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It was yet another busy year in the world of steel news.

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The main pillar of that news was the Trump administration’s imposition of a 25% tariff on imported steel.

That saga, of course, is ongoing.

A select few countries have won exemptions of some form from the tariffs (whether with or without a quota) — those being South Korea, Australia, Argentina and Brazil.

However, trading partners like Canada, Mexico and the European Union continue to push for exemptions of their own (after their temporary exemptions expired mid-year). Those efforts continue, even after the U.S., Mexico and Canada recently signed the United States-Mexico-Canada Agreement (USMCA), the successor to NAFTA, during the Group of 20 summit in Argentina.

As you’ll note, many of these stories also appeared in the recently published top 10 most-viewed posts of the year.

Given the events that transpired in 2018, there will be plenty more steel coverage to come in 2019.

  1. Steel Price Trends: An Upcoming Top?

  2. Section 232 Steel Probe Report Moves on to President Trump

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

  4. Department of Commerce Releases Section 232 Aluminum, Steel Recommendations

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

  6. Steel Prices Pick Up Momentum to Kick Off 2018

  7. Raw Steels MMI: Steel Prices Gain Momentum in February

  8. Raw Steels MMI: Domestic Steel Price Momentum Picks Up

  9. Stainless Steel MMI: LME Nickel Price, Stainless Surcharges Both Rise

  10. Stainless Steel MMI: LME Nickel Prices Fall But Stainless Steel Surcharges Rise

MetalMiner’s Annual Outlook provides 2019 buying strategies for carbon steel

The year is coming to a close, which means it’s a perfect time to look back before saying goodbye to 2018.

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So, before we turn the calendar over to 2019, let’s take a look back at the top 10 most-viewed stories here on MetalMiner.

Unsurprisingly, anything having to do with steel prices and the Trump administration’s rollout of its Section 232 tariffs on steel and aluminum were of great interest to readers this year.

With that, enjoy these stories from the year that was:

  1. Steel Price Trends: An Upcoming Top?

  2. Section 232 Steel Probe Report Moves on to President Trump

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

  4. How Has the Rest of the World Reacted to Trump’s Section 232 Announcement?

  5. Global Precious MMI: What’s in the Forecast for Platinum, Palladium Prices?

  6. Copper Had a Big 2017, but What Does 2018 Hold?

  7. Department of Commerce Releases Section 232 Aluminum, Steel Recommendations

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

  9. Global Precious MMI: Will Drop in Platinum, Palladium Prices Continue?

  10. How Will Trump’s Proposed Tariffs Impact India?

MetalMiner’s Annual Outlook provides 2019 buying strategies for carbon steel

Well, that was something and nothing, wasn’t it?

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The non-event of the month was the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) announcement this week of its intention to end sanctions on En+ Group plc, UC Rusal plc, and JSC EuroSibEnergo, all vehicles associated with Russian oligarch Oleg Deripaska.

Deripaska remains on the sanctions list. However, following his nominal separation from the firms, OFAC decided to end sanctions.

Deripaska is reported to have put plans in place to reduce his shareholding in holding company En+, which is currently 70% to fall to 44.95%, while a Russian bank will take title to a portion of Deripaska’s shares, according to Aluminium Insider.

The article states Deripaska will also be required under the agreement to hand over shares in En+ to charitable foundations and assign voting rights above a 35% threshold to a voting trust. Other shareholders deemed to have a familial or professional relationship will be compelled to do the same.

Once the entire plan has been executed, En+ will retain ownership of 56.88% of Rusal, with Deripaska’s stake reduced to 0.01%.

That’s good news, aluminum buyers may retort, and yes, it is in terms of finally settling a source of some disquiet that has been underlying the market since May.

But the fact that the aluminum price barely moved underlines the reality that the market had long expected this outcome — and barely reacted, accordingly.

What happens next year remains to be seen.

The whole metals complex has been at best trading sideways during the second half this year, buoyed by decent demand but depressed by worries about global growth and trade wars.

The lifting of sanctions frees up some 200,000 tons of Rusal primary metal sitting on the LME for consumption, and potentially 10 times as much sitting in off-warrant or off-market stock and finance trade storage.

