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KOREA ALUMINIUM SNAPSHOT: Premium ranges narrow but views mostly optimistic heading into 2018

Base Metals Market - Thu, 12/28/2017 - 04:25
Key data from the Wednesday December 27 pricing session in Singapore.
Categories: Metals Industry News

2017 REVIEW: Chinese aluminium market’s reform gains, export pains

Base Metals News - Thu, 12/28/2017 - 04:24

Supply-side reforms in China’s aluminium industry have removed over 11 million tonnes of capacity, while simultaneously a negative export arbitrage and anti-dumping measures have squeezed the market in 2017.

China’s aluminium output fell by 16.8% on an annual comparison in November, making it the fifth consecutive month of decline, according to data published by the country’s National Bureau of Statistics (NBS).


Although accumulated aluminium production in the first 11 months of this year increased by 1.7% year on year, the rate of growth has slowed down markedly.

Supply-side reform 
Aluminium supply-side reform started at the end of 2016, and involved many government departments, including the Ministry of Industry and Information Technology (MIIT), Ministry of Environmental Protection (MEP), Development and Reform Commission (DRC) and provincial governments.

Government-initiated reforms have halted a total of 11.56 million tonnes per year of aluminium capacity in China, including 5.37 million tpy of illegal capacity and 6.19 million tpy of non-compliant aluminium capacity, Wen Xianjun, the vice chairman of the China Nonferrous Metals Industry Association (CNIA) said in a speech in November.

In Shandong province alone, officials ordered 3.21 million tpy of aluminium capacity to be halted at the end of July, including 2.68 million tpy from Weiqiao Group and 530,000 tpy from Xinfa Group. The two top aluminium smelters reported the work as completed in early August.

The industry also made great efforts to undertake winter capacity cuts, which officially started on November 15 and are expected to end on March 15, 2018.
At the beginning of this year, the Chinese environmental authority said it would cut 30% of operational aluminium smelting and alumina refining capacity in two municipalities and 26 cities in Shandong, Henan, Shanxi and Hebei provinces as part of a plan to reduce air pollution.

Since then, many provincial governments and companies involved in the operation have announced plans to reduce their smelting and refining capacity during the winter.

Negative export arbitrage, anti-dumping duties 
Meanwhile, China’s total exports of unwrought aluminium and aluminium products for the first 11 months of the year stood at 4.35 million tonnes, 3.7% higher than the corresponding period of 2016.

Yet the hefty tax that Chinese participants are required to pay on exports of aluminium ingots as well as the increased scrutiny that China-origin shipments face amid trade cases in the United States are likely to affect exports over the year, according to market participants.

This is in spite of the high stocks in China’s domestic market and supply tightness in the rest of the world.

The SHFE-LME arbitrage ratio, in a range of 6.97-7.59 so far this year, has not been suitable for aluminium exports.

“The arbitrage ratio has gone down, but [it is still] not low enough at present,” a Shanghai trader said.

When the arbitrage ratio is around 6.5 or below, it can encourage exports, Metal Bulletin heard.

This year has been marked by aluminium-importing countries investing more on anti-dumping measures.

In December 12, the US, European Union and Japan said in a joint statement that they would work within the World Trade Organization (WTO) and other multilateral groups to eliminate unfair competitive conditions caused by subsidies, state-owned enterprises, “forced” technology transfer and local content requirements.

The statement does not mention any countries but many in the market believe they are targeting China.

Earlier in April, US president Donald Trump signed an executive order launching a self-initiated Section 232 investigation into imports of products including aluminium.

In October, the US Department of Commerce made an affirmative preliminary determination in its investigation into imports of Chinese aluminium foil into the US, levying heavy anti-dumping duties.

And the EU Council of Ministers has now also formally approved new anti-dumping rules which may help the EU impose anti-dumping duties against Chinese dumped metal exports, clearing the way for the new system to come into force by December 20.

