Author Archives: Fouad Egbaria

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This morning in metals news, European leaders plan to press President Trump on steel this week, the aluminum price could be heading back down after the U.S. opened the door to easing the recently announced Russian sanctions and Glencore is looking into options with respect to recapitalization of one of its DRC copper operations.

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Macron, Merkel Look to Press Trump on Steel

Cecilia Malmstrom, the European commissioner for trade, said Monday that German Chancellor Angela Merkel and French President Emmanuel Macron will meet with President Trump this week, when they are expected to discuss moving away from the looming steel tariff schedule.

The E.U. was temporarily spared from the Section 232 steel and aluminum tariffs imposed in March, having negotiated an exemption until May 1.

Aluminum Price Back Down?

The aluminum price has soared in recent weeks, in large part on the news regarding U.S. sanctions targeting Russian oligarchs and companies.

Among those companies was aluminum giant Rusal — but according to Bloomberg, aluminum’s price rally could come to an end if the U.S. eases the sanctions. As Bloomberg reported, the U.S. opened the door to a potential easing of the sanctions on Monday, which has already led to a plunge in aluminum prices.

Glencore Looks into Recapitalization of DRC Copper Unit

Glencore is considering recapitalization of its copper unit in the Democratic Republic of the Congo, the Financial Times reported.

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Glencore’s Katanga Mining subsidiary, which owns the Kamoto Copper Company, is looking into recapitalization to resolve a dispute with state-owned miner Gecamines. Gecamines, according to the FT, has started legal action to dissolve Kamoto.

The U.S. International Trade Commission late last week sent out a note that it is looking for input on a new investigation concerning proposed modifications to the U.S. Korea Free Trade Agreement (KORUS), specifically related to customs duties for motor vehicles.

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Recently, the U.S. and South Korea reached an agreement in principle to revamp the free trade agreement, which originally went into effect in 2012.

“The investigation, U.S.-Korea FTA: Advice on Modifications to Duty Rates for Certain Motor Vehicles, was requested by the U.S. Trade Representative (USTR) in a letter received on April 6, 2018,” a USITC release said. “The letter included an attachment detailing the articles affected by the proposed modifications.”

The USITC will submit its advice to the USTR by June 1, according to the announcement.

On March 28, USTR Robert E. Lighthizer and Republic of Korea Minister for Trade Hyun Chong Kim issued a joint statement announcing they had reached an agreement in principle regarding revisions to KORUS.

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U.S. goods and services trade with Korea was an estimated $144.6 billion in 2016, per the USTR. Exports were $63.8 billion; imports were $80.8 billion, making for a goods and services trade deficit with Korea of $17.0 billion in 2016.

Several aluminum associations around the world penned a joint letter in which they urged G20 leaders to hold a forum on global aluminum overcapacity.

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“In light of the conclusions reached last July at the G20 Summit in Hamburg, Germany, and the publication of the Global Forum on Steel Excess Capacity Report, we are writing to urge G20 leaders to apply this framework to a similar global forum on aluminium excess capacity,” the letter read. “We believe the Global Forum on Steel Excess Capacity is a useful model for tackling these persistent issues with a coordinated effort also for aluminium.”

The letter was signed by: Heidi Brock, president and CEO of The Aluminum Association; Milton Rego, executive president of the Aluminium Association of Brazil; Jean Simard, president and CEO, of The Aluminium Association of Canada; Gerd Götz, director-general of European Aluminium; and Yoshihisa Tabata; executive director of Japan Aluminium Association.

The associations called for a forum at the next G20 Summit in Buenos Aires to “endorse market economy principles and transparent methods to create an adequate level playing field in the global aluminium market.”

The letter emphasized global, collaborative action as being critical in tackling the issue of overcapacity, with specific reference to China. The U.S. last month imposed tariffs on aluminum imports of 10% (in addition to steel imports of 25%).

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The G20 Summit is scheduled to take place Nov. 30- Dec. 1 in Buenos Aires, Argentina.

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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 headlines here on MetalMiner:

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Our latest round of Monthly Metal Index (MMI) reports is in, snapshotting what was a particularly busy month in the world of metals.

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Last month, the Trump administration enacted Section 232 tariffs on steel and aluminum imports, which had been a topic of intense scrutiny dating back to April 2017, when the Section 232 probes were first launched. Some countries have negotiated exemptions to the tariffs, while other allies, like Japan, are seeking to negotiate exemptions of their own.

A few high points from this month’s round of MMIs:

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Read about all of the above and much more by downloading the April MMI report below.

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This morning in metals news, big firms Thyssenkrupp and Tata Steel are delaying the signing of a previously agreed to joint venture for their European operations, Chinese steel is retracing and  LME zinc has hit a four-month low.

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Thyssenkrupp, Tata Delay Inking Deal

A joint-venture deal between Thyssenkrupp and Tata Steel is being delayed due to ongoing talks between the latter firm and workers in Britain and the Netherlands, Reuters reported.

The German and Indian firms agreed in principle last fall to a deal that would combine their European steel operations.

Chinese Steel Loses Ground

Profits were up significantly for many Chinese steelmakers in 2017, but that momentum could be running out of steam soon, the Nikkei Asian Review reported.

According to the report, falling prices and the U.S.’s metals tariffs could eat into Chinese steelmakers’ earnings. According to the Review’s report, shares of five big Chinese steelmakers (including China’s largest, Baoshan Iron and Steel) have dipped between 12% and 17% since the end of February.

Zinc Falls to Four-Month Low

Zinc has hit a four-month low, partly on the basis of slow Chinese demand pick-up, Reuters reported.

