- India has big plans to modernize its railway system, our Sohrab Darabshaw writes.
- In case you missed it, our November MMI report is out. You can download it here to catch up on news and trends affecting our 10 MMI sub-indexes.
- Electric vehicles are all the rage — but what about simply smaller vehicles when it comes to curbing emissions? Our Stuart Burns delved into the matter earlier this week.
- The recently released Panama Papers shined a light on the world of corporate finance, and, furthermore, tax-dodging methods.
- Prefer to get your metals news and analysis in audio format? You’re in luck, as we recently relaunched the MetalMiner Podcast! In case you missed it, check out the first episode with Michael Stumo, CEO of the Coalition for a Prosperous America.
- Investor interest in commodities has picked up — Burns touched on why that is on Wednesday.
- Aluminum has cooled down a bit, but it might be a temporary dip.
- Our Irene Martinez Canorea offered her own take on the surge in commodities interest, with reference to the CRB index.
- Chinese excess capacity has been a long-standing gripe of producers in the European Union and U.S. But circumvention of antidumping tariffs via third parties is also on the E.U. and U.S.’s radar, Burns writes.
Yes, the aluminum price has fallen back this month.
Yes, it is looking decidedly weak compared to its high point of $2,215 per metric ton earlier this month.
Yes, inventory on the Shanghai Futures Exchange (SHFE) is building rapidly, hitting a record high this week of 666,581 tons, according to Reuters.
That’s not where we expected aluminum to be back in the summer when the market was talking all about smelter closures in China this winter and supply constraints.
Does that mean the market thinks the constraints are not going to happen? Is this another case of Beijing talking up their policies but failing to enforce them?
This morning in metals news, U.S. Steel faces a potential lawsuit for dumping toxic materials into Lake Michigan, a Chinese aluminum producer cuts smelter capacity and NAFTA renegotiation talks resume.
U.S. Steel Could Face Lawsuit for Chromium Dumping
U.S. Steel faces a lawsuit after dumping toxic chromium in Lake Michigan, the Chicago Tribune reported.
According to the report, the 56.7 pounds of chromium released in late October by the company’s Midwest Plant was 89% higher than its water pollution permit allows over 24 hours.
Luoyang Xiangjiang Wanji Aluminium Cuts Back Smelter Capacity
Winter is coming, which means it’s time for those capacity cuts in China.
According to a report by Platts, China’s Luoyang Xiangjiang Wanji Aluminium, located in the Henan province, announced major capacity cuts. On Wednesday, the firm announced 30% cuts of aluminum and alumina capacity, running from today through March 15, 2018, according to the report.
Time For Another Round
Yet another round of talks focused on renegotiating the North American Free Trade Agreement (NAFTA) kicked off Wednesday in Mexico City.
Tensions have ramped up of late from all sides, according to the report, as the U.S. tries to push through a set of demands being balked at by China and Mexico.
Although the hope was that a deal could be reached by the end of the year, the teams agreed to extend talks into next year.
This morning in metals news, the CEO of Northam Platinum indicated the platinum price is due for upward movement, raw steel production in the U.S. last week was up significantly and Chinese aluminum production was down during October.
Platinum on the Rise?
As we’ve noted here in recent weeks, palladium has outdone platinum of late — normally, it’s the other way around.
But according to Northam Platinum CEO Paul Dunne, platinum should be on its way back up.
“We have said for a number of years from various public platforms that you would see a phased recovery with palladium running first, then rhodium, and finally platinum,” Dunne said in a report by Mining MX. “Palladium has been off to the races over the past year and the rhodium price has now started to move in recent months rising around 50%.”
Raw Steel Production Up
According to data from the American Iron and Steel Institute (AISI), U.S. raw steel production was up 9.3% for the week ending Nov. 11 compared with the same week last year.
Domestic raw steel production was 1,739,000 net tons for that week, with a capability utilization rate of 74.6%.
