Articles in Category: Global Trade

This morning in metals news, a Turkish military pension fund has reportedly reached a tentative deal to buy the ailing British Steel, copper prices held flat Friday and the latest round of tariffs could impact China’s ability to prop up its economy.

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Turkish Military Pension Fund to Buy British Steel

The British Steel saga could be moving toward a positive resolution.

The steelmaker, the U.K.’s second-largest, went into liquidation in May after it was unable to secure a government loan. Afterward, a bidding process began for the firm.

In recent weeks, a Turkish military pension fund emerged as the favorite to buy the troubled steelmaker. On Friday, the BBC reported the Turkish fund has reached a tentative deal to buy British Steel.

According to the report, the Turkish Armed Forces Assistance Fund said it plans to take over British Steel by the end of the year.

Copper Flat

Copper prices traded flat to close the week, Reuters reported.

LME three-month copper held at around $5,750 per ton, while the most-traded SHFE copper contract held at around $6,591 per ton, according to Reuters.

Tariffs and China

Earlier this month, President Donald Trump announced a new round of tariffs on Chinese products, aiming a 10% tariff on an additional $300 billion in Chinese goods (although the U.S. later announced the tariff would be delayed for some items in the product list).

With the new tariffs, nearly all of the U.S.’s imports of China would be subjected to tariffs.

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According to a J.P. Morgan analyst in an interview with CNBC, the tariffs could impact Beijing’s ability to mitigate the damages via government measures. Bruce Kosman, chief economist and head of global economic research for J.P. Morgan, said China has deployed policies to mitigate the damages of the tariffs over the last year, but it is unclear how much more China will be able to do on that front.

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This morning in metals news, China says it hopes to reach a compromise with the U.S. on trade, the U.S. Department of Commerce self-initiated an investigation related to imports of corrosion-resistant steel products and iron ore prices continue to slide.

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Looking for a Deal

Chinese government officials recently expressed the willingness to do what is necessary to combat U.S. tariffs while also indicating a desire to reach the U.S. “halfway” for a trade deal.

The U.S.’s imposition of a 10% tariff on an additional $300 billion on Chinese goods is set to go into effect Sept. 1. Tensions were dialed back slightly this week when the United States Trade Representative announced that tariffs on select items from the $300 billion tariff list, including cellphones and laptop computers, would be delayed until later this year.

“We hope the U.S. side will meet China half-way, and implement the consensus reached by the two leaders during their meeting in Osaka, and look for mutually acceptable solutions through dialogue on the basis of equality and mutual respect,” said Hua Chunying, a Chinese foreign ministry spokesperson, as quoted by CNBC.

DOC Launches Circumvention Probe

The U.S. Department of Commerce plans to investigate possible circumvention with respect to imports of corrosion-resistant steel products from Costa Rica, Guatemala, Malaysia, South Africa and the United Arab Emirates.

“In these inquiries, Commerce will determine whether imports of CORE completed in Costa Rica, Guatemala, Malaysia, South Africa, and the UAE using Chinese-origin substrate, or imports of CORE completed in Malaysia using Taiwanese-origin substrate, are circumventing the antidumping duty (AD) and countervailing duty (CVD) orders on CORE from China or the AD order on CORE from Taiwan,” the Department of Commerce said in a release.

Iron Ore Prices Continue to Fall

Prices for the steelmaking material iron ore continue to fall after reaching five-year highs earlier this summer.

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According to Reuters, China’s stimulus spending has not been enough to offset the reintroduction of iron ore supplies to the market (after supply-side disruptions in Australia and Brazil earlier this year).

Source: The Coca-Cola Company

This morning in metals news, beverage maker Coca-Cola has announced it will shift to aluminum cans for its Dasani water brand, the U.S. Department of Commerce announced it found evidence of dumping of refillable stainless steel kegs from Mexico and China still plans to send trade officials to Washington next month for talks.

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Coca-Cola Announces New Dasani Packaging

In an effort to reduce plastic use and increase the use of recyclable materials, Coca-Cola announced plans to shift its Dasani water brand’s packaging from plastic bottles to aluminum.

“Updates to DASANI’s packaging line-up are designed to reduce plastic waste and increase the use of recycled and renewable materials in the United States, while ensuring that all DASANI bottles continue to be fully recyclable,” the company said.

Under the beverage maker’s proposed “World Without Waste” program, it aims to produce make its bottles and cans with an average of 50% recycled material by 2030. The company will roll out the water brand in aluminum cans in the northeastern U.S. in the fall (and 2020 everywhere else), and aluminum bottles in mid-2020.

U.S. Rules on Stainless Steel Keg Dumping Case

The U.S. Department of Commerce announced it had found evidence of dumping with respect to imports of stainless steel kegs from Mexico.

According to the department, the kegs were sold at less than fair value in the U.S. at a rate of 18.48%.

