Articles in Category: Company News

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This morning in metals news, India is considering upping its steel import duty, China’s spending on subways could assist its steel sector and an update in the Rusal sanctions saga.

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Supporting the Rupee

In order to give support to its currency, the Indian government is considering increasing its import duty on some steel products, according to a Reuters report.

Current duties range from 5% to 12.5%, according to the report, while the government is considering raising the duty to 15%.

Steel and Subways

China’s push toward subway investment could be a boon for its steel sector, Reuters reported.

Last month, the cities of Suzhou and Changchun announced plans to spend the equivalent of billions of dollars to add approximately 1,000 miles to their underground subway systems, according to the report.

A Little Leeway

With the Oct. 23 deadline approaching, many are wondering if the U.S. will in fact rescind the sanctions imposed back in April on Russian companies (including aluminum giant Rusal).

Even so, a new development could help to mitigate the type of market reaction seen in April, when aluminum prices skyrocketed on the news of the sanctions.

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According to Bloomberg, the U.S. Treasury Department is allowing Rusal’s existing customers to negotiate new contracts.

The aluminum market is facing much more uncertainty now than it was in February 2018 when Norsk Hydro agreed with Rio Tinto to buy the 205,000-ton-per-year capacity ISAL aluminum smelter, located in Hafnarjordur, Iceland.

According to the Financial Times, that deal included the balance 53.3% share in the Aluchemie anode plant in the Netherlands that Hydro does not own and a 50% share in the aluminum fluoride plant in Sweden, from Rio Tinto.

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The transaction to acquire Rio’s last remaining aluminum assets in Europe was initially expected to be finalized in the second quarter of 2018 following the surprise agreement by Rio to sell its aluminum Dunkerque smelter in France to Liberty House for U.S. $500 million in June.

The announcement of sanctions on Oleg Deripaska in April this year — and by extension En+ and Rusal, the largest aluminum producer outside of China — has cast some doubts on alumina supplies for European smelters, as Rio sources some of the alumina for its ISAL plant from the Russian company’s Aughinish refinery in Ireland.

But Rio seemed quite confident it could source alumna from elsewhere and Norsk Hydro certainly has enough alumina supply options around the world that raw material supply should not be a major issue.

No, the main reason the firm pulled out seems to be the initial feedback from the E.U. competitions authority, which was raising concerns about market domination reducing competition in Europe if the deal had gone through.

Norsk Hydro makes around 2.1 million tons of primary aluminum a year and ISAL would further consolidate its position as the largest primary supplier in the European market. However, competition authorities may still have had one eye on the Rusal situation.

If, as some are now beginning to question, the sanctions are not lifted in October when the current extension expires, primary metal supply will become very tight in Europe again.

Rusal produced some 3.7 million tons last year according to its annual accounts. While a proportion is consumed domestically, some 0.9 million tons, a significant percentage is exported to the European market, usually under annual supply agreements. If that tonnage is denied the European market due to sanctions, competitions authorities may worry the remaining suppliers will have too much influence to ensure an open and competitive marketplace.

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Fortunately, Rio is making good profits out of its aluminum business, the Financial Times reports — some U.S. $1.58 billion last year — so it is hardly desperate for a sale.

Still, investors were not heartened by the news. Rio’s share price dropped $0.14 on the news, down nearly 16% from its 2018 high of $86.75 in May of this year.

Source: wto.org

This morning in metals news, China went to the World Trade Organization to file a complaint regarding the U.S.’s $200 billion worth of tariffs announced Monday, Nucor resumes operations in the Carolinas following Hurricane Florence and copper prices rally.

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China Goes to the WTO

Following the U.S.’s announcement Monday of its intention to slap $200 billion worth of tariffs on imports from China as of Sept. 24, China has gone to the World Trade Organization (WTO) to file a complaint, Reuters reported.

The U.S. announced plans to impose a 10% tariff on $200 billion worth of Chinese imports on Monday.

