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

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  • Rio Tinto’s massive Dunkerque aluminum smelter is possibly set to change hands — to a familiar buyer, our Stuart Burns writes.
  • A tight nickel market has seen prices of the metal soar in recent weeks.
  • India’s state-owned National Aluminum Company is thinking big with a little more revenue in the bank for projects.
  • In case you missed it, we released our January Monthly Metals Index (MMI) Report earlier this week.
  • China is often the focal point in U.S. discussions of potential trade remedies vis-a-vis metals imports — but should that be the case?
  • Fitch recently warned of upcoming rate rises.
  • Burns again touched on that recent superstar, zinc — how much higher can it go? For context, LME primary cash zinc hovered around $2,723/metric around this time last January, according to MetalMiner IndX data — meanwhile, yesterday the metal hit $3,444/mt.
  • The U.S. International Trade Commission voted last week to continue the anti-dumping and countervailing duty investigations of common alloy aluminum sheet from China. As can often be the case, reactions to this are mixed within the domestic industry.
  • Sticking on the trade case front, the U.S. Department of Commerce made a preliminary ruling on steel flanges from India and China.
  • Steel has gotten off to a strong start this calendar year, our Irene Martinez Canorea writes.

Free Download: The January 2018 MMI Report

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This morning in metals news, China ramped up its aluminum output in December, British police are looking into allegations of pension fraud against steelworkers and India considers a plan to have its steel ministry oversee iron ore and coal operations.

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Chinese Aluminum Output in December

China upped its aluminum output to close 2017, jumping back up to its highest total since June 2017, Reuters reported.

According to the report, China produced 32.27 million tons of aluminum last, up 1.6% from 2016, per National Bureau of Statistic Data.

British Police Look Into Possible Pension Fraud

According to the Financial Times, police in south Wales are looking into allegations that some Port Talbot steelworkers have been victims of pension fraud.

The complaints were put forth by the British Steel Pension Scheme.

Iron Ore, Coking Coal Mining to Steel Ministry?

India is considering transferring control of iron ore and coking coal mining to its steel ministry, Bloomberg reported, in an effort to boost the country’s burgeoning steelmaking industry.

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A shift in regulatory oversight from the mines and coal ministries to the steel ministry requires approval from the prime minister’s office and the ministries, according to the report.

The U.S. Department of Commerce took another step forward in its investigation of steel flanges from China and India, announcing affirmative preliminary determinations in its countervailing duty (CVD) investigation on Wednesday evening.

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In its release covering the announcement, the department once again touted its uptick in trade cases considered since President Trump took office.

“With a 58 percent increase in trade cases initiated since President Trump took office, this Administration has made it a clear priority to defend domestic businesses from unfair trade practices,” Secretary of Commerce Wilbur Ross said in the release. “Today’s preliminary decision allows U.S. producers to receive relief from the market-distorting effects of potential government subsidies while we continue our investigation.”

The department calculated countervailable subsidies of 174.73%, and from 5.00% to 239.61%, for China and India, respectively. A countervailable subsidy is “financial assistance from a foreign government that benefits the production of goods from foreign companies and is limited to specific enterprises or industries, or is contingent either upon export performance or upon the use of domestic goods over imported goods,” the department’s fact sheet on the case explains.

Imports of steel flanges in 2017 were estimated to be valued at a total of $48.4 million from the two countries, according to the release.

The domestic petitioners in the case are the Coalition of American Flange Producers and its individual members: Core Pipe Products, Inc. (of Carol Stream, Illinois) and Maass Flange Corporation (of Houston, Texas). The petitions were filed Aug. 16, 2017, and the Department of Commerce initiated its investigation Sept. 5. The U.S. International Trade Commission then delivered its preliminary determinations Sept. 30.

The Chinese respondents in the case were: Both Well (Jiangyan) Steel Fittings Co., Ltd., Hydro Fluid Controls Ltd., Jiangyin Shengda Brite Line Kasugai Flange Co., Ltd., and Qingdao I-Flow Co., Ltd.

According to the department, it calculated the countervailable subsidy rate based on “adverse facts available” due to the companies’ “failure to fully cooperate” in the investigation.

Commerce calculated a rate for the Indian respondents under similar circumstances.

“In the India investigation, Commerce has calculated a preliminary subsidy rate of 239.61 percent for mandatory respondent Bebitz Flanges Works, based on adverse facts available due to the company’s failure to fully cooperate in the investigation., and a preliminary subsidy rate of 5.00 percent for mandatory respondent Echjay Forgings Private Limited,” the department’s fact sheet states. “Commerce preliminarily determined a rate of 5.00 percent for all other Indian producers and exporters.”

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The Department of Commerce is scheduled to make a final CVD determination in the case against China on April 3, and May 29 for India.

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This morning in metals news, our own Lisa Reisman appeared on NPR’s “Marketplace” yesterday, President Trump said Wednesday that terminating the North American Free Trade Agreement (NAFTA) would lead to the best renegotiated deal and Alcoa reported its 2017 4Q and full-year earnings.

