Industry News

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This morning in metals news, the U.S.’s steel import market share was 21% last month, ArcelorMittal reached a provisional deal with the trade unions of Italy’s Ilva and the Bureau of Labor Statistics released U.S. employment data for August.

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Steel Import Market Share

The American Iron and Steel Institute (AISI) released its Steel Import Monitoring and Analysis (SIMA) data for August this week, reporting that steel import market share hit 21% for the month.

Market share for the year to date sits at 24%, according to the SIMA report.

ArcelorMittal Reaches Deal with Ilva Unions

As part of its takeover bid of the Italian firm Ilva, ArcelorMittal reached a provisional agreement with Ilva’s trade unions, the Luxembourg-based firm announced.

According to the ArcelorMittal release announcing the provisional agreement, the terms need to be voted on by Ilva employees before being formally ratified.

“The agreement we have reached with Ilva’s unions meets the two major objectives we set out at the start of negotiations: to find an acceptable solution for every employee at Ilva; and to reach an agreement that reflects Ilva’s economic reality and provides a sound base for it to have a sustainable future,” said Geert Van Poelvoorde, CEO of ArcelorMittal Europe Flat Products, in a prepared statement. “I would like to thank the Minister of Economic Development for his support and also the union representatives with whom we engaged during these discussions. They are a very important stakeholder and we will work to maintain a positive and constructive dialogue with them in the future.”

One of the terms of the agreement includes an ArcelorMittal commitment “to initially hire 10,700 workers based on their existing contractual terms of employment.”

U.S. Unemployment Flat; Jobs Added in Mining

According to the latest Bureau of Labor Statistics employment report, U.S. unemployment hit 3.9% in August, unchanged from the previous month.

Nonfarm payroll employment increased by 201,000 last month. Mining was among the sectors seeing job gains last month, having added 6,000 jobs in August.

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“Since a recent trough in October 2016, the industry has added 104,000 jobs, almost entirely in support activities for mining,” the report states.

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This morning in metals news, customers reportedly are set to avoid Rusal during a crucial upcoming industry gathering in Berlin, Tata Steel announces a new sustainable steelmaking procedure and NAFTA negotiations pick up again today after a long Wednesday night of talks.

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Cold Shoulder

According to a Reuters report, customers plan to avoid Rusal during an upcoming industry gathering in Berlin, during which firms lock up 2019 aluminum supply deals.

The Russian aluminum giant was hit with U.S. sanctions in April, which sent the aluminum market into shock and yielded skyrocketing prices.

Prices came back down when the U.S. Treasury Department extended the deadline for firms to unwind business with Rusal by Oct. 23.

However, according to the Reuters report, some customers aren’t optimistic that that sanctions will in fact be lifted.

Sustainable Steelmaking

Tata Steel on Thursday announced a new steelmaking process that it claims will cut carbon dioxide emissions stemming from the steelmaking process by half, the Economic Times reported.

The firm conducted testing at its Ijmuiden site in the Netherlands, according to the report.

NAFTA Talks Resume

NAFTA renegotiation efforts are set to continue today after what was reportedly a long night of talks on Wednesday.

Canadian Prime Minister Justin Trudeau recently commented that “No NAFTA is better than a bad NAFTA deal.”

Meanwhile, on Saturday President Trump tweeted: “There is no political necessity to keep Canada in the new NAFTA deal. If we don’t make a fair deal for the U.S. after decades of abuse, Canada will be out. Congress should not interfere w/ these negotiations or I will simply terminate NAFTA entirely & we will be far better off…”

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The U.S. and Mexico have already reached an agreement in principle on certain provisions of NAFTA; following that, the U.S. and Canada picked up talks last week in an effort to bring the latter into the fold.

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Rare earth exporters in India have lodged protests after the government snatched their rights to send these precious elements abroad.

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Rare-earth metals are a group of 17 elements, which are found in geological deposits. Some of the most abundant metals in the world are neodymium, cerium, and lanthanum.

All rare earths are classified into two groups: light rare earths (LREs), and heavy rare earths (HREs).