Nucor Operations Restart in North Carolina, South Carolina

After halting its operations in the Carolinas last week ahead of Hurricane Florence, Nucor’s plants in the two states are back up and running, S&P Global Platts reported.

Copper Prices Rise

Despite an escalation in trade tensions between the U.S. and China, the price of copper rallied Tuesday, Reuters reported.

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LME copper jumped 1.4% Tuesday, according to the report.

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This morning in metals news, President Donald Trump again expressed support for imposing tariffs on imports (as the U.S. considers further tariffs on Chinese goods), shares of the Chinese aluminum giant China Hongqiao fell, and base metals prices are down on the prospect of escalating tariffs between China and the U.S.

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Tweeting for Tariffs

On Monday morning, President Trump expressed support yet again for his administration’s strategy of tariffs:

Tariffs have put the U.S. in a very strong bargaining position, with Billions of Dollars, and Jobs, flowing into our Country – and yet cost increases have thus far been almost unnoticeable. If countries will not make fair deals with us, they will be “Tariffed!”

He also made direct reference to the steel industry:

Our Steel Industry is the talk of the World. It has been given new life, and is thriving. Billions of Dollars is being spent on new plants all around the country!

The U.S. has already slapped a total of $50 billion worth of tariffs on Chinese goods, and, according to The New York Times, the president is expected to announce an additional $200 billion in tariffs on Chinese goods this week, which would mark a significant escalation in tensions between the two countries.

China Hongqiao Shares Fall

Shares in Chinese aluminum maker China Hongqiao dropped on the news of new fees announced by Shandong province, Reuters reported.

Shares fell by as much as 8.5% Monday after falling nearly 16% Friday, according to the report.

Base Metals Prices Drop

Speaking of trade tensions, said tensions have had a depressive effect on base metals prices, according to Reuters.

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Base metals prices fell across the board Monday in anticipation of an expected announcement this week from the U.S. regarding an additional $200 billion in tariffs on Chinese goods.

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This morning in metals news, the United Steelworkers union is reportedly not happy with U.S. Steel’s latest contract proposal, Vice President Mike Pence touts a steel resurgence in Michigan and South Korean firms seek an exemption from the E.U. steel safeguards.

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Union Not Happy with U.S. Steel Proposal

Contract talks are ongoing between U.S. Steel and the union representing its workers, United Steelworkers. However, according to a report by the Times of Northwest Indiana, the firm’s latest proposal wasn’t met positively by the union.

Pence Visits Michigan, Talks Steel Comeback

In a visit to a steel processing facility in Grand Rapids, Michigan, Vice President Mike Pence touted the administration’s steel tariff and its role in aiding the steel industry, the Detroit News reported.

“Get ready to get even busier,” the vice president told company officials and hard-hat workers during a speech at the steel processing facility, according to the report.

South Korea Seeks Exemptions

South Korean steel producers are looking to win exemptions on provisional steel safeguards imposed by Europe, S&P Global Platts reported.

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Steel product exports from South Korea into Europe amount to 3.24 million mt per year, according to the report.

Nucor Suspends Operations at Two Mills Ahead of Hurricane Florence

Nucor halted operations at two of its mills in the Carolinas ahead of the expected impact of Hurricane Florence on Thursday, according to an Argus report.

The plants in question are Nucor’s Berkeley, South Carolina sheet mill and its Hertford, North Carolina plate mill.

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This morning in metals news, Nucor announced plans late last week to invest $650 million in its Kentucky sheet mill, ArcelorMittal put in a revised bid for Essar Steel and China warns it will retaliate if the U.S. imposes further tariffs.

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A Big Investment

The Nucor Corporation announced Friday that it planned to invest $650 million in to expand the production capability of Nucor Steel Gallatin, its flat-rolled sheet steel mill in Ghent, Kentucky.

