Articles in Category: Non-ferrous Metals

This morning in metals news, a new European steel giant could be coming on the scene, that giant could result in the loss of thousands of jobs and aluminum hits a five-year high ahead of further Chinese supply cuts.

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Tata Steel, ThyssenKrupp Agree to Merge European Operations

The New York Times reported Wednesday that Tata Steel and ThyssenKrupp had agreed to a deal to merge their European steel operations — a merger that has been in the news for more than a year.

According to the report, while there are still some obstacles to completion of the merger, if it goes through the merged operation would make the second-largest steelmaker in Europe, behind only ArcelorMittal.

Merger Could Yield Loss of 4K Jobs

While the potential merger of the Indian steel giant Tata and German firm ThyssenKrupp’s European operations might be cause for celebration for some, it won’t be for a considerable number of workers, according to one report.

The merger of the two firms’ European operations could lead to the loss of 4,000 jobs, according to CNNMoney.

The merger is expected to cut costs by between €400 million and €600 million ($720 million) a year, according to the report.

Aluminum Soars to Five-Year High

Aluminum continued its strong 2017, hitting a five-year high, Reuters reported.

Not surprisingly, news from China has much to do with the rise, as supply cuts are forthcoming from Chinese producer Chinalco, according to the report.

Free Download: The September 2017 MMI Report

LME aluminum traded at $2,191 per ton, its highest since September 2012, according to Reuters.

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This afternoon in metals news, black cabs in London will be moving toward electric power, production of copper and steel is up in Kazakhstan, and Dr. Copper appears to be backsliding after its previously torrid pace.

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Electric Cabs?

Further adding momentum to the electric vehicle industry, black cabs in London will soon be powered by electricity.

Sapa SA’s aluminum plant in Wales will reopen this week and supply parts for automakers like London Electric Vehicle Co., the maker of black cabs, Bloomberg reported.

The move is part of the overall comeback for aluminum, which works in tandem with the rise of the electric vehicle, particularly the U.K.’s effort to phase out vehicles powered by fossil fuels by 2040.

Copper, Steel Output Up in Kazakhstan

Cooper and steel production have surged in Kazakhstan through the first seven months of the year, according to a Reuters report.

For January-August, copper production is up 5.5% and crude steel production is up 9.7% in Kazakhstan, according to Statistics Committee data.

Copper Price Begins to Slide

The metal often referred to as “Dr. Copper” boasted a healthy diagnosis as late as last month, when the metal hit a three-year high.

But political tensions on the Korean peninsula, among other things, have seen the metal’s price begin to backslide.

Free Download: The September 2017 MMI Report

The copper price has dipped 6% since Sept. 8, when President Donald Trump said the U.S. would not rule out a military option vis-a-vis North Korea’s latest nuclear test, according to Reuters.

Our September MMI report is in the books — overall, it was another strong month for metals.

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For our latest batch of readings, all 10 of the MMI sub-indexes posted upward movement.

It was a big month for aluminum, as the Aluminum MMI rose 8.2% and LME aluminum jumped 10.73% through the month. The Construction and Automotive MMIs also had solid months, while the Copper MMI shot up 7.7% in what was another good month for Dr. Copper.

Meanwhile, in policy news, last week the U.S. Department of Commerce launched an anti-dumping and countervailing duty investigation into stainless steel flanges from China and India. As our Irene Martinez Canorea wrote in her Stainless MMI report, a preliminary determination in the case is coming Oct. 2.

In addition, today the DOC announced it had launched an investigation into imports of titanium sponge from Japan and Kazakhstan.

More broadly, the Section 232 investigations into aluminum and steel imports are still ongoing. It’s unclear when exactly a ruling will be made, but Secretary of Commerce Wilbur Ross has January deadlines to meet, as he is required to present President Donald Trump with a report and policy recommendations vis-a-vis the probes.

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

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This morning in metals news, Chinese steel production once again hit a record last month, copper took a dip, and the gap between high-grade and low-grade iron ore grew larger as China attempts to combat its smog problem.

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Steel Output Hits New Record in China

Steel mills in China cranked up production levels en route to hitting a new monthly production record, according to Bloomberg.

According to the report, Chinese crude steel output hit 74.59 million metric tons in August, surpassing the previous peak of 74.02 million in July.

Copper Falls Back

Copper has been having a good year, but it fell to a four-week low Thursday as a result of what Reuters calls lackluster Chinese economic data.

What appears to be slowing demand from China, the world’s top metals consumer, contributed to the metal’s drop, according to the report.

Premiums Soar for High-Grade Iron Ore

Sticking with the China theme, Reuters reported the gap between high-grade and low-grade iron ore in China grew as a result of the country’s efforts to fight pollution.

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The trading gap between the two forms of ore was at its highest since August 2011, according to the report.

