Articles in Category: Non-ferrous Metals


This morning in metals news, Tata Steel is making job cuts across its European operations, U.S. Steel announced it plans to reduce its greenhouse gas emissions by 20% by 2030 and copper ticked up again Monday.

Job Cuts Coming to Tata Steel’s European Operations

Steelmaker Tata Steel will cut jobs throughout its European operations, Reuters reported, where the company employs approximately 20,000 people.

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According to the report, Tata says there won’t be any plant closures.

U.S. Steel Announces Emissions Target

U.S. Steel announced last week it plans to cut emissions by 20% by 2030.

“The company has set a goal to reduce its global greenhouse gas emissions intensity by 20 percent, as measured by the rate of carbon dioxide (CO2) equivalents emitted per ton of finished steel shipped, by 2030 based on 2018 baseline levels,” the company said. “This target will apply to U. S. Steel’s global operations.”

The steelmaker also outlined initiatives toward that goal.

“U.S. Steel’s greenhouse gas emissions intensity reduction goal will be achieved through execution of multiple initiatives,” the company said. “These include the development of electric arc furnace steelmaking at U.S. Steel’s Fairfield Works and at Big River Steel, the first LEED-certified steel mill in the nation, in which U.S. Steel recently acquired a minority interest with an option to acquire the remainder over the next four years. Electric arc furnace steelmaking relies on scrap recycling to produce new steel products, capitalizing on steel’s status as the most recycled material on earth.  Further carbon intensity reductions are expected to come from the company’s introduction of state-of-the-art endless rolling and casting technology and construction of a cogeneration facility at its Mon Valley Works announced in May, as well as implementation of ongoing energy efficiency measures, continued use of renewable energy sources and other process improvements.”

Copper Makes Gains

Copper prices rose for the second straight session Monday, Reuters reported.

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LME three-month copper ticked up 0.1%, while SHFE copper rose 0.3%, according to the report.

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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 coverage here on MetalMiner, including: copper prices, “Steelmageddon,” rising palladium prices, and aluminum and steel demand in Europe.

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The normally pragmatic Netherlands has been strangely agitated recently, as both the construction and agricultural industry have protested on the streets of the capital, the Hague, against the government’s measures for combating nitrogen and PFAS-based pollution.

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In itself this would barely be newsworthy for MetalMiner if it weren’t for the impact it is having on an already subdued metals industry.

Even before the widespread disruption to the Dutch construction industry, demand for steel and aluminum was suffering from depressed German industrial consumption, largely due to a downturn in the automotive market.

But in the Netherlands, the government is struggling to resolve an issue with nitrogen emissions permitting, which Reuters reports are four times the E.U. average per capita in the small and densely populated Netherlands.

Although 61% of emissions are coming from agriculture, a sizable portion also comes from the construction industry – a big consumer of aluminum and steel products.

The impact is particularly damaging, as the country has been enjoying a boom in infrastructure and housing investment of late.

As a result of a fiasco over how permits are assessed, a review is underway and, in the meantime, new permits have been withheld, leading to delays and project uncertainty.

Aluminum extruders estimate the European market is down at least 20% from last year as a result. With steel prices also waning, participants across the supply chain are reducing inventories, adding further to the fall in demand being experienced by producers.

Lead times have come in and order books are weak, as many in the steel and aluminum supply chains find themselves overstocked relative to ongoing demand. The double whammy of weak automotive demand now being exacerbated by a fall in construction activity has caught many by surprise.

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The government in the Netherlands will no doubt resolve its permitting issues. However, a return to last year’s robust level of activity is unlikely to bounce back quickly and producers remain pessimistic about demand next year.

In the meantime, prices are likely to remain under pressure and lead times will remain short into 2020.

The Copper Monthly Metals Index (MMI) increased slightly this month to 73, compared to last month’s value of 71, with all copper prices in the index increasing mildly.

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Overall, the LME copper price moved up in October but did not quite make it back to the $6,000/mt price level.

Source: MetalMiner analysis of London Metal Exchange (LME) and FastMarkets

Even with the recent increase in prices, levels remain constrained, still hitting resistance around $6,000/mt.