“This investment is another major component of our planned strategy for long-term profitable growth,” said John Ferriola, chairman, CEO and president of Nucor. “Together with the new galvanizing line, this expansion increases our presence in the important Midwest market, specifically in the automotive, agriculture, heavy equipment, and energy pipe and tube sectors.”

According to the release, Nucor acquired the former Gallatin Steel Company in late 2014 for approximately $780 million.

ArcelorMittal Revises Essar Bid

ArcelorMittal submitted a higher bid for the bankrupted Essar Steel, the Economic Times reported.

According to the report, the new bid is higher than the bid submitted by another suitor, Numetal.

China Warns of Tariff Retaliation

As the U.S. mulls whether to impose tariffs on Chinese goods worth approximately $200 billion, China warned it would retaliate against additional tariffs, ABC News reported.

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In addition, President Donald Trump indicated Friday he was considering tariffs on an additional $267 billion worth of goods (in addition to the aforementioned $200 billion currently under review).

To be fair, not all shale gas drilling is slowing, but in the Permian Basin, which has seen the most incandescent growth in recent years, according to the Financial Times, growth is slowing markedly, according to Schlumberger, Halliburton and the U.K.’s Weir Group – all majors suppliers to, or active players in, the fracking industry.

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Source: Financial Times

The article cites logistical challenges, including labor costs and a lack of adequate pipeline capacity constraining growth. The article states the following factors have undermined the economics of oil production in the region:

  • rising costs for labor and equipment
  • difficulties in disposing of the unwanted water and natural gas produced alongside the oil
  • and, above all, a shortage of pipeline capacity for taking crude from the wilds of west Texas to refineries and export terminals along the Gulf of Mexico coast.

The Financial Times quotes Bill Thomas, chief executive of EOG Resources, who said: “When you’re focused on one basin, one play, it gets very difficult to continue high rates of growth.”

Source: Financial Times

From a low two years ago, the tight oil industry’s rebound has been impressive. Much of it is coming from the Permian Basin, with national production up by 1.5 million barrels a day in the 12 months to July.

But questions are being asked as to whether or not the Permian may be reaching a plateau. New wells drilled alongside older wells are relatively less productive than the original when assessed on the basis of their length and the weight of sand used in the fracking process — so-called “parent” and “child” wells, as the Financial Times calls them.

That would suggest the long-term potential for the region to continue impressive growth at ever-lower cost is called into question.

Whether that proves to be the case remains to be seen. Of course, the Permian is not the only tight oil resource in the country. While others haven’t seen the level of investment the Permian has enjoyed in the last two years, subject to oil prices, the other regions still have huge potential.

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What it probably does say is the stellar growth of recent years is unlikely to continue and may be slower from the middle of this year onwards. With the dramatic rise in steel prices following the U.S.’s imposition of a 25% import tariff on steel products, it was to be expected drillers would find both exploratory work and infrastructure investment slowing. However, the Financial Times suggests the slowdown has caught many in the industry by surprise and suppliers’ share prices have taken a hit as a result.

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This morning in metals news, the U.S.’s steel import market share was 21% last month, ArcelorMittal reached a provisional deal with the trade unions of Italy’s Ilva and the Bureau of Labor Statistics released U.S. employment data for August.

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Steel Import Market Share

The American Iron and Steel Institute (AISI) released its Steel Import Monitoring and Analysis (SIMA) data for August this week, reporting that steel import market share hit 21% for the month.

Market share for the year to date sits at 24%, according to the SIMA report.

ArcelorMittal Reaches Deal with Ilva Unions

As part of its takeover bid of the Italian firm Ilva, ArcelorMittal reached a provisional agreement with Ilva’s trade unions, the Luxembourg-based firm announced.

According to the ArcelorMittal release announcing the provisional agreement, the terms need to be voted on by Ilva employees before being formally ratified.

