Author Archives: Fouad Egbaria

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.

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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 stories here on MetalMiner:

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  • Joseph Kabila, president of the Democratic Republic of Congo, is looking to rip up a 2002 mining charter in order to secure a larger piece of the revenue from the country’s vast natural resources.
  • Copper prices have been trending down since a December surge (when the LME copper price reached $7,215/mt).
  • There’s a battle going on between two rival manufacturers of the famous London black cab.
  • Hong Kong’s housing market is overstretched, MetalMiner’s Stuart Burns writes.
  • In case you missed it, it’s Monthly Metals Index (MMI) Week! We kicked our off monthly round of subindex reports this week, which are available at the following links: Construction, Rare Earths, Renewables, and Automotive. Look for the remaining six MMI reports next week.
  • India is among the list of countries still lobbying for exemptions from the U.S.’s Section 232 tariffs on steel and aluminum imports.

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This morning in metals news, the U.S.-China trade conflict escalated further on Thursday, ABB’s chief executive hopes some relief might be offered by the U.S. vis-a-vis Chinese steel import tariffs and Japan’s second-quarter steel outlook reflect a year-over-year increase in production but includes uncertainty about the ultimate impact of the U.S.’s Section 232 tariffs.

Trump Raises the Stakes

The U.S. and China have traded announcements of tariffs intended to be placed on the other country’s goods, with the figures rising to $50 billion.

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On Thursday, that number grew significantly when President Trump requested his trade officials to identify $100 billion more in possible tariffs on Chinese goods.

Swiss Group ABB Hopes U.S. Pulls Back on Chinese Steel Tariffs

Reuters reported the chief executive of Swiss engineering group ABB is hoping that the U.S. makes some concessions with respect to its Section 232 steel tariffs, particularly with respect to China.

According to the report, China and the U.S. are ABB’s two biggest markets.

Japan’s 2Q Steel Output Projected to Increase Nearly 1%

According to a report from Japan’s Ministry of Economy, Trade and Industry (METI), Japan’s steel output in the second quarter is expected to increase 0.9% year over year.

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While several U.S. allies have thus far received exemptions from the Section 232 tariffs, Japan has not been been among those. President Trump and Japanese Prime Minister Shinzo Abe are scheduled to meet this month, during which Abe is expected to make the case for exemption from the tariffs.

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This morning in metals news, Japan is opting for a “low-key” approach in its efforts to win Section 232 tariff exemptions, Ukraine’s steel production dropped 3% in the first quarter and Turkey sent a letter to the U.S. lobbying for tariff exemptions of its own.

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Japan Confident in Section 232 Response

In a time of escalating trade tensions and threats of retaliatory efforts, Japan’s approach to responding to the U.S.’s Section 232 aluminum and steel tariffs is notable.

The Financial Times reported that Japan’s approach is an indicator of the country’s confidence in its ability to secure product-by-product exemptions. So far, Canada, Mexico, the E.U., Argentina, Brazil, Australia and South Korea have secured exemptions (whether temporary or permanent).

Ukraine Steel Production Falls 3%

Ukraine’s steel output in the first quarter fell 3% year over year, Reuters reported.

According to the Ukrainian steel producers union, poor rail networks and lost production capacity since pro-Russian separatists took over parts of the eastern portion of the country have led to the decline.

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Turkey Lobbies for Tariffs Exemptions

Turkey has sent a letter to U.S. Secretary of Commerce Wilbur Ross outlining its request to receive exemptions from the Section 232 tariffs.

The Renewables Monthly Metals Index (MMI) rose seven points on the month, hitting 107 for our April reading.

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Within the basket of metals, Korean, Chinese and U.S. steel plate posted price increases, while Japanese steel plate traced back slightly. U.S. steel plate jumped significantly, posting a 13.6% increase for the month.

U.S. grain-oriented electrical steel (GOES) coil fell on the month, while neodymium picked up by 0.7%.

The always volatile cobalt price shot up significantly last month, rising 10.6%.

Tesla Strategy Places Premium on Neodymium

As we mentioned earlier this week, growing demand for neodymium from electric vehicle (EV) maker Tesla will put even more pressure on what is already a constrained market.

