Copper

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This morning in metals news, Chinese aluminum output fell to its lowest total since February 2015, Liberty House considers buying a large Rio Tinto smelter in France and copper approaches a two-week high.

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Chinese Aluminum Output Falls

Chinese primary aluminum production dropped for a fifth straight month, Reuters reported.

In fact, winter smelting restrictions saw output fall to its lowest in the country since February 2015, according to the report.

Liberty House Eyes Rio Tinto Smelter

According to Reuters, Liberty House is considering a bid for Rio Tinto’s aluminum smelter in northern France.

The Dunkirk plant is valued at around 200 million euros, according to Reuters sources familiar with the matter.

Copper Rises Near Two-Week High

A weakening dollar and positive Chinese manufacturing data saw copper rise on Thursday, Reuters reported.

The Chinese industrial sector grew faster in November than markets expected.

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London Metal Exchange copper traded at $6,760 a ton in official midday rings, according to the report.

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This afternoon in metals news, the U.S. renewable energy industry has reason to worry about the Republican tax proposal, union members at the Quebrada Blanca copper mine in Chile move closer to a strike, and precious metal prices fall.

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Renewables Market Pushes Against BEAT Tax

While the Republicans’ latest attempt at an overhaul of the U.S. tax system is receiving the usual praise and criticism, the renewable energy sector is concerned – and understandably so. As Dino Grandoni explains in the Washington Post, the bill may inadvertently end investment in wind and solar energy.

Currently, many companies have large multinational corporations finance wind or solar energy projects, and in return, give the latter the renewable energy credit that the government provides. But these credits may be cancelled out as part of the base erosion anti-abuse (BEAT) tax, which is meant to discourage multinationals from moving profits abroad.

According to the American Wind Energy Association’s Peter L. Kelley, the BEAT tax – if it is not amended to exempt renewables credits – could put an end to more than half of the country’s wind projects.

Strike Brewing at Quebrada Blanca Mine

A quarter of the workforce at the Quebrada Blanca copper mine in Chile moved closer to a strike, as the 106-member union rejected Canadian miner Teck Resources’ contract offer on Wednesday, Reuters reports. Ninety-six percent of the union voted to reject the offer and strike, said the president of the union. Read more

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This morning in metals news, the U.S. Department of Commerce launched an anti-dumping and anti-subsidy probe into Chinese aluminum imports, oil prices rise above $60/barrel and copper prices fall for a third consecutive day.

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Commerce Dept. Launches Aluminum Probe

On Tuesday, the U.S. Department of Commerce launched an anti-subsidy and anti-dumping probe of imported Chinese aluminum alloy sheet, Reuters reports. Beijing is less than happy about the investigation and released a strongly-worded statement on Wednesday, arguing that the move 10would harm both countries.

What sets this probe apart is that it was initiated by the Commerce Department itself, whereas usually these investigations are requested by companies and industries claiming harm from imports. The last time the Commerce Department initiated an anti-subsidy probe was in 1991, on Canadian softwood lumber.

If the probe proceeds, preliminary anti-subsidy and anti-dumping duties could be issued in February and April 2018, respectively.

The End of the Global Oil Oversupply?

Is it the beginning of better days for oil exporters? OPEC and Russia’s agreement last year on oil production cuts has helped prices recover. Brent crude oil reached $64 a barrel this week, the New York Times reports, and some analysts are expecting prices to top $70 next week. Read more

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This morning in metals news, the Indian government says the country’s steel firms can meet the railway industry’s needs, copper hits a one-month high and the Japan Iron and Steel Federation says it doesn’t expect a decline in automobile steel sheet demand.

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Domestic Firms Can Meet Railway Demand, Indian Government Says

According to an Indian government panel, domestic steel companies like Jindal Steel and Power Limited can meet the railways’ demand if given an opportunity, Reuters reported.

According to Reuters, the state-run Steel Authority of India Ltd (SAIL) has struggled to supply the steel as India looks to expand its rail network, the fourth-largest rail network in the world.

Copper Hits One-Month High

Copper rose to a one-month high on Monday, Reuters reported, topping $7,000 in the process.
The jump comes “amid signs of resilience in China’s industrial sector,” Reuters reported.

Demand for Automotive Steel: Japan Iron and Steel Federation

Despite news that Nissan and Subaru did not comply with inspection procedures for decades, the top official of the Japan Iron and Steel Federation said they do not expect a decline in demand for automobile steel sheets.

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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.

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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.

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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.

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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.

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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.

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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.

