Articles in Category: Commodities

London Metal Exchange

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Before we head into the weekend, let’s take a look back at the week that was in metals storylines here on MetalMiner, including Stuart Burns on LME steel contracts, the green revolution in aluminum and much more.

Regarding the LME steel contracts, Burns noted, “For over 200 years, the London Metal Exchange (LME) has provided the trade – producers, traders and consumers – the opportunity to hedge their risk across a growing range of base metals.

“However, only recently have exchanges such as the LME, the U.S.’s CME and the Shanghai Futures Exchange (SHFE) in China introduced products allowing the trade to hedge raw material and finished steel price risk.”

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Week of Jan. 18-22 (LME steel contracts, green aluminum and more)

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aluminum ingot stacked for export

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This morning in metals news: the Aluminum Association outlined the issues it hopes the Biden administration will take on; in addition, Alcoa recently reported its Q4 2020 and full-year results; and, finally, the oil price retraced slightly this week.

Aluminum Association: aluminum can be part of ‘American comeback’ story

The Aluminum Association laid out its ambitions and goals for a better U.S. aluminum sector in a series of documents titled “Presidential Policy Brief: Recommendations for a Strong U.S. Aluminum Industry.”

“We congratulate President Biden and look forward to working with him and his team in the coming months and years,” said Tom Dobbins, president and CEO of the Aluminum Association, in a release. “During this challenging time for our nation, it is critically important that we all work together toward renewal and recovery. A strong and growing domestic aluminum industry can play a role in the American comeback story.”

The brief refers to energy, environment, infrastructure, recycling and trade as key areas for aluminum.

“The single biggest threat to U.S. aluminum remains unfairly subsidized overcapacity in China,” the brief states. “Strong, targeted trade enforcement is vital to the U.S. aluminum industry’s ability to compete on a market-based, level playing field. The Aluminum Association supports renewed cooperation with traditional trading partners and allies to address this perennial issue.”

Furthermore, the Aluminum Association cited the need to improve recycling levels from consumer applications.

Make sure you are following the five best practices of sourcing aluminum

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bulk cargo iron ore

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This morning in metals news: Rio Tinto’s iron ore shipments rose 2% year over year in Q4 2020; the Energy Information Administration forecast 2021 will see less power generation from natural gas this year; after rising during the first week of 2021, the LME three-month aluminum price has since been sliding.

Rio Tinto reports rise in iron ore shipments

Miner Rio Tinto released its Q4 2020 production results, reporting iron ore shipments rose 2% year over year. Iron ore shipments also jumped 8% compared with the previous quarter.

Meanwhile, iron ore production rose 3% year over year.

The miner’s aluminum production jumped 4% year over year. In addition, bauxite production fell 12% year over year.

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EIA forecasts less power generation from natural gas in 2021

Meanwhile, in energy news, the Energy Information Administration (EIA) forecast power generation from natural gas in the U.S. will decline this year.

The EIA forecast the decline will be about 8% this year.

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January 2021 MMI trends chartBefore we head into the weekend, let’s take a quick look back at the week that was and the metals storylines here on MetalMiner, including the release of the January 2021 MMI, a look at what might happen to the iron ore price and much more.

Inauguration Day draws near for President-elect Joe Biden, leaving metals industry groups to wonder what happens next for President Donald Trump’s signature metals policy: Section 232 tariffs on steel and aluminum imports. Whether Biden ultimately chooses to maintain those measures or do away with them remains to be seen, but metals watchers will be eyeing those developments closely.

As for metals prices, some price gains slowed down amid the festive season, but some have resumed their upward ascent in early 2021. Copper, for example, crossed the $8,100 per metric ton threshold earlier this month.

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lithium-ion battery

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An Indian agency has reported evidence that shows the presence of a lithium deposit of about 1,600 tons in the southern province of Karnataka.

It may be a small find. Still, it is important, especially with the world moving away from fossil-fueled vehicles to electric vehicles.

Lithium deposit in India

Initial surveys by the Atomic Minerals Directorate for Exploration and Research (AMD), an arm of India’s Department of Atomic Energy has shown the presence of lithium in igneous rocks of the Marlagalla-Allapatna region of Karnataka, according the Indian Express.

Lithium is a vital ingredient of the lithium-ion rechargeable batteries that power electric vehicles (EVs), laptops and smartphones. Furthermore, they are even used in military products.

The lithium find is comparatively small. Reserves in Bolivia are 21 million tonnes), the Indian Express notes, with significant deposits in Argentina (17 million tonnes), Australia (6.3 million tonnes) and China (4.5 million tonnes).

Nonetheless, it has given hope to Indian authorities as they look to move away from lithium imports, on which the country is now 100% reliable.

