaya and Yuzhkuzbassugol and an iron ore mind at Kachkanarsky.

However, the information made no mention of Evraz’s Mezhegeiugol coking coal mine in eastern Siberia or its vanadium production operations.

Freezing the assets of companies like Evraz has played a large role in how Western countries and the EU are punishing Russia for its Feb. 24 invasion of Ukraine. Indeed, back on Mar. 10, the UK’s Financial Conduct Authority officially suspended the group’s shares on the London Stock Exchange.

The earlier move was in response to the national government placing Roman Abramovich on its list of sanctioned individuals. Well known as the owner of Chelsea Football Club, Abramovich holds the single largest stake in Evraz (28.64%).

At that time, Evraz denied any involvement in actions against Ukraine. They have since reiterated claims that they mainly produce materials for construction and infrastructure.

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Evraz NTMK poured 4.1 million metric tons of crude steel in 2018, from which it rolled about 4.6 million metric tons of finished product. The manufactured items included rails, long products, rings for mechanical engineering, and grinding balls. According to the group’s website, the plant also produced semis for tubular production.

Meanwhile, Zapsib’s product assortment includes long section steel and continuously cast and hot rolled slabs. The plant also produced continuously cast and hot rolled section billets, rails, and downstream products. In 2016, Zapsib produced 6.9 million tons of crude steel and 6.3 million metric tons of steel products.

The OFSI did note that Evraz could continue to operate with its North American subsidiaries. Allotments include “payments to or from those subsidiaries under any obligations or contracts” and “payments to or from any third party under any obligations or contracts.” It also includes the “receipt of payments made by the North American Subsidiaries for audit services.” The OFSI also added that “Evraz North America is permitted to pay for the audit services referred to in the previous sentence.”

One source noted that many Russian companies are trying to put distance between their overseas assets and their owners in Moscow. “Everyone is separating or thinking about spinning off assets abroad into separate divisions,” that analyst added. Only time will tell if their efforts will pay off.

Evraz North America’s headquarters are in Chicago, but the subsidiary has a welded pipe mill in Oregon (Evraz Portland) and a hot end and rail mill in Colorado (Evraz Pueblo).

In total, Evraz North America has six plants spread throughout the United States and Canada. The wholly-owned subsidiary can produce up to 2.3 million metric tons per year of crude steel via electric arc furnaces at Pueblo and Regina alone. The former is located in Colorado, while the latter is situated in Saskatchewan.

Besides having hot ends, the Pueblo plant can roll long products that include rail as well as wire rod and rebar in both coils and seamless pipes. Meanwhile, the Regina plant produces line pipe from its own rolled plate products.

Other Canadian sites, such as Camrose, Calgary, and Red Deer,  produce casings and tubings for Oil Country Tubular Goods (OCTG) as well as straight- and spiral-weld line pipes. Evraz North America’s Portland plant also produces line pipe from the plate and hot coil it rolls on site

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There’s something afoot on the rare earths front in China. Specifically, the country recently decided that it wants to tighten its export control laws. The regulation passed about two years ago to stop importing countries from diverting “Chinese products for non-intended use.” In most cases, the “products” refer to rare earth elements, of which China is the world’s biggest producer.

The announcement comes just a few days after news that an American company may have found the largest reserves of rare earth elements in the US. In fact, US-China relations experts are still trying to connect the “geo-political” dots around China’s latest move and its implications.

A report from nikkei.com stated that going forward, exporters of Chinese products with potential military applications may have to provide documentation as to their intended use. Apparently, the ultimate goal is to “halt the militarization of sensitive tech.”

The article also reported “concerns” that the regulations would be arbitrarily enforced against countries that have poor diplomatic relations with Beijing. Officials did not name the US directly, of course. Still, it’s no secret that trade relations between the US and China have not been healthy since the Trump administration.

In December of 2020, China finally joined many other countries in passing an Export Control Law. The crux of the legislation gave Beijing control over strategic products and even advanced technology items. The move was widely seen as a response to US restrictions on Chinese IT firms like Huawei Technologies Co.

