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This morning in metals news, South Korea will no longer seek to benefit from special treatment granted to developing countries vis-a-vis WTO rules, iron ore exports from Australia’s Port Hedland are surging and Rio Tinto has commissioned new press filter technology at its Quebec alumina refinery.

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South Korea to Give up Seeking Developing Country Treatment

According to a Reuters report citing South Korea’s finance minister, the country will give up seeking the special treatment afforded to developing countries.

“The government decided not to seek special treatment as a developing country from future negotiations at WTO,” Finance Minister Hong Nam-ki was quoted as saying.

Developing country status is self-designated; however, other WTO members can challenge a country’s claim to the status.

Earlier this year, the White House released a memorandum calling for reforms to developing country designations.

“While some developing-country designations are proper, many are patently unsupportable in light of current economic circumstances,” the memorandum stated. “For example, 7 out of the 10 wealthiest economies in the world as measured by Gross Domestic Product per capita on a purchasing-power parity basis — Brunei, Hong Kong, Kuwait, Macao, Qatar, Singapore, and the United Arab Emirates — currently claim developing-country status.  Mexico, South Korea, and Turkey — members of both the G20 and the Organization for Economic Cooperation and Development (OECD) — also claim this status.”

Through the first half of 2019, South Korea accounted for 9% of U.S. steel imports (1.3 million metric tons).

Port Hedland Iron Ore Exports Rising

Iron ore exports from Australia’s Port Hedland are expected to hit a record high this fiscal year, according to a Bloomberg report.

According to the report, iron ore volumes from the port last year reached 508.5 million tons.

Rio Tinto Announces New Press Filter Tech at Quebec Refinery

Rio Tinto has commissioned new press filter technology at its Vaudreuil alumina refinery in Quebec.

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“The new filter presses will deliver environmental benefits by moving the refinery to dry stacking of bauxite residue and extend the life of the operation, which supports 1,000 jobs in the Saguenay-Lac-St-Jean region,” the company said. “The presses will ramp up to being fully operational in early 2020.”

The new presses will be able to dry bauxite residue — preparing it for storage — in just 17 minutes, according to Rio Tinto, down from the three years it currently takes to dry the material.

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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 coverage here on MetalMiner, which included stories on: steel production and the falling steel price; a dip in aluminum production and the flagging aluminum price; U.S. oil exports; and a survey of U.S. electronics manufacturers regarding tariffs.

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• Stuart Burns on copper projects that could weigh on the metal’s price in the near future.
• U.S. housing starts took a fall in September.
• Despite a drop in global aluminum production, the aluminum price has also fallen.
• U.S. steel prices have continued to tumble as the sector’s capacity utilization dipped below 80% last week.
• Burns on developments in the world of iron ore, which has had an up-and-down year.
• The U.S.’s status as a prominent exporter of oil has continued to grow this year.
• India’s largest coal producer has had operational challenges, but the country’s coal imports are still forecast to drop this month.
• A recent IPC survey asked U.S. electronics manufacturers about tariffs.
• Steel demand is on the decline, but China’s steel production continues to forge ahead on an upward trajectory.

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This morning in metals news, the U.S.’s imports of steel are down 13.7% in the year to date, miner Glencore is partnering with other companies at the World Economic Forum on responsible sourcing and the Aluminum Association supported a bipartisan letter to Congress lobbying for an aluminum import monitoring program.

Keep up to date on everything going on in the world of trade and tariffs via MetalMiner’s Trade Resource Center.

Steel Imports Down 13.7%

U.S. imports of steel fell 13.7% through the first nine months of the year, according to the American Iron and Steel Institute (AISI).

The U.S. imported 22.6 million tons during the nine-month period this year.

In September, the U.S. imported 1.9 million tons of steel, down 6.2% compared with the August import total.

Glencore to Partner on Responsible Sourcing

Along with other companies, miner Glencore announced it will work on responsible sourcing initiatives with the World Economic Forum.

Glencore will participate in the Mining and Metals Blockchain Initiative, which will “explore the building of a blockchain platform to address transparency, the track and tracing of materials, the reporting of carbon emissions or increasing efficiency.”

Other companies participating in the initiative are: Antofagasta Minerals, Eurasian Resources Group Sàrl, Klöckner & Co, Minsur SA, Tata Steel Limited and Anglo American/De Beers (Tracr).

