Articles in Category: Commodities

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This morning in metals news, U.S. steel import permit applications surged in October, U.S. Steel has laid off workers at its Granite City operation and Port Hedland iron ore shipments to China dropped in October.

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Steel Import Permit Applications Surge

U.S. steel import permit applications for October jumped 34.6% compared with the September final import total, the American Iron and Steel Institute (AISI) reported this week.

Import permit applications for October totaled 2.56 million tons, according to AISI.

Meanwhile, steel import market share in October checked in at 17%.

U.S. Steel Lays Off Workers at Granite City

On the heels of news of layoffs at U.S. Steel’s taconite operations in Minnesota, the steelmaker has reportedly also laid off an unspecified number of nonunion workers at its Granite City, Illinois operation, the Belleville News-Democrat reported.

The Granite City operation famously received a boost after the Trump administration’s imposition of Section 232 tariffs on imported steel. Previously idled, in March and June of 2018, U.S. Steel announced it would restart two blast furnaces at the plant, welcoming back approximately 800 workers in the process.

Port Hedland Iron Ore Exports to China Drop in October

Exports of iron ore to China from Australia’s Port Hedland fell in October, Reuters reported.

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On a month-over-month basis, iron ore exports to China from the major port dropped 0.7% in October.

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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 coverage here on MetalMiner, including coverage of: Freeport-McMoRan’s use of artificial intelligence (AI), U.S. steel production, aluminum prices, U.S. automotive sales, construction spending and India’s decision to back away from the proposed RCEP trade pact.

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This morning in metals news, South Korea will no longer seek to benefit from special treatment granted to developing countries vis-a-vis WTO rules, iron ore exports from Australia’s Port Hedland are surging and Rio Tinto has commissioned new press filter technology at its Quebec alumina refinery.

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

South Korea to Give up Seeking Developing Country Treatment

According to a Reuters report citing South Korea’s finance minister, the country will give up seeking the special treatment afforded to developing countries.

“The government decided not to seek special treatment as a developing country from future negotiations at WTO,” Finance Minister Hong Nam-ki was quoted as saying.

Developing country status is self-designated; however, other WTO members can challenge a country’s claim to the status.

Earlier this year, the White House released a memorandum calling for reforms to developing country designations.

“While some developing-country designations are proper, many are patently unsupportable in light of current economic circumstances,” the memorandum stated. “For example, 7 out of the 10 wealthiest economies in the world as measured by Gross Domestic Product per capita on a purchasing-power parity basis — Brunei, Hong Kong, Kuwait, Macao, Qatar, Singapore, and the United Arab Emirates — currently claim developing-country status.  Mexico, South Korea, and Turkey — members of both the G20 and the Organization for Economic Cooperation and Development (OECD) — also claim this status.”

Through the first half of 2019, South Korea accounted for 9% of U.S. steel imports (1.3 million metric tons).

Port Hedland Iron Ore Exports Rising

Iron ore exports from Australia’s Port Hedland are expected to hit a record high this fiscal year, according to a Bloomberg report.

According to the report, iron ore volumes from the port last year reached 508.5 million tons.

Rio Tinto Announces New Press Filter Tech at Quebec Refinery

Rio Tinto has commissioned new press filter technology at its Vaudreuil alumina refinery in Quebec.

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“The new filter presses will deliver environmental benefits by moving the refinery to dry stacking of bauxite residue and extend the life of the operation, which supports 1,000 jobs in the Saguenay-Lac-St-Jean region,” the company said. “The presses will ramp up to being fully operational in early 2020.”

The new presses will be able to dry bauxite residue — preparing it for storage — in just 17 minutes, according to Rio Tinto, down from the three years it currently takes to dry the material.

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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 coverage here on MetalMiner, which included stories on: steel production and the falling steel price; a dip in aluminum production and the flagging aluminum price; U.S. oil exports; and a survey of U.S. electronics manufacturers regarding tariffs.

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This morning in metals news, a planned takeover of British Steel by a Turkish military pension fund is in doubt, Caterpillar reported down third-quarter earnings and Chinese iron ore futures made gains again.