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According to reports, China’s Ministry of Commerce has published its new export proposal with the intent of soliciting public comment. The regulations are also in line with the “total national security outlook” policy of President Xi Jinping. This includes 11 total areas of security coverage: politics, land, military, economy, culture, society, science and technology, information, ecology, resources, and nuclear.

If and when the proposed regulation becomes law, it will empower the Chinese Government to carry out a “risk assessment” of the country or region receiving the exported products. This would factor in both national security interests as well as foreign policy needs. Export licenses for “high-risk destinations” will also be subjected to even stricter screenings.

The Nikkei report went on to say that rare earth metals could be subject to export controls “depending on how authorities interpret the regulations.” Many of these materials feature in the manufacture of high-performance magnets. However, those importers who alter the “end use”  without permission may find themselves on a regulated list. Repeat offenders may end up subjected to embargoes or even a revocation of their export license.

Ostensibly, the new law seeks to prevent the export of dangerous products to terrorist outfits or rogue nations. Still, how China plans to assess the risk level of export partners is not yet clear. Currently, China forbids the transfer of regulated products to third parties without the approval of the government. After Russia invaded Ukraine, China had got some flak for allowing the export of chips used in Russian missiles and spy satellites. There were also reports of US chips being used in missiles after being clandestinely exported via Bulgaria.

There’s a major semiconductor shortage in the world today, and the Ukraine conflict has only intensified US-China trade tensions. According to this report, US officials warned they would impose strict export controls on China should the country try to send semiconductors containing US technology to Ukraine. For this reason, the purported move by China was seen as an illegal attempt to help Russia cope with global sanctions.

Xinjiang Rare Metals National Mine Park

A wide range of industries rely on rare earth minerals, including automobiles, transportation, power generation, and defense. In recent decades, US investment in its homegrown chip industry has decreased. This was largely because Japan, Taiwan, South Korea, and China were making them far cheaper. Now, the US has decided to halt this reliance, especially when it comes to China.

That’s why the initial discovery report from Wyoming comes as such a happy surprise. According to the data, the rocks there have an unusually high content of several “rare earth” elements: Neodymium, Dysprosium, Praseodymium, and Terbium. All of these are essential for making the magnets used in electric vehicle motors and wind turbines.

American Rare Earths, the company conducting the exploration and analyses, also has holdings in Arizona and Nevada. Combined, all of these could ease US dependence on foreign sources of these key metals. Indeed, China controls roughly 87% of the magnets market, a fact that many US officials are desperate to change.

US Senators Tom Cotton & Mark Kelly recently introduced legislation that would establish a rare earth stockpile via the Department of Defense. It would also require defense contractors to stop buying rare earths from China by 2026. This follows an earlier bill introduced by senators Marco Rubio and Cindy Hyde-Smith. The latter’s goal was to provide Department of Energy funding that could support domestic manufacturing of finished rare earth products.

Clearly, for the US, the supply-chain mess, the pandemic, and the Ukraine conflict have served to highlight the importance of rare earth independence. Now, we need only wait to hear the final word on China’s counter-move.

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At least two Ukraine steel manufacturers are ready to restart production amid the ongoing conflict with Russia. Sources indicate this is because the areas where the mills are located have seen less impact from the invasion. Global investors greeted the announcement with much fanfare. After all, the renewed export of Ukrainian steel will undoubtedly have a significant impact on European markets.

Luxembourg-based ArcelorMittal Kryviy Rih, a longs producer in the country’s second-largest city, is set to bring Blast Furnace No. 8 back online on May 2. This is according to CEO Mauro Longobardo, who made the announcement in the April 8 issue of the plant newspaper, Metallurg. Longobardo went on to say that Blast Furnace No. 6 will resume operations “in the coming days.”