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This morning in metals news, China is looking to the World Trade Organization (WTO) to make its case with respect to the ongoing aluminum foil dispute with the U.S., copper and nickel are up, and Kobe Steel executives are deciding whether or not to resign.

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China, the U.S. and the WTO

According to a Reuters report, China has asked the WTO report for consultations regarding the recent U.S. Department of Commerce antidumping decision on Chinese aluminum foil.

China’s Ministry of Commerce submitted the request for supplementary consultations under the WTO dispute resolution mechanism on Nov. 3, according to the report.

Copper, Nickel Rise With EV Optimism

Copper and nickel saw their fortunes rise on Monday, according to Reuters, backed by optimism regarding the electric vehicle market, pollution crackdown in China and global economic strength.

Nickel rose 10% last week to hits its highest price since June 2015.

Kobe Execs Consider Resignation

According to a Reuters report, Kobe Steel executives will decide whether or not to resign following the results of an independent probe into the firm.

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The firm also plans on releasing an internal report regarding the company’s quality data falsification scandal, which has seen the company’s share price plummet in recent weeks and significantly dented the firm’s credibility in the global market.

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This morning in metals news, growth in China’s steel industry has slowed down significantly, U.S. steel production was up 8.6% year-over-year and a Russian firm launches a new copper and gold mine near the Chinese border.

Chinese Steel PMI Falls to 6-Month Low

The Chinese steel Purchasing Managers’ Index (PMI) fell to a 6-month low this month as the government attempts to curb pollution, according to a Reuters report.

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This month, the PMI dropped to 52.3 from 53.7.

U.S. Steel Production Up 8.6%

Through the month of September, U.S. steel production was up 8.6% year-over-year, according to a report by the Northwest Indiana Times.

According to the report, citing stats from the World Steel Association, steel output rose by 5.6% internationally in September compared to September 2016.

Russia’s Norilsk Opens New Mine Near Chinese Border

The Russian firm Norilsk Nickel has launched a new copper, iron and gold mine near the Chinese border, according to Reuters.

The project, situated about 250 miles by rail from the border, will send iron ore exports to China.

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Chinese copper demand continues to be strong. According to the report, Shanghai copper futures have surged 18% this year.

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This afternoon in metals news, European steel demand is expected to grow 2.3% this year, Bloomberg takes a look at the Trump administration’s “Made in America” pledge and Freeport-McMoRan is working with the Indonesian government to resolve a mining permit dispute.

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European Steel Demand to Grow 2.3%: Eurofer

The European steel association Eurofer predicts 2.3% growth in 2017 for European steel demand, according to a Reuters report.

The European steel industry is worth about 170 billion euros a year, according to the report.

Made in America?

Among other things, President Donald Trump has pushed a “Made in America” agenda, aiming to boost domestic industry.

But, in practice, has there been a rise in U.S.-based production? A Bloomberg report outlines the reality of rising steel imports and pipeline contracts increasingly being won by Russia’s Evraz.

Freeport, Indonesia Look to Settle Permit Dispute

Richard Adkerson, chief executive of copper miner Freeport-McMoRan Inc., said on Wednesday that the miner wants to avoid arbitration vis-a-vis a mining dispute in Indonesia.

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Freeport is looking to renew the permit for its Grasberg copper and gold mine.

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This morning in metals news, the chairman of Chinalco says Chinese aluminum demand growth will stay ahead of the country’s GDP, a hedge fund is suing Barclays for over $850 million related to copper trading losses and a Chinese investor is placing big bets on copper.

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Chinese Aluminum Demand Growth

According to Chinalco, China’s biggest state-run aluminum producer, consumption of the metal will  grow 9-10% this year, Reuters reported.

According to the report, strong downstream demand is a primary factor behind the uptick.

Ge Honglin, chairman of Chinalco, told Reuters that demand growth is expected to rise faster than the country’s GDP in 2018. China is targeting GDP growth of around 6.5 percent this year, but has not yet set a 2018 goal, according to the report.

Red Kite Suing Barclays

A hedge fund is suing for over $850 million related to losses in copper trading, Reuters reported Monday.

The hedge fund, Red Kite, is suing Barclays, alleging that it manipulated the copper market and ultimately resulted in $850 million in losses for the hedge fund.

Futures of Chinese Copper

There has been a sharp rise in Chinese copper futures bets — why?

According to one source quoted by Kitco, a private coal mining industry investor in China, Gelin Dahua Futures Co Ltd, is behind the surge.

Free Download: The October 2017 MMI Report

Gelin Dahua holds more than 35% of the open interest in copper contracts for the first half of 2018 on Shanghai Futures Exchange (SHFE), per exchange data referenced by Kitco.