Industry News

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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 headlines here on MetalMiner:

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This morning in metals, we look at a few key stories circulating in the metals news mill that buyers should have an eye on.

EU ETS Reform to Increase Aluminium Smelting Costs

According to CRU Group (paywall), the free carbon permit allowances for EU aluminum smelters that have always been in place are about to be reduced.

And that amounts to a cost hike.

Due to the reforms of the EU Emissions Trading Scheme (ETS) for the years 2021-2030, we can expect higher carbon prices and rising aluminum smelting costs. Buyers take note: this “will raise smelting costs for the average smelter by $10-$25/ton of aluminum, depending on the final EU policy decision,” according to CRU. “The increasing permit price will also drive indirect carbon costs higher, but the effect varies greatly from smelter to smelter,” according to the firm.

U.S. Aluminum Scrap Exporters Screwed By China?

The Wall Street Journal reports that “prices for mixed aluminum scrap dropped by about 15% over the past month, crumbling profit margins for processors and brokers that sell the material to China,” according today’s WSJ supply chain and and logistics newsletter.

“Analysts say Chinese companies may end up buying more scrap aluminum from cheaper sources in Europe. In the U.S., some worry that trash collectors may simply toss recyclables in landfills if they can’t find other buyers,” writes Jennifer Smith. Check the full story out here (paywall).

Tariffs? What Tariffs?

Meanwhile, “China’s aluminum exports hit their highest in nine months in March as strong international prices led the world’s biggest producer to sell more abroad, despite a growing trade spat with the United States,” reports Reuters.

Unwrought aluminum and aluminum product exports increased 10.2% from a year ago to 452,000 metric tons last month, according to the news service, quoting General Administration of Customs statistics.

Analysts and traders downplayed the impact of Trump’s recent import tariff since it only took effect from March 23, while the U.S.-Rusal dust-up regarding sanctions — and subsequent disruption of trade flows — could mean China’s exports have further to rise in coming months, according to Reuters.

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This morning in metals news, big firms Thyssenkrupp and Tata Steel are delaying the signing of a previously agreed to joint venture for their European operations, Chinese steel is retracing and  LME zinc has hit a four-month low.

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Thyssenkrupp, Tata Delay Inking Deal

A joint-venture deal between Thyssenkrupp and Tata Steel is being delayed due to ongoing talks between the latter firm and workers in Britain and the Netherlands, Reuters reported.

The German and Indian firms agreed in principle last fall to a deal that would combine their European steel operations.

Chinese Steel Loses Ground

Profits were up significantly for many Chinese steelmakers in 2017, but that momentum could be running out of steam soon, the Nikkei Asian Review reported.

According to the report, falling prices and the U.S.’s metals tariffs could eat into Chinese steelmakers’ earnings. According to the Review’s report, shares of five big Chinese steelmakers (including China’s largest, Baoshan Iron and Steel) have dipped between 12% and 17% since the end of February.

Zinc Falls to Four-Month Low

Zinc has hit a four-month low, partly on the basis of slow Chinese demand pick-up, Reuters reported.

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LME zinc dropped 2.7% Thursday, its lowest since Dec. 12.

The U.S. Department of Commerce on Tuesday announced it had issued a final affirmative determination in its anti-dumping investigation of imports of cold-drawn mechanical tubing from China, Germany, India, Italy, Korea and Switzerland.

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“Today’s decision allows U.S. producers of cold-drawn mechanical tubing to receive relief from the market-distorting effects of foreign producers dumping into the domestic market,” Secretary of Commerce Wilbur Ross said in a prepared statement. “We will continue to take action on behalf of U.S. industry to defend American businesses, workers, and communities adversely impacted by unfair imports.”

The DOC determined the following dumping margins (value of 2016 imports of the product from each country is included in parentheses):

  • China: 44.92 to 186.89% ($29.4 million)
  • Germany: 3.11 to 209.06% ($38.8 million)
  • India: 8.26 to 33.80% ($25.0 million)
  • Italy: 47.87 to 68.95% ($11.9 million)
  • Korea: 30.67 to 48.00% ($21.3 million)
  • Switzerland: 12.05 to 30.48% ($26.2 million)

The domestic petitioners in the case were: ArcelorMittal Tubular Products (Shelby, Ohio), Michigan Seamless Tube, LLC (South Lyon, Michigan), PTC Alliance Corp. (Wexford, Pennsylvania), Webco Industries, Inc. (Sand Springs, Oklahoma), and Zekelman Industries, Inc. (Farrell, Pennsylvania).