Aluminum Association Applauds Letter on Import Monitoring

The Aluminum Association on Thursday applauded a letter sent by members of Congress advocating for an aluminum import monitoring program.

“On behalf of the 162,000 Americans working in aluminum, we appreciate this bipartisan effort to shore up trade enforcement in our sector,” said Joe Quinn, vice president of public affairs at the Aluminum Association, in a release. “An aluminum import monitoring system is a necessary step to ensure that all aluminum producers are operating on a level playing field in a fair, rules-based global trading system.”

The letter, co-authored by the chairs of the Congressional Aluminum Caucus and addressed to Secretary of Commerce Wilbur Ross, cites China’s aluminum production growth.

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“A monitoring program would give the U.S. government — and the aluminum manufacturing sector — new tools to identify trends and trade flows to determine if there is circumvention or evasion of the industry’s AD/CVD orders and to swiftly address illegal activity,” the letter states. “Notably, Canada recently expanded its import monitoring system to include aluminum and aluminum products.”

It has come as a surprise to some in the coal sector that for the third consecutive month, India’s coal imports are set to drop in October.

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News agency Reuters reported India’s seaborne imports of both thermal and coking coal were on track to be about 13.3 million tons this month, according to vessel tracking and port data compiled by Refinitiv.

The development has caught some experts off guard given the fact that India’s largest producer, Coal India, has seen industrial action in some of its operations and the flooding of a major mine.

By the end of October, analysts believe India’s import figure is likely to go up. Even if October imports do exceed the current estimate, it’s likely they will still fall short of the 15.3 million tons of September, which was down from 15.9 million tons in August.

Like their global counterparts, Indian steelmakers are dependent on coal for making steel. India is dependent on imports of coking coal, as there is not enough indigenous coal to meet domestic demand (India’s total coal reserves are about 260 billion tons).

India imports coal from countries like Australia, Canada and the U.S. The import figures through July this year were 8% higher as compared with the same seven-month period in 2018.

Because of strikes, Coal India said its output was down by 13 million tons, or 2.1%, of its annual output this financial year.

To add to the coal producer’s woes, an unusually high and largely devastating monsoon season has stopped production at a major coal mine in the Chhattisgarh province, exacerbating the overall coal production shortfall.

In the last days of September, a river here suddenly changed its course, flooding the Dipka coal mine in Korba district, Quartz India reported. Incidentally, Chhattisgarh produced the highest quantity of coal in the country in financial year 2018-19.

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Recently, India became the second-largest destination for seaborne coking coal after China, which was about 13% of global demand in the spot market.

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The U.S.’s rise as an oil producer is well-documented, but the U.S. Energy Information Administration’s (EIA) latest report marks another milestone for the domestic sector.

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According to the EIA, the U.S. now exports crude oil to more nations than it imports from.

In 2009, the U.S. imported oil from as many as 37 sources in a given month, according to the EIA. Meanwhile, through the first seven months of 2019, the largest number of import sources in a given month was 27.

In terms of exports, the U.S. exported oil to as many as 31 destinations per month through the first seven months of 2019.

“This rise in U.S. export destinations coincides with the late 2015 lifting of restrictions on exporting domestic crude oil,” the EIA said. “Before the restrictions were lifted, U.S. crude oil exports almost exclusively went to Canada. Between January 2016 (the first full month of unrestricted U.S. crude oil exports) and July 2019, U.S. crude oil production increased by 2.6 million b/d, and export volumes increased by 2.2 million b/d.”

Demand abroad for light-sweet crude oil has fueled the U.S.’s rise as an oil exporter.

“Several infrastructure changes have allowed the United States to export this crude oil,” the EIA said. “New, expanded, or reversed pipelines have been delivering crude oil from production centers to export terminals. Export terminals have been expanded to accommodate greater crude oil tanker traffic, larger crude oil tankers, and larger cargo sizes.”

As noted in MetalMiner’s Annual Outlook, in addition to the strength of the U.S. dollar and China’s economy, oil prices constitute a key price driver for metals.

OPEC’s daily basket price reached $59.50 per barrel on Monday.

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According to a Reuters report, OPEC and its allies are considering whether to extend previously agreed upon supply curbs in an effort to support flagging oil prices.

The inevitable has happened.

For some months now, copper industry experts in India have been predicting India would become a net importer of copper during this fiscal year.

Well, that has happened.

