Author Archives: Fouad Egbaria

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

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With the February 2019 Monthly Metals Index (MMI) report, we can officially move past  2018 and begin to take a look at the world of metals thus far in the new year.

On the trade front, trade officials from the U.S. and China met in January for renewed talks on the ongoing trade standoff between the economic powerhouses. A March 2 deadline approaches, however, after which President Donald Trump had previously indicated the U.S. would up its tariff rate from 10% to 25% on a a wide variety of Chinese imports (worth approximately $200 billion).

However, this week the president indicated he might not stick to that March 2 deadline, which could allow for further negotiations between the two countries if the deadline were postponed.

Meanwhile, in the world of metals, seven of our 10 Monthly Metals Indexes (MMIs) made gains this post month, with the remaining three posting no movement.

A few highlights from this month’s round of MMI reports:

Read about all of the above and much more by downloading the February 2019 MMI Report below:

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This morning in metals news, Big Three automaker Ford Motor Co. has expressed unease about the ramifications of a hard Brexit, Canada reverses a duty on some forms of steel from Mexico and India is considering pushing back a deadline after which more stringent steel import rules were set to go into effect.

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Ford and a Hard Brexit

With a Brexit deadline fast approaching in late March, it’s not surprising to see some businesses pondering the economic impact of a no-deal Brexit.

Ford Motor Co., for example, recently said if the U.K. is not able to secure a deal as it exits the E.U., the result would be “catastrophic,” the BBC reported.

Ford operates three plants in the U.K.: the Dagenham Engine Plant, the Halewood Transmission Plant, the Bridgend Engine Plant and the Dunton Technical Centre, employing a total of approximately 13,000 workers.

Canada Reverses Steel Duties on Forms of Mexican Steel

According to the CBC, Canada has removed 25% import tariffs on two forms of steel from Mexico.

The reversal was effective as of Feb. 2, according to the report, and applies to Mexican energy tubular products and wire rod shipments.

India Mulls Deadline Pushback

As India aims to push domestic steel consumers to consume domestic steel, Reuters is reporting that a deadline for more stringent steel import rules aimed at automakers could be pushed back.

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The government is considering delaying the Feb. 17 deadline by four months, according to the report.

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This morning in metals news, the copper price picks up, the Bureau of Labor Statistics released Consumer Price Index (CPI) data and the National Australia Bank lifted its forecast for iron ore.

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Copper Price Rises

The London copper price picked up Wednesday, good for its first gain in five sessions, Reuters reported.

LME copper rose 0.5% to $6,134.50 per ton, according to the report.

BLS Reports CPI Data

The Bureau of Labor Statistics on Wednesday released its latest round of CPI data. (The CPI is a measure of the average change over time in the prices paid by urban consumers for a market basket of consumer goods and services.)

According to the report, the energy index declined for the third consecutive month.

“The energy index fell 3.1 percent in January. The gasoline index continued to decline, falling 5.5 percent,” the report states. “(Before seasonal adjustment, gasoline prices fell 5.2 percent in January.) The other major energy component indexes declined more modestly in January. The electricity index fell 0.6 percent, the index for natural gas declined 0.3 percent, and the fuel oil index decreased 1.3 percent.”

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A Sunny Forecast for Iron Ore?

According to S&P Global Platts, the National Australia Bank has lifted its forecast for iron ore, citing mine closures in Brazil.

Last month, a dam breach at Vale SA’s Corrego do Feijao mine — after which it declared force majeure — led to an uptick in iron ore prices, as the mine accounted for 9% of Vale’s annual iron ore output.

The National Australia Bank lifted its 2019 iron ore forecast from $62/mt to $80/mt, according to the report.

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This morning in metals news, U.S. steel mills produced at a capacity utilization rate of 80.6% for the year through Feb. 9, U.S. steel mill shipments rose 4.8% in 2018 on a year-over-year basis and a Peruvian plant used to produce copper will be partially suspended for the next 3-5 days.

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Capacity Rate Maintains Level Above 80%

U.S. raw steel production for the year through Feb. 9 reached 10.9 million tons, according to the American Iron and Steel Institute (AISI), up 9.3% from the 9.9 million tons produced during the same period in 2018.

For the aforementioned period this year, U.S. steel mills produced at a capacity utilization rate of 80.6%, up from 75.7% for the same period in 2018.

For the week ending Feb. 9, production hit 1.9 million tons at a capacity utilization rate of 81.5%.

