Author Archives: Fouad Egbaria

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This morning in metals news, tensions could ease between the U.S. and China on the tariff front, ArcelorMittal reported its third-quarter financial results and copper prices made gains this week.

Keep up to date on everything going on in the world of trade and tariffs via MetalMiner’s Trade Resource Center.

U.S., China Could Roll Back Tariffs with an Initial Deal

In what would represent a significant deescalation of trade tensions, the U.S. and China have reportedly agreed to roll back tariffs if they are able to reach a first-phase trade deal.

However, according to Reuters, the proposal faces internal opposition in the White House, with officials making conflicting public statements regarding tariff rollbacks either being or not being a condition for an initial trade deal.

ArcelorMittal Reports 3Q Results

ArcelorMittal reported a net loss of $539 million in Q3, compared with a net loss of $447 million in Q2.

The firm’s steel shipments fell 7.3% compared with the previous quarter.

Copper Price Rises

The LME three-month copper price has made gains over the last month.

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The price approached the $6,000/mt as the week has come to a close, reaching $5,949/mt. The price is up 4.59% on a month-over-month basis, per MetalMiner IndX data.

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The Rare Earths Monthly Metals Index (MMI) dropped one point for a November MMI reading of 20.

Lynas Signs Deal with Malaysia’s MARA

Australia-listed rare earths firm Lynas Corporation, the largest rare earths firm outside of China, announced Nov. 4 it had signed a memorandum of understanding (MOU) with Malaysia’s MARA Corporation through which the parties would “work collaboratively on several key projects, including attracting downstream industries and downstream customers to Malaysia.”

Keep up to date on everything going on in the world of trade and tariffs via MetalMiner’s Trade Resource Center.

In August, the Malaysian government granted Lynas a six-month license renewal for its rare earths processing plant in the country. The decision came after months of back and forth between the firm and the government, primarily focused on the environmental impact of radioactive waste stemming from cracking and leaching processes at the plant.

“Lynas is delighted to be partnering with MARA Corporation on this exciting initiative,” Lynas CEO Amanda Lacaze said. “MARA Corporation is a strong and important local partner as we grow our global business from Malaysia. We have always strived to be an excellent foreign direct investor in Malaysia and this joint project is another way that we can facilitate economic development and jobs for Malaysians.”

Launched in 2016, MARA aims to create and develop “investments in key sectors to deliver scalable and sustainable financial returns that shape industries and deliver socio-economic outcomes,” according to its website.

“Creating economic opportunities in Malaysia, especially for the Malay and Bumiputra population is at the heart of MARA Corporation’s business,” said Akhramsyah Muammar Ubaidah Bin Sanusi, chairman of MARA Corporation. “We have followed the impressive progress of Lynas Malaysia as it has grown to become a major global player in the rare earth industry with a strong core of Malay technical professionals driving its progress. We are fortunate to have a key component of this supply chain already operating in Malaysia, and it is time to develop opportunities to further enhance Malaysia’s green and high-tech industries in line with the Pakatan Harapan government’s new Shared Prosperity Vision 2030.”

According to Lynas, it will work with MARA on a number of initiatives, including: attracting downstream industries and downstream customers to Malaysia; education and training initiatives; commercialization of NUF residues from the Lynas Malaysia plant, including making soil conditioner products available to Malay farmers; and design and fabrication work related to the Lynas 2025 Project.

Australia Mulls Funding Rare Earths Exploration

Major economies — notably, the U.S. — are aiming to wean themselves off of dependence on China for rare earths, as China wields overwhelming control of the rare earths mining and processing sector.

However, among the other places with potentially promising sources of rare earths minerals is Australia, which has drawn interest from the U.S. in the form of potential partnerships.

Matt Canavan, Australia’s resources minister, was quoted by Reuters as saying the government might consider underwriting projects to develop the country’s reserves of rare earths minerals.

Canavan underscored the importance of developing those mineral reserves during a speech at the International Mining and Resources Conference late last month.

“The government is also supporting the broader minerals sector with its $100 million Exploring for the Future program,” Canavan said. “That program is using the latest seismic and aeromagnetic techniques to try to find new discoveries. Some great work has already been done especially in the south Nicholson Basin that straddles the Queensland and Northern Territory borders.

“This work is especially important because there has never been a greater need for the mining industry. The mining industry has always been important. The Ancient Roman historian Alexander Demandt once compiled 210 reasons for the fall of the Roman Empire. One of the 210 reasons was the depletion of its mineral resources, especially those at the ancient mines at Rio Tinto.