The LME metal is unlikely to go anywhere fast. Currently, the LME supports rollover of maturing stock and finance trade contracts with two-year forwards at a sufficient premium to one-month forward to facilitate extension.

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As such, the market is not going to be flooded with Rusal metal that would cause a further weakening of prices. That clearly is the market’s assessment, too, otherwise prices would have fallen significantly after the announcement.

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

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Despite posting a year over year production decline through the first nine months of the year, Indonesia’s state-run tin producer PT Timah announced its third-quarter production jumped 27% on a quarter-over-quarter basis, according to a report by the International Tin Association (ITA).

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PT Timah’s tin production hit 8,898 tons in the third quarter, according to the ITA. However, production through the end of September is down 7% year over year.

However, the third quarter built on a strong second quarter, the ITA report notes, as production in Q3 rose 8% year-over-year. According to the report, “the company attributed the stronger output to investment into various tin mining technologies, both onshore and offshore.” Two projects are set for completion in 2020, according to the report, those being an Ausmelt tin smelter and a tin fuming plant.

In addition, the tin content of PT Timah’s tin ore and slag inventories is up 46% in the year to date and 5% from Q2, according to the report. Refined tin stocks rose 14% year-over-year to 4,546 tons, marking a quarter-over-quarter increase of 40%.

The tin producer has seen production growth after a slower start to the year.

“Weak production in the first half of 2018 can be primarily attributed to export license and quota issues as well as seasonal low production during the wet season,” the ITA report states. “However, there were no such issues in Q3 translating to a strong increase in tin production.”

LME tin prices hit $19,725 per ton on Tuesday, continuing a recovery after a 6.1% drop to close November, when the price fell from $16,595 per ton Nov. 20 to $18,400 per ton Nov. 28.

2018 LME tin prices. Source: LME

The ITA previously reported the global tin market in 2019 will likely switch to a 500-ton surplus from a 7,500-ton deficit in 2018, driven by weaker Chinese demand.

As we noted in our most recent Monthly Metal Buying Outlook, tin demand could contract to 357,000 tons in 2019 from this year’s 363,000 tons, while tin production will likely increase to 357,500 tons from the current 355,000 tons.

In addition, per Indonesian trade ministry data, refined tin exports dropped 42% in October compared to September’s data.

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Compared to October 2017, Indonesian tin exports fell by 33% this year. Exports fell due to restrictions on Indonesia’s only tin-trading bourse. The Indonesia Commodity and Derivatives Exchange (ICDX) suspended trading of tin ingots and tin ore trading coming from PT Surveyor Indonesia in mid-October. PT Surveyor verified around 70% of the tin passing through the bourse from January to October.

After surging more than 50% in the last four months, palladium — that previously little-discussed Platinum Group Metal (PGM) — reached $1,255.12/ounce, surpassing gold for the first time in 16 years last week, according to The New York Times.

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Driven by both investor and trade interest, palladium appears to be responding to strong demand from the auto industry (from which 80% of its consumption comes).

A swing to petrol engines has boosted palladium demand, in preference to its sister metal, platinum, which is used more in diesel engines. The metal is also used in alloys for products like surgical instruments, dental alloys and certain electronic applications, The New York Times notes, but it is a combination of catalyst demand and constrained supply that has caused shortages, leading some dealers to run out of metal.

According to the report, citing consulting firm Metals Focus, demand for the metal for catalytic applications will reach a record high of 8.5 million ounces this year. Tighter emissions legislation and the switch to petrol cars is driving surging demand, such that consumption is expected to outstrip supply by 1.2 million ounces this year, with the market remaining in deficit next year.

Miners have found it difficult to keep up.

Mines in South Africa, in particular, have faced worker disruption and are said to be struggling to cover costs, as PGM prices generally remain depressed but mine inflation challenges profitability and deters investment.

The world’s largest producer is Norilsk Nickel in Russia. Buyers were heartened by the firm’s announcement last week that it plans to invest $12 billion in mine expansion over the next five years, according to The NewYork Times report. Supply may come onto the market just as the long anticipated but equally delayed arrival of electric vehicles finally begins to become a reality.

