Articles in Category: Non-ferrous Metals

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This morning in metals news, European steel association Eurofer predicted increased steel demand in its Monday forecast, but also sounded a cautionary note regarding the U.S. potentially imposing steel tariffs (as a product of the Department of Commerce’s Section 232 investigation); Norwegian metals company Norsk Hydro inks a $3.2 billion deal to buy a 50% stake in aluminum products maker Sapa; and LME copper stabilized Monday after U.S. jobs report news.

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Demand To Go Up … But Eurofer Wary of Section 232 Tariffs

Eurofer, the European steel association, offered a mix bag of news in its Monday steel forecast.

On the one hand, it predicted an uptick in demand for steel, according to Reuters. According to the report, the forecast predicts a 1.9% rise in apparent EU steel demand, to 159 million tons, up from a previously forecasted 1.3%.

On the other hand, Eurofer sounded a warning note regarding the potential for “market distortions,” including tariffs, like the ones the U.S. Commerce Department may impose on steel and aluminum imports at the conclusion of its Section 232 investigations.

“In particular, measures potentially stemming from the U.S. section 232 investigation may lead to a proliferation of disastrous global trade flow distortions,” Eurofer director general Axel Eggert said in a statement quoted by Reuters.

Norsk Hydro Buys Aluminum Products Maker Sapa

Norwegian metals firm Norsk Hydro, in a deal worth $3.2 billion, bought a 50% stake in aluminum products maker Sapa, Reuters reported Monday.

Norsk Hydro’s acquisition allows it to spread its business across the value chain — the Norwegian firm makes primary aluminum from scratch, while Sapa presses, cuts and shapes it, according to the report.

Sapa, which has 22,400 employees and in 2016 recorded sales of 53 billion crowns ($6.84 billion), has been jointly owned by Orkla and Hydro since 2013, according to Reuters.

LME Copper Steadies

Copper prices stabilized Monday after news of a solid U.S. jobs report inspired optimism in a U.S. economic recovery, Reuters reported Monday.

This follows June’s news of expansion in Chinese manufacturing, which also buoyed prices by virtue of increased demand for the metal.

Since late June, copper prices have been consolidating in the range of $5,800-$5,965, according to the report.

For more on copper, come back to check out Irene Martinez Canorea’s Copper MMI piece this afternoon, which will survey the month that was and market trends for the metal.

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Copper is commonly considered to be a proxy for the general economy by metal analysts — hence the name “Dr. Copper.”

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During this last year, both political and supply and demand concerns have driven LME copper prices up. Despite a small price dip in May, those prices continued to increase in June.

Source: MetalMiner analysis of FastMarkets

After Donald Trump won the presidential election, copper rallied and surpassed its previous psychological price ceiling of $6,000/metric ton.

However, copper has failed to continue that initial uptrend.

Although copper supply concerns during the first quarter helped sustain price momentum, these same supply concerns eased in April and slowed copper’s price rise.

Most copper analysts believe copper prices will likely increase on the basis of fundamentals like  supply and demand only. Alternatively, MetalMiner sees copper prices declining, not as a result of fundamentals, per se, but as a result of a rising U.S. dollar index (USD) and a falling commodities index (placing the historical inverse relationship between the USD index and commodities back in play).

Chinese demand has improved during June, and, consequently, prices increased this month. However, current economic indicators suggest this demand may fall, which would cause copper prices to slip.

Automotive sales within China have risen from April to May, which may have provided a short-term lift in copper prices. However, if analyzing automotive sales compared to last year’s data, sales have only held steady; therefore, we do not see a growing automotive sector or increased demand for copper and the subsequent lift in copper prices.

Free Download: The June 2017 MMI Report

It should come as no surprise then that even  “Dr. Copper” has reflected a price uptrend this June — but future prices may not be as bright as expected for copper traders.

Buying organizations will want to evaluate indicators this month and follow the detailed analysis in our monthly forecast reports.