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This morning in metals news, production of raw steel in the U.S. is up for the year, President Donald Trump reportedly rejected a Chinese proposal to cut its steel excess capacity and copper approached a three-year high.

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Steel Production Up 3% Year-Over-Year: AISI

According to data released by the American Iron and Steel Institute on Monday, U.S. raw steel production for the week ending Aug. 26 was down 1.3% from the previous week.

However, compared to the same week in 2016, production was up 5.1%.

In the year to date, production through Aug. 26 amounted to 59,153,000 net tons, up 3% from the 57,416,000 net tons during the same period last year.

Trump Reportedly Rejects China’s Capacity Cut Proposal

Given how much ink has been spilled and time spent talking about Chinese excess steel capacity and its effect on the global market, one would think any proposals from China aimed at cutting capacity would be welcomed.

Apparently not.

According to reporting from the Financial Times, President Trump rejected a Chinese proposal to cut its excess capacity. China proposed cutting 150 million tons by 2022, but Trump instead directed advisors to find ways to impose tariffs on imports, according to the report.

As has been discussed ad nauseam, China’s overcapacity has been the focal point of the Trump administration’s Section 232 investigations into steel and aluminum imports.

Copper Continues Rise

Copper rose nearly to a three-hear high Tuesday on falling inventories and a dropping dollar, Reuters reported.

The metal reached $6,825 per ton, its highest since October 2014, according to the report.

Free Download: The August 2017 MMI Report

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This morning in metals news, it was a mixed Monday for base metals in China; in Arizona, the copper industry, environmentalists and recreation groups are at odds; and a Washington State aluminum smelter’s future remains uncertain.

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Nickel, Zinc, Lead All Fall

It was not a great Monday for Chinese base metals linked with the steel markets, Reuters reported.

According to the report, nickel, zinc and lead posted the biggest drops, while copper gained by 0.9%.

Multinational Company Wants to Mine in Ironwood Forest National Monument

Mining firm Asarco wants permission to set aside 11,000 acres of the Ironwood Forest National Monument for it to mine copper, according to an Associated Press report.

That request has received some pushback. U.S. Rep. Raul Grijalva, whose district includes much of Ironwood, emphasized the importance of preserving public land.

“The reason Ironwood was designated was to protect its habitat and protect its land in perpetuity,”  Grijalva told the AP. “There are no private rights to public property.”

On Again, Off Again

The Alcoa aluminum plant in Wenatchee, Wash., has had a wobbly existence since the turn of the century.

The plant first shut down in 2001, reopened in 2004 and shut down again in 2015, affecting the local working population.

With prices of aluminum ingots rising, could it mean the return of jobs there? The Seattle Times reported on the plant, its future and the locals whose livelihoods are linked with the plant’s future.

Free Download: The August 2017 MMI Report

Given that the total number of U.S. aluminum smelters in operation has declined from 23 in 1993 to six today, Wenatchee is just one example of a town hit by the decline of the U.S. aluminum smelting industry. Whether it, and other plants like it, can come back on stream remains to be seen. Of course, how the Trump administration concludes its Section 232 investigations of steel and aluminum imports will have a significant impact.

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India’s aluminum production is expected to grow at a compound annual growth rate (CAGR) of 3.5% in the next 2-3 years to cater to a rise in domestic demand, according to a new report.

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CARE Ratings’ report titled “Aluminium Industry: The Silver Knight of the Economy,” said that what would propel this growth are the various initiatives taken up by the Indian government, and the ramping up of smelter capacities. Surplus stock will continue to be exported, owing to its low-cost advantage.

So what will drive the growth? According to CARE, the growth in consumption is likely to be driven by the growth in power transmission and the automobile sector. While the demand from the building and construction and consumer durable segment is likely to remain subdued, demand from the packaging sector is likely to support the domestic demand.

CARE has estimated the prices of LME aluminum to range around $1,800/ton to $2,000/ton in the short- to medium-terms.

India is among the lowest cost producers of aluminum in the world, owing to easy availability of raw materials and comparatively low labor costs. The growing demand for aluminum in the last decade, driven by India’s underlying growth story, has resulted in expansion of smelting capacities of the major domestic players.

With the addition of new aluminum capacities, India aims at not only satisfying domestic demand, but also playing a major role in the global aluminum market.

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Bizarrely, although zinc prices have soared this year on the back of demand for galvanized steel for construction, further strength this week may have been heightened by a loss of investor appetite for those same steel products.

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Following booming steel prices this year, the Shanghai exchange increased trading charges last week in an effort to curb speculative activity. Steel prices have consequently slumped by 3.5% as investors got out of steel and into steelmaking raw materials with lower transaction charges, such as zinc.

Surging Shanghai zinc prices have in turn encouraged a rise in the London Metal Exchange price, hitting a peak of $2,994 per metric ton — not seen since October 2007, Reuters reports.

