Articles in Category: Commodities

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This morning in metals news, the iron ore price continues to rise, the U.S. cut its import tariff on Turkish steel in half and copper is on its way to its fifth consecutive weekly loss.

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Iron Ore Rises After Vale Warning

The iron ore price has received several supply-side boosts this year, stemming from operational failures at miner Vale’s operations in Brazil and tropical cyclones in Australia.

An update from Vale regarding its Gongo Soco mine has offered even more support to the iron ore price, which climbed over the $100 per ton mark for the first time in five years, the Financial Times reported.

Earlier this year, a dam breach occurred at Vale’s Corrego do Feijao mine in Brumadinho, killing hundreds. Now, Vale is issuing a warning about a potential breach at its Gongo Soco mine’s Sul Superior dam.

“As soon as a movement was detected on the northern slope of a pit at the Gongo Soco mine in Barão de Cocais, Minas Gerais, paralyzed since 2016, Vale immediately informed the competent authorities and has taken a series of necessary measures to update the region’s population about the situation in the pit and at the Sul Superior dam, which is approximately 1.5 km from the mine area,” Vale said in a prepared statement.
“It should be noted that there are no technical elements so far that point towards an eventual slide of the northern slope of the Gongo Soco Mine, which could act as a trigger for a breach of the Sul Superior Dam. Even so, Vale is reinforcing the alert and readiness level for a worst-case breach scenario.”

U.S. Cuts Turkish Steel Tariff

Amid a year of diplomatic tension between the U.S. and Turkey, the U.S. last year doubled its Section 232 tariffs on steel and aluminum against the latter, raising them to 50% and 20%, respectively.

This week, however, the White House announced it would cut the steel tariff in half, back to the original 25% rate.

In a statement, the White House said steel imports fell 12% in 2018 compared with the previous year, including a 48% decline in imports of steel from Turkey.

“Given these improvements, I have determined that it is necessary and appropriate to remove the higher tariff on steel imports from Turkey imposed by Proclamation 9772, and to instead impose a 25 percent ad valorem tariff on steel imports from Turkey, commensurate with the tariff imposed on such articles imported from most countries,” the White House said. “Maintaining the existing 25 percent ad valorem tariff on most countries is necessary and appropriate at this time to address the threatened impairment of the national security that the Secretary found in the January 2018 report.”

Copper Down Again

The price of copper is on its way to its fifth consecutive weekly loss, Reuters reported.

MetalMiner’s Annual Outlook provides 2019 buying strategies for carbon steel

According to the report, LME copper dropped 1.4% this week, moving near a 3 1/2-month low reached on Monday.

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This morning in metals news, Brazilian miner Vale SA has plans to invest approximately $2.5 billion over the next five years in dry iron ore processing, Rusal reported a drop in its first-quarter profits and copper prices bounced back.

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Processing Plans

Miner Vale SA announced it plans to invest approximately $2.5 billion in dry iron ore processing at its operations.

The investment will be made over the next five years. Currently, approximately 60% Vale’s production comes from dry processing; the miner aims to make dry iron ore processing account for 70% of its production.

Dry iron ore processing does not require water, which means there is no need for dams and tailing are not generated. In January, a dam collapse at Vale’s Corrego do Feijao mine in Brumadinho led to hundreds of deaths.

Rusal Profits Slide in Q1

Still feeling the bite of U.S. sanctions that were then in effect, Rusal reported its Q1 profits fell to $300 million from $531 million last year, Reuters reported.

The U.S. sanctions were removed in January; after being applied in April 2018, aluminum prices skyrocketed on fears of Rusal aluminum being taken off the market.

Copper Prices Bounce Back

After dropping to a 15-week low, the copper price picked back up Tuesday (despite the conclusion of U.S.-China trade talks last week without a deal).

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LME copper picked up 0.7% to reach $6,049.50 per ton, according to Reuters.

