This Morning in Metals: Tangshan Mills Boost Steel Production

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This morning in metals news, mills in the Chinese city of Tangshan have increased steel production despite the official start of winter cuts, LME copper prices fell and U.S. imports of aluminum from Australia have been on the rise.

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Tangshan Boosts Steel Production

The Chinese city of Tangshan, a steelmaking hub in the country, has seen its steel mills boost production despite the start of winter cuts, Reuters reported.

According to the report, local officials did not give precise instructions on the targeted emissions curbs. Recently, Beijing delegated the imposition of its annual winter caps — part of the government’s effort to tackle pollution in the country — to local governments.

LME Copper Price Falls 1%

Also according to Reuters, the price of LME copper fell 1% Thursday as a result of a stronger U.S. dollar — the two are inversely correlated — and pressure on the Chinese economy.

MetalMiner’s Take: LME copper fell slightly this month. However, LME copper prices have shown a recovered momentum since September, when prices breached the psychological level of $6,000/mt.

Copper prices tend to react to Fed index rate increases — or, at least, the expectation of Fed rises. When that happens, the U.S. dollar tends to have a short-term trend reaction and prices move higher for a week. However, the long- and mid-term trend does not change for that reason.

Therefore, copper prices may continue their uptrend. Buying organizations can expect LME copper prices to trade higher.

Imports of Aluminum From Australia Rising

Imports of aluminum from Australia into the U.S. have been increasing of late, according to an S&P Global Platts report.

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Per the report, imports of aluminum from Australia have jumped 23% from July to August.

MetalMiner’s Take: It should come as no surprise to anyone that Australian P1020 aluminum ingots have started to arrive on U.S. shores at a discount.

Interestingly, the discount represents two driving factors: the fact that Australia is exempt from Section 232 aluminum tariffs and that U.S. buyers prefer T-bar or sows and not ingot (which is the form coming from Australia).

The U.S. does not produce enough primary material domestically and the tariffs have driven the trade shift from Canada (the previous dominant supplier) to Australia. What will become more interesting to OEMs and other large buying organizations, however, involves the semi-finished material market, in which the U.S. currently operates with a significant deficit.

MetalMiner expects large volumes of semi-imports from Europe to help mitigate domestic supply shortages.

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