Just 20 years earlier, the Government of India (GoI) allowed the private sector into beach sand mining. Now, it issued a notification, wherein the right to export these rare-earth metals have been taken away.

Instead, the GoI has introduced a canalization system.

The primary aim of canalization of exports through Indian Rare Earths (IRE), according to the Financial Express, is to curtail direct private sector export of beach sand minerals and derivatives like ilmenite, rutile and zircon.

Canalizing means putting quantitative restrictions on exports.

But the move has obviously not gone down well with rare earths miners. Miners have said these checks would curtail beach sand mining activities and deprive India of a developing sector.

According to a new research report by Global Market Insights, Inc, the rare earths market size will exceed U.S. $20 billion by 2024. It’s well known that the majority of the global rare earth production capacity is in China. However, China has not shown much inclination of sharing those resources with other nations.

Thus, the focus is on countries like India and Japan — specifically India, which has a sizable reserve.

Driving this sector is the demand for magnets in automobiles, and requirements in defense and energy generation. Electric cars, for example, rely on some of rare-earth metals.

Beach sand minerals and their derivatives find diverse applications in paints and other decorative materials, papers and plastics, and high-tech applications. At present, much of India’s share of domestic production, as well as exports, are done by private sector firms.

The GoI notification said export of beach sand minerals had been brought under the STE and shall be canalized through IRE. Beach sand minerals, permitted anywhere in the export policy, will now be regulated in terms of the new policy. One of the other sources of angst for private firms in the business is that they have already made huge capital investments by way of technology and production facilities.

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According to the Financial Express report, beach sand minerals mining activity commenced in India in 1908. In addition, until 1998, other minerals were restricted only to public sector companies (except for garnet), but just after that the GoI embarked on a path of liberalization that allowed participation by the private sector.

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This morning in metals news, the U.S. steel industry posted its highest weekly capacity utilization ratio since 2014, U.S. Steel workers hope to see a windfall from rising steel prices and Canada is holding firm in NAFTA talks.

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Steel Capacity Utilization Rises

The U.S.’s steel capacity utilization rate for the week ending Sept. 1 hit its highest level since 2014, according to S&P Global Platts.

According to the American Iron and Steel Institute (AISI), the rate hit 79.8% for the week. Production for the week reached 1.87 million net tons.

U.S. Steel Workers Want Trade War Benefits

Workers at U.S. Steel, whose contract ran out Sept. 1, remain on the job — but they’re looking for the benefits from a trade war that has yielded rising steel prices, Bloomberg reported.

According to a statement from United Steelworks (USW), the union has not received a pay increase in three years.

NAFTA Talks Continue

Talks between the U.S. and Canada continued from last week into this week on the heels of an agreement in principle reached between the U.S. and Mexico.

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However, Canada is holding firm and indicating it does not plan to agree to just any deal to modernize the 24-year-old trilateral trade pact, according to a government source cited by Reuters.

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This morning in metals news, Argentina sets exports tariffs, LME copper drops and China’s biggest aluminum-producing city is getting set to roll out high-end aluminum projects.

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Argentina Slaps Exports with Tariffs

Argentina added export tariffs to all products, including steel, according to S&P Global Platts.

According to the report, the country’s steel exports to the U.S. in the year to date are down 11.9%.

Copper Falls

LME copper reached a nearly two-week low Tuesday, Reuters reported.

However, the metal stabilized, ultimately trading flat on Tuesday, according to the report, while SHFE copper fell 0.4%.

High-End Aluminum

The Chinese city of Binzhou, home to aluminum major China Hongqiao Group, is planning projects to encourage growth in high-end aluminum production, according to a Reuters report citing a local government document.

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One of the projects includes an aluminum alloy plant of 10,000 tons per year, according to the report.

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Just last year, the U.S. Department of Commerce kicked off an investigation of imports of aluminum foil from China; in February, it issued a final affirmative determination in its anti-dumping and countervailing duty cases.

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Last week, Mexico announced it was going in a similar direction.

