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Steel in autos to drop sharply thru 2040: CAR

  • Market: Coking coal, Metals, Petrochemicals
  • 16/09/20

The amount of steel in automobiles is expected to fall sharply over the next two decades, replaced increasingly by aluminum and plastic, as automakers continue to strive for lighter weight vehicles.

The use of all types of steel in cars may fall by to 46pc of total curb weight in 2040, down from 65pc in 2020 vehicles, the Center for Automotive Research (CAR) said in a 14 September presentation.

Mild steel and high strength steel (HSS) will be most impacted, falling from 40pc of vehicle curb weight in 2020 to just 9pc in 2040, according to CAR.

In 2019, US steel mills shipped 16.8mn short tons (st) of steel to the US auto industry, including for production of automobiles, heavy trucks, trailers and other vehicle parts, according to data from the American Iron and Steel Institute (AISI).

If the CAR forecast holds, by 2040 steel shipments to the US auto industry could fall to 11.89mn st.

The benefactors of lower steel use will be aluminum, whose share CAR projects will double to 26pc in 2040, and plastics, where curb weight is forecast to grow by 150pc to 15pc of total curb weight.

Between 2020 and 2025, steel used in vehicles is expected to fall by 5 percentage points, with a similar drop expected in the following five-year period. Mild steel and HSS are expected to shoulder all of the declines over those 10 years. The use of Generation 3 steel is expected to increase while advanced high strength steel (AHSS) use will remain approximately the same.

The changes comes as the auto industry climbs out of a deep hole dug during the Covid-19 pandemic, when automakers shut down production for two months from mid-March to mid-May and the US economy fell into a recession.

CAR research expects US vehicle production to fall to 6.6mn vehicles in 2020, down by 39pc compared to the 10.9mn vehicles produced in 2019. CAR expects production to recover to 10.5mn vehicles in 2021, climbing to 11.6mn in 2022 and remaining above 11.5mn through 2028.

Total vehicles sales in the USare forecast to fall to 12.9mn vehicles in 2020, down by 24pc compared to the 17mn vehicles sale recorded in 2019. Sales are not expected to recover above 16mn until 2022, and will not reach 17mn in 2024, according to CAR.

