Articles in Category: Non-ferrous Metals

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This morning in metals news, President Donald Trump indicated Wednesday the U.S. tariffs on China might not be going away anytime soon, copper prices soared to an eight-month high and an Ohio steel company received a state grant to upgrade a railroad spur.

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Tariffs Likely to Linger

As U.S.-China trade talks continue, President Donald Trump on Wednesday indicated the tariffs imposed on China over the last year likely aren’t going anywhere.

“We’re not talking about removing them, we’re talking about leaving them for a substantial period of time,” Trump was quoted by CNN as saying. “Because we have to make sure that if we do the deal with China that China lives by the deal because they’ve had a lot of problems living by certain deals.”
In addition to the Section 232 tariffs on steel and aluminum, the U.S. used Section 301 of the Trade Act of 1974 to impose a total of $250 billion worth of tariffs on imports from China last year.

Copper Price Rises to Eight-Month High

The price of copper got a boost on the heels of Federal Reserve comments indicating the economy has slowed since the fourth quarter of last year.

According to Reuters, copper reached an eight-month high, moving against the falling dollar on the heels of the Fed’s comments on the economy; the U.S. dollar index dipped Wednesday afternoon, but has returned to pre-dip levels Thursday.

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Ohio Steel Company Gets Government Grant

An Ohio steel company, Taylor Coil Processing, has received a state grant of $56,125 to upgrade a rail spur, the Tribune Chronicle reported.

The upgrade would facilitate movement of products into and out of Taylor’s plant, according to the report. Citing data from the Youngstown Warren Regional Chamber, more than 350 million pounds of steel were transported into and out of the Taylor plant in 2018, with 10-15% of that total moving by rail.

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This morning in metals news, Aeris Resources Ltd. has put in a big offer for a Glencore mine in Australia, trade volumes at the Port of Brownsville increased 6.6% in 2018 and one consultancy says U.S. tariffs on aluminum have actually driven Chinese exports of the metal.

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Aeris Bids for Glencore Mine in Australia

According to a MarketWatch report, Australian firm Aeris Resources Ltd. has put in a $575 million offer for a Glencore mine in eastern Australia (the story was first reported by the Australian Financial Review).

According to a release from Aeris, funding for the offer has not yet been finalized.

“Broadly, the current offer by Aeris comprises $US575m in mix of cash (approximately US$525m) and Aeris shares (approximately US$50m) plus a royalty payable to Glencore,” the release stated.

Trade Volumes Rise at Port of Brownsville

The Port of Brownsville, located on the U.S.-Mexico border in southeastern Texas, had a banner year in 2018.

“The Port of Brownsville set new records in tonnage and total operating revenue in 2018, moving 11.3 million tons of diverse cargos with operating revenues of more than $24.2 million,” a release from the port stated. “The results, announced today at the annual State of the Port Address, reveal a 6.6 percent increase in cargos, a 25 percent increase in rail movements, and a 2.5 percent increase in operating revenues from the previous year.”

“Congratulations to our partners, customers, and port users who all contributed to these new high-
water marks,” said John Reed, chairman of the Brownsville Navigation District, in the release. “Steel was up, almost all petroleum categories were up, dry bulk cement and sugar were way up.”

China’s Aluminum Exports

According to consultancy Wood Mackenzie, the U.S.’s tariffs on aluminum have actually “encouraged” China to export aluminum, S&P Global Platts reported.

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Using Section 232 of the Trade Expansion Act of 1962, the U.S. imposed tariffs on imported steel and aluminum in March 2018. The tariffs sparked concerns from some countries, including the European Union trading bloc, regarding the possibility of diverted supplies of Chinese steel and aluminum disrupting their domestic sectors. (As a result, the E.U. earlier this year imposed new steel safeguards.)

In addition, in April 2018 the E.U. announced it would begin monitoring levels of aluminum imports to determine if the Section 232 tariffs would lead to increased import levels.

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This morning in metals news, Chilean miner Antofagasta expects a copper deficit this year, Polish lawmakers have proposed slashing the country’s mining tax and hackers have targeted Norwegian aluminum maker Norsk Hydro.

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Copper Deficit

Chilean miner Antofagasta forecasts a 2019 copper deficit ranging between 100,000 and 300,000 tons, Reuters reported.

“When we talk about the deficit, I don’t think it’s going to be a big one… it’s probably in a range between 100,000 and 300,000 tonnes,” CEO Iván Arriagada was quoted as saying.

Poland Mulls Cutting Mining Tax

According to another Reuters report, Polish lawmakers are considering cutting the country’s mining tax.

