Industry News

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This morning in metals, the London Metal Exchange announced a new partnership that aims to promote “market uptake of a transparent and representative global lithium price,” President Donald Trump backs off imposing a 5% tariff on all imports from Mexico and China’s May copper imports dropped. 

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LME Announces New Partnership

The LME announced its latest steps toward creation of an LME lithium contract.

“Over the past 18 months the London Metal Exchange (LME) has been working closely with the global lithium industry to meet the need for transparent and robust reference prices,” an LME release stated. “Following extensive market engagement, the LME is announcing today that it is partnering with price reporting agency Fastmarkets to promote market uptake of a transparent and representative global lithium price. Continued adoption of reference pricing across the industry will pave the way for launch of a LME lithium futures contract.”

Among other uses, lithium is coveted for its use in electric vehicle batteries.

“In recent years there has been unprecedented price volatility in the lithium market, driven particularly by explosive electric vehicle (EV) battery demand,” said Robin Martin, LME head of market development.The LME has been approached by a number of industry players, including producers, end users and several leading automotive firms, to develop effective lithium price-risk management tools. We are delighted to be announcing the next step in that process today.”

No Mexico Tariffs … For Now

Late Friday, the Trump administration announced it had reached a deal with the Mexican government and, as such, the U.S. would not impose a previously mentioned 5% tariff on all imports from Mexico.

Trump said last month that the U.S. would impose an escalating tariff, beginning at 5%, as of June 10 if the two countries could not reach a deal that addressed the flow of migrants to the U.S.

However, the threat of tariffs still looms.

In a tweet Monday morning, Trump said if the immigration deal does not receive approval by Mexico’s legislature, “tariffs will be reinstated.”

China Copper Imports Down

China’s imports of unwrought copper dropped 10.9% in May from the previous month, Reuters reported.

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Among other metals, China is the world’s top consumer of copper. The country’s imports of copper reached 361,000 tons in May, according to Reuters.

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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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This morning in metals news, the LME copper price continued its tumble this week, U.S. imports from countries like Vietnam have increased and the June 10 Mexico tariff deadline draws near.

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Copper Down for Eighth Straight Week

The copper price is set to fall for the eighth consecutive week this week, Reuters reported.

LME copper fell 1% Friday and was down 1.4% for the week, according to Reuters.

Rising Imports

Amid ongoing trade tensions with China, the U.S. has seen import levels from other countries rise.

Citing Census Bureau data, CNN reported the U.S.’s imports from Vietnam increased 38% over the first four months of this year. Imports during that period from Taiwan (22%), South Korea (17%) and Bangladesh (13%) were also up.

Tariffs on the Horizon

Vice President Mike Pence said the U.S. is still planning to slap tariffs on imports from Mexico next week, Bloomberg reported.

President Donald Trump has threatened to impose an escalating tariff, beginning at 5%, on all imports from Mexico if the two countries can’t reach a deal to stem the flow of migrants into the U.S.

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According to Mexican Foreign Minister Marcelo Ebrard, talks to reach a deal and avoid tariffs continued Friday.

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This morning in metals news, U.S. steel import permit applications dropped last month, the Trump administration’s Section 232 aluminum tariff left its mark on operations at the Port of Oswego and the Trump administration released a new strategy that aims to ensure a reliable supply of critical minerals.

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Steel Import Permit Applications Drop in May

Steel import permit applications fell 10.8% in May compared with April, the American Iron and Steel Institute (AISI) reported.

By country, the largest finished steel import permit applications for offshore countries were: South Korea (296,000 NT, up 8% from April preliminary), Japan (123,000 NT, down 22%), Germany (77,000 NT, down 46%), Taiwan (76,000 NT, up 8%) and Vietnam (60,000 NT, down 24%).

Oswego Impact

Last month, the Trump administration lifted its Section 232 tariffs with respect to imports of steel and aluminum from Canada and Mexico — but the impact of the tariffs was still felt throughout the year since their implementation.

