Articles in Category: Public Policy

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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President Donald Trump’s suggestion that the U.S. could buy Greenland from Denmark was met with incredulity in Nuuk, Copenhagen and across Europe.

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“Greenland is not for sale. Greenland is not Danish. Greenland belongs to Greenland. I strongly hope this is not meant seriously,” Greenland Prime Minister Mette Frederiksen said during a visit to the territory on Sunday, as reported by The Times.

The prime minster added, “Thankfully, the time where you buy and sell other countries and populations is over. Let’s leave it there. Jokes aside, we will of course love to have an even closer strategic relationship with the United States.”

Frederiksen is said to have rejected Trump’s proposal, describing the notion of selling Greenland as “an absurd discussion.”

Strangely, Trump seems to have taken affront that the 58,000 population of Greenland did not want to be bought and sold like chattels. He then tried to lean on Denmark by commenting on how the U.S. protects Denmark and, as a result, should be more willing to sell its semi-autonomous territory (Greenland governs itself but relies on Denmark for its defense and foreign policy).

After being flatly refused by both Nuuk and Copenhagen, President Trump reacted in an apparent fit of pique, canceling his planned trip to Denmark next month.

Crass as the handling of this idea has been, it is not the first time the U.S. has tried to buy its massive neighbor.

Read more

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This morning in metals news, President Donald Trump on Sunday said he is not ready to make a trade deal with China just yet, ArcelorMittal faces falling steel prices as it attempts to revive India’s Essar Steel and the Department of Commerce today added 46 Huawei affiliates to the Entity List.

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Trump ‘Not Ready’ for a Deal

On Sunday, President Trump said he’s “not ready” to make a deal with China on trade.

Earlier this month, the president announced a 10% tariff on an additional $300 billion in Chinese goods.

“We’re doing tremendously well, our consumers are rich, I gave a tremendous tax cut, and they’re loaded up with money,” Trump was quoted as saying by Reuters.

Falling Steel Prices Impact ArcelorMittal’s Essar Plans

Falling steel prices could complicate steelmaker ArcelorMittal’s plans to bring India’s Essar Steel back to health, according to a report by the Hindu Business Line.

Earlier this year, ArcelorMittal put forth a $6 billion bid to buy the bankrupt Indian steelmaker, which was approved by an Indian court in July.

DOC Adds Huawei Affiliates to Entity List

On Monday, the Department of Commerce announced the addition of 46 affiliates of Chinese tech firm Huawei to the Bureau of Industry and Security (BIS) Entity List.

However, the BIS will also extend certain licensing agreements to Huawei for 90 days, effective today.

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“BIS has also announced that it will extend the Temporary General License (TGL) authorizing specific, limited engagements in transactions involving the export, reexport, and transfer of items – under the Export Administration Regulations (EAR) – to Huawei and its non-U.S. affiliates which are subject to the Entity List,” the Department of Commerce said in a release. “The continuation of the TGL is intended to afford consumers across America the necessary time to transition away from Huawei equipment, given the persistent national security and foreign policy threat. This license will be effective on August 19, 2019 and last an additional 90 days.”

This morning in metals news, a Turkish military pension fund has reportedly reached a tentative deal to buy the ailing British Steel, copper prices held flat Friday and the latest round of tariffs could impact China’s ability to prop up its economy.

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Turkish Military Pension Fund to Buy British Steel

The British Steel saga could be moving toward a positive resolution.

The steelmaker, the U.K.’s second-largest, went into liquidation in May after it was unable to secure a government loan. Afterward, a bidding process began for the firm.

In recent weeks, a Turkish military pension fund emerged as the favorite to buy the troubled steelmaker. On Friday, the BBC reported the Turkish fund has reached a tentative deal to buy British Steel.

According to the report, the Turkish Armed Forces Assistance Fund said it plans to take over British Steel by the end of the year.

Copper Flat

Copper prices traded flat to close the week, Reuters reported.

LME three-month copper held at around $5,750 per ton, while the most-traded SHFE copper contract held at around $6,591 per ton, according to Reuters.

Tariffs and China

Earlier this month, President Donald Trump announced a new round of tariffs on Chinese products, aiming a 10% tariff on an additional $300 billion in Chinese goods (although the U.S. later announced the tariff would be delayed for some items in the product list).

With the new tariffs, nearly all of the U.S.’s imports of China would be subjected to tariffs.

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According to a J.P. Morgan analyst in an interview with CNBC, the tariffs could impact Beijing’s ability to mitigate the damages via government measures. Bruce Kosman, chief economist and head of global economic research for J.P. Morgan, said China has deployed policies to mitigate the damages of the tariffs over the last year, but it is unclear how much more China will be able to do on that front.

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This morning in metals news, Vale’s resumption of activities boosted its iron ore production to its highest level in nine months, ArcelorMittal released its second-quarter financial results and a U.S. judge blocked a planned copper project in Arizona.

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Vale Production Surges in July

After Brazilian miner Vale resumed production at its largest mine in the Minas Gerais state, its iron ore production soared 16.6% in July from the previous month, Reuters reported.