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This morning in metals news: copper slides slightly but is still near its recent 11-week high; shares of a U.S.-based aluminum company fell after a Reuters report that the company knowingly supplied flammable panels for use in Grenfell Tower and the European Union is considering retaliatory measures if the U.S. places tariffs on steel and aluminum imports.

Copper Hovers Near 11-Week High

Copper fell on Monday but still hung around its previous 11-week high, Reuters reported, hanging tough amid good news about Chinese demand and potential supply shortages.

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On Friday, LME copper reached its highest price since April 7. According to a report cited by Reuters, a seasonal rise in electricity usage in China is likely to contribute to a rise in demand for the metal.

Arconic Shares Fall After Report Linking Company’s Products to Grenfell

On the heels of the deadly June 14 fire at Grenfell Tower in London, metal company Arconic‘s shares are falling after a report indicated the company knowingly provided flammable panels for use in the tower.

According to a Reuters report, emails sent to and from an Arconic sales manager include questions about why the company provided combustible cladding material for use in the building of the tower.

Arconic argued that while it knew the panels would be used for construction of the tower, it was not its role to decide what materials are or aren’t compliant with building codes, the Reuters report says.

Shares of Arconic dropped 6% early Monday, CNBC reported.

EU Considers Response to Potential U.S. Tariffs

While China is the primary target of the U.S.’s Section 232 investigations into steel and aluminum imports, other countries are preparing for the effects of potential U.S. tariffs.

EU nations are among those concerned about a trade policy readjustment from the Trump administration.

Cecilia Malmström, EU trade commissioner, said the bloc was “making preparations” to respond to the imposition of U.S. tariffs, USA Today reported. She added U.S. tariffs would “unjustifiably hit” EU nations.

The Trump administration launched the investigations in April. The U.S. Department of Commerce held public hearings on the subjects of steel and aluminum imports May 24 and June 22, respectively.

Chinese excess capacity has been the main talking point for U.S. producers, who argue that China is flooding the market with the metals and leading to depression of prices and, as a result, job losses and plant closures in the U.S.

Free Download: The June 2017 MMI Report

The trade commissioner also said the EU would study any actions by the Trump administration to determine if they are in line with World Trade Association rules.

A Department of Commerce hearing is underway Thursday morning on the subject of the Section 232 investigation into aluminum imports. qingwa/Adobe Stock

This morning in metals news, the Department of Commerce’s Section 232 hearing on aluminum is in progress this morning, the LME is expected to cut its trading fees and London copper rose Thursday as a result of data indicating a global supply deficit.

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Section 232 Hearing on Aluminum Underway This Morning

The U.S. Department of Commerce’s hearing regarding its ongoing Section 232 investigation into aluminum imports started at 8 a.m. CDT Thursday.

Those interested in watching can tune into the live streams on the Department of Commerce’s Facebook or YouTube pages. After a brief break, the hearing is reconvening as of 9:59 a.m. CDT and is scheduled to continue until just after 11 a.m. CDT.

As mentioned earlier this morning, Chinese overcapacity continues to be the primary talking point.

The hearing started with testimony from: Kentucky State Rep. Jim Gooch Jr.; Li Xie, director of Export Division One, People’s Republic of China, Ministry of Commerce; Talal M. Al Kaissi, representative from the Trade & Commercial Office from the Embassy of the U.A.E.; Lurii Stegnii, deputy trade representative from the Trade Representation of the Russian Federation in the United States; and Gerd Gotz, director general of European Aluminum.

Gooch Jr.’s state is home to Century Aluminum, which operates two smelters in the Bluegrass State (one in Hawesville, the other in Sebree).

LME Planning to Cut Trading Fees

The LME is planning on cutting its trading fees in the hopes of boosting volumes, Reuters reported Thursday.

According to the report, a 35% fee hike in January 2015 is a major reason cited by those in the industry to explain declining LME volumes.

Overall volumes in the five months to the end of May this year fell more than 5% from the same five-month period in 2016, according to the article.

LME Copper Ticks Up

LME copper rose Thursday, driven by data showing a global supply deficit, according to Reuters.

