Articles in Category: Global Trade

However, it appears unclear as to who will reap the benefits.

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The story begins with the U.S. GOES trade case that resulted in no duties applied to imported products to the U.S. However, U.S. power equipment manufacturers moved to alternative sources all the same, importing wound and stacked cores instead of purchasing GOES from domestic sources. Despite the unfavorable ruling for the U.S. domestic producers, other countries soon began filing anti-dumping cases.

GOES_Chart_August_2016_FNL

Chinese producers Wuhan Iron & Steel Co. and Baoshan Iron and Steel persuaded the Chinese government to rule against Japanese, Korean and European producers of GOES. The Republic of Korea received final duties of 37.3%. The preliminary duties on Korea, however, had been 14.5%-29.5%. The final duty rate, coming in significantly higher will likely shut down all Korean exports to China. With Japan receiving duties over 45%, both countries will no longer sell GOES into China.

According to a recent Reuters report, China imported over 120,000 metric tons of GOES of which over 95,000 mt came from Japan and Korea combined. Much of that material likely included the higher performing GOES grades. Japan had already started to withdraw from the Chinese market. Now China will need to find equivalent supply domestically which could limit GOES exports from China.

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In the meantime, here in the U.S., a word of clarity on the cold-rolled coil dumping case – grain-oriented electrical steel was “specifically excluded from the scope of this investigation”.

U.S. GOES prices inched up slightly.

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Profits were down at Hong Kong Exchanges & Clearing Ltd. in the first half of 2016 and Rio Tinto and BHP Billiton are fighting an Australian iron ore mining tax.

Profits Down at HKEX in First Half

Core first-half earnings of the Hong Kong Exchanges & Clearing Ltd.’s commodity division slumped by 19% as trade in metals declined while hiring linked to a new spot commodities trading platform in China drove up costs, the exchange said on Wednesday.

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HKEX’s second-quarter net profit slumped 38% as falling trading volumes pushed down fees for buying and selling shares and commodities contracts.

BHP, Rio Blast Proposed Australian Iron Ore Mining Tax

Mining giants Rio Tinto Group and BHP Billiton on Tuesday issued statements attacking proposals for a new Australian mining tax as damaging and unfair. Brendon Grylls, leader of the National Party in Western Australia, has proposed an iron ore levy of $3.86 (Australian $5) a metric ton that would specifically target BHP and Rio.

The battle has intensified between the European Union and low-cost steel suppliers to the region. Specifically, the E.U. is taking action against China and Russia by imposing more anti-dumping duties on steel products from those regions, and for the first time applied them retroactively, according to the Financial Times.

Duties on Foreign Steel

The FT said the duties on cold-rolled steel range up to 22.1% for Chinese imports and up to 36.1% for Russian imports. The rates are a little higher than the provisional penalties in place since February.

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Using a different calculation method, the U.S. imposed tariffs in excess of 500% on similar cold-rolled steel materials from China earlier this year and the E.U. Commission is said to be planning further measures that would allow it to impose U.S.-style tariffs against steel that is believed to be dumped at particularly low prices or is subsidized. Read more

Source: Thomson Reuters Datastream/China Customs 8/9/2016

Source: Thomson Reuters Datastream/China Customs 8/9/2016

Chinese steel exports rose in the first half of 2016, despite promises of production cutbacks.

Gold and silver will return to the London Metal Exchange soon and China’s pollution crackdown may affect tin prices as many smelters have shut down.

Gold and Silver Return to the LME

The London Metal Exchange said today it is planning to launch spot and futures contracts for gold and silver in the first half of 2017, adding to its list of products which includes copper and aluminum.

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The 139-year old exchange is working in collaboration with the World Gold Council, an industry body backed by gold mining companies such as Barrick Gold and Goldcorp, and is supported by five banks and proprietary trader OSTC, which have committed to provide liquidity.

China Cracks Down on Pollution

China could ramp up imports of refined tin as a string of environmental inspections at smelters in the world’s top producer of the metal curbs local output.

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Officials in eight provinces last month began inspecting metals producers including tin smelters, forcing some to shutter production while they look to comply with environmental standards, according to industry officials and analysts.

Our Aluminum MMI fell by one point for the month as investors seemed unwilling to chase prices much above $1,600 per metric ton.

Surplus or Deficit?

There is still a divided opinion over weather aluminum is in a surplus or a deficit this year. On one side, is the opinion that China hasn’t cut enough capacity and that its smelters are planning to increase output after a modest recovery in prices this year. Meanwhile, many others believe that aluminum markets will record their first deficit year in a decade.

Aluminum_Chart_august_2016_FNL

According to the latest figures released by the International Aluminum Institute (IAI), Chinese aluminum production has now fallen on a year-over-yeqars basis in five out of the last six months. For the first half, Chinese aluminum production has fallen by 3.3% compared to the same period last year. If things continue like this, this will be the first year where Chinese annual aluminum output declines.

Rising Aluminum Demand

While production is likely to fall this year, unless Chinese smelters decide to ramp up production, demand is also looking pretty good. Real state indicators in China for the first half are much better than last year. Also China’s car sales continued to climb in June, up 18% from June of 2015. Finally, the Caixin Manufacturing PMI in China rose above 50 points for the first time since February 2015.

Looking at the Chinese aluminum demand indicators, aluminum’s demand could grow in the ballpark of 5-6%, as most aluminum producers are projecting, especially if China continues to provide stimulus in the second half.

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So, for the first half of the year, China’s aluminum demand rose while production fell. This is also being reflected in exports this year. China’s aluminum exports rose by 10% y-o-y in 2015. However, for the first half of 2016, exports have fallen by more than 9%. Falling aluminum exports are a welcome sign for U.S. aluminum producers.