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Our August MMI report is in the books, and it paints a positive picture for a wide range of metals.

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In our June MMI, four sub-indexes posted no movement. The July MMI? Only one stood pat.

Our August MMI, meanwhile, painted a different picture.

Nine of the 10 sub-indexes posted positive movement, with the remaining sub-index (GOES) dropping.

It was a strong month for the Renewables MMI, which grew 6.9% to hit 77. The Raw Steel MMI rose 5.6% to hit 75.

As Irene Martinez Canorea wrote Friday, there’s a bullish outlook behind metals like aluminum, copper and zinc these days. Can they continue that momentum throughout the rest of the calendar year? That remains to be seen, but they’ve certainly been on an uptrend.

Speaking of aluminum, the U.S. Department of Commerce last week made a preliminary determination in a countervailing duty investigation of Chinese aluminum foil, declaring that the products are unfairly benefiting from Chinese government subsidies. The decision was met with applause from the U.S. aluminum industry, particularly the Aluminum Association.

“The association and its foil-producing members are very pleased with the Commerce Department’s finding and we greatly appreciate Secretary Ross’s leadership in enforcing U.S. trade laws to combat unfair practices,” said Heidi Brock, President and CEO of the Aluminum Association, in a prepared statement.

What could come of the investigation? Duties as high as 81% could be slapped on Chinese aluminum foil.

In other investigations, the Department of Commerce’s Section 232 investigations of steel and aluminum imports remain pending. The investigations don’t appear to be at the forefront of the Trump administration’s agenda right now. Furthermore, the deadlines for Secretary of Commerce Wilbur Ross to present President Donald Trump with policy recommendations don’t hit until January.

Of course, things can change quickly — but, for now, a final ruling on trade policy regarding steel and aluminum imports possibly won’t materialize for a while.

Free Sample Report: Our Annual Metal Buying Outlook

You can read about all of the above and much more in our August MMI report, which you can download below.

An interesting report by Reuters explores the vagaries of supply from Indonesia and the Philippines, the world’s two largest nickel producers — and, unfortunately for the nickel price, it would seem two of the least reliable suppliers.

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Source: Reuters

By far and away the most volatile supplier has been the Philippines.

Former Secretary of Environment and Natural Resources Regina Lopez’s mining crusade and resulting export ban last year had a cataclysmic effect on output from which the country has not recovered, despite her replacement in May by Roy Cimatu, Reuters reports.

The latest assessment by the International Nickel Study Group (INSG) notes the country’s nickel production fell by 15% to 101,000 metric tons in the first five months of this year. Shipments of nickel ore to China have also been flowing at a reduced pace. Chinese imports from the Philippines slid by 6% over the first half of the year, according to Reuters.

Indonesia’s supply constraint, on the other hand, was driven by a policy to achieve greater value add in-country, started by a 2014 export ban on unprocessed ore which has only recently seen a partial rollback, as progress has been made in setting up nickel pig iron plants in the country. There are now multiple nickel “smelters” producing nickel pig iron or equivalent intermediate product in Indonesia, Reuters reports, quoting INSG estimates that mined production has surged 89% to 122,000 tons in the January-May period.

Meanwhile, the market has been responding to these political proclamations and about-turns with dramatic changes in short and long positions.

Reuters quotes LME Commitment of Traders figures to support price movements and investor position taking. The 18% nickel price rally over the last month to $10,445, a five-month high, followed investors flocking back to the market driving net long positions to 32,363 lots, compared with a net short of 887 lots on May 15. The return to the market seems to have been on the back of the nickel price’s fall to a year’s low of $8,680 and the widespread belief — supported by the closure of half of Indonesia’s processing plants — that refining becomes uneconomic below a nickel price of $9,000 per metric ton.

If $9,000 is the price floor based on current technology, what is the upside, stainless consumers will be asking?

In part, that depends on the potential for constraints to supply.

Demand remains solid. Reuters states Chinese imports of Indonesian “ferronickel” (nickel pig iron) broke through the 100,000-ton barrier in May and stayed there in June, while cumulative imports in those two months were 270,000 tons (bulk weight), exceeding total imports in 2015.

Demand, therefore, remains solid, but so too does supply. Netted between them, the two countries produced 223,000 tons of nickel in the first half of this year, up from 184,000 tons in the  same  period of 2016, according to the INSG. China’s imports of nickel raw materials, ore and concentrates, were also up in the first half of this year by 4% (not counting the separate flow of Indonesian ferronickel).

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Providing Cimatu continues with his conciliatory approach to miners, the market is likely to conclude exports are going to continue. The market has a floor at $9,000 per ton, but according to Reuters it could also be capped by rising supply as both countries ease restrictions and supply remains adequate.