The Mexican government launched an anti-dumping investigation of imports of aluminum foil from China. Mexican firm Almexa Aluminio was the petitioner in the case, according to the government release.

The products referred to in the company’s petition are “aluminum foil coils for domestic and/or industrial use with a thickness equal to or less than 0.080 millimeters (mm), without support, simply laminated, with an external diameter equal to or greater than 100 mm and weighing more than 5 kg,” according to the release.

The Aluminum Association, a U.S. industry group, expressed support for the Mexican government’s decision.

“The Aluminum Association is pleased by the Government of Mexico’s decision to launch an antidumping investigation on imports of certain Chinese aluminum foil,” said Heidi Brock, president and CEO of the Aluminum Association. “The North American aluminum market is highly integrated, and it is vital the region work together to combat unfair trade practices and enforce rules-based trade. The U.S. aluminum industry has already seen real results from targeted and durable trade enforcement actions, and we are glad to see trading partners like Mexico demonstrate their commitment to rigorous and timely enforcement of global trade rules.”

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Per the Mexican government release, “non-market economy conditions prevail in China” for some several reasons, including:

  • the artificial reduction of prices
  • the role of “industrial associations as tools of the state”
  • and the “control and state direction of foreign direct investment abroad and the direction and control of the State in the entry of investment and property”

In a world of increasing trade tensions, sometimes involved parties just want to talk.

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Such was the case last week, as China initiated a World Trade Organization (WTO) dispute complaint seeking consultations with the U.S. over the $16 billion in tariffs that went into effect Aug. 23.

The U.S. announced an initial $50 billion in tariffs earlier this year, which went into effect in two tranches. First, $34 billion in tariffs on imports from China began July 6. Following a review period, the remaining $16 billion went into effect last month.

According to China’s request for consultations, the U.S. measures — which were pursuant to Section 301 of the Trade Act of 1974 — are inconsistent with some provisions of the WTO’s General Agreement on Tariffs and Trade (GATT) 1994.

The measures go against Article I.1, China argues, because they “fail to extend immediately and unconditionally to the products originating in China an ‘advantage, favour, privilege or immunity’ granted by the United States ‘[w]ith respect to customs duties and charges of any kind imposed on or in connection with’ the importation of products originating in the territories of other Members.”

China’s request was circulated to WTO members Aug. 27.

In response to both U.S. tariff tranches, China has responded in kind with a total of $50 billion in tariffs on U.S. goods. That included a retaliatory $16 billion in tariffs, a 25% rate on 333 U.S. products that included motorcycles and passenger cars.

As for the WTO itself, it is an organization that has come in for criticism on numerous occasions from President Donald Trump. In March, during the announcement kickstarting the process that produced the aforementioned tariffs on China, Trump said the WTO has been very “unfair” to the U.S.

Meanwhile, in an interview with Bloomberg News last week, Trump threatened to pull the U.S. out of the global trading body and called the decision to form it “the single worst trade deal ever made,” harkening to his comments throughout the past year on the 24-year-old North American Free Trade Agreement (NAFTA).

“If they don’t shape up, I would withdraw from the WTO,” Trump said.

Bluster or not, a U.S. withdrawal would have a significant impact on the trading body.

Similarly, according to a number of media reports, the president last week indicated he wanted to move forward with the previously announced additional $200 billion in tariffs on Chinese goods.

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With respect to what has already gone into effect, $50 billion is positively minuscule in comparison. Like the WTO threat, it remains to be seen if the U.S. will be riding this particular $200 billion tariff train.

The proposed list of products that could be slapped with tariffs as part of the $200 billion grouping can be found here.

To our U.S. readers, we here at MetalMiner wish everyone a happy and safe Labor Day weekend.

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The next couple of days will be busy ones here at MetalMiner. Keep an eye out for the release of our usual Monthly Metals Outlook (MMO) report. Then, also keep an eye out for our big annual report, which offers a more expansive view of the various metals categories tracked in our MMO.

On top of all that, also keep an eye out for our usual Monthly Metals Index (MMI) reports, which will get rolling this week.