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For the first time in 18 years, India turned into a net copper importer. The primary factor behind the shift is the permanent closure of Sterlite’s 400,000 ton per annum smelter in South India from May 2018.

Two other major players, along with Sterlite, dominated primary copper production in India: state-owned Hindustan Copper and privately held Hindalco Limited. With Sterlite gone from the picture, there is now a shortfall of almost 40% between supply and demand.

The Times of India quoted Urvisha Jagasheth, research analyst at CARE Ratings, saying in a report that domestic production of refined copper had grown at a CAGR of 9.6% during fiscal years 2014-2018. Production fell by 46.1% during FY 2019 due to the Sterlite closure.

Faced with no other option, those requiring copper, like cathode ray tube producers, turned to importing refined copper.

During the nine months in FY 2019, India imported refined copper from Japan which accounted 71% of the country’s copper imports, followed by the Democratic Republic of the Congo (7%), Singapore (6%), Chile (4%), South Africa (4%), Tanzania (3%), Switzerland (1%) and UAE (1%), the Financial Express reported.

Meanwhile, in the other direction, India exported refined copper to China (75%), Taiwan (10%), Malaysia (7%), South Korea (6%) and Bangladesh (3%) during the same period.

CARE said in an earlier report in the Business Standard that there was intense pressure from domestic buyers because of the increasing demand from the power sector, what with the Indian government’s emphasis on renewable energy. Soon, adding to this mix, manufacturers of hybrid and electric cars will also become major buyers of copper.

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“We estimate domestic refined copper demand to increase by 7-8 per cent (including consumption of scrap) by the end of FY20,” the CARE report said.

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This morning in metals news, Rio Tinto released its third-quarter production figures, India has proposed an anti-dumping duty on flat-rolled steel from China and other countries, and copper prices dropped after a strike was averted at Chile’s Antofagasta.

Keep up to date on everything going on in the world of trade and tariffs via MetalMiner’s Trade Resource Center.

Rio Tinto Posts Strong Third Quarter

Miner Rio Tinto posted third-quarter iron ore production of 87.3 million tons, marking a 6% increase on a year-over-year basis and a 10% increase compare with Q2 2019.

Bauxite production increased 9% year over year, while aluminum production fell 3%.

“We have delivered improved production across the majority of our products in the third quarter, with a solid result at our Pilbara mines driving increased sales of iron ore into robust markets,” Rio Tinto CEO J-S Jacques said. “Our strong value over volume approach, coupled with our focus on operational performance and disciplined allocation of capital, will continue to deliver superior returns to shareholders over the short, medium and long term.”

India Proposes Anti-Dumping Duty on Chinese Flat-Rolled Steel

The Indian government Tuesday proposed a new flat-rolled steel anti-dumping duty on imports from China, Vietnam and South Korea, Reuters reported.

The duty, once implemented, will be effective for six months, according to the report.

Copper Drops on Antofagasta News

After Chilean copper miner Antofagasta reached a new 36-month contract with laborers at its Los Pelambres mine, copper prices moved downward, Reuters reported.

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Three-month LME copper dipped 0.2% Wednesday to $5,764 per ton, according to the report.

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This morning in metals news, the U.S. steel sector’s capacity utilization rate inched down another tenth of a percentage point, the U.S. raised its steel tariffs on Turkey to 50% and Chinese iron ore futures fell Tuesday.

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U.S. Steel Capacity Utilization Rate Falls to 80.3%

The U.S. steel sector’s capacity utilization rate for the year through Oct. 12 reached 80.3%, down from 80.4% the previous week.

Steel production for the year through Oct. 12 reached 76.1 million tons, up 2.9% on a year-over-year basis.

Trump Raises Turkey Steel Tariffs

In yet another turn in U.S.-Turkey relations, President Donald Trump signed an executive order halting trade negotiations with Turkey and raising the tariff on Turkish steel imports to 50%.

Last year, the Trump administration raised its Section 232 steel tariff on Turkish steel to 50% amid a row over Turkey’s detention of American pastor Andrew Brunson; the U.S. eventually brought the tariff back down to the standard 25% rate.

However, after the U.S. announced a withdrawal of its forces from Syria, followed by Turkey’s military offensive in the region, Trump released a statement announcing the U.S. would sanction Turkish government officials and “any persons contributing to Turkey’s destabilizing actions in northeast Syria.”

Chinese Iron Ore Futures Down Amid Vale Production Uptick

Chinese iron ore futures dropped to an over two-week low amid Brazilian miner Vale’s announcement of elevated third-quarter production, Reuters reported.

