Archive for the ‘home-news’ Category

New Developments for Steel and Aluminum in the Automotive Field

Thursday, November 12th, 2015

Steel is the dominant material for making cars today, and it is most often used for the outer shell of the car, along with many of the internal parts, such as brakes, chassis, exhaust and engine. As an automotive material, most of the competition for steel comes from aluminum, a more expensive material that is lightweight and rustproof. Currently, many automakers are seeking to combine steel with aluminum to create their vehicles. While members of the steel industry feel confident of their prospects of maintaining their dominance of the auto industry, researchers elsewhere are creating new methods of welding these materials together for cars of the future. The combination of tradition and innovation creates a new dynamic in the automotive industry for raw material suppliers, and capitalizing on these developments could prove to be a source of great opportunity for all concerned.

In a recent American Iron and Steel Institute (AISI) internal interview, the president of the Steel Market Development Institute, Lawrence Kavanagh, states that while aluminum is certainly a factor in the automotive market, the new Novelis high-strength aluminum automotive grade is still only as strong as the steel made in the 1980s, and that “Automakers love to work with steel.” Kavanagh goes on to say that the truck and SUV market is looking to be targeted by alternative materials “because they not only represent half of the market, they are higher-cost vehicles that have higher profit margins and therefore could absorb the additional costs of using those materials.” He believes that steel can still compete in this area because of the industry’s efforts of meeting the updated weight requirements. Kavanagh says that automakers will eventually realize they can cut down their weight with steel alone (Source: AISI).

What if there was a way for steel and aluminum to be integrated together in a cost-effective process? Researchers at Ohio State University announced that they have developed a new way to weld different metals, reducing welding costs by 80 percent with 50 percent stronger bonds. These researchers note that welds are the key to process, as “materials have gotten stronger, but welds haven’t. We can design metals with intricate microstructures, but we destroy the microstructure when we weld” (Source: To combat this, researchers developed the following method: they run a small current through the materials, while also forcing them together at such a speed that it rearranges the atomic structure of each material together. In such a manner, the OSU researchers have successfully been able to weld together steel and aluminum, something that has been difficult to achieve at the commercial level. In fact, according to the researchers the welded areas are actually stronger than the base materials alone. The team looks to begin collaborating with manufacturers to make this method the new standard in the automotive field.

Iron Ore Price Continues to Fall Globally

Saturday, October 24th, 2015

This week the price for iron ore has dropped to its lowest level since July, and the price for iron has dropped 27% this year overall. The price benchmark set at China’s Tianjin port is at $52.10/ton, with some analysts believing that the price will drop further to around $50 by the end of this year (CNBC). The primary reason for the current worldwide drop in price is due to the decrease of demand in China, which forced the price of steel rebar to record lows. For comparison, the price of iron ore was $185/ton in 2011 due to the constant demand from Chinese expansion in construction at that point in time (MetalJunction). As the market is looking to drop even further in 2016—down to $40/ton by some estimates—the global steel industry prepares for its bearish prospects in the near future as Chinese construction maintains its slow pace.

Another contributing reason for the dropping price is the continual increase of production from low-cost iron ore producers, who are forced to export their goods due to the already low demand within their home countries. BHP Billiton, the #3 iron ore producer in the world and based out of Australia, increased its production 7 percent for September and is set to hit its previously set goal of increasing its 2015 production by 6 percent. In addition, the Indian mining company known as Vendata also expects an increase in exports of over 5.5 Million tons, most of which analysts believe will eventually find its way into China. The glut of material in the international market and the drop in worldwide demand combine to form the cycle of collapsing prices.

The price is not due to recover until the third quarter of 2016, as that is when a new round of major Chinese construction projects are set to begin. However, as low-cost producers continue to increase their output, the glut could absorb this new demand, preventing the expected rebound in pricing.  Low-cost iron ore producers are better able to survive the current drop in prices due to their inherent efficiency, but the downside is that the bear market is prohibitive to iron-dependent industries such as steel, unless those affected businesses are also following a cost-efficient model. If the price makes its expected recovery in 2016, this will create opportunities for companies using more premium pricing, providing much needed balance to the market.