The tax — introduced in 2012 — primarily affects copper and silver producer KGHM, which is a major employer in the country, according to the report.

Norsk Hydro Hacked

The news turned from the announcement of a new Norsk Hydro CEO Monday to hacking on Tuesday.

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According to Reuters, the Norwegian aluminum maker suffered an attack by hackers that forced several plants to go offline.

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Stock and currency markets have been a little perkier the last week or so as expectations rise of some form of Chinese stimulus to boost demand — and, hence, global growth.

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That optimism, though, may be somewhat misplaced.

China has limited scope of debt-fueled stimulus of the type employed in the past, so a pick-up in demand resulting from fiscal measures may be more muted than some optimists hope.

Still, hopes were raised when Premier Li Keqiang closed a briefing to the National People’s Congress with a number of announcements. Beijing intends to use tools such as lowering bank reserve requirements, according to Bloomberg.

However, a promise to reduce VAT on manufactured goods from the current 16% to 13% from April 1 gave a definite fillip to traders and cast depression among hard-pressed aluminum semis manufacturers in the region. More competitively priced Chinese aluminum semi-finished product is the last thing regional aluminum producers want on their doorstep.

The measure is expected to further boost exports, which have already been running at near-record levels in 2018-19. According to Aluminium Insider, exports have risen from 517,000 tons per month last August to 552,000 tons in January to set a new record. Primary producers, who had been meeting to negotiate capacity closures in the face of slowing demand, are reportedly now likely to reverse that decision in the hope demand will pick up.

According to Aluminium Insider, the move is expected to pump in the region of CNY 600 billion (U.S. $90 billion) into the manufacturing sector, boosting the country’s gross domestic product by 0.6%. The move comes as the latest in a series of changes to the country’s tax regime conducted by Beijing, carried out to bolster the economy after manipulations of monetary policy and further debt-based spending have become increasingly difficult avenues for effecting change.

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Optimism is supported by the widespread belief that an agreement on China’s trade war with the U.S. is just a matter of weeks away — but the much-touted trade summit between President Donald Trump and Premier Li Keqiang has been postponed yet again, and may now not take place until well into April or even May.

A successful trade deal is by no means a certainty, as much as the markets will look for any deal to be better than no deal.

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This morning in metals news, copper prices were up slightly Monday, Tokyo Steel held prices steady for the fourth straight month and Rio Tinto responds to criticism about carbon emissions stemming from its customers’ operations.

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Copper Prices

LME copper traded up 0.4% on Monday, Reuters reported, reaching $6,458 per ton.

Citing Society Generale analyst Robin Bhar, the report notes the second quarter of the year typically features conditions conducive to price support for copper.

Holding Steady

Japan’s Tokyo Steel has announced it is holding prices steady for its steel products for the fourth straight month, according to another Reuters report.

Kiyoshi Imamura, managing director of Tokyo Steel, was quoted as saying that domestic construction demand was “sluggish due to higher inventories and delays in some projects because of shortage of labour and some materials.”

Rio Answers Emissions Criticism

Rio Tinto has faced some criticism from environmental activists, who have called for the iron ore miner to bear more responsibility for the emissions caused by the miner’s customers.

Rio, however, says it can’t be held responsible for what customers do with their iron ore, the Australian Financial Review reported.

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Rio Tinto Chairman Simon Thompson wrote a letter to shareholders in which he explained that responsibility lies “within the control of our customers, not Rio Tinto,” he was quoted as writing.

Source: Toyota

Automaker Toyota last week announced a push to increase its previous investment pledge in the U.S.

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Last week the automaker announced it would up a 2017 pledge to invest $10 billion in the U.S. over five years, increasing the investment up to $13 billion.

“These latest investments represent even more examples of our long-term commitment to build where we sell,” said Jim Lentz, chief executive officer for Toyota Motor North America, in a company release. “By boosting our U.S. manufacturing footprint, we can better serve our customers and dealers and position our manufacturing plants for future success with more domestic capacity.”

In addition to the wider pledge, Toyota announced investments totaling $750 million in five states: Alabama, Kentucky, Missouri, Tennessee and West Virginia. The investments include “production capacity increases and building expansions at Toyota’s unit plants in Huntsville, Alabama, Buffalo, West Virginia, Troy, Missouri and Jackson, Tennessee.”

An investment of $288 million aims to increase annual engine capacity from 670,000 to 900,000 by the end of 2021 at its Huntsville, Alabama plant, and will include the addition of 450 new jobs.

