Author Archives: Fouad Egbaria

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This morning in metals news, it was a busy week for U.S. Steel, copper hit a two-week high and miner Rio Tinto signed its first portside iron ore contract in Chinese currency.

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

U.S. Steel Looks to the Future

Steelmaker U.S. Steel this week announced CFO Kevin Bradley’s intention to resign effective Nov. 4.

Bradley will be succeeded by Christine Breves, the firm’s senior vice president of manufacturing support and chief supply chain officer.

“Kevin has served U. S. Steel well as CFO, contributing to the transformation of the company, including last week’s announcement of our investment in Big River Steel,” CEO and President David Burritt said. “Kevin’s leadership improved the company’s balance sheet and enabled the company’s transformation to a world competitive ‘best of both’ integrated and mini mill technology company.”

In addition, the company is rolling out a new operating model that will go into effect Jan. 1, 2020, in an attempt to cut costs and boost the company’s technological standing.

“The realignment of U.S. Steel’s leadership team around more nimble and efficient executive functions, notably to sharpen focus on operational and commercial excellence and promote technological innovation, will enable the company to establish a more competitive cost structure with enhanced capabilities to serve priority customers in strategic markets,” the company said.

“Additionally, this enhanced operating model will create a new, differentiated U.S. Steel with a team that is charged with leading the execution of the strategy and increasing profitability. It also will further unlock the value of U. S. Steel’s announced investments in Big River Steel and at Mon Valley Works and Gary Works to drive profitable growth, deliver capital and operational cash improvements, and position U. S. Steel to continue to be an industry leader in delivering high-quality, value-added products.”

Copper Hits Two-Week High

Whether it proves to be founded or not, optimism regarding the potential for a partial trade deal between the U.S. and China has offered support to the copper price.

Top-level negotiators from the two countries met Thursday and Friday, with some hope the countries could agree on at least some concessions.

According to Reuters, LME copper rose 0.4% to $5,805 per ton, buoyed by the optimism coming from this week’s talks.

Rio Tinto Signs Contract in Yuan

Multinational miner Rio Tinto has signed its first portside Chinese iron ore contract using Chinese Renminbi, Reuters reported.

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The contract featured the sale of 10,000 tons of mid-grade iron ore to Chinese company Shanxi Gaoyi Steel Co Ltd, according to Reuters.

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This morning in metals news, U.S. import market share for steel reached 17% in September, the European Commission is investigating potential dumping of hot-rolled stainless steel from China and Indonesia, and India is set to become a net importer of iron ore.

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

Steel Import Market Share 17% in September

According to the American Iron and Steel Institute (AISI), U.S. steel import market share hit 17% in September, down from the 20% for the year to date.

Steel import permit applications totaled 1.97 million net tons for the month, down 9.4% from import permit tons recorded in August.

European Commission to Launch Anti-Dumping Probe

The European Commission is set to investigate potential dumping of hot-rolled stainless steel from China and Indonesia, Reuters reported.

In addition, the European Commission has imposed provisional anti-dumping duties of up to 66% on steel road wheels imported from China, according to the report.

India to Become Net Iron Ore Importer

India is set to become a net importer of iron ore in the next financial year, the Hellenic Shipping News reported.

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The Indian government is auctioning off iron ore blocks ahead of the expiration of a number of mining leases early next year; however, potential hang-ups in the process could leave the country short on available iron ore supply, leading to the necessity to import the steelmaking material.

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The Global Precious Monthly Metals Index (MMI), which tracks a basket of precious metals and precious metals prices, picked up one point for an MMI reading of 107 this month.

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

Palladium Surges, Widens Spread with Platinum

Last month, we noted the narrowing of the platinum-palladium spread in platinum’s favor, down to $539 per ounce as of Sept. 1.

This past month, however, that narrowing proved short-lived, as the spread ballooned to $763 per ounce.

The palladium price has been a steady riser this year.