“Just like in Roman times, the future health of our economy and society will depend on continuing access to high quality mineral resources.”

Free Partial Sample Report: 2020 MetalMiner Annual Metals Outlook

Actual Metal Prices and Trends

Chinese yttrium ticked up 1.6% month over month to $31.98/kg as of Nov. 1. Chinese terbium oxide fell 7.5% to $500.24/kg.

Chinese neodymium oxide fell 6.7% to $41,710/mt.

Chinese europium oxide fell 0.7% to $30.55/kg. Chinese dysprosium oxide fell 16.4% to $218.14/kg.

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This morning in metals news, No. 1 copper producer Chile saw its export levels drop 21% last month amid protests around the country, steel production in the U.S.’s Great Lakes region dropped last week and Shanghai Metals Markets forecast Chinese tin prices to rise back above $20,000 per ton by the end of the year.

Keep up to date on everything going on in the world of trade and tariffs via MetalMiner’s Trade Resource Center.

Chile Copper Exports Decline in October

Anti-government protests in several cities around Chile — including the capital, Santiago — have resulted in at least 23 deaths, according to Reuters, and had an impact on the country’s economy.

According to Reuters, while the protests have not significantly impacted copper mine production, Chile’s exports of copper dropped by 21% in October.

Great Lakes Steel Production Down

Steel production in the U.S.’s Great Lakes region declined by 26,000 tons last week, the Times of Northwest Indiana reported.

Production last week reached 676,000 tons, according to the Times, marking a 3.6% decline.

SMM: SHFE Tin Could Breach $20K Per Ton This Year

According to Shanghai Metals Markets, the SHFE tin price could bounce back this year and rise above $20,000 per ton.

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“In line with other analysts, SMM are positive on the tin market for the remainder of the year,” the International Tin Association said in a release. “While we are forecasting stable demand in Q4 and falling supply (particularly in China), we expect that any price increase this year will be resisted by the high stocks on the LME. In 2020, we also see demand returning to the market as economic growth recovers and uncertainty dissipates. However, currently idled production is likely to re-enter the market to cope with increased consumption. Next year, we see tin recovering from current uncharacteristic lows, but feel that average price forecasts of US$ 22,000/tonne are slightly optimistic.”

The Construction Monthly Metals Index (MMI) retraced by one point this month, falling for a November MMI reading of 76.

Keep up to date on everything going on in the world of trade and tariffs via MetalMiner’s Trade Resource Center.

U.S. Construction Spending

U.S. construction spending in September ticked up compared with the previous month, according to the U.S. Census Bureau.

September spending came in at a seasonally adjusted annual rate of $1,293.6 billion, up 0.5% compared with August’s $1,287.1 billion.

September spending, however, dropped 2% on a year-over-year basis, down from September 2018’s $1,319.7 billion.

Private construction spending reached a seasonally adjusted annual rate of $961.7 billion, up 0.2% from August’s $959.9 billion. Under the umbrella of private construction, residential construction spending reached an adjusted annual rate of $511.4 billion, up 0.6% from the previous month. Nonresidential construction reached a seasonally adjusted annual rate of $450.3 billion, down 0.3% from August.

Meanwhile, under public construction, spending reached a seasonally adjusted annual rate of $331.9 billion, up 1.5% from August. Educational construction reached $78.9 billion, up 3.1% from August. Highway construction checked in at a rate of $98.0 billion, up 2.6% from the previous month.

ABI Shows Slight Contraction

The Architecture Billings Index (ABI), produced monthly by the American Institute of Architects, checked in at 49.7 this month, up from 47.2 the previous month. Any reading below 50 indicates billings contraction.

By region, the South led the way in September with an ABI of 52.3, followed by the West (51.3). The Northeast (46.3) and Midwest (45.3) posted contractionary readings.

“Business conditions remained generally flat at architecture firms in September,” this month’s ABI report noted. “But while the Architecture Billings Index (ABI) score remained below the 50 threshold at 49.7 (a score over 50 indicates billings growth, a score below 50 indicates a decline), that score is 2.5 points higher than the August score, indicating that fewer firms saw declining billings in September.”

This month’s ABI survey asked industry professionals about the impact of project changes or delays.

More than half of respondents (52%) said they had experienced at least one project that was either significantly delayed or put on hold, redesigned or scaled back, or canceled outright.

Meanwhile, 46% of respondents said they haven’t had any significant project delays, changes or cancelations this year.

Pending Home Sales Rise for Second Straight Month

Pending home sales increased in September for the second straight month, according to the National Association of Realtors.