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Aluminum production

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This morning in metals news: Rio Tinto and Meridian Energy have reached a deal that will allow New Zealand’s Aluminum Smelter to continue operating the Tiwai Point aluminum smelter; BHP unveiled plans to build a new wind fence; and the Energy Information Administration (EIA) forecasts U.S. oil and natural gas production will fall this year.

Rio Tinto, Meridian Energy reach deal on Tiwai Point aluminum smelter

Miner Rio Tinto announced it had reached a deal with Meridian Energy that will allow New Zealand’s Aluminum Smelter to continue operating the Tiwai Point aluminum smelter until 2024.

“The extension provides certainty to employees, the local community and customers while providing more time for all stakeholders to plan for the future,” Rio Tinto said in a release.

The agreement with Meridian helps make the smelter “economically viable and competitive,” Rio Tinto added.

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BHP plans to build wind fence

On Thursday, BHP announced plans to build a wind fence as part of its Pilbara Air Quality Program.

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The Raw Steels Monthly Metals Index (MMI) increased by 16.5% this month, as steel prices showed strength in December.

January 2021 Raw Steels MMI chart

U.S. steel events

The American Iron and Steel Institute, the Steel Manufacturers Association, the United Steelworkers union, the Committee on Pipe and Tube Imports and the American Institute of Steel Construction sent a letter to Joe Biden urging him to keep the 25% national security tariffs on steel imports that were imposed in 2018.

The industry groups emphasized that the tariffs are essential “to ensure the viability of the domestic steel industry in the face of this massive and growing excess steel capacity.”

“Removing or weakening of these measures before major steel producing countries eliminate their overcapacity — and the subsidies and other trade-distorting policies that have fueled the steel crisis — will only invite a new surge in imports with devastating effects to domestic steel producers and their workers,” the letter continued.

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iron ore

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Iron ore — or at least iron ore producers — have had a pretty good pandemic.

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Recovering iron ore output

In Brazil, historic environmental restrictions and, at least in Q1 2020, heavy rains hampered Vale’s operations. In addition, the miner faced an ongoing impact on its workforce due to the spread of the virus in South America.

However, output came back as 2020 progressed.

Output averaged 4.48 million tons per month in the first half of 2020. However, output increased to 6.10 million tons per month in the second half, according to SPG Global estimates.

Australia’s iron ore sector and China tensions

 

Meanwhile, Australia had fewer environmental and pandemic-related challenges.

However, the country has been fighting an ongoing trade war with China. The conflict stems from Australian suggestions that China should investigate and publish details on the cause and early spread of the COVID-19 virus from Wuhan.

Beijing has reacted negatively to those suggestions. In turn, it has applied sanctions on Australian thermal coal and other commodities in a bid to get them to retract the demand.

As a result, China has tried to dissuade purchases from Australia. However, with supply out of Brazil hampered, Australia still secured the lion’s share, amounting to some 60% of Chinese iron ore imports.

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E.U. flag

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This morning in metals news: new E.U. duties on iron and steel imports from Turkey take effect today; meanwhile, the Aluminum Association commented on President-elect Joe Biden’s nomination for the post of secretary of commerce; and natural gas prices fell to their lowest levels in decades last year.

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E.U. duties on Turkish iron, steel

E.U. duties on Turkish iron and steel imports are set to take into effect today, Reuters reported.

According to the report, the anti-dumping duties will range from 4.8-7.6%.

Meanwhile, the European Steel Association (Eurofer) in May 2020 filed the initial complaint that sparked the probe. In September 2020, Eurofer petitioned for the registration of Turkish hot-rolled steel imports.

Elsewhere, MetalMiner contributor Christopher Rivituso earlier this week surveyed the Turkish steel market.

Aluminum Association comments on Biden’s pick to lead DOC

On the heels of President-elect Joe Biden’s announcement that he intends to nominate Rhode Island Gov. Gina Raimondo for the post of secretary of commerce, the Aluminum Association released a statement.

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China and Australia flags

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Nobody yet is quite sure whether Australia and China’s spat over coking coal imports will eventually turn out to be a case of bad politics making good economics or bad economic sense making for good politics.

While politics between China and Australia is part of the reason for the former to have completely banned the import of coal from the latter, it has led to churn in the Asian the rest of the global coal markets.

With China not lifting the ban despite it being a new year (as some had anticipated), the volatility in the markets is likely to continue.

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China’s coking coal import ban

In the last quarter of 2020, a verbal ban by China to halt all Australian coke was followed up with a formal one.

Coking coal import prices then declined by 24% from early-October to mid-December. Why? Because market players expected a glut in the global coal market in the medium term.

This game of Chinese checkers is not relegated to only the two players, China and Australia.

Ripple effects

India, Japan, and a host of other Asian and Southeast Asian nations have started to feel the after-effects.

Of late, according to this report by CNBC, major Chinese cities have started suffering power cuts because of the Chinese authorities limiting power usage while citing a shortage of coal.

What’s more, Chinese coal prices have shot up due to the reported shortage.

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