Articles in Category: Global Trade

General Motors headquarters in Detroit, Michigan

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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.

In sustainability news, Big 3 automaker General Motors said it intends to be carbon neutral in its operations by 2040. The automaker has also indicated it will offer 30 new all-electric models by mid-decade, as it — like other traditional automakers — aims to catch up to Tesla in the electric vehicle market.

In other news, US GDP gained by 4% in the fourth quarter of 2020. Meanwhile, US steel imports increased in December and the copper price rise has slowed down in recent weeks.

Week of Jan. 25-29 (General Motors makes carbon pledge, copper prices and more)

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Changan

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This morning in metals news: Ford Motor Co. announced Changan Ford will manufacture the new all-electric Mach-E SUV in China for local customers; the U.S.’s monthly deficit declined from November to December; and U.S. steel imports fell by 21% last year.

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Changan Ford to manufacture new Mach-E

Changan Ford will manufacture Ford’s new all-electric SUV, the Mach-E, in China for local customers, Ford announced Thursday.

“A breakthrough vehicle in Ford’s electrification strategy, Mustang Mach-E will set new standards in style and performance in the Chinese high-end EV market when it becomes available in China later this year,” Ford said.

The Mustang Mach-E will boast a range of over 600 kilometers (373 miles).

U.S. trade deficit dips in December

The U.S. posted a trade in goods deficit of $82.5 billion in December, the Census Bureau reported.

Meanwhile, the November trade deficit reached $85.5 billion.

Steel imports fall 21%

In steel trade flows, the U.S.’s imports of steel fell by 21.2% last year, the American Iron and Steel Institute reported.

The U.S. imported 22.0 million net tons in 2020. Furthermore, steel import market share reached 18%.

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India and US flags

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It is too early to talk of the direction US-India relations will take under US President Joe Biden’s administration.

But Indian trade circles are keeping a close eye on trade-related developments with a hopeful eye.

Hopes for better US-India relations

Much of the hope for better US-India relations focuses on the desire that the US will focus more on its bilateral ties with India because of the former’s strained relation with China, and why the US would benefit from such a move.

China will be on the new US administration’s mind as it assesses the Indo-US trade relationship. For now, though, the Biden administration has made it clear it would not considering any new free trade deals. Furthermore, it’s unclear whether the Biden administration will maintain or rescind existing Section 232 steel and aluminum tariffs.

The two countries have a lot going on together. The two have a robust bilateral trade. Through the first 11 months of 2020, the U.S. imported goods from India worth $46.3 billion and exported about $24.6 billion in goods. In addition, the countries have cooperation in defense and an ever-increasing reliance on each other in the field of energy.

The appointment of four Indian-Americans to senior posts in the Department of Energy (DOE) is being seen as a positive. Energy expert Tarak Shah was appointed as the department’s chief of staff, making him the first Indian-American to serve in the position. The DOE said the new leaders will direct policy and enact Biden’s vision for “bold action on the climate crisis.”

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imports

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This morning in metals news: U.S. steel imports in December picked up compared with the previous month; President Joe Biden’s nomination for secretary of commerce, Rhode Island Gov. Gina Raimondo, faced her Senate confirmation hearing yesterday; and the E.U.’s ambassador to the United States called on Biden to reach a resolution on aluminum tariffs and the long-running subsidy saga between Airbus and Boeing.

Steel imports rise in December

U.S. steel imports reached 1.4 million tons in December, up from 1.2 million tons the previous month, the Census Bureau reported today.

Steel import rises were seen for oil country goods, plates in coils and hot rolled sheets. Meanwhile, imports declined for: blooms, billets, and slabs; reinforcing bars; and hot dipped sheets and galvanized strip.

In addition, imports surged from South Korea, rising from 115,332 metric tons in November to 201,332 metric tons in December.  Meanwhile, imports from Germany, Turkey and Thailand declined.

