Author Archives: Fouad Egbaria

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Before we head into the weekend, let’s take a look back at the week that was and some of the metals storylines here on MetalMiner:

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This morning in metals news, the state of falling global steel prices is a temporary condition attributable to Chinese overproduction ahead of winter cuts, according to miner Brazilian miner Vale; Chilean copper exports in November were less valuable; and the arrest of a Huawei Technologies executive has caused concern that it could cast a shadow on ongoing U.S.-China trade talks.

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Falling Steel

Brazilian iron ore miner Vale said the recent dip in global steel prices is temporary, a result of a Chinese surge in production just ahead of scheduled winter cuts, Reuters reported.

Unlike last year, Beijing has delegated authority on the exact specifications of the winter cuts — aimed at tackling pollution in the country’s industrial hubs — to local authorities this year, as opposed to the blanket cuts it imposed last year.

Chilean Copper

The world top copper producer, Chile, announced a budget surplus for November, but the value of its copper exports fell, according to a Reuters report citing the country’s central bank.

The value of its copper exports fell 12.5% in November, according to the report.

Arrest of Huawei CFO Raises Concerns Regarding U.S.-China Trade Talks

The Group of 20 (G20) summit saw President Donald Trump and President Xi Jinping agree to commencing a 90-day negotiating window on trade — a positive, if still uneasy step toward potential resolutions to the ongoing U.S.-China trade conflict.

However, the arrest of Huawei CFO Meng Wanzhou, at the behest of the U.S., has led to concern that it could impact the footing — uneasy footing — established for the current round of trade talks.

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According to the Washington Post, citing analysts in Beijing, the Chinese government, while upset about the arrest, will attempt to not allow it to impact the trade talks going forward.

The Rare Earths Monthly Metals Index (MMI) picked up one point, rising for a December MMI reading of 18.

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Lynas Considers Legal Action Against Malaysian Government

In last month’s installment of the Rare Earths MMI, we noted shares of Australian miner Lynas Corporation Limited got a boost on news that the Malaysian government would allow it to continue storing waste materials in the country.

However, this week the miner announced it was considering legal action, among other options, against the Malaysian government, which recently issued a statement regarding conditions for the miner’s license renewal.

According to a Lynas statement, the two conditions for renewal on Sept. 2, 2019, from the Malaysian government are: 1) the export of Water Leach Purification residue before Sept. 2, 2019, and 2) submission of an action plan for the disposal of Neutralization Underflow Residue (NUF) (which has valid approval through Feb. 5, 2019).

As readers know, China overwhelmingly dominates the global rare earths sector; however, Lynas represents the biggest rare earths miner outside of China.

Rare-Earths Elements in Mining Waste?

Given the demand for rare earths, particularly vis-a-vis high-tech applications (e.g. electrical vehicle batteries), every little bit of supply helps.

According to doctoral research cited by, it may be possible to extract quantities of rare earths from quarried ore.

“The problem is that the minerals we want are hidden in the waste heaps in very small quantities, and we do not have efficient methods for extracting them,” Wenzhong Zhang, a doctoral researcher in the Department of Chemistry at the University of Helsinki, was quoted as saying.

His research focuses primarily on recovery of rare-earths elements, namely scandium, from aluminum.

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Actual Metal Prices and Trends

Yttrium rose 1.3% to $32.68/kilogram, while terbium oxide rose 3.6% to $432.16/kilogram.

Neodymium oxide jumped 2.8% to $45,903.70/mt. Europium oxide was up 1.3% to $42.13/kilogram, while dysprosium oxide rose 9.5% to $180.13/kilogram.

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This morning in metals news, steel imports coming into the U.S. continue to be down from last year’s levels, Shanghai steel prices are down and the sharp corrective trend in iron ore prices could be coming to an end.

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U.S. Steel Import Market Share at 21% in November

According to a report by the American Iron and Steel Institute (AISI), U.S. steel import market share reached 20% for November.

Market share for the year to date is 23%, according to the report.

MetalMiner’s Take: What nuggets in the steel import data should buying organizations pay special attention to?

MetalMiner finds the rising import numbers of HRC and plate of greatest interest because it suggests the arbitrage between HRC prices (as well as plate prices) in the U.S. and elsewhere are so significant that buying organizations still achieve a lower total cost — even after paying a 25% import duty.

Rising imports for these two products will continue to put price pressure on domestic steel prices. Rising import levels (and 2018 imports for both products are higher than 2017 levels), suggest that the Q4 bounce that we have seen in prior years may not appear at all. The best way to gauge the trend is to track the spread between countries, factoring in freight, margin, duty, etc.

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Shanghai Steel Prices Fall

According to a Reuters report, Shanghai steel prices fell Thursday on oversupply concerns.