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Aluminum and China on NPR

Our very own Lisa Reisman, founder and executive editor of MetalMiner, made an appearance on NPR’s “Marketplace” yesterday morning to talk about the aluminum market.

To check out the segment, visit the Marketplace website (the segment starts at 2:28).

Trump Again Hints at Termination of NAFTA

As negotiating teams from the U.S., Canada and Mexico have met over several rounds of talks to revamp the 24-year-old trilateral trade deal, President Trump once again hinted at termination of the deal.

According to Reuters, Trump on Wednesday said the U.S. could get a better deal via termination.

“We’re renegotiating NAFTA now,” Trump told Reuters. “We’ll see what happens. I may terminate NAFTA.

“A lot of people are going to be unhappy if I terminate NAFTA. A lot of people don’t realize how good it would be to terminate NAFTA because the way you’re going to make the best deal is to terminate NAFTA. But people would like to see me not do that.”

Alcoa Reports 4Q, Full-Year 2017 Earnings

Alcoa released its earnings report for the final quarter of 2017, reporting a net loss of $196 million, or $1.06 per share.

For 2017 as a whole, Alcoa reported full-year 2017 net income of $217 million, or $1.16 per share and adjusted net income of $563 million, or $3.01 per share.

“Solid market fundamentals allowed us to deliver our strongest adjusted EBITDA quarter since our launch as an independent, publicly-traded company,” said Roy Harvey, president and CEO, in a release covering the earnings announcement. “With a series of operating and asset decisions, we also purposefully delivered against our strategic priorities. Our first full year has been truly remarkable.

“By continuously focusing on our strategic priorities, and supported by favorable markets, we’ve been able to accelerate our plan to strengthen Alcoa’s foundation for an even brighter tomorrow. As we enter 2018, we will continue to execute on our objectives and look forward to delivering more in the new year.”

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Alcoa became an independent, publicly traded company Nov. 1, 2016.

Last week, the U.S. International Trade Commission (ITC) voted to continue the AD and CVD investigations into common alloy aluminum sheet from China — a decision met with favor by some and concern by others within domestic industry.

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Unlike most such cases, the Department of Commerce self-initated the investigations, marking the first time it had done so since 1991.

Heidi Brock, president and CEO of the Aluminum Association, lauded the decision to continue the investigations.

“The Aluminum Association and its members are encouraged by today’s unanimous preliminary finding by the U.S. International Trade Commission that imports of common alloy aluminum sheet from China are a cause of injury to the domestic industry and their workers,” Brock said in a release. “U.S. companies that make common alloy aluminum sheet have suffered extensive injury thanks to unfairly traded imports from China for many years. Our members are participating in the trade cases initiated by the Department of Commerce to return fair pricing to the U.S. market, and to allow the U.S. industry to make needed investments to further strengthen its competitiveness.”

Not everyone is happy about the decision, however.

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This morning in metals news, the metals supply situation is complicated, Russian steel producer NLMK‘s output rose 3% last year and copper dropped the most it had in almost six weeks.

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What is the Supply Situation?

According to Reuters, stocks of metals in LME industrial warehouses fell by 40% last year, meaning tighter supply and a subsequent rise in prices — at least, that’s the conventional wisdom.

But when it comes to the global picture, it isn’t that simple. According to Reuters, some smaller exchanges aren’t experiencing such drops in inventory, which balances out the supply picture.

For example, warehouses monitored by the Shanghai Futures Exchange (ShFE) went up, as did CME Group warehouse inventories in the U.S.

As such, according to the report, only lead and zinc really fit the bill vis-a-vis being tagged with the tight supply label.

NLMK Sees Output Rise in 2017

The Russian steel producer said its 2017 production rose 3% last year, according to Reuters.

NLMK’s crude steel output amounted to 17.1 million tons last year.

Copper Posts Biggest Drop Since Early December

Is the rally coming to an end for copper? It’s a little early to make that declaration, but according to Bloomberg the metal posted its biggest drop Tuesday since Dec. 5.

Copper dropped 1.8% on Tuesday to $7,078 per ton, according to the report.

The metal, often dubbed “Dr. Copper” for its ability to serve as an indicator of overall economic health, had a strong December. However, 2018 hasn’t been as kind.

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LME copper closed Dec. 1 at $6,733 and closed Dec. 29 at $7,156.50 (a rise of 6.3%). In the new year, however, the metal has tracked back, hitting $7,022 as of Wednesday morning, according to MetalMiner IndX data.

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This morning in metals news, Rio Tinto made a copper discovery at its Grasberg mine for the first time since 2014, automakers urge Trump not to withdraw from the North American Free Trade Agreement (NAFTA) and copper hits a 3 1/2-week low.

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Rio Makes Copper Find at Grasberg

Rio Tinto made a copper discovery at its Grasberg mine, marking the first discovery of copper at the location since 2014, Bloomberg reported.

