Ulbrich Economic Update - Number 11 (April 2021)

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Click here to download the 16 page Economic Update for the full details of recent economic trends impacting the steel and commodities markets, as well as the associated industries across the globe. Continue reading below for the Executive Summary.

April 2021 Economic Update Executive Summary

The Americas

U.S. MANUFACTURING ACTIVITY soared to its highest level in more than 37 years in March, driven by strong growth in new orders, the clearest sign yet that a much-anticipated economic boom is underway. The unemployment rate dropped to 6.0% in March as employers added 916,000 new jobs to payrolls. Temporary help and auto manufacturing were weak spots. Factory orders fell 0.8%, impacted by unseasonably cold weather, including winter storms in Texas and other parts of the densely populated South. Industrial production in the U.S. fell 2.2%, pulled down by manufacturing production (-3.1%) and mining production (-5.4%).

Activity in the service sector soared in March. It was the strongest expansion in the service sector in eleven years. Household net worth in America finished 2020 at the highest level on record, as soaring prices for stocks, real estate and other assets erased losses inflicted by the effects of the coronavirus pandemic. U.S. consumer confidence rose in March to its highest level since the pandemic started, with Americans expressing more optimism about business and labor-market conditions in the coming months. Logjams at U.S. ports are spreading beyond Southern California’s choked gateways and shipping officials are projecting the backups will continue into the summer.

Overseas

RISING RAW-MATERIALS COSTS AND UNRELENTING SUPPLY-CHAIN CONSTRAINTS are prompting many
Chinese exporters to increase prices for the goods they export, raising fears it may add to global inflationary pressures. Eurozone manufacturing PMI vaulted to its highest level since data collection started 24 years ago. The UK manufacturing PMI grew for a tenth consecutive month. OPEC and a group of other big oil producers agreed to add about 350,000/bbls. a day in production starting in May.

Metals & Commodities News

BOOMING ELECTRIC-VEHICLE DEMAND SUPERCHARGES LITHIUM PRICES. Lithium prices are surging, sparking concerns about limited supplies of the battery metal that is crucial to the electric-vehicle boom. Chinese prices for lithium, considered a bellwether, have soared since the start of the year. Platinum demand has been boosted by renewed efforts around the world to reduce carbon-dioxide emissions. Australian iron ore exports are expected to hit US$104 billion this year.

Automotive Industry Advancements

VW EXPANDS EV OFFENSIVE WITH PLANS FOR SIX BATTERY FACTORIES. The automaker revealed the latest part of its plan to lead in electrification: building six new battery factories across Europe to be in operation by 2030. Each factory will have a capacity of 40 gigawatt-hours. VW also plans to invest in its charging networks around the world, including building another 3500 Electrify America fast chargers in North America in 2021, along with increasing the number of charging stations from 560 to 800.

Steel Industry Trends

DEMAND FOR STAINLESS STEEL CONTINUED STRONG in March led by the automotive and appliance sectors which, along with low inventories and extended lead times, has supported two mill base price increases since December. The market expects a third increase soon. The Metal Service Center Institute reported inventories going into March were 12.7% below February 2020 levels. Although the LME nickel price has recently declined, the drop’s effect on the April surcharge was offset by higher chrome and scrap prices.

Medical Insights

ONE GRAM OF NICKEL CAN KEEP YOUR GLASSES FROM FOGGING UP. Using a fine nickel containing stainless steel strip keeps masks fitting snugly on medical professionals and frontline workers who wear glasses and need to see clearly at all times. In addition to its ease of sourcing and the absence of any allergic reactions, the stainless steel strip can be recycled along with the other materials that constitute the mask. Quite an achievement for barely one gram of nickel containing stainless steel!

Latest Aerospace Developments

AIRLINES PUSH TO REDUCE CARBON FOOTPRINT WITH GREENER FUELS. Air traffic, the second biggest source of transport emissions after roads, is expected to grow more than threefold by 2045. Under pressure to reach net-zero greenhouse gas emissions by 2050, airlines are experimenting with sustainable aviation fuels (SAF). Only biofuel is in use today, but a promising new technology is e-fuels, or power-to-liquid fuels, which use renewable energy such as solar and wind to split water into hydrogen and oxygen (electrolysis). To make fuel, the hydrogen is then combined with carbon monoxide created from captured carbon dioxide.

Innovation & Energy Sector Updates

STARTUP JOINS RACE TO MAKE GREEN HYDROGEN CHEAPER. An Israeli startup joined the race to make cheap green hydrogen after securing investments from funds backed by Microsoft founder Bill Gates and Hong Kong billionaire Li Ka-shing. As governments and industries get serious about cutting greenhouse gas emissions, demand has grown for hydrogen produced by splitting water using renewable electricity as a potential carbon-free fuel to replace coal, oil and natural gas.

New Specialty Materials Technology

NITINOL+ TIRES THAT ARE SUPERELASTIC, AIRLESS AND NEVER GO FLAT. The startup SMART Tire Company, in partnership with NASA, has developed a superelastic tire technology that uses a shape memory alloy (SMA). The airless, non-pneumatic tire design was originally envisioned for Martian and lunar rovers. Made from a special advanced material, NiTinol+, the METL tires can travel safely over rocky and sandy terrain. Shape memory alloys are capable of undergoing significant reversible strain (up to 10%), enabling the tires to withstand an order of magnitude more deformation than other non-pneumatic tires.

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