In short, that means rising prices for the material, reflected in this month’s activity.

Tesla is looking to neodymium for magnetic motors in its Model 3 Long Range cars, as mentioned in the Reuters report we cited Tuesday. Last year, supply fell short of demand by 3,300 tons, according to that report.

DRC Looks to Shake Up 2002 Mining Charter

When it comes to anything cobalt, the Democratic Republic of Congo is typically at the center, being the source of the majority of the world’s cobalt.

Earlier this week, MetalMiner’s Stuart Burns wrote about President Joseph Kabila’s move to readjust the nation’s 2002 mining charter to, essentially, secure a bigger piece of the pie vis-a-vis the country’s vast mineral resources.

It comes as no surprise that the multinational miners doing business in the DRC aren’t exactly thrilled by the proposition of increased royalties and levies. However, as Burns noted, value of materials like cobalt and the demand they draw, combined with their relative scarcity, means such multinationals will continue to do business there, no matter what happens with the charter.

“If the state takes a little more of the pie, it will probably be reflected in prices,” Burns wrote. “But with limited alternatives for products like cobalt, it is unlikely to dent mining companies’ enthusiasm for investing in the DRC.”

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Actual Metal Prices and Trends

Within the basket of metals, Korean, Chinese and U.S. steel plate posted price increases, while Japanese steel plate traced back slightly. Korean plate rose 6.6% to $650.16/mt. Chinese plate ticked up only slightly, by 0.1%, to $716.64/mt.

U.S. steel plate jumped significantly, posting a 13.6% increase for the month, up to $920/st.

U.S. grain-oriented electrical steel (GOES) coil fell 1.9% to $2,597 on the month, while neodymium picked up by 0.7% to $71,265.50/mt.

The always volatile cobalt price shot up significantly last month, rising 10.6% to $98,274/mt.

The Automotive Monthly Metals Index (MMI) jumped three points for an April reading of 103 after a month that saw the U.S. impose Section 232 tariffs of 25% and 10% on steel and aluminum imports, respectively, in addition to escalating trade tensions between the U.S. and China.

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Within the basket of metals, U.S. HDG rose 12.3%. Meanwhile, palladium continues to outpace platinum in price, continuing the ahistorical trend that began last October.

U.S. shredded scrap jumped 3.1%, while LME copper continued its 2018 cooling down, dropping 2.5% month over month.

Chinese primary lead jumped 1.3%.

U.S. Auto Sales

According to monthly sales data release by Autodata Corp, it was a strong month for several of the top automakers in the U.S. market.

General Motors posted a 15.7% increase in sales year over year, and is up 3.8% in the year to date compared with the same time frame last year.

Ford Motor Co. saw its sales jump 3.5% year over year in March, but remains down 2.7% in the year to date.

Fiat Chrysler’s March sales jumped 13.6% year over year, and boasts an 0.8% increase for the year to date. Toyota’s sales jumped 3.5% in March year over year and is up 7.4% in the year to date. Honda also had a good month, posting a year-over-year sales increase of 3.8%; however, its year-to-date sales are down 0.8%.

Volkswagen, Mitsubishi and Mazda continued what has been a strong 2018 for each of them. Volkswagen’s March sales rose 13.5% year over year, while the German automaker’s year-to-date sales are up 9.9%. Mitsubishi jumped 21.7% in March and is up 22.7% in the year to date. Mazda, meanwhile, posted a 35.7% increase in March and is up 21.6% in the year to date.

In total, vehicle sales in March were up 6.3% year over year and are up 1.9% in the year to date. American consumers continue to prize light trucks, as sales of those vehicles rose 16.3% year over year in March and are up 9.8% for the year to date.

U.S.-China Trade Tensions Rise

Earlier this week, the Office of the United States Trade Representative released a list of 1,300 Chinese products that could be hit with tariffs (stemming from the administration’s Section 301 probe of Chinese trade practices).

Not long after, China announced it would place 25% tariffs on 106 U.S. products, including autos, Reuters reported.

Tesla and Tariffs

It’s been a rough couple of weeks for Tesla.

