Articles in Category: Non-ferrous Metals

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This morning in metals news, the Chinese steelmaking province of Hebei has moved up its target date for plant relocation and capacity cuts, miners in the Democratic Republic of the Congo are moving to copper as a result of dropping cobalt prices, and Chile’s copper exports fell in June.

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Hebei Moves Up Capacity Cut Target Date

China’s steelmaking province of Hebei is moving up a target date for planned capacity cuts and production relocation, Reuters reported.

According to the report, the province is moving the target date by two months, up to the end of October.

Cobalt to Copper

With cobalt prices on the decline, miners in the DRC are switching to copper, Bloomberg reported.

The country produces a majority of the world’s cobalt, which is used in electric vehicles and smartphones, among other high-tech uses.

The report cities Andries Gerbens, a cobalt specialist at Darton Commodities, who said output by artisanal miners in the country could decline by 70% this year.

Chile’s Copper Exports Fall

Chile’s exports of copper declined in June, Reuters reported.

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According to Chile’s central bank, the country’s copper exports fell 14% in June on a year-over-year basis, down to a value of $2.628 billion.

The U.S. Department of Commerce. qingwa/Adobe Stock

This morning in metals news, the Department of Commerce made preliminary affirmative determinations with respect to imports of steel from Vietnam, iron ore is powering Australia’s trade surplus and copper slipped for the second straight session.

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DOC Issues Circumvention Rulings

The Department of Commerce announced Wednesday it had made affirmative preliminary determinations vis-a-vis circumvention related to imports of steel from Vietnam.

According to the DOC, the products covered include steel originally produced in South Korea and Taiwan and sent to Vietnam for “minor processing.”

“These duties will be imposed on future imports, and also on any unliquidated entries since August 2, 2018 (the date on which Commerce initiated these circumvention inquiries),” a DOC release stated. “The applicable cash deposit rates will be as high as 456.23 percent, depending on the origin of the substrate and the type of steel product exported to the United States.”

Iron Ore Powers Australia Surplus

Iron ore prices, which have surged to a five-year high, have lifted Australia to a trade surplus in May.

According to the Australian Broadcasting Corporation, Australia tallied a record $5.7 billion trade surplus in May, with the value of its iron ore shipments jumping 13%.

Copper Price Drops

After Monday’s post-G20 optimism provided a shot of optimism to copper prices, the metal has slipped for two straight days.

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According to Reuters, LME copper fell 0.1% on Wednesday, down to $5,883 per ton.

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This morning in metals news, India is likely to remain a net steel importer for at least the next two years, residents of Scunthorpe are concerned about the future of their town should British Steel close down and the copper price retreated to a one-week low.

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India to Remain Net Steel Importer

As steel imports continue to flow into the country, India is likely to remain a net steel importer over the next two years, Bloomberg reported citing Fitch Ratings Ltd.’s local unit.

India’s annual steel consumption is nearing 100 million tons, according to the report.

Worrying About the Future

A recent bid deadline came and went for the liquidated British Steel, based in Scunthorpe, England.

Media reports indicate there have been at least nine interested buyers, but it remains unclear if a buyer would be willing to take on the entirety of the business, as opposed to individual parts.

With the plant’s future in limbo, the BBC reported residents of Scunthorpe are concerned about a potential shuttering of the plant and the impact it would have on the town.

“If the worst comes to worst, and the steelworks does actually shut, it will be devastating for so many people here,” one resident is quoted as saying.

“People will probably have to move away.”

Copper Slides

On the heels of the weekend’s G20 Summit in Japan, the copper price fell to a one-week low Tuesday, Reuters reported.

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Copper prices soared to a six-week high on Monday. The LME copper price traded down 0.5% Tuesday, according to the report, down to $5,925 per ton, on weak global manufacturing data.

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According to the International Lead and Zinc Study Group’s (ILZSG) most recent report, the global lead and zinc markets both were in deficit through the first four months of the year.

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Zinc Deficit Hit 97,000 Tons

Global refined zinc supply fell short of demand by by 97,000 tons over the first four months of the year, according to the ILZSG.

World zinc mine production jumped by 1.5% during the four-month period to 4.12 million tons, paced largely by an increase in Australia, in addition to smaller increases in Europe, Namibia and South Africa. Meanwhile, zinc mine production fell in China, India, Mexico, Peru and the United States.

Meanwhile, refined zinc metal production fell during the first four months of the year to 4.25 million tons, down from 4.35 million tons during the equivalent period in 2018. According to ILZSG, refined zinc metal production increased in Mexico and Peru but fell in China, India and Russia.

Zinc usage, meanwhile, fell 1.3% to 4.35 million tons through the first four months of the year, depressed by a fall in apparent demand in China. Usage in the U.S., India, Japan and Europe remained flat.

Lead Deficit Reaches 39,000 Tons

The lead metal deficit for the first four months of the year hit 39,000 tons, according to the ILZSG.

