Articles in Category: Non-ferrous Metals

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This morning in metals news, Tokyo Steel plans to raise plate prices, Rio Tinto says new aluminum capacity is needed outside of China and copper prices tick upward.

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Plate Prices Rise

Tokyo Steel plans to raise heavy plate prices by 2.5% in December, according to a Reuters report. The steelmaker had not raised heavy plate prices since January, the report noted.

MetalMiner’s Take: Plate prices have always had their own price dynamics separate from the other forms of flat rolled steel (such as HRC and CRC).

Plate prices in the U.S. have remained fairly well-supported compared to the other forms of steel, so it should come as no surprise that in markets with strong construction demand, like Japan, mills would announce price increases.

Interestingly, Chinese plate prices have started to slip, but those dynamics could change based on environmental curbs, whether the Japanese plate price increases stick and Chinese demand.

U.S. metal-buying organizations will want to pay close attention to these price dynamics in Japan and China.

Aluminum Capacity

Rio Tinto Group says the world needs new aluminum capacity outside of China in the coming years, Bloomberg reported.

Copper Price Rises

Prices of LME and SHFE copper increased Monday, Reuters reported, on the heels of positive sentiment stemming from comments made by President Donald Trump regarding tariffs on China.

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During a press briefing Monday, Trump said the U.S. might not need to impose further tariffs on China, the world’s top copper consumer.

Industry groups testified before the U.S. International Trade Commission (USITC) late last week on the United States-Mexico-Canada Agreement (USMCA) and its potential impact on the U.S. economy and industry sectors.

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The Aluminum Association was one of the groups to comment, particularly focusing on the Section 232 steel and aluminum tariffs. Despite the three countries reaching a deal on USMCA — which is set to serve as the successor to the North American Free Trade Agreement (NAFTA) if ultimately finalized — the U.S. metals tariffs remain in effect for Canada and Mexico.

During her testimony, Aluminum Association President and CEO Heidi Brock renewed the industry group’s call for quota-free tariff exemptions for Canada and Mexico.

“Limiting access for U.S. aluminum producers to reach their suppliers and customers – and in some cases, their own subsidiaries and facilities – in Canada and Mexico, as we see with the Section 232 tariffs today, will hamper continued growth and investment for our industry here at home,” Brock said. “This is why we continue to call for quota-free exemptions from these tariffs for our USMCA partners. The U.S. aluminum industry faces an acute and persistent issue of illegally subsidized Chinese aluminum overcapacity in the market, but tariff or quota actions against countries like Canada and Mexico that operate as market economies do not address the China challenge and instead harm the overall competitiveness of the region.”

Brock concluded the USMCA cannot work without removal of the tariffs on Canada and Mexico.

“From the beginning, we have supported a modernized North American trade agreement, and USMCA achieves that in important ways,” she said. “However, we urge the president to resolve the Section 232 tariffs on aluminum imports for our neighbors to ensure free movement of aluminum and aluminum products within North America. The new agreement simply cannot work as intended for the aluminum industry and our customers with those tariffs – or quotas to limit access to supply – in place. Full, quota-free exemptions for Canada and Mexico from aluminum tariffs as part of this agreement will benefit the U.S. aluminum industry and the hundreds of thousands of American workers who depend on its success.”

Almost two weeks after the USMCA was announced, the USITC announced Oct. 12 that it would investigate the potential impacts of the deal. The investigation came at the request of U.S. Trade Representative Robert Lighthizer.

Kevin Dempsey, the senior vice president for public policy and general counsel for the American Iron and Steel Institute (AISI), also testified at the hearing.

Dempsey said the U.S. steel industry views NAFTA as a “successful agreement,” but one that should be modernized and strengthened. He went on to list provisions of USMCA that he said would benefit the steel industry, including a strengthened rules of origin benchmark and provisions promoting “increased cooperation and information sharing between the three North American governments to address circumvention and evasion of trade remedy orders.”

As we noted Friday, it remains to be seen what impact, if any, the new Democrat-majority House of Representatives will have on implementation of the USMCA.

Some Democrats have expressed concerns about the deal, including New Jersey Rep. Bill Pascrell, the leading Democrat on the House Ways and Means Subcommittee on Trade.

“As claims start to be made about the miracles that the new NAFTA will bring, we are relying on you, this commission, the International Trade Commission, to tell it like it really is,” Pascrell said in his opening remarks during the USITC hearing last Thursday.

Pascrell said he is reviewing the text of the USMCA and plans to use the USITC’s analysis, among other analyses, to inform his views on the agreement.

