Articles in Category: Global Trade

coronavirus

JJ Gouin/Adobe Stock

Could the coronavirus pandemic bring about more reshoring in the U.S.?

The question is not just of interest in the U.S. By many measures, Europe has been hit as severely by the pandemic. If anything, Europe is even more reliant on global supply chains than the U.S.

The political philosophy that underpinned the Trump administration’s efforts to slow China’s advance — that is, to bring jobs back to the U.S. and “level the playing field” — is also prevalent in Europe. However, in the more fragmented political environment of the E.U., that philosophy is arguably taking longer to come into focus.

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Supply chains, reshoring and a ‘great reset’

Disruption to supply chains due to lockdowns was a relatively short, albeit very sharp, shock.

Automakers temporarily shut down Japanese production lines due to a shortage of parts from China in Q1. Furthermore, there is ongoing chaos at European, particularly U.K., ports due to a host of pandemic-related factors.

Supply chains far and wide have struggled during 2020. These challenges are prompting many to ask: is this the jolt needed to stimulate a great reset?

As The Economist notes, there can be a business case for it, too.

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imports

nattanan726/Adobe Stock

This morning in metals news: U.S. steel imports dropped 22.1% year over year through the first 11 months of the year; the U.S. international trade deficit rose by 5.5% from October to November; and global aluminum production totaled 5.47 million metric tons in November.

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U.S. steel imports drop

U.S. steel imports fell by 22.1% year over year through November, the American Iron and Steel Institute (AISI) reported.

The U.S. imported 20.5 million net tons of steel this year.

Meanwhile, in November, the U.S. imported 1.37 million net tons of steel, a 9.2% drop compared with October.

U.S. trade deficit rises in November

The U.S. international trade deficit totaled $84.8 billion in November, up 5.5% from $80.4 billion in October, the U.S. Census Bureau reported.

Imports in November came in at $212 billion, up $5.5 billion from October.

Global aluminum production

Global aluminum production totaled 5.47 million metric tons in November, the International Aluminum Institute reported.

The total marked an increase from the 5.26 million metric tons produced in November 2019.

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metalworking

nordroden/Adobe Stock

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)

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imports

nattanan726/Adobe Stock

This morning in metals news: U.S. import prices rose slightly in November, according to the Bureau of Labor Statistics; the Pilbara Ports Authority reported November shipping data;  and, finally, there is speculation the U.S. could reimpose sanctions on Russian aluminum giant Rusal, Bloomberg reported.

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Import prices rise in November

Import prices picked up by 0.1% in November, the Bureau of Labor Statistics (BLS) reported.

Higher fuel prices made imports more expensive last month.

“Prices for import fuel increased 4.3 percent in November following a 0.9-percent decline in October and a 4.7-percent drop in September,” the BLS reported. “Higher prices for both natural gas and petroleum contributed to the November advance.”

Meanwhile, export prices gained 0.6% after rising by 0.2% and 0.6% the previous two months.

Pilbara Ports Authority reports November shipping data

Australia’s Pilbara Ports Authority reported November throughput of 57.4 million tonnes, down 3% year over year.

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Brexit

hakinmhan/Adobe Stock

Among all the hullabaloo of COVID-19 infection rates and surging deaths, we may all be forgiven for having forgotten that a small but relatively important part of the European Union, Britain, formally leaves the bloc — that is, Brexit — in just over two weeks time with no formal separation agreement or coherent working plan for how the U.K. will trade with the EU from January onwards.

Public sentiment is resigned to the constant buildup and letdowns of every previous “deadline” that came and went in what has been a colossal failure of statehood on both sides.

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Brexit deal or no deal

No new deadlines have been set save the obvious one of Dec. 31, after which the two sides will have to start applying tariffs to each other’s imports and exports by reverting to WTO rules.

But even a Brexit “deal” is a pale shadow of the close cooperation that previous Prime Minster Theresa May’s government negotiated with Brussels, only to have it thrown out by Tory backbenchers and dysfunctional opposition parties who used the opportunity to bring the government down rather than try to secure the deal they said they wanted.

The remaining sticking points to a deal may seem bizarre to an outsider.

The E.U. was insisting that Europe retains the legal right to penalize the U.K. if it diverges from the E.U.’s state aid rules. It’s a bizarre principle for a conservative government to be fighting over, as conservatives by tradition are deeply averse to state aid for anything.

But the principle here for MPs is an even deeper aversion to the U.K. being subject to diktat from Brussels. Such control undermines the very principle of being a sovereign nation.

The fudge both sides may be moving towards is to agree any such sanction is not automatic. Furthermore, there would be an arbitration system, allowing both sides to agree on some success in the negotiations.

