Author Archives: Fouad Egbaria

Before we head into the weekend, let’s take a look back at the week that was and some of the metals stories here on MetalMiner®:

Need buying strategies for steel? Try two free months of MetalMiner’s Outlook

MetalMiner’s Annual Outlook provides 2018 buying strategies for carbon steel

Dmitry/Adobe Stock

This morning in metals news, China responds to the U.S.’s $16 billion in tariffs with the same amount in return, China’s additional announced $60 billion tariff threat could have a significant impact on the liquefied natural gas sector and copper traded flat yesterday.

Need buying strategies for steel? Try two free months of MetalMiner’s Outlook

Back and Forth

China returned serve this week, responding to the U.S.’s announcement of $16 billion in tariffs on Chinese imports with the same amount in return, marking another escalation of trade tensions.

According to a report by the state-run Xinhua News Agency, the Customs Tariff Commission of the State Council will impose a 25% tariff on $16 billion in U.S. goods.

The list of U.S. goods targeted for tariffs (which is available on the Chinese Ministry of Finance website), encompasses 333 product lines.

Tariffs on LNG?

Liquefied natural gas (LNG) is among the items included in a $60 billion tariff list announced by China last week, CNBC reported.

The U.S. is the No. 1 producer of LNG, while China is currently the second-largest importer, according to the report.

Tensions Weigh on Copper

According to a Reuters report, LME copper traded nearly flat Wednesday, as trade tensions between the U.S. and China continue to negatively impact the metal’s price.

MetalMiner’s Annual Outlook provides 2018 buying strategies for carbon steel

Softening of the U.S. dollar prevented bigger losses, according to the report. The U.S. Dollar Index fell from 95.39 to 95.03 by the end of the Wednesday; however, it has bounced back so far Thursday morning.

The Renewables Monthly Metals Index (MMI) dropped three points for an August MMI reading of 105.

Need buying strategies for steel? Try two free months of MetalMiner’s Outlook

BHP Getting Into Cobalt

Miner BHP Billiton has plans to ramp up its production of a cobalt product used in electric vehicle (EV) batteries, Bloomberg reported.

Per the report, the miner has had success in producing cobalt sulphate alongside its nickel product at its Western Australia operation, according to an interview with Asset President Eduard Haegel.

Questions about cobalt supply and price volatility persist, but a miner of the size of BHP looking to expand its presence in the sphere is an indicator of the metal’s importance and, thus, the level to which the EV market is coveted.

Speaking of Cobalt Prices…

The price of the coveted metal has come off a bit of late, but that might just be a short-term blip.

According to the Toronto-based Sherritt International Corp — a miner with operations in Cuba, Madagascar and Canada — the softening of cobalt prices should reverse as demand continues to pick up, particularly vis-a-vis the growing EV sector, Reuters reported.

Plate Prices

According to a report in the Hellenic Shipping News, shipbuilders in South Korea are asking steelmakers to freeze shipbuilding plate prices.

According to the report, the Korea Offshore & Shipbuilding Association is asking for the freeze because price hikes threaten their survival, as declining orders and increased competition from China have weighed on the Korean shipbuilding sector.

Thick steel plate prices jumped $44/ton in the first half of the year, according to the report.

Actual Metals Prices and Trends

Japanese steel plate fell 1.0% month over month to $715.62/mt. Korean steel plate rose 1.6% to $682.89/mt. Chinese steel plate fell 4.4% to $707.51/mt.

U.S. steel plate jumped 5.2% to $986/st.

Benchmark your current cold rolled coil sheet prices and see how it compares to the market

Chinese neodymium fell 4.0% to $60,182/mt. Chinese silicon fell 2.8% to $1,511.89/mt. Chinese cobalt cathodes fell 2.8% to $97,612.20/mt.

Dmitry/Adobe Stock

This morning in metals news, the Office of the United States Trade Representative announced it will move forward with $16 billion in tariffs on Chinese imports (out of an initially announced total of $50 billion in tariffs), Chile posted solid copper exports in July and U.S. raw steel production data is in for the week ending Aug. 4.

