In a previous article, we discussed how the real prices of commodities tend to fall in the long term (i.e. once adjusted for inflation).
While there are a number of factors contributing to this, perhaps the most important is that of technological advance.
A recent article in The Economist highlights this argument with regard to the steel industry. The article discusses the growing application of two different steelmaking techniques – Castrip and Belt Casting.
Continue reading Innovation in steelmaking
Following the sharp upturn in galvanized steel prices seen during the early months of this year, German steelmaker ThyssenKrupp announced back in April its intention to re-open its Galmed plant in Valencia, Spain by the end of this year (outbound link in Spanish). The facility, which can produce up to around 400,000 tonnes per year of hot-dipped galvanized steel (HDG) had previously been shuttered in late 2013.
And with Spanish car production up by around 11% during the first half of this year as well, the time seemed right to re-open a facility that previously shipped large quantities of HDG to Spain’s automotive factories.
But there are now thought to be doubts creeping in at ThyssenKrupp, which may opt to delay the re-opening of its Galmed plant until March 2017.
Continue reading ThyssenKrupp hesitates over Galmed re-opening given worsening outlook for Spain’s automotive industry
After having gone after imports of both hot-rolled coil (HRC) and cold-rolled coil (CRC) this year, will the European Commission soon be turning its attention to imports of galvanized steel? (primarily hot-dipped galvanized material (HDG))
In all likelihood yes but just how effective would any import restrictions be?
Let’s take a look at the case for implementing trade protection measures on these products and what effect they may have.
Continue reading More trade protection on the way in Europe?
A month on from the UK’s referendum vote to leave the EU and the focus has quickly shifted onto how the relationship between the EU and the UK will be managed in the future, and indeed whether the UK may benefit or suffer from its decision to leave the EU.
One industry that has a particular interest in this changing landscape is the UK’s automotive industry. With around 80% of its output heading for international markets (more than 50% alone heads to other EU countries), and with the majority of components used by the industry imported, the UK’s automotive industry will be a keen observer of how the UK’s international trading relations develop over the coming years.
Continue reading What now for the UK automotive industry post-Brexit?
Just under ten years ago, during June 2006, Mittal Steel finally gained control of Arcelor, creating what in turn is still today the world’s largest steelmaker, ArcelorMittal.
Continue reading Ten years of ArcelorMittal
Last year was once again rather disastrous for commodity prices. Average prices of the base metals traded on the LME all dropped massively, while average prices of oil, iron ore and steel also fell sharply. The general downward trend that has been in place since 2011 continued.
Continue reading 2016 commodities outlook: From super cycle to super correction
With commodity prices dropping sharply over the past 15-18 months, many economies have been hit hard. Oil-rich Saudi Arabia issued its first government bonds since 2007 earlier this year as it looked to cover a widening budget deficit caused by the collapse in oil prices, while commodity-dependent Brazil and Russia have entered outright recession this year.
It is the latter of these countries that is the focus of this article, and in particular Russia’s steelmakers. How have they coped with the significant falls in domestic GDP this year, of some 3.5-4%, as well as a sharply weakened currency and a large jump in inflation and interest rates?
Continue reading Russian steelmakers benefit from rouble weakness
With prices of many commodities at multi-year lows, recent financial releases from some of Europe’s major steelmakers delivered a reminder that not everything is bad in the steel industry.
Following an improvement in profit margins last year, Europe’s steelmakers have continued their resurgence during the first half of 2015.
Why, when most stories surrounding the steel and commodity markets are overwhelmingly negative these days, might this be the case?
Continue reading Prices down but profitability quietly creeps up in Europe’s steel industry
With a population equivalent to just 3% of the eurozone total, and with public debt equivalent to just 3% of eurozone GDP, the concern regarding the ongoing financial crisis in Greece in recent weeks perhaps seems out of proportion.
Continue reading Will the Greek tragedy turn into a European disaster?
A recent article in The Economist highlighted the problems being faced by US manufacturers in the face of a strengthening dollar.
Indeed, with economic data for Europe increasingly surprising on the upside so far this year, and that of the USA increasingly disappointing, there are ever more questions over whether the positive economic data coming out of Europe is merely coming at the expense of that in the USA following the large shift in value of each region’s currency.
Put simply, US goods have become much more expensive in overseas markets while European goods have become relatively cheaper.
A look at the world’s tinplate industry, which has shown little-to-no global growth over the past decade, suggests that growth in one region at the expense of growth in another is very much a real phenomenon.
Continue reading US tinplate industry in trouble