But for now, the metal seems a good bet for 2019, providing vehicle sales do not falter. Investors have driven Palladium ETFs up 12.3% this year, even as gold has fallen 6.4%.

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The big money has been made, but palladium’s fundamentals remain better than gold’s — providing global growth and vehicle sales hold up in 2019.

The Raw Steels Monthly Metals Index (MMI) fell again this month, dropping to 83 points. The Raw Steels MMI held at 89 points since August for four consecutive months, but started decreasing in November.

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The recent slowdown in domestic steel price momentum led to the decline. Domestic steel prices recently decreased sharply on the back of slower demand and softer Chinese prices.

Domestic steel prices have showed slowing momentum since June 2018. Domestic steel prices increased sharply at the beginning of the year, driven by a bullish market in commodities and industrial metals and Section 232 tariffs. During most of 2018, domestic steel prices have remained at seven-year highs.

Source: MetalMiner data from MetalMiner IndX(™)

All forms of steel decreased in November except plate, which increased (driven by tight supply). Domestic plate has longer lead times than other forms of steel.

Hot-rolled coil (HRC), and hot-dip galvanized (HDG) prices also fell in December, while cold-rolled coil (CRC) prices increased slightly.

However, domestic steel prices remain in a downtrend that may last until the Chinese steel sector shows some strength again.

Historically, prices tend to drift lower during the beginning of Q4 and then rise. Last year, HRC domestic prices started to increase in December, then skyrocketed during the first quarter of 2018. However, MetalMiner does not see this increase happening during this year’s Q4 cycle.

Chinese Steel Prices

So far in December, prices of all forms of Chinese steel have decreased.

Chinese domestic steel prices started to decrease at the end of October, driven by the start of the winter season.

Source: MetalMiner data from MetalMiner IndX(™)

Chinese steel domestic demand appears weaker; fears around the Chinese economy and manufacturing growth have sent prices down.

HRC prices have declined by 5% in December already, while CRC prices have fallen by 7%.

Lower prices in China come as a result of weaker demand and increasing production. October Chinese steel output increased for a third straight month, as mills boosted output ahead of production cuts.

Chinese stock market (FXI Shares). Source: MetalMiner analysis from SeekingAlpha

The yuan continues to weaken, and the yuan/USD exchange rate is falling. U.S. importing organizations might want to remember that a weaker yuan makes Chinese goods more appealing, despite the tariffs.

Meanwhile, the Chinese stock market (FXI Shares) has fallen during most of 2018 after reaching a peak at the beginning of the year. The new downtrend comes as a result of a slowdown in China.

What This Means for Industrial Buyers

Current domestic steel prices seem to have started a downtrend.

Adapting the right buying strategy becomes crucial to reducing risks.

Only the MetalMiner monthly outlooks provide a continually updated snapshot of the market from which buying organizations can determine when and how much to buy of the underlying metal.

For more information on how to mitigate price risk year-round, request a free trial to our Monthly Metal Buying Outlook.

MetalMiner’s Annual Outlook provides 2019 buying strategies for carbon steel

Actual Raw Steel Prices and Trends

The U.S. Midwest HRC 3-month futures price fell this month by 6.86%, moving to $760/st.

Chinese steel billet prices fell this month by 12.81%, while Chinese slab prices fell by 10.78% to $536/mt. The U.S. shredded scrap price closed the month at $358/st, increasing by 4.6% month over month.

In December, the Copper Monthly Metals Index (MMI) rose three points, returning to October 2018 levels. Higher LME copper prices drove the index. The current Copper MMI stands at 77 points.

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Contrary to other base metals, LME copper prices increased in November.

LME copper prices have maintained momentum that started back in September. LME copper prices still trade over the $6,000/mt level, which served as a stiff resistance level for most of 2017. Prices over this level indicate a bullish copper market, while prices below that level signal a more bearish trend. Trading volume remains heavier on the buys, which also supports prices.

LME Copper prices. Source: MetalMiner analysis of Fastmarkets

LME copper prices, however, have fallen so far in December. However, this slight decrease does not seem to be relevant.

Buying organizations can expect LME copper price momentum to remain strong in the short term.