Need buying strategies for steel? Try two free months of MetalMiner’s Outlook

Trump Administration Enacts $16B in Tariffs

The Office of the United States Trade Representative (USTR) announced Tuesday afternoon that it will move forward with $16 billion in tariffs on Chinese imports (in addition to the $34 billion that went into effect July 6).

The USTR finalized the previously announced list of products. From the original list, which included 284 tariff lines, 279 made it into the final list.

Duties will be collected on the list of 279 products beginning Aug. 23.

Chile Posts Strong July in Exports, Particularly Copper

Chile boasted a trade surplus of $375 million in July, according to a Reuters report, powered in part by strong copper exports.

July copper exports were up 9.47% year over year, according to the report.

Steel Production Up 4.3% Year Over Year Last Week

According to American Iron and Steel Institute (AISI) data released this week, U.S. steel production for the week ending Aug. 4 was up 4.3% compared with the same period in 2017.

MetalMiner’s Annual Outlook provides 2018 buying strategies for carbon steel

Production for the week, however, was down 0.4% compared with the previous week.

Dmitry/Adobe Stock

The Rare Earths Monthly Metals Index (MMI) fell one point for an August reading of 18.

Need buying strategies for steel? Try two free months of MetalMiner’s Outlook

Rare Earths and Trade Tensions

Much has been said about the rise of trade tensions around the world, particularly between the U.S. and China.

Those tensions began to manifest in the form of the Trump administration’s steel and aluminum tariffs this past spring, which, in addition to China, have affected U.S. allies.

But what about the impact of trade conflict on rare-earth metals, a market overwhelmingly dominated by China (at approximately 90%, according to most industry estimates)?

The U.S. is threatening a potential additional $200 billion in tariffs on Chinese imports (on top of the previously announced $50 billion, of which $34 billion has already gone into effect), while China has indicated it is prepared to respond in kind.

But, as The New York Times reported last month, China could strike back in other ways, too, including disruption of supply chains that depend on rare earth metals for an end product (e.g. smartphones).

As the report notes, some rare-earths metals appeared on the Section 301 product list drawn up by U.S. Trade Representative Robert Lighthizer at President Trump’s direction.

Those metals and related compounds included:

  • scandium and yttrium, whether or not intermixed or interalloyed
  • mixtures of rare-earth oxides or of rare-earth chlorides
  • yttrium materials and compounds containing by wt. >19% but < 85% yttrium oxide equivalent
  • compounds, inorganic or organic, of rare-earth metals, of yttrium or of scandium, or of mixtures of these metals, nesoi
  • cerium compounds

With very little in the way of alternative supplies — that is, supplies of rare earths outside of China — the end result could simply be that U.S. companies will have no choice but to pay more for the metals, as an editorial in the South China Morning Post explains.

China’s dominance in the market and concerns over that fact are nothing new, nor is the situation likely to change anytime soon.

As the U.S. Geological Survey (USGS) noted earlier this year, rare earths were not mined in the U.S. at all in 2017. According to USGS, the estimated value of rare-earth compounds and metals imported by the U.S. in 2017 was $150 million, up from $118 million in 2016. According to USGS, the distribution of rare-earths imports by end use was as follows: catalysts, 55%; ceramics and glass, 15%; metallurgical applications and alloys, 10%; polishing, 5%; and other, 15%.

Outside of China

Despite China’s dominance in the rare-earths sector, that hasn’t stopped business interests from probing for new sources around the world.

Within the U.S., Alaska is one such place considered potentially viable for rare-earth mining.

Alaska Sen. Lisa Murkowski, who chairs the Energy and Natural Resources Committee, expressed concerns during a July hearing on the issue of China’s dominance of the market and the impact of potential tariffs.

“My concern, among many concerns, is if China ultimately responds to tariffs by restricting our supply of rare earths, or any number of other minerals, the U.S. could be in serious trouble. We’ve heard testimony in the past about the dangers of the concentration of supply from a handful of countries that control the supply chain,” she said, as quoted by the Anchorage Daily News. “I’m hopeful that we aren’t about to experience those dangers firsthand and will continue to urge action to reduce this significant vulnerability.”

As the report notes, at the current stage, much work remains to be done before assessing the viability of rare-earth mining in the state, including the Bokan Mountain prospect, considered to be the most promising of Alaskan sites, per the report. But availability and viability are two different things; particularly in light of the specter of potential tariffs, it is certainly worth keeping an eye on developments in rare-earth mining efforts in The Last Frontier.