Midest Premiums Fall

For aluminum buyers, the all-in aluminum price consists of the aluminum price plus regional aluminum premiums. U.S. Midwest premiums fell slightly in July, with current quotes of $0.07 per pound. The picture doesn’t look any better in Europe where physical premiums are near their all-time lows.

The ongoing weakness in premiums this year might look surprising, given falling exports and a projected deficit this year. Some analysts attribute this weakness to the current flow of aluminum from non-LME-registered warehouses to physical markets.

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While demand for iron ore is up in China, the Philippines has shut down its only producer.

Chinese Iron Ore Imports Increase

On July 19th, the iron ore benchmark for immediate delivery to China’s Tianjin port fell by 2% to $55.10 per metric ton, the lowest since July 1st. Chinese iron ore imports rose 8.3% in July from the previous month to hit its second-highest on record, customs data showed on Monday.

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The move followed a significant drop in the most traded benchmark for construction material rebar on the Shanghai Futures Exchange. Demand for the key steel-making ingredient has increased as Chinese steel mills fired up furnaces on the back of higher prices.

Philippines Shuts Down Lone Iron Ore Miner

The Philippines has suspended the operations of the country’s only iron ore miner due to environmental infractions, officials said on Monday, bringing to eight the number of mineral producers halted in a government crackdown.

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The Southeast Asian nation, the world’s top nickel ore supplier, began an audit of all its metallic mines on July 8, shaking global nickel markets as seven nickel miners were suspended for causing environmental harm.

Olympics organizers on Monday rushed to fix bad wiring, broken plumbing and other problems in the athletes’ village in Rio de Janeiro after several foreign teams complained that accommodations were dirty and in disrepair less than two weeks before the start of the Games.

Entirely Expected

Here at MetalMiner, we often write about the quirks of Olympic construction and the graft, price inflation and other things that come along with them. We also document how major steelmakers often set up new operations just to provide products for events such as World Cups and Olympics. Brazil is definitely the rule and not the exception.

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We even scraped together a World Cup of industrial metals to see which metals were gaining the most from World Cup demand back in 2014 when Brazil was rushing to get stadiums, athlete accommodations, hotels and businesses done in time … as opposed to today when just Rio is rushing to get stadiums, athlete accommodations, hotels and businesses done in time.

Construction_yoders_550_030116

Can we do Olympic construction better? Choosing cities years ahead just makes prices escalate faster anymore. Photo: Jeff Yoders

Why isn’t Olympic construction ever done on time, on budget and up to the quality standards that International Olympic Committee member-countries demand anymore? Sochi wasn’t smooth by any stretch of the imagination but, aside from the study in hubris that was Bob Costas’ pink-eye broadcasts, it’s looking like Rio’s problems dwarf Sochi’s. Yes, Rio, you made Sochi look good. Why is each Olympics worse than the last? And more costly? Read more

The London Metal Exchange made news this week for cutting trading fees and retroactively slapping Detroit warehouse operator Metro International with a $10 million retroactive “settlement” long load-out queues that distorted prices.

LME Will Cut Trading Fees

The London Metal Exchange is expected to cut some trading fees, in a bid to arrest sliding volumes, but lower costs are unlikely to convince those already using cheaper alternatives — such as off-warrant storage — to return, metals industry sources say.

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Volumes on the 139-year-old exchange have been falling since trading fees were hiked an average 31% in January 2015. The drop has accelerated this year; in the six months to June volumes are down nearly 9% from the same period in 2015.

LME Hits Metro International $10 Million Non-Fine

Metro International Trade Services has just been hit with a $10 million “settlement” by the London Metal Exchange for its role in abetting the original load-out queue for aluminum in Detroit.

The subsequent splintering of the aluminum price between LME basis price and physical market premium caused collective outrage among manufacturers struggling to find ways to hedge the latter’s unprecedented volatility.

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Some are still pursuing Metro and its owner, Goldman Sachs, through the courts. The LME insists that the $10 million payment is not a fine but, rather, a settlement Metro agreed to in negotiations about the long load-out queues at its operation in the last three years.

Our Rare Earths MMI held steady, or flat, depending on how you look at it, at 17 this month, an example of how stagnant prices have been in a low range this year.

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The low price of rare earths did not come about because of export quotas being struck down in China or the World Trade Organization loss that precipitated the quotas’ end. In China, heavy rare earths production became more stable, but that wasn’t the reason either. What has caused the rare earths market to essentially collapse is substitution on a large scale and better recycling of the high-tech minerals.

Rare-Earths_Chart_August-2016_FNL

Rare earths demand has fallen because manufacturers sought to eliminate the threat of a national blockade, the likes of which Japan felt after Chinese rare earths producers essentially blacklisted the country in 2011.

Companies such as Siemens, Samsung and Honda have accelerated research on how to use less of the minerals, especially the “heavy” rare earths such as lanthanum and dysprosium. In that way, China hurt its own monopoly by forcing their customers to apply more ingenuity and brains to eliminating or limiting the scarce elements in their supply chains. Honda even produced a hybrid car engine, the first ever, that doesn’t rely on heavy rare earths.

Honda’s apparent turning point was a partnership with fellow Japanese firm Daido Steel in 2011, prompted by China’s squeeze. The result today is a new technique for designing crucial engine magnets that avoid heavy rare earths and are 10% cheaper and 8% lighter, Honda told the Wall Street Journal.

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The world will still likely need rare earth elements, particularly for renewable energy products such as solar panels and wind turbines, but the evidence of the damage done by China’s attempt to corner the market on heavy rare earths is now overwhelmingly apparent and a recovery in prices will not happen in the short term.

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