Chinese government and industry organizations, such as the Trade Remedy and Investigation Bureau and the CNIA, have responded by offering advice on how to face trade conflicts.

For example, Chinese officials have questioned the veracity of the US’s Section 232 probe into the national security issues related to a reliance on aluminium imports. In a statement in late May, a spokesman with the CNIA expressed his “deep concern” over the “fairness” of the investigation.

Chinese enterprises that are active in exploring the global market have also faced problems overseas.

In the middle of November, Zhongwang USA’s proposed acquisition of Aleris Corp, which Metal Bulletin first reported in August 2016, has expired and will not proceed, with both sides citing regulatory scrutiny of the deal as insurmountable. 

The post 2017 REVIEW: Chinese aluminium market’s reform gains, export pains appeared first on FastMarkets.

Categories: Metals Industry News

EUROPEAN MORNING BRIEF 28/12: SHFE copper rises; Updates on 2018 TC/RCs; China's minors under environmental crackdown

Base Metals Market - Thu, 12/28/2017 - 04:14
Good morning from Metal Bulletin’s offices in Asia, bringing the key news and market stories on Thursday December 28.
Categories: Metals Industry News

2017 REVIEW: Chinese aluminium market’s reform gains, export pains

Base Metals Market - Thu, 12/28/2017 - 04:00
Supply-side reforms in China’s aluminium industry have removed over 11 million tonnes of capacity, while simultaneously a negative export arbitrage and anti-dumping measures have squeezed the market in 2017.
Categories: Metals Industry News

LIVE FUTURES REPORT 28/12: SHFE copper higher after LME copper peaks near-three-year high; other base metals follow suit

Base Metals Market - Thu, 12/28/2017 - 03:40
The most-traded copper price on the Shanghai Futures Exchange rose during Asian morning trading hours on Thursday December 28 after the three-month LME copper price hit its highest level since January 23, 2014.
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NEWSBREAK: Tongling, Freeport agree 2018 TC/RCs at $82.25/8.225 cents [UPDATE 2]

Base Metals Market - Thu, 12/28/2017 - 02:28
Tongling Nonferrous Metals Group and Freeport-McMoRan have agreed to set 2018 copper treatment and refining charges (TC/RCs) at $82.25/8.225 cents, sources close to the matter told Metal Bulletin on Wednesday December 27.
Categories: Metals Industry News

2017 REVIEW: Environmental scrutiny reshapes China’s minor metals markets

Base Metals News - Thu, 12/28/2017 - 02:26

The nationwide campaign against environmental violations in 2017 changed the landscape of Chinese minor metals markets after permanently closing some smaller illegally operated miners, smelters and flotation plants.

China’s central government inspection teams co-ordinated with multiple local government agencies in sweeps across 30 provinces and regions, including major minor metals production hubs of Hunan, Guangxi, Yunnan and Guangdong provinces, resulting in operation suspensions at some antimony, bismuth and gallium smelters in these provinces over the past few months.

Antimony 
Anti-pollution campaigns had a remarkable effect on the antimony market, with around 50% of output cuts in the second quarter pushing antimony prices to a 41-month high of 61,000-62,000 yuan ($10,000-10,164) per tonne on May 8. The last time prices were at that level was on November 25, 2013.

“Many plants with non-compliance environmental protection standard facilities have been dismantled following the scrutiny this year, so production will be centered on large-scaled producers or state-owned smelters in Hunan (50% of China’s total), Guangxi (20%), Yunnan and Guizhou (10% each),” a source familiar with the market told Metal Bulletin.

Bismuth
Hunan province is also a major production hub for bismuth, and after the stringent environmental scrutiny, many processors in Chenzhou city in the southeast of the province left the industry.

In the future, bismuth production will mainly come from Jinwang Bismuth, Guangdong Vital, Xianyang Yuehua, Grand Sanyuan, the recycling plants of Yongxing Zhongde, Fujia, Yonghe, and several base metals smelters who recycle scrap to process bismuth, including Jinli Gold & Lead, Yuguang Gold & Lead, Yunnan Copper and Jiangxi Copper.