According to the data, the global world refined copper market showed a deficit of 5,000 tons in March, Reuters reported. That figure stands in stark contrast with the 102,000-ton surplus reported for February.

Free Download: The June 2017 MMI Report

Meanwhile, three-month LME copper was down 0.6%, according to Reuters.

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Two words are dominating the U.S. aluminum industry’s focus as it awaits the Department of Commerce’s Section 232 investigation findings relating to aluminum (and steel) imports: Chinese overcapacity.

Cheap Chinese imports, subsidized by the Chinese government, U.S. producers argue, have adversely affected U.S. producers — leading to job losses and closures of smelters.

Of course, Chinese overcapacity is not a new target — former President Barack Obama filed a complaint to the World Trade Organization in January regarding “artificially cheap loans” propping up Chinese producers and, consequently, undercutting U.S. producers.

Ahead of tomorrow morning’s scheduled Department of Commerce hearing (9 a.m., Eastern Time) on the ongoing Section 232 investigation into aluminum imports, senior-level executives in the U.S. aluminum industry on Wednesday offered a preview of the testimony they will deliver in Washington D.C.

Speaking at the conference Wednesday were: Garney B. Scott, president of Scepter, Inc. and chairman of The Aluminum Association; Marco Palmieri, president of Novelis North America, Heidi Brock, president and CEO, of The Aluminum Association; and John Herrmannpartner at Kelley Drye & Warren.

“The past two or three years have been among the most challenging in the industry’s history,” Scott told reporters. Scott said U.S. producers have competed on the global marketplace for decades, but cannot compete with China and “more than a decade of government subsidies that have led to irrational, non-market incentives for companies to produce metal the world does not need,” adding eight U.S. smelters have closed since 2014 as a result.

The executives were united in their expressed hopes for the outcome of the Section 232 investigation.

“What we want is a negotiated government-to-government agreement that has a concrete and enforceable plan to address Chinese aluminum overcapacity,” Brock said.

Brock added that China is the sole focus of the U.S. aluminum industry’s overcapacity concerns. Furthermore, she said it is important that any trade policy readjustments do not adversely affect countries, like Canada and those in the European Union, who are “playing by the rules.”

“Canada and countries that play by the rules and have not contributed to overcapacity … we want to make sure there are not unintended consequences on the supply chain,” she said.

In a show of solidarity, The Aluminum Association, the Aluminum Association of Canada and European Aluminium released a joint statement Tuesday, urging governments of the G20 to tackle global aluminum overcapacity.

“We acknowledge the issue of Chinese aluminum excess capacity as the root cause of the challenges faced by the aluminium industries in North America and in Europe,” the release said. “Overcapacity encourages unfair trading practices and displacement of domestic production, which cause global imbalances in the aluminium industry and distort international trade flows.”

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In terms of aluminum rolling, Palmieri told reporters Chinese capacity amounts to 15 million tons per year, while its consumption is approximately 9 million tons per year, leaving an excess of 6 million tons — greater than the 5 million ton capacity of the U.S. and Canadian markets.

Prepared statements provided and intended to be delivered as testimony during tomorrow’s hearing further drove home the focus on Chinese overcapacity.

Palmieri, the president of Novelis North America, wrote the investigation is “timely and vital to the future of the domestic aluminum industry,” adding that unfairly priced Chinese aluminum has already forced the company to “exit some product lines.”

“We also have reason to believe that Chinese producers will increase production of automotive aluminum capacity within the next few years,” Palmieri writes. “If this increased capacity of aluminum were permitted to be exported to the U.S. at subsidized and unfair prices, Novelis could be forced to slash production, lay off employees, and shutter entire facilities if those facilities are not able to deliver reasonable rates of return.”

Commerce Department Hearing Gives Aluminum Industry Chance to Express Concerns

What ultimately comes out of the investigation remains to be seen (including which policy recommendations Secretary of Commerce Wilbur Ross provides at the investigation’s conclusion will be accepted as given to President Donald Trump, which is in accordance with his authority under Section 232 of the Trade Expansion Act).

