Articles in Category: Non-ferrous Metals

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This morning in metals news, aluminum industry officials testified to the U.S. International Trade Commission regarding the ongoing aluminum foil investigation, Mexico’s economy minister says automotive rules of origin will change as part of the ongoing renegotiation talks surrounding the North American Free Trade Agreement (NAFTA) and copper is on track for its biggest weekly drop in two months.

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Aluminum Industry Testifies to ITC

Representatives of the aluminum industry in the U.S. testified before the ITC earlier today as part of the final phase of an investigation of aluminum foil imports.

“The relief we seek will help ensure that the U.S. aluminum foil industry can compete fairly in the U.S. market,” Aluminum Association CEO and President Heidi Brock said in her testimony. “The Aluminum Association is committed to combating unfair trade practices that impact our industry while we strive for a level playing field. The U.S. government must enforce its trade rules so that companies can continue to innovate, invest and grow with confidence in the United States.”

Brock’s full testimony can be read here.

Rules of the Road

Renegotiation talks surrounding NAFTA, the 24-year-old trilateral trade deal, have been contentious at times. The U.S. negotiating team has sought to win concessions from Canada and Mexico, among them including tighter automotive rules of origin.

On Thursday, Mexico’s Economy Minister Ildefonso Guajardo said the rules of origin will change, Reuters reported.

Copper Continues Down Week

In good news for copper buyers, the price of the metal has dipped significantly this week amid significant market volatility.

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According to Reuters, copper is on track to post its biggest weekly loss since early December. London copper dipped below the $7,000 mark yesterday, closing at $6,837 per ton.

The Copper MMI (Monthly Metals Index) traded lower this month, falling one point for a February reading of 87. The fall was driven by a slight retracement of copper prices, which had skyrocketed in December. In January, LME copper prices fell by 1.21%.

Despite the price retracement, LME copper prices held above the $7,000/mt level at the beginning of February, and fell below this level during the second week. Trading volumes still support the uptrend. Copper prices could continue their rally.

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Source: MetalMiner analysis of FastMarkets

Labor Disputes Could Threaten Copper Supply

Mine strikes continually threaten copper supply. BHP’s Escondida mine, the world’s largest copper mine, failed to develop a new labor agreement in advance of formal negotiations, scheduled for June. Last year, a 43-day strike at the Escondida mine impacted copper supply.

Since BHP’s Escondida copper mine produces around 5% of the world’s copper, it’s easy to see the impact of strikes on LME copper prices.

Meanwhile, Glencore forecasts its own copper output to increase by 150,000 tons at its Katanga mine in the Democratic Republic of Congo.

U.S. Dollar, Copper Back to Negative Correlation

Copper and the U.S. dollar maintain a strong negative correlation. The negative correlation gives the direction of the trends; when the U.S. dollar is weaker (downtrend), copper prices are stronger (uptrend).

The negative correlation did not hold during the first six months of 2017, nor did it hold for commodities and the U.S. dollar. However, the historical negative correlation has reappeared, as copper prices and the U.S. dollar now trade in opposition to one another.

The U.S. dollar in black. Copper spot prices in purple. Source: MetalMiner analysis of StockCharts

The U.S. dollar traded sideways during Q3 2017. Many analysts (not MetalMiner) started to believe  the U.S. dollar had reached a bottom.

MetalMiner, however, remained more bearish on the U.S. dollar, as the dollar did not give any clear signs of a trend reversal. The distinction between a short-term trend that could impact prices in one to three months, versus a long-term trend, which could actually impact a buying strategy becomes important. The fact remains, the U.S. dollar has fallen to a more than three-year low.

Copper Scrap vs. LME Copper

In January, copper scrap prices did not move with the LME copper price. LME copper prices fell  slightly, while copper scrap prices increased by 2%. Therefore, the spread between the two decreased slightly this month. We can expect these types of divergences in the short term, although the two tend to trade together over the longer term.

Source: MetalMiner data from MetalMiner IndX(™)

In January, several Chinese copper scrap restrictions went into effect. The Ministry of Environmental Protection announced that only end-users and copper scrap processors will be allowed to import. This restriction in effect removes Chinese traders from the copper scrap market.

What This Means for Industrial Buyers

In January, buying organizations had some opportunities to buy some volume. The weak U.S. dollar and strength of other base metals support the bull narrative for copper. As long as copper prices remain bullish, buying organizations may want to “buy on the dips.”  For those who want to understand how to reduce risks, take a free trial now to the MetalMiner Monthly Outlook.

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This morning in metals news, China is aiming to meet its 2020 goal for steel capacity cuts this year, a new bottle technology makes aluminum bottles feel like plastic and copper output in the Democratic Republic of Congo rose significantly in 2017.