Chinese Steel Showing Signs of Decline in Output, Growth in Exports

Thursday, October 15th, 2015

China, accountable for half of the entire world’s steel production, has been showing indications that its steel industry is slowing this year. Both the country’s production levels and consumption of steel has dropped over the past twelve months. However, during the same time frame the number of steel product exports from China has actually increased. Given China’s presence as the dominant force in worldwide steel output, changes in levels from its industry has wide reaching effects in quality, quantity and pricing of its exports, and as the United States is the world leader in steel imports, it feels these market fluctuations more than any other nation. By looking at how Chinese policy over the past year affects its own industry, American steel professionals can better adjust to market changes going forward.

In the past year, China’s steel output has dropped 3.5% from last year. In 2014, China was responsible for roughly 822 million metric tons of crude steel, so a drop of 3.5% is equal to 28.8 million metric tons (Metaljunction). To put that in perspective, the total imports of steel for the United States in 2014 equaled 40.2 million metric tons (US Census Bureau). This shows how even a small change in output in China’s industry could have global implications. China’s government has sought to put a cap on its country’s crude steel production, and it seems its policies are having the desired effect as China is going through the first decline in output after 20 years of steady growth (Hellenic Shipping News).

Despite the decline in crude output, Chinese steel product exports are on track not only increase, but are also set to break the 100 million metric ton mark for the first time in its history. The increase in exports is being attributed to the glut of steel in China’s domestic market caused by years of overproduction, which caused both a decrease in demand and prices. Therefore, Chinese steel manufacturers looked to the global market to sell their products (Metaljunction). The ripple effects are still being felt worldwide, as the low prices of the worldwide dominant producer of steel causes manufacturers from all over the world to cut their own prices in order to compete. Given the overwhelming size of China’s steel industry, the trends are set to continue in this direction until the Chinese domestic market adjusts to its own overproduction. In the meantime, leading importers such as the United States must wait for China’s market to stabilize before it can rely on steady pricing from the giant of the global steel industry.

USITC Finds Damages Caused by Imports to Domestic Steel Industry

Thursday, October 15th, 2015

According to the US International Trade Commission, seven foreign countries showed evidence of dumping hot rolled steel imports into the United States market. As reported by Reuters, the USITC found reasonable evidence that the domestic US steel industry was damaged by the imported steel being sold at a basement price. The seven countries under investigation include Australia, Japan, the Netherlands, the UK, Brazil, South Korea and Turkey. Due to the indication of dumping, the Federal Commerce Department will look into whether or not the countries will receive import duties on their steel trade.

Dumping is a type of aggressive pricing policy often found in international markets. The current incident involving steel provides a textbook example, as the steel is sold by the foreign company at a much lower price than the common rate of the home country, damaging overall sales and business for the domestic industry. In extreme cases, the product is sold below cost as a way to prey on the domestic business, however in this instance that does not look to be the case according to the USITC. Hot rolled steel products in particular are a target for price dumping, as they are one of the least expensive items in the field. Hot rolled steel is a common type of carbon steel, the other type being cold rolled. Cold rolled steel provides better overall tolerance and finishing qualities to hot rolled steel, allowing it to be produced in nearly any type of gauge but is often more available in thinner gauges to its hot rolled counterpart. Cold rolled steel is sold at a higher price than hot rolled and the costs are harder to manipulate by predatory pricing.

Import duties created by the federal government are the standard response to price dumping – the duties would raise the price of the imported goods, protecting the domestic industry and creating revenue for the government. However, such duties could also hurt the relationship with the targeted country, causing friction in future dealings in all businesses with the foreign nation, not just in the one industry. A private company from the foreign nation could be responsible for the dumping without the rest of the country being aware. That is why warnings and cautions are used by the government ahead of any duties, allowing companies to correct their actions before more serious sanctions are created. Ideally, with the announcement form the USTIC, the countries involved will reduce the amount of unfairly priced goods on the market and return balance to the industry.