Average vehicle structure

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19/09/24

Brazil hikes import tax on polymers, chemicals

Brazil hikes import tax on polymers, chemicals

Sao Paulo, 19 September (Argus) — Brazil's government increased import taxes of 30 polymers and chemicals to 20pc from 12.6pc this week, including polyethylene (PE), polypropylene (PP) and polyvinyl chloride (PVC). Another 32 chemical products remain under evaluation by Gecex, the Brazilian committee for commercial trade management. With the 18 September decision, most rates will rise and will remain at this level for 12 months. Domestic manufacturers and chemical industries associations welcomed the decision, arguing that the measure will help level the playing field against foreign competitors who benefit from lower production costs. Brazil's chemical industry association Abiquim has been asking the government provide commercial protections for 62 products since May. Supporters of the tax hike, including Abiquim, say it will help create jobs and strengthen Brazil's domestic economy. They also said that the increased revenue from the higher taxes can be reinvested in infrastructure and public services, further benefiting the country. Brazilian petrochemical major Braskem said Thursday that it sees the tax increase as a positive step towards ensuring fair competition and fostering growth within the industry. Braskem produces basic chemicals, PE, PP and PVC. The most important aspect of the tax increase is not the number of products covered, but what it represents in value, said Abiquim's executive president Andre Passos Cordeiro. "These 30 products that were approved represent about 65pc of the import volume of this set of 62 products that we had proposed to the government," he said. "They also represent 75pc of the value of this same set of imports. The decision is welcome, well-founded technically, and brings relief to the chemical industry." The share of chemical imports in the Brazilian market soared in the last 20 years, according to Abiquim, reaching 47pc in 2023 from 21pc in 2000. In the first half of this year, the sector's trade deficit was close to $23bn, while the national industry's idle capacity reached its worst level ever. "We were losing strength with the closure of factories and loss of jobs," Cordeiro said. "I reiterate that the government's decision was essential for us, as an industry and as Brazilians. A strong industry presupposes a strong country." The Brazilian chemical industry is responsible for around 11pc of Brazil's GDP, according to Cordeiro Taxes could up consumer costs Critics of the tax hikes say they will increase costs for consumers and manufacturers who rely on imported polymers and chemicals. Brazil's plastic industry association Abiplast said it was concerned that the higher import taxes will increase production costs for plastic products, which could result in higher prices for end consumers. In a letter to associates, Abiplast said that the measure could hurt small- and medium-sized enterprises that do not have the same capacity as larger companies to absorb the increased costs. The tax hike could also negatively impact the competitiveness of Brazilian products in the global market, Abiplast said. By increasing the cost of raw materials, Brazilian plastic converters may find it more challenging to compete with foreign companies that have access to cheaper inputs. That could lead to a decrease in exports and a potential loss of market share internationally. Furthermore, opponents of the tax increase highlight that the measure could have unintended consequences on the broader economy. Higher production costs could lead to inflationary pressures, affecting the purchasing power of Brazilian consumers. They also point out that the tax increase may not necessarily lead to the desired boost in domestic production, as the domestic industry may not have the capacity to meet the increased demand for polymers and chemicals. The letter, signed by the chairman of the association's board Jose Ricardo Roriz Coelho, also said that despite exhaustive explanations to the government about the taxes' downsides, final approval [of the tax hike] still goes through Brazil's partners in trade bloc Mercosur — Argentina, Uruguay, and Paraguay. If validated, the measure is expected to go into effect in October and last for one year. Abiplast said it will continue battling to reverse the measure, which the association deems unreasonable. Higher domestic prices may follow The market is taking some notice of the new proposed measures. One US polymers exporter to Brazil told Argus that if the tax hike becomes effective, Brazilian polymers manufacturers are expected to immediately raise prices to recover their margins. "The timing for the tax hike announcement was fine-tuned to let local producers secure additional margins in a time that sales are expected to increase in Brazil due to Christmas and New Year celebrations," one market participant told Argus. But any drop in polymer imports into Brazil from the taxes should recover in he beginning of next year, the source said. "Brazil's polymers production is not enough to address local demand, so imports will always be needed," the source said. Brazil's January-August PE imports surged by 45pc from the same period in 2023, reaching almost 1.4mn metric tonnes. North America had a 79pc share, while South America had another 10pc. The country also buys from Asia and the Middle East. By Fred Fernandes Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

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LNG-burning vessels well positioned ahead of 2025


