Articles in Category: Exports

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A chorus of protests against Indian iron-ore exports — with associations of sponge iron and steel-forgings manufacturers making common cause with the India Steel Association (ISA) — has brought pressure on ministers to ban exports of iron ore.

Of those exports, 90% goes to China.

The groups are protesting in a bid to support domestic steel mills from rising raw material costs.

Ministers have refrained from taking action, arguing they would rather the market decide when it makes sense to export and when to import.

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Iron ore export ban?

However, a ban hardly seems necessary.

A massive 30% export tax kicks in this quarter on the lower Fe grade material between 58 to 62%. That is expected to decimate exports this quarter, the Business Standard reports.

In an effort to improve supply, the authorities have taken action against underused mining leases.

According to the New Indian Express, production declined during 2020. Comparing the two years January to September 2019 to the same period in 2020, iron ore production totaled 110.95 million metric tons in 2019. Meanwhile, output reached 76.01 million metric tons in 2020, marking a 31.5% drop.

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China has had a fraction of the deaths and hospitalizations from the COVID-19 pandemic that Western societies have had. Furthermore, China had an economic bounceback that saw its GDP rise 2.3% last year.

China’s bounceback

The rebound has been impressive.

Construction of new high-speed train lines to smaller provincial cities and new motorways connecting remote cities left behind in previous plans in part drove the recovery.

The housing sector has also boomed. Overseas demand has boosted manufacturing, particularly PPE and electronic goods, even as other exporters have suffered by lockdowns in those markets.

In the longer term, further debt and a swing back to manufacturing from the earlier pivot to consumption will not do the economy or China any good.

For now, however, the economy is humming. Tailwinds from both stimulus and pent-up savings should keep the economy growing strongly in the first half of 2021.

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Nobody yet is quite sure whether Australia and China’s spat over coking coal imports will eventually turn out to be a case of bad politics making good economics or bad economic sense making for good politics.

While politics between China and Australia is part of the reason for the former to have completely banned the import of coal from the latter, it has led to churn in the Asian the rest of the global coal markets.

With China not lifting the ban despite it being a new year (as some had anticipated), the volatility in the markets is likely to continue.

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China’s coking coal import ban

In the last quarter of 2020, a verbal ban by China to halt all Australian coke was followed up with a formal one.

Coking coal import prices then declined by 24% from early-October to mid-December. Why? Because market players expected a glut in the global coal market in the medium term.

This game of Chinese checkers is not relegated to only the two players, China and Australia.

Ripple effects

India, Japan, and a host of other Asian and Southeast Asian nations have started to feel the after-effects.

Of late, according to this report by CNBC, major Chinese cities have started suffering power cuts because of the Chinese authorities limiting power usage while citing a shortage of coal.

What’s more, Chinese coal prices have shot up due to the reported shortage.

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After four and a half years and unprecedented social and political discord, it has finally happened: the United Kingdom has left the European Union with the bare bones of a free trade agreement.

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Bare bones free trade agreement

It took until Christmas Eve — ahead of the Dec. 31 deadline exit date for both sides to make the final compromises necessary to reach an agreement.

However, to Prime Minister Boris Johnson’s credit, after all of the lies and disinformation around the benefits of leaving the E.U., he did finally get it done. Even the normally neutral and sober Financial Times acknowledges it is but the bare bones of a deal, with much left uncovered and much still to be agreed.

The deal covers goods, exports to the E.U. of which make up just 8% of U.K. GDP. However, the deal leaves out services. According to The Guardian, services account for around 80% of the U.K.’s economic activity and about 50% of its exports by value to the E.U.

There will be a lengthy process of ongoing negotiation around how much access the City of London is allowed to E.U. business. Similarly, there will be discussions regarding what constitutes the required “equivalence” for which the E.U. is looking.

This means the previous passporting agreement allowing automatic access to the E.U. is replaced by so-called equivalence. That is, each side unilaterally permits companies from the other to conduct certain financial activities in its territory.

That’s hardly a stable position. E.U. countries like France and Germany have made no secret of their desire to challenge the U.K.’s historical dominance in financial services post-Brexit.

