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This morning in metals news, aluminum producer Alcoa Corporation reported its fourth-quarter and full-year 2018 results, India is considering a higher iron ore import duty and Shanghai steel futures moved up.

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Alcoa Reports 4Q Earnings

Pittsburgh-based aluminum producer Alcoa Corporation reported its fourth-quarter and full-year 2018 earnings this week, reporting adjusted net income of $125 million, excluding special items, for the final quarter of 2018.

The 4Q net income total was up from $119 million in the third quarter but down from $195 million in 4Q 2017.

For 2018 as a whole, the company reported adjusted net income excluding special items of $675 million, up from $563 million in 2017.

“Despite sequentially weaker commodity prices, we had a strong fourth quarter with higher profits in our Bauxite and Alumina segments,” President and CEO Roy Harvey said. “With the help of higher market prices earlier in the year, we increased annual profits, addressed liabilities, significantly strengthened our balance sheet, and began returning cash to stockholders. With markets likely to remain dynamic in 2019, we will focus on what we can control to continue improving our operations, addressing challenges with agility, and making the most of opportunities in the year ahead.”

In 2019, Alcoa projects a global aluminum deficit between 1.7 million and 2.1 million metric tons. In addition, Alcoa reported the global alumina market came in at a deficit of 0.6 million metric tons.

“In 2019, the Company expects the alumina market to move to a surplus that is projected to range between 0.2 million and 1 million metric tons, which assumes ongoing, third-party supply disruptions in the Atlantic region,” Alcoa states. “The projected alumina surplus is driven by China, where refining expansions are expected to outpace demand growth from smelting.”

India Considers Hiking Iron Ore Duty

According to a report from Creamer Media’s Mining Weekly, the Indian government is considering an increase to its iron ore import duty.

Per the report, domestic industry has lobbied the government to increase the current 2.5% duty on imported iron ore.

Shanghai Steel Picks Up

Global steel prices have lagged of late, but Thursday was a positive session for Shanghai steel futures, Reuters reported.

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Per the report, the most-traded rebar contract on the SHFE ticked up 0.8%, while hot rolled coil was also up 0.8%.

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A resolution that sought to reverse the Trump administration’s decision to ease sanctions on Russian companies — including aluminum heavyweight United Company Rusal — failed to pass this week, coming in at a 57-42 vote (just short of the 60 votes needed to pass).

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Sen. Chuck Schumer (D-NY) introduced the resolution Jan. 4, after which it was referred to the Committee on Banking, Housing, and Urban Affairs.

The resolution states that Congress “disapproves of the action relating to the application of sanctions imposed with respect to the Russian Federation proposed by the President in the report submitted to Congress under section 216(a)(1) of the Russia Sanctions Review Act of 2017 on December 19, 2018, relating to terminating sanctions imposed on En+ Group plc (“En+”), UC Rusal plc (“Rusal”), and JSC EuroSibEnergo (“ESE”).”

In April 2018, the U.S. Treasury Department announced sanctions against several Russian companies and their owners, including Russian oligarch Oleg Deripaska and Rusal (the second-largest aluminum producer in the world).

The April announcement sent aluminum prices skyrocketing on fears of Rusal aluminum being taken off the market.

2018 LME prices. Source: LME

As has been noted here previously, the Treasury proceeded to delay its deadline for U.S. companies to unwind business relations with the listed Russian firms, first from Oct. 23 to Nov. 12, to Dec.12, then Jan. 7, then Jan. 21.

However, on Dec. 19, 2019, the Treasury announced intentions to delist En+ Group (which has a controlling interest in Rusal), Rusal, and EuroSibEnergo.

“Treasury sanctioned these companies because of their ownership and control by sanctioned Russian oligarch Oleg Deripaska, not for the conduct of the companies themselves. These companies have committed to significantly diminish Deripaska’s ownership and sever his control.  The companies will be subject to ongoing compliance and will face severe consequences if they fail to comply,” Treasury Secretary Steven Mnuchin said in a release at the time. “OFAC maintains the ability under the terms of the agreement to have unprecedented levels of transparency into operations.”

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Notably, although the resolution ultimately did not receive the requisite votes to pass, 11 Senate Republicans voted in favor of the resolution to reverse the decision to ease sanctions — representing a now rare instance of bipartisanship.