Articles in Category: Exports

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This morning in metals news, China announced some U.S. goods would be exempted from tariffs, steel production is down in the Great Lakes region and copper falls amid declining Chinese auto sales.

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China Announces Tariff Exemptions

The Chinese government announced Wednesday that it will exempt 16 types of U.S. goods from tariffs for one year as of Sept. 17, CNBC reported.

Among the products included in the list of exemptions are food for livestock, lubricants and cancer drugs, CNBC reported.

Steel Production Down in Great Lakes

Steel production in the U.S.’s Great Lakes region in the last week of August declined for the fifth straight week, the Times of Northwest Indiana reported.

Production for the week declined 1.17% from the previous week.

Copper Price Falls

Amid falling Chinese auto sales, the copper price approached a two-year low reached earlier this month, Reuters reported.

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LME copper was bid down 0.6% on Wednesday down to $5,793 per ton, Reuters reported.

The China Association of Automobile Manufacturers reported August automotive sales dropped 6.9% on a year-over-year basis.

GDP figures may be holding up well, but metal consumption in China suggests the global slowdown and the ongoing trade war with the U.S. are taking their toll on China’s manufacturing sector.

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Reuters reported top state primary aluminum producer Chalco is quoted as filing an 8% fall in output, with primary aluminum output of 1.89 million tonnes in the first half of the year, down from 2.06 million tons compared with the first half of 2018.

Overall, revenue actually rose 15% to 94.9 billion yuan, despite a 10% drop in the primary aluminum segment, helped by rising alumina output. Alumina output increased 3.2% year-on-year to 6.82 million tons, fueling a trading revenue increase of 23%.

But higher primary metal costs and weak prices in the primary sector hit profits. In the second quarter alone, Chalco’s net profit dropped 52.7% from a year earlier, while revenue was up 11.3% year on year.

In a separate Reuters article, the news source reported exports have also been hit, falling 4.3% in August from the previous month despite a weaker yuan. Unexpected production outages at two key smelters meant there was less metal available for overseas shipments following flooding at Hongqiao’s premises earlier last month and a separate outage in Xinjiang.

Last month, China exported 466,000 tons of unwrought aluminum, including primary metal, alloy and semi-finished products. The total was the lowest since February and was also down 9.9% from August 2018.

Supporting the aluminum picture, imports of unwrought copper — including anode, refined and semi-finished copper — products into China stood at 404,000 tons last month, Reuters reported, down 3.8% from the 420,000 tonnes in July and also down 3.8% year on year. The article went on to state the decline came despite copper prices in China being mostly high enough in August for traders to make a profit by buying on the London Metal Exchange, the global price benchmark, and selling on China’s Shanghai Futures Exchange (encouraging bookings of physical copper imports into China).

The blame for the drop in demand is laid at China’s bruising trade war with the United States, driving a fourth straight month of contraction in factory output in August, according to an official survey.

China is not alone, of course.

U.S. manufacturing output has remained positive, albeit slower than a year earlier. However, early indicators, like the Institute for Supply Management survey, showed a contraction in August — the first since 2016, according to Bloomberg. That suggests at least parts of the manufacturing landscape are facing rising headwinds; we would be complacent to think the consequences of the trade war are falling solely on China.

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Western Europe is also slowing fast. German manufacturing is arguably already flirting with recession as a consequence of a slowing Chinese economy.

Just as a rising tide lifts all boats, falling global GDP correspondingly depresses prospects for all.

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This morning in metals news, China’s trade activity with respect to aluminum and copper slowed in August, Nucor announced Chairman and CEO John Ferriola will be retiring at the end of the calendar year and residents of an Arizona town expressed staunch opposition to a proposed aluminum recycling plant.

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China’s Aluminum Exports, Copper Imports Fall

China’s imports of copper and exports of aluminum fell in August as the trade war with the U.S. escalated with the most recent exchange of tariffs.

China’s copper imports fell 3.8% in August compared with the previous month, Reuters reported, while aluminum exports fell 4.3% compared with July totals.

Nucor CEO to Retire

Nucor Chairman and CEO John Ferriola will retire at the end of this year, the company reported.

Ferriola has served as chairman since 2014 and CEO since 2013.

Nucor’s Board of Directors elected Leon J. Topalian, 51, to be president and chief operating officer, effective Sept. 5, 2019. Topalian will succeed Ferriola as CEO on Jan. 1, 2020.

