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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: the Federal Reserve’s recent industrial production report, the U.S.’s December boom in housing starts, the U.S. steel sector’s capacity utilization rate and the International Monetary Fund’s latest growth projections.
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This morning in metals news, the European Union has registered flat-rolled stainless steel imports from a trio of Asian countries in what could be a prelude to tariffs, China’s Jingye Group plans to cut 500 jobs as part of its British Steel takeover and manufacturers look to adapt to business conditions in the years ahead.
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This morning in metals news, U.S.-E.U. trade tensions are again at the forefront with President Donald Trump’s recent threats at the World Economic Forum in Davos, a Chinese firm has purchased British steel trader Stemcor and Brazil’s Vale is off to a slow start this year.
At the World Economic Forum in Davos this week, President Donald Trump threatened to impose tariffs on automobiles imported from the E.U., marking another uptick in trade tensions as the president turns attention to Europe not long after inking a Phase One trade deal with China earlier this month.
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This morning in metals news, a Turkish conglomerate is reportedly ready to step into the British Steel process if Jingye Group’s takeover effort falls apart, copper prices fell to a two-week low and an Indonesian company aims to augment its aluminum production.
As Chinese firm Jingye Group attempts to push through its takeover bid of the liquidated British Steel, Turkish conglomerate Cengiz Holdings is ready to step in if talks fall apart, The Guardian reported.
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This morning in metals news, BHP released its half-year production results, the GFG Alliance unveiled a new aluminum group and copper prices have been on the rise early this year.
Miner BHP released its production results for the half year ending Dec. 31, 2019, showing its copper production ticked up 7% on a year-over-year basis.
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December proved to be a fruitful month for U.S. housing starts, which reached their highest level since 2007.
The new data came the same day the Federal Reserve reported manufacturing production had ticked up slightly in December.
According to data released by the U.S. Census Bureau and the Department of Housing and Urban Development, privately owned housing starts in December reached a seasonally adjusted annual rate of 1,608,000, up 16.9% from the previous month. December starts were up by an even larger percentage on a year-over-year basis (40.8%).
Broken down further, single-family housing starts reached a seasonally adjusted annual rate of 1,055,000 in December, up 11.2% from the previous month.
Meanwhile, the rate for units in buildings with five units or more reached 536,000.
Overall, housing starts in 2019 reached their highest level since 2007, according to Census Bureau historical data.
U.S. housing starts from 2007-2019 (data from the U.S. Census Bureau)
Housing starts plummeted after the 2008 financial crisis, down from 1,355,000 in 2007 to 905,500 in 2008 and 554,000 in 2009.
After 2009, housing start activity gradually returned, crossing the 1 million start threshold in 2014.
Low mortgage rates have in part contributed to the rise. According to Freddie Mac, 30-year fixed-rate mortgages averaged 3.9% in 2019, the fourth-lowest annual average rate since the company began issuing its weekly survey on mortgage rates in 1971.
Housing units authorized by permits reached a rate of 1,416,000 in December, down 3.9% from the previous month but up 5.8% on a year-over-year basis.
Permits for single-family homes reached a rate of 916,000, down 0.5% from the previous month, while permits for units in buildings with five units or more hit a rate of 458,000.
Overall, permits increased in 2019 compared with the previous year. In 2019, approximately 1,289,800 units were authorized by building permits, marking a 3.2% increase from the previous month.
Housing completions were also up in December, hitting a seasonally adjusted annual rate of 1,277,000, which marked a 5.1% increase from the previous month and a 19.6% increase from December 2018.
Single‐family housing completions in December hit a rate of 912,000, up 0.7% from November. For units in buildings with five units or more, the rate reached 357,000.
An estimated 1,250,600 housing units were completed in 2019, which marked a 5.6% increase from 2018.
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This morning in metals, miner Rio Tinto recently released its Q4 production results, China unveiled new copper scrap and aluminum scrap regulations, and China’s Jingye Group has called on consultants to help strengthen its case for its British Steel takeover plans.
Rio Tinto’s Pilbara iron ore shipments fell 3% in 2019 compared with 2018, the company recently reported.
According to the U.S. Federal Reserve’s latest report on industrial production, industrial production in December dipped 0.3%.
Industrial capacity utilization dipped by 0.4 percentage point to 77.0%, which is down from the long-run average — from 1972-2018 — of 79.8%
Utilities fell 5.6% on the month, down to an index reading of 101.6% (with a reading of 100% equivalent to production in 2012) — marking its first decline since August.
“The drop for utilities resulted from a large decrease in demand for heating, as unseasonably warm weather in December followed unseasonably cold weather in November,” the Fed said.
However, manufacturing production was up 0.2% (after rising 1.0% in November), while mining increased 1.3% after posting declines in four of the previous five months (including a 0.2% drop in November).
The escalation in U.S.-China trade relations appeared to take a brief pause Wednesday when U.S. President Donald Trump and Chinese Vice Premier Liu He signed what has been billed as a “Phase One” trade agreement between the world’s two largest economies.
“Today we take a momentous step, one that has never been taken before with China, toward a future of fair and reciprocal trade as we sign Phase One of the historic trade deal between the United States and China,” Trump said in opening remarks during the signing ceremony Wednesday, adding the deal would begin to “right the wrongs of the past.”
Over the past two years, following the launch of a Section 301 investigation in August 2017, the U.S. has imposed a total of approximately $370 billion in tariffs on Chinese goods, with China responding with tariffs of its own at each step of the way amounting to $110 billion.
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This morning in metals news, the U.S. and China will ink the previously agreed “phase one” trade deal today, the United States-Mexico-Canada Agreement (USMCA) is expected to be up for a vote in the U.S. Senate soon and China’s steel mills may be looking away from higher-grade iron ores.
After many turbulent months that saw an escalation of trade tensions, the U.S. and China are finally set to sign a so-called “phase one” trade deal today that, while it doesn’t mark an end to the trade war, at least constitutes a de-escalation.