Free Download: The June 2017 MMI Report

Under Section 232, the Secretary of Commerce must conclude the investigation and deliver findings within 270 days of the investigation’s commencement. The investigations into the national-security threats posed by aluminum and steel imports were announced in April.

Whatever happens, U.S. aluminum industry figures across the supply chain will have the chance to make their concerns heard.

Thursday morning’s hearing can be live-streamed on YouTube and Facebook.

Physical delivery premiums are a pretty accurate measure of primary aluminum metal supply. They reflect the balance between suppliers’ aspirations for the highest price and buyers’ determination for the opposite.

Benchmark Your Current Metal Price by Grade, Shape and Alloy: See How it Stacks Up

The setting of physical delivery premiums is, therefore, a function of supply and demand — or, more accurately, the availability of physical metal in the marketplace.

So when Metal Bulletin announced that third-quarter main Japanese port (MJP) premiums have fallen 7.4% quarter on quarter and settled for the July-September period at $118-119/ton, from $128/ton in the second quarter, it supported anecdotal evidence that, despite supply disruption from Australia and New Zealand, the Asia-Pacific market remains well supplied.

Source: Reuters

Credit for this — if “credit” is the correct term — goes in part to China’s failure to sufficiently implement supply-side reform of its aluminum sector.

The aluminum price rose strongly in the first quarter with the expectation that Beijing’s announcements regarding curtailment of excess aluminum capacity would be vigorously implemented this year.

Read more

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This morning in metals news: copper on the London Metal Exchange (LME) is hanging steady, zinc pulled back after hitting a two-week high and General Electric (GE) announced plans to build the world’s largest laser-based powder bed metal 3-D printer.

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No Movement for Copper

A stronger U.S. dollar put a cap on gains for LME copper, as the metal’s price didn’t show much movement Tuesday, Reuters reported.

The U.S. dollar hit a three-week high against the yen after a Federal Reserve official said inflation should rise alongside wages — “reinforcing expectations for the Fed to keep raising interest rates,” according to Reuters.

Zinc Falls After Two-Week Peak

Zinc prices have been steadily climbing of late, with the metal hitting a two-week high yesterday. That has pulled back a bit, partly as a result of questions about Chinese demand, Reuters reported.

“You’ve got some news with a bullish tone, so that’s supporting the market, but I don’t know how sustainable this will all be,” Gianclaudio Torlizzi, partner at the T-Commodity consultancy, told Reuters.

LME zinc fell by 0.4%, according to the report.

GE Makes 3-D Printer Announcement

Say hello to ATLAS.

That’s the name of the new metal 3-D printer GE announced it is building, a printer that will be the world’s largest laser-based power bed metal 3-D printer.

GE made the announcement at the Paris Air Show, according to 3D Printing Industry.

Free Download: The June 2017 MMI Report

Per 3D Printing Industry, the printer has a build volume of 1 meter cubed.

The landmark North American Free Trade Agreement (NAFTA) went into effect 23 years ago — unsurprisingly, many in the metals industry are eyeing reforms to modernize the long-standing agreement signed by the U.S., Canada and Mexico.

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In late April, President Donald Trump signed an executive order focusing on trade-agreement violations and abuses, directing the Department of Commerce and the United States trade representative (USTR) to study the U.S.’s free-trade agreements. One month ago, the office of the USTR notified Congress of the administration’s intention to renegotiate NAFTA.

In recent months, Trump has indicated he is willing to terminate the agreement if renegotiation efforts don’t go anywhere. In April, the president said he was “psyched” to terminate the deal, but ultimately had a change of heart after speaking with Canadian Prime Minister Justin Trudeau and Mexican President Enrique Peña Nieto, per media reports.

That came three months after Trump pulled the U.S. out of the Trans-Pacific Partnership (TPP), negotiated by his Democratic predecessor Barack Obama.

When will renegotiation actually happen? The timeline isn’t clear. On Monday, Secretary of Commerce Wilbur Ross told reporters renegotiation might not happen until next year.

