This Morning in Metals: Oil producers reach tentative deal on output cuts … but Mexico holds out

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This morning in metals news, oil producers on Thursday (including Saudi Arabia and Russia) reached a deal in principle to slash output, ArcelorMittal is laying off new hires and Chinese iron ore futures made gains to close the week.

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OPEC nations reach tentative deal Thursday on output cuts

As MetalMiner’s Stuart Burns has covered extensively before, the oil price of late has been in free fall, in part because of dropping demand related to the coronavirus outbreak but more because of a spat between major producers Saudi Arabia and Russia.

Oil producers, including Russia and Saudi Arabia, met via teleconference Thursday to hash out output cuts to support the oil price, ultimately settling on cuts of 10 million barrels per day for two months. After the two-month period ends June 30, the reduction drops to 8 million barrels per day for a period of six months.

Oil prices made double-digit percentage gains in anticipation of the news but retraced later in the day.

However, the deal was hanging in the balance as a result of objections from Mexico.

“The above was agreed by all the OPEC and non-OPEC oil producing countries participating in the Declaration of Cooperation, with the exception of Mexico, and as a result, the agreement is conditional on the consent of Mexico,” OPEC said in a statement.

ArcelorMittal to lay off new hires at Burns Harbor

Steelmaker ArcelorMittal will lay off new hires at its Burns Harbor mill in Indiana, the Northwest Indiana Times reported.

Earlier this week, the Northwest Indiana Times reported ArcelorMittal was laying off workers at its Indiana Harbor steel mill.

Chinese iron ore futures rise

As China slowly gets back to work after being hit by the coronavirus outbreak, iron ore futures have made gains amid dropping steel stocks, Reuters reported.

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The most-traded iron ore contract on the Dalian Commodity Exchange closed up 3.3% on Friday, Reuters reported, up to 598 yuan ($84.64) per ton.

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