Global Copper Outlook

Chile, the world’s top copper producer, reported a 7.3% increase in copper output in the January- September time frame compared with the same period in 2017, boosted by a sharp increase from BHP’s Escondida copper mine.

The Escondida mine reached 950,000 tons of copper output, 57.8% higher from the same period in 2017 (due to the 40-day strike last year).

Meanwhile, Codelco’s production came in at  1.29 million tons, down 2% from last year. The Collahuasi mine, owned by Anglo American Plc and Glencore Plc, currently the second-largest mine in the country, reached 401,8000 tons of copper output during this period, 5.8% higher than last year.

Delegates at the Asia Copper Conference in Shanghai forecasted a strong and healthy outlook for copper demand in the mid- to long term. According to Jerry Jiao, vice president of China Minmetals Corp., the renewable energy revolution will boost copper demand in the future, with an expected increase of 2.4 million tons by 2030. That demand, together with the increase of the Chinese car fleet replaced by 20% electric vehicles by 2030 will result in 2.8 million tons of incremental copper demand (based on 60 kilogram per car and 47 million cars in the country, as reported by Reuters).

Current copper Chinese demand goes toward air conditioning, automobiles (for which demand has weakened) and infrastructure investment. In fact, copper used for infrastructure investment will serve as the biggest contributor to Chinese copper demand in 2019.

Indian copper demand will likely double by 2026, due to increasing demand in power, auto and consumer sectors. Demand in the country could reach 1.433 million tons by 2026 from 650,000 tons in 2018. Different projects have boosted investments, but this projection does not include copper usage in electric vehicles, which would increase demand up to 2.5 million tons.

Indian smelter capability utilization came in at 80%, or 843,000 tons of refined copper versus the projected 642,000 tons of projected demand. However, the recent shutdown of Vedanta (400,000 tons per year) may lower the refined copper number in 2018.

Chinese Scrap Copper

LME copper prices and Chinese copper scrap prices tend to follow the same trend. Both increased this month.

However, the pace of the increases seems to differ.

Chinese scrap prices increased softly, while LME copper prices showed stronger momentum.

Source: MetalMiner data from MetalMiner IndX(™)

The spread has become wider again. The wider the spread, the higher the copper scrap consumption, and therefore, the price.

What This Means for Industrial Buyers

LME copper prices increased this month, following a two-month uptrend. Buying organizations will want to understand how to react to the latest copper price movements.

Adapting the right buying strategy is crucial to reducing risks. Only the MetalMiner monthly outlooks provide a continually updated snapshot of the market from which buying organizations can determine when and how much to buy of the underlying metal.

For more information on how to mitigate price risk year-round, request a free trial to our Monthly Metal Buying Outlook.

MetalMiner’s Annual Outlook provides 2019 buying strategies for carbon steel

Actual Copper Prices and Trends

In November, most of the prices comprising the Copper MMI basket rose.

LME copper increased by 4.48% this month. Indian copper prices rose by 6.82%, while Chinese primary copper prices jumped 3.92%.

Prices of U.S. copper producer grades 110 and 122 increased by 4.08%. Meanwhile, the price of U.S. copper producer grade 102 rose 3.86%, up to $3.76/pound.

The Rare Earths Monthly Metals Index (MMI) picked up one point, rising for a December MMI reading of 18.

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Lynas Considers Legal Action Against Malaysian Government

In last month’s installment of the Rare Earths MMI, we noted shares of Australian miner Lynas Corporation Limited got a boost on news that the Malaysian government would allow it to continue storing waste materials in the country.

However, this week the miner announced it was considering legal action, among other options, against the Malaysian government, which recently issued a statement regarding conditions for the miner’s license renewal.

According to a Lynas statement, the two conditions for renewal on Sept. 2, 2019, from the Malaysian government are: 1) the export of Water Leach Purification residue before Sept. 2, 2019, and 2) submission of an action plan for the disposal of Neutralization Underflow Residue (NUF) (which has valid approval through Feb. 5, 2019).

As readers know, China overwhelmingly dominates the global rare earths sector; however, Lynas represents the biggest rare earths miner outside of China.

Rare-Earths Elements in Mining Waste?

Given the demand for rare earths, particularly vis-a-vis high-tech applications (e.g. electrical vehicle batteries), every little bit of supply helps.