One such community that felt the impact was Oswego, New York, and its port, WRVO Public Media reported. According to the report, aluminum shipments into the port are down 50% this year, resulting in job cuts at the port, according to the director of the Oswego Port Authority.

Critical Minerals Strategy

This week, the Trump administration unveiled a report titled “A Federal Strategy to Ensure a Reliable Supply of Critical Minerals.

“The strategy directs the U.S. Department of the Interior (DOI) to locate domestic supplies of those minerals, ensure access to information necessary for the study and production of minerals, and expedite permitting for minerals projects,” a Department of the Interior release states.

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Last year, the DOI released a list of 35 minerals deemed critical to U.S. economy and security. According to the DOI, the U.S. relies on other counties for more than a dozen minerals, used in cellphones, automobiles, airplanes, ships and computers, the release states.

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This morning in metals news, U.S. steel executives are concerned about the impact of proposed tariffs on Mexican goods, bidders are looking at the liquidated British Steel in parts and Norsk Hydro released its Q1 2019 financial results.

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U.S. Steel Executives Express Concern About Mexico Tariffs Impact

Recently, President Donald Trump threatened to impose a 5% tariff on all goods imported from Mexico; according to Bloomberg, executives of the biggest U.S. steel companies aren’t too keen on the proposed duties, particularly as the United States-Mexico-Canada Agreement (USMCA) still hangs in the balance.

According to the report, executives from AK Steel, Nucor and Steel Dynamics spoke at an industry conference Tuesday, expressing concerns regarding the potential tariffs’ impact on the USMCA talks carrying on among the U.S., Canada and Mexico.

“Our reaction was surprise,” Nucor CEO John Ferriola was quoted by Bloomberg as saying. “We hope it does not impact the USMCA — we think that’s a good thing for the steel industry and manufacturing in general in the U.S. and the economy as a whole.”

Piece by Piece

After the U.K.’s second-largest steelmaker, British Steel, was ordered liquidated last month, the race has been on to save the company from the brink.

With a deadline fast approaching, bidders have been making offers for the firm; however, they’ve been doing so in parts.

According to Reuters, none of the bidders are interested in buying the entirety of British Steel due to the capital expenditures that would be required.

Norsk Hydro Releases Q1 Financials

The first quarter of 2019 was a challenging one for Norsk Hydro, as the firm dealt with a cyber attack and the ongoing ramifications of production curtailment at its Alunorte refinery (where it recently got the green light from Brazilian authorities to resume full production).

“I am pleased that the production embargoes at Alunorte have been lifted, so that we can focus our efforts on safely returning Alunorte, Paragominas and Albras towards normal operations,” President and CEO Hilde Merete Aasheim said in a company release. “Our Brazilian operations are a fundament for Hydro’s overall agenda and our ambition to lift profitability.”

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Hydro reported underlying earnings before financial items and tax of NOK 559 million (USD $64.0 million) in Q1 2019, down from NOK 3,147 million (USD $360.7 million) in Q1 2018, due to lower aluminum prices, higher raw material costs and the production curtailment at Alunorte.

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A new government in India has steel companies and iron miners rushing to it with urgent pleas on iron ore mine auction.

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One appeal is for the government to auction iron ore mining licenses held by private miners when they expire in March 2020.

If that happens, it will come as a relief for India’s steel companies, as they will no longer have to rely on costly imports.

Mining leases of at least 59 iron ore mines with a total capacity of 85 MTY are set to expire March 31, 2020. These have a combined production capacity of around 60 MTY, but none of them has been put up for new auctions.

A few days ago, the Indian Chamber of Commerce (ICC), Associated Chambers of Commerce and Industry of India (Assocham) and the Chattisgarh Sponge Iron Manufacturers’ Association (CSIMA) sent off letters to NITI Aayog, India’s planning commission, and the mines ministry, making a case for mine auctions, Livemint reported.

Experts say production at non-integrated steel companies, which do not have access to captive iron ore resources, will be disturbed if the auctions were delayed any more, affecting even major steel companies like Rashtriya Ispat Nigam Ltd, Essar Steel and JSW Steel.