A $238 million investment at its Georgetown, Kentucky plant will see to the commencement of production of the Lexus ES 300h hybrid in May, with production of the RAV4 hybrid beginning in 2020.

Toyota is also investing in its Bodine Aluminum plant in Missouri toward the goal of producing an additional “864,000 cylinder heads for Toyota’s New Global Architecture (TNGA),” up from the current level of more than 3 million cylinder heads per year. The automaker is also investing in its Tennessee aluminum plant, namely for equipment and a building expansion to double its annual capacity of hybrid transaxle cases and housings to 240,000.

Toyota also plans to double its capacity of hybrid transaxles to 240,000 by 2021 at its West Virginia plant.

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Earlier this month the automaker reported its February U.S. sales were down 5.2% year over year. For the first two months of the year, Toyota’s U.S. sales are down 5.9% compared with the same time period in 2018.

According to a recent report from the U.S. Geological Survey (USGS), U.S. mines churned out $82.8 billion worth of minerals in 2018.

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The 2018 total marked a 3% year-over-year increase from $79.7 billion in 2017, according to the report from the USGS National Minerals Information Center.

“The Mineral Commodity Summaries provide crucial, unbiased statistics that decision-makers and policy-makers in both the private and public sectors rely on to make business decisions and national policy,” said Steven M. Fortier, director of the National Mineral Information Center, in a prepared statement. “Industries – such as steel, aerospace and electronics – processed nonfuel mineral materials and created an estimated $3.02 trillion in value-added products in 2018, which is a 6 percent increase over 2017.”

The report highlights the U.S.’s dependence on foreign sources for a number of minerals. According to the report, “imports made up more than half of U.S apparent consumption for 48 nonfuel mineral commodities, and the U.S. was 100 percent net import reliant for 18 of those.”

Of the 18 commodities for which the U.S. is totally reliant on imports, 14 were named on a critical minerals list designated in May 2018 by the U.S. Department of the Interior.

The full list of critical minerals included: aluminum (bauxite), antimony, arsenic, barite, beryllium, bismuth, cesium, chromium, cobalt, fluorspar, gallium, germanium, graphite (natural), hafnium, helium, indium, lithium, magnesium, manganese, niobium, platinum group metals, potash, the rare earth elements group, rhenium, rubidium, scandium, strontium, tantalum, tellurium, tin, titanium, tungsten, uranium, vanadium, and zirconium.

China topped the list of exporters of nonfuel minerals to the U.S., followed by Canada. As noted in our Rare Earths MMI series, the U.S. — the whole world, in fact — is largely dependent on China for rare earths elements, as China controls most of the sector.

Unsurprisingly, when it came time for the Trump administration to roll out a finalized list of tariffs in September — $200 billion worth in tariffs on Chinese goods, in addition to the $50 billion worth of tariffs imposed earlier in 2018 — rare earths were left off the list.

While it certainly is not enough to counterbalance China’s dominance in the sector, the USGS report notes rare earth mining resumed in the U.S. last year for the first time since 2015, when Molycorp, owner of the Mountain Pass rare earths mine, declared bankruptcy. Mountain Pass, the U.S.’s only operating rare earths mine, was eventually sold to MP Mine Operations LLC for $20.5 million in 2017.

Minerals Production Up, Metal Mine Production Down

Breaking down U.S. mine production further, U.S. industrial minerals production came in at a value of $56.3 billion last year (up 7% from 2017), while metal mine production checked in at an estimated $25.9 billion (down 4% from 2017).

Crushed stone, construction sand and gravel accounted for 45% of industrial minerals production, at a value of $25.3 billion. Meanwhile, gold, copper, iron ore and zinc led the way in metal mine production.

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Other Highlights

A few other items of note from the USGS report:

  • U.S. imports of aluminum fell by an estimated 11% last year, as the U.S.’s Section 232 tariff on imported aluminum went into effect. Argentina and Australia were exempted from the duty (Argentina was tagged with a quota), while the tariff rate for Turkish aluminum doubled amid diplomatic tensions last year.
  • A New York zinc mine, last operational in 2008, reopened last year.
  • Twelve states produced more than $2 billion worth of nonfuel mineral commodities in 2018, according to the report. The list includes, in descending order: Nevada, Arizona, Texas, California, Minnesota, Florida, Alaska, Utah, Missouri, Wisconsin, Michigan and Wyoming.