“Base metals smelters are not frequent participants in bismuth spot markets owing to limited output and lower profits compared with base metals, and the [bismuth] market was mostly dominated by the other producers,” a source said.

Chinese domestic bismuth prices lingered around 63,000-66,000 yuan ($9,526-9,980) to 75,000-77,000 yuan per tonne this year, higher than the ranges of 54,000-55,500 yuan to 70,000-76,000 yuan in 2016, mainly attributed to the inspector-enforced production cuts, but “speculations also played an important role”, a second source reported.

“The [bismuth] market has been recovering since the second half 2016, but demand was also restricted following shutdowns among downstream consumers after the inspections. Rumors that several major producers will stock the material have been circulating in the market for several months, and that is the main driver behind price rises in recent months,” the second source added.

Gallium 
The gallium market also saw production cuts in 2017, with the number of active producers halving from earlier levels.

“There were nine operating producers this March, but six in October; much earlier, there were around 13 gallium smelters in China,” Xiong Tian, sales director at Beijing Jiya Semiconductor, told Metal Bulletin.

“The average operation rate in the gallium market was around 60% over the past 10 months as several producers stopped [output] because of below-cost prices or environmental inspections,” a second source said.

Low operation rates helped China’s gallium prices remain over 800 yuan per kg for most of the first 11 months of this year after they bottomed out early last May; several major producers halted production for around nine months beginning in the second quarter of 2016.

“The vast majority of producers in the market have been profitable this year, much better than last year, not only because of supply disruption but also because of a steady increase in demand,” a third source said.

Silicon
Meanwhile, stricter-than-ever environmental scrutiny meant Chinese silicon metal export prices broke tradition this year.

Usually, Chinese silicon metal export prices start to fall during April-May and come under pressure in the summer when silicon refineries in southern China resume production amid lower hydro-power costs during the rainy season.

But instead of a price drop, the market saw a steady ascent in Chinese silicon metal export prices at the start of July 2017, and a multi-year high hit on September 1 when the price reached $2,080-2,130 per tonne, compared with $1,420-1,440 per tonne in the corresponding period last year.

A delay in production resumption following the start of the rainy season was behind such an unusual price curve.

Perhaps more important was the environmental scrutiny on silicon production which led to rising raw materials costs for silicon since the start of this year, and caused spot supply tightness in the August-September period when refineries in several provinces were forced to shutter down operations.

“Now it is quite hard to predict the price because you don’t know when another environmental inspection will take place,” a Chinese trader said.

The post 2017 REVIEW: Environmental scrutiny reshapes China’s minor metals markets appeared first on FastMarkets.

Categories: Metals Industry News

WEEKLY BASE METAL PREMIUMS REPORT 27/12

Base Metals Market - Wed, 12/27/2017 - 18:17
Metal Bulletin's weekly roundup of the state of base metal premiums on Wednesday December 27.
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LIVE FUTURES REPORT 27/12: LME ali price hits highest since March 2012; Copper sets new 2017 high

Base Metals Market - Wed, 12/27/2017 - 17:44
The three-month aluminium price rallied 3% on the London Metal Exchange this afternoon, Wednesday December 27, following a huge 42,325-tonne cancellation.
Categories: Metals Industry News

Aluminium market sees latest large cancellation heading to US

Base Metals Market - Wed, 12/27/2017 - 15:56
Market participants are anticipating the roughly 42,000 tonnes of aluminium canceled on Wednesday December 27 to flow from Asia to the US.
Categories: Metals Industry News

NEWSBREAK: Tongling, Freeport agree 2018 TC/RCs at $82.25/8.225 cents [UPDATE]