“There are certainly some improvements in the USMCA over the previous NAFTA, but the jury is still out as to whether this deal meets my standard for a better deal for American workers,” Pascrell said. “The Commission’s report on the potential economic impact of the USMCA is a critical component in assessing the merits or flaws of the new deal. Any new deal will not be a success unless it eliminates the incentives for outsourcing in the original NAFTA and boosts jobs and wages in a meaningful way in the United States.

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“For these reasons, we need a comprehensive and meaningful ITC report to determine whether all of the Administration’s rhetoric around transforming and rebalancing U.S. trade policy will actually carry the day.”

The full text of the USMCA is available on the Office of the U.S. Trade Representative’s website.

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This morning in metals news, the zinc and copper prices made gains this week, automakers expressed criticism of the U.S.’s steel and aluminum tariffs, and Shanghai rebar prices fell.

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Zinc, Copper Prices Rise

Both metals made gains this week on concerns of supply tightness, Reuters reported.

Per the report, LME copper was up 1.8% on the week.

MetalMiner’s Take: Copper prices are behaving like most base metals. Base metals are currently being moved by two drivers: the Chinese economy and tightening supply.

The Chinese economy seems to have slowed down recently and analysts’ main concern has been how that would affect demand for metals. In addition, supply is tightening, which usually drives prices up.

LME prices are currently balancing between these two drivers. The Chinese economy may be the decisive indicator for prices to move down or to continue increasing slightly.

Automakers Critical of Metals Tariffs, Potential Auto Tariffs

Groups representing the automotive industry were intensely critical of the Trump administration’s steel and aluminum tariffs, in addition to the specter of possible additional tariffs on imported automobiles, the Detroit News reported.

Groups made the comments during a U.S. International Trade Commission (USITC) hearing Thursday morning on the United States-Mexico-Canada Agreement (USMCA), the trade deal agreed upon by the three countries that is to supersede the North American Free Trade Agreement (NAFTA).

MetalMiner’s Take: Manufacturers can expect their trade associations to continue putting pressure on the Trump administration to remove or adjust the steel and aluminum tariffs, particularly for Canada and Mexico.

Mexico has previously indicated it would not approve the deal if the tariffs are not addressed. The real question involves what a Democratically controlled house might do about USMCA; however, many of its provisions support labor more than the existing NAFTA agreement.

Will the new House of Representatives view USMCA as a piece of legislation that crosses partisan boundaries, or will it use USMCA as its first opportunity to obstruct the president’s legislative agenda?

Only time will tell.

But rest assured the Trump administration won’t move on tariffs until it absolutely needs to.

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Shanghai Rebar Price Drops

The Shanghai rebar price dropped to close the week, Reuters reported, down 0.4%.

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This morning in metals news, Chilean state copper agency Cochilco again trimmed its average copper price prediction for the year, China’s state-owned aluminum producer Chinalco is looking abroad and oil prices are up for the second straight day.

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Copper Price Prediction Falls

Chile’s state copper agency, Cochilco, lowered its average copper price prediction for the year, Reuters reported.

According to the report, it downgraded its prediction by $0.03 to $2.97/pound.

Chinalco Looks Abroad

Amid challenges at home, the state-run aluminum major Chinalco is looking elsewhere to buttress its business.

According to a Bloomberg report, the global aluminum market is set to swing from a deficit to a surplus in 2019, which will put pressure on the aluminum producer (in tandem with rising prices of raw materials).

Bloomberg cites Chinalco’s deputy general, Ao Hong, who said the firm is looking into an Indonesian alumina project.

Oil Prices Rise Again

The oil price made gains for the second straight day Thursday, Reuters reported.

After exceeding the $80/bbl mark in September — its highest level since 2014 — the price has come off in the last six weeks.

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According to the report, OPEC is considering a cut of up to 1.4 million barrels per day next year to head off a further plunge in the price.

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Yesterday, we noted a recent Aluminum Association letter, in which the industry group claimed the Department of Commerce’s Section 232 tariff exclusion request undermined the domestic aluminum industry.

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On Tuesday, the Coalition of American Metal Manufacturers and Users (CAMMU) also weighed in with its thoughts on the process.

Beginning in June, the DOC began receiving requests for exemptions from the steel and aluminum tariffs, as U.S. companies argued that the type of steel or aluminum product they needed is not made in the U.S. in the appropriate quantity or quality they need.

The sheer volume of requests seems to have taken the DOC by surprise. As MetalMiner’s Stuart Burns recently noted, by Oct. 29 the DOC had issued decisions in only about one-third of the nearly 50,000 total requests.