In late March, the fatal crash of a Tesla Inc. Model X led to a massive selloff, leading to an 8.2% drop in its stock and its lowest closing in almost a year, CNBC reported.

On top of that, the electric vehicle (EV) maker continues to struggle with the cold, hard reality of production timelines. CNBC reported that Tesla missed its quarterly goal of producing 2,500 Model 3s per week.

The stock price recovered Tuesday, but Wednesday’s news of $50 billion in tariffs from China — in retaliation to the U.S.’s own recent announcement regarding a potential $50 billion in tariffs on Chinese imports — is another hit to the EV firm.

According to Bloomberg, China accounted for 17% of Tesla’s 2017 revenue.

Actual Metal Prices and Trends

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This morning in metals news, the Office of the United States Trade Representative (USTR) releases the list of Chinese products that could be hit with tariffs (stemming from the Section 301 probe), China responds with a tariff announcement of its own and copper drops in line with escalating trade tensions.

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USTR Announces List of Chinese Products Potentially Subject to Tariffs

Following the president’s announcement late last month regarding the administration’s Section 301 probe vis-a-vis Chinese trade practice, the Office of the United States Trade Representative (USTR) on Tuesday released a list of potential Chinese products that could get hit with tariffs.

According to the announcement, the list covers 1,300 separate tariff lines and will be subject to review and a public comment process.

China Retaliates With $50B in Tariffs

China’s Finance Ministry announced Wednesday it will impose a tariff of 25% on 106 U.S. products, Reuters reported.

The list includes products ranging from agriculture to automobiles and aircraft.

Copper Slides as Trade Tensions Heat Up

As trade tensions between the U.S. and China ramp up, the price of copper has reacted, falling more than it has since early February, Reuters reported.

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LME copper fell 2% to $6,662 per ton, Reuters reported.

The Rare Earths Monthly Metals Index (MMI) picked up a point this month, rising from 20 for an April reading of 21. 

The basket of metals posted price gains across the board this past month.

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Yttrium rose 1.2%, while terbium oxide rose 1.6%. Neodymium oxide rose 0.2%, europium oxide was up 1.3% and dysprosium oxide was up 0.8%.

Growing Demand for Neodymium

A move by Tesla to a magnetic motor for its Model 3 Long Range car, Reuters reported last month, will add pressure on an already constrained neodymium market.

According to the research group imarc, the market for the neodymium-iron-boron magnet used for the magnetic motors is now worth more than $11.3 billion, Reuters reported.

Global demand for neodymium exceeded supply by 3,300 tons, according to the report.

With the demand for electric vehicles growing more and more, so too will the demand for rare-earth metals like neodymium. Complicating the supply landscape, however, is China’s total dominance in the rare earths market. Given rising trade tensions, stemming from the Trump administration’s recent Section 232 steel and aluminum tariffs, plus the recent Section 301 announcement — the Office of the United States Trade Representative yesterday posted a proposed list of Chinese products that could be subject to tariffs — the neodymium supply market is something to be monitored.

As Reuters notes, China previously instituted a neodymium export ban, which was lifted in 2015 — could it happen again? That remans to be seen, but increasingly inflamed global trade relations certainly don’t do anything to tamp down the possibility.

Speaking of Trade Tensions…

Bloomberg speculated last month on ways China could retaliate against the U.S. should the latter eventually impose tariffs on Chinese goods amounting to potentially $50-$60 billion.

The article notes that in 2010, China stopped giving Japan export licenses for rare earth metals used in cars and electronics, as a result of tensions related to islands in the East China Sea.

Again, it remains to be seen what the rising tensions mean for the rare-earths market, but it is certainly worth monitoring going forward.

Searching from Above

In the search for new deposits of rare earths (and metals, in general), scientists are looking from a bird’s eye view — or, rather, a drone’s eye view.

According to a report in The Guardian, German scientists are using drones to scout out potential new sources of metals. The scientists are using drones, equipped with special cameras and sensors, to identify potential deposits based on the unique reflections of light various minerals produce, according to the report.

As noted above, the demand for rare earth materials is only going to increase, not just for application in electric vehicles, but also in other high-tech products.

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Actual Metal Prices and Trends

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