According to doctoral research cited by phys.org, it may be possible to extract quantities of rare earths from quarried ore.

“The problem is that the minerals we want are hidden in the waste heaps in very small quantities, and we do not have efficient methods for extracting them,” Wenzhong Zhang, a doctoral researcher in the Department of Chemistry at the University of Helsinki, was quoted as saying.

His research focuses primarily on recovery of rare-earths elements, namely scandium, from aluminum.

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Actual Metal Prices and Trends

Yttrium rose 1.3% to $32.68/kilogram, while terbium oxide rose 3.6% to $432.16/kilogram.

Neodymium oxide jumped 2.8% to $45,903.70/mt. Europium oxide was up 1.3% to $42.13/kilogram, while dysprosium oxide rose 9.5% to $180.13/kilogram.

The Automotive Monthly Metals Index (MMI) picked up one point for a December MMI reading of 95.

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U.S. Sales

General Motors reports sales numbers on a quarterly basis, rather than a monthly basis. The automaker reported sales fell 11% year over year in the third quarter, but touted an average transaction price that was up $700 compared with the same period last year (up to a third-quarter record of $35,974).

As for November reports, Ford Motor Co. reported its U.S. sales dropped 6.9% year over year, with 196,303 units sold in the month. Even trucks and SUVs, which have become the automaker’s focal points amid the deemphasis on traditional sedans, saw sales drops (2.3% and 4.9%, respectively).

Fiat Chrysler, meanwhile, posted another strong month, with U.S. sales up 17% year over year. Sales of Fiat Chrysler’s Ram and Jeep brands surged 44% and 12% year over year, respectively.

Honda reported a 9.5% year-over-year drop in U.S. sales, while Nissan sales were down 18.7%.

According to a sales forecast by Edmunds.com, total sales in the U.S. were projected to decrease 1.3% in November compared with November 2017, but up 1.3% compared with the previous month.

GM Moves to Close Plants, Slash Workforce

Among the bigger automotive developments last month came from GM, which announced the closure of several North American plants and a 15% workforce reduction.

“The actions we are taking today continue our transformation to be highly agile, resilient and profitable, while giving us the flexibility to invest in the future,” GM Chairman and CEO Mary Barra said in a prepared statement. “We recognize the need to stay in front of changing market conditions and customer preferences to position our company for long-term success.”

The move, which is projected to save the automaker approximately $6 billion, was unsurprisingly the source of sharp criticism from politicians, including President Donald Trump, who referred to the Commerce Department’s pending Section 232 probe of automobile imports in a tweet respond to the GM news.

“The reason that the small truck business in the U.S. is such a go to favorite is that, for many years, Tariffs of 25% have been put on small trucks coming into our country,” Trump tweeted Nov. 28. “It is called the “chicken tax.” If we did that with cars coming in, many more cars would be built here. and G.M. would not be closing their plants in Ohio, Michigan & Maryland. Get smart Congress. Also, the countries that send us cars have taken advantage of the U.S. for decades. The President has great power on this issue – Because of the G.M. event, it is being studied now!”

GM announced, among other facilities, three North American assembly plants would be “unallocated,” located in Oshawa, Ontario; Detroit; and Warren, Ohio.

MetalMiner’s Stuart Burns touched on the announcement last week, noting the move might simply be a harbinger in the automotive sector at large.

“What is more surprising to some is that GM is acting when results are strong,” Burns wrote. “GM’s third-quarter adjusted earnings per share were 42% higher than the same period a year ago and its underlying earnings before interest and tax rose 25% to $3.2 billion. Net revenues rose 6.4% to $35.8 billion.

“But analysts see this as GM being a first mover and acting ahead of the curve.”

Actual Metal Prices and Trends

U.S. HDG steel fell 6.9% month over month to $934/ton. Platinum bars fell 3.5% to $806/ounce, while palladium bars rose 11.7% to $1,192/ounce.

MetalMiner’s Annual Outlook provides 2019 buying strategies for carbon steel

LME copper rose 4.5% to $6,287/mt. U.S. shredded scrap steel jumped 4.7% to $358/st.

Chinese primary lead rose 1.6% to $2,734.61/mt.