Last year, imports of the kegs from Mexico were valued at $13.4 million, according to the Department of Commerce.

China to Continue with Planned September Meetings

Despite the recent U.S. announcement of tariffs on an additional $300 billion in Chinese goods, Chinese trade officials still plan to visit Washington in September as planned, Bloomberg reported.

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However, according to a source cited by Bloomberg, China is unlikely to make concessions next month.

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This morning in metals news, the United States Trade Representative (USTR) announced the U.S. would delay some of the recently announced tariffs on Chinese goods, what could be the largest copper mine project in North America recently got a key approval from the U.S. Forest Service and a Turkish military pension fund has a £900 billion revival plan for British Steel.

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U.S. to Delay Some Tariffs

On Aug. 1, President Donald Trump announced the U.S. would impose a 10% tariff on an additional $300 billion in Chinese goods as of Sept. 1.

On Tuesday, however, the USTR said the tariffs for select items included in that tariff list would be pushed back to Dec. 15.

“Further, as part of USTR’s public comment and hearing process, it was determined that the tariff should be delayed to December 15 for certain articles,” the USTR said in a release. “Products in this group include, for example, cell phones, laptop computers, video game consoles, certain toys, computer monitors, and certain items of footwear and clothing.”

The USTR said it will conduct an exclusion process for the items included in the tariff list. In addition, it plans to publish information today related to the items affected by today’s announcement.

Resolution Copper Project Moves Closer to Go-Ahead

Rio Tinto’s Resolution Copper project in Arizona, which the miner says could be the largest in North America, has received an important approval from the U.S. Forest Service, Kitco News reported.

According to the report, the government agency issued a Draft Environmental Impact Statement for the project, which moves the Arizona project closer to development.

A £900B Revival Plan

A Turkish military pension fund has emerged as the favorite to take over the ailing British Steel, which went into liquidation earlier this year after it failed to secure a second government loan.

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According to Sky News, Ataer Holding has a £900 billion investment plan to nurse British Steel, the U.K.’s second-largest steelmaker, back to health.

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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:

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

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This morning in metals news, China offered a response to the U.S.’s designation of it as a currency manipulator, British Steel’s lenders are looking for a speedy end to the auction for the liquidated steel company and Glencore announced it will pause production at a mine in the Democratic Republic of the Congo.

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China Responds to ‘Currency Manipulator’ Label

Earlier this week, in response to China’s devaluing the yuan to levels last seen during the financial crisis, the U.S. Treasury Department announced it had designated China a currency manipulator.

The move marked yet another escalation in tensions in the ongoing U.S.-China trade war.

According to CNBC, the People’s Bank of China has rejected the claim and agued the U.S.’s move negatively impacts the international financial order.

Looking for Closure

Meanwhile, lenders to the embattled British Steel, the firm forced into liquidation earlier this year when it was unable to secure another government loan, are looking for a swift end to the auction process, Sky News reported.

According to Sky News, lender White Oak ABL, which agreed to lend British Steel £90 million last year, has argued British Steel’s Scunthorpe plant should be shuttered unless a deal can be reached.

Glencore to Pause Production at Mutanda

Miner Glencore announced will pause production at its Mutanda mine in the DRC, Bloomberg reported.

The mine is one of the world’s largest sources of cobalt, which is used in electric vehicle batteries. According to the report, the plunge in cobalt prices prompted the miner to close the mine.

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“At Mutanda, we are planning to transition the operation to temporary care and maintenance by year end, reflecting its reduced economic viability in the current market environment, primarily in response to low cobalt prices,” CEO Ivan Grasenberg said in a Wednesday release covering the miner’s half-year results. “We continue to progress studies on the sulphide project, having the potential to extend operations for many years, and anticipate being able to provide an update at our Investor Day in December.”

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This morning in metals news, the American Iron and Steel Institute (AISI) applauded the U.S. Treasury’s designation of China as a currency manipulator, U.S. companies are hoping the Trump administration does not impose tariffs on copper from the E.U. and Novelis announced its quarterly financial results.

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U.S. Treasury Labels China a Currency Manipulator

On the heels of the devaluation of the yuan to levels not seen since the 2008 financial crisis, the U.S. Treasury officially designated China as a currency manipulator.

“This pattern of actions is also a violation of China’s G20 commitments to refrain from competitive devaluation,” the Treasury said in a statement. “As highlighted in the FX Report, Treasury places significant importance on China adhering to its G-20 commitments to refrain from engaging in competitive devaluation and to not target China’s exchange rate for competitive purposes. Treasury continues to urge China to enhance the transparency of China’s exchange rate and reserve management operations and goals.”

The American Iron and Steel Institute (AISI) applauded the move.