Contract signings increased 3.9% in September on a year-over-year basis. NAR’s Pending Home Sales Index jumped 1.5% for a September reading of 108.7 (a reading of 100 is equal to the level of contract activity in 2001).

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Actual Metal Prices and Trends

Chinese rebar held flat this month at $525.82/mt. Chinese H-beam steel fell 2.1% month over month to $521.55/mt as of Nov. 1.

U.S. shredded scrap steel fell 11.4% to $225/st.

European commercial 1050 aluminum sheet ticked up slightly to $2,474.57/mt.

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This morning in metals news, miner Rio Tinto has advanced work on its Oyu Tolgoi copper and gold mine project, the U.S. is reportedly considering rolling back some tariffs against China, and Novelis announced its quarterly financial results.

Keep up to date on everything going on in the world of trade and tariffs via MetalMiner’s Trade Resource Center.

Rio Tinto Reaches ‘Significant Milestone’

Earlier this year, MetalMiner’s Stuart Burns weighed in on delays at Rio Tinto’s massive Oyu Tolgoi project in Mongolia, citing possible delays of 16-30 months.

This week, however, the miner offered positive news, announcing the completion of a portion of the project.

“Rio Tinto has achieved a significant milestone at the Oyu Tolgoi mine in Mongolia with the completion of Shaft 2, which enables the acceleration of work on the underground development,” the miner said. “Shaft 2, a 10 metre diameter shaft sunk to approximately 1.3 kilometres below the surface, has now entered into the final stages of commissioning.

“This is a critical piece of infrastructure and will enable a step change in terms of delivering the underground mine. Shaft 2 can carry 300 people per cage cycle versus a maximum of 60 people per cage cycle through Shaft 1. The 48 tonne capacity cage can now be used to support logistics, transporting supplies and components for development of the mine.”

Tariff Talks

Among other issues, tariffs remain at the center of the trade dispute between the U.S. and China.

China has asked the U.S. to drop tariffs in exchange for an initial deal. In that vein, according to several media reports, the U.S. is considering rolling back approximately $112 billion worth in tariffs on Chinese goods toward a first-phase trade deal.

Novelis’ Net Income Rises 31% YoY

For the second quarter of Novelis’ fiscal year 2020, the firm reported net income of $160 million, marking a 31% year-over-year increase.

Adjusted EBITDA reached $374 million, up 5% year over year.

In addition, Novelis’ acquisition of Aleris Corporation is expected to close in the coming months.

Keep up to date on everything going on in the world of trade and tariffs via MetalMiner’s Trade Resource Center.

“On July 26, 2018, Novelis announced it signed a definitive agreement to acquire Aleris Corporation,” the company said. “Having received conditional approval in the European Union, as well as a clear path forward for approval in the U.S., Novelis continues to work closely with the Chinese State Administration for Market Regulation to receive its approval. The company expects to close the transaction by January 21, 2020, the outside date under the merger agreement.”

The Automotive Monthly Metals Index (MMI) ticked up one point for an MMI reading of 86.

Keep up to date on everything going on in the world of trade and tariffs via MetalMiner’s Trade Resource Center.

U.S. Auto Sales

As mentioned in previous reports, the top three automakers in the U.S. — General Motors, Ford and Fiat Chrysler — all now report sales on a quarterly basis.

GM reported net income of $2.3 billion in the third quarter, down 8.7% on a year-over-year basis. GM delivered 739,000 vehicles in the third quarter, up 6% on a year-over-year basis.

Ford reported third-quarter net income of $400 million, down from $1 billion in Q3 2018.

Fiat Chrysler’s worldwide shipments fell 9% “primarily due to continued dealer stock discipline in North America.”

Honda’s U.S. sales rose 7.6% in October, with its truck sales rising 15%. For the year through October, Honda’s U.S. sales are up 0.6% compared with the same period in 2018.

Toyota Motor North America saw its October sales drop 1.2% on a volume basis and by 4.9% on a daily selling rate basis.

Nissan’s October sales dropped 5.8% on a year-over-year basis.

According to a forecast report by J.D. Power and LMC Automotive, new-vehicle retail sales in October were forecast to decline by 0.9% year over year (when adjusted for number of selling days).

Average transaction prices, however, are at a record high. According to the jointly released report, the average transaction price moved above $34,000 for the first time ever in October and was up nearly $1,300 compared with October 2018.

GM Strike Comes to an End

After 40 days, the nationwide strike at General Motors finally came to an end.