December Steel Shipments Up 6.5%

According to another AISI report, U.S. steel mills in December shipped 7.8 million net tons, marking a 0.8% increase from the previous month and a 6.5% increase year over year.

Shipments for the full year hit 95.3 million net tons, up 4.8% compared with 2017 shipments.

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Southern Copper Corp. Announces Suspension of Peru Plant

According to a Reuters report, Southern Copper Corp. announced the partial suspension of a plant in Peru used to produce copper.

The plant will not restart for another 3-5 days, according to the report, as the miner works on tailings and railway infrastructure.

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This morning in metals news, U.S. Steel announced the restart of construction on an electric arc furnace (EAF) facility, a new £35 million research network aims to make the U.K.’s steel sector carbon-neutral and the latest on the Thyssenkrupp-Tata joint venture.

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An EAF Restart

U.S. Steel announced Monday that it would restart construction on an EAF facility in Fairfield, Alabama.

Per the steelmaker’s announcement, completion of the construction is expected to cost $215 million and will add about 150 jobs.

Research Network Aims for Carbon-Neutral U.K. Steel Sector

A new research network aims to make the U.K.’s steel sector carbon-neutral by 2040, according to the BBC.

Per the report, Swansea, Sheffield and Warwick universities will work together in a £35 million project in an effort toward the carbon-neutral goal.

A Warning for Thyssenkrupp-Tata

As the proposed Thyssenkrupp-Tata Steel joint venture is analyzed by Europe’s competition authorities, one report offers not-so-positive news for the firms.

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According to Reuters, the companies will be warned this week that their joint venture — which would create Europe’s second-largest steelmaker — could be vetoed by Europe’s antitrust regulators unless they offer concessions.

The Renewables Monthly Metals Index (MMI) picked up two points this month, rising for a February MMI value of 104.

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Glencore to Cut Cobalt Workforce in DRC

According to a Bloomberg report, miner Glencore plans to cut its workforce at its Mutanda copper and cobalt mine in the Democratic Republic of the Congo (DRC).

According to the report, the miner is looking to invest in technology for cobalt extraction from sulfide deposits rather than from the oxide ore found at the Mutanda mine.

Nonetheless, it’s been a rocky year for cobalt miners in the DRC, as the government revised its mining code to nearly triple the royalties miners must pay on cobalt. In addition, the country held a presidential election in December that resulted in a victory for Felix Tshisekedi; however, the results of the election remain disputed as the country looks to move on with a successor to Joseph Kabila, who stayed on as president two years past the end of his mandate.

Political instability in the DRC would contribute to rising prices for cobalt and make the price of doing business much higher for miners like Glencore; political developments in the DRC should be monitored by cobalt watchers (not to mention copper and coltan).

U.S. Steel Plate

As Belinda Fuller noted this week, plate prices have gone against the general downward trend for most forms of steel.

While CRC, HRC and HDG have been on the decline in the recent months, plate prices have been on the upswing.

Source: MetalMiner data from MetalMiner IndX(™)

Grain-Oriented Electrical Steel (GOES)

[Editor’s note: The GOES MMI, covering grain-oriented electrical steel, will no longer be featured in a separate post; instead, GOES commentary will henceforth appear within the Renewables MMI.]

The proposed joint venture between German firm ThyssenKrupp and India’s Tata Steel — in which the two firms would merge their European operations — has reached the stage of review by the European Commission’s competition authorities.

Back in October, the European Commission released a statement on the proposed merger, explaining that its “initial market investigation raised several issues relating in particular to combining both companies’ offer of certain specialty flat carbon steel and electrical steel products.”

“Steel is a crucial input for many of the goods we use in our everyday life, and competitive steel prices are vital for the European economy,” said Margrethe Vestager, commissioner in charge of competition policy. “Industries dependent on steel employ over 30 million people in Europe and we must be able to compete in global markets. This is why we will carefully investigate the impact of the planned combination of Tata Steel’s and ThyssenKrupp’s steel businesses on effective competition in the steel markets.”

According to a Reuters report, ThyssenKrupp CEO Guido Kerkhoff said the company has had constructive talks with the European’s European Commission on the proposed joint venture.

GOES is used in transformers and large generators.

Actual Metal Prices and Trends

The price of U.S. steel plate moved up 2.1% month over month to $1,015/mt as of Feb. 1. Japanese steel plate jumped 0.8% to $790.09/mt. Korean steel plate fell 8.4% to $575.45/mt. Chinese steel plate rose 1.9% to $619.02/mt.

