Industry News

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This morning in metals news, the E.U. opened a new steel investigation, turnover at Russian aluminum giant Rusal and Novelis announces a major investment.

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E.U. Investigates Chinese Steel

According to Reuters, the E.U. has launched a new investigation of Chinese hot-rolled steel sheet piles coming into Europe.

The E.U. already has 17 anti-dumping or anti-subsidy measures in place on various forms of steel, according to the report.

Rusal CEO, Directors Quit

The Russian aluminum firm, recently in the news for being one of the Russian companies hit with U.S. sanctions, announced Thursday that its CEO and seven of its directors have stepped down, according to a CNN report.

According to the report, Rusal’s stock was up 7% after the announcement, but is still down significantly from its level before the U.S. sanctions were announced.

Novelis Plans New Investment in China

American aluminum firm Novelis announced it plans to invest $180 million to augment its Chinese automotive body sheet capacity, Reuters reported.

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Per the report, the investment would lead to an additional 100,000 tons of capacity at the firm’s Changzhou plant.

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This morning in metals news, India went to the World Trade Organization (WTO) to file a complaint over the U.S.’s steel tariff, President Trump is reportedly considering a 10% cut in imports of steel and aluminum from the E.U., and the copper falls after optimism fades vis-a-vis U.S.-China trade relations.

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India Goes to the WTO

India officially filed a complaint at the WTO over the U.S.’s steel tariffs, Reuters reported.

President Considers Import Cut

President Trump is considering cutting imports of steel and aluminum from Europe by 10%, according to a MarketWatch report.

The 28-member bloc’s exemptions from the Section 232 tariffs are set to expire June 1. The exemptions were extended April 30 by 30 days, less than 24 hours before the previous deadline.

Copper Price Falls

The copper price fell after some optimism stemming from the U.S.-China trade talks seems to have subsided, according to a Reuters report.

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Flying against recent gains, LME copper dropped 2.2% Wednesday to hit $6,828 per ton, according to the report.

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The U.S. Department of the Interior on Friday published a final list of minerals deemed “critical to the economic and national security of the United States.”

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According to a United States Geological Survey (USGS) announcement, the list will be the “initial focus of a multi-agency strategy due in August this year to implement President Donald J. Trump’s Executive Order to break America’s dependence on foreign minerals.”

Earlier this year, the Interior published a draft list of minerals and kicked off a window for public comment. After the public comment window closed — which saw submission of 453 comments — the Interior decided to finalize the original list.

“The expertise of the USGS is absolutely vital to reducing America’s vulnerability to disruptions in our supply of critical minerals,” said Dr. Tim Petty, assistant secretary of the Interior for Water and Science, in the prepared statement.

A Department of Commerce report is due to President Trump by Aug. 16. According to the USGS release, the report will include:

  • a strategy to reduce the nation’s reliance on critical minerals
  • the status of recycling technologies
  • alternatives to critical minerals
  • options for accessing critical minerals through trade with allies and partners
  • a plan for improvements to mapping the United States and its mineral resources
  • recommendations to streamline lease permitting and review processes,
  • ways to increase discovery, production, and domestic refining of critical minerals

The full list of minerals is as follows:

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This morning in metals news, the E.U. is reportedly getting ready for the U.S. Section 232 tariffs to go into effect, U.S. raw steel production was up last week and Rio Tinto asked the Mongolian government to fulfill contract stipulations related to the firm’s copper mining project in the country.

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E.U. Not Optimistic About Section 232 Exemption

According to an Associated Press report, the E.U. has expressed doubt that it will win a long-term exemption from the U.S.’s Section 232 steel and aluminum tariffs.

“There have been signals from the U.S. that the exemptions will not be prolonged. So either they will be imposed on us the first of June, or there will be other sorts of limiting measures,” E.U. Trade Commissioner Malmstrom was quoted as saying.

Steel Production Rises

U.S. raw steel production for the week ending May 19 was up 3.3% from the same week last year, according to the American Iron and Steel Institute (AISI).

Production for the week was also up 1.6% from the previous week ending May 12.

Rio Tinto Asks Mongolian Government to Fulfill Copper Mine Contracts

According to a Reuters report, Rio Tinto has asked the Mongolian government to honor contracts related to its copper mine project in the country.

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According to the report, the government has arrested officials on account of possible misuse of power related to the contracts for the Oyu Tolgoi mine.

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This morning in metals news, U.S.-China trade talks have led to a tenuous truce, Nippon Steel says strong demand is easing the blow of the U.S.’s steel tariff, and shares of US Steel and AK Steel dropped on the heels of the latest developments in the U.S.-China trade talks.