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OYAK Bid for British Steel Takeover on Shaky Ground

Plans for a Turkish military pension fund that has emerged as the favorite to take over the U.K.’s second-largest steelmaker, British Steel, are in doubt.

According to Reuters, Ataer Holding, a subsidiary of the OYAK pension fund, received a 10-week exclusivity period earlier this year to hash out a takeover deal of the liquidated British Steel.

However, with the deadline on that exclusivity period falling today, the U.K.’s Official Receiver said other options will be explored, according to Reuters.

Caterpillar Posts Down 3Q

Caterpillar reported third-quarter sales and revenues of $12.8 billion, down 6% from the $13.5 billion recorded in 3Q 2018.

“The primary driver of the decline in sales and revenues was a $1.2 billion movement in dealers’ inventories,” the company said. “Dealers decreased their inventories about $400 million during the third quarter of 2019, after increasing their inventories about $800 million during the third quarter of 2018.”

The company also lowered its full-year profit-per-share guidance down to a range of $10.90 to $11.40 (from $12.06 to $13.06).

Chinese Iron Ore Futures Keep Rising

Chinese iron ore futures made gains for a fourth straight session, Reuters reported.

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The most-active contract on the Dalian Commodity Exchange closed up 1%, according to the report, at 628 yuan ($88.90) per ton.

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The U.S.’s rise as an oil producer is well-documented, but the U.S. Energy Information Administration’s (EIA) latest report marks another milestone for the domestic sector.

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According to the EIA, the U.S. now exports crude oil to more nations than it imports from.

In 2009, the U.S. imported oil from as many as 37 sources in a given month, according to the EIA. Meanwhile, through the first seven months of 2019, the largest number of import sources in a given month was 27.

In terms of exports, the U.S. exported oil to as many as 31 destinations per month through the first seven months of 2019.

“This rise in U.S. export destinations coincides with the late 2015 lifting of restrictions on exporting domestic crude oil,” the EIA said. “Before the restrictions were lifted, U.S. crude oil exports almost exclusively went to Canada. Between January 2016 (the first full month of unrestricted U.S. crude oil exports) and July 2019, U.S. crude oil production increased by 2.6 million b/d, and export volumes increased by 2.2 million b/d.”

Demand abroad for light-sweet crude oil has fueled the U.S.’s rise as an oil exporter.

“Several infrastructure changes have allowed the United States to export this crude oil,” the EIA said. “New, expanded, or reversed pipelines have been delivering crude oil from production centers to export terminals. Export terminals have been expanded to accommodate greater crude oil tanker traffic, larger crude oil tankers, and larger cargo sizes.”

As noted in MetalMiner’s Annual Outlook, in addition to the strength of the U.S. dollar and China’s economy, oil prices constitute a key price driver for metals.

OPEC’s daily basket price reached $59.50 per barrel on Monday.

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According to a Reuters report, OPEC and its allies are considering whether to extend previously agreed upon supply curbs in an effort to support flagging oil prices.

Two features of Chinese political and industrial policy have been consistent over the years: the willingness to plan long term and deep pockets to finance those plans.

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A major state-owned steelmaker and mining company, Sinosteel, has epitomized this in western Australia.

The steelmaker has bought into the region’s lower-grade iron ore resources back in the last decade, in what was seen at the time as a potential rival to the country’s largest iron ore producing region further north at Pilbara.

A collapse in iron ore prices largely brought a halt to not just Sinosteel’s ambitions but those of joint venture partners and competitors Mitsubishi. During the five-year life of Mitsubishi’s Stage 1 operations at nearby Jack Hills, it produced and shipped around 1.8 million tons of lump and fines DSO each year.

Jack Hills, owned by Mitsubishi via its Crosslands subsidiary, was closed in 2015. Sinosteel’s Weld Range also closed, set to be a $2 billion iron ore project in the region when the Oakajee deepwater Port and 570-kilometer rail project was also shelved following cost blowouts that forced up proposed port fees, Reuters reported.

It was hoped Mitsubishi would come to the rescue when it paid A$325 million for the balance 50% stake in Oakerjee that it did not own.

But as iron ore prices continued to slide, the project was shelved — until now.