The most-traded SHFE rebar contract fell to 3,375 ($484.55) yuan per ton from an opening price of 3,360 yuan ($488.18) per ton.

An Iron Ore Recovery?

After a November that saw iron ore prices tumble, iron ore may be headed for a more stable period.

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According to Goldman Sachs, cited by Business Insider Australia, the iron ore price is expected to hold in the $60-$70 range over the coming 12 months.

The Renewables Monthly Metals Index (MMI) picked up a point this month, rising for an MMI reading of 102.

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DRC Declares Cobalt ‘Strategic’ Substance

The Democratic Republic of the Congo (DRC) — where a majority of the world’s cobalt is mined — declared cobalt to be a “strategic” substance, according to a Reuters report citing a government decree.

So, what does that mean, exactly?

Operating in the country is going to be pricier for miners like Glencore. The royalty rate for the coveted material will rise to 10%, nearly triple its previous rate, according to the report.

The decree was signed by Prime Minister Bruno Tshibala Nov. 24 and made public this week.

Cobalt is coveted for its application in batteries used in electric vehicles. However, the price of cobalt on the LME has plummeted this year, from $95,000/ton in late March to $54,750/ton this week.

2018 LME cobalt prices. Source: LME

The DRC ushered in a new mining code earlier this year, which saw an increase in royalty rates for a number of metals, including cobalt.

Glencore, a major mining player in the country, in October reported cobalt production of 28,500 tons, up 44% year over year, through the first three quarters. Its full-year guidance called for approximately 39,000 tons of production (plus-minus 2,000 tons), which would mark an increase from last year’s 27,400 tons.

Speaking of cobalt and tension with the DRC government, Bloomberg reported the government had begun an audit of cobalt produced by a Glencore unit in the country was found to have traces of uranium.

Tokyo Steel Announces Plate Price Hike

As we noted last month, Tokyo Steel announced plans to hike steel plate prices in the final month of the year.

“Plate prices have always had their own price dynamics separate from the other forms of flat rolled steel (such as HRC and CRC). Plate prices in the U.S. have remained fairly well-supported compared to the other forms of steel, so it should come as no surprise that in markets with strong construction demand, like Japan, mills would announce price increases,” we noted in a post last month.

“Interestingly, Chinese plate prices have started to slip, but those dynamics could change based on environmental curbs, whether the Japanese plate price increases stick and Chinese demand. U.S. metal-buying organizations will want to pay close attention to these price dynamics in Japan and China.”

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Actual Metal Prices and Trends

Japanese steel prices fell on the month, down to $757.12/mt. Korean steel plate fell 2.5% to $640.18, while Chinese steel plate dropped 7.5% to $637.71/mt.

U.S. steel plate rose 2.1% to $1,022/mt.

Chinese neodymium jumped 2.6% to $58,469.10/mt, while silicon rose 1.3% to $1,496.23/mt. Cobalt cathodes rose 1.3% to $96,601.10/mt.

The Construction Monthly Metals Index (MMI) fell seven points, down to a December MMI reading of 82.

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U.S. Construction Spending

Estimated U.S construction spending in October fell 0.1% from September according to Census Bureau data, but marked a 4.9% increase from the October 2017 spending total.

Spending in October hit an estimated seasonally adjusted annual rate of $1,308 billion, the lowest monthly spending total since March ($1,293 billion).

As for private construction, spending was at a seasonally adjusted annual rate of $998.7 billion, down 0.4% from the revised September estimate of $1,003.0 billion.

Within the umbrella of private constriction, residential construction hit $539.0 billion in October, down 0.5% from the revised September estimate of $541.7 billion. Nonresidential construction reached $459.7 billion in October, down 0.3% from the revised September estimate of $461.3 billion.

Public construction hit $310.2 billion, up 0.8% from the revised September estimate of $307.8 billion.

Within public construction, educational construction hit $76.9 billion, up 2.6% from the September estimate of $75.0 billion. Highway construction reached $94.6 billion, down 0.1% from the revised September estimate of $94.6 billion.

October Sees Only Slight Billings Growth

The Architecture Billings Index (ABI), put out monthly by the American Institute of Architects, reached a value of 50.4 for October, down from 51.1 in September. A reading of 50 indicates no growth, with anything greater signifying growth.

“Although growth is still occurring, the pace of that growth has continued to ebb and flow through much of the year,” the ABI report states. “But the outlook still remains positive, as inquiries into new work remain strong, and the value of new signed design contracts remains relatively strong as well.”

By region, the Midwest led the way with a reading of 57.8, followed by: the Northeast (51.8), the South (48.4) and the West (46.9).

“Regionally, conditions look to be changing from the trends that have dominated so far this year,” the report states. “Billings at firms in the Northeast rebounded modestly in October, following several months of softness, while billings declined at firms located in the South and West, where conditions have been strong recently. However, it is too early to say if this is a one-month blip or a more protracted change.”