ArcelorMittal Kryviy Rih also expressed plans to return rolling production to the “highest possible level” by May 10. At the same time, the company plans to resume exports of iron ore concentrates. However, Longobardo made it clear that these actions are contingent on both logistics and the military situation. Currently, the plan is to dispatch finished products to Poland via train.

“It used to go by sea, but now we will transport it by rail first to Poland and from there to our customers,” Longobardo added.

MetalMiner Insights currently publishes a full range of American, European, Japanese, Chinese and Korean steel prices. 

When Russia invaded back on February 24, Arcelor Mittal announced it would slow down production at Kryviy Rih to a technical minimum. However, AMKR is located in Ukraine’s Dnipropetrovsk region, which has so far not experienced much fighting. Though the war appears far from over, many Ukranian businesses are eager to get the economy rolling again.

The Ukrainian steel industry typically comprises around 15% of the country’s economy. This is meaningful, as the World Bank estimated that the war will shrink Ukrainian GDP by as much as 45%. Altogether, mills in Ukraine can produce about 20 million metric tons of finished and semi-finished steel products. Before the war began, some 70% of this amount was exported. Were exports to continue, it might help alleviate wartime financial problems.

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Indeed, Arcelor Mittal alone can produce around 6 million metric tons per year of crude steel via the BF/BOF Route. Its steel is mainly cast into billets. These are then rolled into long products, such as wire rods, rebar, and merchant bar.

On April 12, Metinvest, an international mining and steel enterprises company, announced that it had restored operations at its sinter plant. The company also said that it was in the process of blowing in two of the four blast furnaces at its Zaporizhstal joint venture.

Zaporizhstal, located in the southeast, is Ukraine’s fourth largest steelmaker. “Gradually, with the production of hot metal by the blast furnaces, subsequent links in the production chain will be put into operation as well,” the group stated. They later added that Zaporizhia Coke and Refractory have also resumed operations.

Metinvest reports a 49.9% stake in Zaporizhstal. However, one source told MetalMiner that this is closer to 100%. This is because the remaining stake originally belonged to “a group of Russian investors.” Of course, since the war began, the Ukrainian government has started confiscating all Russian-owned assets.

Zaporizhstal lies some 550 kilometers southeast of Kyiv. According to Metinvest representatives, the site’s four blast furnaces can produce up to 3.8 million metric tons (mmt) of pig iron annually. Meanwhile, its seven open-hearth furnaces and single bath furnace can pour around 4 mmt of crude steel.

Zaporizhstal’s Mill 1680 can also make up to 3.6 mmt per year of hot-rolled sheet and coil in multiple gauges and widths. Further downstream, the plant has an annual capacity of 1 mmt for cold-rolled coil. In this case, Rolling Shops #1 and #3 produce gauges of 0.2-5 mm gauges and 850-2,300 mm.

Another Metinvest operation is Kamet Steel. The company acquired it back in June 2021, when it was known as Dneprovsky Iron & Steel Integrated Works. Situated near Dnipro, this longs producer has managed to operate as normal virtually the entire war.

Kamet Steel site can pour up to 3.5 million metric tons of crude steel per year. The company casts nearly all of this into square and round billet. It then makes these billets available for commercial sale. They can also roll the billet into roughly 1.8 million metric tons of long products or ship them to Metinvest’s Promet subsidiary in Bulgaria.

The fact that Metinvest and ArcelorMittal Kryviy Rih are restarting production is undoubtedly good news. What effects will renewed steel export have on Ukraine’s overall economic situation? It’s hard to tell . However, European investors are undoubtedly eager to see anything returning to “normal.”

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India’s Hindalco Industries Ltd. (a major aluminum and copper producer) recently earmarked CAPEX totaling US $7.2 billion. According to recent news reports, Hindalco management is seeking to expand the company’s aluminum production over the next five years. This includes commitments to boost aluminum resources in both North America and Germany.

In a recent presentation to investors, Hindalco reps remarked on how global supply shortages have pushed aluminum prices to new levels. In response, they’re pouring resources into new investments. The plan includes US $4.8 billion for its subsidiary, Novelis Inc., which will help increase distribution to the US, Brazil, Asia, and Germany. This move comes fresh on the heels of several other major expansions.

