Industry News

The copper market will go into deficit by 2020, just when Rio Tinto‘s, extension to the Oyu Tolgoi mine in Mongolia comes online, the company said on Tuesday.

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The Anglo-Australian mining major gave approval in June for a $5.3 billion expansion of Oyu Tolgoi, one of the world’s largest copper mines and a project central to the major’s efforts to become less dependent on iron ore.

Traders Still Skeptical of OPEC Output Cut

The Organization of Petroleum Exporting Countries‘ output set another record high in November, rising to 34.19 million barrels per day from 33.82 million bpd in October, according to a Reuters survey.

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Oil prices pared losses slightly after inventory data released late Tuesday from the American Petroleum Institute showed U.S. crude stocks dropped more than expected last week despite a hefty build of 4 million barrels in Cushing, Oklahoma.

The Obama administration slammed the brakes on the Dakota Access pipeline on Sunday, refusing to issue a required easement from the Army Corps of Engineers while saying it will conduct a more stringent environmental review to consider alternate routes and consult further with the Standing Rock Sioux tribe, which has bitterly opposed the project.

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However, the 1,172-mile pipeline may not be dead in its current form. Nearly all of the pipeline has been completed except a few miles that are planned to flow underneath the Missouri River and the manmade Lake Oahe in North Dakota. The Army has said they will ask Energy Transfer Partners, the developer of the pipeline, to consider alternative routes and said that would be best accomplished through an environmental impact statement with full public input and analysis.

The Army Corps had actually approved the easement back in June but stepped in again after a federal judge dismissed a lawsuit by the Standing Rock Sioux whose reservation is near Lake Oahe. President-elect Donald Trump came out in support of completing the pipeline as planned last week and his administration could, potentially, undo these recent actions by the Obama administration.

A massive stockpile of 500,000 metric tons of aluminum has been trucked out of the Mexican city of San José Iturbide and shipped to a remote port in Vietnam, according to shipping records and people familiar with the matter.

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The Wall Street Journal reports that the stockpile is believed to be related to or entirely the product of Chinese aluminum producer China Zhongwang. As a result of moving the massive stockpile, Vietnam has become a major importer of aluminum extrusions this year.

Preliminary Steel Exports Down

Based on preliminary Census Bureau data, the American Iron and Steel Institute reported that the U.S. imported a total of 2,682,000 net tons of steel in October, including 2,225,000 nt of finished steel (down 3.4% and up 4.7%, respectively, vs. September final data).

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On the year-to-date (YTD), through 10 months of 2016, total and finished steel imports are 27,486,000 and 22,017,000 nt, down 19% and 19.8%, respectively, vs. the same period in 2015. Annualized total and finished steel imports in 2016 would be 33.0 and 26.4 million nt, down 15% and 16.1%, respectively, vs. 2015. Finished steel import market share was an estimated 26% in October and is estimated at 25% on the year.

Subsidies given by the U.S. state of Washington to Boeing are illegal under international trade rules derived from the General Agreement on Tariffs and Trade (GATT), the World Trade Organization said on Nov. 28.

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It was a victory for rival aircraft maker Airbus and the European Union. The ruling from a WTO panel is the latest blow in a drawn out trans-Atlantic battle between the aviation industry’s two titans, which has seen both Airbus and Boeing score points along the way.

In the decision, the WTO said that subsidies set up by Washington state to support production of Boeing’s 777X commercial jet, were “prohibited” as they encouraged the use of domestic materials, fueling unfair trade distortions.

The panel called  for the subsidies to be withdrawn within 90 days.

Airbus was represented by the European Union in the case while the U.S . federal government fought for Boeing and Washington state because companies and regional authorities are not represented at the Geneva-based WTO.

Potential Tata, Thyssen Merger Could Shutter Half of Port Talbot

Tata Steel and Thyssenkrupp AG are looking at reducing the size of Britain’s largest steel plant in Port Talbot, Wales, industry sources told Reuters, as the two firms press ahead with merger plans for their European steel operations. The plan would also deal with the overcapacity afflicting the industry.

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The move could see one of Port Talbot’s two blast furnaces shut, halving the plant’s capacity. Up to 4,000 people are employed at the site.

The Organization of the Petroleum Exporting Countries was trying this morning to rescue a deal to limit oil output as tensions grew among the producer group and non-OPEC member Russia, with top exporter Saudi Arabia saying markets would rebalance even without an agreement.

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OPEC experts started a meeting in Vienna at 0900 GMT and were due to make recommendations to their ministers on how exactly the organization and its member-states should reduce production when it meets on Nov. 30.

Meanwhile, the Algerian and Venezuelan oil ministers were to travel to Moscow on Monday and Tuesday in a final attempt to persuade Russia to take part in cuts instead of merely freezing output, which has reached new highs in the past year.