19/09/24
News
19/09/24

LNG-burning vessels well positioned ahead of 2025

New York, 19 September (Argus) — Vessels outfitted with dual-fuel LNG-burning engines are poised to have the lowest marine fuel expense heading into 2025 when the EU will tighten its marine EU emissions trading system (ETS) regulations and add a new regulation, " FuelEU", from 1 January 2025. Considering both regulations, at current price levels, fossil LNG (also known as grey LNG) will be priced the cheapest compared with conventional marine fuels and other commonly considered alternative fuels such as biodiesel and methanol. The EU's FuelEU maritime regulation will require ship operators traveling in, out and within EU territorial waters to gradually reduce their greenhouse gas (GHG) intensity on a lifecycle basis, starting with a 2pc reduction in 2025, 6pc in 2030 and so on until getting to an 80pc drop, compared with 2020 base year levels. The FuelEU GHG intensity maximum is set at 85.69 grams of CO2-equivalent per MJ (gCO2e/MJ) from 2030 to 2034, dropping to 77.94 gCO2e/MJ in 2035. Vessel pools exceeding the FuelEU's limits will be fined €2,400/t ($2,675/t) of very low-sulphur fuel oil (VLFSO) energy equivalent. GHG emissions from grey LNG vary depending on the type of marine engine used to burn the LNG, but ranges from about 76.3-92.3 gCO2e/MJ, according to non-governmental environmental lobby group Transport & Environment. This makes a number of LNG-burning, ocean-going vessels compliant with FuelEU regulation through 2034. The EU's ETS for marine shipping commenced this year and requires that ship operators pay for 40pc of their GHG generated on voyages within, in and out of the EU. Next year, the EU ETS emissions limit will increase to 70pc. Even with the added 70pc CO2 emissions cost, US Gulf coast grey LNG was assessed at $639/t VLSFOe, compared with the second cheapest VLSFO at $689/t, B30 biodiesel at $922/t and grey methanol at $931/t VLSFOe average from 1-18 September (see chart). "In 2025, we expect [US natural gas] prices to rise as [US] LNG exports increase while domestic consumption and production remain relatively flat for much of the year," says the US Energy Information Administration. "We forecast the Henry Hub price to average around $2.20/million British thermal units (mmBtu) in 2024 and $3.10/mmBtu in 2025." Provided that prices of biodiesel and methanol remain relatively flat, the projected EIA US 2025 LNG price gains would not affect LNG's price ranking, keeping it the cheapest alternative marine fuel option for ship owners traveling between the US Gulf coast and Europe. LNG for bunkering global consumption from vessels 5,000 gross tonnes and over reached 12.9mn t in 2023, according to the International Maritime Organization (IMO), up from 11mn t in 2022 and 12.6mn t in 2021. The maritime port authority of Singapore reported 111,000t of LNG bunker sales and the port authorities of Rotterdam and Antwerp reported 319,000t in 2023 from all size vessels. Among vessels 5,000 gross tonnes and over, LNG carriers accounted for 89pc of LNG bunker demand globally, followed by container ships at 3.6pc, according to the IMO. The large gap between LNG global and LNG Singapore, Rotterdam, and Antwerp bunker demand, is likely the result of most of the demand taking place at the biggest LNG export locations where LNG carriers call, such as the US Gulf coast, Qatar, Australia, Russia and Malaysia. By Stefka Wechsler USGC bunkers and bunker alternatives $/t VLSFOe Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

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UK's RJH ceases trading, merges with Amalgamet


19/09/24
News
19/09/24

UK's RJH ceases trading, merges with Amalgamet

London, 19 September (Argus) — London-based minor metals firm RJH Trading (RJH) will cease its trading operations and all business will be transferred to Amalgamet Limited, Argus learnt today. Starting from 1 October, Amalgamet — the physical trading arm of non-ferrous metals at UK-based AMC Group — will take over the management of all RJH operations. Amalgamet is hiring the team from RJH, including Charles Swindon, the founder and managing director of RJH and former chairman of the Minor Metals Trade Association (MMTA), who will work as a consultant. Senior RJH traders in Scandinavia and India will trade for Amalgamet. Amalgamet, also headquartered in London, aims to expand further into more high-growth metals and take advantage of trading a greater diversity of metals and concentrates, both parties told Argus . Amalgamet mainly supplies base and minor metals, and through the merger will add new products that RJH has been trading for years including ferro-alloys such as ferro-chrome, ferro-silicon and other minor metals such as magnesium. For several metals including antimony there will be a crossover, as both trading firms have positions in the market. Charles Swindon told Argus the mix of the two portfolios is a good match and added that it is important to spread risk at a moment of geopolitical fragmentation. "This [partnership] brings over 100 years of invaluable trading experience in all metals as well as new opportunities in all parts of the world," he said. The financial details of the transaction have not been disclosed. By Cristina Belda Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

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EU HRC market gears up for mill consolidation