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LME zinc dropped 2.7% Thursday, its lowest since Dec. 12.

The U.S. Department of Commerce on Tuesday announced it had issued a final affirmative determination in its anti-dumping investigation of imports of cold-drawn mechanical tubing from China, Germany, India, Italy, Korea and Switzerland.

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“Today’s decision allows U.S. producers of cold-drawn mechanical tubing to receive relief from the market-distorting effects of foreign producers dumping into the domestic market,” Secretary of Commerce Wilbur Ross said in a prepared statement. “We will continue to take action on behalf of U.S. industry to defend American businesses, workers, and communities adversely impacted by unfair imports.”

The DOC determined the following dumping margins (value of 2016 imports of the product from each country is included in parentheses):

  • China: 44.92 to 186.89% ($29.4 million)
  • Germany: 3.11 to 209.06% ($38.8 million)
  • India: 8.26 to 33.80% ($25.0 million)
  • Italy: 47.87 to 68.95% ($11.9 million)
  • Korea: 30.67 to 48.00% ($21.3 million)
  • Switzerland: 12.05 to 30.48% ($26.2 million)

The domestic petitioners in the case were: ArcelorMittal Tubular Products (Shelby, Ohio), Michigan Seamless Tube, LLC (South Lyon, Michigan), PTC Alliance Corp. (Wexford, Pennsylvania), Webco Industries, Inc. (Sand Springs, Oklahoma), and Zekelman Industries, Inc. (Farrell, Pennsylvania).

The case now moves to the U.S. International Trade Commission, which will rule on or before May 24. If the commission rules in the affirmative, anti-dumping orders will be issued.

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A full list of foreign respondents in the case is included below.

Source: U.S. Department of Commerce

This morning in metals news, Russian aluminum giant Rusal saw its shares pulled from global indexes and its metal disallowed from the London Metal Exchange and CME Group, one analyst says Russian aluminum will find its way to market in some way and the Chinese iron ore price dropped Wednesday.

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Rusal Dropped from Indexes

On the heels of U.S. sanctions, Russian aluminum giant Rusal will be removed from global equity and debt indexes, Reuters reported.

In addition, its metal will be disallowed from the LME and CME Group.

Finding a Way

Despite sanctions, Russian metal exports — for example, from companies like the aforementioned Rusal — will find a way to market, according to Paul Gait, an analyst at Sanford C. Bernstein, as reported by Bloomberg.

Sanctions on Russian companies will lead to a reshaping of trade flow. Gait argued that short term, the metal supplies will be impacted, but that it is unlikely the Russian supply will remain idled for long.

Chinese Iron Ore Drops

Concerns about falling steel margins contributed to a drop in the price of Chinese iron ore, Reuters reported.

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On the Dalian Commodity Exchange, the most-traded ore fell 0.7% to 447.5 yuan per ton, down from a one-week high of 461 yuan per ton reached during the day, and down from the day’s opening price of 452.5 yuan per ton.

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This morning in metals news, China filed a complaint at the World Trade Organization (WTO) over the U.S. steel and aluminum tariffs, the president of the China Baowu Steel Group says the tariffs would have a limited impact on Chinese exports and LME aluminum prices jumped more than 7% after the U.S. sanctions on Russian individuals and businesses.

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China Looks to WTO to Combat U.S.’s Section 232 Tariffs

China has filed a trade complaint at the WTO over the U.S.’s Section 232 steel and aluminum tariffs.

The complaint includes a Chinese request for 60 days of consultations with the U.S. over the tariffs.

Steel Group President Downplays Effect of Tariff on Chinese Exports

China Baowu Steel Group President Chen Derong said Tuesday that the U.S.’s tariff on steel would have limited effect on Chinese exports, Reuters reported.

Aluminum Prices Get a Boost

Aluminum prices rose on the heels of the recently announced U.S. sanctions of Russian oligarchs and business, MarketWatch reported.

Russian aluminum giant Rusal was among the targets of the sanctions.

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LME aluminum jumped from $1,966/mt on Friday to $2,112/mt on Monday, a 7.4% increase.

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This morning in metals news, Rusal saw its stock tumble after being hit with sanctions by the U.S., President Trump criticizes China’s auto tariffs and the U.S. Department of Commerce issued a final affirmative determination in its countervailing duty probe of stainless steel flanges from China.

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Russian Aluminum Firm Hit With Sanctions

Rusal, the world’s second-largest aluminum producer, saw its stock drop more than 40% after it was included on a U.S. sanctions list targeting Russian companies and their owners, Reuters reported.

According to the report, the sanctions list targeted seven Russian oligarch, including Oleg Deripaska, the former president of Rusal.

Trump Hits Back at China Tariffs

As the specter of a trade war grows, so too does the war of words.

President Trump castigated China’s tariffs on automobiles, calling the gap between U.S. auto tariffs and Chinese auto tariffs an example of “stupid trade” in a tweet Monday morning.

The president tweeted: “When a car is sent to the United States from China, there is a Tariff to be paid of 2 1/2%. When a car is sent to China from the United States, there is a Tariff to be paid of 25%. Does that sound like free or fair trade. No, it sounds like STUPID TRADE – going on for years!”

DOC Issues Final Affirmative Determination on Stainless Steel Flanges

In other trade news, the U.S. Department of Commerce issued a final affirmative determination in its countervailing duty investigation of stainless steel flanges from China.

The DOC concluded the products received countervailable subsidies of 174.73%.

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The case now moves to the U.S. International Trade Commission, which is scheduled to make a final determination on or around May 21. If it rules in the affirmative, a countervailing duty order will be issued.