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This morning in metals news, the price of copper has surged to an eight-month high, Nucor earlier this month announced a new coil paint line and iron ore prices were also up on the final Friday of 2019.

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Copper prices rise

On this final Friday of the year, copper prices are up to their highest level in eight months, Reuters reported.

According to the report, LME three-month copper jumped 0.7% to $6,256 per ton.

Nucor to add new Arkansas coil paint line

Earlier this month, Nucor Corporation announced it would be adding a new coil paint line at its sheet mill in Mississippi County, Arkansas.

According to the company, the new line is expected to come onstream as of the first half of 2022 and will have a capacity of 250,000 tons per year.

Nucor’s Arkansas facility produced hot-rolled sheet steel for a wide range of applications, including automotive, appliances and construction, among others.

Iron ore up on China’s lifting of anti-smog alert

According to another Reuters report, iron ore futures received a boost when China’s top steelmaking city, Tangshan, lifted anti-smog measures.

The lifting of the measures is expected to lead to increased demand for the steelmaking raw material iron ore.

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

The most-traded iron ore contract on the Dalian Commodity Exchange jumped 1.2% to 642.50 yuan per ton ($91.83), 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 coverage here on MetalMiner, including coverage of: India’s Hindalco, U.S. steel capacity utilization, Trump’s trade deals, the Department of Commerce’s circumvention rulings on steel routed through Vietnam, U.S. industrial production and more.

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• Sohrab Darabshaw delved into Hindalco’s plans to diversify its operations amid challenging conditions for aluminum in India.
• Rio Tinto’s Pacific operations recently gained Aluminum Stewardship Initiative certifications.
• Stuart Burns on what 2020 might have in store in terms of economic growth.
• Don Hauser overviewed recent trade developments related to the USMCA and U.S.-China talks.
• The European Commission has a proposal aimed at protecting its trade rights amid a deadlock in the World Trade Organization’s Appellate Body.
• The U.S. steel sector’s capacity utilization rate hit 80.1% for the year through Dec. 14.
• The Department of Commerce issued affirmative determinations related to circumvention of steel products produced in Korea and Taiwan but shipped through Vietnam.
• U.S. industrial production bounced back in November.
• ArcelorMittal and Nippon Steel recently completed acquisition of the debt-ridden Indian steelmaker Essar Steel.

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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This morning in metals news, Alcoa announced the closure of its Point Comfort alumina refinery, Glencore makes an acquisition and Alro Steel will open a new facility in February 2020.

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Alcoa to close Point Comfort refinery

Alcoa announced this week it plans to permanently shutter its Point Comfort alumina refinery in Texas.

The plant, which boasted an annual alumina capacity of 2.3 million tons, has been fully curtailed since June 2016.

“In October of 2019, Alcoa announced that it was conducting a review of its global production capacities to drive lower costs and sustainable profitability,” the company said. “The review includes 4 million metric tons of alumina capacity, or approximately 27 percent of the Company’s total global refining capacity.”

Glencore to buy LNG business

In other company news, Glencore has announced it has reached an agreement to acquire the liquefied natural gas (LNG) business of Orsted A/S.

“The agreement will involve Glencore novating a number of contracts, including the right to use 3bcm of annual regasification capacity at the Gate terminal in Rotterdam until 2031,” Glencore said. “The agreement also includes a number of LNG supply contracts.”

Alro Steel to open new Oshkosh facility

Meanwhile, Alro Steel announced construction on a new plant in Oshkosh, Wisconsin, is expected to be completed in February 2020.

The new 200,000-square-foot facility will replace Alro’s older, 54,000-square-foot plant in Oshkosh.

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

“This will allow Alro to expand our product offerings and processing capabilities and focus on cut-to-size metals with next day delivery to Wisconsin customers,” the company said in a release.

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This morning in metals news, the United States Trade Representative outlined the mini-trade deal reached with China late last week, ArcelorMittal and Nippon Steel completed their acquisition of Essar Steel, and the Pilbara Ports Authority saw its November throughput increase 8% year over year.