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Before we head into the penultimate weekend of 2020, let’s take a look back at the week that was and some of the metals storylines here on MetalMiner, including: research findings related to organic molecules’ impact on machinability; gold prices; and the arrival of an allocation market for steel-buying organizations, as explained by MetalMiner CEO Lisa Reisman:

Week of Dec. 14-18 (machinability, gold prices and steel allocation market)

• Stuart Burns delved into the gold price and what 2021 may hold for the precious metal.
• The Energy Information Administration released its Short-Term Energy Outlook.
• Nippon Steel is increasing emphasis on export markets.
• The shipping industry continues to face a number of challenges this year, from container shortages to port congestion.
• The European Raw Materials Alliance recently launched the Rare Earth Magnets and Motors Cluster, aimed at developing solutions to strengthen supply chains.
• Earlier this month, MetalMiner released the December update to its Annual Outlook originally published in September.
• This month’s Global Precious MMI includes gold prices, the weakening dollar and PGM price movements.
• Elsewhere, the U.S.’s share of power generation from renewables is forecast to rise slightly next year.
• Rio Tinto announced a $10 million investment toward its joint research with Chinese steelmaking behemoth Baowu Steel Group on greener steelmaking processes.
• Burns checked in on the Brexit saga, as the Dec. 31 transitional period deadline draws near.
• We touched earlier on Nippon Steel’s efforts to augment exports. Meanwhile, Christopher Rivituso on Severstal’s intention to look to export more large-diameter pipe to the North American market.
• Meanwhile, import prices rose slightly in November.
• “A” is for allocation in steel markets, Lisa Reisman explained.
• Lastly, a research team from Purdue University, Osaka University and the Indian Institute of Science published findings on the impact of organic molecules on machinability of metals.

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This morning in metals news: Norsk Hydro has signed a memorandum of understanding to explore a potential lithium-ion battery business; U.S. import prices fell slightly in October; and Gulf of Mexico oil production fell in August by the largest amount since 2008.

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Norsk Hydro signs MOU to explore potential lithium-ion battery business

Norsk Hydro, Panasonic and Equinor have signed a memorandum of understanding to explore the potential for a lithium-ion battery business based in Norway.

“The companies will work together towards summer 2021 to assess the market for lithium-ion batteries in Europe and mature the business case for a green battery business located in Norway,” Norsk Hydro said in a release. “The companies intend that this initiative is based on Panasonic’s leading technology and targets the European market for electric vehicles and other applications.”

U.S. import prices fall in October

Meanwhile, U.S. import prices fell 0.1% in October after gaining 0.2% in September, the Bureau of Labor Statistics reported.

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The Rare Earths Monthly Metals Index (MMI) held flat once again this month.

The MetalMiner 2021 Annual Outlook consolidates our 12-month view and provides buying organizations with a complete understanding of the fundamental factors driving prices and a detailed forecast that can be used when sourcing metals for 2021 — including expected average prices, support and resistance levels.

China export control law to take effect Dec. 1

China’s legislature last month approved a new export control law that will go into effect Dec. 1, the state-run Xinhua news agency reported last month.

“China may take countermeasures against any country or region that abuses export-control measures and poses a threat to China’s national security and interests, according to the law,” Xinhua reported.

“The law also clarifies that technical documentation related to the items covered by the law is also subject to export-control stipulations.”

The law could impact exports of rare earths, for which China overwhelmingly dominates the global market.

As we have noted in this column before, the U.S. — especially the Pentagon — has long sought to diversify its rare earths supply chain. The U.S. earlier this year approved Phase 1 contracts with MP Materials and Lynas Corporation for work to develop rare earths separation facilities in the U.S.

South Korean-Australian joint project produces praseodymium, neodymium

Continuing the theme of various countries’ efforts to wean themselves off of rare earths dependence on China, Forbes recently reported on a joint venture between South Korea and Australia that has showed some promise.

