Articles in Category: Public Policy

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This morning in metals news, the United Auto Workers (UAW) union has a tentative labor deal with Ford, the U.S. Office of Inspector General says the Section 232 tariff exclusion process needs more transparency and U.S. Steel officially completed the acquisition of a 49.9% ownership stake in Big River Steel.

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

UAW Announces Tentative Ford Deal

Not long after UAW members voted to ratify a new labor deal with General Motors late last week, the union now appears to be close to finalizing a deal with Ford.

In a statement this week, the UAW said it had reached a tentative agreement with Ford.

“Our national negotiators elected by their local unions have voted to recommend to the UAW-Ford National Council the proposed tentative agreement,” UAW Vice President Rory Gamble. “Our negotiating team worked diligently during the General Motors strike to maintain productive negotiations with Ford. The pattern bargaining strategy has been a very effective approach for UAW and its members to secure economic gains around salary, benefits and secured over $6 billion in major product investments in American facilities, creating and retaining over 8,500 jobs for our communities.”

Ford confirmed UAW’s announcement but did not provide further details.

“Ford can confirm the UAW’s announcement that the UAW and Ford have reached a proposed tentative agreement on a four-year contract,” said Bill Dirksen, vice president for labor affairs at Ford. “Further details will be provided at a later date.”

IG: More Transparency Needed in Section 232 Exclusions Process

U.S. importers have been applying for Section 232 tariff exclusions over the last year — a process that has come in for criticism.

Criticism has focused on the Commerce Department’s capacity to process the thousands of applications and accusations that some domestic firms are asserting an outsized influence on the Commerce Department’s decisions with respect to exclusion requests.

In a letter and management alert to Commerce Secretary Wilbur Ross, Carol Rice, assistant inspector general for audit and evaluation, shared her office’s concerns.

“Attached is a management alert regarding a lack of transparency that contributes to the appearance of improper influence in decision-making for tariff exclusion requests under Section 232 of the Trade Expansion Act of 1962, as amended,” Rice wrote. “Issues regarding this topic came to our attention during fieldwork for the ongoing audit of the Bureau of Industry and Security’s and International Trade Administration’s processes and procedures for reviewing and adjudicating Section 232 exclusion requests.”

The Inspector General’s office initiated an audit of the process Oct. 29, 2018. The management alert lists some of the findings unearthed by the audit, which include:

  • Evidence of an “unofficial appeals process”
  • Communications with an objector “prompted a change in internal review criteria”
  • No documentation for off-record conversations between “interested parties and Department officials”

U.S. Steel Finalizes Big River Steel Deal

U.S. Steel has finalized its $700 million acquisition of a 49.9% ownership stake in Arkansas-based Big River Steel (initially announced Oct. 1).

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“Today is a true milestone for our 118-year old company,” said David B. Burritt, president and CEO of U. S. Steel. “The closing of our investment in Big River brings us one step closer to creating a differentiated, world-competitive company that can offer our customers, employees and stockholders the ‘best of both’ integrated and mini mill steel making technology. We have done more than make an investment in the newest and most advanced flat-rolled mill in North America … we have invested in the future of U.S. Steel. We are gratified by the positive response we have received from our stakeholders recognizing the strategic rationale of this transaction since we announced it on October 1. We now look forward to executing the next phase of our strategy with our new partners at Big River.”

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This morning in metals news, the Federal Reserve has cut interest rates for the third time this year, AK Steel released its third-quarter financials and 16 steel industry associations praised the work of the Global Forum on Steel Excess Capacity.

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

Fed Cuts Rates Again

For the third time this year, the Federal Reserve announced a downward adjustment to its federal funds rate.

The Fed lowered its federal fund target rate range by one-quarter of a percentage point, down to 1.50-1.75%.

“Information received since the Federal Open Market Committee met in September indicates that the labor market remains strong and that economic activity has been rising at a moderate rate,” the Fed said in a release. “Job gains have been solid, on average, in recent months, and the unemployment rate has remained low. Although household spending has been rising at a strong pace, business fixed investment and exports remain weak. On a 12-month basis, overall inflation and inflation for items other than food and energy are running below 2 percent. Market-based measures of inflation compensation remain low; survey-based measures of longer-term inflation expectations are little changed.”

In a pair of tweets, President Donald Trump again criticized the Fed and its chairman, Jerome Powell.

