Articles in Category: Commodities

freshidea/Adobe Stock

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:

Need buying strategies for steel? Request your two-month free trial of MetalMiner’s Outlook

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

nikitos77/Adobe Stock

This morning in metals news, Vale’s resumption of activities boosted its iron ore production to its highest level in nine months, ArcelorMittal released its second-quarter financial results and a U.S. judge blocked a planned copper project in Arizona.

Need buying strategies for steel? Request your two-month free trial of MetalMiner’s Outlook

Vale Production Surges in July

After Brazilian miner Vale resumed production at its largest mine in the Minas Gerais state, its iron ore production soared 16.6% in July from the previous month, Reuters reported.

Earlier this year, a fatal tailings dam breach at Vale’s mine in Brumadhinho impacted operations and helped send iron ore prices upward.

ArcelorMittal Releases Q2 Results

Steelmaker ArcelorMittal reported Q2 2019 EBITDA of $1.6 billion and 1H 2019 EBITDA of $3.2 billion, which was down 42.6% on a year-over-year basis.

Second-quarter shipments of steel and iron ore rose 4.8% and 6.1%, respectively, on a year-over-year basis.

“Given weak demand and high import levels in Europe, the Company has taken steps to align its European production levels to the current market demand,” the steelmaker said. “As a result of previously announced European production curtailments, approximately 4.2Mt of annualized production curtailment is scheduled for 2H 2019.”

Judge Blocks Arizona Copper Project

A U.S. judge blocked a copper project previously approved by the U.S. Forest Service, the Associated Press reported.

Want to a see Cold Rolled price forecast? Get two monthly reports for free!

The previously approved project included plans for a $1.9 billion mine in Arizona’s Coronado National Forest.

nikitos77/Adobe Stock

Copper has been buffeted by macroeconomic and political news, suffering from trade tensions and fear of slowing growth in top consumer China. Conversely, iron ore has been trading at recent five-year highs this month, topping U.S. $130/ton amid reports of tight supply and robust demand. (We wrote last week about the apparent disparity between copper and iron ore price direction in China.)

Need buying strategies for steel? Request your two-month free trial of MetalMiner’s Outlook

But a report in the Financial Times suggests what we may be seeing is simply a mismatch of timing.

The relatively well-supplied copper market has shown weakness in the absence of any supply-side dynamic to support higher prices. This comes despite, as we observed, falling treatment charges suggesting ore supply is getting tighter. Iron ore, on the other hand, has suffered supply outages from Brazil and constraints in Australia that, coming on top of historically low Chinese port inventories, has driven short-term demand this year and forced prices up.

That may be about to change, the Financial Times suggests.

The article focuses on miner Anglo American’s surprise decision to return $1 billion to investors via a buyback alongside $800 million as an interim six-month dividend this month.

The move is not in and of itself surprising, as Anglo has made record profits on the back of strong iron ore prices and a stellar rise in palladium prices. The miner reported a 19% increase in underlying earnings to $5.5 billion in the six months to June.

What is noteworthy is, despite the apparently strong position for both metals, Anglo has made no commitments — not even hints — that it will continue with buybacks in the year ahead.

The firm justifies its position by saying, “In terms of capital allocation, is it sustainable? Well, no. It’s a one-off . . . until such time as we accumulate more cash,” Anglo’s finance director Stephen Pearce is quoted as saying by the Financial Times. “It’s very much an ‘earn it before we think about it’ policy.”

What does that tell us about the miner’s expectations for iron ore prices in the year ahead?

The report observes the price of iron ore has fallen back to $118 per ton since its high, as the pace of stock declines at Chinese ports has started to slow in recent weeks — a signal that supply is starting to recover from problems earlier this year, according to analysts.

On top of that, there has been an increase in Chinese steel inventories, indicating output could slow in the second half of the year.

Steel prices had been supported by environmentally promoted steel mill closures, restricting supply as government-supported housing construction drove demand. However, although anti-pollution measures are expected to continue, it will require further stimulus to keep the housing market running at the current pace.

Anglo may be right to set cautious expectations about its ability to earn big rewards from iron ore in the near term.

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

For the time being, at least, peak iron ore may already have been breached.

leszekglasner/Adobe Stock

This morning in metals news, the nickel price rally appears to have lost some steam, iron ore prices have started to come back down to earth and a Chinese company pulls out of the bidding for British Steel.

Need buying strategies for steel? Request your two-month free trial of MetalMiner’s Outlook

Nickel Price Slides

After surging earlier this month, the nickel price has come back down this week.