All in all, Hindalco has decided to use about 75% of its cash flow towards growth CAPEX. Of the total new investments until 2027, US $2.4 billion has been earmarked for spending in India.

Most analysts and industry experts welcomed Hindalco’s announcement with open arms. After attending the presentation earlier this month, Edelweiss reported that Hindalco’s CAPEX plan should strengthen its competitive position in chosen markets. Better yet, it will still allow the company to concentrate on the high returns segment in India.

In its main points, the presentation referred to the company assessing and setting up the first greenfield mill in the US 20 years ago. It also reminded attendees of how Hindalco concentrated on US beverage can and automotive markets and limited Brownfield Al smelter expansion to 180ktpa.

The Edelweiss team went on to report that concentration in the US and on alumina in India was a step in the right direction. The former represents some 65% of total Novelis spending. The latter represents some 32% of all spending on the subcontinent.

Aluminum is the key ingredient in countless products, including everything from auto parts to beverage cans. Earlier this month, aluminum prices jumped to an unprecedented high of $4,000 a ton. This was largely the result of Russia’s war against Ukraine, which raised apprehensions about stifled supply.

Back in January, Novelis announced plans to construct a US $365 million recycling center next to its automotive finishing plant in Guthrie, Kentucky. According to a report in Recycling Today, the center would bring its carbon emissions down by over one million tons a year. At the same time, it would help expand the company’s closed-loop recycling program. Even better, the center would also be able to process aluminum from end-of-life vehicles.

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Last October, Novelis announced plans to invest approximately US $130 million in upgrades to its aluminum mill in Oswego County, New York. Even then, Hindalco was eager to need a growing demand for sustainable, aluminum at rolled products. According to the report, the upgrades would allow the facility to boost hot mill capacity by 124,000 metric tons.

When completed, the new recycling center in Kentucky will feature advanced shredding and sorting technology. It will also boast several energy-efficient innovations intended to support Novelis’ sustainability goals. Among them is a commitment to reduce energy intensity by at least 10 percent before 2026.

While the company explained its India and North American expansion plans in some detail, its plans for the German operation were less thorough. Of course, Novelis is well recognized as a key player in the German automotive market. Along with the likes of Thyssenkrupp AG, & BASF SE, the company helps manufacture lightweight materials for electric vehicles.

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In our ongoing coverage of the Russia-Ukraine war and its impact on metal prices, the Financial Conduct Authority, the UK’s financial regulator, has suspended trading of Russian steelmaker Evraz’s shares on the London Stock Exchange.

The move follows the government’s addition of Roman Abramovich to its list of sanctioned individuals.

The MetalMiner team will continue to break down the Russia-Ukraine war and its impact on metals markets during this month’s webinar session scheduled for Wednesday, March 30. 

The suspension became effective from 11:00 a.m., London time, “in order to protect investors pending clarification of the impact of the UK sanctions,” the LSE said on March 10.

A notice from HM Treasury’s Office of Financial Sanctions Implementation stated that Abramovich exercises effective control in Evraz, given his large shareholding in the company as well as those of his associates, whom Abramovich could direct.

Abramovich holds the largest stake in Evraz at 28.64%. Evraz’s non-executive chairman, Alexander Abramov, holds 19.32%. Non-executive director Alexander Frolov holds 9.65%.

“Evraz PLC is or has been involved in providing financial services, or making available funds, economic resources, goods or technology that could contribute to destabilising Ukraine or undermining or threatening the territorial integrity, sovereignty or independence of Ukraine – which includes potentially supplying steel to the Russian military which may have been used in the production of tanks,” HM Treasury also stated.

Two steelmakers in Ukraine have placed their plants in conservation mode. This comes after the country’s invasion by Russian armed forces in the early hours of Feb. 24. Metinvest Holding announced that it would suspend operations for seven days throughout its hot end at the Azovstal plant as well as at the plant’s coke shop.

