This morning in metals news, North American aluminum associations wrote a joint letter asking for quota-free tariff exemptions for Canadian and Mexican aluminum, European automakers plan to try out new LME steel contracts launching next year, and the LME copper price has dropped ahead of the U.S. midterm elections.
Aluminum Associations Seek Quota-Free Tariff Exemption
Earlier this year, Canada and Mexico received temporary exemptions from the U.S.’s tariffs on steel and aluminum; however, those exemptions eventually were allowed to expire.
Since then, the Aluminum Association in the U.S. has continued to petition for the imposition of quota-free tariff exemptions for the U.S.’s neighbors to the north and south.
Aluminum associations in the three countries penned a joint letter to President Trump this week reiterating the call for quota-free tariff exemptions.
“On behalf of the North American aluminum industry, we the undersigned association leaders congratulate you on reaching an initial agreement on the United States-Mexico-Canada Agreement (USMCA),” the letter states. “We support a modernized, trilateral agreement that recognizes the importance of the integrated North American supply chain and enables the aluminum industry to meet growing demand year over year.
“We are now asking that you work together expeditiously with the other North American leaders to resolve the national security concerns related to the Section 232 tariffs on aluminum products within North America, and to ensure the United States reinstates the exemptions from the aluminum tariffs for Canada and Mexico.”
MetalMiner’s Take: Aluminum-buying organizations face significant material shortages within the U.S. market. Canada and Mexico will likely keep up the pressure to advocate for quota-free imports to the U.S., particularly since all three countries have come to an agreement via the USMCA (the successor to NAFTA).
In the meantime, buying organization should expect continued tightness.
Copper Price Slides
The LME copper price has slipped ahead of the U.S. midterm elections and a Federal Reserve meeting later this week, Reuters reported.
The LME copper price fell 0.4% Tuesday, according to the report.
MetalMiner’s Take: LME copper prices have increased so far in November. Despite some analysts claiming a bearish call for LME copper prices, the base metal seems to be moving up again.
Fed interest rate rises have not impacted LME copper prices or the U.S. dollar that much. The U.S. dollar tends to react for a couple of days, only to then follow its previous pace; LME copper shows the same behavior.
The important driver for copper is Chinese demand, which has not yet softened. That could make the difference in LME copper pricing. So far, LME copper prices may continue increasing in the upcoming months.
European Automakers to Try Out LME Steel Contracts Next Year
European automakers will be looking to tap into new LME steel contracts that are scheduled to be launched early next year, Reuters reported.
According to the report, the LME is planning to launch three hot rolled coil steel futures contracts next year.
MetalMiner’s Take: Buying organizations could get excited about new LME steel contracts if they had the support of steel producers. It has taken the CME years to build up liquidity in its HRC contract.
Assuming the LME has identified multiple European steel producers willing to participate (a big question), then buying organizations will have another regionalized solution to mitigate steel-price volatility.