LME nickel was bid down 3.6% in official rings Thursday, Reuters reported, one week after the metal reached its highest price in a year.

Iron Ore Pendulum Swings Back

Iron ore miners have benefited from a skyrocketing price of the steelmaking raw material this year, surging well past $100 per ton.

Iron ore has received supply-side support from events in Brazil and Australia this year. In January, a tailings dam collapsed at Vale’s Corrego do Feijao mine in Brazil, killings hundreds. In addition, adverse weather conditions impacted iron ore operations in Western Australia.

However, the iron ore price has started to come back down; Australian miners are feeling the effect. In addition to the falling iron ore price, news of a potential ramp-up of production by Vale helped push shares down for a number of iron ore miners, the Sydney Morning Herald reported.

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

Rio Tinto, for example, saw its shares fall 4.2% Thursday, while BHP fell 1.8% and Fortescue Metals Group dropped 5.5%.

Chinese Company Pulls Out of British Steel Bidding

After British Steel was ordered into liquidation in May, companies had the opportunity to bid for the troubled firm — the U.K.’s second-largest steelmaker — as thousands of jobs hang in the balance.

According to the Financial Times, however, Chinese company Jingye Group has pulled out of the bidding, despite reportedly having previously put in a bid to acquire the entire business. There has been speculation regarding whether or not British Steel would be able to find a buyer for the entire business, as opposed to interest in parts of its assets.

Pavel Ignatov/Adobe Stock

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:

Need buying strategies for steel? Request your two-month free trial of MetalMiner’s Outlook

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

vadiml/Adobe Stock

This morning in metals news, Colombia could look to make itself a factor in the copper market, Aus Tin announced that it had begun the first phase of its Taronga tin project and Rio Tinto announced its Q2 2019 production results.

Need buying strategies for steel? Request your two-month free trial of MetalMiner’s Outlook

Colombia and Copper

The head of Colombia’s national mining agency said the country is looking to become a bigger producer of copper in the near future, Reuters reported.

Silvana Habib, president of the Colombia Mining Agency, said she wants to see Colombia in the “ranking of copper-producing countries in the short and medium term,” according to the report.

Aus Tin Kicks Off Taronga

Aus Tin recently commenced the first stage of its Taronga project in New South Wales, Australia, according to the International Tin Association.

According to the ITA, production expectations over the nine-year life of the mine come in at 2,800 tons of tin per year.

Rio Unveils Q2 Production Results

Rio Tinto posted Pilbara iron ore shipments of 85.4 million tons in Q2, up 24% from Q1 but down 3% on a year-over-year basis.

Meanwhile, iron ore production reached 79.7 million tons, up 5% from the previous quarter but down 7% on a year-over-year basis.

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

“We saw a challenging operational performance across our portfolio in the first half, while also investing in future growth at Richards Bay Minerals and Resolution,” Rio Tinto CEO J-S Jacques said in a release. “Whilst we experienced operational and weather issues at our iron ore operations in Australia, pricing and market demand has remained robust.”

vadiml/Adobe Stock

This morning in metals news, BHP forecasts increases in copper and iron ore production, Alcoa released its second quarter financial results and ArcelorMittal USA is asking its suppliers to cut costs.

Need buying strategies for steel? Request your two-month free trial of MetalMiner’s Outlook

Copper and Iron Ore

Miner BHP Billiton forecast an increase in copper and iron ore production for the coming fiscal year, according to Kitco News.

BHP forecasts an increase in copper production between 1% and 8% and an increase of between 2% and 6% for iron ore.

Alcoa Releases Q2 Results

Pittsburgh-based aluminum firm Alcoa announced Q2 revenue of $2.71 billion, about flat with Q1, but down from the $3.6 billion in Q2 2018.

Alcoa posted adjusted EBITDA of $455 million in Q2, down from $467 million in Q1 and from the $783 million in Q2.

ArcelorMittal USA Asks Suppliers to Cut Costs

According to S&P Global Platts, ArcelorMittal wants its suppliers to cut costs in a steel market that has lost some steam over the past year.

MetalMiner Executive Editor Lisa Reisman argues the move sends the wrong message and could be harmful for ArcelorMittal’s otherwise strong brand.

“Research has shown that establishing strong win-win supply arrangements always yields better outcomes relative to product innovation, quality, reliability, etc.,” Reisman said. “It’s an absolute mistake to wield a hammer as a punishment for margin erosion due to falling prices.”

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

Reisman said the company should have hedged some of its sales with exchange-traded products (like the CME HRC contract). In addition, with prices likely having hit their bottom and a cyclical uptick being very possible, the request for lower prices could be unsuitable to near-term market conditions.