“The price has risen a third this year alone and hit $1,700/ounce this week on the back of a limited supply market facing off rising demand from tighter emission standards in China and a switch from diesel to petrol in Europe, both favoring palladium demand,” MetalMiner’s Stuart Burns explains. “This is despite a generally weak global automotive market, with production down everywhere. Think what it would be like with production at 2017-18 levels — probably over $2,000/ounce. It may still hit that next year.”

China’s massive automotive market has contracted this year.

Through the first eight months of the year, automotive production in China reached 15.93 million units, down 12.1% on a year-over-year basis, according to the China Association of Automobile Manufacturers. Meanwhile, Chinese automotive sales through the first eight months were down 11% compared with the first eight months of 2018.

Meanwhile, U.S. automotive production in August reached 213,000 units, approximately flat compared with August 2018, according to Federal Reserve Bank of St. Louis data.

Gold, Silver and Fed Rates

Meanwhile, in the safe-havens, market watchers should keep an eye on the Federal Reserve.

“Gold and silver are being driven more by safe-haven status and expectations the Fed will reduce rates,” Burns explained. “Lower interest rates are a boost for gold and, to a lesser extent, silver. The investment community is taking an interest in gold this year, with ETF holdings near three-year highs and heavy buying by the Chinese central bank adding almost 100 tons in the last 10 months as it seeks to diversify away for the dollar. For the time being, Fed expectations will be the prime mover for prices.”

In September, the Federal Reserve announced it would lower the range for its benchmark interest rate by 25 basis points, to a range of 1.75-2.0%, marking the Fed’s second cut this year.

However, Fed Chairman Jerome Powell indicated the possibility of another rate cut this month, USA Today reported.

“While not everyone fully shares economic opportunities and the economy faces some risks, overall, it is — as I like to say — in a good place. Our job is to keep it there as long as possible,” Powell said in opening remarks during an event at the Federal Reserve Bank of Kansas City on Oct. 9. “While we believe our strategy and tools have been and remain effective, the U.S. economy, like other advanced economies around the world, is facing some longer-term challenges — from low growth, low inflation, and low interest rates.

“While slow growth is obviously not good, you may be asking, ‘What’s wrong with low inflation and low interest rates?’ Low can be good, but when inflation — and, consequently, interest rates — are too low, the Fed and other central banks have less room to cut rates to support the economy during downturns.”

President Donald Trump has on numerous occasions this year criticized the Fed and Powell for not doing enough to cut interest rates.

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Actual Metal Prices and Trends

The U.S. silver ingot price fell 5.6% month over month to $17.21/ounce as of Oct. 1.

U.S. platinum bars fell 4.4% to $875/ounce, while U.S. palladium bars rose 12.7% to $1,638/ounce.

Chinese gold bullion fell 2.9% to $47.99/gram. U.S. gold bullion dropped 3.2% to $1,478.60/ounce.

The Rare Earths Monthly Metals Index (MMI) dropped one point this month down to an MMI reading of 21.

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

U.S. Looks Beyond China

One point of underlying tension between the U.S. and China, as the two countries have waged a bitter trade war over the past year, has been China’s dominance of rare earths.

The materials, crucial for use in a wide variety of high-tech capacities, overwhelmingly come from China.

As such, the U.S., looking to wean itself off dependence on China for said rare earths, is looking to form partnerships elsewhere, as MetalMiner’s Stuart Burns recently explained.

“Many will recall, and not a few lament, the failure to support California’s Mountain Pass mine, source of the country’s rare earth metals, as an example of how exposed the U.S. has become,” Burns explained.

“According to the Defense Visual Information Distribution Service (DFIDS), the U.S. was largely self-sufficient for most of the 20th century, with all of its rare-earth needs being met by the Mountain Pass mine.

“However, following a free trade deal between the U.S. and China in the 1990s, lower labor costs and regulatory requirements meant China could undercut Mountain Pass. Combined with problems over water supply pollution and stricter regulations, Mountain Pass was forced to shut down.”