“Today’s action by the Treasury Department is welcome news for the steel industry and American manufacturing,” AISI President and CEO Thomas J. Gibson said in a prepared statement. “China was, and remains, a currency manipulator. The Chinese government’s actions today are just one more instance of its active role in manipulating the value of its currency to promote Chinese exports. We applaud the decisive action today by President Trump and the U.S. government to address the damage, and unfair competitive advantage, that China’s undervalued currency has caused to our nation’s manufacturing sector – especially the steel industry.”

U.S. Companies Concerned About Copper Tariff

As the U.S. has proposed tariffs on a number of items — including copper alloys — from the E.U. as part of the ongoing battle over Airbus subsidies, several U.S. companies have expressed concern.

During a United States Trade Representative (USTR) hearing Monday, many testified to ask the USTR to remove the copper tariffs from the proposed list, Reuters reported.

Novelis Reports 1Q 2020 Earnings

Novelis announced its first-quarter earnings for fiscal year 2020, posting net income of $127 million (down from $137 million for the same quarter in 2018).

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Excluding special items, however, the firm reported net income of $145 million, up from $115 million the previous year.

It should come as no surprise that President Trump last week announced the imposition of a 10% tariff on an additional U.S. $300 billion worth of Chinese goods from Sept. 1.

The new tariff would come on top of the 25% levy that Trump already imposed on $250 billion worth of Chinese imports — resulting in the U.S. taxing nearly everything China sends to it, The New York Times reported.

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The move appears to be in frustration with the slow pace of negotiations since the president and President Xi Jinping met at the G20 summit in Japan in June and agreed to restart negotiations.However, talks have broken down due, the U.S. side says, to a failure by China to implement earlier promises to buy large volumes of U.S. agricultural products, a promise Trump said at the time was to be immediately implemented but was never agreed to by the Chinese side.

In what has become a media circus of twitter announcements and accusations, it is impossible to tell who is telling the truth, whole truth and nothing but the truth.

The reality is both sides use the media to pressure the other by making statements of the other’s intent, only to then accuse them of backtracking when it doesn’t happen.

More importantly, both sides seem further apart than ever and neither side seems willing or able to engage in the meaningful compromises that a negotiated settlement would require. It is therefore a near certainty the tariffs will remain in place, at least until after the 2020 presidential elections and should, if Trump is re-elected, quite possibly continue for many months thereafter.

The Chinese side, much like the Europeans in dispute with the U.S. over Airbus and Boeing subsidies, appear to have decided the current administration is not willing to negotiate or compromise and, as such, only a one-sided agreement is possible. So, if they wait it out until after the elections, there is a chance they may have a different administration with which to deal.

In the meantime, China is likely to impose some reciprocal tariffs against a further range of U.S. goods, but they are fast running out of products to which they have not already applied some form of tariff (as they import less from the U.S. than they export).

China could increase existing tariffs, but are more likely to make life increasingly difficult for American corporations doing business with and exporting to China as a form of retaliation. The New York Times lists surprise inspections, rejections for licenses, and moves to roll out a list of “unreliable entities” that Beijing has threatened to take action against as examples of potential measures China may use other than tariffs.

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Either way, the stock market and currency market’s reaction to the news of additional tariffs says it all — both fell as investors acknowledged the damage the tariffs would cause to global growth and investment.

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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:

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

Although the U.S. and China restarted trade talks this week after a May flare-up in tensions — one that led to the U.S. increasing tariffs on $200 billion in Chinese goods, followed by $60 billion in retaliatory tariffs from China — tariffs were back on the table.

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On Wednesday, President Donald Trump announced the U.S. would impose a 10% tariff on an additional $300 billion in Chinese goods as of Sept. 1.

“Our representatives have just returned from China where they had constructive talks having to do with a future Trade Deal,” Trump tweeted. “We thought we had a deal with China three months ago, but sadly, China decided to re-negotiate the deal prior to signing.”

Trump argued China had not committed to augmenting its agricultural purchases from the U.S. or to stop selling the synthetic opioid fentanyl into the U.S.

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

He continued, stating trade talks are continuing but that the U.S. “will start, on September 1st, putting a small additional Tariff of 10% on the remaining 300 Billion Dollars of goods and products coming from China into our Country.”

Trump’s tweets shook the stock market Wednesday. The Dow Jones Industrial Average had been up about 300 points, but lost its gains on the heels of Trump’s tweets, closing down 1.05%. The Nasdaq Composite fell 0.8%, while the S&P 500 was down 0.9%.

The tariffs would cover products on the United States Trade Representative’s (USTR) List 4, which included a wide variety of goods, including everyday consumer items.

The list includes cellphones, cheeses, jackets, shirts, jewelry, toys and more.

As for metals, the list features: various forms of iron/nonalloy steel; copper and copper alloy table, kitchen, household articles & parts; and aluminum kitchen or household articles, among others.

Last year, Trump imposed a total of $250 billion in tariffs, first in smaller tranches of $16 billion and $34 billion, then a $200 billion list announced in September 2018. The latest $300 billion tariff list would bring the total to $550 billion, or nearly all imports from China.