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Biden’s DOC pick on China, tariffs

With respect to trade policy, among the most important questions surrounding the Biden administration are how the new administration’s policy will compare with Trump’s on China and Section 232 tariffs (covering steel imports, in addition to aluminum).

On Tuesday, Rhode Island Gov. Gina Raimondo answered questions at her Senate hearing on the heels of her nomination for secretary of commerce.

However, after the hearing, questions still remain.

The Washington Post reported Raimondo promised an “aggressive” approach against China’s “unfair” trade practices. However, she did not detail how she would approach the Section 232 steel and aluminum tariffs Trump imposed in 2018.

E.U. ambassador calls on Biden to nix aluminum tariffs

Meanwhile, in Europe, the E.U. ambassador to the U.S. has called on President Joe Biden to remove the aforementioned aluminum tariffs and resolve the dispute over subsidies for airplane manufacturers Boeing and Airbus, Reuters reported.

Furthermore, the ambassador, Stavros Lambrinidis, also called on the U.S. to allow for the work of the WTO’s Appellate Body to restart. During the Trump administration, the U.S. blocked the appointment of new judges, leaving the body without a quorum to hear new appeals.

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London Metal Exchange

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Before we head into the weekend, let’s take a look back at the week that was in metals storylines here on MetalMiner, including Stuart Burns on LME steel contracts, the green revolution in aluminum and much more.

Regarding the LME steel contracts, Burns noted, “For over 200 years, the London Metal Exchange (LME) has provided the trade – producers, traders and consumers – the opportunity to hedge their risk across a growing range of base metals.

“However, only recently have exchanges such as the LME, the U.S.’s CME and the Shanghai Futures Exchange (SHFE) in China introduced products allowing the trade to hedge raw material and finished steel price risk.”

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Week of Jan. 18-22 (LME steel contracts, green aluminum and more)

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copper coils stacked

Hedgehog/Adobe Stock

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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U.S., China and Russia flags

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This morning in metals news: the United States Trade Representative released its annually mandated report covering the WTO rules compliance of China and Russia; U.S. Steel officially closed on its acquisition of the remaining equity of Big River Steel; and the Pilbara Ports Authority earlier this month reported shipping data for December.

USTR releases annual WTO compliance report for China, Russia

As mandated by Congress, the United States Trade Representative on Friday released its annual report on the WTO compliance of China and Russia.

“The United States has been closely monitoring China’s progress in implementing its numerous commitments under the Phase One Agreement and has regularly engaged China using the extensive consultation processes established by the agreement to discuss China’s implementation progress and any concerns as they arise,” the report reads. “Currently, the evidence indicates that China has been moving forward in good faith with the implementation of its commitments, making substantial progress in many areas.

“Because the Phase One Agreement does not cover all of the United States’ concerns, the United States will need to turn to Phase Two of its trade negotiations with China in order to secure resolutions to important outstanding issues.”

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U.S. Steel closes acquisition of remaining Big River Steel equity

In December, U.S. Steel announced plans to acquire the remaining equity in Arkansas-based Big River Steel for $774 million.

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China and Australia flags

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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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U.S. trade

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This morning in metals news: the Census Bureau and Bureau of Economic Analysis reported the U.S. goods and services deficit totaled $68.1 billion in November; the Brazilian state of Minas Gerais is hoping to win a compensation deal from miner Vale; and the American Iron and Steel Institute released steel import data for December.

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Goods and services deficit reaches $68.1B

The U.S. goods and services deficit reached $68.1 billion in November, the Census Bureau and BEA reported.

The deficit jumped from $63.1 billion in October.

Brazilian state aims to win settlement from miner over 2019 dam disaster

The Brazilian state of Minas Gerais is in talks over a settlement deal with miner Vale vis-a-vis the fatal Brumadinho tailings dam collapse in 2019, Reuters reported.

Per Reuters, the state is seeking a settlement worth at least $5.3 billion.

Government and Vale officials were set to meet today, according to Reuters.

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Brexit

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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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