“The work stoppage in the U.S. negatively affected North American business results in the third quarter and expected results for the year,” GM said in its third-quarter earnings release. “In the third quarter, about two weeks of vehicle production was lost.”

According to GM, the strike resulted in a net EBIT-adjusted impact of $1 billion, or $0.52 per diluted share; GM expects the full-year impact to come in at $2.00 per diluted share.

In September, the United Auto Workers union initiated the first nationwide strike at GM since 2007.

On Oct. 25, UAW announced it had ratified a new four-year labor deal.

“General Motors members have spoken,” said Terry Dittes, UAW vice president and director of the UAW-GM department. “We are all so incredibly proud of UAW-GM members who captured the hearts and minds of a nation. Their sacrifice and courageous stand addressed the two-tier wages structure and permanent temporary worker classification that has plagued working class Americans.”

According to UAW, the approved deal included “an economic package of an $11,000 per member signing bonus, performance bonuses, two 3% annual raises and two 4% lump sum payments and holding the line on health care costs.”

Fiat Chrysler to Merge with PSA Groupe

As MetalMiner’s Stuart Burns explained earlier this week, Fiat Chrysler and France’s PSA Groupe — maker of Peugeot — have plans to merge.

According to Fiat Chrysler, the merger would create the world’s fourth-largest OEM by annual unit sales.

“FCA abandoned attempts to merge with Peugeot’s French rival, Renault, earlier this year when the French government, a 15% shareholder, blocked the move,” Burns explained.

“But the FCA has long held that consolidation within the European car industry, if not globally, is inevitable as the industry goes through unprecedented disruption in terms of a switch to electric and competition from Asia.

“There is arguably a better logic to a Peugeot-FCA merger than a Renault-FCA tie-up.”

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Actual Metal Prices and Trends

U.S. HDG fell 7.2% month over month to $746/st as of Nov. 1.

LME three-month copper rose 3.7% to $5,840/mt. U.S. shredded scrap steel fell 11.4% to $225/st.

The Korean 5052 aluminum coil premium rose 2.2% to $3.21/kg.

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This morning in metals news, Workday is acquiring sourcing and procurement firm Scout RFP, the Italian government and ArcelorMittal are butting heads over the latter’s intention to pull out of its Ilva contract and the U.S. might not have to impose tariffs on imported automobiles.

Keep up to date on everything going on in the world of trade and tariffs via MetalMiner’s Trade Resource Center.

Workday Acquiring Sourcing and Procurement Firm Scout

MetalMiner sister site SpendMatters has all the news regarding Workday’s acquisition of sourcing provider Scout RFP for $540 million.

According to Workday, a finance and HR solutions provider, closing on the deal should occur by Jan. 31, 2020.

Check out other SpendMatters coverage of the acquisition, including Jason Busch’s analysis of the acquisition and background information on the companies.

Italy, ArcelorMittal Clash Over Ilva

On Tuesday, ArcelorMittal sent a letter to Italian firm Ilva detailing its intention to terminate a previously announced deal to purchase the struggling steelmaker.

ArcelorMittal closed on the deal Oct. 31, 2018.

“The Agreement stipulates that, in the event that a new law affects the environmental plan for the Taranto plant so as to materially impair the ability to operate it or to implement its industrial plan, the Company has a contractual right to withdraw from the Agreement,” ArcelorMittal said. “Effective on 3 November 2019, the Italian Parliament has removed the legal protection necessary for the Company to implement its environmental plan without the risk of criminal liability, thus justifying the withdrawal notice.”

However, Italian Prime Minister Giuseppe Conte pushed back, arguing the contract must be respected and that he won’t “bend” on the issue, Reuters reported.

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U.S. Auto Tariff Deadline Draws Near

A deadline is fast approaching.

This month, President Donald Trump will have to decide whether to impose tariffs on imported automobiles and auto parts, much to the chagrin of European automakers.

The decision comes pursuant to the processes of Section 232 of the Trade Expansion Act of 1962 — the same statute used to impose tariffs on imported aluminum and steel based on national security concerns.

Secretary of Commerce Wilbur Ross, however, cited conversations with automakers in the E.U. and Japan in noting the U.S. may not need to impose the new tariffs, Bloomberg reported.

The U.S. steel sector notched a capacity utilization rate of 81.6% for the week ending Nov. 2, according to a recent American Iron and Steel Institute (AISI) report, as U.S. steel prices continue to plunge.

Keep up to date on everything going on in the world of trade and tariffs via MetalMiner’s Trade Resource Center.

