Author Archives: Stuart Burns

In one of its first tests as a free trading global economy after Brexit, Britain achieved a middling mark this past week.


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Trade minister Liz Truss accepted its independent, newly established Trade Remedies Authority recommendation to scrap some quotas on imports that had been carried over from the European Union in 2019 prior to Brexit.

The MetalMiner Best Practice Library offers a wealth of knowledge and tips to help buyers stay on top of metals markets and buying strategies.

Brexit Britain scrap import quotas

The rules set quotas on some 19 steels whereby a 25% anti dumping tariff is applied if imports exceed pre set quarterly quotas.

Detail have been sparse, however, on what is included and what isn’t.

However, a UK government website lists what remains under the quota and what is to be revoked.

The list includes extensions for: non-alloy and other alloy hot rolled sheets and strips; non-alloy and other cold rolled sheets; metallic coated sheets; organic coated sheets; and tin mill products.

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Analysis, specifically what’s termed fundamental analysis of metal supply and demand, and its impact in driving metal prices, is often a blunt tool.

That is particularly true since the financial crisis. Then, traders and hedge funds discovered the wheeze of buying spot and selling far forward (typically from 18-month to a few years) when the market is in a strong contango (when the higher forward price is sufficiently above spot to more than cover the cost of storage, insurance and finance, leaving a profit for the company).

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Metal stock levels don’t match price movements

aluminum ingot

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As we all know, this has at times driven the creation of off-market inventory, sometimes termed shadow stocks, in non-exchange warehouses (because rents are cheaper).

For some metals, like zinc and copper, this has, at times, been hundreds of thousands of tons. For aluminum, it has been in the millions, dwarfing the exchange stocks on the LME and SHFE.

Trying to take these stocks into consideration is a nightmare. The LME’s increased reporting regime has helped. However, even so so-called shadow stocks are in their entirety at best an estimate.

So, when commentators say LME stocks have fallen as a justification supporting increased demand — or, vice versa, rising LME stocks are proof of weak demand — take such comments with a pinch of salt.

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The zinc price has defied expectations that oversupply would put so much downward pressure on prices that last month’s $3,100/ton high would be the peak for years to come.

Although the zinc price has drifted off those highs, it is currently just under $2,900 per metric ton for cash and three-month on the LME, zinc prices have remained stubbornly high, despite a complete lack of investor interest.

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Zinc price trends


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As with aluminum and copper, the Shanghai Futures Exchange has outperformed London this year. However, even the SHFE zinc price has come off this month. Most metals have moved into a temporary sideways market.

The International Lead and Zinc Study Group estimates the zinc market recorded a supply-demand surplus of just 31,000 metric tons in January-April, compared with a surplus of 256,000 tons in the same period last year, according to a Reuters post. That also compares with an earlier April forecast for a 353,000-ton surplus this year.

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The metals markets received a jolt late last week with the news that Russia is considering applying export tariffs to steel, aluminium, copper, nickel and ferro alloys from this August through to at least the end of the year in order to ease metal supply and prices for domestic consumers.

Each month, MetalMiner hosts a webinar on a specific metals topic. Explore the upcoming webinars and sign up for each on the MetalMiner Events page.

Russia metals tariffs to cover copper, aluminum, nickel and others


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According to Bloomberg, the plans include a base duty rate across all products covered by the duties of 15%. However, it includes a specific minimum tariff for each metal, varying from $1,226 a ton for copper, $2,321 for nickel and $254 for primary aluminum. In addition, each steel grade would incur its own rate, starting with HRC at $115 per ton.

As Bloomberg states, the taxes could have far-reaching implications for global metals markets.

That is particularly true at a time of tight supply for products such as aluminum.

Rusal controls about 10% of the global aluminium sector. Meanwhile, Norilsk Nickel produces about 20% of the world’s nickel. Russia is the third-biggest steel exporter, with most sales going to Europe.

Just under 10% of the European market is serviced by primary aluminum imports from Russia. Europe is not alone, either. The U.S. and consumers in the Far East all receive primary aluminum supplies. Therefore, the tariff will have an impact on physical delivery premiums in the U.S., Europe and Japan.

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The steel market is running two diverging narratives.

In the U.S., the market remains extremely tight. Mill lead times are out to the end of this year. Furthermore, prices are set to stay high into 2022.

The situation is not dissimilar in Europe. In Europe, the steel market is seeing a similar post-pandemic bounceback, supply chain restocking and constraints, like the U.S., by tariffs on imported material.

But in the rest of the world, global steel production seems to be slowing. Raw material prices — iron ore, in particular — are easing.

Are you under pressure to generate steel cost savings? Make sure you are following these five best practices

Steel market narrative outside of US, Europe

China steel production

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According to Capital Economics, global daily steel production in May came in somewhat lower than April, as output in China dipped.

The World Steel Association reported global steel production rose by an impressive 16.5% year over year in May. However, this is against a 2020 reference point during which many countries were only starting to emerge from national lockdowns in May 2020.

But looking at the month-over-month growth rate, daily global steel output fell by 0.4% in May. That followed a 3.5% rise in April.