The case now moves to the U.S. International Trade Commission, which will rule on or before May 24. If the commission rules in the affirmative, anti-dumping orders will be issued.

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A full list of foreign respondents in the case is included below.

Source: U.S. Department of Commerce

This morning in metals news, Russian aluminum giant Rusal saw its shares pulled from global indexes and its metal disallowed from the London Metal Exchange and CME Group, one analyst says Russian aluminum will find its way to market in some way and the Chinese iron ore price dropped Wednesday.

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Rusal Dropped from Indexes

On the heels of U.S. sanctions, Russian aluminum giant Rusal will be removed from global equity and debt indexes, Reuters reported.

In addition, its metal will be disallowed from the LME and CME Group.

Finding a Way

Despite sanctions, Russian metal exports — for example, from companies like the aforementioned Rusal — will find a way to market, according to Paul Gait, an analyst at Sanford C. Bernstein, as reported by Bloomberg.

Sanctions on Russian companies will lead to a reshaping of trade flow. Gait argued that short term, the metal supplies will be impacted, but that it is unlikely the Russian supply will remain idled for long.

Chinese Iron Ore Drops

Concerns about falling steel margins contributed to a drop in the price of Chinese iron ore, Reuters reported.

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On the Dalian Commodity Exchange, the most-traded ore fell 0.7% to 447.5 yuan per ton, down from a one-week high of 461 yuan per ton reached during the day, and down from the day’s opening price of 452.5 yuan per ton.

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This morning in metals news, China filed a complaint at the World Trade Organization (WTO) over the U.S. steel and aluminum tariffs, the president of the China Baowu Steel Group says the tariffs would have a limited impact on Chinese exports and LME aluminum prices jumped more than 7% after the U.S. sanctions on Russian individuals and businesses.

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China Looks to WTO to Combat U.S.’s Section 232 Tariffs

China has filed a trade complaint at the WTO over the U.S.’s Section 232 steel and aluminum tariffs.

The complaint includes a Chinese request for 60 days of consultations with the U.S. over the tariffs.

Steel Group President Downplays Effect of Tariff on Chinese Exports

China Baowu Steel Group President Chen Derong said Tuesday that the U.S.’s tariff on steel would have limited effect on Chinese exports, Reuters reported.

Aluminum Prices Get a Boost

Aluminum prices rose on the heels of the recently announced U.S. sanctions of Russian oligarchs and business, MarketWatch reported.

Russian aluminum giant Rusal was among the targets of the sanctions.

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LME aluminum jumped from $1,966/mt on Friday to $2,112/mt on Monday, a 7.4% increase.

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This morning in metals news, Rusal saw its stock tumble after being hit with sanctions by the U.S., President Trump criticizes China’s auto tariffs and the U.S. Department of Commerce issued a final affirmative determination in its countervailing duty probe of stainless steel flanges from China.

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Russian Aluminum Firm Hit With Sanctions

Rusal, the world’s second-largest aluminum producer, saw its stock drop more than 40% after it was included on a U.S. sanctions list targeting Russian companies and their owners, Reuters reported.

According to the report, the sanctions list targeted seven Russian oligarch, including Oleg Deripaska, the former president of Rusal.

Trump Hits Back at China Tariffs

As the specter of a trade war grows, so too does the war of words.

President Trump castigated China’s tariffs on automobiles, calling the gap between U.S. auto tariffs and Chinese auto tariffs an example of “stupid trade” in a tweet Monday morning.

The president tweeted: “When a car is sent to the United States from China, there is a Tariff to be paid of 2 1/2%. When a car is sent to China from the United States, there is a Tariff to be paid of 25%. Does that sound like free or fair trade. No, it sounds like STUPID TRADE – going on for years!”

DOC Issues Final Affirmative Determination on Stainless Steel Flanges

In other trade news, the U.S. Department of Commerce issued a final affirmative determination in its countervailing duty investigation of stainless steel flanges from China.

The DOC concluded the products received countervailable subsidies of 174.73%.

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The case now moves to the U.S. International Trade Commission, which is scheduled to make a final determination on or around May 21. If it rules in the affirmative, a countervailing duty order will be issued.