“The agreement we have reached with Ilva’s unions meets the two major objectives we set out at the start of negotiations: to find an acceptable solution for every employee at Ilva; and to reach an agreement that reflects Ilva’s economic reality and provides a sound base for it to have a sustainable future,” said Geert Van Poelvoorde, CEO of ArcelorMittal Europe Flat Products, in a prepared statement. “I would like to thank the Minister of Economic Development for his support and also the union representatives with whom we engaged during these discussions. They are a very important stakeholder and we will work to maintain a positive and constructive dialogue with them in the future.”

One of the terms of the agreement includes an ArcelorMittal commitment “to initially hire 10,700 workers based on their existing contractual terms of employment.”

U.S. Unemployment Flat; Jobs Added in Mining

According to the latest Bureau of Labor Statistics employment report, U.S. unemployment hit 3.9% in August, unchanged from the previous month.

Nonfarm payroll employment increased by 201,000 last month. Mining was among the sectors seeing job gains last month, having added 6,000 jobs in August.

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“Since a recent trough in October 2016, the industry has added 104,000 jobs, almost entirely in support activities for mining,” the report states.

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This morning in metals news, customers reportedly are set to avoid Rusal during a crucial upcoming industry gathering in Berlin, Tata Steel announces a new sustainable steelmaking procedure and NAFTA negotiations pick up again today after a long Wednesday night of talks.

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Cold Shoulder

According to a Reuters report, customers plan to avoid Rusal during an upcoming industry gathering in Berlin, during which firms lock up 2019 aluminum supply deals.

The Russian aluminum giant was hit with U.S. sanctions in April, which sent the aluminum market into shock and yielded skyrocketing prices.

Prices came back down when the U.S. Treasury Department extended the deadline for firms to unwind business with Rusal by Oct. 23.

However, according to the Reuters report, some customers aren’t optimistic that that sanctions will in fact be lifted.

Sustainable Steelmaking

Tata Steel on Thursday announced a new steelmaking process that it claims will cut carbon dioxide emissions stemming from the steelmaking process by half, the Economic Times reported.

The firm conducted testing at its Ijmuiden site in the Netherlands, according to the report.

NAFTA Talks Resume

NAFTA renegotiation efforts are set to continue today after what was reportedly a long night of talks on Wednesday.

Canadian Prime Minister Justin Trudeau recently commented that “No NAFTA is better than a bad NAFTA deal.”

Meanwhile, on Saturday President Trump tweeted: “There is no political necessity to keep Canada in the new NAFTA deal. If we don’t make a fair deal for the U.S. after decades of abuse, Canada will be out. Congress should not interfere w/ these negotiations or I will simply terminate NAFTA entirely & we will be far better off…”

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The U.S. and Mexico have already reached an agreement in principle on certain provisions of NAFTA; following that, the U.S. and Canada picked up talks last week in an effort to bring the latter into the fold.

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This morning in metals news, the U.S. steel industry posted its highest weekly capacity utilization ratio since 2014, U.S. Steel workers hope to see a windfall from rising steel prices and Canada is holding firm in NAFTA talks.

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Steel Capacity Utilization Rises

The U.S.’s steel capacity utilization rate for the week ending Sept. 1 hit its highest level since 2014, according to S&P Global Platts.

According to the American Iron and Steel Institute (AISI), the rate hit 79.8% for the week. Production for the week reached 1.87 million net tons.

U.S. Steel Workers Want Trade War Benefits

Workers at U.S. Steel, whose contract ran out Sept. 1, remain on the job — but they’re looking for the benefits from a trade war that has yielded rising steel prices, Bloomberg reported.

According to a statement from United Steelworks (USW), the union has not received a pay increase in three years.

NAFTA Talks Continue

Talks between the U.S. and Canada continued from last week into this week on the heels of an agreement in principle reached between the U.S. and Mexico.

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However, Canada is holding firm and indicating it does not plan to agree to just any deal to modernize the 24-year-old trilateral trade pact, according to a government source cited by Reuters.