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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 storylines here on MetalMiner:

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MetalMiner’s Annual Outlook provides 2019 buying strategies for carbon steel

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This morning in metals news, Brazilian miner Vale SA reported its Q1 2019 production totals, ArcelorMittal is idling mills in Europe and U.S. Rep. Betty McCollum questioned Interior Secretary David Bernhardt regarding plans to advance copper-nickel mining in northeastern Minnesota.

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Vale SA Reports Q1 Output

Brazilian miner Vale SA reported its Q1 iron ore output and sales figures this week, showing sharp declines in both.

In late January, a dam breach at a Vale mine in Brumadinho left hundreds dead and hobbled production amid review of safety conditions at other mines; as such, the iron ore price has soared in the ensuing months.

Vale reported iron ore fines production of 72.9 million tons in Q1, down 28% from the previous quarter and down 11% from Q1 2018.

Meanwhile, iron ore fines and pellet sales volume reached 67.7 million tons, which marked a 30% drop from Q4 2018 and a 20% drop from Q1 2018.

ArcelorMittal Idles European Mills

Earlier this week, steelmaker ArcelorMittal announced plans to temporarily idle steelmaking production at its Krakow, Poland facilities and reduce production in Asturias, Spain.

“In addition, the planned increase of shipments at ArcelorMittal Italia to a six million tonne annual run-rate will be slowed down following a decision to optimise cost and quality over volume in this environment,” ArcelorMittal said.

“Together, these actions will result in a temporary annualised production reduction of around three million tonnes.”

U.S. Rep. Questions Interior Secretary Over Minnesota Mining Plans

During a budget hearing this week, U.S. Rep. Betty McCollum questioned Interior Secretary David Bernhardt over plans to advance copper-nickel mining in northeastern Minnesota, the Minneapolis Star Tribune reported.

The Minnesota Democrat raised concerns about the impacts of sulfide ore mining on public lands, referring to the proposed mining plans raise by Twin Metals Minnesota and mine owner Antofagasta.

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McCollum questioned Bernhardt about the status of documents related to the Trump administration’s reversal of an Obama administration decision to terminate Twin Metals’ federal mining leases and cancel a two-year study into the potential impacts of copper-nickel mining in the Superior National Forest on nearby wilderness areas.

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This morning in metals news, steel production for the year through May 4 reached 33.7 million tons, Japan’s March steel exports jumped and Dalian iron ore futures made gains on supply concerns.

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U.S. Steel Production

According to the American Iron and Steel Institute (AISI), U.S. raw steel production for the week ending May 4 was 1.9 million net tons, at a capacity utilization rate of 82.3%. The week’s production marked a 6.6% increase from production for the equivalent week in 2018. 

Meanwhile, year-to-date production through May 4 hit 33.7 million tons, at a capacity utilization rate of 81.7%. 

Japan’s Steel Exports

Japan’s steel export levels surged 18.3% in March compared with the previous month, S&P Global Platts reported.

Exports, however, fell 17.9% on a year-over-year basis, according to the report.

Dalian Iron Ore Futures

Dalian iron ore futures jumped 4% Tuesday, Reuters reported, partially aided by supply-side concerns stemming from Brazilian miner Vale’s Brucutu iron ore mining complex.

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According to the report, a court order reversed a previous decision that had allowed Vale to reopen its Brucutu mine in the state of Minas Gerais.

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This morning in metals news, U.S. Steel announced Thursday it plans to invest more than $1 billion at its Mon Valley Works facilities, Australian iron ore exports bounced back in April after being impacted by tropical cyclones in March and the zinc price fell to its lowest level in 2 1/2 months.

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U.S. Steel Announces $1B Investment

U.S. Steel announced today that it plans to invest more than $1 billion to build a “new sustainable endless casting and rolling facility” at its Edgar Thomson Plant in Braddock, Pennsylvania, and a cogeneration facility at its Clairton Plant in Clairton, Pennsylvania.