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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 stories here on MetalMiner:

Need buying strategies for steel? Try two free months of MetalMiner’s Outlook

  • Joseph Kabila, president of the Democratic Republic of Congo, is looking to rip up a 2002 mining charter in order to secure a larger piece of the revenue from the country’s vast natural resources.
  • Copper prices have been trending down since a December surge (when the LME copper price reached $7,215/mt).
  • There’s a battle going on between two rival manufacturers of the famous London black cab.
  • Hong Kong’s housing market is overstretched, MetalMiner’s Stuart Burns writes.
  • In case you missed it, it’s Monthly Metals Index (MMI) Week! We kicked our off monthly round of subindex reports this week, which are available at the following links: Construction, Rare Earths, Renewables, and Automotive. Look for the remaining six MMI reports next week.
  • India is among the list of countries still lobbying for exemptions from the U.S.’s Section 232 tariffs on steel and aluminum imports.

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This morning in metals news, the U.S.-China trade conflict escalated further on Thursday, ABB’s chief executive hopes some relief might be offered by the U.S. vis-a-vis Chinese steel import tariffs and Japan’s second-quarter steel outlook reflect a year-over-year increase in production but includes uncertainty about the ultimate impact of the U.S.’s Section 232 tariffs.

Trump Raises the Stakes

The U.S. and China have traded announcements of tariffs intended to be placed on the other country’s goods, with the figures rising to $50 billion.

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On Thursday, that number grew significantly when President Trump requested his trade officials to identify $100 billion more in possible tariffs on Chinese goods.

Swiss Group ABB Hopes U.S. Pulls Back on Chinese Steel Tariffs

Reuters reported the chief executive of Swiss engineering group ABB is hoping that the U.S. makes some concessions with respect to its Section 232 steel tariffs, particularly with respect to China.

According to the report, China and the U.S. are ABB’s two biggest markets.

Japan’s 2Q Steel Output Projected to Increase Nearly 1%

According to a report from Japan’s Ministry of Economy, Trade and Industry (METI), Japan’s steel output in the second quarter is expected to increase 0.9% year over year.

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While several U.S. allies have thus far received exemptions from the Section 232 tariffs, Japan has not been been among those. President Trump and Japanese Prime Minister Shinzo Abe are scheduled to meet this month, during which Abe is expected to make the case for exemption from the tariffs.

Unlike China, its neighbor India is not right now thinking on the lines of imposing retaliatory tariffs on U.S. products.

However, the Indian government has requested the U.S. to exempt it from the hefty tariffs on steel and aluminum imports.

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This was revealed by a minister in the Lower House of the Indian Parliament in a written reply to a question. Following the announcement by U.S. President Donald Trump in late March of increasing the tariffs on imports, the Indian government had also conducted a study on the impact on Indian goods and steel industry.

MetalMiner reported that the move by the U.S. government may not impact India the way it will China.

India exports around U.S. $1.5 billion of these products to America.

India said it was willing to sit with the U.S. and solve the issue bilaterally.

The U.S. president signed two proclamations that levied a 25% tariff on steel and 10% tariff on aluminum imported from all countries, except neighboring Canada and Mexico (since then, others have gained exemptions).

A news report in the business newspaper Mint has said India will seek to convince the U.S. to exempt it from these duty hikes at a bilateral meeting during a visit by Assistant U.S. Trade Representative (USTR) Mark Limscott to New Delhi next week.

The meeting scheduled for April 10, in preparation of a trade policy forum dialogue for the year’s end, will be the first opportunity for the Indian side to put across its case for an exemption.

The news report quoted an unnamed commerce ministry official as saying the U.S.’s decision to impose tariffs on the grounds of national security, and then grant exemptions to allies, was against World Trade Organization (WTO) rules.

India does not want to “retaliate” like China against the U.S., as the latter was considered to be a “valuable strategic partner.”

China recently hiked tariffs by up to 25% on 128 US products, from frozen pork and wine to certain fruits and nuts, escalating a trade dispute between the two nations.

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India is the world’s 14th-largest steel exporter, and sold iron and steel worth $320 million and aluminum worth $350 million to the U.S. in 2016-17. The U.S. ranked seventh as a destination for Indian steel, accounting for 5% of exports.