SHFE Copper Prices Fail to Gain Value Once Again in October

SHFE copper prices continued to move sideways, with the trading range becoming more limited recently; prices still look slightly stronger, as lows increased in October.

Source: MetalMiner analysis of FastMarkets

Still, a lack of stronger upward momentum for prices indicates a lack of copper demand.

China’s Copper Smelters Plan to Increase Treatment Charges

Insiders indicated China’s top copper smelters plan to increase Q4 treatment and refining charges (TC/RCs) by 20% over Q3 rates, from $55 per ton to $66 per ton, according to Reuters. Rates have hit seven-year lows recently. Last year, during Q4 2018, charges were higher at $90 per ton.

The TC/RC rate gets set on an annual basis during November by the China Smelters Purchase Team (CSPT), which includes representation from most of China’s top smelters. The agreed-upon rates act as a spot processing price floor for CSPT members.

Some question whether the rate increase will stick at this time due to recent concentrate shortages, combined with some recent copper capacity expansion, leaving smelters to compete for concentrate through lower TC/RCs.

For instance, China’s Zijin Mining, recently increased capacity by 150,000 tons per year (a sizable increase). However, in early November, Zijin announced an expansion in its copper mine holdings through the acquisition of Freeport-McMoRan’s share of a copper-gold mine based in Serbia for $390 million, according to press reports.

The acquisition increases the company’s copper resources by 7.72 million tons, a boost of 15.6%, to a total of 57.24 million tons.

Weak Demand in China

Additionally, growth in China looks set to slow further — down to 5.8% in 2020, according to the most recent IMF estimate.

China’s Official NBS Manufacturing PMI fell to 49.3 in October, compared to 49.8 in September, marking a sixth consecutive month of contraction.

In contrast, China’s Caixin PMI registered a solid increase in October, falling clearly in expansionary territory.

Long-term Supplies Abundant, Despite Short-term Supply Disruptions

Due to the nature of mining, supply disruptions from weather in any given year tend to be normal, rather than unusual.

Additionally, labor issues can result in mining disruptions on a fairly frequent basis.

This year proved no exception, as recent supply disruptions broadened the global deficit situation this year.

For example, Antofagasta PLC released a statement indicating copper production this year will range from 750,000-770,000 tons, compared to the previous estimate of 750,000-790,000 tons. The downward revision accounts for labor-related mining disruptions, mainly around the Los Pelambres mine, which reduced production by around 10,000 tons total.

However, new sources of supply will help alleviate concerns of longer-term deficits, particularly as demand for copper will continue to increase due to copper’s role as a battery metal for electric vehicles.

MetalMiner’s Stuart Burns recently pointed out Anglo American’s $5 billion copper project,  based in Quellaveco, Peru, likely holds a tremendous supply of the red metal (with the mine thought to have a 100-year life span).

While the exploration phase is not yet complete, ore grades look promising so far.

The company aims to start mining operations at this new location in 2022, with output of 330,000 tons per year expected during the first five years.

The Kamoa-Kakula mine, located in the Democratic Republic of the Congo, may result in as much as 700,000 tons per year  (mining there is slated to start in 2021).

With these new, large resources on the horizon, copper looks set to shift to surplus in the coming years.

As pointed out in this month’s MetalMiner Monthly Outlook for November, the International Copper Study Group (ICSG) expects this year’s deficit of 320,000 tons to shift to a surplus of around 280,000 in 2020.

What This Means for Industrial Buyers

While copper prices increased recently, overall, the uptrend lacked strong momentum.

Industrial buying organizations need to stay alert for a rise in prices, in case mixed growth signals turn solid.

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Buying organizations seeking more insight into longer-term copper price trends may want to read MetalMiner’s Annual Metal Buying Outlook.

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Actual Copper Prices and Trends

Copper prices increased across all index values this month, with Japan’s primary cash price increasing the most (by 4% to $6,148/mt).

The LME primary three-month price increased by 3.7% to $5,850/mt.

Korean copper strip increased by 2.8% to $8.07 per kilogram.