As uncertainty clouds NAFTA’s future, domestic metals organizations have weighed in on the ways in which they believe the 23-year-old agreement can be improved.

Metal Industry Hopes to Keep Positives, Target Problem Areas

Players in the metals industry have spoken out about how they want to see 23-year-old trilateral trade agreement modified for this new age.

In a filing June 12, The Aluminum Association, addressing U.S. Trade Representative Robert Lighthizer, urged that NAFTA should be renegotiated in a way that modernizes it without compromising the benefits of the original agreement.

In the letter to Lighthizer, The Aluminum Association underscored three ways to strengthen the agreement:

  • Improving and strengthening customs procedures and cooperation to facilitate the movement of aluminum and aluminum products among the United States, Canada, and Mexico
  • Working with the Canadian and Mexican governments to ensure that “NAFTA preferences are available only to aluminum articles that truly originate in the territory of a NAFTA party” and that “unscrupulous producers and exporters operating outside the NAFTA region are not improperly claiming preferential treatment under NAFTA by either making fraudulent country of origin claims or incorrectly classifying the article at issue”
  • Negotiating common disciplines on the operations of State-Owned Enterprises (SOEs), which “often benefit from favorable government policies and subsidies that create significant market distortions”

Regarding the third point, the release specifically zeroed in on China, noting “massive overcapacity” encourages unfair trading practices.

In addition to the aluminum industry, steel groups are weighing in on a potential NAFTA face-lift.

The American Iron and Steel Institute (AISI), like The Aluminum Association, stressed in a letter to Edward Gresser, chair of the Trade Policy Staff Committee, that NAFTA has yielded “significant benefits” but could be modernized after nearly a quarter of a century since its passage.

NAFTA has been critical to the steel industry, as 90% of all U.S. steel mill product exports went to Canada or Mexico in 2016, according to the June 12 AISI letter.

U.S. steel exports to Canada and Mexico grew rapidly following the passage of NAFTA. Source: American Iron and Steel Institute

Like The Aluminum Association, the AISI cited rules-of-origin issues, global overcapacity and conduct of SOEs as issues needing assessment in a revamped agreement.

In addition, currency manipulation was a point of emphasis.

“Currency manipulation makes exports more expensive, imports cheaper, and can subsidize cheaper prices for exports to third-markets,” the AISI letter states. “The International Monetary Fund (IMF) has provisions against currency manipulation, but the lack of an enforcement mechanism has limited their effectiveness.”

The AISI also suggested possible improvements to “streamline” customs procedures and “to ensure that manufacturers can ship and receive steel in an efficient manner.” Part of that streamlining, AISI argues, includes updating border infrastructure.

So, in many ways, U.S. steel and aluminum seem to be on the same page with respect to NAFTA — that is, that there’s room for improvement.

NAFTA Renegotiation a Hot Topic

The USTR sent out a notice May 27 seeking public comments on the topic of NAFTA renegotiation. The period for public comments closed June 12, but not before 1,396 comments were submitted.

Clearly, NAFTA is a very important subject to many people and industry organizations. While the minutiae of free-trade agreements can sometimes make the subject seem opaque, the outcomes are decidedly human, as jobs and livelihoods are often at stake.

Leo Gerard, international president of United Steelworkers, submitted a public comment in support of renegotiating NAFTA, provided it is “along the lines identified in the comprehensive approach identified in the negotiating framework document submitted on behalf of the USW and other unions by the AFL-CIO.”

“We have felt the negative impact of the NAFTA first hand since it entered into force more than two decades ago,” Gerard wrote. “Tens of thousands of plants have shut down, millions of workers have lost their jobs and many other workers have seen their compensation stagnate or decline as a result of NAFTA.”

Looking Ahead

What’s next for the process? A public hearing will be held at 9 a.m. Tuesday, June 27, in the Main Hearing Room of the United States International Trade Commission, 500 E Street SW., Washington D.C.

As demonstrated by the volume of public comments, there is a wide range of suggestions being offered with respect to NAFTA renegotiations.

One thing, however, is clear: Many of the interested parties want change of some kind.