“The cutting-edge endless casting and rolling technology combines thin slab casting and hot rolled band production into one continuous process and will make Mon Valley Works the first facility of this type in the United States, and one of only a handful in the world,” the steelmaker said in a release.

First coil production is expected in 2022, the company said.

Australian Iron Ore Exports Pick Up

The Australian iron ore sector was impacted in late March by a pair of tropical cyclones that battered Western Australia, disrupting exports of the steelmaking raw material.

However, exports of iron ore from Australia did bounce back in April, Reuters reported.

MetalMiner’s Annual Outlook provides 2019 buying strategies for carbon steel

According to Reuters, exports rose 20% month over month in April, rising to 69.1 million tons of iron ore.

Zinc Price Falls

Zinc prices fell to their lowest levels since mid-March, Reuters reported, on concerns regarding demand and rising inventories.

In the aftermath of the Section 232 tariffs on steel and aluminum going into effect in March 2018, we heard and read a lot about some of the largest American OEMs and their business challenges.

For example, Ford Motor Company’s claim that the tariffs cost the automaker $1 billion in profits last year.

But what’s not known or reported as much in the mainstream is what manufacturers have been doing to strategically mitigate tariff risk, or how their various business units and organizations put practices in place to hedge against that risk.

“We’re flexible, and we can move quickly now that we have started to qualify additional materials,” said Matt Marthinson, VP Supply Chain at JB Poindexter & Co., Inc. “So I like our chances much better than where we were just two years ago.”

A company like that has to be flexible — as a large-volume metals buyer, JB Poindexter is the largest truck manufacturer in the U.S. of Class 3 through Class 7 trucks, including the majority of UPS, FedEx, U.S. Postal Service, Penske and Ryder trucks across North America, according to Marthinson.

In a conversation with Lisa Reisman on our current podcast series, “The Maker-to-User Trend in the Time of Tariffs,” Marthinson lets listeners in on how an established transportation industry manufacturer with significant exposure to commodity risk views the tariff landscape, both now and into 2020.

Listen in!

According to his company bio, Matt Marthinson is the leader for the Supply Chain transformation initiative at JBPCO, which includes partnering with the business owners to consolidate and leverage spend across all business units. He has over 25 years of comprehensive business achievements and expertise in Lean Manufacturing Operations, Production Planning, Materials Management, Procurement, Transportation and Logistics, Sourcing and Supply Chain with Kaiser Aluminum, Honeywell, Alcoa and Hubbell Incorporated, most recently as vice president of strategic sourcing. Learn more here.

Maker-to-User in the Time of Tariffs: Background

After the U.S. Commerce Department’s Section 232 findings in early 2018, President Donald Trump took action — and the rest is history.

This new podcast series takes a closer look at the U.S. manufacturing landscape in our present time of trade tariffs, and how manufacturers themselves are affected by the tariffs (winners and losers).

For example, just over 90% of manufacturing industry respondents in a recent, informal MetalMiner poll indicated that the Trump tariffs have hurt their respective businesses, via increased material costs, inventory woes and longer lead times, among other effects.

However, other manufacturers — for example, Honda — have posted healthy profits over the last year.

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Ultimately, we’re interested in what all of this means for the “maker-to-user” trend that we’ve seen gain steam the past several years.

For an excellent primer on the “maker-to-user” movement and trends, download our free white paper on the topic here.

Listen to more episodes and follow the MetalMiner Podcast here.

Source: Tesla

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:

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MetalMiner’s Annual Outlook provides 2019 buying strategies for carbon steel

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What a difference a month makes in commodity markets.

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Just a month back, we reviewed the delicate balance OPEC was facing in trying to drive prices higher without having to make further cuts in output.

It seemed every time they squeezed the market higher, greater U.S. shale output slowed the advance, yet OPEC lost market share.

But now the U.S. seems to be coming to OPEC’s aid.

The market was finely balanced after a loss of output from Libya, where a civil war is raging, and Venezuela, where state bankruptcy and U.S. sanctions have put output into what appears to be, if not terminal decline, then a fall that could take many years of investment before it can recover.