The Chinese neodymium price jumped 2.0% to $59,366/mt. Silicon rose 2.6% to $1,536.37/mt. Cobalt cathodes rose 2.6% to $99,192.90/mt.

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U.S. grain-oriented electrical steel rose 2.2% to $2,520/mt.

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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:

This morning in metals news, Ford Motor Co. announced an investment in its Chicago plants, industry group American Iron and Steel Institute (AISI) reiterated its support for the Trump administration’s Section 232 steel tariffs and finished steel imports through the first 11 months of 2018 were down 10.8% year over year.

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Ford Announces Chicago Investment

The Detroit automaker announced a $1 billion investment in its Chicago plants that it says will create 500 jobs.

“We are proud to be America’s top producer of automobiles. Today, we are furthering our commitment to America with this billion dollar manufacturing investment in Chicago and 500 more good-paying jobs,” said Joe Hinrichs, president of global operations. “We reinvented the Explorer from the ground up, and this investment will further strengthen Ford’s SUV market leadership.

AISI: Section 232 Trade Remedy is ‘Critical’

Last week, four members of Congress introduced the Bicameral Congressional Trade Authority Act, which seeks to curtail the executive branch’s — that is, the president’s — authority to impose Section 232 tariffs on imports by virtue of requiring Congressional approval.

The U.S. Chamber of Commerce came out in support of the proposal.

“The Chamber is deeply concerned by the unrestricted use of Section 232 to impose new tariffs,” said in a prepared statement. “Tariffs imposed on steel and aluminum imports have harmed U.S. industry and elicited retaliatory tariffs from our closest allies, inflicting serious harm on U.S. workers, farmers, and small businesses, and undermine U.S. efforts to build an international coalition of like-minded countries to combat the use of unfair trade practices.”

However, the American Iron and Steel Institute (AISI) has again expressed its support for Trump’s use of Section 232 to impose steel tariffs.

“The Administration’s trade actions and tax and regulatory reform policies, in addition to the strong economic climate enabled by those policies, have allowed the American steel industry to begin to recover after more than a decade of low capacity utilization and weaker earnings due to repeated surges in imports fueled by global steel overcapacity,” said Thomas J. Gibson, president and CEO of AISI, in a prepared statement.

“Capacity utilization at existing mills has increased in recent months to over 80 percent — levels not seen in the last ten years. Some shuttered plants are being re-opened, laid-off workers are going back to work and companies are making investments in new steel production facilities.”

Gibson added that “recent progress” will disappear if the tariffs are “prematurely terminated.”

“The massive overcapacity in steel still exists globally,” Gibson said. “And China in particular is producing steel at record levels – exceeding one billion net tons in 2018. This means there is plenty of excess supply that will flood into our market but for the continuation of the Section 232 tariffs.  The Section 232 trade remedy is critical to ensuring steel remains a vital asset for our national and economic security.”

Steel Imports Down 10.8%

Speaking of AISI, its recently released steel imports report showed U.S. steel imports last year through November were down 11% year over year.

In November, the U.S. imported 2.39 million tons of steel, which marked a 27.2% year-over-year decrease.

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Meanwhile, through the first 11 months of 2018 steel imports reached 31.83 million tons, down 10.8% from the same period in 2017.

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This morning in metals news, ArcelorMittal  on steel demand in China (and elsewhere), copper lost ground after several upward sessions in a row and Mexico’s steel industry is not happy with the government’s decision to not renew steel safeguards protecting against steel from countries with which Mexico does not have a trade agreement.

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Chinese Steel Demand

ArcelorMittal expects the steel sector to come back down a bit after a run of strong prices, according to a Bloomberg report.

Unsurprisingly, much of that expected decline has to do with softening demand in China. Per the report, the firm expects steel demand growth to slow around the world,  and contract in China for the first time since 2015.

Copper Falls

After three straight upward sessions for London copper, the price fell back Thursday, Reuters reported.

LME copper fell 0.2% Thursday, according to the report. Meanwhile, Chinese markets remain closed over the Lunar New Year holiday break.

Mexico’s Steel Safeguards

According to an S&P Global Platts report, Mexican industry groups are not happy with the government’s decision to let a 15% steel safeguard lapse.

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The safeguard applied to imports from countries with which Mexico does not have a trade agreement, according to the report.