What happens from here remains to be seen, but Reisman argued this move could have repercussions, including suppliers questioning the move and potentially reconsidering their allocations to ArcelorMittal in future tight markets.

freshidea/Adobe Stock

This morning in metals news, the United States Trade Representative USTR once again dished up criticism of the World Trade Organization’s (WTO) Appellate Court, China aims to mitigate the impact of rising iron ore prices on its steelmakers and India’s steel exports have plunged over the last year.

Need buying strategies for steel? Request your two-month free trial of MetalMiner’s Outlook

‘Determined to Take All Necessary Steps’

The USTR took aim Tuesday at a WTO Appellate Court ruling on China’s countervailable subsidies.

“Today’s appellate report recognizes that the United States has proved that China uses State-Owned Enterprises (SOEs) to subsidize and distort its economy,” the USTR said in a prepared statement. “Nonetheless, the majority in the report says that the United States must use distorted Chinese prices to measure subsidies, unless the U.S. provides even more analysis than the hundreds of pages in these investigations.  This conclusion ignores the findings of the World Bank, OECD working papers, economic surveys, and other objective evidence, all cited by the United States.”

The Trump administration has often criticized the WTO; the USTR said the recent report “also illustrates the concerns the United States has been raising about the Appellate Body’s functioning.”

“The United States is determined to take all necessary steps to ensure a level playing field so that China and its SOEs stop injuring U.S. workers and businesses,” the USTR concluded.

China’s Steelmakers and Rising Iron Ore Prices

Steelmakers in China have been feeling the pressure this year amid a surge in iron ore prices.

The Chinese government hopes it can do something to reverse the upward trend in the steelmaking material’s cost.

According to Reuters, in a government meeting with steelmakers, the former promised to keep “order” vis-a-vis the iron ore market.

Indian Steel Exports Down

India’s steel exports fell 34% in 2018-2019 compared with the previous fiscal year, the Hellenic Shipping News reported.

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

Exports fell to 6.36 million tons during fiscal year 2018-2019, according to the report.

kropic/Adobe Stock

This morning in metals news, President Donald Trump is expected to sign an executive order calling for heightened steel content thresholds for federal projects, Japanese firm Nippon Steel is planning to offload $1.9 billion in assets in order to purchase India’s Essar Steel and Chinese iron ore prices are getting a boost from a positive demand outlook.

Need buying strategies for steel? Request your two-month free trial of MetalMiner’s Outlook

Trump to Sign Executive Order

President Donald Trump will sign an executive order Monday calling for higher steel content thresholds for federal projects, according to White House trade adviser Peter Navarro in an opinion piece published by Fox News.

According to Navarro, the order will call for the raising of the domestic steel content threshold for federal projects from 50% to 95%.

The president also signed a proclamation hailing this week “Made in America Week.”

Nippon Steel to Buy Essar Steel

Japan’s Nippon Steel plans to offload $1.9 billion in assets toward its purchase of India’s Essar Steel, according to the Nikkei Asian Review.

According to the report, Nippon’s plans to sell approximately 200 billion yen in assets comes in at about twice the amount initially expected to be offloaded to finance the deal.

Chinese Iron Ore Price Gains

Expectations of rising demand boosted Chinese iron ore and coke prices Monday, Reuters reported.

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

According to Reuters, the most-traded September iron ore contract on the Dalian Commodity Exchange surged 2.3% on Monday to 895 yuan ($130.22) per ton.

Zerophoto/Adobe Stock

This morning in metals news, China’s copper import levels fell in June, the U.S.-China trade war saw China’s imports of U.S. goods plunge in June and BHP has long-term designs on mine expansion over the next century.

Need buying strategies for steel? Request your two-month free trial of MetalMiner’s Outlook

China Copper Imports Fall

Imports of copper in China fell 27% on a year-over-year basis, Reuters reported.

In addition, unwrought imports in 1H 2019 fell 12.5% compared with the same period in 2018.

Trade War Slows U.S.-China Trade

Unsurprisingly, ongoing trade tensions between the U.S. and China have seen trade between the two countries slow considerably.

Citing Chinese customs data, the Associated Press reported China’s imports of U.S. goods fell 31.4% in June on a year-over-year basis. Meanwhile, Chinese exports to the U.S. in June fell 7.8%.

Miner BHP Could Expand Significantly

According to Bloomberg, miner BHP Billiton says it could build as many as 11 more iron ore mines in Australia’s Pilbara region over the next 50-100 years.

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

Iron ore prices have surged this year to five-year highs amid supply disruptions in Brazil and Australia.