“Ideally, the Department would eliminate the Section 232 tariffs on steel and aluminum imports as it is clear that the utilization rates for domestic producers now exceed the goals set forth when these tariffs were implemented by the President,” the CAMMU release says. “As long as the tariffs remain, it is essential that exclusion requests are processed in a fair, transparent, and expeditious manner.”

In its letter, addressed to Secretary of Commerce Wilbur Ross, CAMMU explains that while the changes introduced to the tariff exclusion process in September were a nice start, further improvements are needed.

CAMMU specifically calls out statements from metals producers in formal objections that do not meet the “available immediately” threshold, defined as being able to supply within eight weeks.

“Objections to exclusion requests available on the Regulations.gov website reveal numerous vague assertions that clearly could not meet the ‘available immediately’ threshold set forth by the Department,” CAMMU argued. “The Department should reject these objections outright. For example, steel and aluminum producers regularly disregard the process for quality and testing that steel‐ and aluminum‐using manufacturers must go through with their customers prior to acceptance of products.”

In addition, CAMMU opined that the typical timeline for the resolution of a tariff exclusion request is too long, particularly given the just-in-time nature of some manufacturing. In the letter, CAMMU said the DOC should accept exemption requests in cases for which it receives no objections (or if it receives an incomplete objection).

CAMMU said the timeline manufacturers face vis-a-vis the exemption request process is too slow:

We also believe the stated 106 day timeline from date of posting does not fully reflect the delays faced by requesters. According to available data, American manufacturers must wait on average nearly 23 days, and almost 17 days for aluminum exclusion requests, before the Department posts their steel exclusion requests on regulations.gov. In the best of circumstances, this means that the average U.S. manufacturer must wait more than four months for the federal government to determine whether its most important input is subject to a 25% or 10% tax. No manufacturer can afford to lose one‐third of the entire calendar year waiting for a response made in a system that places greater weight to the objections raised than to the facts presented by actual purchasers of the raw materials.

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CAMMU’s full letter is available here.

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A financing deal was recently struck between steel tycoon Sanjeev Gupta’s GFG Alliance with international banks for the purchase of Rio Tinto’s Dunkerque aluminum smelter in France, one of Europe’s largest smelters. The Liberty House Group is a part of the GFG Alliance.

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The term loan secured on standard financial terms provides five-year committed funds, Liberty said in a press release. Analysts say the development clears the way for the deal to be formally completed before the end of November.

Gupta, the executive chairman of the GFG Alliance, was quoted as saying, “This transaction allows us to press ahead with our plans to develop Dunkerque, to expand production and create added-value downstream operations. This agreement underlines the support of the banking community for GFG’s vision for economic and environmental sustainability.”

The agreement comes after a series of talks which also involved getting the French government’s approval, plus garnering long-term power price contracts.

According to GFG Alliance, there will now be more investments in the property after the plant is eventually acquired. Previously, Liberty House acquired an aluminum wheels facility in Chateauroux. With these purchases the firm will position itself as a major integrated manufacturing business, producing metals and components for the automotive and other growing industries in France.

The Dunkerque smelter boasts an annual capacity of 270,000 tons. The smelter was commissioned in 1991 and later purchased by Alcan, which was then purchased by Rio Tinto about a decade ago.

Liberty is part of the GFG Alliance, a global group of energy, mining, metals, engineering, logistics and financial services businesses, headquartered in London. GFG has additional hubs in Dubai, Hong Kong, Singapore, Sydney, Paris and New York, and a presence in around 30 countries worldwide. The GFG Alliance has a turnover exceeding U.S. $15 billion, and features integrated industrials and metals businesses under the Liberty banner.

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Recently, Liberty Steel announced an agreement to deal with ArcelorMittal to acquire three European steel plants, signaling another major expansion by the British-owned Liberty Steel.

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This morning in metals news, Novelis Inc. announced a $175 million investment in its aluminum recycling and production capabilities in aluminum, Chinese steel prices fell, and U.S. CRC and HDG prices dropped to start the week.

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Novelis Announces $175M Investment

Aluminum roller and recycler Novelis announced it is investing $150 million in its Brazilian aluminum rolling and recycling operations.

The investment will seek to expand its Pindamonhangaba facility.

“This investment in additional rolling and recycling capacity further strengthens our commitment to the South American region and better positions us to meet our customers’ needs,” President and CEO Steve Fisher said in a release. “Our focus on establishing another reliable water source also helps us further deliver on our purpose of shaping a sustainable world together.”