As such, the U.S. is looking to shore up its rare earths supply chains by forming partnerships elsewhere.

“Now, the U.S. is seeking cooperation from potential supply countries outside of China — notably Australia, but also Greenland, Botswana and Peru,” Burns continued. “The U.S. is looking to develop not just alternative raw material supply but, more importantly, to develop refining facilities, too.

“A new body, the U.S. Development Finance Corporation, is set to play a significant role in facilitating the U.S. government’s efforts to take equity positions in mining projects and encouraging private sector investment, according to Frank Fannon, the U.S. assistant secretary of state for energy resources, according to Reuters.”

Trudeau, Trump Talk Rare Earths

Continuing the aforementioned theme, Bloomberg reported late last month that U.S. President Donald Trump and Canadian Prime Minister Justin Trudeau recently discussed efforts to secure supply chains for rare earths.

According to the report, a joint action plan will be presented to the government coalition that forms after the Oct. 21 elections in Canada.

“It is in our interests to ensure that we have reliable supplies of these important minerals for technology, and it’s a conversation that our government is leading on,” Trudeau was quoted as saying at a recent press conference. “Canada has many of the rare earth minerals that are so necessary for modern technologies.”

Also of note, the next round of U.S.-China trade talks are scheduled for later this week.

However, the two countries are already on shaky ground heading into the talks.

Following a tweet by Daryl Morey, general manager of the Houston Rockets NBA franchise, in which he expressed support for anti-government protestors in Hong Kong, Chinese businesses announced they would sever ties with the organization. Chinese broadcast partners Tencent and the state-owned CCTV announced they would no longer broadcast Rockets games, marking yet another point of tension between the two countries.

In addition, the Bureau of Industry and Security announced it would add 28 Chinese organizations to the Entity List for “engaging in or enabling activities contrary to the foreign policy interests of the United States.”

“The U.S. Government and Department of Commerce cannot and will not tolerate the brutal suppression of ethnic minorities within China,” Secretary of Commerce Wilbur Ross said. “This action will ensure that our technologies, fostered in an environment of individual liberty and free enterprise, are not used to repress defenseless minority populations.”

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Actual Metal Prices and Trends

Chinese yttrium prices rose 0.4% month over month to $31.48/kilogram as of Oct. 1. Chinese terbium oxide dropped 1.2% to $540.68/kilogram.

Neodymium oxide fell 0.8% to $44,695.50/mt.

Europium oxide rose 0.3% to $30.78/kilogram. Dysprosium oxide fell 2.0% to $260.90/kilogram.

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This morning in metals news, China could be pushing for a partial trade deal with the U.S., the Trump administration criticized the Louisiana governor over his characterization of the reasons for Bayou Steel Group’s closure and copper ticked up Wednesday.

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

U.S.-China Move Toward Next Round of Talks

The road to the next round of U.S.-China trade talks, scheduled to begin Thursday, has been fairly bumpy.

In recent days, the U.S.’s National Basketball Association (NBA) has found itself in a PR crisis following a since-deleted tweet by Houston Rockets General Manager Daryl Morey, who expressed support for anti-government protestors in Hong Kong.

As a result, Chinese broadcasters have severed ties with the organization, which boasts a sizable Chinese following.

On Monday, the Bureau of Industry and Security announced it would add 28 Chinese organizations to its Entity List, calling out human rights abuses in Xinjiang.

However, according to a CNBC report, China is looking to make some concessions toward a partial trade deal. Among those concessions, according to the report, includes an agreement to increase purchases of agricultural products from the U.S.

Trump Administration Criticizes Louisiana Governor’s Bayou Steel Comments

On the heels of the bankruptcy of Bayou Steel Group, Louisiana Gov. John Bel Edwards indicated the closure of the business could at least in part be linked with the Trump administration’s tariffs.

Peter Navarro, Trump’s assistant for trade and manufacturing policy, struck back at the characterization.

