Articles in Category: Non-ferrous Metals

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This afternoon in metals news, renegotiation efforts focused on the North American Free Trade Agreement (NAFTA) appear to be at a standstill, Chile’s state copper commission boosts its 2018 copper forecast and a European agency advises plane manufacturers to suspended their use of products from embattled Japanese steelmaker Kobe Steel.

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NAFTA Deadlock

The fourth round of renegotiation talks regarding the 23-year-old NAFTA concluded yesterday, but the U.S., Mexico and Canada appear to be no closer to a consensus.

According to Bloomberg, initial hopes for a quick resolution have fizzled, as talks will now be extended into 2018 (which was previously hoped to be avoided, given the scheduled elections in each country next year).

The next round of talks is scheduled for Nov. 17-21 in Mexico.

Cochilco Forecasts Copper at Nearly $3/Pound in 2018

Chile’s state copper commission, Cochilco, on Wednesday put out a forecast for 2018 including a prediction of the average global copper price hitting $2.95/pound.

The new forecast is up significantly from Cochilco’s mid-year estimate of $2.68/pound. Greater Chinese demand is cited as a supporter of the global price.

Kobe Steel Saga Continues

The fallout from the Kobe Steel data falsification scandal continues, as the European Aviation Safety Agency (EASA) advised plane manufacturers to suspend their use of products from the firm, the third-largest steelmaker in Japan, according to CNN Money.

According to the report, EASA advised those manufacturers to find alternative suppliers and conduct a “thorough review of their supply chain.”

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A number of global heavyweights use Kobe Steel products, including GM, Boeing, Ford and Toyota, according to the report.

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This morning in metals news, U.S. raw steel production went up last week, aluminum is heating up as China prepares for winter cuts to excess capacity and Kobe Steel’s data falsification scandal could stretch back a decade.

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Raw Steel Production Up 5.4%

U.S. raw steel production for the week ending Oct. 14 was up 5.4% from the same week in 2016, according to weekly data from the American Iron and Steel Institute (AISI).

Production for the week amounted to 1,744,000 tons, up from 1,655,000 for the same time frame in 2016.

Aluminum Heating Up

It’s been a big year for aluminum — and with Chinese winter cuts to excess capacity on the way, the aluminum price could continue to rise.

According to a Reuters report, China is preparing to reduce its aluminum smelting capacity by one-tenth by the end of the year.

Kobe Steel Scandal Could Go Back More Than 10 Years

The data falsification scandal plaguing Japan’s third-largest steelmaker could go back more than a decade, according to a Bloomberg report.

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According to the report, Kobe Steel will cooperate with the U.S. Department of Justice. A company executive quoted in the report told Bloomberg that data falsification at the firm has likely been happening for over a decade — stretching further than Kobe’s admission of falsification dating back to 2007.

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This morning in metals news, Kobe Steel’s share price continues to plummet in the wake of its data falsification scandal, London copper hits a three-year high and palladium is having a strong 2017.

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Kobe Steel Shares Hit Lowest Price Since 2012

Kobe Steel, Japan’s third-largest steelmaker, continues to see its share price drop on the heels of its data falsification scandal.

The fallout from the scandal has already seen Kobe lose approximately $1.8 billion in market value, Reuters reported.

On Friday, Hiroya Kawasaki, Kobe’s chief executive, said about 500 companies received falsely certified products from Kobe, which was more than double a previously released number, according to the Reuters report.

LME Copper on the Rise

London copper is on the way up again, this time rising to hit a three-year high, Reuters reported.

The metal eclipsed the $7,000 mark, powered in part by good news on the Chinese economy, according to the report.

Palladium Powered by Automotive Demand

Recently, the palladium price recently eclipsed that of platinum for the first time in 16 years.

It’s been that kind of year for palladium.

Free Download: The October 2017 MMI Report

According to a CNNMoney report, 78% of palladium demand this year came from the automotive market.

Before we head into the weekend, let’s take a look back at the week that was. 

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  • In case you missed it, our October MMI report is out. Make sure to check out the free PDF download for the rundown on the last month for our 10 MMI sub-indexes: Automotive, Construction, Aluminum, Copper, Renewables, Rare Earths, Raw Steels, Stainless Steels, GOES and Global Precious.
  • Also, our Annual Outlook is out, too. Check it out for a comprehensive look ahead to 2018.
  • Coal India Ltd. is looking to diversify beyond coal, Sohrab Darabshaw wrote earlier this week.
  • Aluminum officials are in “wait-and-see mode” when it comes to the ongoing Section 232 probe vis-a-vis aluminum imports. The investigations into the national security impact of aluminum and steel imports were launched in April and have a January statutory deadline; at that point, Secretary of Commerce Wilbur Ross must present President Donald Trump with a report and recommendations.
  • Glencore bet big on zinc — and won, our Stuart Burns writes.
  • Although oil prices are well below 2014 numbers, supply cuts in some cases have seen the price start to climb. Are more cuts on the way, further constraining global supply and driving up prices? Burns wrote about the subject and what OPEC Secretary General Mohammad Barkindo called a “rebalancing process.”
  • In big news, Kobe Steel is in hot water for a data falsification scandal, one which threatens the firm’s credibility among consumers and manufacturers. The scandal has already had major financial ramifications, as the company’s share price has been in free fall since the news hit.