The letter to NITI Aayog by the ICC said accepting merchant miners’ request to extend their license till 2030 would mean a huge revenue loss by way of auction premium for the exchequer. It takes about two years for operations to restart once regulatory clearances are received.

For India’s iron ore miners, there’s new hope, however, given that international prices are over $100 a ton, the highest in five years, which means a restart in export of lower grades of ore from India.

The Indian province of Odisha has in excess of 100 million tons of inferior grade iron ore accumulated at mine heads, which nobody wants in India. Similar inventory is to be found in the province of Jharkhand. Both provinces account for over 80% of India’s accumulated iron ore stockpile, the Business Standard reported.

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In the recent past, export of iron ore failed to pick up, despite incentives. Miners are hopeful a supply disruption in Brazil and Australia will make global steelmakers look to source more iron ore from India.

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This morning in metals news, European steel sector leaders are asking the E.U. for action in the face of rising imports, the U.S. says China is playing the “blame game” and U.S. Commerce Secretary Wilbur Ross met with Mexico’s Secretary of Economy Graciela Márquez Colín.

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European Steel Sector Looks for Help

Amid challenging times for the European steel sector, steel chiefs there are asking the E.U. for help.

European steel sector leaders sent a letter to the E.U. asking it act, arguing the U.S.’s Section 232 steel tariff has resulted in an influx of diverted steel to the E.U., Reuters reported.

According to the steel sector leaders, E.U. steel imports have doubled since 2013.

Playing the ‘Blame Game’

The U.S. accused China of playing the so-called “blame game” in the two countries’ ongoing trade talks.

Despite auspicious signs, trade talks took a hit last month when President Donald Trump opted to raise tariffs on $200 billion in Chinese goods, after which China retaliated with tariffs on $60 billion in U.S. goods.

“The United States is disappointed that the Chinese have chosen in the ‘White Paper’ issued yesterday and recent public statements to pursue a blame game misrepresenting the nature and history of trade negotiations between the two countries,” the Office of the United States Trade Representative said in a release. “To understand where the parties are and where they can go, it is necessary to understand the history that has led to the current impasse.”

Another Front

Elsewhere, President Donald Trump recently threatened to impose an escalating tariff on all Mexican goods, beginning at 5%.

U.S. Commerce Secretary Wilbur Ross met with Mexico’s Economy Secretary Graciela Márquez Colín to discuss the issue.

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“Today, I met with Mexico’s Minister of Economy, Graciela Marquez, to discuss bilateral trade and United States’ upcoming plan to tariff Mexican goods at 5%,” Ross said in a release. “We also discussed next steps for the U.S.-Mexico-Canada Agreement. I reiterated the President’s message that Mexico needs to do more to help the U.S. address immigration across our shared border.”

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This morning in metals news, Australian Prime Minister Scott Morrison said the country’s aluminum exports to the U.S. are fair, China’s Baowu Steel is acquiring a majority stake in rival Magang and the USTR announced an extension related to duties imposed on Chinese goods.

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Australia Abiding by Export Deal

Australian Prime Minister Scott Morrison said his country is sticking to its deal with the U.S. over aluminum exports, Reuters reported. The assurance comes on the heels of a report by The New York Times stating President Donald Trump considered imposing new tariffs on Australia.

Australia received exemptions from the U.S.’s Section 232 steel and aluminum tariffs imposed last year.

Baowu to Buy Majority Stake in Rival

Chinese steel giant Baowu Steel Group is buying a majority stake in rival steelmaker Magang Group Holding Co Ltd, Reuters reported.

Baowu ranked as the world’s second-largest steelmaker in 2017, according to World Steel Association data cited in the report.

Section 301 Notice

The United States Trade Representative released a notice Friday that it would release a notice on the Federal Register related to an extension for the time Chinese goods have to enter the U.S. before they are subject to a tariff rate increase (from 10% to 25%).