“People are VERY disappointed in Jay Powell and the Federal Reserve,” Trump wrote. “The Fed has called it wrong from the beginning, too fast, too slow. They even tightened in the beginning. Others are running circles around them and laughing all the way to the bank. Dollar & Rates are hurting our manufacturers. We should have lower interest rates than Germany, Japan and all others. We are now, by far, the biggest and strongest Country, but the Fed puts us at a competitive disadvantage. China is not our problem, the Federal Reserve is! We will win anyway.”

AK Steel Releases 3Q Results

Ohio-based AK Steel announced adjusted EBITDA of $86.9 million in the third quarter, down from $160.8 million in 3Q 2018.

Net sales of $1.5 billion in the third quarter marked a 12% year-over-year decrease.

“Our third quarter results were essentially in line with our expectations despite a challenging environment,” CEO Roger K. Newport said. “We continued to make solid progress in our strategy to focus on higher-value business during the quarter. As we look to 2020, we are excited about our prospects, particularly in automotive where we expect meaningful market share growth.”

Steel Associations Applaud GFSEC Members’ Work on Excess Capacity

A group of 16 steel industry associations around the world released a statement praising the work of members involved in the Global Forum on Steel Excess Capacity and asking for that work to continue.

In addition, the associations “called upon the few dissenting members to reconsider their current position as quickly as possible.”

“According to the latest OECD information, there are 440 million metric tons of steel excess capacity in the world today. This is an increase of 6.5 percent over last year,” the groups said in a joint statement. “Governments of steelmaking economies worldwide must redouble their efforts to address this persistent global excess capacity in the steel sector, eliminating the support measures that cause it, and implementing strong rules and remedies that reduce excess capacity. We call on governments to continue the work on the issue of steel excess capacity without delay.”

China has been critical of the forum, arguing that it has done enough to work toward addressing the issue of steel excess capacity, the South China Morning Post reported.

The U.S. has also been critical of the forum, claiming it has not been effective.

“The decision by a vast majority of Global Forum members to continue the work of the Forum beyond 2019 is a recognition that severe excess capacity is a continuing crisis,” the Office of the United States Trade Representative said Saturday. “The Global Forum’s policy prescriptions and information-sharing process will not alone resolve the crisis of excess capacity in the global steel sector. This will only happen when those that have created the problem take concrete steps toward true market-based reform. Participation in the Global Forum process is a signal of each member government’s commitment to adhere to principles intended to ensure market-based outcomes.”

In 2017, the USTR said the forum “has not made meaningful progress yet on the root causes of steel excess capacity.”

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The groups issuing the call for continued action were: Steel Manufacturers Association (SMA), American Iron and Steel Institute (AISI), EUROFER (the European Steel Association), Canadian Steel Producers Association (CSPA), CANACERO (the Mexican Steel Association), Alacero (the Latin American Steel Association), Brazil Steel Institute, The Japan Iron and Steel Federation (JISF), European Steel Tube Association (ESTA), Specialty Steel Industry of North America (SSINA), South African Iron and Steel Institute (SAISI), The Cold Finished Steel Bar Institute (CFSBI), Indian Steel Association, Association of Enterprises UKRMETALURGPROM (Ukraine), Russian Steel Association, and The Committee on Pipe and Tube Imports (CPTI).

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This morning in metals news, global aluminum associations are calling for action on market-distorting activity, China’s semi-finished steel imports skyrocketed in September and Freeport-McMoRan reported its 3Q 2019 results.

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

Aluminum Associations Demand Reforms

Yesterday, we noted steel associations around the world are asking governments to tackle the challenge of steel excess supply.

Now, aluminum associations are asking for reforms of their own, particularly in an effort to tackle activities that distort markets.

Jean Simard, president and CEO of the Aluminium Association of Canada; Gerd Götz, director general of European Aluminium, and Ryan Olsen, vice president of business information and statistics for the Aluminum Association, released a joint statement asking for action on the matter.

“Given the extent and duration of the harm suffered by the aluminium industry, we are calling for swift, focused and decisive action on market-distorting behavior and excess capacity in both the upstream and downstream sectors,” they said. “On behalf of our respective member companies, we stand ready to support Governments and international organizations with our knowledge, data and commitment to articulate improved trade rules and to restore normal market functions so that all producers throughout the aluminum value chain can compete under conditions of fairness and transparency.”

China’s Semi-Finished Steel Imports Jump in September

China’s imports of semi-finished steel increased in September amid new restrictions earlier this year on scrap imports, Reuters reported.