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The most-traded iron ore contract on the Dalian Commodity Exchange fell 1.2% on Tuesday, down to 644 yuan ($91.05) per ton, according to the report.

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This morning in metals news, the U.S. and China are working toward a partial trade deal, the largest copper mine in Ecuador has curbed operations amid protests and China’s copper imports hit an eight-month high.

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U.S., China Talks Could be Working Toward Partial Deal

As with anything else, there are two sides to every story.

While a wider understanding on trade between the U.S. and China is still far off, the two countries appeared to have made some progress toward a partial trade deal.

According to Reuters, the U.S. agreed to delay a scheduled October tariff increase, and Treasury Secretary Steven Mnuchin said the two countries have a “fundamental understanding” on many of the critical issues.

However, the deal is far from done. In addition, comments from the Chinese side were far less effusive than those of President Donald Trump.

“We have made substantial progress in many fields. We are happy about it. We’ll continue to make efforts,” Vice Premier Liu He was quoted as saying.

Ecuador Protests Impact Copper Activity

Ecuador’s largest copper mine has curbed its activity amid protests in the country, Bloomberg reported.

Protestors rallied against a proposed fuel price hike, ordered by the government in an effort to secure a loan from the IMF.

China Copper Imports Jump

F0r those of the mind that copper indeed lives up to its “Dr. Copper” moniker, China’s consumption is a critical piece of the copper puzzle.

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According to Reuters, China’s copper imports surged 10.15% in September on a month-over-month basis to its highest level in eight months.

Anyone who argues the U.K. has not been impacted by its decision three years ago to leave the European Union only has to look at the figures to see how wrong that argument is.

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The Financial Times reported this week that the U.K. narrowly avoided a recession this summer, as Q2’s contraction was followed by a minuscule bounceback in Q3 thanks to a pick-up in services, which grew at 0.4%.

Manufacturing, however, as anyone in the metals industry will know only too well, remained in recession, contracting by 0.7% in August compared to last year, according to the Financial Times.

Commentators put this down to uncertainty over what Brexit will look like and when it will happen, hindering plans for investment and creating an atmosphere of uncertainty and retrenchment.

Set this against a possibly more worrying trend for the U.K. and you have to ask what the longer-term prospects are for the economy.

An earlier Financial Times article this week explored the longer-term fall in productivity that has held back wealth creation since the financial crisis.

In the U.K., productivity has stagnated since the 2008 financial crisis, the Financial Times reported, failing to recover as it typically does following contractions.

Moreover, it has weakened since the 2016 Brexit referendum and contracted in the past year; productivity contracted in the second quarter at the fastest pace in five years.

According to the Financial Times, many economists and businesspeople point to the lack of business investment as a reason for deteriorating productivity. Business investment has barely expanded since the second quarter of 2016 and contracted 0.4% in the three months to June, suggesting Brexit and falling productivity are a conjoined crisis, with one supporting the other.

Businesses have preferred to hire workers than invest, so unemployment is low and that’s what grabs the headlines, but the inability to increase the value of goods and services produced per hour of work limits what companies can afford to pay their workers — so, living standards stagnate.

Utilities and construction were the only sectors that recorded a rise in productivity, while output per hour fell 1.9% in the manufacturing sector and by 0.8% in the services sector. Services account for about 80% of the U.K.’s economy.

Source: Financial Times

Nor is the U.K. simply suffering the same problem as everyone else.

Since the second quarter of 2008, the U.K.’s lack of productivity growth contrasted with an average 9% expansion in labor productivity for the 36 member countries of the OECD.

It is hard to see what will break the cycle.

Supporters of Brexit talk about the U.K. being transformed into a low-tax tiger, like Singapore, post-Brexit.

Realistically, most see that as unlikely.

Even if taxes were to be dramatically reduced, with the expected new immigration controls and low unemployment, labor could begin to get tight and wages could rise sharply. If that were not accompanied by a sharp uplift in GDP, the U.K. could be caught in a deflationary trap, with low-cost, tax-free imports causing major disruption to domestic producers.

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No wonder the issue of Brexit has the public and politicians so divided.

Unaware, as most are, of the U.K.’s low productivity growth, the long-term impact has been the very stagnation in living standards that has in part fueled the desire to leave the E.U. and search for a brighter future.

Good luck with that.