Until then, enjoy the Labor Day weekend. With the official end of summer drawing near, let’s take a look back at the most popular posts of the summer season (for the purposes of this, that’s June-August):

  1. Raw Steels MMI: Steel Prices Sit at More Than Seven-Year High

  2. Raw Steels MMI: Domestic Steel Price Momentum Continues to Grow

  3. Stainless Steel MMI: Stainless Surcharges, LME Nickel Prices Rise

  4. Aluminum MMI: LME Aluminum Drops, Midwest Premium at Four-Year High

  5. India’s Coal Shortage is U.S. Miners’ Gain

  6. AI Firm Brings Expertise Into the World of Metal Manufacturing

  7. Dropping Zinc Prices Get a Boost From Chinese Smelter Cuts

  8. Aluminum MMI: LME Aluminum Prices Lead the Way

  9. Stainless Steel MMI: LME Nickel Prices Fall While Stainless Surcharges Rise

  10. Copper MMI: LME Copper Prices Continue Downtrend

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

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  • MetalMiner’s Stuart Burns took a look at Chinese domestic consumption and its impact on commodities.
  • On Monday we delved into recent trends in the world of aluminum, from prices to company investments.
  • How big of an impact are U.S. tariffs having on Turkey? In short, a big one, given the prominent place its steel sector has in its overall economy.
  • The U.S. and Mexico announced an agreement in principle on certain NAFTA provisions, as talks awaited between the U.S. and Canada with respect to the 24-year-old trilateral trade deal.
  • You’ve probably heard President Trump’s call for a s0-called “Space Force,” touted as a sixth branch of the armed forces. Burns looked into that and what the call for a Space Force will, in all likelihood, turn out to be (if anything).
  • Not surprisingly, U.S. imports of steel are down through the first seven months of the year.
  • The Department of Commerce made an affirmative determination in a countervailing duty investigation of imports of steel wheels from China. The case will now move on to the U.S. International Trade Commission.
  • Global crude steel production was up 5.8% year over year in July, according to a World Steel Association report.
  • Sohrab Darabshaw touched on Vedanta and its plans to invest billions of dollars, namely in Indian oil and energy businesses.

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This morning in metals news, some steel stocks fell on the heels of President Trump’s proclamation on targeted tariff relief for quota countries, China looks to speak with its domestic aluminum foil makers as Mexico recently launched an anti-dumping probe and European Commission President Jean-Claude Juncker responds on the subject of automotive tariffs.

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Tough Thursday

U.S. steel stocks struggled yesterday on the heels of Trump’s proclamation affording “targeted relief” to three countries currently with steel quotas.

Companies in South Korea, Argentina and Brazil can apply for steel tariff exclusion requests, per the proclamation.

According to Markets Insider, U.S. Steel dropped 6%, AK Steel fell 4% and Steel Dynamics dropped 2%.

Beijing to Meet with Foil Makers

On the heels of Mexico’s announcement that it had launched an anti-dumping probe of aluminum foil imports from China, the Chinese government plans to meet with foil producers early next week, according to Reuters.

Back and Forth

The U.S. and E.U. remain at odds over automotive tariffs; the disparity in automotive tariff rates is a subject Trump has harped upon on numerous occasions.

Per a CNBC report, European Commission President Jean-Claude Juncker said the 28-member bloc would increase its automotive tariffs if Trump reneges on a previous reached agreement to not increase auto tariffs.

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MetalMiner’s Take: Not for the first time there appears to be contrarian positions, even within the European Commission.

Hours after European Trade Commissioner Cecilia Malmstrom offered to cut auto tariffs to zero if the US would do the same (see our post earlier this morning), cantankerous European Commission President Jean-Claude Juncker was issuing threats to reciprocate with higher auto tariffs if the U.S. went ahead with threats made last month to raise tariffs on E.U. cars coming into the U.S.

In practice, neither side should panic; the threat of tariffs on E.U. cars is a powerful bargaining tool the U.S. appears willing to use. But in reality a zero or tariff-free deal would be a major achievement for President Trump and could lay the groundwork for similar bilateral deals with Europe for other industries.