Articles in Category: Commodities

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This morning in metals news, China spared U.S. soybeans and pork imports from tariffs, copper prices gained on the current tenor of trade news and Chinese iron ore rose to a five-week high.

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China Exempts Pork, Soybeans from Tariffs

China announced it will exempt imports of U.S. soybeans and pork from tariffs, MarketWatch reported, as the two countries aim to move toward a resolution to their long-simmering trade differences.

Trade talks between the countries are scheduled to resume in early October.

Copper Prices Rise

Copper prices made gains to close the week amid the latest seemingly positive news coming out of the ongoing U.S.-China trade saga.

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LME three-month copper was bid up 1.1% on Friday, reaching $5,895 per ton, Reuters reported.

Iron Ore Rises to 5-Week High

Chinese iron ore prices surged to a five-week high, the Hellenic Shipping News reported, supported by restocking demand ahead of holidays in the country.

Iron ore futures on the Dalian Commodity Exchange rose as much as 3.9% on Thursday, up to 681 yuan ($96.08) per ton, according to the report.

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This morning in metals news, iron ore made gains Friday, a Houston metal manufacturer plans to close and Nippon Steel plans to cut its capital spending by 10%.

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Iron Ore Prices Rise

Chinese iron ore futures rose 4% Friday on heightened restocking demand, Reuters reported.

The most-traded January 2020 Dalian Commodity Exchange contract picked up 4% to reach $85.65 per ton, according to the report.

Houston Metal Fabricator to Shutter

United Structures of America, a metal fabricator with locations in Houston and Portland, Tennessee, will shutter in September, the Houston Chronicle reported.

The report cites steel tariffs, a recent cyber attack and financial issues as factors underpinning the shuttering.

Nippon to Cut Capital Spending

Japan’s Nippon Steel plans to cut its capital spending by 10% through fiscal year 2020, the Nikkei Asian Review reported, impacted by a slowing steel market and the ongoing U.S.-China trade war.

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Nippon expects its profits to fall 55% this fiscal year compared with last year, according to the report.

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This morning in metals news, China’s Finance Ministry announced new tariffs on U.S. goods, Germany’s thyssenkrupp is suing over the European Commission’s decision to block a proposed merger with Tata Steel and iron ore prices could continue to slide.

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China to Impose New Tariffs

China’s Ministry of Finance announced it will impose a 5% or 10% tariff on an additional $75 billion worth of U.S. goods, effective Sept. 1, CNN reported.

The move comes after the U.S. announced it would impose a 10% tariff on an additional $300 billion in Chinese goods as of Sept. 1.

The Ministry of Finance also said it will resume tariffs on U.S. automobiles and automotive parts, according to the report, which will come in at 25% or 5%.

thyssenkrupp Sues European Commission Over Blocking of Tata Merger

German firm thyssenkrupp’s planned merger of its European operations with those of Tata Steel hit a wall earlier this year when European competition authorities blocked it citing concerns over higher prices and a decline in market choices.

According to German television station Deutsche Welle, thyssenkrupp has filed a complaint in a European court, claiming the European Commission’s decision to block the merger did not take into “adequate account the structural importance of imports into Europe.”

In a statement Thursday, the German firm criticized the European Commission’s decision.

“The consolidation of the European steel industry is still right and necessary which is also shown by the current critical market situation for steel manufacturers,” said Donatus Kaufmann, member of the German firm’s executive board. “Overcapacities and high import pressure from Asia create an environment in which the planned joint venture with Tata Steel would not have impaired competition. We regret the European Commission’s decision and regard it as too far-reaching and wrong. That is why we are filing a complaint.”

Falling Iron Ore

Iron ore’s price slide may be set to continue.

Prices for the steelmaking raw material surged earlier this year to over $120 per ton, powered by supply-side support from Brazil and Australia.

In recent weeks, however, the iron ore price has fallen back to earth.

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According to the Australian Financial Review, Liberum Capital has downgraded its iron ore forecast, predicting the steelmaking material will average around $75 per ton in the second half of 2019 and could average $50 per ton in 2020.

President Donald Trump’s suggestion that the U.S. could buy Greenland from Denmark was met with incredulity in Nuuk, Copenhagen and across Europe.

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“Greenland is not for sale. Greenland is not Danish. Greenland belongs to Greenland. I strongly hope this is not meant seriously,” Greenland Prime Minister Mette Frederiksen said during a visit to the territory on Sunday, as reported by The Times.

The prime minster added, “Thankfully, the time where you buy and sell other countries and populations is over. Let’s leave it there. Jokes aside, we will of course love to have an even closer strategic relationship with the United States.”

Frederiksen is said to have rejected Trump’s proposal, describing the notion of selling Greenland as “an absurd discussion.”

Strangely, Trump seems to have taken affront that the 58,000 population of Greenland did not want to be bought and sold like chattels. He then tried to lean on Denmark by commenting on how the U.S. protects Denmark and, as a result, should be more willing to sell its semi-autonomous territory (Greenland governs itself but relies on Denmark for its defense and foreign policy).

After being flatly refused by both Nuuk and Copenhagen, President Trump reacted in an apparent fit of pique, canceling his planned trip to Denmark next month.

Crass as the handling of this idea has been, it is not the first time the U.S. has tried to buy its massive neighbor.

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This morning in metals news, Chinese iron ore futures fell to their lowest level in 10 weeks, JP Morgan weighed in on the impact of tariffs on U.S. consumers and Tokyo Steel has decided to hold its prices steady for September.

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Iron Ore Slide Continues

Chinese iron ore futures fell to a 10-week low, Reuters reported.

Iron ore prices surged to five-year highs earlier this summer, but have plunged since then.

