Industry News

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This morning in metals news: U.S. import prices rose in December; the Aluminum Association commented on potential changes to the Section 232 aluminum tariff program; and November steel shipments dropped by 11.9%.

U.S. import prices gain by 0.9% in December

U.S. import prices jumped by 0.9% in December, per the Bureau of Labor Statistics. Furthermore, the December increase marked the largest jump in import prices since August.

Meanwhile, U.S. export prices rose by 1.1% after rising by 0.7% in November.

Aluminum Association calls for ‘targeted, multilateral’ approach

We previously noted several industry groups’ recent call for the incoming Biden administration to maintain existing steel tariffs and quotas.

In that vein, the Aluminum Association offered its own comments on the Section 232 aluminum tariff program.

“The Aluminum Association continues to favor a targeted approach to trade enforcement,” Aluminum Association President and CEO Tom Dobbins said in a prepared statement. “Across-the-board tariffs have failed to dent the non-market-based structural subsidies that drive overcapacity and hurt U.S. aluminum producers and workers. We look forward to working with President-elect Biden’s trade team on new, creative approaches to combat this perennial challenge, including renewed cooperation with traditional trading partners and allies.”

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An Indian agency has reported evidence that shows the presence of a lithium deposit of about 1,600 tons in the southern province of Karnataka.

It may be a small find. Still, it is important, especially with the world moving away from fossil-fueled vehicles to electric vehicles.

Lithium deposit in India

Initial surveys by the Atomic Minerals Directorate for Exploration and Research (AMD), an arm of India’s Department of Atomic Energy has shown the presence of lithium in igneous rocks of the Marlagalla-Allapatna region of Karnataka, according the Indian Express.

Lithium is a vital ingredient of the lithium-ion rechargeable batteries that power electric vehicles (EVs), laptops and smartphones. Furthermore, they are even used in military products.

The lithium find is comparatively small. Reserves in Bolivia are 21 million tonnes), the Indian Express notes, with significant deposits in Argentina (17 million tonnes), Australia (6.3 million tonnes) and China (4.5 million tonnes).

Nonetheless, it has given hope to Indian authorities as they look to move away from lithium imports, on which the country is now 100% reliable.

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This morning in metals news: Rio Tinto and Meridian Energy have reached a deal that will allow New Zealand’s Aluminum Smelter to continue operating the Tiwai Point aluminum smelter; BHP unveiled plans to build a new wind fence; and the Energy Information Administration (EIA) forecasts U.S. oil and natural gas production will fall this year.

Rio Tinto, Meridian Energy reach deal on Tiwai Point aluminum smelter

Miner Rio Tinto announced it had reached a deal with Meridian Energy that will allow New Zealand’s Aluminum Smelter to continue operating the Tiwai Point aluminum smelter until 2024.

“The extension provides certainty to employees, the local community and customers while providing more time for all stakeholders to plan for the future,” Rio Tinto said in a release.

The agreement with Meridian helps make the smelter “economically viable and competitive,” Rio Tinto added.

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BHP plans to build wind fence

On Thursday, BHP announced plans to build a wind fence as part of its Pilbara Air Quality Program.

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This morning in metals news: several industry groups urged President-elect Joe Biden to continue existing steel tariffs and quotas; Germany’s OGE and Thyssenkrupp and Norwegian energy company Equinor are collaborating to mitigate emissions; and Norsk Hydro and Nuvosil are working on aluminum and silicon recycling technology.

Industry groups urge Biden to keep steel tariffs

President Donald Trump in 2018 used Section 232 of the Trade Expansion Act of 1962 to impose steel tariffs of 25%.

The steel tariffs remain in place, as does the 10% tariff on aluminum.

President-elect Joe Biden is set to take office next week. As such, many have wondered how the former vice president’s trade policy will differ from Trump’s approach.

In a joint letter, the American Iron and Steel Institute (AISI), Steel Manufacturers Association (SMA), the United Steelworkers union (USW), The Committee on Pipe and Tube Imports (CPTI) and American Institute of Steel Construction (AISC) urged Biden to keep the steel tariffs in place.

“Continuation of the [steel] tariffs and quotas is essential to ensuring the viability of the domestic steel industry in the face of this massive and growing excess steel capacity,” the statement reads.

The letter adds that removing or weakening the measures will invite a “new surge” in imports.

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OGE, Thyssenkrupp, Equinor work together to curb Duisburg emissions

According to Reuters, German firms OGE and Thyssenkrupp and Norwegian energy company Equinor will work together to curb emissions from Thyssenkrupp’s plant in Duisburg, Germany.

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This morning in metals news: U.S. steel capacity utilization reached 75.4% for the week ending Jan. 9; General Motors announced the launch of BrightDrop; and Rusal America announced a new line of aluminum additive manufacturing powders.

Volatility is the name of the game. Do you have a steel buying strategy that can handle the ups and downs?

Steel capacity utilization reaches 75.4%

The U.S. steel sector’s capacity utilization rate reached 75.4% for the week ending Jan. 9, the American Iron and Steel Institute (AISI) reported.

The rate increased from 74.6% the previous week.

Production during the week ending Jan. 9 totaled 1.71 million net tons, up 3.6% from the previous week. However, output during the week declined 10.3% year over year.

General Motors launches new BrightDrop business

General Motors today announced the launch of a new business called BrightDrop, which it says will “offer an ecosystem of electric first-to-last-mile products, software and services to empower delivery and logistics companies to move goods more efficiently.”

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Automotive producers the world over are facing challenges, but the U.K. automotive industry is arguably in the most challenging environment of all.

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U.K. automotive sector faces headwinds

Over the last year, COVID-19 restrictions have closed showrooms. Furthermore, Brexit has raised the prospect of trading tariffs with Europe. In addition, the government has repeatedly moved the goal posts on the sale of internal combustion engines toward the end of the decade.