Chinese Steel Prices Drop

Prices of Chinese steel fell to multimonth lows, Reuters reported, as a result of concerns regarding demand in the country.

Rebar hit a 3 1/2-month low Monday but gained 0.3% Tuesday, according to the report.

MetalMiner’s Take: SHFE Chinese rebar prices this week fell back to April levels, when prices started to increase.

The pullback in prices is not only driven by a slower Chinese economy, but also by a slower demand. Chinese steel prices also started to decrease at this point of the year last year. Readers may want to study last year’s price levels and formulate a strategy based on them.

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U.S. HDG, CRC Prices Fall

Prices of U.S. cold-rolled coil and hot-dipped galvanized steel sheet have continued to drop this week, S&P Global Platts reported.

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This morning in metals news, the nickel price has plunged to its lowest level in 11 months, Canadian Prime Minister Justin Trudeau spoke with President Donald Trump over the weekend regarding the U.S.’s steel and aluminum tariffs, and two train derailments appear to have had little impact on Australia’s iron ore sector.

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Nickel Falls to 11-Month Low

The nickel price dropped to an 11-month low Monday, Reuters reported, based on worries of slowing Chinese steel demand.

LME nickel fell 1%, while the most-traded Shanghai nickel contract fell 2.4%, according to the report.

MetalMiner’s Take: While nickel falls to an 11-month low, the MetalMiner analyst team has a close eye on several key metals market price drivers.

Oil prices have begun to drop but remain above the $58/barrel level, which serves as the long-term bear/bull threshold. As oil prices currently remain above that level, the long-term trend remains bullish.

The other key price driver to watch is the U.S. dollar, which has increased. However, it remains below the key resistance level MetalMiner has set as the level at which the markets turn from bullish to bearish.

MetalMiner readers will note the dollar and commodities trade inversely, so a higher dollar results in lower commodity prices.

Metal-buying organizations will want to pay careful attention now to oil prices, the U.S. dollar and China demand. A change in any two of these three could signal a market shift.

Trudeau, Trump Talk Tariffs

As world leaders gathered in France this weekend for the 100th anniversary of Armistice Day, Canadian Prime Minister Justin Trudeau and President Donald Trump exchanged words over the weekend regarding the U.S.’s steel and aluminum tariffs, Reuters reported.

Canada’s temporary exemption to the U.S.’s Section 232 steel and aluminum tariffs expired June 1.

According to the report, Trudeau said he hoped to reach a resolution on the issue before this year’s G20 Summit, which kicks off Nov. 30 in Buenos Aires.

Australian Iron Ore

A pair of recent train derailments have had minimal impact on Australia’s substantial iron ore sector, according to a Bloomberg report.

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According to the report, iron ore futures on the Dalian Commodity Exchange fell 1% Monday.

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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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This morning in metals news, the copper price has slipped to a one-week low, builders in British Columbia are asking the Canadian government to loosen limits on steel imports and U.S. tariffs contributed to a Pittsburgh steelmaker’s down third quarter.

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LME Copper Price Falls

The price of London copper dropped to its lowest level in a week, Reuters reported.

MetalMiner’s Take: LME copper prices have decreased this week, but are still over the $6,000 ceiling. The base metal is also influenced by a stronger U.S. dollar and weaker Chinese sentiment.

However, copper demand seems to be strong and supply is tightening. We could see copper increasing again in the upcoming month.

B.C. Builders Seek Steel Relief

Builders in British Columbia sent a letter to Canadian Prime Minister Justin Trudeau and Finance Minister Bill Morneau asking that 100,000 tons of rebar be exempted from steel tariffs and quotas announced in October, Reuters reported.

The Canadian government announced the steel safeguards last month.

Pittsburgh Steelmaker Says Tariffs a Factor in Down 3Q

Pittsburgh steelmaker Ampco-Pittsburgh Corp. reported a $7 million third-quarter loss, which its executives indicated was partially attributable to U.S. tariffs on steel, the Pittsburgh-Post Gazette reported.

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The company had purchased a plant in Ontario two years ago, according to the report.

MetalMiner’s Take: Steel tariffs, as MetalMiner has stated many times, have certainly supported higher prices — but they have not provided all of the lift.

A booming economy and the commodity bull market have also created challenges for buying organizations. Companies heavily reliant on non-U.S. sources have more exposure than those who are able to source domestically or regionally. Though MetalMiner has not conducted a formal analysis, most companies have passed on price increases as a way to mitigate some of the impacts of higher steel prices.