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import tariff

Dmitry/Adobe Stock

The U.S. has agreed to refund “a significant portion, plus accrued interest” on an import tariff for slab imports to Russian steelmaking group Novolipetsk Steel’s U.S. subsidiary, the parent group said.

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U.S. subsidiary of Russian steelmaking group reaches deal on import tariff refund

The refund is the result of a settlement between NLMK USA and the federal government in a dispute over the refund of duties for slab imports.

However, the government did not admit to any improprieties, the group said in a mid-November statement.

Since 2018, steel imports into the United States are subject to duties imposed under Section 232 of the Trade Expansion Act of 1962. The duties amounted to 25% and 10% on steel and aluminum, respectively, on imports from most countries.

NLMK USA normally sources slab from Novolipetsk Steel’s main plant at Lipetsk, in Russia. The slab is used for rolling at NLMK Indiana, as well as at NLMK Pennsylvania and Sharon Coating.

Costs to produce one metric tonne of steel in the United States are $460-500. Meanwhile, in Russia they are $320-350, industry watchers told MetalMiner.

Case background

NLMK USA originally brought the import tariff lawsuit in February against the government at the United States Court of International Trade. That claim covered 86 exclusions submitted for slab that the steelmaker submitted in 2018.

The U.S. Department of Commerce denied the requests. The department argued other steelmakers in the country claimed they were able to produce adequate supply of slab for rolling.

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mine mining

AdobeStock

Industrial metals have done rather well in bouncing back from the coronavirus pandemic lockdowns.

Classic fundamentals have been supported by rising sentiment to boost prices across the board. Mine supply has been constrained by governments forcing companies to close mine sites and refineries in a bid to contain the spread of the virus resulting in a hit to raw material and refined metal output in a number of countries.

Do you know the five best practices of sourcing metals, including aluminum?

According to Capital Economics, nickel, tin and zinc have been hit the most, each down 8% to 11% for the first three quarters of 2020 over 2019.

On the other side of the fundamentals, equation demand in top consumer China came roaring back during Q2 and Q3, fueled by infrastructure spending that is seeing positive PMI numbers across all sectors — consumption, retail, construction, manufacturing and exports.

GDP in China has recovered to finish the year above last, and there seems little sign that demand is likely to tail off anytime soon. While the rest of the world’s demand has been initially badly hit by lockdowns, it was maintained for electronics and PPE equipment, both dominated by Chinese manufacturers, which have more than made up for losses in more conventional areas.

Prospects for industrial metals next year

Will this buoyant backdrop persevere into 2021, consumers are asking themselves, should I be factoring in continually rising prices through next year?

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Glencore mining

Emil/AdobeStock

The global mining and trading business Glencore will get new leadership next year, with the firm announcing Friday that CEO Ivan Glasenberg will retire and that Gary Nagle, a senior deputy overseeing coal industrial assets, will succeed him, the Wall Street Journal reports.

Are you prepared for your annual aluminum contract negotiations? Be sure to check out MetalMiner’s 5 best practices.

Glasenberg, 63, started with Glencore in 1984 and has been CEO for 18 years. Nagle, 45, joined the company in 2000, working his way up via coal operations in Colombia, South Africa’s alloy assets and now in Australia.

About a year ago, Glasenberg bluntly stated the need for a changing of the guard.

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oil derricks

James Thew/Adobe Stock

It would seem the stock markets are not the only beneficiaries of good news on the results and roll-out of vaccines protecting against the coronavirus. The oil price has been a significant beneficiary too, briefly touching the highest level since March this week, before easing slightly.

According to the FT, Brent crude gained 3.8% to $47.80 a barrel, having earlier briefly topped $48, as traders bet that travel and other energy-intensive industries would pick up in 2021. Tamas Varga, an analyst at Brokerage PVM is quoted saying the rally this month that had been driven by FOMO — or “fear of missing out” — has now become a “fundamentally justifiable price rise.” Oil had already risen 25% this month as the vaccine news became progressively more positive.

Oil prices have been further supported by expectations that OPEC and its allies, including Russia, will extend the duration of their production cuts when they meet next week, to offset weak demand over the winter months.

Are you prepared for your annual aluminum contract negotiations? Be sure to check out our 5 best practices

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China story steel production

Zhao Jiankang/AdobeStock

If we were worried about China’s dominance of global steel output over the last decade, the next decade is looking like it may be even worse.

Having bounced back robustly this year from severe coronavirus lockdowns in Q1, China is on track to top 1 billion tons of steel production by the end of 2020, beating 2019’s 996.3 million tons despite steel-consuming industries suffering a lockdown.

Indeed China is the only major producing country to have increased output this year, up 5.6% at the end of October. Europe, North America, Japan, South Korea, and India are all down over the year cumulatively, leading to a global 1.9% reduction.

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Despite a small decrease from record levels in August and September, China’s October output was still up on last year.

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