Author Archives: Fouad Egbaria

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This morning in metals news, the Japanese steel industry’s output is expected to grow next year, lenders have a new plan for Essar Steel, and China’s zinc and copper outputs in November were at their highest since late 2014.

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Japanese Steel Sector Set to Ramp Up Output

According to the Japan Iron and Steel Federation, the country can expect to see increased crude steel output in 2018 and 2019.

According to Reuters, Kosei Shindo, the chairman of the Japan Iron and Steel Federation, said “I hope that crude steel output (for next business year) would exceed 10.6 million tonnes.”

A New Plan for Essar Steel

In its insolvency proceedings, lenders to Essar Steel have reduced the time allowed to resolve the firm’s default, according to a report by the Economic Times.

The “single stage” process, according to the report, means any interested bidder has to meet both the conditions to be considered by the bankers, according to the report.

China Zinc, Copper Output Up

China’s output of copper and zinc in November was at its highest since December 2014, according to Reuters.

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According to the report, China’s refined copper output increased 9.8% to 786,000 tons, while zinc production rose 7.5% to 603,000 tons.

The Department of Commerce announced Wednesday, Dec. 13, that it had issued a preliminary affirmative determination in the countervailing duty (CVD) investigation of cast iron soil pipe fittings from China.

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The department announced the determination in a release, ruling that exporters from China received countervailable subsidies in a fairly broad range of 8.66-102.31%.

“The Trump Administration will not sit back and watch as American companies and workers are harmed by unfair government subsidies,” Commerce Secretary Wilbur Ross said in a prepared statement. “The United States is committed to free, fair and reciprocal trade, and will continue to validate the information provided to us that brought us to this decision.”

The petitioner in the case was the Illinois-based Cast Iron Soil Pipe Institute, which boasts three members: AB&I Foundry (California), Charlotte Pipe & Foundry (North Carolina), and Tyler Pipe (Texas).

According to the department, the 79 antidumping or countervailing duty investigation it initiated from Jan. 20 to Dec. 11 of this year marks a 52 percent increase from investigations started during the same period last year.

As for the respondents, according to a fact sheet provided by the Commerce Department, the following preliminary subsidies were calculated for the respondents:

  • 8.66% for mandatory respondent Shanxi Xuanshi Industrial Group Co., Ltd.
  • preliminary subsidy rate of 12.72% for mandatory respondent Wor-Biz International Trading Co., Ltd. (Anhui).
  • Commerce applied an adverse facts available rate of 102.31% for mandatory respondent Shijiazhuang Chengmei Import & Export Co., Ltd. because of its failure to respond to the Department of Commerce’s request for information.
  • 10.37% for all other Chinese producers and exporters

According to the Department of Commerce, imports of cast iron soil pipe fittings from China during 2016 were valued at an estimated $8.6 million.

A final decision in the CVD case is scheduled for April 24, 2018.

U.S. ITC Rules in 5-Year Sunset Review of Stainless Steel Pipe Fittings

The U.S. International Trade Commission (USITC) issued its own ruling Dec. 14 on stainless steel butt-weld pipe fittings from Italy, Malaysia and the Philippines.

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The USITC ruled that removing existing antidumping duty orders on the product from the trio of countries “would be likely to lead to continuation or recurrence of material injury within a reasonably foreseeable time.”

Before we head into the weekend, let’s take one last look back at the week that was:

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Free Download: The December 2017 MMI Report

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This morning in metals news, Chinese aluminum output fell to its lowest total since February 2015, Liberty House considers buying a large Rio Tinto smelter in France and copper approaches a two-week high.

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Chinese Aluminum Output Falls

Chinese primary aluminum production dropped for a fifth straight month, Reuters reported.

In fact, winter smelting restrictions saw output fall to its lowest in the country since February 2015, according to the report.

Liberty House Eyes Rio Tinto Smelter

According to Reuters, Liberty House is considering a bid for Rio Tinto’s aluminum smelter in northern France.

The Dunkirk plant is valued at around 200 million euros, according to Reuters sources familiar with the matter.

Copper Rises Near Two-Week High

A weakening dollar and positive Chinese manufacturing data saw copper rise on Thursday, Reuters reported.

The Chinese industrial sector grew faster in November than markets expected.

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London Metal Exchange copper traded at $6,760 a ton in official midday rings, according to the report.

We’re another month closer to the end of the calendar year, and there’s much to recap from the last month in metals.

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After four MMIs ticked upward for our November reading, five did so for our latest report.