Free Download: The June 2017 MMI Report

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This morning in metals news, base metals got off to a solid start this week, Carpenter Technology Corporation enters into a supply agreement with a company that produces 3-D printing systems and zinc hits a two-week high.

Markets Start Monday with Strong Base

It was a good start to the week for base metals on the London Metal Exchange (LME).

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Prices closed Friday with an average increase of 0.4%, according to FastMarkets. Those metals kept the momentum rolling into this week (particularly lead, zinc and nickel).

LME prices increased by an average of 0.5%, with three-month copper prices up 0.3% and lead prices up 1%, according to FastMarkets.

Carpenter, Desktop Metal Enter Supply Relationship

Desktop Metal, Inc., which produces end-to-end metal 3-D printing systems, has entered into a supply relationship with Carpenter Technology Corporation, according to a NASDAQ release.

Carpenter Technology Corporation is a producer and distributor of premium specialty alloys, including titanium alloys, nickel and cobalt based superalloys, stainless steels, alloy steels and tool steels. Carpenter’s powder metals will be utilized in Desktop’s premium materials cartridges, according to the release.

The move is just another signal of the ongoing growth of the 3D-printing market and the method’s uses in a variety of applications.

Zinc Hits Two-Week High

Rather than start the week Monday sluggishly, zinc prices have ticked upward, reaching a two-week high, according to Reuters.

The rising price was driven by expectation of higher demand from steelmakers and LME inventories of zinc hitting nine-year lows, according to the Reuters report.

Free Download: The June 2017 MMI Report

London zinc prices rose 0.9%, to their highest price since June 2.

Meanwhile, mine closures led to China’s lowest output in more than two years. Chinese imports increased by by 21 percent in April, Reuters reported.

Before we head into the weekend, let’s take a look back at a few of this week’s stories:

Benchmark Your Current Metal Price by Grade, Shape and Alloy: See How it Stacks Up

A Surprise in the U.K.

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Our Stuart Burns wrote about the U.K. parliamentary elections, which surprised many and saw Labour outperform expectations against Prime Minister Theresa May’s Conservative Party.

What does the election result mean for business? Well, that will partially be determined by which path to Brexit the U.K. ultimately takes. Burns writes there is likely to be compromise and a search for alternate solutions — that is, a softer Brexit.

The 411 on 232

White House spokesman Sean Spicer announced Monday the findings of the administration’s Section 232 investigation into steel imports could be released as early this week.

Although the findings have yet to be released, our Lisa Reisman laid out the potential outcomes and impacts of the investigation on Wednesday.

How will the recommendations affect steel prices domestically? No one knows for sure, of course, but Reisman wrote we shouldn’t jump to conclusions about potential price increases.

“Some have speculated that the forthcoming recommendations would force prices higher, however, we would not necessarily rush to that same conclusion,” Reisman wrote.

Markets showing pessimistic side

Burns also wrote this week about commodities markets — and not just metals, but oil, too — which have seen a drop in optimism of late.

What’s the downtrend all about? Many reasons, Burns argues, including: oversupply, the Chinese government “squeezing investors by increasing shadow banking borrowing costs,” and waning optimism with respect to the Trump administration delivering on campaign promises regarding massive infrastructure projects.

But not to send you into your weekend on a down note — it’s not all cloudy skies.

“With that said, that doesn’t mean the U.S. or global economies are about to tank,” Burns writes. “European growth has been much better this year and Japan is expected to improve further, while the World Bank is predicting an unchanged 2.7% global growth this year in its latest report.”

June MMI Report Released This Week

In case you missed it, our monthly MMI Report was released this week; as always, it’s jam-packed with information.

The report covers markets trends in our 10 sub-indexes: Automotive, Aluminum, Construction, Copper, Global Precious, GOES (grain-oriented electrical steel), Rare Earths, Raw Steel, Renewables and Stainless Steel.

Want to know what’s happening in any of these categories? Get yourself up to speed by checking out the June report, which you can access by visiting the link below.

Free Download: The June 2017 MMI Report