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Trade deal calls for China to make ‘substantial additional purchases’ of U.S. goods

Late last week, the U.S. and China announced they had reached a deal in principle on a mini-trade deal that would see the U.S. pull back on $160 billion in tariffs on Chinese goods in exchange for the latter’s agreement to purchase more U.S. agricultural goods.

In 2017, U.S. agricultural exports to China reached $23.8 billion, accounting for 17% of all U.S. agricultural exports. The U.S.’s agricultural exports reached a high of $29.4 billion in 2013.

In an interview Sunday on CBS’ “Face the Nation,” United States Trade Representative (USTR) Robert Lighthizer said agricultural exports to China are expected to reach between $40 billion and $50 billion annually over the next two years, Reuters reported.

While the text of the agreement itself has yet to have been made public, the USTR summarized the deal in a release Friday.

“The United States and China have reached an historic and enforceable agreement on a Phase One trade deal that requires structural reforms and other changes to China’s economic and trade regime in the areas of intellectual property, technology transfer, agriculture, financial services, and currency and foreign exchange,” the USTR said. “The Phase One agreement also includes a commitment by China that it will make substantial additional purchases of U.S. goods and services in the coming years. Importantly, the agreement establishes a strong dispute resolution system that ensures prompt and effective implementation and enforcement. The United States has agreed to modify its Section 301 tariff actions in a significant way.”

According to the USTR fact sheet, the deal includes chapters covering: intellectual property, technology transfer, agriculture, financial services, currency, expanding trade and dispute resolution.

ArcelorMittal, Nippon complete Essar acquisition

After a long and winding process that has played out in the courts over the last two years, ArcelorMittal and Nippon Steel have finally completed their acquisition of the insolvent Indian steelmaker Essar Steel.

The joint venture will be called ArcelorMittal Nippon Steel India Limited, which will run Essar Steel; ArcelorMittal owns 60% of the joint venture, with Nippon holding the balance.

“The acquisition of Essar Steel is an important strategic step for ArcelorMittal. India has long been identified as an attractive market for our company and we have been looking at suitable opportunities to build a meaningful production presence in the country for over a decade,” ArcelorMittal Chairman and CEO Lakshmi Mittal said. “Both India and Essar’s appeal are enduring. Essar has sizeable, profitable, well-located operations and the long-term growth potential for the Indian economy and therefore Indian steel demand are well known. The transaction also demonstrates how India benefits from the Insolvency and Bankruptcy Code, a genuinely progressive reform whose positive impact will be felt widely across the Indian economy.”

PPA sees November throughput rise 8%

Australia’s Pilbara Ports Authority recently reported November shipments increased 8% on a year-over-year basis.

Total throughput for the 2018-2019 fiscal year reached 291.5 million tons, marking a 2% year-over-year increase.

Port Hedland, a critical iron ore terminal, saw throughput of 43.8 million tons (43.3 million tons of which was iron ore), which marked a 9% year-over-year increase.

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

Meanwhile, imports of 158,000 tons in November at Port Hedland marked a 45% year-over-year increase.

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Before we head into the weekend, let’s take a look at the week that was and some of the metals storylines here on MetalMiner:

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• Stuart Burns on President Donald Trump’s recent announcement regarding tariffs on steel and aluminum from Argentina and Brazil.
• Nickel prices have seen a significant downward correction.
• November proved to be a solid month for automotive sales in the U.S. market.
• Burns delved into the economic and political situation in Zimbabwe, plus their implications on mining.
• India appears set to become a net importer of iron ore next year.
• U.S. construction spending in October picked up 1.1% on a year-over-year basis.
• Oil behemoth Saudi Aramco finally floated some shares, albeit only on the Riyadh exchange.
• Australian rare earths miner and processor Lynas Corp. announced the site for its new cracking and leaching plant.
• Indian steel demand fell in October for the first time in seven months.
• U.S. steel prices have bounced back over the last month.
• The spread between palladium and platinum widened this past month.
• Glencore announced a cobalt supply deal with South Korean company SK Innovation.
• Power outages in South Africa resulted in price support for palladium and platinum.