19/09/24
News
19/09/24

EU HRC market gears up for mill consolidation

London, 19 September (Argus) — The European hot-rolled coil (HRC) market is gearing up for potential consolidation over the coming year, as mills grapple with tough market conditions. The share prices of key European producers have rallied in recent days, despite continued weakness in HRC prices. Global steelmaker ArcelorMittal's shares traded above €22/share ($24/share) on the Luxembourg Stock Exchange at 12:30 GMT today, up from €19.70/share on 10 September. This strength is partly attributable to the expected release of economic stimulus measures in China, and the US Federal Reserve's recent interest rate cut, sources suggest. But market strength could also be because of growing talk that a new wave of consolidation is on its way, fuelled by decarbonisation efforts and the strained positions' of some mills. There has long been talk that steel coil producer Tata Steel Netherlands could be sold, after the Dutch state agreed to contribute to its decarbonisation spend. Recent difficulties at Germany's ThyssenKrupp have also sparked suggestions it could be an acquisition target. Czech Republic energy company EP Corporate Group (EPCG) recently completed its purchase of a 20pc stake in ThyssenKrupp's Steel Europe division, and could increase this to 50pc in the near future. EPCG owner Daniel Kretinsky may be seeking a strategic partner to help run the business, sparking talks that other mills could bid for a stake in the company. ThyssenKrupp shares were trading at €3.20/share on Deutsche Borse Xetra at 12:30 GMT today, up from €2.78/share on 10 September. Concerns over strong positions in niche markets, particularly tin plate, saw Tata Steel and Thyssekrupp call off their proposed joint venture in May 2019. But the market is in a different position now. Some mills have reduced capacity but new entrants are trying to join the market as green producers. And the global market is oversupplied, putting European producers in a difficult financial predicament, especially given their capital-intensive efforts to decarbonise. In the case of ThyssenKrupp, expectations that the mill will reduce its production footprint could partially alleviate potential competition concerns in the event of a takeover. By Colin Richardson Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

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US Fed cuts rate by half point, signals more: Update


18/09/24
News
18/09/24

US Fed cuts rate by half point, signals more: Update

Adds chairman Powell comments, economic projections. Houston, 18 September (Argus) — The US Federal Reserve cut its target interest rate by 50 basis points today, the first rate cut since 2020, with policymakers signaling they expect to make another half-point worth of cuts by the end of 2024. The Fed's Federal Open Market Committee (FOMC) lowered the federal funds rate to 4.75-5pc from the prior range of 5.25-5.5pc, which was a 23-year high. The Fed had kept the target rate unchanged since July 2023 after hiking it for more than a year in the most intense rate-tightening campaign in four decades to quash inflation, which peaked at 9.1pc in mid-2022. "The committee has gained greater confidence that inflation is moving sustainably toward 2pc, and judges that the risks to achieving its employment and inflation goals are roughly in balance," the FOMC said in its statement after the two-day meeting. "Job gains have slowed, and the unemployment rate has moved up but remains low." In their latest economic projections, the Fed board and policymakers expect the target rate range will end 2024 near a midpoint of 4.4pc compared with an end of year midpoint of 5.1pc projected in June, which implies further cuts amounting to 50 basis points by the end of 2024. Policymakers also penciled in another 100 basis points of cuts over the course of 2025. "We're recalibrating policy down over time to a more neutral level and we're moving at the pace that we think is appropriate given developments in the economy," Fed chair Jerome Powell told a press conference after the meeting. "The economy can develop in a way that will cause us to go faster or slower. The US economy is in a good place and our decision today is designed to keep it there." The Fed's economic projections see core Personal Consumption Expenditures inflation — the Fed's favorite measure of inflation — ending 2024 at a median rate of 2.6pc, down from a prior forecast of 2.8pc. Policymakers see core PCE inflation falling to a median of 2.2pc by the end of next year. The outlook for the unemployment rate for the end of 2024 climbed to 4.4pc from 4pc penciled in at the June meeting. Policymakers expect gross domestic product (GDP) growth to end 2024 at an annual 2pc, slightly down from a prior 2.1pc projection. The latest policy meeting comes as the Consumer Price Index (CPI) eased to an annual 2.5pc in August , down from 2.9pc in July, the Labor Department reported on 11 September. Inflation had ticked up to 3.5pc in March from 3.1pc in January, prompting the Fed to turn more cautious about beginning its rate cuts. US job growth has recently slowed sharply, falling to an average 116,000 in the three months through August from 211,000 for the prior three months. The jobless rate rose to 4.3pc in July, the highest in three years, before edging down to 4.2pc in August. By Bob Willis Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

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