This Morning in Metals: Chinese Iron Ore Drops to 4 1/2-Month Low

Chinese Iron Ore Continues Fall

Prices of Chinese iron ore fell to a 4 1/2 month low, according to the Hellenic Shipping News.
Trade tensions have weighed on the Chinese economy this year, with steel prices taking a tumble, even while Chinese steel production has not let up (in fact, China’s crude steel production jumped 9.7% year over year in October, according to a recent World Steel Association report).
U.S. President Donald Trump and Chinese President Xi Jinping are scheduled to attend this week’s G20 Summit in Buenos Aires, where they are expected to talk trade. The tariff rate on the U.S.’s $200 billion tariff package is set to jump from 10% to 25% at the start of the new year, barring an agreement that would preclude the hike.

Zinc Price Falls Again

The price of London zinc dropped for a fourth straight sessions Tuesday, according to a Reuters report.
LME zinc dropped 0.3% Tuesday, according to the report, down to $2,428.50 per ton.

Tariff Waivers and Chinese Metals

According to a report by The New York Times that cites a congressional analysis, the Trump administration has granted more than 3,000 tariff waivers that could exempt Chinese-made metals.
MetalMiner’s Annual Outlook provides 2019 buying strategies for carbon steel
In fact, according to the report, the U.S. has granted waivers with respect to a higher share of requests from China than from Japan and Canada.
MetalMiner’s Take: Clearly, the process for obtaining tariff exemptions remains opaque and, in some cases, irrational.
We have seen specific instances, such as with grain-oriented electrical steel (GOES) requests, that disputes often occur within some very gray areas that require a deep subject matter expert to vet and ascertain.
The simple “if nobody opposed the exclusion request” rule of thumb is faulty, particularly in the case of Mandel Metals, where the amount of the request far exceeds the total volumes necessary to run Mandel’s operations. Perhaps the “return of market fundamentals” will help guide the process, as well.
In the case of aluminum, a real common alloy shortage exists. The exclusion request process ought to consider where the U.S. runs market deficits and shortages versus only who, in theory, can produce the particular metal.
The same can not be said for many of the common forms of steel, where ample domestic supply exists to meet demand.