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Actual Metal Prices and Trends

Chinese rebar plunged 20.2%, down to $544.74/mt, while Chinese H-beam steel fell 12.2% to $540.39/mt. It remains to be seen whether the U.S. and China can reach an agreement to deescalate trade tensions during the 90-day window agreed upon at the Group of 20 (G20) summit this past weekend in Argentina.

U.S. shredded scrap steel rose 4.7% to $358/st.

European commercial 1050 aluminum sheet fell 4.0% to $2,644.47/mt, while Chinese aluminum bar fell 1.6% to $2,139.75/mt.

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This morning in metals news, a Canadian miner is teaming up with a Japanese company on a major mine expansion effort in Chile, the U.K. steel sector is struggling with power costs and an Illinois steel plant is on the move.

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Teck Resources to Work with Sumitomo on Mine Expansion

Canadian miner Teck Resources announced it will team up with Japan’s Sumitomo on a planned copper mine expansion in Chile.

The expansion is set to come in at a cost of just under $4.8 billion.

“QB2 is one of the world’s premier undeveloped copper assets and this transaction further confirms the value of the project,” Teck Resources President and CEO Don Lindsay said. “This partnership significantly de-risks Teck’s investment in the project, enhances our project economics and preserves our ability to continue to return capital to shareholders and reduce bonds currently outstanding.”

U.K. Steel Sector’s Power Struggle

According to an industry report cited by Reuters, the U.K. steel sector is faced with much higher power costs than operators in neighboring countries.

According to the report, U.K. steel firms pay 50% more for power than French competitors and twice as much as German firms.

MetalMiner’s Take: The UK steel sector is facing a host of challenges — a report by Reuters that British steelmakers pay 50% more for electricity as their French competitors and twice as much as their German rivals is only part of the problem.

Brexit, as an upcoming article of ours will explain, is unraveling before our very eyes. This is dissuading continental consumers from placing 2019 contracts with British steelmakers, for fear of delayed deliveries and, possibly, the imposition of E.U. import tariffs if the U.K. crashes out (as opposed to achieving some kind of free trade agreement).

The U.K. power sector is itself challenged by lack of spare capacity, so there is little appetite for cutting big consumers like steel, cement or aluminum a low price deal.

Since 2000, E.U. rules have forced the U.K. to close over 15 large power stations and build thousands of wind turbines and solar panels to generate electricity in a bid to meet climate change targets — diktats that other E.U. states have simply chosen to ignore.

Alliance on the Move

An Illinois steel company is moving just across the Illinois-Indiana state line.

Alliance Steel — based in Bedford Park, a southwest suburb of Chicago — is making a move to Gary, Indiana, the Chicago Sun-Times reported.

MetalMiner’s Take: Alliance Steel might not be the first or the last steel operation to consider relocating to northwest Indiana.

Without a doubt, the decision to move to northwest Indiana has everything to do with high taxes in Illinois, a new governor whose budgetary and tax plans remain unclear, and the attraction of drawing a similar, if not the same, workforce with a much lower operating cost structure.

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A quiet revitalization of Gary has been ongoing, including new airport enhancements and investment in neighboring communities. Midwest buying organizations should expect more such moves.

The Automotive Monthly Metals Index (MMI) picked up one point for a December MMI reading of 95.

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U.S. Sales

General Motors reports sales numbers on a quarterly basis, rather than a monthly basis. The automaker reported sales fell 11% year over year in the third quarter, but touted an average transaction price that was up $700 compared with the same period last year (up to a third-quarter record of $35,974).

As for November reports, Ford Motor Co. reported its U.S. sales dropped 6.9% year over year, with 196,303 units sold in the month. Even trucks and SUVs, which have become the automaker’s focal points amid the deemphasis on traditional sedans, saw sales drops (2.3% and 4.9%, respectively).

Fiat Chrysler, meanwhile, posted another strong month, with U.S. sales up 17% year over year. Sales of Fiat Chrysler’s Ram and Jeep brands surged 44% and 12% year over year, respectively.

Honda reported a 9.5% year-over-year drop in U.S. sales, while Nissan sales were down 18.7%.

According to a sales forecast by, total sales in the U.S. were projected to decrease 1.3% in November compared with November 2017, but up 1.3% compared with the previous month.

GM Moves to Close Plants, Slash Workforce

Among the bigger automotive developments last month came from GM, which announced the closure of several North American plants and a 15% workforce reduction.

“The actions we are taking today continue our transformation to be highly agile, resilient and profitable, while giving us the flexibility to invest in the future,” GM Chairman and CEO Mary Barra said in a prepared statement. “We recognize the need to stay in front of changing market conditions and customer preferences to position our company for long-term success.”