Azovstal’s plate mill as well as rail and structural mills will also stop operations. The group will also halt production at Ilyich Iron and Steel Works’ sinter plant, the hot ends as well as Mills 1700 and 3000. Any decisions on the plants’ further operations, will stem from how the situation in the country develops.

Azovstal has a crude steel capacity of 5.3 million metric ton per year. The plants has five blast furnaces and two 350-ton basic oxygen furnaces. In addition, the plant also has four two-strand billet casters, an ingot caster and a blooming mill. A slab caster on site also produces the semi-finished product in 220-300mm gauges, 1,250-2,100mm widths and in lengths of 5,000mm to 12,000mm.

The MetalMiner Raw Steels MMI tracks raw material price movements. Companies use this index to gauge monthly price changes.

Ilyich has five blast furnaces, one BOF and two open-hearth furnaces. One analyst estimated its crude capacity at 5 million metric tons per year. The site poured 4.26 million tons of crude steel in 2021, up 4.6% year on year from slightly over 4.07 million metric tons, the analyst added.

Azovstal and Ilyich plants are in the port city of Mariupol, on the Sea of Azov, and is in the part of Donetsk region that is under Ukrainian control.

Russia wants to control the coast of the Sea of Azov

“Capturing it now would let Moscow link Russian-controlled Crimea over land to the separatist enclaves and secure complete control over the coast of the Azov Sea, increasing economic pressure on Ukraine’s government,” according to a recent Reuters report.

In addition, ArcelorMittal also said via Twitter earlier on Feb. 24 that it would slow production to a technical minimum at Kryviy Rih plant. Furthermore the steel producer stopped production at its underground mines there. That plant, in the Dnipropetrovsk region, can produce an estimated 6 million metric tons per year of crude steel via the BF/BOF route. Finally, the facility  casts into billets for rolling into long products, such as wire rod, rebar and merchant bar.

The MetalMiner weekly newsletter always contains the latest information on European steel prices and the current situation regarding Russia and Ukraine

About 70% of Ukraine’s finished and semi-finished products go for export, including to Europe, Turkey, Asia and Africa. The current situation will undoubtedly impact steel markets in Europe, one trader said.

“It is clear that prices are going up, but to what level is unclear,” that source told MetalMiner.

End-users in Central and Eastern Europe will likely feel the brunt of events in Ukraine. These companies are large consumers of Ukrainian steel, the trader added.

The current situation in Ukraine also prompted several end-users from Poland to call and say that they were prepared to pay almost any price for steel, regardless of its origin, the trader claimed.

Energy prices also on the rise

European energy prices also soared on Feb. 24 as TTF Amsterdam gas finished the day at €119 ($133.23) per megawatt hour, up by one-third from €88.89 ($99.49). Prices did touch  €140 ($156.13) in the course of trading.

The city of Kharkiv, about 70 kilometers from the border with Russia also came under attack on Feb. 24. A live stream of Kyiv’s Maidan square throughout the evening of Feb. 24 showed a quiet city, though explosions in the distance were audible.

State rail operator Ukrazaliznytsia stated on its website that it was adding evacuation trains, but did not indicate what was happening with freight movements in the country. The Ukrainian government’s main website has also ceased to function in the day, but was up later.

MetalMiner will continue to provide coverage of the Russian invasion. Analysis will focus on impacts to global metal supply and prices including energy (raw material) input costs.

The London Metal Exchange’s (LME) nickel price shot up by more than $1,000/mt on Friday Feb 25, a rise that one analyst directly connected to Russia’s invasion into Ukraine.

The official, three-month nickel bid price reached $25,625 per metric ton on Feb. 24, The price increased 4.3% on the day from $24,575/mt, data from the bourse showed.

Therefore, prices could continue moving higher. Russia’s Norilsk Nickel serves as a major provider of nickel to global markets, an analyst told MetalMiner.