U.S. producer copper grades 110 and 122 increased by 2.4% (both now at $3.42 per pound), while grade 102 increased 2.2% to $3.64 per pound.

China’s copper #2 price increased by 1.6% to $5,457/mt. China’s copper bar price increased by 0.9% to $6,665/mt. China’s primary cash and copper wire prices both increased 0.8%, rising to $6,679/mt and $6,672/mt, respectively.

The Indian copper cash price increased by 0.7% to $6.17 per kilogram.

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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, including coverage of: Freeport-McMoRan’s use of artificial intelligence (AI), U.S. steel production, aluminum prices, U.S. automotive sales, construction spending and India’s decision to back away from the proposed RCEP trade pact.

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

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This morning in metals news, tensions could ease between the U.S. and China on the tariff front, ArcelorMittal reported its third-quarter financial results and copper prices made gains this week.

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

U.S., China Could Roll Back Tariffs with an Initial Deal

In what would represent a significant deescalation of trade tensions, the U.S. and China have reportedly agreed to roll back tariffs if they are able to reach a first-phase trade deal.

However, according to Reuters, the proposal faces internal opposition in the White House, with officials making conflicting public statements regarding tariff rollbacks either being or not being a condition for an initial trade deal.

ArcelorMittal Reports 3Q Results

ArcelorMittal reported a net loss of $539 million in Q3, compared with a net loss of $447 million in Q2.

The firm’s steel shipments fell 7.3% compared with the previous quarter.

Copper Price Rises

The LME three-month copper price has made gains over the last month.

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The price approached the $6,000/mt as the week has come to a close, reaching $5,949/mt. The price is up 4.59% on a month-over-month basis, per MetalMiner IndX data.

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This morning in metals news, No. 1 copper producer Chile saw its export levels drop 21% last month amid protests around the country, steel production in the U.S.’s Great Lakes region dropped last week and Shanghai Metals Markets forecast Chinese tin prices to rise back above $20,000 per ton by the end of the year.

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Chile Copper Exports Decline in October

Anti-government protests in several cities around Chile — including the capital, Santiago — have resulted in at least 23 deaths, according to Reuters, and had an impact on the country’s economy.

According to Reuters, while the protests have not significantly impacted copper mine production, Chile’s exports of copper dropped by 21% in October.

Great Lakes Steel Production Down

Steel production in the U.S.’s Great Lakes region declined by 26,000 tons last week, the Times of Northwest Indiana reported.

Production last week reached 676,000 tons, according to the Times, marking a 3.6% decline.

SMM: SHFE Tin Could Breach $20K Per Ton This Year

According to Shanghai Metals Markets, the SHFE tin price could bounce back this year and rise above $20,000 per ton.

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“In line with other analysts, SMM are positive on the tin market for the remainder of the year,” the International Tin Association said in a release. “While we are forecasting stable demand in Q4 and falling supply (particularly in China), we expect that any price increase this year will be resisted by the high stocks on the LME. In 2020, we also see demand returning to the market as economic growth recovers and uncertainty dissipates. However, currently idled production is likely to re-enter the market to cope with increased consumption. Next year, we see tin recovering from current uncharacteristic lows, but feel that average price forecasts of US$ 22,000/tonne are slightly optimistic.”

The aluminum price is a contrary thing, isn’t it?

For months, aluminum prices have been falling on the basis that demand is waning due to slowing global growth (particularly in top consumer China).

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China’s gross domestic product growth slowed again to 6.0% year over year in the third quarter, its weakest pace in almost three decades, Aluminium Insider reports. Citing a Reuters poll, the report notes industrial activity is expected to have shrunk for the sixth month in October, quoting a Reuters poll, suggesting hardly any relief from slowing global demand and the trade war.

The latest economic data from the E.U. and the U.S. also indicate slowing growth, with Germany flirting with a recession in the manufacturing sector. Although the aluminum market was estimated to be in deficit last year and this, a Reuters poll suggests it is likely to flip into a surplus of 304,000 metric tons next year — almost a 1 million ton turnaround from the 658,500-ton estimate for this year.