According to Reuters, the most-traded iron ore contract on the Dalian Commodity Exchange closed down 4.3% to 589.50 yuan per ton.

Tariff Impact

According to an analysis by investment bank JP Morgan, the Trump administration’s tariffs to date have had an average per-household impact of $600, CNN reported.

However, if the Trump administration goes through with the recently announced 10% on $300 billion in Chinese goods, that impact will rise to $1,000 per household.

Tokyo Steel Stands Pat on Prices

Tokyo Steel announced it will hold prices steady for September, Reuters reported.

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According to the report, the announcement marks the second straight month of price freezes from Tokyo Steel.

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This morning in metals news, China says it hopes to reach a compromise with the U.S. on trade, the U.S. Department of Commerce self-initiated an investigation related to imports of corrosion-resistant steel products and iron ore prices continue to slide.

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Looking for a Deal

Chinese government officials recently expressed the willingness to do what is necessary to combat U.S. tariffs while also indicating a desire to reach the U.S. “halfway” for a trade deal.

The U.S.’s imposition of a 10% tariff on an additional $300 billion on Chinese goods is set to go into effect Sept. 1. Tensions were dialed back slightly this week when the United States Trade Representative announced that tariffs on select items from the $300 billion tariff list, including cellphones and laptop computers, would be delayed until later this year.

“We hope the U.S. side will meet China half-way, and implement the consensus reached by the two leaders during their meeting in Osaka, and look for mutually acceptable solutions through dialogue on the basis of equality and mutual respect,” said Hua Chunying, a Chinese foreign ministry spokesperson, as quoted by CNBC.

DOC Launches Circumvention Probe

The U.S. Department of Commerce plans to investigate possible circumvention with respect to imports of corrosion-resistant steel products from Costa Rica, Guatemala, Malaysia, South Africa and the United Arab Emirates.

“In these inquiries, Commerce will determine whether imports of CORE completed in Costa Rica, Guatemala, Malaysia, South Africa, and the UAE using Chinese-origin substrate, or imports of CORE completed in Malaysia using Taiwanese-origin substrate, are circumventing the antidumping duty (AD) and countervailing duty (CVD) orders on CORE from China or the AD order on CORE from Taiwan,” the Department of Commerce said in a release.

Iron Ore Prices Continue to Fall

Prices for the steelmaking material iron ore continue to fall after reaching five-year highs earlier this summer.

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According to Reuters, China’s stimulus spending has not been enough to offset the reintroduction of iron ore supplies to the market (after supply-side disruptions in Australia and Brazil earlier this year).

We are not stock market investors at MetalMiner. While we may hold shares, either as direct punts or as part of pension or investment funds, we do not consider ourselves stock market experts and, as such, rarely cover market movements unless part of a wider review of financial markets.

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That said, few can have missed the wild gyrations U.S. stock markets — also mirrored in Europe and Asia — have been going through this month. Those movements might lead one to question whether this has implications for commodity markets in general and metal markets in particular.

Anyone who has attended one of our market seminars will know there are clear correlations between share prices and commodities, so it is not an idle question to ask whether this month’s falls are a correction or the early signs of an end to the bull market that has powered shares higher for some 11 years.

Source: Financial Times

To answer that question, it helps to review why share prices have taken such a hammering.

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This morning in metals news, the world’s top aluminum producer was flooded after Typhoon Lekima, Chinese cities did not meet targets to cut pollution and iron ore prices continue to slide.

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China Hongqiao Takes Damages After Typhoon

The world’s largest aluminum producer, China Hongqiao, was flooded over the weekend after Typhoon Lekima struck Shandong province, Reuters reported.

According to an affiliate, a wall at the firm’s aluminum plants was “immediately overwhelmed” by water flooding from the Xiaofu river Sunday night.

Chinese Cities Fail to Meet Pollution Curb Targets

China has continued its battle against pollution, but some cities have failed to meet their targets.

According to another Reuters report, China’s steelmaking province of Hebei is summoning the leaders of three cities — Handan, Hengshui and Xingtai — after they did not meet pollution curb targets during the first six months of 2019.

Iron Ore Continues to Fall

After reaching a five-year high earlier this summer, the iron ore price has quickly retraced in recent weeks.

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According to Bloomberg, the iron ore price fell toward the $80 per ton mark, led by concerns regarding slowing economic growth in China.

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This morning in metals news, iron ore prices this week have plunged, the Energy Information Administration (EIA) released its short-term energy outlook and China could weaken its currency further.

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Iron Ore Prices Plunge

After reaching five-year highs earlier this year, aided by supply-side disruptions in Brazil and Australia, the iron ore price has plunged this week.

The iron ore price reached around $120 per ton earlier this year, but has fallen to the $80s this week. According to Bloomberg, iron ore on the Singapore Exchange for September fell as much as 7% to $86.68 per ton, while Dalian Commodity Exchange futures fell as much as 5.1%.

EIA Releases Short-Term Energy Outlook

The EIA released its short-term energy outlook this week, predicting average monthly gasoline prices in the U.S. peaked in May at $2.86 per gallon.

The EIA estimated U.S. crude oil production in July reached 11.7 million b/d, down 0.3 million b/d from June.

Meanwhile, Brent crude spot prices averaged $64 per barrel in July, flat compared with June but down $10 per barrel from July 2019.

China Could Devalue Currency Further

Recently, the U.S. Treasury Department officially designated China a currency manipulator after China devalued its currency to levels not seen since the financial crisis.

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According to The New York Times, China could devalue its currency further. Per the report, on Thursday China’s central bank set the midpoint of the renminbi’s daily trading range above 7 to the U.S. dollar for the first time in over a decade.