U.S. steel production reached 1.89 million tons for the week ending Nov. 2, marking a 0.1% year-over-year increase over the week ending Nov. 2, 2018 (when production reached 1.88 million tons at a capacity utilization rate of 80.5%).

Meanwhile, production during the week increased 1.2% compared with the previous week ending Oct. 26, 2019, when production totaled 1.87 million tons at a rate of 80.7%.

For the year to date, production reached 81.60 million tons at a capacity utilization rate of 80.3%. Production during the period was up 2.5% compared with the 79.58 million tons produced during the same period in 2018 (when the capacity utilization rate checked in at 77.5%).

By region, production totals checked in at:

  • Northeast: 190,000 tons
  • Great Lakes: 676,000 tons
  • Midwest: 181,000 tons
  • Southern: 767,000 tons
  • Western: 74,000 tons

Steel’s Slide Continues

On the price side, October proved to be another downward month for U.S. steel prices.

U.S. hot-rolled coil was down to $483/st as of the start of the month — nearing MetalMiner’s short-term support level. The price declined 12.97% month over month.

U.S. cold-rolled coil fell to $684/st, down 7.69% month over month. U.S. hot-dip galvanized is down 7.21% month over month, having fallen to $746/st.

The plate price dropped 7.07% to $684/st.

Steelmakers continue to grapple with the reality of falling prices, now with over 18 months gone by since the Trump administration slapped a 25% tariff on imported steel.

U.S. Steel, for example, reported an adjusted net loss of $35 million in its third-quarter earnings announcement. Meanwhile, in 3Q 2018, the steelmaker reported adjusted net earnings of $321 million.

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For the first nine months of the year, U.S. Steel reported adjusted net earnings of $124 million, down 80.6% from the $640 million reported during the first nine months of 2018.

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This morning in metals news, miner Antofagasta lowered its full-year copper guidance by 20,000 tons, a new favorite has emerged in the British Steel sweepstakes and the U.S. unemployment rate was unchanged in October.

Keep up to date on everything going on in the world of trade and tariffs via MetalMiner’s Trade Resource Center.

Antofagasta Lowers Copper Guidance Amid Supply Disruptions

Protests and labor stoppages in Chile have impacted copper production in the country, the world’s top copper producer.

Antofagasta announced it was lowering its full-year copper guidance from a range of between 750,000 to 790,000 tons down to a range of 750,000 and 770,000 tons.

“Further to the 3Q 2019 Production Report announcement on 23 October 2019 and following the unrest in Chile, all of the Company’s mines are now back in operation,” the company said. Disruptions of the mines’ supplies mainly affected Los Pelambres whose access road was blocked. This, combined with some damage to ancillary infrastructure outside Los Pelambres’ perimeter, is estimated to have an impact on the Company’s full year production of approximately 10,000 tonnes of copper, including the 5,000 tonnes previously disclosed.

“At Antucoya, labour negotiations have been successfully concluded with the union ending the strike which started on 16 October. The impact on copper production is estimated at approximately 4,000 tonnes.”

New Favorite in British Steel Bidding

Following the failure to reach a deal with Ataer Holding, an arm of the Turkish military pension fund OYAK, a Chinese firm has emerged as the favorite to take over the insolvent British Steel.

According to The Guardian, Jingye is “extremely interested” in making a bid for the U.K.’s second-largest steelmaker, which was forced into liquidation in May.

Unemployment Rate Holds Steady

According to the latest jobs report from the Bureau of Labor Statistics (BLS), the U.S. unemployment rate held steady at 3.6% in October.

In October, nonfarm payroll employment increased by 128,000 jobs, according to the BLS.

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However, jobs declined in the motor vehicles and parts manufacturing sector due to strike activity (namely, the 40-day General Motors strike, which recently concluded).

Employment in manufacturing dropped by 36,000 in October. Employment in the motor vehicles and parts manufacturing sector fell by 42,000.

MetalMiner’s November 2019 Monthly Metal Buying Outlook is in the books.

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The Monthly Metal Buying Outlook, released at the beginning of every month, offers analysis and buying strategies for 10 metals:

  • Aluminum
  • Copper
  • Nickel
  • Lead
  • Zinc
  • Tin
  • Hot-Rolled Coil  (HRC)
  • Cold-Rolled Coil (CRC)
  • Hot-Dipped Galvanized (HDG)
  • Steel Plate

The monthly report supplies buyers with valuable data and analysis to mitigate price risk and buy at the most opportune times in the price cycle.

In addition to buying strategies, the outlook includes analysis of the last month in news and trends for each metal category, drivers affecting price movements, and resistance and support levels (and much more).

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