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Life is full of ups and downs.

So, too, is the world of metals.

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Last month, all 10 of our MMIs saw upward movement. This month? Not so much.

Eight of 10 MMIs tracked back this month, albeit several of them fell by small amounts. The GOES MMI, meanwhile, picked up a point, while the Aluminum MMI posted no movement.

If you’ll remember, copper and aluminum had big months in August, as we detailed in last month’s MMI report. After a cooling period last month, though, so far in October copper has tracked back upward — so maybe it was just a September slump for the good Dr. Copper.

“However, market watchers can see a new rally taking place within the base metals industry,” wrote our Irene Martinez Canorea in her Copper MMI report. “Copper prices — along with lead and tin — increased sharply on heavy trading volumes. Buying organizations can expect upward movements within the bullish market.”

Meanwhile, as for aluminum, the flat month is actually an encouraging sign for the metal’s strength.

“Aluminum traded sideways in September,” Martinez Canorea wrote. “This trading pattern suggests resilience, as aluminum prices digest price gains and become strong again to continue the uptrend. Trading volumes continue to support the current rally, driving aluminum prices to a five-year-high in September.”

The aforementioned represents a small snippet of the analysis available in this month’s report.

You can read about all of the aforementioned — and much more — by downloading the October MMI report below.

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This morning in metals news, the world’s top copper producer expects a moderate rise in the metal’s price going forward, the Aluminum Association announces new leadership and Kobe Steel continues to reel from its data falsification scandal.

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Copper on the Rise

The price of copper is set to experience moderate increases, according to the mining minister of Chile, Reuters reported.

Aurora Williams, the mining minister of Chile (the world’s top copper producer), said Wednesday that there will be moderate increases in the metal’s price, but not enough to push it above $3/pound for the year.

According to the Reuters report, copper exports reached $3.18 billion in September, their highest level in nearly three years.

Changing of the Guard

The Aluminum Association announced new leadership on Wednesday.

Michelle O’Neill, senior vice president of senior vice president of global government affairs and sustainability at Alcoa, was elected as Aluminum Association Chair, becoming the first woman in the association’s 84-year history to hold the position. She replaced Garney Scott, president and CEO of Scepter, Inc., following a two-year term.

Kobe Steel Data Scandal Continues

It’s difficult to quantify lost trust, but it’s a problem Kobe Steel, Japan’s third-biggest steelmaker, is dealing with now on the heels of a data falsification scandal.

Now, the chief executive of the company is admitting the scandal is a serious hit on the company’s image, one that leaves it with “zero credibility,” The Guardian reported.

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According to The Guardian’s report, General Motors is the latest manufacturer to check whether its cars contain falsely certified parts or components sourced from Kobe Steel.

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Aluminum industry officials restated a long-held stance that in the U.S. Department of Commerce’s Section 232 investigation into aluminum imports, China should be the primary focus of any trade action.

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During a roundtable conference Wednesday, Oct. 4, in Washington D.C., Michelle O’Neill, Alcoa’s senior vice president for global government affairs and sustainability (and newly elected chairwoman of the Aluminum Association); Ganesh Paneer, vice president and general manager of Automotive North America for Novelis; and Garney B. Scott, president and CEO of Scepter, answered questions about the state of the aluminum industry and outstanding trade legislation in the Department of Commerce.

O’Neill said the Aluminum Association will soon release a new statistical review of the aluminum market through 2016.

Citing shipment figures, O’Neill said overall demand is high, with shipments of aluminum from the U.S. and Canada up 40% from the trough of the recession in 2009 and “within striking distance “of record shipment numbers in 2005-2006. In that same vein, Paneer noted aluminum’s growing market share in the automotive market as another indicator of the versatile metal’s strength.

Despite these figures, however, the officials reiterated concerns about leveling the global trade playing field.

Scott, O’Neill’s predecessor as chairman of the Aluminum Association, said one of the Association’s biggest efforts is ensuring U.S. aluminum producers, recyclers and fabricators get to operate in a “predictable regulatory environment” and in a “rules-based global trading system internationally.”