According to the report, China imported 370,000 tons of semi-finished steel in September, which marked a 418% year-over-year increase.

Freeport’s Copper Sales Fall in 3Q

Miner Freeport McMoRan reported its third-quarter financial results Wednesday, reporting an adjusted net loss of $8 million.

Sales of copper and gold in the third quarter were down on a year-over-year basis “reflecting anticipated lower mill rates and ore grades as PT Freeport Indonesia (PT-FI) transitions mining from the open pit to underground,” according to the firm.

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Third-quarter copper sales reached 795 million pounds, down from 1.0 billion pounds in 3Q 2018. Gold sales totaled 243,000 ounces, down from 837,000 ounces in 3Q 2018.

Nuclear energy is, for now, playing a minuscule role in India’s energy story, contributing to about 2% of the country’s electricity needs.

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But nuclear power generation in India is a story that is set to grow.

India is looking at adding another 5.4 GW to the nuclear power plants in the next decade, adding to the current total output of 6.7 GW.

But new nuclear plants have been opposed by the local populace in almost every part of the country where they have been proposed to be set up.

Now, an in-principle approval given by the Indian government to initiate exploratory mining for more uranium across the two southern provinces of Andhra Pradesh and Telangana has locals up in arms.

The location also includes a nature reserve not only rich in flora and fauna, but also with a large tiger population. The technical go-ahead was given a few months back for Uranium Corporation of India Limited (UCIL) to begin exploration for uranium, but an earlier protest led to a temporary pause in the process.

Andhra Pradesh is the largest producer of uranium in India. Tummalapalle village, located in the Kadapa district of Andhra Pradesh, is considered to have one of the largest uranium reserves in the world.

Next to the mine there is a processing plant that converts the uranium ore into sodium diuranate for use in nuclear power plants. Over the years, local farmers and environmentalists have alleged that it had led to the contamination of soil and groundwater, in addition to the destruction of water bodies.

A rethink by the government to go ahead with the fresh exploration has once again raised the hackles of environmentalists in India, who argue that whatever the procedure used to extract uranium, the wholesale mining for uranium would produce large amounts of radioactive waste that would pollute a major river nearby (as well as the surrounding areas).

They claim even if the waste is treated before disposal, uranium mining can still lead to the contamination of water and soil, eventually harming the flora and fauna of the region.

Officials of the Atomic Minerals Directorate tried to take samples after drilling a bore well for exploration and research, but were prevented by villagers, according to the News Minute.

The villagers have also been joined by opposition parties in the protests.

India’s nuclear plants are controlled by Nuclear Power Corporation of India (NPCIL), a state-owned corporation. India currently has seven nuclear power plants, but there are plans to add more.

But toward that goal, the government faces an uphill task.

Indian Prime Minister Narendra Modi told a conference by the Bloomberg Global Business Forum in New York that India was unable to drastically reduce its dependence on coal for electricity generation. India, incidentally, has the third-highest coal reserves in the world.

The prime minister partially blamed the dependence on coal on being kept out of the Nuclear Suppliers Group.

It is only because India is not part of this group that India does not have an assured supply of nuclear fuel, Modi told the audience.

Compared to other countries, India’s coal generation is expected to grow into the late 2030s, according to BloombergNEF.

Of late, India has been scouting around for nuclear fuel suppliers. India and Uzbekistan recently signed a deal for long-term supply of uranium to power its domestic atomic reactors. Kazakhstan and Russia are already supplying the same to India, while there are plans to also purchase the fuel from Australia.

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First found in 2000, the uranium reserves in the province of  Andhra Pradesh were officially commissioned in 2012 and equipped to cater to 25% of the requirement of uranium in India’s nuclear power plants.

The total reserves of uranium oxide in the divided Andhra Pradesh reached about 122,000 tons in 2017.

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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:

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

 

Looking for metal price forecasting and data analysis in one easy-to-use platform? Inquire about MetalMiner Insights today!

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This morning in metals news, the Federal Reserve is expected today to cut interest rates once again, the LME copper price dropped ahead of the Fed’s decision and Steel Authority of India Ltd. (SAIL) shares rose Tuesday.

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Federal Reserve Expected to Make Interest Rate Cut

The Federal Reserve is expected to cut interest rates again later today, CNBC reported.

If the cut comes to fruition, it would mark just the second interest rate cut since the Great Recession.