The joint mineral processing project, Forbes notes, has so far produced neodymium and praseodymium. The two elements are used in permanent magnets in electric vehicles and, for praseodymium, renewable energy apparatus, like wind turbines.

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We wrote last month how China’s rapid recovery from the COVID-19 pandemic resulted in the country importing semi-finished products for which it previously had been self-reliant or even a net exporter for the last decade.

Some steel products and primary aluminum swung into becoming significant net inflows for the economy during the summer months.

But as we cautioned at the time, this was only expected to be a temporary phenomenon.

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China’s steel flows recalibrate

Sure enough, although volumes are still down on this time last year, exports have picked up and imports have fallen.

In a recent post, Argus Media reported China’s steel exports in October rose by 5.2% from September to 4.04 million tons. Chinese mills shifted supplies to overseas markets, enabled — or forced, depending on your point of view — by falling domestic prices.

Summertime exports rose as domestic prices fell

Falling domestic prices in the summer aided Chinese steel mills’ ability to export so aggressively.

Domestic inventory levels rose and domestic crude steel production hit record levels of 3.09 million tons a day in September, in large part to meet domestic demand. Weakness in domestic steel prices suggests overoptimism by the steel mills, inevitably resulting in excess production leaking into export markets looking for a home.

Domestic Chinese steel prices have recovered since the summer as global steel prices have risen and imports have fallen.

As the global recovery has lifted demand and prices, mills in India and elsewhere have not felt the need to distress sell metal into China. In addition, the arbitrage window has narrowed.

Imports have therefore appeared less attractive to Chinese buyers and exports more attractive to mills. That is a trend we expect to continue through Q4.

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This morning in metals news: the nickel price has gained to start the week; Reliance Steel and Aluminum Co. recently released its Q3 results; and, finally, the U.S. imported $19 billion in energy goods from Mexico last year.

The MetalMiner 2021 Annual Outlook consolidates our 12-month view and provides buying organizations with a complete understanding of the fundamental factors driving prices and a detailed forecast that can be used when sourcing metals for 2021 — including expected average prices, support and resistance levels.

Nickel price gains

The LME three-month nickel price gained over the first two sessions of the week.

Closing Tuesday at $15,384 per metric ton, the LME three-month nickel price gained $236 per metric ton over the previous 24 hours.

On a month-over-month basis, nickel is up 6.8%.

Reliance releases Q3 results

In its Q3 financial results, Reliance Steel and Aluminum posted pretax income of $127 million, up from $102 million in Q2 2020.

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Before we head into the weekend, let’s take a look back at the week that was and the metals storylines here on MetalMiner, including: the nickel market; aluminum prices on the SHFE and LME; China’s metals rebound; and much more.

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Week in Review, Oct. 12-16 (nickel market, China’s metals rebound and more)

• The U.S. Department of Commerce last week issued a preliminary affirmative determination on anti-dumping duties applying to common alloy aluminum sheet imports from 18 countries.
• The nickel market is set to experience some level of disruption, MetalMiner’s Stuart Burns explained.
• Aluminum prices trended sideways in September, MetalMiner’s Maria Rosa Gobitz noted in this month’s Aluminum MMI report.
• Gobitz also broke down the month that was in the world of copper.
• The U.S. steel sector’s capacity utilization rate jumped to 67.9%.
• China’s economic recovery has powered the rebound for a number of metals markets.
• U.S. steel prices made gains across the board in September.
• U.S. imports of stainless steel products surged in September.
• Steel shipments from U.S. mills fell 22.9% in August.
• Chinese President Xi Jinping recently unveiled an ambitious plan to bring the country to carbon neutrality. However, is it feasible and, moreover, likely to take place as laid out?
• We released the October MMI report earlier this week, including coverage of 10 key metals areas.
• Circling back to the U.S.’s new anti-dumping duty on aluminum sheet, India’s sheet exports to the U.S. likely won’t be significantly affected.

The MetalMiner 2021 Annual Outlook consolidates our 12-month view and provides buying organizations with a complete understanding of the fundamental factors driving prices and a detailed forecast that can be used when sourcing metals for 2021 — including expected average prices, support and resistance levels.