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Trade Truce

On the heels of a visit from Chinese trade officials to Washington late last week, Treasury Secretary Steven Mnuchin over the weekend announced the two countries had reached somewhat of a truce, for now.

Of course, the longevity of that truce remains in question. According to the Washington Post, Mnuchin said on Monday that the president could still impose tariffs on Chinese goods if a deal can’t be reached to scale back the U.S. trade deficit with China.

Nippon Says Demand Working to Lessen Blow of U.S. Tariffs

Japan’s Nippon Steel & Sumitomo Metal Corp said strong demand for steel has cut the impact of the U.S.’s import tariff on the metal, according to a Reuters report.

“There has been no major impact from the U.S. tariffs thanks to solid global demand,” Katsuhiro Miyamoto, Nippon Steel executive vice president, told Reuters.

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US Steel, AK Steel Shares Down After China Truce Announcement

Shares of US Steel and AK Steel fell 1.1% and 2.6%, respectively, in premarket trade Monday, according to MarketWatch. The drop came on the heels of the weekend’s announcement regarding a truce between the U.S. and China on trade.

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Before we head into the weekend, let’s take a look back at the week that was with some of the stories here on MetalMiner:

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  • In case you missed it, we updated our China MES microsite this week, covering the status of China’s quest for market-economy status and the U.S.’s pushback. Check out the updated page here.
  • MetalMiner’s Stuart Burns wrote about growth in India and the country’s new bankruptcy code.
  • Staying with India, the country went to the World Trade Organization (WTO) to express concern about the U.S.’s steel and aluminum tariffs.
  • Alcoa made a big announcement about its new Elysis joint venture and new technology promising a green aluminum smelting process, but that process might not be as green as it is being billed to be.
  • Secretary of Commerce Wilbur Ross addressed the National Press Club earlier this week in a speech that saw China, Europe and the WTO come in for criticism.
  • The U.S. claimed victory after an WTO Appellate Body ruling in the long-running dispute vis-a-vis subsidies for Airbus.
  • The rising oil price could have a far-reaching impact going forward.
  • With the U.S.-China trade relationship and the role of the WTO in the news quite a bit of late, Burns took a look at the state of the modern global trading system. (Part 1, Part 2)

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This morning in metals news, Tata Steel completed its buy of the bankrupt Bhushan Steel, Chinese steel mills are turning to scrap and Turkey is preparing to respond over the U.S. tariffs on aluminum and steel.

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Tata Steel Buys Bhushan Steel

Indian firm Tata Steel completed its purchase of the bankrupt Bhushan Steel for $5.2 billion, Reuters reported.

Bhushan has an annual steelmaking capacity of 5.6 million tons, according to the report.

Scrapping Plans

Amid environmental rules, Chinese steel mills are looking to use more scrap, according to a report by the South China Morning Post.

The recycling of material comes as the government continues to crack down on “smoke-stack industries,” according to the report.

Turkey Plans Response on Section 232 Tariffs

Turkey is among the many countries not to have won an exemption from the U.S.’s Section 232 tariffs on steel and aluminum; unsurprisingly, Turkey is planning a response, according to one report.

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Turkey plans to impose tariffs worth about $266.5 million on U.S. products, including coal, paper, walnuts, almonds, tobacco and unprocessed rice, among other items, according to a report by the Hurriyet Daily News.

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This morning in metals news, Japan is considering retaliation over the U.S.’s Section 232 metals tariffs, copper gains slowed in the face of a strengthening U.S. dollar, and South Korea initiated a complaint at the World Trade Organization (WTO) over the U.S. duties on solar cells and washing machines.

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Section 232 Retaliation

Several U.S. trading partners have negotiated long-term exemptions from its Section 232 tariffs. A notable name not on that list yet? Japan.

As such, the Wall Street Journal reported that Japan is considering retaliatory measures.

Copper Rise Slows

LME copper’s rise slowed Thursday as the U.S. dollar rose to a five-month high against the euro, Reuters reported.

South Korea Goes to WTO Over U.S. Duties on Washing Machines, Solar Cells

South Korea has initiated a WTO complaint against the U.S. with respect to the latter’s duties on South Korean washing machines and solar cells.

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“Korea has requested WTO dispute consultations with the United States regarding US safeguard duties imposed on imports of large residential washers and crystalline silicon photovoltaic products,” a notice on the WTO website states. “The requests were circulated to WTO members on 16 May.”

Rising oil prices were seen last year as a positive result of growing global growth and recovery, but a combination of factors are turning this benign view into a more sinister scenario.