A new trade deal with the E.U. allows tariff free access to the U.K.’s largest automotive export market. The announcement of the new deal on Christmas Eve proved a massive relief for the industry, according to Mike Hawes, chief executive of the Society of Motor Manufacturers and Traders (SMMT), an industry body, as quoted in the Financial Times.

However, tariff-free does not mean barrier-free. Additional safety certification and much more onerous paperwork involved in the movement of goods between the U.K. and the E.U. will increase complexity for a U.K. supply chain intimately entwined with the E.U.

New clarity in 2021 for U.K. automotive industry

Nevertheless, the U.K. automotive industry is at least starting 2021 with better clarity than it endured through much of last year.

But one looming crisis the SMMT identified is the incomplete nature of the U.K.’s electric vehicle supply chain.

Specifically, the FT reports, the U.K. is going to need far more battery factories if it is to sustain a switch to electric vehicles in the decade ahead.

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This morning in metals news: Turquoise Hill Resources offered an update on the Oyu Tolgoi copper mine expansion project; renewable power generation will continue to rise this year in the U.S.; and the aluminum price has traded sideways over the last month.

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Oyu Tolgoi copper mine project in danger

The fate of the Oyu Tolgoi copper mine expansion project is up in the air, as it could face termination from the Mongolian government.

Turquoise Hill Resources, which is majority-owned by miner Rio Tinto, jointly owns the massive project with the Mongolian government. The parties reached a financing plan for the project in 2015.

However, the Mongolian government appears to be concerned about runaway costs for the project.

“In addition, the Government of Mongolia has advised Rio Tinto that it is dissatisfied with the results of the Definitive Estimate, which was completed and delivered by Rio Tinto and publicly announced by the Company on December 18, 2020, and is concerned that the significant increase in the development costs of the Oyu Tolgoi project has eroded the economic benefits it anticipated to receive therefrom,” Turquoise Hill said in a statement. “The Government of Mongolia has indicated that if the Oyu Tolgoi project is not economically beneficial to the country, it would be necessary to review and evaluate whether it can proceed.”

Renewables continue to rise

Renewable sources account for the most new electricity-generating capacity this year, the Energy Information Administration reported.

“According to the U.S. Energy Information Administration’s (EIA) latest inventory of electricity generators, developers and power plant owners plan for 39.7 gigawatts (GW) of new electricity generating capacity to start commercial operation in 2021,” the EIA reported. “Solar will account for the largest share of new capacity at 39%, followed by wind at 31%. About 3% of the new capacity will come from the new nuclear reactor at the Vogtle power plant in Georgia.”

Aluminum trends flat

After surging throughout most of the second half of 2020, the aluminum price has slowed down of late.

The LME three-month aluminum price is up just 0.22% over the last month. The price closed Friday at $2,032 per metric ton.

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This morning in metals news: new E.U. duties on iron and steel imports from Turkey take effect today; meanwhile, the Aluminum Association commented on President-elect Joe Biden’s nomination for the post of secretary of commerce; and natural gas prices fell to their lowest levels in decades last year.

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E.U. duties on Turkish iron, steel

E.U. duties on Turkish iron and steel imports are set to take into effect today, Reuters reported.

According to the report, the anti-dumping duties will range from 4.8-7.6%.

Meanwhile, the European Steel Association (Eurofer) in May 2020 filed the initial complaint that sparked the probe. In September 2020, Eurofer petitioned for the registration of Turkish hot-rolled steel imports.

Elsewhere, MetalMiner contributor Christopher Rivituso earlier this week surveyed the Turkish steel market.

Aluminum Association comments on Biden’s pick to lead DOC

On the heels of President-elect Joe Biden’s announcement that he intends to nominate Rhode Island Gov. Gina Raimondo for the post of secretary of commerce, the Aluminum Association released a statement.

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Nobody yet is quite sure whether Australia and China’s spat over coking coal imports will eventually turn out to be a case of bad politics making good economics or bad economic sense making for good politics.

While politics between China and Australia is part of the reason for the former to have completely banned the import of coal from the latter, it has led to churn in the Asian the rest of the global coal markets.

With China not lifting the ban despite it being a new year (as some had anticipated), the volatility in the markets is likely to continue.

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China’s coking coal import ban

In the last quarter of 2020, a verbal ban by China to halt all Australian coke was followed up with a formal one.

Coking coal import prices then declined by 24% from early-October to mid-December. Why? Because market players expected a glut in the global coal market in the medium term.

This game of Chinese checkers is not relegated to only the two players, China and Australia.

Ripple effects

India, Japan, and a host of other Asian and Southeast Asian nations have started to feel the after-effects.

Of late, according to this report by CNBC, major Chinese cities have started suffering power cuts because of the Chinese authorities limiting power usage while citing a shortage of coal.

What’s more, Chinese coal prices have shot up due to the reported shortage.

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This morning in metals news: the Census Bureau and Bureau of Economic Analysis reported the U.S. goods and services deficit totaled $68.1 billion in November; the Brazilian state of Minas Gerais is hoping to win a compensation deal from miner Vale; and the American Iron and Steel Institute released steel import data for December.

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Goods and services deficit reaches $68.1B

The U.S. goods and services deficit reached $68.1 billion in November, the Census Bureau and BEA reported.

The deficit jumped from $63.1 billion in October.

Brazilian state aims to win settlement from miner over 2019 dam disaster

The Brazilian state of Minas Gerais is in talks over a settlement deal with miner Vale vis-a-vis the fatal Brumadinho tailings dam collapse in 2019, Reuters reported.

Per Reuters, the state is seeking a settlement worth at least $5.3 billion.

Government and Vale officials were set to meet today, according to Reuters.

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