“Covered products that were exported from China to the United States prior to May 10, 2019 will remain subject to an additional 10 percent tariff if they enter into the U.S. before June 15, 2019, the USTR said in the release. “Originally, the deadline to enter the U.S. before the goods would be subject to an additional 25 percent tariff was June 1, 2019.

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“This limited extension will further account for customs enforcement factors and the transit time between China and the United States by sea.”

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Tin is most noted for its use as a coating or as part of a wide array of alloys.

In the Bronze Age, bronze was often formed as an alloy of copper and tin to make, among other things, various tools and weapons.

Fast forward to the modern day — tin cans are probably the first thing one thinks of when they hear the world “tin.” Tin cans are actually fashioned out of steel and coated with tin, which offers corrosion resistance.

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However, a British firm is deploying tin for another, far more cosmic purpose: harvesting energy from our sun.

According to the International Tin Association, the British firm Oxford PV plans to bring to market a tin-using, perovskite-based solar cell by the end of next year. Perovskite is a mineral made up mostly of calcium titanate, contrasting with the silicon used in traditional photovoltaic cells. In previous iterations, lead had been used; now, the hope is tin can be a safer, more efficient element in the photovoltaic cell.

“ITA has been tracking R&D developments in tin-containing perovskite solar technology for some years now and is amongst a set of next-generation renewable energy technologies that will be positive for tin demand,” the ITA said in a release.

Oxford PV was established in 2010, based on research pioneered by Henry Snaith at Oxford University.

“Our perovskite solar cell technology will allow silicon solar cell and module manufacturers to break through their performance barrier,” Oxford PV says on its website. “Significantly improving the performance of silicon photovoltaics, will allow cost reductions, that transform the economics and accelerate the growth of solar energy generation globally.”

Why are perovskite-based solar cells attractive? According to the ITA, they are “cheaper, more efficient and easier to produce than standard solar panels.” However, the cells do carry durability concerns.

Similarly, in 2014 a team of Northwestern University scientists published research in the journal Nature Photonics on lead-free solid-state organic–inorganic halide perovskite solar cells. In the team’s abstract, it wrote that the “reported CH3NH3SnI3–xBrx perovskite solar cells represent a step towards the realization of low-cost, environmentally friendly solid-state solar cells.”

The International Copper Study Group (ICSG) recently reported world copper mine production fell 1.8% through the first two months of the year, per preliminary data.

The global copper market was in surplus by 40,000 tons in the first two months of the year, the ICSG reported.

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Mine Production

Production declines in Chile and Indonesia offset growth in other countries, according to the ICSG’s monthly report.

Chile, the world’s top copper producer, saw its mine production drop 6% as a result of lower copper head grades, according to the ICSG report. No. 2 producer Peru’s production increased, as did production in Australia, China and Mongolia.

Indonesian concentrate production, meanwhile, fell 50% as the transition of two mines to different ore zones led to a temporary output reduction.

Combined output in Zambia and the Democratic Republic of the Congo rose 1.3% through the first two months of the year, compared with a 13% increase in 2018.

Refined Production

Preliminary data shows global refined production was flat through the first two months of the year, with primary production falling 0.6% and secondary production from scrap jumping 0.3%.

China, Australia, Brazil and Poland contributed to refined production growth, but production in Chile fell 15% on account of temporary smelter shutdowns. The report notes India’s production fell 45%, still hampered by the ongoing shutdown of Vedanta’s Tuticorin smelter (which has remained shuttered since May 2018).

Refined Usage

Similarly, apparent refined usage was also flat through the first two months of the year.

China’s apparent usage increased 4% during the two-month period. Elsewhere, demand increased in India but fell in Japan, the E.U. and the U.S.

Copper Prices

The copper price has been on the decline of late, in May posting its largest monthly loss since November 2015, according to Reuters.

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The ICSG noted the average LME cash price for April 2019 was $6,445.10 per ton, down 0.1% from the March average of $6,451.02 per ton.

The low price through the first four months of the year was $5,811 per ton (Jan. 3), while the high came in at $6,572 (March 1). The January-April 2019 average was down 3.9% from the 2018 annual average, hitting $6,270.39 per ton.