Ulbrich Economic Update - Number 8 (April 2020)

A Note from Our CEO:

With the rapidly changing landscape due to the spread of COVID-19 (Coronavirus), Ulbrich has regrettably decided to temporarily suspend our production and distribution of the monthly Ulbrich Economic Update. We would love to continue the newsletter, but other things must take priority in this difficult time. Click here to download the latest update and to continue reading the letter from CEO, Chris Ulbrich. Though shortened, the April Economic Update still contains articles on recent economic trends impacting the steel and commodities markets, as well as exciting industry innovations happening across the globe.

April 2020 // Economic Update Executive Summary

Steel Industry Update

ARCELORMITTAL WILL IDLE BLAST FURNACES AT INDIANA HARBOR AND DOFASCO IN ONTARIO. U.S. steelmakers initially saw no impact on production from the pandemic, then the automakers announced an eleven-day shutdown. Automotive is 25% of U.S. steel demand and 40%-or more of sheet demand, so the 2nd Qtr and 3rd Qtr likely will see steel volume losses as well as pricing degradation. The pandemic is exacerbating the global glut in steel production and threatens to unleash a new surge in imports into the U.S, according to the AISI, which has urged Congress to continue to support the Section 232 tariffs on steel. Millions of tons of steel and aluminum produced during what is now the worst manufacturing slump on record in China have created a surplus of metal that will take months to shrink, even if the COVID-19 epidemic is contained and demand recovers later this year in China and beyond.

Metals & Commodities Market Update

HARVESTING NICKEL FROM PLANTS, BOTANISTS TEST THE POTENTIAL OF PHYTOMINING. Some of Earth’s plants have roots that act almost like magnets and flourish in metal-rich soils which hundreds of thousands of other plant
species flee or die. Slicing open one of these trees or running the leaves of its bush cousin through a peanut press produces a sap that oozes a neon blue-green. This “juice” is actually one-quarter nickel, far more concentrated than the ore feeding the world’s nickel smelters. This vegetation could be the world’s most efficient, solar-powered mineral smelters. As a partial substitute to traditional, energy-intensive and environmentally costly mining and smelting, the world might harvest nickel plants. On a plot of land on the island of Borneo, an Australian research group proved the concept on small scale. Fears that mass disruption in China caused by the novel coronavirus outbreak would weigh on iron ore prices have not materialized, with the raw material for steelmaking up almost 7% over the past month. However, base metal prices generally continued to slump in March.

Latest Aerospace Market Developments

SPACEX WILL SEND ASTRONAUTS TO THE SPACE STATION FOR THE FIRST TIME IN MAY. It will be the first crewed launch from the U.S. to the platform since 2011. Elon Musk's company will launch a Falcon 9 rocket to transport NASA astronauts Bob Behnken and Doug Hurley in a first for the space agency as it looks to cut costs. Since the last U.S. space shuttle mission in 2011 (after 30 years of service), only the Russians have been going back and forth to the International Space Station.

Automotive Industry Economic Trends

MORGAN STANLEY CUT ESTIMATES FOR U.S. AUTO SALES, PREDICTING A “DEMAND SHOCK”. The Detroit car companies agreed to temporarily shut down U.S. factories to protect workers against the rapidly spreading coronavirus - an unprecedented work stoppage that will affect more than 150,000 factory employees. Several automakers said U.S. buyers of new vehicles will have the option to defer their payments, and customers with existing car loans could ask for payment rescheduling if impacted by shutdowns due to coronavirus. Automakers in the United States are raiding their parts bins to help save lives during the coronavirus outbreak. It's an effort that already was well underway but gained urgency when the President used the Defense Production Act to order General Motors to move faster as the nation confronts a shortage of critical medical equipment. Automakers have sprung into action while the coronavirus outbreak has halted their ability to build vehicles, leveraging their manufacturing scale, supply chain channels and production efficiency to help make respirators and ventilators instead. General Motors, trying to refashion itself as a futuristic company with technology to compete against Tesla, rolled out plans in March for 13 new electric vehicles during the next five years.

Manufacturing Questions During a Pandemic

AN EXPERT SPEAKS ON HOW CORONAVIRUS WILL IMPACT THE GLOBAL SUPPLY CHAIN. Coronavirus has posed tremendous global disruption in the end-to-end global supply chain. Nick Vyas, executive director of the Center for Global Supply Chain Management at the USC Marshall School of Business, answers questions about what to expect and estimates it will take the United States two to three months to go back to normal once the virus has passed through our country. When asked if there was a silver lining buried in the cloud of pandemic and what companies can learn from this situation, Vyas said that cost should not be the only consideration when establishing a company's supply chain; there have to be some mitigation strategies as well. He thinks this situation is a great lesson, and the country will have a better global supply chain network that is resilient, agile and reliable in the future.

April Innovation

THE WORLD’S MOST INNOVATIVE ECONOMIES IN 2020 RANKS THE U.S. AT NINTH. Every year Bloomberg releases its “Innovation Index”, ranking the 60 most innovative economies worldwide. Germany, South Korea and Singapore took the top three positions this year. University of Central Florida researchers are helping to close the gap separating human and machine minds. The UCF team showed that by combining two nanomaterials into a new superstructure, they could create a nanoscale device that mimics the neural pathways of brain cells used for human vision, a step toward developing neuromorphic computers. The trick to the innovation was growing nanoscale, light-sensitive perovskite (a calcium titanium oxide mineral) quantum dots on the twodimensional, atomic thick nanomaterial graphene.

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