Earlier this year, a fatal tailings dam breach at Vale’s mine in Brumadhinho impacted operations and helped send iron ore prices upward.

ArcelorMittal Releases Q2 Results

Steelmaker ArcelorMittal reported Q2 2019 EBITDA of $1.6 billion and 1H 2019 EBITDA of $3.2 billion, which was down 42.6% on a year-over-year basis.

Second-quarter shipments of steel and iron ore rose 4.8% and 6.1%, respectively, on a year-over-year basis.

“Given weak demand and high import levels in Europe, the Company has taken steps to align its European production levels to the current market demand,” the steelmaker said. “As a result of previously announced European production curtailments, approximately 4.2Mt of annualized production curtailment is scheduled for 2H 2019.”

Judge Blocks Arizona Copper Project

A U.S. judge blocked a copper project previously approved by the U.S. Forest Service, the Associated Press reported.

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The previously approved project included plans for a $1.9 billion mine in Arizona’s Coronado National Forest.

This morning in metals news, the EPA reversed an Obama-era decision regarding an Alaskan mining project, the Federal Reserve issued its first rate cut since the financial crisis and a Chinese billionaire is alleged to have instituted a scheme to avoid $1.8 billion in tariffs on aluminum exported to the U.S.

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EPA Decision Undoes Obama-Era Ruling

The EPA issued a ruling that reversed an Obama-era ruling that had blocked an Alaskan mining project, CNN reported.

According to the report, the Pebble Mine project had previously been blocked because the EPA during the Obama administration determined the project would have adverse effects on the area’s fish habitat.

Fed Issues First Rate Cut Since 2008

As many had expected, the U.S. Federal Reserve on Wednesday announced its first interest rate cut since 2008.

The Fed and Chairman Jerome Powell have come in from criticism by President Donald Trump for previous rate increases, arguing they were hampering the economy’s momentum.

The rate decrease announced Wednesday come in at a quarter of a point, down to 2-2.25%.

“Job gains have been solid, on average, in recent months, and the unemployment rate has remained low,” the Fed said. “Although growth of household spending has picked up from earlier in the year, growth of business fixed investment has been soft. 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.”

Chinese Billionaire Accused of Scheme to Avoid $1.8B in Aluminum Tariffs

In a 53-page indictment released by a federal grand jury this week, a Chinese billionaire is accused of misrepresenting aluminum exports to the U.S. as pallets in an effort to avoid $1.8 billion in aluminum tariffs.

“The 53-page indictment alleges that China Zhongwang Holdings Limited, Asia’s largest aluminum extrusion company; Zhongtian Liu, the company’s former president and chairman; and several individual and corporate co-defendants lied to U.S. Customs and Border Protection to avoid paying the United States $1.8 billion in anti-dumping and countervailing duties (AD/CVD) that were imposed in 2011 on certain types of extruded aluminum imported into the United States from China,” the U.S. Attorney’s Office of the Central District of California said in a release.

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According to the documents, the aluminum exports were simple extrusions, rather than pallets. The products, misrepresented as pallets in order to circumvent tariffs, were then sold “to related entities to fraudulently inflate the company’s revenues and deceive investors around the world,” the indictment alleges.

Rare earths are coveted around the world for their application in a wide variety of high-tech uses, from consumer electronics to military applications.

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However, a rare earths market dominated for years by China has presented a challenge to the U.S.

Toward that end, President Donald Trump this week directed the Pentagon to search for alternative sources of rare earths magnets, particularly cobalt samarium magnets.

In a determination pursuant to Section 303 of the Defense Production Act of 1950, Trump said the “domestic production capability for Samarium Cobalt Rare Earth Permanent Magnets is essential to the national defense.”

“Without Presidential action under section 303 of the Act, United States industry cannot reasonably be expected to provide the production capability for Samarium Cobalt Rare Earth Permanent Magnets adequately and in a timely manner,” Trump’s determination continued. “Further, purchases, purchase commitments, or other action pursuant to section 303 of the Act are the most cost-effective, expedient, and practical alternative method for meeting the need for this critical capability.”

In a separate letter — addressed to Rep. Maxine Waters, chairwoman of the House Committee on Financial Services, and Sen. Mike Crapo, chairman of the Senate Committee on Banking, Housing and Urban Affairs — Trump said there is a “shortfall in the defense industrial base relating to production capability” for samarium cobalt rare earth magnets.

“The Department of Defense will take actions to develop and purchase equipment and materials needed for creating, maintaining, protecting, and expanding production capability for Samarium Cobalt Rare Earth Permanent Magnets,” Trump said in his letter.

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Last year, the Trump administration omitted rare earths from a $200 billion tariff list on Chinese goods. (Earlier this year, MetalMiner’s Stuart Burns delved into China’s upper hand in the rare earths market and how it could use that as a bargaining chip in its ongoing trade talks with the U.S.)

According to the U.S. Geological Survey, U.S. imports of rare earths in 2018 reached a value of $160 million, up 17% from $137 million in 2017. From 2014-2017, 80% of the U.S.’s imports of rare earths compounds and metals came from China.