Production for the week ending Nov. 11 was up 1.4% from the previous week, when production was 1,715,000 net tons and the rate of capability utilization was 73.6 percent.
Chinese Aluminum Production Drops in October
Primary aluminum production in China fell 2.3% in October from the previous month, according to a Reuters report citing government data.
According to the report, factors contributing to the drop include high costs and the closure of illegal capacity.
In August, all 10 of our MMIs saw upward movement. That changed the following month, when eight of 10 MMIs fell (albeit several of them fell by small amounts).
For our November MMI (tracking October’s activity), four of the MMIs moved up, five moved down and one held flat (the Automotive MMI).
Hitting some of the high points:
- It was a big month for stainless steel. The Stainless MMI surged by seven points, hitting 70, up from the October reading of 63.
- Aluminum also had another strong month, continuing what has been a very strong 2017 for the metal. The Aluminum MMI hit its highest reading, 99, in the history of the MMI series.
- The doctor was in the house this past month (Dr. Copper, that is). The Copper MMI jumped four points.
You can read about all of the aforementioned — and much more — by downloading the November MMI report below.
This morning in metals news, Japan’s aluminum industry is considering crafting a set of quality assurance guidelines (on the heels of the Kobe Steel quality data falsification scandal), LME copper move further away from last week’s one-month low and Kobe Steel blames its plant managers for the data scandal.
Changes to Aluminum Industry in Japan?
On the heels of Kobe Steel’s quality data falsification scandal, many in Japan are asking the same question: how can we prevent the same thing from happening again?
The scandal has rocked Kobe Steel, the third-largest steelmaker in Japan. As a result, the Japanese aluminum industry is considering building a new set of quality assurance guidelines, Reuters reported.
Copper Moves Up
London copper moved up Monday, Reuters reported, powered by strong demand and a lagging U.S. dollar.
Copper moved up 0.7% to $6,832.50 a ton by 0719 GMT, according to the report, up from a one-month low last week of $6,761.50 a ton.
Kobe Steel Plant Managers Get Blame for Scandal
As with any scandal, designation of blame is inevitable — and vis-a-vis Kobe Steel’s quality data falsification scandal, Kobe is blaming its plant managers, according to The New York Times.
According to an internal company report, plant managers were at the center of the issue — instead of scrapping products that fell below quality guidelines and manufacturing new ones, the plant managers signed off on the sub-standard metal products.
Before we head into the weekend, let’s take a look back at the week that was.
- In case, you missed it, our November MMI series is complete. You can read each piece at the following links:
- Oil prices, cobalt and electric vehicles — Stuart Burns touched on all of them in his post Wednesday.
- It’s been a tumultuous week, particularly in Saudi Arabia, as Crown Prince Mohammed bin Salman has made moves to consolidate his power while tensions with Lebanon are rising, per media reports. Burns touched on the political situation’s impact on the oil price — unsurprisingly, the price is going up. Political turmoil, however, isn’t the only thing sending prices upward.
This morning in metals news, U.S. imports of steel are up 19.4% through the first 10 months of the year, the European Union’s antitrust watchdog is eyeing ArcelorMittal’s bid to buy Ilva and London copper posted little movement Thursday.
Steel Import Market Share Hits 26% in October
According to data released by the American Iron and Steel Institute (AISI), for the first 10 months of 2017, total and finished steel imports were 32,841,000 net tons (NT) and 25,375,000 NT, up 19.4% and 15.1%, respectively, from the same period in 2016.
In addition, the estimated finished steel import market share in October was 26% and is 27% for the year to date.
EU to Look at ArcelorMittal’s Ilva Takeover Bid
The EU’s antitrust watchdog is taking a look at ArcelorMittal’s bid to buy Ilva, amid concerns that the purchase could stifle competition and lead to rising prices, the Associated Press reported.
According to the report, the EU Commission said Wednesday that it fears “the merger may reduce competition for a number of flat carbon steel products.”
London Copper Doesn’t Budge
It was a quiet Thursday for LME copper, as the metal traded just above the previous one-month low, Reuters reported.