In that vein, Scott referred to the levels of aluminum coming into the U.S.

“We continue to have a serious issue with the aluminum supply coming into the U.S.,” he said. “Last year saw record levels of imported aluminum into North America and more specifically the United States. The 13.1 billion pounds of imports accounted for more than half of U.S. supply.”

Scott further zeroed in on the problem, noting that while imports in general aren’t always a negative, the volume of imports from China continues to be a problem for the U.S. aluminum industry.

“While this industry has many responsible trading partners and does not view all imports as a problem, we do take issue when we see imports surg2ing from a country like China that operates outside the bounds of our global system of rules-based trade,” Scott said.

Imports from China have increased 200% since 2012, Scott said, and in the year to date are up 30%.

“These imports are a direct result of metal overcapacity,” he said.

He added that a negotiated agreement between the U.S. and Chinese governments is needed.

Recently, the Commerce Department opted to defer the issuance of a preliminary antidumping duty determination in its investigation of aluminum foil from China. Underpinning the deferral was a desire to incorporate information regarding the ongoing study of China’s non-market economy status. According to a Commerce Department release, rulings on China’s status and on aluminum foil will come no later than Nov. 30.

As for Section 232 — the administration’s investigation into the national security implications of aluminum (and steel) imports — there hasn’t been much chatter since the early summer, when an announcement appeared to be coming, but the administration’s self-imposed June deadline came and went.

“We’re in wait-and-see mode,” Scott said regarding the Section 232 investigation.

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According to the law, once a Section 232 investigation is launched, the secretary of commerce has 270 days to present findings and recommendations to the president, which makes for January deadlines for both the pending aluminum and steel investigations.

As for the ongoing talks geared toward renegotiating the 23-year-old North American Free Trade Agreement (NAFTA), Scott emphasized the industry’s trade ties with Mexico and Canada, adding that the industry isn’t looking for a “significant amount of changes” with respect to NAFTA.

Trade negotiators from the U.S., Canada and Mexico recently met in Ottawa in late September for a third round of negotiations focusing on NAFTA.

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This morning in metals news, the Environmental Protection Agency (EPA) announced it will take steps to repeal the Obama-era Clean Power Plan, copper hit a four-week high and two Russian tycoons are selling a 3% stake in aluminum giant Rusal.

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Obama Initiative to Curb Emissions to be Rolled Back: EPA

The EPA announced Monday that it would begin to take steps to roll back the Obama-era Clean Power Plan, which sought to bring down emissions from power plants, The New York Times reported.

While constituting a loss for the environment, the measure marks a win for industry. (For a review of the costs associated with the plan, our Taras Berezowsky delved into the issue in this 2015 post.)

Scott Pruitt, head of the EPA, made the announcement in Kentucky yesterday.

“The war on coal is over,” Pruitt said, as quoted by The New York Times. “Tomorrow in Washington, D.C., I will be signing a proposed rule to roll back the Clean Power Plan. No better place to make that announcement than Hazard, Ky.”

The repeal proposal will be filed with the Federal Register today. The EPA announced its launch of a review of the plan on April 4.

Copper Bounces Back

After a cooling down in September, copper has hit a four-week high, Reuters reported.

The uptick comes as a function of expected supply shortages in China, according to the report.

Rusal Stake to Be Sold Off

Russian tycoons Mikhail Prokhorov (who also owns the NBA’s Brooklyn Nets) and Viktor Vekselberg are selling a 3% stake in aluminum giant Rusal, Reuters reported.

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The value of the 3% stake is worth $341 million based on Rusal’s closing price Tuesday, Reuters reported.

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This morning in metals news, a Japanese steelmaker is mired in scandal after admitting to falsifying inspection data, copper exports by Sicomines have been halted by the Congolese government and Shanghai zinc hits a 9 1/2-year high.

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Kobe Steel Hit by Scandal

The third-largest steelmaker in Japan, Kobe Steel, admitted to falsifying inspection data, according to the Financial Times.

The falsified data was for about 20,000 tons of metals used in aircraft and automobiles.

Copper Exports Halted for Sicomines

Export of copper by Sicomines in the Congo have been halted by the Congolese government, according to a Bloomberg report.

The Congolese government order Sinohydro Corp. and China Railway Construction Corp.’s local mining venture to stop exporting unprocessed copper and instead exporting “high-value products.”

Shanghai Zinc Hits 9.5-Year High

Zinc on the Shanghai Futures Exchange jumped 4% on Monday, reaching its highest point in 9 1/2 years, according to Reuters.

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According to Reuters, the metal rose on both supply concerns and “expectations for improved liquidity in markets in China.”