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On the supply side, the combined efforts of OPEC and Russia, leaky as the agreement has been, have managed to reduce the global oil surplus in just 18 months to bring the market largely into balance. As a result, oil prices have gradually risen during the period. It’s a trend most observers have been sanguine about, believing the U.S.’s tight oil producers, encouraged by rising prices, will increase output to ensure ample supply and keep a lid on oil prices getting ahead of themselves.

But that benign view had not taken account of President Trump’s decision to rip up the Iran nuclear deal and, as a result, to reinstate sanctions, a move that will take place in two phases to give firms time to adjust.

According to The Telegraph, this will be done in two stages, on Aug. 6 and Nov. 4, allowing 90- and 180-day wind-down periods. In addition the Treasury is to re-list Iranian individuals and entities in the Specially Designated Nationals (SDN) list, thus revoking special licenses and exceptions previously granted to individuals and companies to deal with Iran, making it all but impossible for firms with a U.S. presence or needing dollar clearing to deal with them.

Lastly, Iran’s crude oil sales will be limited under the National Defense Authorization Act of 2012, as the U.S. departments of State, Energy and Treasury will allow ongoing but reduced purchases of oil from Iran, termed “significant reduction exceptions” on a country-by-country basis if they demonstrate a commitment to substantially decrease oil purchases (usually at least a 20% reduction).

As a result, Iran’s exports this year are likely to take a 500,000-barrel-per-day hit, from the country’s roughly 2,200,000 bpd current exports. The Telegraph speculates this could rise to 750,000 bpd next year as sanctions bite deeper.

Iran is not the only threat to supply. The ongoing implosion in Venezuela’s output, as spare parts run out and infrastructure collapses, also figures into the equation. So far, this has taken some 700,000 bpd out of global markets, the news source reports, with no sign of the trend slowing and no quick fix, even if a revolution overthrows the Maduro regime.

Meanwhile, the global oil industry investment collapse since 2014 following the plunge in oil prices has, like a juggernaut, taken time to impact output.

Output from conventional projects has until now been rising as projects started at the beginning of the decade have come onstream, but the cycle is turning — The Telegraph reports output will fall precipitously, by 1.5 million bpd in 2019.

So, what of all that replacement supply from the U.S. shale market?

Rig counts have predictably risen and output is up, but both U.S. tight oil and the Alberta tar sands are facing an infrastructure squeeze. Limited pipeline capacity and the failure to build new ones is holding back supply from the West Texas and Tar Sands regions. The U.S. is now becoming the world’s largest oil producer, on target to produce 12 million bpd next year by Energy Information Administration (EIA) estimates. However, that will not insulate the U.S. from higher oil prices, as the country is now exporting significant quantities of distillates and growing volumes of crude.

Saudi pledges to maintain stability in the oil markets should be taken with a pinch of salt. They have equally said they do not see any problem with a $100/barrel oil price and so are unlikely to raise their own production to ease the pain for everyone else until prices are well into triple digits.

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The Telegraph quotes Westbeck Capital, which says “We believe an oil price shock is looming as early as 2019 as several elements combine to form a ‘perfect storm’,” predicting $100 crude in short order, with $150 coming into sight, as the world faces a crunch all too reminiscent of July 2008.

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This morning in metals news, we updated our China MES page on market-economy status, steel production dropped in the Great Lakes region and the White House still hopes for a deal on the North American Free Trade Agreement (NAFTA) before the Thursday deadline.

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China and Market-Economy Status (MES)

MetalMiner originally published its China MES (Market Economy Status) page in 2016, covering everything about the years following China’s accession to the World Trade Organization (WTO) and its ensuing quest to receive all-important market-economy status.

As you probably know, a lot has happened since 2016 on the U.S.-China trade front, particularly since Donald Trump’s election as president. So, we updated the comprehensive page to cover recent developments, including the Section 232 and Section 301 probes, not to mention the recent back-and-forth threats of major tariffs on goods.

You can check out the updated page here.

Great Lakes Steel Production Falls

Steel production in the Great Lakes region last week fell 2.23% compared with production the previous week, according to American Iron and Steel Institute (AISI) data reported by the Northwest Indiana Times.

Production in the region last week amounted to 655,000 tons, according to the report.

Looking For a Deal

Despite a fast-approaching Thursday deadline, the U.S. is still hopeful it can reach a deal on renegotiating NAFTA with partners Canada and Mexico.

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White House Press Secretary Sarah Sanders told Fox News, as quoted by Reuters: “We still want to see something happen and we’re going to continue in those conversations. They’re ongoing now and we’re pushing forward and hopeful that we can get something done soon.”