Articles in Category: Commodities

The month of August has seen the Indian government slap anti-dumping duties on the import of a variety of steel products from six countries including China, South Korea, Brazil and Indonesia.

Two-Month Trial: Metal Buying Outlook

In the first week, the import duty was imposed on hot-rolled steel products, while a few days ago, the duty was enforced on certain cold-rolled flat steel products from different countries to protect the domestic industry from cheap imports.

In the first case, anti-dumping duties $474-557 per metric ton were imposed on hot-rolled flat products of alloy or non-alloy steel from China, Japan, South Korea, Russia, Brazil and Indonesia, according to a government notification.

Coiledsteel_585

Imports of coiled steel will be heavily tariffed in India, too. Source: iStock.

The duty will be in force for six months until February 7.

Hot-Rolled Duties

An anti-dumping duty of $474 per ton was imposed on import of hot-rolled flat products of alloy or non-alloy steel of a width up to 2,100 millimeter with a width up to 25 mm from Korea and Japan.

According to an Indian Express report Korean firms affected by this were Hyundai Steel Co. and POSCO. Three Japanese companies — JFE Steel Corp., Nippon Steel and Sumitomo Metal Corp. are also on the list. A similar anti-dumping duty was slapped on imports of similar products from China. Exporters Angang Steel Company Ltd. and Zhangjiagang were among the hardest hit. Imports of the same from Indonesia, Russia and Brazil attracted the $474 per mt duty. Read more

Copper LME falls to two-month low

London Metal Exchange copper falls to a two-month low. Source: MetalMiner analysis of @StockCharts.com data.

Copper prices fell to their lowest level in two months on the London Metal Exchange Wednesday. Copper started the year bullish, but ever since prices have struggled near $5,000 per metric ton as investors seem unwilling to chase prices higher.

Two-Month Trial: Metal Buying Outlook

Weaker Chinese imports over the past few months and the bearish calls of some major banks have contributed to the recent price fall. Unlike other base metals, sentiment on copper is still sort of bearish, making this metal the worst performer among its peers this year. Read more

Tin prices continue to march higher. Tin is one of the best performers among industrial metals this year, up more than 40% from its January’s lows.

3M LME Tin. Source: MetalMiner analysis of Fastmarkets data

Three-month London Metal Exchange tin price. Source: MetalMiner analysis of Fastmarkets.com data.

The metal continues to rise on a bull narrative of supply shortfall this year.

China’s Tin Production Falls

The Chinese administration began environmental inspection at eight major provinces starting July 19th, leading to smelters in China either suspending or cutting back production.

Two-Month Trial: Metal Buying Outlook

The recommended plant relocations and maintenance operations are expected to keep smelters idle for more than a month in some cases, with many mills not yet clear on possible restart dates. Read more

The London Metal Exchange and CME Group took action recently to, respectively, cut fees for traders and stop a spoofer.

We’re Sorry: LME Cuts Fees

The London Metal Exchange has cut fees in half for open outcry trades during August as a goodwill gesture after it had to vacate its premises because of structural problems, it said on Monday.

Free Download: The August 2016 MMI Report

Ring trading moved to its disaster recovery site in Chelmsford, east of London, in July after a potential safety issue was discovered in the building that houses its offices in London’s financial district.

CME Suspends Spoofer

CME Group, Inc. suspended a futures trader from its markets for spoofing on Monday, the exchange operator said, the latest regulatory action over the manipulative trading practice.

The company — which owns Comex, the Chicago Mercantile Exchange and other exchanges — barred Andrey Sakharov from trading for 60 days and could extend his ban, according to a disciplinary notice.

On multiple dates starting last month, Sakharov entered electronic orders in CME’s gold and natural gas markets that he did not intend to trade, the disciplinary notice said.

Two-Month Trial: Metal Buying Outlook

The practice of placing bids to buy or offers to sell contracts with the intent to cancel them before execution is known as spoofing and is illegal. It is used to create an illusion of demand in markets, so that spoofers can influence prices to benefit their market positions.

The Aluminum Association has not given up on the U.S. reaching a binding bilateral deal with China to reduce aluminum overcapacity, but the group is also holding out the option of pursuing anti-dumping or countervailing duty cases if market conditions fail to improve.

Two-Month Trial: Metal Buying Outlook

The aluminum industry is gearing up for a Sept. 29 International Trade Commission hearing, which would serve as the first step in any future trade defense cases on aluminum. The industry has taken a less aggressive approach than steel in not more pursuing anti-dumping, countervailing duties or World Trade Organization action against China on aluminum, opting instead to try to reach a bilateral or multilateral deal, Aluminum Association Vice President of Policy Chuck Johnson told World Trade Online.

“The issues of overcapacity really came to a head in the middle of last year,” Johnson said. “Prior to that, we had not been active on this issue. We have not, as an association, pursued antidumping and other trade enforcement remedies for our industry as have steel and other industries that have been facing a more endemic and long-term conditions. … But we are not taking anything off the table.”

This is a shift for the association, which represents original aluminum manufacturers throughout North America.

The ITC hearing will look at Chinese trade practices including trade policies, export duties and industry subsidization. The goal, Johnson said, is to get better documentation on China’s industry than has previously been gathered.

Free Download: The August 2016 MMI Report

The ITC is currently collecting information and gathering public comments in preparation for the hearing. The commission is also circulating a questionnaire looking at the competitive conditions affecting the U.S. aluminum industry as a whole.