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Chinese Government Looks to Hit Capacity Cuts Two Years Early

The Chinese government plans to reach its previously set 2020 goals for steel capacity reduction this year, Reuters reported.

According to the report, the government plan called for the reduction of 150 million tons of steel capacity by 2020.

An Aluminum Bottle that Feels Like Plastic?

According to a report in Packaging World, one company has been working on a bottle innovation for about a decade that will produce aluminum bottles with the feel of plastic.

Betty Jean Pilon, president of Montebello Packaging, explained the company’s Ushape blow-molded bottle technology during The Packaging Conference, held Feb. 5-7 in Orlando, Florida.

“We know that Canada, the United States, China, and Brazil are the largest beverage markets in the world,” Pilon was quoted as saying. “They singlehandedly produce 100 billion bottles each year. The Europeans consume about 63 billion, the South Americans about 32 billion, and the rest of the world, approximately 20 billion. So that’s why we got into it.”

Congo Copper Output Up 6.9% in 2017

Copper output in the Democratic Republic of Congo shot up 6.9% in 2017, Reuters reported.

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The country produced 1.09 million tons of copper last year, according to the report, while its cobalt output rose 15.5% to 73,940 tons.

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This morning in metals news, Rusal saw its fourth quarter 2017 aluminum production rise, commodities generally escaped the brunt of Monday’s market plummet and European steel demand is set to rise in 2018.

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Rusal Aluminum Production Jumps

According to Platts, Rusal’s Q4 2017 aluminum production rose 1.5% year over year.

Rusal’s production was up 1.4% from its third quarter total.

Commodities Avoid Fallout from Monday Meltdown

Despite the historic Dow market drop on Monday, commodities made it through relatively unscathed on account of strong demand, Bloomberg reported.

European Steel Growth to Rise in 2018

According to the European steel association Eurofer, Europe’s steel sector will see increased growth this year but also will be threatened by imports, Reuters reported.

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According to the report, apparent steel consumption in the European Union is expected to increase by 1.9% this year.

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This morning in metals news, the chief executive of Austria’s Voestalpine says Europe’s steel industry has excess capacity, copper picked up as the dollar’s gains paused and automotive aluminum use is picking up according to one survey.

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Voestalpine Chief Executive Says Europe Must Address Steel Overcapacity

According to the chief executive of Voestalpine, Europe should prepare for potential factory closures on account of a steel surplus of about 20%, the Financial Times reported.

According to Wolfgang Eder, Europe will be vulnerable to cheap imports. He said the European steel sector should shift its focus from commodity metal to higher-value products, according to the report.

Copper Price Rises

Copper rose as the dollar steadied on the heels of previous gains, Reuters reported.

LME copper hits $7,094.50 per ton at midday, according to the report.

Aluminum Autos

The aluminum sector is becoming more influential in the automotive industry, according to one survey.

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According to a report in Automotive News, a Ducker Worldwide survey said aluminum is “the fastest growing automotive material over competing materials and is entering its most unprecedented growth phase since we’ve been tracking the shifting mix of automotive materials.”

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This morning in metals news: copper jumped as the dollar continued its slide; ArcelorMittal saw its core profits grow significantly in 2017, leading to a resumption in dividend payments; and the London Metal Exchange has a new chief operating officer.

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Copper Jumps Ahead of Fed Announcement

Copper jumped 1% on Wednesday, according to Reuters, ahead of a Federal Reserve policy statement.

The rise comes in spite of weaker than expected Chinese manufacturing data, according to the report.

ArcelorMittal Enjoyed Strong 2017

ArcelorMittal, the world’s largest steelmaker, did well in 2017, posting a one-third increase of annual core profits and reinstating dividend payments, according to the Financial Times.

Shareholders will receive dividend payments of $0.10 per share, on the heels of two years of no payments, according to the report.

LME Introduces New COO

According to Reuters, the LME Group has appointed James Cressy as its new chief operating officer.

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Cressy previously held the position of head of operations for LME Clear, according to the report.

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This morning in metals news, Indian crude steel production jumped 6.2% in 2017, a Swiss steel firm was chosen to buy a troubled French steelmaker and Novelis announced that its aluminum will be supplied for the 2018 Jeep Wrangler.

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Indian Crude Steel Production Rises

India saw its crude steel production jump 6.2% in 2017, according to the World Steel Association’s recent report.

Indian production hit 101.4 million tons, the Economic Times reported.

Schmolz+Bickenbach to Buy Ascometal

A Strabourg court tapped Swiss firm Schmolz+Bickenbach to buy French steelmaker Ascometal, Reuters reported.

The Swiss firm won out over a bid from Liberty House, according to the report. Ascometal filed for court protection in November, Reuters reported.