“This is comically bad staff work: there are no tariffs on inbound recycled scrap and there is an abundance of cheap scrap on domestic soil,” Navarro was quoted as saying by nola.com. “Bayou Steel folded like a cheap tent under the weight of a leveraged buyout by Wall Street vultures picking the carcass of a highly inefficient and antiquated plant. Ironically, the Trump steel tariffs actually kept Bayou Steel as a going concern longer than it otherwise would have existed.

Copper Moves Up

With the next round of U.S.-China trade talks set to begin Thursday, copper prices inched up Wednesday.

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LME copper moved up 0.3% to $5,691/mt, Reuters reported.

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This morning in metals news, the U.S. steel industry’s capacity utilization rate fell to 80.4%, those in the copper market could use satellites to keep tabs on production stoppages and the General Motors strike continues into its fourth week.

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

U.S. Steel Capacity Utilization Falls to 80.4%

The U.S. steel industry’s production levels remain higher in the year to date on a year-over-year basis. Production reached 74.3 million tons for the year through Oct. 5, up 3.0% compared with the same period in 2018.

Capacity utilization fell to 80.4% for the year, however, down from 80.6% as of the previous week.

New Service to Help Copper Watchers Keep Eye on Smelters

A new service will help copper traders and fund managers keep eyes on copper smelters — from above.

According to Reuters, a new service will offer the use of satellites to monitor copper smelters for production stoppages or ramp-ups, which would be invaluable to stay ahead of price movements.

The Earth-i service, based in the U.K., will launch next week, according to the report.

GM Strike Continues

The strike at automaker General Motors entered its fourth week this week, as GM and the United Automobile Workers (UAW) continue to dig in.

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According to a report by MLive, one point of negotiation has hit a wall: the issue of bringing production back to the U.S. from Mexico.

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This morning in metals news, the U.S. steel industry received a downgrade from Moody’s, a Russian tin producer is looking to expand production and oil prices have taken a fall.

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

Moody’s Down on U.S. Steel Industry

With U.S. steel prices trending downward of late, ratings service Moody’s has downgraded the U.S. sector.

Moody’s downgraded the outlook for the sector from “stable” to “negative.”

“The price for hot-rolled coil, the benchmark steel price, declined steadily since the second half of 2018, save for a short-lived bounce in August,” Moody’s Senior Vice President Carol Cowan said. “The high prices seen in the first half of 2018 were not supported by underlying demand fundamentals, however, but more the market’s expectation of the US imposing import tariffs, as well as supply concerns, and as such, some price correction was expected.”

Russia’s Seligdar Eyes Expansion

According to the International Tin Association (ITA), Russian tin miner Seligdar is looking to boost its tin concentrate production.

After more than tripling its tin-in-concentrate production to 1,000 tons during the first half of the year, the firm is aiming to produce 6,000 tons per year by 2024, according to the ITA.

Oil Prices Dip

On the heels of attacks at two Saudi Arabian oil installations in September, oil prices received a boost.

However, that boost proved to be short-lived.

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According to Reuters, both Brent crude and U.S. WTI were down more than 5% last week.

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Before we head into the weekend, let’s take a look back at this week’s coverage on MetalMiner, which included analysis of Chinese steel production, the U.S.’s search for sources of rare earths outside of China, and falling copper and aluminum prices.

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

Looking for metal price forecasting and data analysis in one easy-to-use platform? Inquire about MetalMiner Insights today!

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This morning in metals news, Codelco is holding its 2020 copper premium flat for Europe, China’s yuan could see further devaluation and Alcoa’s Baie-Comeau smelter has received certification from the Aluminum Stewardship Initiative.

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

Copper Premium Flat

According to Reuters, Codelco’s copper premium will be held flat for European customers in 2020.

Codelco’s premium will check in at $98/ton, according to the report.

Reuters Poll: Yuan to Slip Further Against the Dollar

Earlier this year, the yuan slipped in value compared to the dollar to an approximately 7-to-1 ratio, which makes imports from China more attractive.