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Before we head into the weekend, let’s take a look at the week that was and some of the metals storylines here on MetalMiner:

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  • The palladium price continues to soar, MetalMiner’s Taras Berezowsky explained in this month’s Global Precious MMI.
  • Rare earths miner Lynas Corp. is appealing a condition put forth by the Malaysian government related to the miner’s license renewal.
  • Stainless steel surcharges and LME nickel prices made gains this past month.
  • The copper price also trended upward last month, but it could be entering a sideways trend.
  • MetalMiner’s Stuart Burns writes about recession concerns in the U.S. and elsewhere, and signs pointing in that direction.
  • Several billionaires are backing a new startup that aims to find new sources of cobalt, using “statistical modeling, big data aggregation, and basic science” to improve methods of exploration.
  • ArcelorMittal’s resolution plan for the bankrupt Essar Steel Ltd. received approval from an Indian tribunal — but an additional challenge awaits, MetalMiner’s Sohrab Darabshaw explained.

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According to a recent International Tin Association (ITA) report, global tin consumption bested expectations last year, despite trade headwinds created by tensions between the U.S. and China.

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“Tin consumption in 2018 was stronger than previously anticipated, according to year-end data,” the ITA said in the report. “Despite a positive start to the year, expectations were revised downwards following the US-China trade tensions and poor macroeconomic data. However, based on the most recent data, growth in tin use remained relatively robust, growing by 2.5% over the course of the year.”

By volume, tin usage increased by 9,000 tons in 2018 compared with 2017. An ITA survey of tin users — accounting for approximately 40% of tin use — had indicated expectations of 3% tin use growth. That was later moderated down to 1% before ultimately finishing up 2.5%.

As in most cases, China’s consumption of the metal accounts for a significant piece of the pie — 45%, according to the ITA.

Last year, however, China’s tin consumption dipped slightly, according to the report.

“While the Chinese solder market is impacted by electronics miniaturisation, there is growing demand in other areas, such as automotive, industrial and medical uses,” the ITA said. “Although Chinese consumption did decline slightly in 2018, this was offset by significant growth in overall tin consumption in the rest of the world (5%).”

What about 2019?

According to the report, preliminary forecasts suggest a contraction in tin use is on the way, but not a large one — that is, less than 1%.

“The overall slowdown of the Chinese economy is likely to be impacted by the on-going US-China trade tensions, although the two countries may be nearing a resolution,” the ITA release stated. “However, it is too early to comment on how a new trade deal would affect tin consumption.”

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Despite a surge in January, the LME tin price trended downward throughout most of 2018, kicking off at $20,140 per ton and closing the year at $19,475 per ton.

LME tin price in 2018. Source: LME

For more information on trends in the tin market (and other metals market trends), request a free trial to our Monthly Metal Buying Outlook.

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This morning in metals news, U.S. Trade Representative Robert Lighthizer on Tuesday said the U.S. is working on a “practical solution” to lift the steel and aluminum tariffs on Canada and Mexico, China is expected to have a 2.65-million-ton copper deficit this year, and a preliminary report on iron ore miner BHP’s train derailment in November said operators mistakenly applied brakes on the wrong train.

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USTR: U.S. Aims to Remove Steel, Aluminum Tariffs on Canada, Mexico While Preserving Gains for U.S. Industry

The United States-Mexico-Canada Agreement (USMCA), the successor to NAFTA, still must be ratified by the legislatures of the three countries.

A hangup toward that end is the fact that the U.S.’s Section 232 tariffs on steel and aluminum remain in effect for Canada and Mexico. The two countries have indicated they would not approve the deal without removal of the tariffs. Likewise, some U.S. politicians have argued for the removal of the tariffs for the U.S.’s northern and southern neighbors.

On Tuesday before the Senate Finance Committee, U.S. Trade Representative Robert Lighthizer said the U.S. is working on a “practical solution” to remove the tariffs while preserving gains the U.S. steel and aluminum industries have made in the last year.

“What I’m trying to do is a have a practical solution to a real problem … get rid of tariffs on these two, let them maintain their historic access to the U.S. market which I think will allow us to still maintain the benefit of the steel and aluminum program,” he was quoted by Reuters as saying.

China’s Copper Deficit

China is expected to post a copper deficit of 2.65 million metric tons this year, S&P Global Platts reported.

The report, citing data from a Beijing Antaike Information forecast, said copper demand is expected to rise 3% to 11.5 million metric tons, with production at 8.85 million metric tons.

Preliminary Report: Brakes Applied on Wrong Train in BHP Train Derailment

According to a preliminary report investigating the derailment of a BHP iron ore train in November, operators applied the brakes to the wrong train, Reuters reported.

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Per the report, the Australian Transport Safety Bureau will release a final report on the incident later this year.