Moreover, Russia provides over 7% of global nickel production. Norilsk’s sales volume for 2021 reached 193,000 metric tons. This represents an 18% drop from the 235,709 metric tons produced in the previous year.

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In addition, stocks of the metal in LME’ warehouses fell to 96,308 metric tons in January. This represents a 61.3% drop from the 248,962 metric tons for the same month in 2021, data from trading company Westmetall showed.

Although Europe’s need for nickel makes it unlikely that the company would directly come under sanctions, the analyst believed that measures to cut Russia’s access to capital markets in the West would further push up global nickel prices. That, in turn, could delay the company’s projects.

“I can see the squeeze on the finance side,” the analyst noted.

The alternative could drive Norilsk to seek financing from China. This could turn into offtake agreements as one method of payment. This could cause the company to become more reluctant to sell to non-Chinese markets.

Join the MetalMiner team for a 30-minute briefing on the aluminum and carbon steel markets as a result of the Russian invasion of Ukraine. The webinar runs from 11:00-11:30 central time on Wednesday, March 2.

The European Union announced in the early hours of Feb. 25, a row of sanctions against Russia.

European Commission President Ursula von der Leyen stipulated a five-pillar plan, which “includes financial sanctions, targeting 70% of the Russian banking market and key state-owned companies, including in defense.”

In addition, other sanctions will limit Russia’s access to technology. These sanctions could cover semiconductors or cutting-edge software, von der Leyen said.

Finally, the United States also introduced sanctions on Feb 24 against two of Russia’s largest financial institutions. These include the stet-owned VTB Bank and Sberbank. Those actions could cut their direct access to the dollar.

Ed Note: MetalMiner will publish a follow-up piece on the likely impact of sanctions on Monday, Feb 28

Stainless and electric vehicle batteries

About 70% of refined nickel goes to stainless steel production, specifically for austenitic, the analyst stated.

Another application for nickel is in batteries, such as for electrical vehicles, though the purity levels for that application do not need to be as stringent, the analyst added.

Companies can track the impact on metals prices by signing up for our Monthly MMI reports. The Stainless MMI, the Renewables MMI and the Automotive MMI all provide a gauge of inflation/deflation for global metals markets

Norilsk reported a full year EBITDA of $10.5 billion, up 37% year on year from about $7.67 billion the company on Feb. 10.

In addition, consolidated revenue was 15% higher at $17.9 billion, from almost $15.6 billion.

Following the collapse of Greensill Capital in March 2021 many expected Sanjeev Gupta’s GFG Alliance metals empire to follow close behind. MetalMiner wasn’t alone in repeatedly questioning the murky financial structure of the sprawling group. Some media outlets suggested it reflected fraud bordering on a ponzi scheme. To most parties’ surprise, GFG has limped on for the last eleven months since Greensill’s collapse.

UK’s third largest steel producer

The temporary UK government moratorium bankruptcy proceedings due to the pandemic, only expired late last year. Surprisingly, the coup de grâce comes not from the aggrieved trade creditors, but from the British Government. In other words, the taxman has come to collect. Her Majesty’s Revenue & Customs (HMRC) has tried to force four companies in Sanjeev Gupta’s UK steel empire, into insolvency. This threatens the employment of close to 2000 people. This move could bring to an end Britain’s third largest steel producer. Although precise figures remain uncertain, the debts to the tax authorities alone run into tens of millions of pounds. £27m ($36.56m) one source suggested, with another investigation gathering speed into alleged fraudulent accounting at a sister enterprise, Liberty Commodities.

Tough pill to swallow for British steel-making

The move to shut down UK divisions of Gupta’s empire lands a tough blow for UK steel making in general. The companies involved all produce high-grade anti corrosion steels used in the oil and gas industry and aerospace.  This alone makes them valuable assets in a country with precious little steelmaking left. According to a post in the Guardian newspaper, the four companies having action taken against them include:

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GFG Alliance has already sold or shuttered numerous companies in a desperate scramble to shore up its finances. Greensill Capital’s failure has also limited GFG’s ability to replace them. That failure says something about the quality of the group’s financial position. Some standalone companies such as car parts maker Liberty Aluminium Technologies (LAT) in the UK and steel companies in Europe have found buyers. But the remaining divisions have not found backers. The giant Aluminium Dunkerque operation reached a re-financing agreement with American Industrial Partners Capital Fund. Late last year however, AIP took title to the plant.