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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This morning in metals news, the European Steel Association (EUROFER) offered its reaction to the new European Green Deal, China’s steel output could fall next year and China’s imports of iron ore dropped in November.

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EUROFER lauds carbon border adjustment mechanism in European Green Deal

This week, the E.U. unveiled the European Green Deal, which EUROFER largely supported in a statement Wednesday.

“We welcome the aims of the European Green Deal,” said Axel Eggert, EUROFER director general. “In charting a series of sectoral and specific policy plans, it is clear policymakers take seriously the need to transition to a carbon-neutral future with industry, rather than without it.”

EUROFER also highlighted the initiative’s carbon-neutral ambitions, particularly through the lens of steelmaking and competition against lower-lost, less “green” steel producers.

“It is now of utmost importance to develop a regulatory framework that creates markets for CO2-neutral products: these have significantly higher production costs, for example because of the use of highly-priced hydrogen instead of coking coal in the steelmaking process,” Eggert said. “Policymakers must establish – jointly with us – how ‘green’ steel can compete against carbon-intense, low-cost steel imports that have a significantly higher CO2 footprint than EU-made steel.

“The EU seeks to make Europe the first carbon-neutral continent by 2050, which is a high ambition. The steel industry is already working on a range of low- and carbon-neutral solutions that could lead to reductions in CO2 emissions from steelmaking by up to 95% in 2050 under an optimum regulatory framework. It is why a partnership on clean steel – as well as other means to ensure the steel industry remains competitive even as it becomes carbon-lean – is so essential.”

China’s steel output to drop in 2020?

Despite mandated winter production cuts over the past few cold seasons, China’s steel output has continued to ascend.

Next year, however, the country’s steel output is expected to come down from its record high set this year, according to the China Metallurgical Planning and Research Institute.

According to Reuters, the institute forecasts steel output will fall to 981 million tons next year, down from 988 million tons this year.

China’s iron ore imports drop

In other China news, the country’s imports of iron ore fell in November, Reuters reported.

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

China imported 90.65 million tons of the steelmaking material last month, down 2.4% from the October import total, according to the report.

After much delay and considerable uncertainty, Saudi Aramco finally got its IPO away, albeit only on the domestic Saudi market and not in New York, London or Hong Kong – yet.

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Shares were priced at $8.53, or 32 Saudi riyals. As such, the IPO will raise $25.6 billion for the kingdom’s coffers and value the company at $1.7 trillion. This was the top end of recent estimates of U.S. $1.1 trillion to $1.7 trillion, according to The New York Times but way short of the Crown Prince’s rumored target of $2 trillion.

At $8.53 per share, the offering is expected to raise $25.6 billion — a fraction of the $100 billion that Prince Mohammad bin Salman originally imagined, the article states.

The challenge has been the market did not view Aramco as favorably as the Saudis did. This comes in part because in a weak oil market and with longer-term threats to fossil fuels, not to mention a risky political backdrop in the Middle East, at $2 trillion the valuation appeared too high relative to other major oil companies.

Some bankers were even talking of a valuation in the range of $1.2 trillion to $1.3 trillion, to which the Saudis are said to have reacted angrily and whipped the IPO away from a team of some 75 international bankers to keep the float domestic. There isn’t sufficient investor demand in the region to enable the Kingdom to realize the value of a full float, so at some stage they will revisit London or New York for a listing there.

That may be a factor in Saudi Arabia’s decision announced at a Vienna meeting of OPEC+ this month to increase the output cuts by an additional 500,000 barrels a day.

The move had the desired effect — boosting the oil price — although it raised as many questions as it answered, not least is that 500,000 extra cutbacks could be off the agreed output limits, rather than off the actual output. Both Saudi Arabia and Angola are said to be producing less than their approved limits already, so if this additional 500,000 barrels reduction is off the agreed limit, then it could be largely cosmetic.

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

Nevertheless, a higher oil price would certainly help the Kingdom’s prospects of achieving a higher value in the future as it gradually offloads its shares in what was billed as the world’s most profitable company.