Steel Futures Surge on Upbeat Chinese Demand

Chinese steel futures jumped over 6% to the highest in 31 months on Monday, as investors raised bets that strong property and infrastructure investment will sustain demand in the world’s top consumer, spurring a similar rally in iron ore and zinc.

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The red-hot rally in steel is bound to push iron ore above $80 a metric ton for the first time since October 2014, having already lifted zinc to a nine-year high.

The Commerce Department has placed countervailing duty investigation of imports of finished carbon steel flanges from India.

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A countervailable subsidy is financial assistance from foreign governments that benefits the production of goods from foreign companies and is limited to specific enterprises or industries, or is contingent either upon export performance or upon the use of domestic goods over imported goods.

Commerce calculated preliminary subsidy rates of 2.76% and 3.66% for mandatory respondents Norma (India) Ltd., its three cross-owned affiliates, and RN Gupta & Company Limited, respectively. Commerce established a preliminary subsidy rate of 3.21% for all other producers/exporters in India.

Industry Groups Still Challenging EPA Mercury Rule

The U.S. Environmental Protection Agency‘s additional, court-ordered justification of its rule limiting mercury and other toxic emissions from coal-fired power plants fails to show how the rule’s benefits outweigh its compliance costs, states and industry groups fighting the revamped rule told the D.C. Circuit on Friday.

Iraq would have to compensate international oil companies for limits placed on their production, according to industry sources and documents seen by Reuters, further reducing the prospect it will join any OPEC deal to curb the group’s output.

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The compensation — stipulated in contracts — would compound the financial hit of losing much-needed revenue from crude sales, if the cash-strapped country were to yield to OPEC entreaties to curtail national production.

Why Are Chinese Investors Flocking to Copper?

Chinese investors, whose rush into copper hauled it to 16-month highs recently, say infrastructure spending and government reforms will keep the metal well supported this year and into 2017.

The energy minister for top Organization of Petroleum Exporting Countries member-state Saudi Arabia said on Thursday on Saudi state-run television that he was optimistic about OPEC’s deal to limit oil output and mentioned the lower end of a previously agreed production target, helping spur a rally in the price of crude.

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The cartel, at a meeting in Algeria in September, made a preliminary deal to limit oil output. Its details are still being worked out.

SolarCity Shareholders Approve Tesla Merger

Shareholders of Tesla Motors Inc. and SolarCity Corp. approved Tesla’s $2.1 billion all-stock offer to merge and create one company headed by Elon Musk that would sell emissions-free cars and rooftop solar panels that power them.

“Your faith will be rewarded,” Mr. Musk told Tesla investors on Thursday after the company announced shareholders overwhelmingly approved the deal.

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Tesla announced that the merger was approved by 85% of Tesla shareholders, excluding Mr. Musk and other affiliated shareholders. SolarCity didn’t disclose the percentage of its shareholders voting.

Republican control of the White House and both chambers of Congress in January will put the GOP in a tenable position to pass significant tax reforms it has been pushing for years, such as lower corporate rates and a simpler tax code, experts say.

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It could be the most significant rewrite of the tax code since the Reagan administration.

The House Republican overhaul of the tax code is being written to expand the economy and avoid increasing budget deficits, U.S. Rep. Kevin Brady (R., Texas), who is leading the effort said on Tuesday.

“We designed our blueprint to break even within the budget, considering that economic growth,” said Brady, the chairman of the House Ways and Means Committee,at The Wall Street Journal’s CEO Council. At the same time, Brady said, if there are some deficits, he would accept them if the result was stronger growth. Avoiding long-run deficits could make it easier for Republicans to pass their plan under budget rules that avoid a Senate filibuster and forbid increasing future deficits.

Johnson-Matthey: Platinum Could See Surplus Next Year

The platinum market could return to surplus for the first time in six years in 2017 as lower auto catalyst loadings and weakness in Chinese jewellery purchases pull demand lower, refiner Johnson Matthey said in a report on Monday.

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Mine supply is expected to be flat next year, but supply of recycled metal from auto catalysts has the potential to rebound, it said.

The Dow Jones Industrial Average opened at a record high today, driven by financial stocks, after the index capped off its best week since 2011 following Donald Trump’s unexpected victory in the U.S. presidential election.

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Since Trump’s triumph last Tuesday, investors have been betting on his campaign promises to simplify regulation in the health and financial sectors and boost spending on infrastructure.

The financial index rose 2.18% to its highest level since 2008. Goldman Sachs and JPMorgan Chase provided the biggest boost to both the S&P 500 and the Dow. Stock markets around the world were affected by a continued selloff in the global bond market as investors looked for more clarity regarding Trump’s policies.

Chinese Steel Output Increases in October

China’s steel output rose 4% to 68.51 million metric tons in October from a year ago, government data showed, as steel mills in the world’s top producer further expanded production.

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Total output for the first 10 months of 2016 edged up 0.7% to 672.96 mmt, data from the National Bureau of Statistics also showed on Monday.