London Copper Falls

Ahead of the Fed’s decision today, copper on the LME dropped, Reuters reported.

LME three-month copper slipped 0.1% to $5,816.50 per ton, Reuters reported, while the most-traded SHFE copper contract dropped 0.2% to 47,310 yuan per ton ($6,673.63 per ton).

SAIL Shares Rise

Shares of Steel Authority of India Ltd. (SAIL) rose on Tuesday to a four-month intraday high, Bloomberg reported.

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The rise came on the heels of the Indian government’s decision to allow the state-run producer to sell 70 million tons of iron ore from its captive mines, according to Bloomberg.

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

This morning in metals news, the U.S. Department of Commerce issued affirmative determinations in its anti-dumping investigation of fabricated structural steel imports, Turkey’s largest industrial group will halt steel production and a U.S. Department of Justice lawsuit poses a roadblock for Novelis‘ bid to buy Aleris.

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U.S. DOC Rules on Fabricated Structural Steel Imports

The Department of Commerce has made affirmative preliminary determinations in its anti-dumping probe of imports of fabricated structural steel from Mexico and China.

The DOC found dumping margins for China and Mexico ranging from 0.00% to 141.38% and 0.00% to 30.58%, respectively.

Meanwhile, the DOC issued a negative determination with respect to imports from Canada.

Turkey’s Largest Industrial Group to Pause Steel Production

According to a report by Ahval, Turkey’s largest industrial group plans to halt steel production due to challenging market conditions.

According to the report, Koç Holding’s Koç Çelik unit will halt production from September until the end of January.

Novelis-Aleris Deal

Novelis‘ planned purchase of Aleris is under scrutiny.

The U.S. Department of Justice filed a lawsuit to prevent the move, citing concerns over potentially higher prices for automotive aluminum sheet.

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The $2.6 billion purchase was initially announced in July 2018.

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Indonesia shook up the nickel market, announcing that it will move up its planned nickel ore export ban by two years.

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Indonesia announced that its export ban on nickel ore will be advanced to Jan. 1, 2020 — two years ahead of the initial deadline.

With an additional 25 smelters set to open — on top of the 11 existing smelters — the country plans to reserve nickel stockpiles, currently estimated at between 600 million and 700 million tons, for downstream domestic production. Indonesia’s nickel ore reserves total around 2.8 billion metric tons.

The Jakarta Post reported the ban comes as the country aims to bolster the development of domestic smelters.

In July, the Indonesian government’s reassertion of plans to impose the export ban sent nickel prices rising, MetalMiner’s Stuart Burns explained.

Now, however, miners have until the end of the year to execute exports of nickel ore from Indonesia.

JFX Announces Physical Tin Contract

In other news from Indonesia, the Jakarta Future Exchange (JFX) in Indonesia will launch a new physical tin contract.

As noted by the International Tin Association (ITA), the new contract is backed by the country’s top tin producer, PT Timah.

According to the ITA, the addition of a physical tin contract does not help private smelters.

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“While the option of a different trading contract is interesting, this does not help private smelters, who remain unable to export due to regulations set by the central government, rather than by one of the country’s exchanges,” the International Tin Association said. “The switch of exchange may have caused the decline in refined tin exports from last month, with sources close to Timah citing export license renewals as the cause of the issue. With a new license seemingly acquired, it is likely that material — stockpiled in the interim — will be released to the market.”

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This morning in metals news, the copper price ticked up Wednesday, an appeals court is reconsidering an aluminum antitrust suit involving several big-name companies and Rio Tinto is taking over a mining site in British Columbia.

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Copper Price Rises

The copper price picked up Wednesday on optimism stemming from the Chinese government’s stimulus measures, Reuters reported.

LME copper moved up 0.2% while the most-traded ShFE copper contract jumped 0.5%.

Aluminum Antitrust Appeal Moves Forward

An antitrust case involving Goldman Sachs, JPMorgan Chase and miner Glencore has been revived by a U.S. appeals court, Reuters reported.

According to the appeal from aluminum purchasers, the companies allegedly conspired to drive up aluminum prices by reducing supply.

Rio Tinto Agrees to Buy BC Mine

Miner Rio Tinto has agreed to take a 100% stake in Triumph Gold’s Andalusite Peak mine property in British Columbia, Mining Weekly reported.

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According to the report, the property was first staked by Triumph Gold in January 2017; high grade copper, gold and silver mineralization was identified on the site.

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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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