The move, which is projected to save the automaker approximately $6 billion, was unsurprisingly the source of sharp criticism from politicians, including President Donald Trump, who referred to the Commerce Department’s pending Section 232 probe of automobile imports in a tweet respond to the GM news.

“The reason that the small truck business in the U.S. is such a go to favorite is that, for many years, Tariffs of 25% have been put on small trucks coming into our country,” Trump tweeted Nov. 28. “It is called the “chicken tax.” If we did that with cars coming in, many more cars would be built here. and G.M. would not be closing their plants in Ohio, Michigan & Maryland. Get smart Congress. Also, the countries that send us cars have taken advantage of the U.S. for decades. The President has great power on this issue – Because of the G.M. event, it is being studied now!”

GM announced, among other facilities, three North American assembly plants would be “unallocated,” located in Oshawa, Ontario; Detroit; and Warren, Ohio.

MetalMiner’s Stuart Burns touched on the announcement last week, noting the move might simply be a harbinger in the automotive sector at large.

“What is more surprising to some is that GM is acting when results are strong,” Burns wrote. “GM’s third-quarter adjusted earnings per share were 42% higher than the same period a year ago and its underlying earnings before interest and tax rose 25% to $3.2 billion. Net revenues rose 6.4% to $35.8 billion.

“But analysts see this as GM being a first mover and acting ahead of the curve.”

Actual Metal Prices and Trends

U.S. HDG steel fell 6.9% month over month to $934/ton. Platinum bars fell 3.5% to $806/ounce, while palladium bars rose 11.7% to $1,192/ounce.

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LME copper rose 4.5% to $6,287/mt. U.S. shredded scrap steel jumped 4.7% to $358/st.

Chinese primary lead rose 1.6% to $2,734.61/mt.

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On Monday, miner Rio Tinto announced it had made the first shipment of bauxite from its Amrun mine in Australia, six weeks ahead of schedule.

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According to a company announcement, the $1.9 billion investment in the Amrun mine serves to replace production from the depleting East Weipa mine. The Amrun mine is expected to hit its full production rate of 22.8 million tons next year.

“Bringing Amrun online further strengthens our position as a leading supplier in the seaborne market. We have the largest bauxite resources in the industry and are geographically well positioned to supply China’s significant future import needs, as well as supporting our refinery and smelting operations in Australia and New Zealand.

“The Amrun mine will ensure generational jobs for Queenslanders and build significantly on our 55-year history on the Western Cape.”

The first shipment was hailed in a ceremony on the Western Cape York Peninsula, seeing the more than 80,000 tons of bauxite off to Rio Tinto’s Yarwun alumina refinery in Gladstone.

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Rio Tinto, the world’s largest bauxite producer, produced 50.8 million tons of bauxite last year. Bauxite ore is the world’s main source of aluminum. Bauxite is refined into alumina, which is then refined into pure aluminum.

According to the U.S. Geological Survey, global bauxite production hit 300,000 tons in 2017.

The miner’s announcement came after last week’s announcement of a $2.6 billion investment in the Western Australia Koodaideri iron ore mine, which the miner said will be its “most technologically advanced mine” once completed.

According to a Rio announcement, construction on the mine is set to begin next year, with production expected to begin in late 2021. The mine is expected to have an annual capacity of 43 million tons.

“Koodaideri is a game-changer for Rio Tinto,” Rio Tinto chief executive J-S Jacques said. “It will be the most technologically advanced mine we have ever built and sets a new benchmark for the industry in terms of the adoption of automation and the use of data to enhance safety and productivity.”

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This morning in metals news, U.S. steel production through Nov. 24 was up 5.6% compared with the same period last year, copper prices fell back Tuesday and Ford’s November U.S. sales were down.

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U.S. Steel Production

According to a recent American Iron and Steel Institute (AISI) report, U.S. steel production for the year (through the week ending Nov. 24) was up 5.6% compared with the same time frame in 2017.

For the period through Nov. 24, the U.S. produced 85.6 million tons at a capacity utilization rate of 78.1%, up from 81.1 million tons at a 74.2% rate last year.

For the week ending Nov. 24, the U.S. saw 1.9 million tons of production at a rate of 81.3%, up from 1.7 million tons at a 73.3% rate for the same week in 2017.

Copper Prices Fall

After making gains Monday, copper prices fell back Tuesday, according to a Reuters report.

Three-month London copper dropped 0.2% Tuesday, while the most-traded SHFE contract fell 0.7%, according to the report.

Ford November Sales

November proved to be a down month for Ford in the U.S. market.

The automaker’s November sales were down 6.9% year over year, with 196,303 units sold.

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Even truck and SUV sales slumped, down 2.3% and 4.9% year over year, respectively.