Reuters_zinc_prices_vs_zinc_stocks_550_081616

Source: Thomson Reuters Datastream.

London Metal Exchange warehouse zinc stocks have steadily fallen since mid-2012, despite mostly stable prices during that period.

Three-month Aluminum on the London Metal Exchange hit a new 13-month high this week, retaking the $1,700 level.

3M LME Aluminum hits 13-month high

Three-month LME Aluminum hits 13-month high. Source: MetalMiner analysis of Fastmarkets data.

Recently we talked about the decline in aluminum exports this year. China exported 390,000 metric tons of unwrought aluminum in July, down 9.3% from July of last year. Chinese aluminum exports have fallen around 7% for the first seven months of 2016. Lower aluminum exports are supporting aluminum prices this year.

Two-Month Trial: Metal Buying Outlook

Despite the fall in exports, the U.S. is considering asking for a reclassification of aluminum products to stop a flood of “fake semi-finished” aluminum products entering the global market. The reason is that Chinese aluminum exporters seem to be avoiding export duties while simultaneously qualifying for Chinese export subsidies for semi-finished products, for products that are being shipped specifically for remelting as unwrought. Read more

At least according to a European Union official familiar with the Union’s steel sector plans, says Reuters.

Two-Month Trial: Metal Buying Outlook

The E.U. is certainly ramping up the pressure. This year, alone, the European Commission has 37 anti-dumping and anti-subsidy measures in place for steel products, 15 of them concerning China, slapping anti-dumping duties on products such as rebar, cold-rolled carbon steel and cold-rolled stainless steel, ranging between 18.4 and 25.3% for imports from China.

Everybody Gets on the Tariff Bandwagon

The E.U. is scheduled to rule on plate and hot-rolled coil from China in November and while rates haven’t been at the same level as the U.S. where up to 520% duties are have been applied, they are estimated by the industry to need to be in the 30-40% range in order to be effective.

Steel mills Molten iron smelting furnace production line

Can China’s zombie steel mills be shut down? Beijing is trying a new tactic. Source: Adobe Stock/ZJK.

Yet despite the unprecedented level of action, carbon steel imports in the year to May rose 21% with China now representing 27% of total E.U. imports, while stainless steel imports rose 17% over the period, E.U. data shows, even though demand remained almost flat. Read more

Global stock markets continue to rise as we noticed last month. Stock markets have already made up for their losses following the U.K.’s decision to leave the European Union.

Two-Month Trial: Metal Buying Outlook

This recovery suggests that investors are turning more positive on the health of the global economy, which bodes well for industrial metals demand growth.

The Chinese stock market ETF hits a nine-month high. Source: MetalMiner analysis of @Stockcharts.com data.

The Chinese stock market ETF hits a nine-month high. Source: MetalMiner analysis of @Stockcharts.com data.

This is especially true when China’s stock markets rally. China’s stock market is possibly the best benchmark for China’s economy or at least investors’ sentiment about the Chinese economy. The slowdown in the Chinese economy (weak demand with too much capacity) explains why industrial metals peaked in 2011.

China’s stock market bottomed out earlier this year (coinciding with a bottom in metal markets) thanks to China’s stimulus measures that fueled demand growth. Chinese shares have risen rapidly this month to the highest levels in nine months as investors expect its central bank to ease monetary policy again.

Caixin’s PMI measure of manufacturing in China moved above the boom-bust line of 50 last month, for the first time since early 2015 while China’s Q2 GDP growth came at 6.7%, beating the market’s expectations.

Industrial Metals Continue to Climb

Industrial Metals ETF rises to a 13-month high. Source: MetalMiner analysis of @Stockcharts.com data.

Industrial Metals ETF rises to a 13-month high. Source: MetalMiner analysis of @Stockcharts.com data.

Not surprisingly, the trend in industrial metal prices looks pretty similar to China’s stock market. The recent rally in global stock markets, particularly in China, favors a continuation of this year metals’ bull market.

Free Download: The August 2016 MMI Report

Some industrial metals have benefited from a bull narrative of supply shortfall this year but, on top of that, they have also benefited from higher demand coming from China which is being reflected in the surge in Chinese imports this year.

Saudi Arabia is pushing for an oil production cut among its fellow OPEC nations as well as other big producers such as Russia. In China, Beijing is pushing local governments to cut steel overcapacity.

Saudis: Let’s Make a Production Cut Deal

The Organization of Petroleum Exporting Countries will probably revive talks on freezing oil output levels when it meets non-OPEC nations next month as top exporter Saudi Arabia appears to want higher prices, according to OPEC sources, although Iran, Iraq and Russia present obstacles to a deal.

Two-Month Trial: Metal Buying Outlook

Riyadh sharply raised expectations for a global production deal between on Thursday when Energy Minister Khalid al-Falih said Saudi Arabia will work with OPEC and non-OPEC members to help stabilise oil markets.

China Vows to Accelerate Steel Capacity Cuts

China should quicken capacity cuts in its bloated steel and coal sectors, the country’s top economic planning agency said on Tuesday, putting pressure on local officials to meet annual targets despite some worries the steps could hurt economic growth.

Free Download: The August 2016 MMI Report

China has promised to slash steel capacity by 45 million metric tons and coal capacity by 250 mmt this year, as it tries to rejuvenate two industries suffering from slowing demand and a massive supply glut.