At the same time, Beijing’s combination of dire warnings about manipulative speculative pricing, restrictions on credit for construction and pressure on polluting industries to reduce emissions have combined to cause a sharp correction on the previously buoyant iron ore price, down 9% on the Dalian exchange to $173/ton this week.

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However you slice and dice the statistics — and there are numerous ways stats can be sliced and diced — the global aluminum market is tight.

Whether we look at primary ingot, extrusion billet or rolling slab intermediates, or semi-finished sheets/plates, tubes and extrusions mill lead times are long and conversion premiums are high. Meanwhile, the global economy has bounced back from the pandemic. Local distortions, such as tariff barriers, to traditional supply chains have added to bottlenecks and robust restocking.

The MetalMiner Best Practice Library offers a wealth of knowledge and tips to help buyers stay on top of metals markets and buying strategies. 

Aluminum deficit to surplus

aluminum price

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According to the International Aluminum Institute (IAI), total global aluminum production rose to 5.74 million metric tons in May. The total marked its highest level and a rise of just under 6% compared to this time last year.

Admittedly, last year was distorted by the pandemic. However, from January through May, global smelters operated normally around the world. The pandemic hit consumption badly, but output remained resilient.

Not surprisingly, therefore, this year to date swung to a 588,000-ton deficit compared to over a 1-million-ton (1,074 kt) surplus, as reported by the World Bureau of Metal Statistics for the whole of last year.

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It won’t have been missed by anyone in the metals markets, but commodity prices have drifted off this past week.

The reason is a resurgent dollar.

The MetalMiner Best Practice Library offers a wealth of knowledge and tips to help buyers stay on top of metals markets and buying strategies.

Commodity prices down on stronger dollar

commodities graphic


It’s a simple but well-worn mantra: a stronger dollar equals weaker commodity prices.

Policy makers at the Federal Reserve advised Wednesday that interest rates would rise from record lows sometime in 2023, updating an earlier forecast of rises not until 2024.


The more bullish position on rates boosted the dollar. As a result, the dollar index gained 1.5% over last week. That marked its best result since last September.

In turn, commodities took a hit across the board.

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It would seem Beijing only has to speak and the market reacts — this time, it’s about base metals.

Worried by what it sees as excessive inflation in commodity prices, which it fears will lead through into factory gate increases, China warned speculators last month over “excessive speculation.” The warning from China’s National Food and Strategic Reserves Administration hit the iron ore market hard, the Financial Times reports, sending the price 10% lower.

Do you know the five best practices of sourcing metals, including aluminum?

China turns to base metals

China aluminum

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This month, Beijing has turned its attention to base metals.

The authorities have hinted they may release metal from their strategic reserves. The move would be an overt attempt to dampen further price rises in what it sees as a speculator-fueled rally. Where applicable, it would provide additional supply for those metals where supplies are genuinely tight.

The country holds strategic reserves in copper built up over decades. During slumps, like after the financial crisis, Beijing has stepped in to support domestic producers.

State secrets

As a strategic reserve, copper stocks are a state secret.

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The Financial Times is among many news sources reporting on the announcement made this week in Brussels that the E.U. and U.S. will end 17 years of litigation over claims and counterclaims that both Boeing and Airbus have received unfair state support in one form or another.

Both sides have won cases at the World Trade Organization (WTO) level. Those wins have resulted the threat of some $11.5 billion in tariffs on E.U.-U.S. trade in both directions.

NBC quoted U.S. Trade Representative Katherine Tai as saying the two sides have come to terms on a five-year agreement to suspend the tariffs at the center of the dispute.

The threat remains that the tariffs could be reimplemented if U.S. companies are not able to “compete fairly” with those in Europe. However, the statement left open quite how that would be prosecuted.

Each month, MetalMiner hosts a webinar on a specific metals topic. Explore the upcoming webinars and sign up for each on the MetalMiner Events page.

Boeing-Airbus dispute nearing an end? Maybe not quite

Airbus plane

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Much was made about moving away from litigation, a strategy that has clearly failed to achieve much after 17 years of lawyer fees.

“Today’s announcement resolves a long-standing irritant in the U.S.-EU relationship” Tai said.

“Instead of fighting with one of our closest allies, we are finally coming together against a common threat,” she added, stressing it is time to put aside the fight and focus on China’s economic assertiveness.

That final point underlines a key issue here.

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The perennially bullish Goldman Sachs is not alone in predicting a higher oil price.

A recent report by the Boston Consulting Group asks the question, “are we on the cusp of a new supercycle?”

In BCG’s opinion? We are.

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Bullish on the oil price

Brent crude oil price chart

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Hedge funds on the whole agree.

By a factor of 6-to-1, bullish long petroleum positions outnumbered bearish short ones on the NYMEX and ICE WTI contracts, according to Reuters.

Net long positions climbed to 919 million barrels, the highest since January 2020, before the pandemic took hold, and prior to that October 2018, before the trade war between the United States and China intensified, the post reports. Demand exceeds supply, which is constrained by OPEC discipline and a subdued US shale market.

In previous oil price rises, shale production has responded rapidly, lifting drilling within months and output inside of a year. However, this time around, those producers that survived the last crunch have chosen to repair their balance sheets rather than borrow and burrow.

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