US factory activity contracts for 6th month: ISM
US manufacturing activity remained in contraction in September for a sixth consecutive month, as a measure of prices shrank for the first time this year and new orders and production weakened, but at diminishing rates.
The manufacturing purchasing managers index (PMI) registered 47.2 in September, matching August's reading, the Institute for Supply Management (ISM) said today. The PMI reading, below the 50 threshold signaling contraction, marked a 22nd month of contraction out of the last 23 months.
Manufacturing accounts for about 10pc of the US economy, and the largest part of the economy — services — has expanded in six of the last eight months through August this year. ISM's services PMI report will be released Wednesday.
"Demand remains subdued, as companies showed an unwillingness to invest in capital and inventory due to federal monetary policy … and election uncertainty," ISM said. "Production execution stabilized in September. Suppliers continue to have capacity, with lead times improving and shortages reappearing."
The Federal Reserve on 18 September cut its target lending rate by a half point, its first cut since 2020, and signaled another 150 basis points of cuts were likely through 2025, as it has succeeded in bringing inflation close to its 2pc target. A key employment report on Friday will factor into the Fed's thinking, with little more than a month to go before the 5 November presidential election.
The new orders index rose to 46.1 in September from 44.6 in August, reflecting a diminishing rate of contraction. Production rose to 49.8, still contracting but approaching expansion territory, from 44.8 the prior month. Employment fell to 43.9 in September from 46 the prior month, reflecting a more rapidly weakening labor market.
New export orders fell to 45.3 in September, showing deepening contraction, from 48.6, and imports fell to 48.3 from 49.6. Prices fell to 48.3 from 54. Inventories fell to 43.9, returning to pre-August low levels, from 50.3, while customers' inventory levels rose by 1.6 points to 50 in September, suggesting a "demand level that is neutral to negative for future new orders and production," ISM said.
The prices index registered 48.3, down from 54 the prior month, indicating raw material prices fell last month after eight straight months of increases.
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UK TRA gets approval on split HRC import quota proposal
UK TRA gets approval on split HRC import quota proposal
London, 1 October (Argus) — The UK Trade Remedies Authority (TRA) on 30 September received government approval of its recommendation to split and increase hot rolled coil (HRC) import quotas, but has been requested to reassess its proposal to temporarily suspend the quotas. The UKA TRA on 30 September made a separate recommendation to suspend the quota for nine months, in light of Tata Steel UK's closure of its blast furnaces and increased imports of HRC. It started its review of this in February 2024 at the request of Tata and steel importer Kromat. But following the government's approval of its recommendation to split the HRC import quotas , the TRA should reassess its recommendation to suspend the quotas, the secretary of state for business and trade, Jonathan Reynolds, said on 30 September. "I would like the TRA to analyse whether, following implementation of the TRQ review solution, the temporary change in market conditions still persists", he said, adding the reassessment should be completed by 31 December 2024. The government's acceptance of the recommendation to split HRC quotas means that from 1 October there will be a 1A quota and 1B quota in place, and the latter can only be used for companies completing downstream processing. The 1A quota for October-December will be 249,391t, and is divided on a country-by-country basis, with the EU getting the largest chunk of the quota at 187,484t. The quota for other countries will be 23,587t. The 1A quota totals 1mn t/yr. The 1B quota will be 578,587t for October-December, and can be sourced globally with a 40pc individual country cap, after which a 25pc duty would be payable. The 1B quota is 2.36mn t/yr, higher than the 1.9mn t/yr recommended by the TRA. By Colin Richardson Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
Some eastern US rail shipments restart after Helene
Some eastern US rail shipments restart after Helene
Washington, 30 September (Argus) — Some railroad operations in the southeastern US have resumed in the aftermath of Hurricane Helene, but major carriers warn that some freight may be delayed while storm-damaged tracks are repaired. Rail lines in multiple states were damaged after Hurricane Helene made landfall on the northeastern Florida coast on 26 September as a category 4 storm and traveled northwards as a downgraded but still dangerous storm into Georgia, Tennessee, and the Carolinas. The storm left significant rain and wind damage in its wake, including washed-away roads, flooded lines, downed trees and power outages. Eastern railroads CSX and Norfolk Southern (NS) said they are working around the clock to restore service to their networks. Norfolk Southern said it had made "significant progress" towards its recovery with most major routes back in service including its Chattanooga, Tennessee, to Jacksonville, Florida, line as well as its Birmingham, Alabama, to Charlotte, North Carolina route. Norfolk Southern said freight moving through areas that are out of service could "see delays of 72 hours". Several of Norfolk Southern's other routes remain out of service, including rail lines east and west of Asheville, North Carolina, because of historic levels of flooding. There are multiple trees to remove along a 70-mile stretch from Macon, Georgia, to Brunswick, Georgia. And downed power lines are keeping the railroad's lines from Augusta, Georgia, to Columbia, South Carolina, and Millen, Georgia, out of service. CSX said "potential delays remain" but did not provide specifics. However, the railroad said it had made "substantial progress" in clearing and repairing its network. The railroad's operations in Florida have mostly reopened, as have rail lines in its Charleston subdivision, which crosses South Carolina and Georgia. But bridge damage and major flooding has kept CSX's Blue Ridge subdivision out of service. A portion of the line running from Erwin, Tennessee, to Spartanburg, South Carolina, has been cleared, but CSX said "a long-term outage" is expected for other parts of the rail line. By Abby Caplan Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
Acer opens consultation on EU gas network code revision
Acer opens consultation on EU gas network code revision