The article went on to say the consensus among major producers is that global aluminum demand growth will be flat (around zero) this year. Norsk Hydro predicts demand outside China will fall by 1-2%, meaning global demand is likely to fall by 0.5%. Alcoa took a similarly pessimistic view.

So why has the aluminum price currently taken a run-up to nearly $1,800 per metric ton on the back of, Reuters reports, supply fears?

It would seem investors are somewhat jittery and struggling to read the fundamentals.

Talk of Rio Tinto having to reduce output (or worse, shut its New Zealand smelter due to high power costs) and China’s second-place Chalco closing 200,000 tons of capacity in Shandong for the same reason seem to have stoked fears a number of smelter cutbacks could lead to a shortage.

Investors also view falling LME and SHFE inventories as a sign of a tightening market.

Aluminum stocks in SHFE warehouses dropped to their lowest level since March 2017 at 278,736 tons, while LME aluminum inventories dipped to their lowest since Sept. 30 at 956,200 tons, according to Reuters.

On the flip side, top consumer China is importing more and more remelt alloy ingots as part of its raw material product mix, which is finding its way through to increased exports of low-priced semi-finished products. China exported 4.37 million tons of mostly semi-aluminum products in the first nine months of the year – 2.8% more than in the previous year.

Primary production may be marginally down, but China is still supplying the world with semis, depressing activity at domestic extrusions and rolling mills in Japan, Europe and, by extension, the U.S.

Although the U.S. doesn’t import Chinese extrusions or billet, material supplied from elsewhere that has been displaced by Chinese metal does find its way in. Extruders are suffering, as illustrated by the low billet premiums prevailing in the U.S. right now.

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While some polls have suggested aluminum prices could be back over $1,800 per ton next year if current conditions prevail, that looks unlikely.

More than just sentiment is being depressed by the trade war. With little chance of a resolution this side of the presidential election, manufacturing is unlikely to recover strongly enough to materially impact the supply-demand balance anytime soon.

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The Aluminum Monthly Metals Index (MMI) remained flat this month at 82, with the majority of prices in the index increasing mildly, offset by a few declining values.

The current index value remains near a three-year low.

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LME aluminum prices generally moved sideways in October but demonstrated strength late in the month, just as prices look set to drop through yet another support level of $1,700/mt. Prices hit as low as $1,713/mt during the month.

Source: MetalMiner analysis of London Metal Exchange (LME) and FastMarkets

That movement appears halted for now, due to supply disruptions and future supply concerns.

SHFE Aluminum Prices Failed to Gain Steam

SHFE aluminum prices still appear constrained by a sideways pattern capped at around CNY 14,500/mt price band, with upward momentum looking weaker as the year has progressed.

Source: MetalMiner analysis of Fastmarkets

Given recent positive PMI readings and improvements in China’s large-cap FXI, for instance, we should see aluminum prices react — unless excess supply exists in the market, stopping increased price momentum and/or demand remains weak in aluminum-intensive areas.

According to Q3 reporting for the Aluminum Corp of China Ltd, or Chalco, as reported by Reuters, aluminum sales dropped by 13.8% for the quarter, compared to Q3 2018, with sales totaling 940,000 tons. Production dropped 10.4% during the same period (July-September) to 950,000 tons.

The company reported significant raw material, energy and operating cost increases of late, ranging from 17% to 21%, during the quarter.

Chalco reported an average sales price of CNY 13,924/mt for Q3 2019, down by 4.2% compared to Q3 2018, with profits down by 47.7% for the first nine months of 2019.

Recently, prices dropped below CNY 14,000/mt — typically a critical break-even point for producers in China — to CNY 13,800/mt.

Supply Concerns Support LME Aluminum Prices

During the most recent round of corporate financial reporting, a couple of high-profile producers noted higher energy costs hurt profitability and indicated the need to upgrade production methods to more energy-efficient processes. The aforementioned is especially true given the energy-intensive nature of aluminum production, which will necessitate major investment costs.

Rio Tinto commented that closure of its aluminum smelter in New Zealand could be possible due to high energy costs hurting profitability.