Following a year in which iron prices have been at their highest since 2014, Sinosteel has acquired Oakerjee and Crosslands (pretty much for free, by all accounts). Reuters reported Sinosteel will control both the port tariffs and the Weld Range mine, not to mention other iron ore assets in the region, assuming Oakajee’s port and rail assets are ever built.

Officially, there are no current plans to construct the deep-water port at Oakajee, nor the network of railways that were going to connect it to the iron ore mines at Jack Hills, Weld Range and related assets.

But documents filed with the Australian Securities and Investments Commission last week show two Sinosteel subsidiaries are the buyers, the article reports. The documents suggest the two subsidiaries paid the just $3 each for their respective 50% stakes in Oakajee Port and Rail, the company that owns the studies and intellectual property for the Oakajee railway network and deep-water port.

One of the Sinosteel subsidiaries was also said to have been transferred all shares in Crosslands Resources, the company that holds the nearby Jack Hills iron ore project. Crosslands is reliant on Oakajee Port and Rail building the port and rail infrastructure to get its product economically to market; so, without the port, the assets is essentially a dead duck.

Maybe not surprisingly, ASIC documents say Crosslands was sold for nothing.

On the face of it, it’s a huge loss for Mitsubishi, which had spent hundreds of millions buying into the related projects and investing in Jack Hills. Meanwhile, it’s a zero cost gain for Sinosteel, but it now leaves the Chinese with the need to invest the best part of A$10 billion to develop the port, rail infrastructure and mines.

With much of the local resources in the form of low-grade magnetite ore, investment will be needed to process the ore from 30-50% purity to 65-70% concentrate, an energy-intensive process that has historically made magnetite deposits largely uneconomical in western Australia.

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Sinosteel may therefore decide to sit on its asset until iron ore prices rise and/or the technology to reduce energy requirements in the concentration process makes the region’s magnetite more economical.

Fortescue appears to be making progress in that direction, Reuters reported, at its Iron Bridge property, halving the energy inputs by improved efficiencies. Even so deep pockets and a willingness to play the long game will be needed by Sinosteel if the region is ever to see its potential realized.

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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 coverage here on MetalMiner, including coverage of global steel demand, Trafigura’s bet on cobalt, electric vehicles and a potential detente in the General MotorsUAW saga.

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

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Brazilian miner Vale recently unveiled its third-quarter production and sales figures, showing a strong quarter for the company’s iron ore operations.

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Vale’s iron ore fines production totaled 86.7 million tons in the third quarter, up 35.4% from the previous quarter. The increase was powered in part by the resumption of operations at Brucutu and the partial resumption of dry processing operations at the Vargem Grande Complex.

“Vale expects to resume the remaining production of approximately 50 Mt by 2021, as several milestones were achieved and others are ongoing, including the approval of trigger tests on the mines to resume dry processing operations and the authorization of trigger tests at the TFA Rail Terminal (Terminal Ferroviário de Andaime), an important step toward debottlenecking the Vargem Grande Complex logistics,” Vale said in its production release.

Vale expects to recover lost production stemming from the January tailings dam collapse in Brumadinho over the next two years. The miner expects to recover approximately 30 million tons of production “with 7 Mt coming from the resumption of the dry processing operations at the Vargem Grande Complex in 2019 and the remaining from Fábrica, Timbopeba dry processing operations and others.”

The remaining production is expected to return in 2021, mainly from wet processing operations at Timbopeba and Vargem Grande Complex.

Meanwhile, Vale’s pellet production reached 11.1 million tons in Q3, up 22.7% from Q2. Last month, Vale revised its pellets production guidance down to 43 million tons from previous guidance of 45 million tons.

Last month, the miner announced investment plans for the communities impacted by the fatal tailings dam collapse in January at its Corrego do Feijao mine.

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The miner announced plans to invest R$190 million in the communities of Macacos, Barão de Cocais and Itabirito.

The October 2019 Monthly Metals Index (MMI) report is in the books.

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This month, just one of the Monthly Metals Indexes (MMIs) increased, while six declined and three held flat.

Some highlights from this month’s MMIs:

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