Residents Oppose Proposed Arizona Aluminum Recycling Plant

Locals in the Arizona farming town of Wenden have come out in opposition to an aluminum recycling plant proposed for the town, reported.

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According to the report, residents urged officials from the Arizona Department of Environmental Quality not to grant an air-quality permit for the proposed Alliance Metals plant.

Norsk Hydro’s Alunorte refinery. Source: Norsk Hydro

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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Indonesia shook up the nickel market, announcing that it will move up its planned nickel ore export ban by two years.

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Indonesia announced that its export ban on nickel ore will be advanced to Jan. 1, 2020 — two years ahead of the initial deadline.

With an additional 25 smelters set to open — on top of the 11 existing smelters — the country plans to reserve nickel stockpiles, currently estimated at between 600 million and 700 million tons, for downstream domestic production. Indonesia’s nickel ore reserves total around 2.8 billion metric tons.

The Jakarta Post reported the ban comes as the country aims to bolster the development of domestic smelters.

In July, the Indonesian government’s reassertion of plans to impose the export ban sent nickel prices rising, MetalMiner’s Stuart Burns explained.

Now, however, miners have until the end of the year to execute exports of nickel ore from Indonesia.

JFX Announces Physical Tin Contract

In other news from Indonesia, the Jakarta Future Exchange (JFX) in Indonesia will launch a new physical tin contract.

As noted by the International Tin Association (ITA), the new contract is backed by the country’s top tin producer, PT Timah.

According to the ITA, the addition of a physical tin contract does not help private smelters.

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“While the option of a different trading contract is interesting, this does not help private smelters, who remain unable to export due to regulations set by the central government, rather than by one of the country’s exchanges,” the International Tin Association said. “The switch of exchange may have caused the decline in refined tin exports from last month, with sources close to Timah citing export license renewals as the cause of the issue. With a new license seemingly acquired, it is likely that material — stockpiled in the interim — will be released to the market.”

After drifting off from a spring high, the nickel price has flatlined in the second quarter (along with much of the rest of the metals complex).

However, the metal has put in a surprisingly strong performance in just the last week due to Indonesia’s announced export ban spooking market concerns about supply, according to the Financial Times.

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Since last week, nickel has reached an 11-month high, jumping 9% to above $14,000 a tonne, the article reports, extending gains since the start of the year to 30%.

In contrast, copper is up just 1.2% in 2019, while aluminum has gained only 2.5%.

Robust demand in China has helped nickel’s overall position this year, but the recent export ban has added fuel to the fire.

Indonesia is the world’s second-largest exporter of nickel ore after the Philippines. In an unexpected move, Jakarta pledged last week to stick with plans to stop exports of unprocessed nickel ore in 2022.

The ban is aimed at encouraging the domestic development of value-added industries, such as refined nickel and even stainless steel production, a policy that has had its ups and downs in recent years but broadly proved successful in encouraging domestic refined metal production.

The Philippines, the top nickel producer, and Indonesia are major ore suppliers to China’s nickel pig iron industry, which currently accounts for some 20% of global nickel production.

Much of the demand for nickel is being driven by stainless steel production in China. So far this year, that demand has been strong. However, as the Financial Times notes, inventories have also been rising, raising questions about the underlying strength of the Chinese market facing the headwinds of a trade war and slowing growth.

Maybe consumers should not be panicking too much about rising nickel prices — a pullback after such a strong rise is likely, especially coming into the summer season when demand in China and western Europe is likely to soften.

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Prices could fall back a little from current highs, but they are unlikely to return to turn-of-the-year levels.

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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.

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‘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.

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

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Much hope was pinned on the latest round of trade talks between the United States and India.

In the end, however, the talks that concluded late last week were inconclusive.

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The Indian government said the countries agreed to continue their discussions for “addressing mutual trade concerns,” Reuters reported.

This round of meetings was supposed to chart the course ahead on trade between the two countries, particularly in the wake of the exchange of tariffs and counter-tariffs.

Yet, many of the questions on agricultural commodities, e-commerce, and steel and aluminum have been put off, according to the report.

Talks will now resume when India’s Commerce and Industry Minister Piyush Goyal goes to Washington next month for talks with United States Trade Representative Robert Lighthizer, Reuters reported.