The end of the road for GFG and Liberty Steel?

Does this mark the last chapter of GFG and Liberty Steel? Perhaps it seems a little too early to write off Gupta. He is after all, a survivor.  However, if he manages to hold his dwindling empire together, the result may only look like a shadow of its former self.

In The Construction Monthly Metals Index (MMI) increased by 0.6% month over month.

US construction spending rose in 2021

U.S. construction spending reached a seasonally adjusted annual rate of $1,639.9 billion in December, the Census Bureau reported. The December rate marked a 0.2% increase from the revised rate November. Furthermore, the December figure jumped by 9.0% compared with December 2020.

For all of 2021, construction spending totaled $1,589.0 billion, up 8.2% year over year.

Private construction spending in December reached a rate of $1,292.9 billion, up 0.7% month over month. Within private construction, residential construction totaled $810.3 billion in December, up 1.1% from November. In addition, nonresidential construction remained virtually unchanged month over month. December’s spending totaled $482.6 billion from $482.7 billion in November.

At the same time, public construction reached $347.0 billion, down 1.6%. Educational construction checked in at $81.0 billion, down 1.4%. Highway construction rose by 0.1% to a rate of $103.5 billion.

MetalMiner covers the impact of these indicators on metal prices in our weekly email updates here.

Nonresidential construction activity remains strong

Meanwhile in the U.S., the Architecture Billings Index (ABI) remains in growth for the eleventh consecutive month. The index increased to 52 in December from 51 the month prior. Any reading greater than 50 indicates billings growth. With an approximate lead time of 9-12 months, the ABI serves as a forward-looking indicator for nonresidential construction.

In addition, design contracts likewise remained in growth as the measure held flat month-over-month at 55.8. Meanwhile, architecture firms continue to report a steady number of projects into the future. Both inquiries and the value of new contracts remain strong. Backlogs stand at an average of 6.5 months, near historical highs.  This suggests material demand from the sector will remain strong well into the year.

Housing starts rose in December

Meanwhile, in the housing market, U.S. housing starts reached a seasonally adjusted annual rate of 1.702 million in December, the Census Bureau reported. The December rate marked a 1.4% rise from the previous month and a 2.5% year-over-year rise.

Finally, single family housing starts fell 2.3% to a rate of 1.172 million. For units in buildings with five units or more, the rate reached 524,000. In total, 2021 saw an estimated 1.5951 million housing units started to reflect a 15.6% year-over-year rise.

Metal buying organizations can track a broad range of monthly price changes via the monthly MMI report.  

Lumber prices hit record highs 

As construction activity remains strong, lumber prices continue to climb on pace. Both 2020 and 2021 saw prices hit record highs. Furthermore, in 2020, framing lumber prices averaged around $550. By 2021, the average surged to $850, 17% above the 25-year average. Prices continue upward in 2022.

Moreover, in the early days of February, lumber prices jumped almost 30%. Lumber futures stood at $934.90 per thousand board feet on Feb. 1. By Feb. 9, futures prices hit $1,204.90 per thousand board feet. Although lumber prices remain historically high, prices sit beneath the record peak reached in May of 2021 of $1,711.

 Actual metals prices and trends

The Chinese rebar steel price rose 3.14% month over month to $768 per metric ton as of Feb. 1. Chinese H-beam steel rose by 6.1% to $790 per metric ton.

The U.S. shredded scrap steel price fell by 4.76% to $480 per short ton.

Finally, European 1050 commercial aluminum sheet rose by 6.82% to $4,832 per metric ton.

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