Lead mine production ticked up 0.7% to 1.54 million tons, paced by increases in Sweden, India and Peru but partially offset by a decline in China.

Lead metal production also picked up during the four-month period, rising 2.3% to 3.87 million tons, paced by higher output in China, India and South Korea.

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Lead metal usage also increased 2.3%, up to 3.90 million tons for the four-month period.

According to ILZSG, China’s imports of lead contained in lead concentrates increased by 30.7% to 260,000 tons, while its net imports hit 67,000 tons compared with 13,000 tons of net exports during the same period in 2018.

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According to the International Copper Study Group’s (ICSG) most recently monthly report, global copper mine production dropped 1.3% in Q1 2019 compared with the same quarter the previous year.

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In addition, concentrate production fell 1% and solvent extraction-electrowinning fell 3.5%.

Top copper producer Chile saw production fall 5% in the quarter. More recently, a two-week strike at Codelco’s Chuquicamata mine reportedly came to an end last week, as the labor unions representing workers at the mine voted to accept an offer from the company.

Meanwhile, Indonesian concentrate production fell 52%. In the Democratic Republic of the Congo, production rose just 1.7% in Q1 after a total 11% jump in 2018.

While not enough to offset losses in Chile and Indonesia, production gains were realized in No. 2 producer Peru, Australia, China and Mongolia, according to the ICSG.

Global refined production also fell in the first quarter, dropping 1.1%, as primary production fell 1.5% while secondary scrap production increased 0.7%.

Chile’s refined output fell 32% “mainly to temporary smelter shutdowns whilst undergoing upgrades to comply with new environmental regulations.” Indian production fell 45% as Vedanta’s Tuticorin smelter remains shuttered.

Refined output was also down in Germany, Japan, Peru and the U.S.

However, apparent refined usage increased 0.8% in Q1, paced in part by a 4% increase in usage in China. World usage ex-China fell 2%.

In terms of prices, the average May price on the LME reached $6,028.31 per ton, down 6.5% from April’s average $6,445.10 per ton.

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Meanwhile, through the end of May, the high copper price on the LME was $6,572 per ton (reached March 1), with a low of $5,780.50 per ton (reached on May 31). The average price for the year through May was $6,221.50 per ton, marking a 4.6% decline from the 2018 annual average.

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This morning in metals news, a workers’ strike came to an end at top copper producer Codelco’s Chuquicamata mine in Chile, South Korean steelmakers Posco and Hyundai Steel are facing government shutdown orders at some locations over emissions, and the liquidated British Steel has attracted some interest before a June 30 bid deadline.

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Strike Ends at Chuquicamata

A workers’ strike at Codelco’s Chuquicamata mine came to an end this week as workers voted to accept an offer from the company, Reuters reported.

The unions at the mine rejected a proposal from the company last weekend, as the strike dragged on for two weeks.

(MetalMiner’s Stuart Burns weighed in on the Chuquicamata strike yesterday.)

Posco, Hyundai Face Shutdowns

South Korean steelmakers Posco and Hyundai could see some of their furnaces shut down by government actions aimed at curbing emissions, the Nikkei Asian Review reported.

In fact, according to the report, one-third of the blast furnaces in the country are facing 10-day shutdown orders from the government.

Interest Comes in for British Steel

The previously set June 30 bid deadline for British Steel is fast approaching, and up to nine entities have expressed interest, Reuters reported.

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The steelmaker went into liquidation last May after it failed to secure a second government loan to continue its operations. The firm was owned by Greybull Capital, which purchased it from Tata Steel in 2016 for a nominal £1.

Copper appears to be caught in the crosswinds.

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After months of steady declines from a peak of U.S. $6,600 per ton in April, the copper price had drifted down to well below $6,000 per ton on fears of what impact the ongoing trade war between the U.S. and China would have on top consumer China.

But while trade war tensions continue to provide significant headwinds, an extending strike at Codelco’s Chuquicamata copper mine is raising concerns about supply.

The copper market is considered to be in deficit, according to Reuters, saying the global refined copper market showed a deficit of 51,000 metric tons in March, compared with a 72,000-ton surplus in February. Bloomberg cited the International Copper Study Group, which forecast a deficit of 189,000 tons by the end of this year.

Codelco’s strike has been rumbling on for 12 days now. Chuquicamata is the company’s third-largest mine, producing 321,000 metric tons last year (so over 10,000 tons have been lost so far).

Some 3,200 workers at the mine are represented by three unions. Their grievance is focused on comparable terms of employment between retiring older workers and incoming new workers. The company is holding back on the more generous terms older workers enjoy as they negotiate the severance of some 1,700 workers due to the transition from open pit to underground mine in the next 12 months.

So far, Codelco says it has made the best offer it can.

Workers, however, are not satisfied.