Additionally, the price increase could have occurred as a result of speculative activity in that it coincided with a recent uptick in press reports covering aluminum as the green solution in the beverage can industry.

Coca-Cola’s Dasani brand of water will move to aluminum cans from plastic, joining PepsiCo’s move for its Aquafina brand. Ball, the jar company, recently created an aluminum cup to compete with plastic (now in test markets). The company began construction of its first dedicated aluminum cup manufacturing facility, with production expected to ramp up in Q4 2020.

Additionally, total LME warehouse stocks trended down to historical lows earlier this year and remained there, at around 1 million tons. SHFE stocks declined more dramatically this year, now down to under 300,000 tons from around 700,000 tons at the start of the year.

New LME Warehouse Rules Target Improved Data Tracking

The LME announced Nov. 1 it will proceed with a proposed package of measures aimed at the optimization of its warehouse network.

The new rules will require network warehouses to report stocks, even when stored outside of an LME location when that metal will be brought in at a later date.

Also, queue-based rent capping will increase to 80 days — from 50 days at present — over the course of nine months.

What This Means for Industrial Buyers

Aluminum prices found some momentum late in October, but what comes next remains unclear.

Buying organizations interested in tracking industrial metals prices with embedded forecasting should request a demo of the MetalMiner Insights platform.

Buying organizations seeking more insight into longer-term aluminum price trends may want to read MetalMiner’s Annual Metal Buying Outlook.

Free Partial Sample Report: 2020 MetalMiner Annual Metals Outlook

Actual Metal Prices and Trends

This month, China aluminum scrap prices increased by 2.4% to $1,805/mt, while Chinese aluminum primary cash prices increased by 1% to $1,975/mt.

Meanwhile, Chinese aluminum billet and bar prices declined by 0.8% and 0.7%, respectively, to $2,041/mt and $2,136/mt.

Korean prices showed strength across the board this month.

Korean commercial 1050 sheet increased by 2.4% to $3.04/kilogram, 5052 coil premium over 1050 increased by 2.2% to 3.21/kilogram, and 3003 coil premium over 1050 increased by 2% to $3.08/kilogram.

The LME primary three-month price increased by 1.6% over the course of the month to $1,747/mt after a couple of months of decline.

European commercial 1050 sheet and 5083 plate both increased again this month, rising by 0.8% and 1.4%, respectively to $2,475/mt and $2,837/mt.

India’s primary cash price dropped by 5.1% to $1.86/kg.

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Mining companies are not renowned for their cutting-edge use of the latest technologies; I’m not trying to be derogatory, but mining is not the first industry you think of when talking about the digital age.

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Their association has been more in the use of their products – copper, rare earths, lithium, etc. are required for these new technological developments.

But an article by Neil Hume in the Financial Times this week reports on the world’s largest copper producer Freeport-McMoRan’s adoption of artificial intelligence (AI) to optimize production at its aging Bagdad Copper mine in Arizona.

As the report states, most of the best copper has been extracted at Bagdad, so miners are having to crush more lower-grade rock just to sustain output.

Apparently, Freeport has developed a process with McKinsey, which uses data from sensors around the mine and suggests new ways to improve the performance of its crushers and processing mills. The system found that the mine was producing seven distinct types of ore and that the processing method, which involves the use of large flotation tanks, could be adjusted to recover more copper by adjusting the PH level, the article states.

Freeport-McMoRan CEO Richard Adkerson is quoted as saying the development has been “a remarkable success.” With very little investment, it has boosted production at Bagdad by 9,000 metric tons of copper this year.

On the basis of this pilot, Freeport-McMoRan is rolling the application out to all its mines in the Americas. The miner has set a goal of increasing production by 90,000 tons, or 5% of its production, by applying this technology.

Putting this in context, the article quotes typical costs to develop 90,000 tons of new copper capacity at about $1.5 billion to $2 billion. Cost include buying new haul trucks, giant shovels and ore crushing equipment; according to the firm, this AI program costs very little.

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Where the majors lead, others will follow.

Freeport’s success in using AI to optimize its extraction processes will no doubt be rapidly copied by its peers.