Hitting some of the high points:

  • The biggest winners of the month were the Automotive, Construction and Raw Steels MMIs. Automotive picked up four points, while Construction and Raw Steels picked up five points apiece.
  • The Aluminum MMI tracked back down, losing four points after a five-point rise the previous month. As Irene Martinez Canorea wrote, a dropping LME aluminum price had much to do with the sub-index’s drop.
  • The Stainless MMI, meanwhile, fell five points on the month. In this case, a 10% decline in nickel prices contributed to the MMI’s fall. Trading volume for LME nickel is still strong, Martinez Canorea wrote, and the outlook for nickel remains bullish.

You can read about all of the aforementioned — and much more — by downloading the December MMI report below.

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This morning in metals news, Toyota and Panasonic are considering working together on developing electric car batteries, U.S. Steel did not test for toxic materials after a chemical spill into Lake Michigan in October and U.S. raw steel production last week was up 4.3% compared with the same week in 2016.

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A Toyota, Panasonic Partnership?

According to Reuters, Toyota and Panasonic are considering joining forcing in developing electric batteries for vehicles.

Panasonic already manufactures batteries for Toyota’s gasoline-electric and plug-in hybrid vehicles, according to the report.

U.S. Steel Didn’t Test Water After October Chemical Spill

Documents posted online by state regulators Tuesday show that following a U.S. Steel chemical spill in a Lake Michigan tributary in October, the company did not test the waters for toxic materials, according to the Chicago Tribune.

The October spill was the second of the year for U.S. Steel, the first affecting the same waterway in April.

According to the Tribune report, an inspector from the Indiana Department of Environmental Management visited U.S. Steel last month, when plant managers told the inspector they decided not to test for hexavalent chromium in the water.

U.S. Raw Steel Production Up 4.3%

U.S. raw steel production for the week ending Dec. 9 jumped 4.3% compared with the same week last year, according to a report from the American Iron and Steel Institute (AISI).

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Domestic raw steel production was 1,672,000 net tons, while it was 1,607,000 net tons in the week ending Dec. 9, 2016.

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This morning in metals news, Wisconsin Gov. Scott Walker signed a bill ending the state’s moratorium on gold and silver mining, Chile approaches a busy year for mine union negotiations, and Chinese steel futures drop.

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Going for the Gold in the Badger State

Wisconsin Gov. Scott Walker signed a bill ending the state’s moratorium on gold and silver mining, Wisconsin Public Radio reported.

The moratorium was imposed in 1998, when Walker was a member of the state Assembly.

Union Negotiations on the Horizon in Chile

Chile’s copper mining industry has a busy schedule next year, with 32 union contracts on the docket, Bloomberg reported.

Chile, a dominant force in the copper industry, will negotiate the contracts, which represent approximately 75% of the country’s copper output, according to the report.

China Steel Futures Drop

Chinese steel futures took a dip Tuesday as a result of concerns regarding demand in the country, the world’s top steel consumer, according to Reuters.

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According to the report, upward price movement driven by supply constriction is expected to be counterbalanced by a drop in demand as winter weather affects construction projects.

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This morning in metals news, Chinese steel got a boost on the heels of another round of output cuts, Goldman Sachs executives warns about the potential of a U.S. departure from the North American Free Trade Agreement (NAFTA) and Thyssenkrupp looks to get union backing for its European merger deal with Tata Steel.

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Chinese Steel on the Rise

On the heels of output cuts, Chinese steel got a boost Monday, according to a Reuters report.

According to the report, the most-active rebar on the Shanghai Futures Exchange (SHFE) jumped 1.6%, ultimately closing at 3,912 yuan ($591.26) a ton.

Goldman Warns About NAFTA Exit

Goldman Sachs warned clients that it wasn’t optimistic regarding a positive resolution to the renegotiation talks.
“While we expect the rising odds of tax reform to put less pressure on the trade agenda, we do not expect passage of tax reform will raise the odds of a successful Nafta renegotiation,” Goldman Sachs said in a note to clients, according to Bloomberg. “And so a withdrawal announcement looks more likely than not, even if tax reform is enacted soon.”

Thyssenkrupp Looks to Win Union Favor

As German firm Thyssenkrupp works to execute a merger deal of its European operations with Tata Steel’s, the company is looking to win over its workers’ favor.

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According to Reuters, Thyssenkrupp is offering workers commitments on jobs and investments to get union backing for the deal (which was agreed to in September by the two companies in September).