The discovery comes as Rio is considering leaving its Indonesian mine operation, according to the report. Rio’s total mined copper output declined by 9% last year, according to the report.

Don’t Pull Out of NAFTA: Automakers

As renegotiation talks focusing on NAFTA continue, automakers once again urged the president not to pull out of the trilateral trade deal.

According to Reuters, automakers urged the president not to terminate the deal and were hopeful a renegotiated deal can be reached among the member nations (the U.S., Canada and Mexico).

Trump has threatened to withdraw from the deal, inked in 1994, as manufacturing and labor group in the U.S. have argued NAFTA has seen jobs leave the country for Mexico. Meanwhile, other groups, like automakers, have indicated a desire to see the deal modernized for the 21st century, as opposed to spiking the deal entirely.

Regardless, pulling out of NAFTA would have a significant impact on a wide range of interconnected supply chains across North America.

The parties involved in the renegotiation hoped to reach a deal by the end of 2017, but that schedule proved to be overly ambitious. Now, negotiators will look to hammer something out during what is an election year in all three countries.

Copper, Nickel Slide

Copper fell to a 3 1/2-week low and nickel dropped by more than 5% on Tuesday, according to Reuters.

After zinc closed out 2017 on a hot streak, it has come back down to earth a bit after not unexpected profit-taking, according to the report.

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Copper, too, also fell as the U.S. dollar steadied (the two are inversely correlated), hitting an index value of 90.61 as of 12:15 p.m. EST Tuesday.

It’s that time — our latest Monthly Metals Index (MMI) report is in, covering the final month of 2017.

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So, before we move onto 2018 for good, let’s take one last look at our newest MMI report and recap some of the highlights:

    • Our January MMI saw seven of 10 sub-indexes move upward, with two holding flat and one dropping (the Construction MMI fell by one point).
    • The biggest winner of the month was the Stainless Steel MMI, which rose 9.2%. Skyrocketing LME nickel prices backed the jump. After hovering around $10,600/metric ton in October, nickel jumped near $13,000/mt last month, and continued to climb in the early days of 2018.
    • The Copper and Aluminum MMIs also went up, by 3.5% and 3.2%, respectively.
    • In the Global Precious MMI, palladium continues to outperform platinum, continuing a run that has bucked historical trends vis-a-vis the two platinum-group metals.
    • The GOES MMI also had a good month, picking up seven points via a 3.8% increase. GOES typically does not follow the price patterns of other forms of steel, but it did this past month.

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You can read about all of the aforementioned — and much more — by downloading the January MMI report below.

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This morning in metals news, two new vehicles made mostly with steel represent a victory for the steel industry, iron ore prices are down and the U.S. International Trade Commission (ITC) voted to continue its investigation into common alloy aluminum sheet from China.

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New Ram Pickup, Chevy Silverado Made with Steel

As the steel industry battles to remain the dominant material in automotive construction, the news of two new models constitutes a win for the industry.

Fiat Chrysler‘s new Ram pickup and General Motors‘ new Chevrolet Silverado truck are made mostly with steel, Reuters reported. The announcements represent a big win for steel, which is seeing increasing competition from aluminum within the automotive industry.

As Reuters reported, in late 2014 Ford launched the all-aluminum body F-150. While the versatile metal offered improved fuel economy, it comes at a premium to steel. The interplay between steel and aluminum vis-a-vis automobile construction is something that will need to continue to be monitored going forward.

Iron Ore Prices Drop

As Chinese rebar steel futures fell, so too did prices of iron ore in the face of flagging demand, Reuters reported.

Iron ore on the Dalian Commodity Exchange dropped 2.3% to 535 yuan per ton, according to the report.

ITC Continues Aluminum Sheet Investigation

The U.S. ITC announced Friday that it voted to continue its investigation of common alloy aluminum sheet from China.

“The United States International Trade Commission (USITC) today determined that there is a reasonable indication that a U.S. industry is materially injured by reason of imports of common alloy aluminum sheet from China that are allegedly subsidized and sold in the United States at less than fair value,” the ITC release covering the announcement states.

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Now, a preliminary countervailing duty determination is due Feb. 1 from the Department of Commerce.

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

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  • This week we wrapped up the latest round of posts for our January Monthly Metals Index (MMI) — check out this week’s posts on the following:
  • Oil and gas exploration is a topic that has both passionate supporters and detractors. President Trump’s recent proposal to open up new areas for drilling, not surprisingly, has both of those, as our Stuart Burns wrote earlier this week.
  • Sticking on the subject of oil, Burns surveyed the factors behind crude oil’s continuing rise in price. Political turmoil is one factor, among others, contributing to the increase.
  • The long wait is over … Secretary of Commerce Wilbur Ross has sent President Trump his Section 232 steel report (the statutory deadline was Jan. 15). Trump now has 90 days to decide what to do. A similar announcement for the Section 232 aluminum probe — which was launched last April, one week after the steel probe — should also be coming soon.