Actual Metal Prices and Trends

It was a down month for many of the metals in the Rare Earths MMI basket.

The price of yttrium fell 2.8% month over month, down to $33.03/kg. Terbium oxide dropped 2.8% to $3,009.10/kg.

Neodymium oxide dropped 4.3% to $46,971.30/mt.

MetalMiner’s Annual Outlook provides 2018 buying strategies for carbon steel

Europium oxide plunged 21.5% to $46.24/kg, while dysprosium oxide fell 3.4% to $168.80/kg.

Dmitry/Adobe Stock

This morning in metals news, a recent poll indicates broad support within the U.S. business community for new tariffs on China, Novelis reported its quarterly earnings and Alcoa seeks an exemption from the Trump administration’s aluminum tariff.

Need buying strategies for steel? Try two free months of MetalMiner’s Outlook

Support for Tariffs

Much has been said about the Trump administration’s program of tariffs, but what do U.S. business owners think about the strategy?

According to a recent UBS poll, 71% of respondents said they supported additional tariffs on China. That percentage fell to 66% for Mexico, 64% for Europe and 60% for Canada.

In addition, 88% of respondents said they believed China is engaging in unfair trade practices.

Novelis Posts 10% Increase in Net Income Year Over Year

Novelis reported net income (excluding special assets) increased by 10% year over year in the most recent quarter.

“Outstanding operational performance with increased asset optimization and favorable market conditions contributed to another strong quarter,” President and CEO Steve Fisher said. “Our recent investment announcements in North America and Asia, along with the pending acquisition of Aleris, will diversify our product portfolio and increase our participation in high-demand, high-value markets to meet growing customer demand.”

Alcoa Seeks Tariff Exemption

Alcoa is among the long list of U.S. companies that have applied for an exemption from the Trump administration’s metals tariffs (in this case, the aluminum tariff), The New York Times reported.

Want to see an Aluminum Price forecast? Take a free trial!

According to the report, Alcoa is asking for the exemption because it imports much of its aluminum from Canada, which is one of the countries affected by the tariffs.

Zerophoto/Adobe Stock

This morning in metals, a Chinese province announced new capacity cut targets as part of the country’s overall environmental plans, copper supply-side issues and Vedanta’s quarterly earnings rise.

Need buying strategies for steel? Try two free months of MetalMiner’s Outlook

Plans to Cut Steel, Coal Capacity

China’s Shandong province has new targets for cuts on steel and coal production, Reuters reported.

The plans include cuts to pig iron production capacity of 600,000 tons and crude steel of 3.55 million tons by the end of this year, according to the report.

Copper Supply-Side Issues

The copper price has been in a downtrend of late. While it remains to be seen if the downtrend will become a long-term slide, copper watchers are also paying attention to supply-side issues at Freeport-McMoRan’s Grasberg mine in Indonesia.

According to Bloomberg, the mine will see production cut by 300,000 metric tons next year as the miner transitions open pits to underground operations.

Vedanta Earnings Up

Indian miner Vedanta Resources reported a rise in quarterly earnings, Reuters reported.

MetalMiner’s Annual Outlook provides 2018 buying strategies for carbon steel

For the three-month period ending June 30, the miner reported EBITDA of $983 million, up from $778 million for the same period in 2017, according to the report.

The Automotive Monthly Metals Index (MMI) retraced four points, hitting 99 for our August MMI reading.

Need buying strategies for steel? Try two free months of MetalMiner’s Outlook

U.S. Auto Sales

July was a down month for Ford, which saw its U.S. sales drop 3.1%. Ford car sales were down 27.7% year over year, and 15.7% in the year to date.

However, truck sales continue to shine, with sales rising 10.2% in July.

“And when you look at the underlying economy, it remains very healthy, and that would be indicative of what we’re seeing in the truck market, with F-Series posting gains and vans posting very big gains for Ford Motor Company,” Ford Sales Analyst Erich Merkle said.

It was a different story for Fiat Chrysler, which reported a 6% sales increase compared with July 2017. According to a company release, its Jeep brand had its best July ever, with retail sales up 16%.