With light volumes, LME copper held at $6,856 a ton by 1:27 GMT, marking a 0.4% gain from the previous session, per the report.
The Aluminum MMI increased two points this month, reaching 99 points.
Stronger LME and Chinese primary cash prices led to the jump. This month’s index reading brings the highest MMI reading of any index since January 2012, when MetalMiner launched the MMI series of indexes.
Upward price momentum may have slowed slightly, but the bullish run appears sustainable. We could expect additional upward movements.
The U.S. Department of Commerce imposed preliminary duties against aluminum foil imports from China. These duties range from 96.81-162.24% and apply to all aluminum foil products from China. The Chinese government requested consultation with the World Trade Organization (WTO) on Nov. 3, claiming that the U.S. is using an expired 2001 clause.
China’s Ministry of Commerce said on Tuesday: “Regrettably, the United States has ignored the expiration of Article 15 … and still persists in its erroneous practice of continuing to use the ‘third country’ method in its anti-dumping investigations on imported products of China in violation of its obligation to WTO rules.”
Of course, China does not have market economy status, so the Department of Commerce will likely not agree with China’s Ministry of Commerce.
Oil, Gasoline Prices
Oil prices have already jumped in November, moving above levels that signal a bull market to MetalMiner. Oil prices hit a two-year high and currently trade over $55/barrel. The latest uptrend reveals strength in the latest oil rally.
Since oil prices serve as one of the most important contributors to the CRB (commodities) index, we expect continuous upward movements for the index. Therefore, the case for a bullish commodity — and industrial metals market, too — appears to have strengthened despite the latest short-uptrend of the U.S. dollar (dollars and commodities tend to move inversely).
Gasoline prices also increased with oil prices. MetalMiner previously analyzed the correlation between gasoline prices (and oil prices) and increasing base metal prices, specifically aluminum. When oil (and gasoline) prices increase, aluminum prices tend to follow. The degree of the increases does not always correlate, but aluminum prices tend to move together with the commodity.
What This Means for Industrial Buyers
Aluminum showed resilience this month, maintaining its trend in the bullish market. Increasing oil prices also support the bullish case for aluminum. Therefore, adapting the right buying strategy becomes crucial for reducing risks.
MetalMiner released its longer-term annual outlook back in October. Readers can grab a free copy here.
Actual Aluminum Prices and Trends
This morning in metals news, aluminum producers in the Middle East say any Section 232 measures implemented by the U.S. will ultimately only impact the American consumer, U.S. steel production was down last week and the next round of North American Free Trade Agreement (NAFTA) talks will start a little earlier than previously announced.
The Impacts of Section 232? Will Only Hurt U.S. Consumers, Middle East Producers Say
Should the U.S. impose duties on aluminum imports — thus concluding its Section 232 investigation — U.S. consumers will be the only ones impacted, according to Middle East aluminum producers.
As reported by Platts, Middle East aluminum producers, meeting at the Arabal 2017 conference in Muscat, Oman, questioned the impact of trade remedies stemming from Section 232.
Tim Murray, CEO of Aluminium Bahrain, said that any measures will “ultimately be a tax on consumers.”
U.S. Raw Steel Production Drops 1.4%
Raw steel production in the U.S. dropped 1.4% for the week ending Nov. 4, with a total of 1,715,000 net tons (NT) produced, according to American Iron and Steel Institute (AISI) data.
Adjusted year-to-date production through Nov. 4 was 76,474,000 net tons, which is up 3.9% from the 73,583,000 net tons during the same period last year.
NAFTA Talks Moved Up
With a fifth round of NAFTA renegotiation talks scheduled for Nov. 17-21 In Mexico City, some aspects of the discussions will actually begin a little bit early.
According to a Reuters report, talks on some issues will kick off Nov. 15.
Textiles, services, labor and intellectual property are among the subjects that could be discussed during the early meetings, according to one official quoted by Reuters.