Novelis Aluminum in the New Jeep Wrangler

Novelis announced today that its aluminum will be supplied for the new 2018 Jeep Wrangler.

“Novelis is proud to offer our unrivaled production capabilities and extensive technical expertise to one of the world’s most iconic vehicles,” said Marco Palmieri, SVP and president of Novelis North America, in a company release. “We work alongside our customers from program development to launch to meet the industry’s evolving needs.”

Although aluminum is more expensive than steel, its lighter weight offers higher fuel economy. As such, several automakers, including Ford, have turned to aluminum for some of their newer models.

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“Novelis aluminum offers a safe, sustainable and cost-effective way to lightweight vehicles,” said Ganesh Panneer, vice president and general manager of Novelis North America’s automotive division, in the company release. “Automotive aluminum applications result in better performance and agility, increased fuel economy and reduced carbon emissions.”

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This morning in metals news, President Trump slaps import tariffs on solar panels and washing machines, year-to-date domestic raw steel production is down 3.2%, and copper prices continue to rise.

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Trump Adds Solar Panels, Washing Machines to Tariff Mix

President Trump’s decision to slap tariffs on solar panels will see investment in the technology shift from the U.S. to Asia, Reuters reported.

The president imposed 30% tariffs that will drop to 15% in four years, according to the report.

In addition, according to the Washington Post, the first 1.2 million washing machines imported each year will face a 20% tariff, with additional imports facing a 50% tax.

The tariff action marks the first major trade action by Trump this year. With North American Free Trade Agreement (NAFTA) renegotiation talks in progress (with the sixth and final round kicking off today in Montreal) and Section 232 cases on steel and aluminum imports pending, it almost certainly won’t be the last.

Domestic Raw Steel Production Drops

In the week ending Jan. 20, domestic raw steel production was 1,693,000 net tons, down from the 1,736,000 net tons produced in the week ending Jan. 20, 2017, according to American Iron and Steel Institute (AISI) weekly data. 

Meanwhile, adjusted year-to-date production through Jan. 20, 2018 was 4,803,000 net tons, down 3.2% from the 4,960,000 net tons during the same period last year.

Copper Builds as Dollar Struggles

Copper, which sees its performance inversely correlated with that of the U.S. dollar, rose despite record Chinese production, Reuters reported.

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On the LME, three-month copper hit $7,090 per ton as of 0153 GMT.

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While it might not draw the same attention as its steel counterpart, the Trump administration’s Section 232 investigation of aluminum imports is just as important to the U.S. aluminum industry.

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Section 232 of the Trade Expansion Act of 1962 affords the president broad powers in determining whether certain imports have a negative effect on the country’s national security. First, the secretary of commerce must present the president with a report and recommendations on the import in question, within 270 days of launching an investigation. Then, the president has 90 days to act.

The last 232 probe came in 2001, when the Department of Commerce concluded imports of iron ore and semi-finished steel did not pose a national security threat.

Last April, the U.S. Department of Commerce launched a probe of steel imports, and officially launched an aluminum probe one week later. The department announced Jan. 11 that Secretary of Commerce Wilbur Ross had sent his steel report on to President Trump.

Meanwhile, a similar announcement came down Monday morning, when the Department of Commerce announced Secretary of Commerce Wilbur Ross had sent his Section 232 aluminum report to President Trump on Friday.

“On Friday, Secretary of Commerce Wilbur Ross formally submitted to President Donald J. Trump the results of the Department’s investigation into the effect of wrought and unwrought aluminum imports on U.S. national security,” the department release states. “After this submission, by law the President has 90 days to decide on any potential action based on the findings of the investigation.  After the President’s decision is announced, the Department will publish a summary of the report in the Federal Register and make the report available to the public after removing any business confidential or classified material.”

Aluminum Association President and CEO Heidi Brock praised the administration for its commitment to trade enforcement.

“On behalf of the domestic aluminum industry, the Aluminum Association appreciates the president’s continued commitment to strong trade enforcement and a level playing field for U.S. producers,” Brock said in a prepared statement. “We expect that the report will recognize the significant role the aluminum industry plays in ensuring our nation’s security and welcome the opportunity to engage the administration on an appropriate remedy that will benefit the entire aluminum value chain. The association supports actions that specifically address Chinese overcapacity, and protect trading relationships between the U.S. and critical partner countries which are crucial to a thriving domestic aluminum industry.”

In the statement, the Aluminum Association reiterated its chance that any trade action should focus on Chinese overcapacity and should not negatively impact trading partners like Canada and the European Union. Any action “should address the needs of the domestic aluminum value chain, including both primary and downstream U.S. production. Specifically, any action should ensure that producers and fabricators of intermediate aluminum products used in manufacturing finished products experience beneficial effects,” the statement added.