Honda reported an 8.2% year-over-year drop, but touted its growing truck sales.

“For the first time in our company’s history, the Honda brand is on pace this year to sell more light trucks than passenger cars,” said Henio Arcangeli Jr., senior vice president of the American Honda Automobile Division, in a release. “Honda’s unique flexibility within our U.S. manufacturing operations has played a critical role in our ability to adjust our production mix and capitalize on the market’s shift toward light trucks.”

Toyota reported its July sales were down 6.0% year over year, but noted July marked its best month ever for light-truck sales.

General Motors no longer reports sales on a monthly basis, instead opting earlier this year to report on a quarterly basis.

Pumping the Brakes?

Late last month, President Donald Trump and European Commission President Jean-Claude Juncker met at the White House, a meeting that yielded an agreement of sorts to pump the brakes on new tariffs.

However, cars were exempted from the agreement between the two leaders.

A U.S. Section 232 investigation into imports of automobiles and automotive imports is still ongoing. The Department of Commerce launched the investigation using the Section 232 statute — also used to impose steel and aluminum tariffs — in late May and a public hearing was held July 19.

GM Seeks Exemption for Buick Envision SUV

Although the Trump administration has yet to impose new tariffs on imported automobiles, General Motors has asked that its Buick Envision SUV, which is made in China, be exempted from any new tariffs, the Detroit Free Press reported.

Most of GM’s sales of the SUV model come from China, according to the report, and the company argues production in the U.S. would thus not be feasible.

Earlier this summer, GM expressed its opposition to the imposition of new automotive tariffs, saying they would lead to job losses and would impact the automaker’s competitiveness in the global marketplace.

Actual Metal Prices and Trends

It was an overall down month for prices within the automotive basket of metals.

U.S. HDG steel fell 0.7% to $1,103/st. U.S. platinum bars fell 1.8% to $837/ounce, while palladium bars dropped 2.1% to $928/ounce.

Chinese primary lead dropped 14.7% to $2,722.87/mt. LME copper fell 6.1% to $6,236.50.

Want to see an Aluminum Price forecast? Take a free trial!

U.S. shredded scrap steel held steady at $371/st. Korean aluminum also held steady, sticking at $3.75/kilogram.

bas121/Adobe Stock

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®:

Need buying strategies for steel? Try two free months of MetalMiner’s Outlook

MetalMiner’s Annual Outlook provides 2018 buying strategies for carbon steel

natali_mis/Adobe Stock

This morning in metals news, U.S. Steel reported its Q2 earnings, Century Aluminum also posted its Q2 earnings and China is preparing $60 billion in retaliatory tariffs against the U.S.

Need buying strategies for steel? Try two free months of MetalMiner’s Outlook

U.S. Steel Posts Strong Q2, But Stock Drops

U.S. Steel reported better-than-expected Q2 net earnings of $214 million, albeit down from $262 million in Q2 2017.

The firm increased its 2018 full-year EBITDA guidance to $1.85-$1.90 billion.

Meanwhile, the company’s stock price dropped more than 8% Thursday on the New York Stock Exchange.

Century Aluminum’s Adjusted EBITDA Up to $54.5M

Century Aluminum reported net income of $19.4 million in Q2 2018, up from a net loss of $0.3 million in Q1 2018.

EBITDA hit $54.5 million, up from $32.7 million in Q1.

China Prepares to Strike Back With Retaliatory Tariffs

In response to the U.S. announcement regarding an increase of the tariff rate on $200 billion worth of Chinese imports (from a previously announced 10% to 25%), China has announced it has prepared tariffs on approximately $60 billion worth of U.S. goods, according to a statement from China’s Ministry of Commerce.

“China decided to impose additional tariffs of four different rates on about 60 billion U.S. dollars worth of products imported from the United States, a spokesperson of the Ministry of Commerce said Friday,” the release states. “The decision was made in response to U.S. plan to raise tariffs to be imposed on 200 billion dollars of Chinese goods from 10 percent to 25 percent.”

MetalMiner’s Annual Outlook provides 2018 buying strategies for carbon steel

According to a report by the state-run Xinhua News Agency, the tariff rates with be 5%, 10%, 20% and 25%, and will cover 5,207 items imported from the U.S.