Talk about an own goal.

India, the fourth-largest iron ore producer in the world, could become a net importer next year, Cogencis reported recently.

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In the April-September period this year, India imported 900,000 tons of iron ore and exported 17.18 million tons partly, due to an oversupply in the domestic market. However, even in 2018, India imported 12.8 million tons of the ore and exported 16.19 million tons, according to the article — a net export of over 3 million tons.

This spectacular own goal has come about because the tenure of 329 non-captive mining leases, including 24 working iron ore mines, is set to expire in March, which contributed roughly 30% to last year’s iron ore output of 210 million tons.

Though the mines would be up for auction from April, the article states, industry officials believe it could take at least 3-4 years for these mines to be operational again because of the time required for new environmental and planning consents.

In and of itself, India’s switch from exporter to importer isn’t going to move the global markets much.

But for a country struggling with its balance of payments, it is an unwelcome burden. For Indian steel producers, the need to import more will raise domestic iron ore prices and, as such, steel input costs for domestic steel mills.

The country generally imports higher-grade iron ore above 60% iron content and exports lower grade below 58% iron content to China, so it will be paying top dollar for Australian or Brazilian premium grade iron ore.

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

Estimates put domestic iron ore prices on track for a 15-20% cost increase next year. As a result, this will reduce Indian mills’ competitiveness on export markets at a time when Chinese steel mills are looking for more export sales if domestic demand weakens there as expected.

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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:

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

• Global steel production contracted in October, according to the World Steel Association.
• We looked back at some of the most-viewed MetalMiner stories from November.
• Global aluminum production rose in October.
• Earlier this week, we released our Monthly Metal Outlook forecast report.
• General Motors and Isuzu are teaming up to build a new Ohio plant via their DMAX joint venture.
• MetalMiner’s Belinda Fuller took a look at the relationship between gold prices and the U.S. dollar.

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Conventional wisdom has suggested we are headed for a significant oil surplus next year, with some commentators talking about a glut.

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

Even respected industry publications like OilPrice.com headlined “IEA Warns Of A Looming Oil Glut Ahead Of OPEC Meeting” this past week, as global oil demand growth has slowed due to weakening economic growth and the continued trade dispute between the United States and China.

The suggestion is OPEC and its partners, principally Russia, are going to have to do more than just rein in a few transgressors of previous quotas like Nigeria and Iraq if they are to keep supply roughly balanced and avoid significant price falls, CNBC reported.

The International Energy Agency’s (IEA) position is premised on projections that non-OPEC supply will rise faster than recovering demand. The IEA sees non-OPEC countries adding another 2.3 million barrels per day (bpd) to their supply in 2020, while global oil demand growth is expected to be around 1.2 million bpd.

Of that amount, the U.S. is predicted by the IEA to add 1.2 million b/d to current levels in 2020.

But is that realistic?

Rig count is a fair measure of likely production growth, although not all wells need to be instantly brought onstream once they have been completed. Cost constraints, however, mean fracking firms rarely plug and store vast numbers of drilled wells.

There is a correlation between rig numbers as a measure of drilling activity and future production – particularly as shale oil wells have a limited life.

Those rig numbers have been falling — see the below graph from Oilprice.com — as we reported earlier this month:

Source: Oilprice.com

That comes partly as the investment market has been turning its back on the fracking industry. In general, the industry is struggling to access credit as easily as it did last year.

In 2018, the shale industry added about 2 million bpd. This year, it has added just a few hundred thousand in the first eight months of this year.

Finance is not expected to improve. Shale is not the hot topic it was – not least because of dire warnings of an oil glut (as demonstrated by the chart above).

In that respect, the U.S. shale industry is remarkably self-regulating. Activity and output, plus demand and supply, move in yearly cycles, rather than the decades of deep ocean or tar sands.

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Front-priced premiums have already begun to increase, suggesting a tightening market.

However, that doesn’t mean we are facing oil price rises. It may mean the price falls some in the industry fear may not be as likely or as deep as the IEA report suggests.