Negotiations are at an impasse. The union is going back to the workers later this week for an extension to the strike. In and of itself, the loss of Chuquicamata’s production is not critical for the copper market, but it heightens concerns about where supply is going to come from, as investment in new mines has been depressed for some years by excess supply and low prices.

Perversely, though, inventory has been rising.

Both the LME and SHFE have seen increases in stocks this year, although they have fallen somewhat in the last month or so. Generally, inventory levels do not suggest a market in crisis.

So, what can we make of the recent price rises: are they purely a reaction to the Chuquicamata strike and a weaker dollar boost to commodity prices, or the buildup for a move higher?

Demand, while less robust than previous years, remains fairly solid. Much of the negativity is down to fears over the trade conflict between the U.S. and China, as is the case with much of the commodity and equity markets; a resolution to that squabble would see a return of optimism and higher prices.

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Without it, though, it is hard to see significant upside to copper this year — the fundamentals are not supporting that yet. In the meantime, sentiment is king.

MetalMiner’s Trade Resource Center (trade.metalminer.com)

This morning in metals news, MetalMiner now has a trade-centered news portal, the European steel sector is demanding tougher safeguards and the copper price posted gains.

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MetalMiner Trade Resource Center

Tariffs, trade deals and trade wars — the world is abuzz these days with trade news.

That is why MetalMiner has launched the MetalMiner Trade Resource Center, which will serve as a one-stop shop for trade news, analysis and data.

Visitors can find the Trade Resource Center under the “Research” menu tab, or by navigating to trade.metalminer.com.

The new page features all of the site’s news and analysis on trade and tariffs, from Section 232 and 301 to the ongoing negotiations with China. Visitors can also find MetalMiner’s library of trade-related podcasts, in addition to MetalMiner white papers and links to pertinent sources of trade data.

E.U. Steel Industry Wants Stronger Safeguards

Earlier this year, the E.U. imposed new steel safeguards aimed at protecting the bloc’s steel sector on the heels of the U.S.’s Section 232 steel tariffs.

The E.U.’s steel industry, however, argues Europe needs to do more.

According to a Reuters report, European steel executives Wednesday argued for stronger safeguards, claiming the European steel sector faces an existential threat. The executives argued the safeguards have not been effective and that a scheduled 5% increase in the quotas set under the safeguards will be detrimental to the sector.

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Copper Hits 5-Week High

The copper price rose to a five-week high Wednesday, buoyed by optimism related to U.S.-China trade talks, Reuters reported.

According to the report, U.S. Treasury Secretary Steven Mnuchin said a trade deal between the two countries is about 90% complete.

U.S. President Donald Trump and Chinese President Xi Jinping are scheduled to meet during the G20 Summit in Japan later this week. The two countries will aim to revitalize trade talks after May’s setbacks, when tensions escalated and the economic superpowers traded tariffs.

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According to the International Aluminum Institute, global aluminum production in May reached 5.43 million metric tons, holding flat from May 2018 production.

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By region, China led the way with 3.09 million metric tons produced, about flat compared with May 2018 production.

Elsewhere, Asian production ex-China reached 374,000 metric tons. Production in Gulf Cooperation Council (GCC) countries reached 464,000 metric tons.

In North America, production reached 326,000 tons, while South American production hit 86,000 metric tons.

Production in western Europe reached 293,000 metric tons, while production in east and central Europe reached 353,000 metric tons.

Production in Africa totaled 142,000 metric tons, while Oceania’s production reached 163,000 metric tons.

As for prices, LME aluminum has been trending downward since March.

The LME aluminum price reached a 2019 high of $1,922 per ton March 20. In the ensuing three months, however, the price has been sliding, hitting $1,764.50 per ton June 24.

LME aluminum price in 2019. Source: LME

U.S., Canada Aluminum Demand and Production

According to the Aluminum Association’s monthly Aluminum Situation report, aluminum demand in the U.S. and Canada increased an estimated 0.4% over the first four months of the year.

Demand reached an estimated 9,547 million pounds for the year through April, according to the Aluminum Association.

Demand for semi-fabricated products reached 6,914 million pounds, marking a 2.6% increase, while apparent consumption in domestic markets reached an estimated 8,505 million pounds, marking a 1.8% increase on a year-over-year basis.

In terms of production, the Aluminum Association reported primary production in the U.S. and Canada reached an annual rate of 4.01 million tons in May, marking a 0.4% decline from the April rate.

Scrap Recovery Drops 6.4% in Q1

In other aluminum news, U.S. recovery of aluminum and aluminum alloys (i.e., scrap) fell 6.4% in Q1 2019 compared with Q1 2018.

The Aluminum Situation report cites data from the U.S. Geological Survey (USGS), which said the U.S. aluminum industry purchased 1,882 million pounds of aluminum scrap in Q1 2019.

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On the other hands, scrap exports during Q1 2019 increased 22.6% on a year-over-year basis, reaching 1,033 million pounds.

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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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MetalMiner’s Annual Outlook provides 2019 buying strategies for carbon steel