London, 30 September (Argus) — EU energy regulators' agency Acer has opened a final consultation on proposed changes to the capacity allocation mechanism (CAM NC), with a view to finalising its recommendations in December. The consultation on 26 September-25 October seeks opinions on Acer's suggested changes to the CAM NC, including options for reforming the incremental capacity process. One option would completely remove the mechanism from CAM NC, while another would amend the process to make it "more robust and efficient". A third would remove the mechanism's binding stage but keep the demand assessment and design stages, Acer proposed. The incremental capacity process has made a "very limited contribution to cross-border capacity development based on market interests", with just one successful project in four cycles, Acer said. Acer also recommended allowing transmission system operators (TSOs) to request deposits from network users that submit non-binding demand indications, which could be returned if the economic test passes at least the lowest level of offered capacity, or if the user submits a binding bid equal to its non-binding indication. Acer also recommended creating a new ‘balance-of-month' (BOM) capacity product, either through rolling auctions for packaged daily products over progressively shorter terms or a standardised BOM product with a dynamic multiplier. TSOs and regulators said the former would be simpler and cheaper to implement, but shippers preferred the latter, Acer said. The EU agency expressed some support for a standardised product with a dedicated price and a dynamic multiplier depending on the days remaining in a month, as this could be accomplished relatively quickly. Acer also recommended that after the initial offering of yearly, quarterly and monthly firm capacities, these products should be offered again in subsequent additional auctions that should take place once a week on Thursdays. Only the relevant upcoming period would be offered in additional auctions, meaning — for example — additional yearly auctions would offer only the upcoming gas year. And separately, monthly capacity should be offered up to three months in advance within each quarter. The group suggested that decisions on applying implicit capacity allocation methods be made jointly by regulators in a region as opposed to a single body, as offering only on one side of an interconnection "would hinder the efficient allocation of capacity". Acer suggested that from 5 August 2026, CAM NC provisions also apply to entry points from and exit points to non-EU countries, subject to derogations under the new decarbonised gas package, before which time the decision would still be taken by national regulatory authorities. And Acer proposed shifting the auction calendar year to July-June rather than March-February, as moving annual capacity auctions to July from March has left the current calendar "misaligned with the cascaded auctioning of capacities of different durations that cover the gas year with yearly capacity being auctioned in July". Finally, Acer proposed recalculating technical capacity "at least every two years", to reflect "evolving market circumstances" such as supply, demand and network planning. When assessing future flows for the purpose of recalculating technical capacity, TSOs should also consult network users and publish information on the process and its outcomes, Acer said. By Brendan A'Hearn Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
Ge buyers seek new supply, alternatives as demand rises
Ge buyers seek new supply, alternatives as demand rises
London, 30 September (Argus) — Germanium consumers around the world are looking for alternatives while producers aim to lift output, as demand increases while restrictions on exports from China reduce availability. Prices for 99.999pc germanium metal exported from China have soared to $2,580-2,680/kg fob from $1,450-1,550/kg at the start of June and $1,110-1,210/kg at the start of 2023, according to Ar gus assessments. The upper end of the range in Europe tipped past $3,000/kg cif at the start of September and remains there. Germanium dioxide prices have similarly climbed. Demand for germanium for defence and advanced computing applications is growing. The adoption of artificial intelligence (AI) in a range of industries is driving strong demand for silicon-germanium owing to the compound's ability to operate at higher frequencies and lower power. That makes it well suited to the higher performance and efficiency that AI requires, according to Israeli firm Tower Semiconductor. Tower expects the utilisation rate of its Fab 3 facility to hit full capacity in the third quarter, up from 55pc in the second quarter in response. Beyond AI and data communications, automotive manufacturers are exploring the use of silicon photonics in light detection and ranging (LiDAR), the company said. As advanced driver-assistance systems (ADAS) become standard and autonomous vehicles are rolled out, consumption of germanium in infrared optics for thermal imaging cameras and night vision devices is increasing. But consumers are concerned about security of supply. The US increased its imports of germanium metal and dioxide in 2023 by around 20pc year on year to 38t, according to the US Geological Survey. Exports from China, the world's largest germanium producer and exporter, dropped sharply after the government introduced export controls in August 2023. Given the use of germanium in optical components, power devices and sensors, the US Department of Defense (DoD) is working with suppliers to ensure it has sustainable access. The Defense Logistics Agency has a partnership with LightPath Technologies to replace germanium in certain DoD applications. LightPath is working to reduce the amount of optics it produces from germanium, to reduce the risk of supply chain disruption and help customers convert their systems to use optics made from its Black Diamond chalcogenide materials, the company's president and chief executive, Sam Rubin, said in its second-quarter earnings call. LightPath's infrared component sales fell by $1.7mn, or 36pc, primarily after its largest customer did not renew a large annual contract for germanium-based products. The company last week announced a $500,000 initial production order for thermal imaging assemblies using Black Diamond from a new tier-1 defence customer. 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Mining exploration companies such as Anson Resources and EV Resources in Australia and Cantex Mine Development in Canada are pursuing projects with germanium content for potential production. But the fastest way to do so is by processing tailings to extract germanium. For instance, Hong Kong Sinomine Rare Metals, which has acquired the Tsumeb copper smelter and polymetallic tailings pile in Namibia, recently estimated that the tailings contain 746.21t of germanium metal. The company plans to add a germanium-zinc smelting production line to the copper smelting line, to commercialise output "as soon as possible". Earlier this year, Belgium's Umicore signed a long-term agreement with STL1, subsidiary of Democratic Republic of Congo state-owned mining firm Gecamines, to optimise germanium production at STL's processing facility commissioned in 2023 at the Big Hill tailings site in Lubumbashi. STL's germanium previously entered the market through third-party refiners outside the country. 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