“The meeting was cordial and aimed at providing a new impetus to bilateral trade and commercial ties, in line with the mandate given by Prime Minister Narendra Modi and the US President Donald Trump during their meeting at Osaka, Japan on June 28, 2019,” Goyal said, according to The Asian Age. “Both sides discussed the broad contours of bilateral trade and commercial ties and agreed to continue their discussions for achieving mutually beneficial outcomes aimed at further growing the economic relationship and addressing mutual trade concerns.”

The U.S. delegation, led by Assistant United States Trade Representative (AUSTR) Christopher Wilson, aimed to explore potential for enhanced bilateral trade and economic engagement with India under the new government, The Asian Age reported. The Indian delegation was led by Sanjay Chadha, additional secretary in India’s ministry of commerce and industry, and also included senior officials from other Indian government ministries.

After delaying the imposition of tariffs on U.S. goods, the Indian government recently opted to levy tariffs on 28 U.S. goods in response to the U.S.’s decision to rescind India’s preferential status under the Generalized System of Preferences (GSP). President Donald Trump announced his intention to remove India’s preferential status in March.

The GSP affords duty-free tariff treatment “to certain U.S. imports from eligible developing countries to support their economic development.” According to the Congressional Research Service (CRS), U.S. imports from India covered by GSP accounted for 11% of U.S. imports from India, checking in at a value of $6.3 billion.

The U.S. was India’s second-largest export market — behind only the E.U. — in 2017, according to the CRS.

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The U.S. goods targeted for tariffs by India included almonds, apples, chemicals, flat-rolled stainless steel products, other alloy steel, tube, pipe fittings, screws, bolts and rivets.

In a July 9 tweet, Trump said “India has long had a field day putting Tariffs on American products,” adding the situation was “no longer acceptable.”

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This morning in metals news, the Chinese steelmaking province of Hebei has moved up its target date for plant relocation and capacity cuts, miners in the Democratic Republic of the Congo are moving to copper as a result of dropping cobalt prices, and Chile’s copper exports fell in June.

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Hebei Moves Up Capacity Cut Target Date

China’s steelmaking province of Hebei is moving up a target date for planned capacity cuts and production relocation, Reuters reported.

According to the report, the province is moving the target date by two months, up to the end of October.

Cobalt to Copper

With cobalt prices on the decline, miners in the DRC are switching to copper, Bloomberg reported.

The country produces a majority of the world’s cobalt, which is used in electric vehicles and smartphones, among other high-tech uses.

The report cities Andries Gerbens, a cobalt specialist at Darton Commodities, who said output by artisanal miners in the country could decline by 70% this year.

Chile’s Copper Exports Fall

Chile’s exports of copper declined in June, Reuters reported.

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According to Chile’s central bank, the country’s copper exports fell 14% in June on a year-over-year basis, down to a value of $2.628 billion.

That the news is all about trade makes a change for us business folks from the tittle-tattle around the private lives of politicians or celebrities, as trade is topic that actually touches all of us (whether we are immediately aware or not).

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That President Donald Trump has made trade dispute a central plank of his first presidency is no surprise.

Throughout his presidential campaign, Trump frequently made reference to what he sees as unfair trade terms enjoyed by America’s trade partners and his intention to use whatever means he could to right the perceived wrong. “Trade wars are good,” he famously said on the campaign trail — he has certainly followed through with that in office.

Just as there appears to be a thaw — or at least a renewed willingness to talk — between the U.S. and China following the G20 summit in Japan, the president has renewed his previous spat with Europe, which ranges across a number of topics.

In addition to the general argument that the U.S. exports less to Europe than Europe does to the U.S., there are specific grievances over automobiles. The U.S. applies a lower rate of duty on European sedans than Europe does on U.S. cars and the company-specific case of subsidies to Airbus, the administration claims, are unfair.

This last one has been the subject of a flare-up this month. The U.S. threatened fresh tariffs on $4 billion covering 89 European products, The Guardian reports, including olives, Italian and Dutch cheese, Scotch whiskey, Irish whiskey, pasta, coffee, and ham. These items join products worth $21 billion that were announced as potential targets for tariffs in April, the paper reports, which included Roquefort cheese, wine, champagne, olive oil and seafood (such as oysters).

The latest list notably also includes a number of copper products, metal consumers should note, including bars, plate, strip and foil (the full list can be found here). The rights and wrongs of the case can be argued with equal validity on both sides, the E.U. claims — and has done since 2004 — that Boeing receives illegal subsidies. Meanwhile, U.S. claims Airbus does.

The reality is both receive state support in one form or another and the WTO has upheld cases in favor of both parties against the other.

So what are you left with?

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