The administration has been active in aluminum trade cases, even self-initiating anti-dumping and countervailing duty investigations — the first self-initiations by the department since 1991 — against common alloy aluminum sheet from China. The Department of Commerce last year also launched an anti-dumping probe of aluminum foil from China.

Through November of last year, the U.S. imported $14.667 billion in aluminum and bauxite imports, according to the U.S. Census Bureau, up from $11.125 billion in imports for the same period in 2016.

On the export side, the U.S. exported $7.13 billion in aluminum and bauxite through November 2017, and $7.87 billion in the same period of 2016.

According to the U.S. Geologic Survey, the U.S. imported a total of 393,000 metric tons (MT) of aluminum products from China from January-October 2017. By comparison, the U.S. imported: 2.62 million MT from Canada; 596,000 from Russia; 201,000 MT from Mexico; and 564,000 MT from the United Arab Emirates.

The U.S. imported a total of 5.8 million MT during that time period, while exporting 2.38 million MT.

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Dating back to November, the Chinese government ordered aluminum smelters and refineries to cut back capacity in an effort to alleviate environmental effects of the industry, like smog. Even so, China’s aluminum output actually increased in December, Reuters reported, up 15.3% from November 2017.

The 2017 calendar year saw copper heat up in a big way.

According to MetalMiner IndX data, LME primary cash copper was $5,512/metric ton on Jan. 1, 2017. It closed the year at $7,215/mt, good for a meteoric rise of 30.9%.

Need buying strategies for copper in 2018? MetalMiner’s Annual Outlook has what you need

Not surprisingly after a strong run, the metal tracked back a bit in the early days of 2018, as our Irene Martinez Canorea wrote in her Copper Monthly Metals Index (MMI) Report earlier this month. LME copper opened the year at $7,180.50, and closed Jan. 17 at $7,045.

LME copper has tracked back slightly in 2018. Source: lme.com

Nonetheless, the point is simple: 2017 was a strong year for copper prices (which isn’t music to consumers’ ears). It took a while, but prices finally recovered after slumping through 2014 and 2015 — on Dec. 18, 2017, LME copper hit $7,215 for the first time since February 2014.

LME copper hit its highest mark in late December since February 2014. Source: lme.com

Obviously, copper has been trending up. Whether it can continue to maintain that pace remains to be seen, but we can look to 2018 and what is in store for the metal on a macroscopic level.

In that vein, the Copper Alliance posted its list of the top five copper trends for 2018.

The Alliance cites the following as the biggest trends: growth of the electric vehicle (EV) market, water delivery challenges around the world, rising electrification, renewable energy and the rise of “resilient buildings.”

The common denominator here? Copper is going to be marked by a tinge of green, not just in 2018 but in the future thereafter.

Copper and EVs

“EV technology is heavily reliant on copper, and copper demand for EVs is expected to increase from 185,000 tons in 2017, to 1.74 million tons in 2027,” the Copper Alliance list states.

If you’re doing the math at home, that would mean an 840% rise in copper demand for EVs. We are still not quite in a world where traditional combustion engine vehicles can be tossed aside for AVs; nonetheless, there’s no doubt copper has a notable role in tandem with the imminent rise of EVs.

Piping for Water Delivery

The list touts copper’s efficacy as piping for water transport, as opposed to lead.

“As a durable, reliable, and long-lasting metal, copper is particularly useful in the construction of water pipe infrastructure,” the list states. “It is also impermeable and prevents contaminants such as petroleum, insecticides, and fertilizers from polluting the water system.”

Renewable Energy, Sustainable Buildings

Copper will also have a big role in all things renewable, the Alliance’s list argues.

Wind turbines use copper for “grounding wires, power cables, transformers, inverters, lightning protection, and as part of generators and control systems.”

Copper will also play a part in so-called “green construction,” as the Alliance cites China and the European Union’s efforts to promote building sustainability as evidence of copper’s growing importance.

“The applications of copper in building construction are nearly endless,” the list says. “Some of the uses include roof and wall cladding, flashing, gutters and downspouts, wiring, plumbing, heating systems, ventilation, and design elements.”

What About Union Contracts?

Although this one wasn’t included on the list, it is something for copper watchers to monitor in 2018: labor negotiations.

A number of copper union contracts in copper giants Peru and Chile are up for negotiation — if enough of those hit an impasse, it could put a squeeze on supply and, thus, push prices upward.

Some labor disputes have been resolved in recent weeks — like at Lomas Bayas and Quebrada Blanca — but strikes can hit at any time.

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Cochilco, Chile’s state copper mining commission, raised its average 2018 copper price forecast from $2.95 to $3.03, Reuters reported, based on the possibility of supply disruptions.