According to a Reuters poll, the yuan could slip further to levels last seen during the financial crisis of 2008.

The yuan could fall as low as 7.20 to the dollar by the end of the year, according to the Reuters poll of foreign exchange strategists.

Alcoa Smelter Gains ASI Certification

Alcoa’s Baie-Comeau smelter in Quebec has received certification from the Aluminum Stewardship Initiative (ASI), a body that formulates and sets sustainability standards for the aluminum sector.

Alcoa now has ASI-certified facilities in three countries: Brazil, Spain and Canada.

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“From mine to metal, Alcoa is recognized as a sustainability leader,” said Michelle O’Neill, Alcoa’s senior vice president of government affairs and sustainability. “This latest ASI certification demonstrates our ongoing commitment to operate in a responsible manner while bringing long-lasting value to our stakeholders.”

The Construction Monthly Metals Index (MMI) held flat this month, sticking at an MMI reading of 77.

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

According to the U.S. Census Bureau, U.S. construction spending in August reached a seasonally adjusted annual rate of $1,287.3 billion, up 0.1% from the revised July estimate of $1,285.6 billion.

The August total, however, was down 1.9% from the August 2018 estimate of $1,312.2 billion.

Meanwhile, for the first eight months of the year, construction spending was down 2.3% compared with the first eight months of 2018.

Broken down further, spending on private construction in August reached a seasonally adjusted annual rate of $955 billion, flat compared with July.

Under the umbrella of private construction, residential construction spending reached a seasonally adjusted annual rate of $507.2 billion, up 0.9% from July. Meanwhile, nonresidential construction spending reached $447.9 billion, down 1.0% from July.

As for public construction, spending in August reached $332.3 billion, up 0.4% from July. Under public construction, educational construction spending totaled $77.0 billion, up 1.4% from July. Highway construction spending reached $98.9 billion, up 0.6% from the July estimate.

ABI Slump Continues

The Architecture Billings Index (ABI), released monthly by the American Institute of Architects (AIA), serves as an indicator of architecture billings growth in the U.S.

The ABI has been mired in a slump, coming in flat for six consecutive months prior to the most recent reading.

The recently released August ABI, however, reflected a downturn.

The August ABI checked in at 47.2, down from 50.1 the previous month (any reading greater than 50 indicates billings growth, while a sub-50 reading indicates contraction).

In its most recent ABI report, the AIA called business conditions “disappointing” for U.S. architecture firms this year.

“The national ABI score for the month was just 47.2 (any score below 50 signifies a decline in aggregate design activity),” the AIA report stated. “Additionally, the national score for new design contracts, which measures new design work coming into architecture firms, was just 47.9 (again, any score below 50 signifies a decline in aggregate new design contract activity). So, architecture firms reported a rare double decline in both new work coming into their firms and design work that was being completed.”

By region, the Midwest was hit hardest, registering an ABI of 46.4 for the month. Billings contracted in the South (48.2) and Northeast (49.1), too, while the West showed billings growth (51.2).

According to the monthly survey of industry professionals included in the ABI report, business conditions are prompting some architecture firms to consider international opportunities.

“At present, only about 10% of U.S. architecture firms are currently working on international projects, while an additional 13% don’t have current projects, but have worked internationally within the past five years,” the report noted. “Another 13% of firms have plans to pursue at least some type of international work in the near future.”

Of the remaining nearly two-thirds, over half would at least consider an international project, according to the survey results.

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Actual Metal Prices and Trends

The Chinese rebar price rose 3.6% month over month to $525.99/mt as of Oct. 1. The Chinese H-beam steel price fell 1.0% to $532.99/mt.

U.S. shredded scrap steel fell 13.6% to $254/st.

European commercial 1050 aluminum sheet rose 2.6% to $2,455.78/mt.

Chinese 62% iron ore PB fines rose 0.3% to $73.44/dmt.