The Financial Times and the Times both reported this week that moves by the Trump administration to remove waivers previously granted to key oil-consuming countries has taken the market by surprise. The news caused oil prices to spike in anticipation of the market being deprived of Iranian production.

Japan, South Korea, Turkey, India and China will, according to the Financial Times, face pressure to cancel Iranian oil imports as the U.S. seeks to increase pressure on Tehran over what it sees as its role in state-sponsored regional terrorism.

Source: Refinitiv

The oil price has already risen sharply this year. Brent crude climbed 2.6% on Monday to $73.80 a barrel, after hitting a high of $74.31 in early Asia trading following the announcement by a U.S. official. West Texas Intermediate, the U.S. marker, rose as much as 1.2% to a high of $64.74, the highest intraday level in two weeks, the Financial Times reported.

According to the Financial Times, the U.S. hopes its traditional oil-producing allies will raise output to offset further falls in Iranian supply — as they did last year — but this decision is not without complications.

Saudi Arabia and OPEC are in conflict with the U.S. in wanting higher oil prices and a balanced market, yet the U.S. is making no efforts to restrict its own shale oil output, expecting OPEC to raise or lower its supply to keep prices stable.

The latest forecasts from major agencies, including OPEC and the U.S. Energy Information Administration, see the market in a deficit of up to 500,000 barrels a day this year, before more supplies from Iran — and possibly Venezuela and Libya — are lost, the Financial Times reports.

A tighter oil market will increase gasoline prices, contrary to a campaign pledge from the president to lower them. The U.S. still imports at least one-third of its oil supply and remains exposed to global oil prices, despite being the largest producer in the world this year.

MetalMiner’s Annual Outlook provides 2019 buying strategies for carbon steel

It would appear prices could rise further as the removal of waivers begins to bite and major consumers switch to other supply sources. Despite slower global growth, energy and transport costs look set to continue to rise. (We will be covering a development in marine transport next week that predicts higher container rates in 2019-20 and suggests supply chain managers should be factoring in higher costs later this year and next.)

The U.S. Department of Commerce. qingwa/Adobe Stock

This morning in metals news, a tariff exemption request by Allegheny Technologies, Inc., has been denied, miner Anglo-American saw its copper production rise in the first quarter and iron ore miners in the Indian state of Karnataka are stuck with millions of tons of unsold iron ore inventory.

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ATI Exemption Request Denied

The Trump administration last year imposed Section 232 tariffs on imported steel and aluminum, but allowed domestic firms to apply for exemptions if a certain product is not made domestically in the quality or quantity needed.

Thousands of exclusion requests have been approved to date. According to QuantGov, 21,464 steel exclusion requests had been approved as of March 18, 2019.

A request by Allegheny Technologies, Inc., however, was denied, the Pittsburgh Post-Gazette reported.

ATI released a statement expressing disappointment with the ruling.

“While we are disappointed that the U.S. Department of Commerce denied the JV’s Section 232 tariff exclusion request, it does not change our strategy of returning ATI’s Flat Roll Products segment to sustained profitability,” said Robert S. Wetherbee, ATI president and CEO. “Although we believe the unique status of the North American stainless steel industry warranted approval of our exclusion, we are committed to meeting our customers’ needs and delivering value to our shareholders. We will work with our joint venture partner to determine our next steps.”

Anglo-American Q1 Copper Output Rises

Miner Anglo-American announced its Q1 copper production rose 4% to 161,100 tons, Reuters reported.

The firm’s total output, however, fell 6% during the first quarter.

Karnataka Miners Stuck with 6.5M Tons of Iron Ore Inventory

Miners in the southwestern Indian state of Karnataka are stuck with 6.5 million tons of unsold iron ore, the Business Standard reported.

MetalMiner’s Annual Outlook provides 2019 buying strategies for carbon steel

According to the report, unsold ore accounts for more than 20% of iron ore production during fiscal year 2019.