The Rare Earths MMI took a three-point drop for the month, falling to 18 for our December reading. 
Save for an 11-cent increase in the Chinese yttrium price, the heavier hitters in this basket of metals  — terbium oxide, neodymium oxide, europium oxide and dysprosium oxide — posted price drops.

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Australian Rare Earths Miner Makes a Comeback

An article by Forbes chronicles the major bounceback of Australian rare-earths miner Lynas Corp., which rebounded after losing 99% of its share price.

The reason for the revival? The electric-car wave and environmental cleanup efforts in China, the Forbes article reports.

Surviving an oversupplied market that saw rare-earths prices plummet in recent years, a tightening of the market by China — the dominant global producer of rare earths — saw the firm’s fortunes reverse.

“Lynas, a former gold miner, somehow survived, and today it’s enjoying a rerun of the rare-earths shortage as China’s tougher pollution laws and the growing popularity of electric cars are boosting prices,” Forbes reports.

Namibia Rare Earths Acquires Portfolio of Metal Properties

In other recent news, Namibia Rare Earths announced in November the acquisition of a portfolio of critical metal properties in Namibia.

According to a release from the firm, it agreed to acquire a “majority interest in seven projects ranging from exploration opportunities to near term feasibility stage” from Gecko Namibia (Pty) Ltd.

“The Gecko Namibia portfolio of properties will expand the Company’s commodity base from solely rare earths to a variety of highly critical commodities including cobalt, copper, zinc, lithium, graphite, tantalum, niobium, nickel, and gold,” the release continues. “Ground holdings in Namibia will increase from 221 km2 (Lofdal) to over 6,850 km2.”

Instability, Violence in Congo

The Democratic Republic of Congo is rich with rare-earths, like cobalt, used in things like computers, cellphones and electric car batteries.

However, political instability and violence in the country this year have understandably had significant effects on the rare-earths market in the central African country. (Of course, as has been mentioned in this space before, the market effects of the instability and violence is not the primary takeaway of these events, but is relevant insofar as we are talking about metals.)

Recently, at least 14 United Nations peacekeepers were killed after an attack in the eastern portion of the country Friday, the Washington Post reported.

In a statement Friday, U.N Secretary-General António Guterres condemned the attack, saying it constituted a war crime.

“This is the worst attack on UN peacekeepers in the Organization’s recent history,” Guterres said.

While the price of metals is a small consideration compared with the bloodshed in the country this year — in August, the U.N. reported approximately 250 people were killed in ethnic-based massacres — instability and violence certainly have an effect on production capabilities and, thus, metal prices for rare earths mined in the DRC (like cobalt).

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Actual Metal Prices and Trends

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Here’s What Happened

  • MetalMiner’s Global Precious MMI, tracking a basket of precious metals from across the globe, ticked up another point to 88 for the December reading, a 1.1% increase.
  • Palladium flexed its muscles, officially busting through the $1,000 per ounce ceiling. The platinum-group metal’s (PGM) U.S. bar price has jumped nearly a whopping 50% since the beginning of the year.
  • Platinum crept closer to palladium’s level over the last month, ending up in the mid-$900s per ounce level. It has receded from its most recent high of March 2017, when it landed above $1,000 per ounce.
  • “We’ve got a trend, folks!” — this is the third straight month in which palladium is priced at a premium to platinum, which has not been the historical norm.
  • After breaking and holding above the $1,300 per ounce threshold at the beginning of September for the first time since October 2016, the U.S. gold price has been dropping for a couple months before leveling out for Dec. 1. Gold bullion is just about $4 per ounce higher than it was at the start of November.

What’s Going On in the Background?

  • Why has palladium been trading at a premium to platinum? A reminder: “Palladium has traded at a discount to platinum because of platinum’s greater cost of extraction and its wider scope of applications,” according to Stuart Burns, MetalMiner’s editor at large. But the fall of diesel (compared to gas) engines has bumped up palladium demand — which, coupled with anticipation of both palladium and platinum production falling, according to analysts from UBS and SP Angel, paints a picture of potentially sustained higher prices. For now, heading into the winter holidays, the current trend is making palladium investors feel pretty good.
  • Gold in the spotlight. Let’s pivot to gold a bit this month. A gold mine in Ireland is causing some controversy amidst the background of Brexit, with greater numbers of potential jobs and environmental impact all hanging in the balance.

What Metal Buyers Should Look Out For

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Key Price Movers and Shakers

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