Base Metals Market - Wed, 12/27/2017 - 10:28
Tongling Nonferrous Metals Group and Freeport-McMoRan have agreed to set 2018 copper treatment and refining charges (TC/RCs) at $82.25/8.225 cents, sources close to the matter told Metal Bulletin on Wednesday December 27.
Categories: Metals Industry News

LIVE FUTURES REPORT 27/12: LME copper continues rally; ali supported by 42,000t cancellation

Base Metals Market - Wed, 12/27/2017 - 10:07
Base metals prices on the London Metal Exchange were mostly higher during morning trading on Wednesday December 27 as the market returned to trading following the Christmas holidays.
Categories: Metals Industry News

METALS MORNING REPORT 27/12: Steady tone continues as markets swing into life

Base Metals Market - Wed, 12/27/2017 - 09:27
Base metals prices trading on the London Metal Exchange are in mixed mood so far on Wednesday December 27, as trade resumes following the Christmas holiday, with lead leading with a gain of 1.2%, followed by copper (+0.8%) and tin (+0.3%), while aluminium, zinc and nickel are in negative ground with the latter down 1.5%.
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SHFE vs LME physical arbitrage 27/12: Copper, aluminum, zinc, nickel

Base Metals Market - Wed, 12/27/2017 - 08:48
Arbitrage for copper, aluminum, zinc and nickel imported into China on Wednesday December 27*
Categories: Metals Industry News

NEWSBREAK: Tongling, Freeport agree 2018 TC/RCs at $82.25/8.225 cents

Base Metals Market - Wed, 12/27/2017 - 07:53
Tongling Nonferrous Metals Group and Freeport have agreed to set 2018 copper treatment and refining charges at $82.25/8.225 cents, sources close to the matter told Metal Bulletin on Wednesday December 27.
Categories: Metals Industry News

EUROPEAN MORNING BRIEF 27/12: LME copper up; Jiangxi Copper production; Indonesia, Philippines impact on nickel weakened

Base Metals Market - Wed, 12/27/2017 - 04:35
Good morning from Metal Bulletin’s offices in Asia, bringing the key news and market stories on Wednesday December 27.
Categories: Metals Industry News

LIVE FUTURES REPORT 27/12: LME back with copper up; SHFE aluminium up

Base Metals Market - Wed, 12/27/2017 - 04:04
The three-month copper price on the London Metal Exchange rose during Asian morning trading hours on Wednesday December 27, the first trading day after the Christmas holiday, while the Shanghai Futures Exchange copper price decreased.
Categories: Metals Industry News

Chinese copper smelters operating normally despite government pollution crackdown; disruption risks seen rising in 2018

Base Metals Market - Wed, 12/27/2017 - 03:29
Jiangxi Copper is operating as usual despite media reports that it has been ordered to halt production to combat pollution, sources familiar with the matter told Metal Bulletin.
Categories: Metals Industry News

2017 REVIEW: Philippines, Indonesia play lesser role in nickel volatility, but policy shifts still sway market

Base Metals News - Wed, 12/27/2017 - 03:28

With the nickel market focused on the electric vehicle (EV) battery story this year, changes in nickel ore-producing countries such as Indonesia and the Philippines have lessened their effect on nickel prices.

Their policy changes this year have still swayed the nickel market, though. Metal Bulletin looks back at the key policy changes in these key global nickel ore suppliers in 2017.

Philippines 
In the first half of this year, nickel prices plunged after Regina Lopez – who had ordered closures of mines accounting for half of the country’s nickel production – was dismissed from her role as chief of the Philippines’ Department of Environment and Natural Resources (DENR).

While Lopez’s dismissal removed a major uncertainty for nickel ore supply in the short term, the impact of the policies she had put in place during her 11 months at the helm of the DENR continued to affect the market.

During her tenure, Lopez had ordered the closure of 22 and suspension of five mining operations on alleged environmental violations. She also cancelled 75 mineral agreements with miners and banned future open-pit mining in the country.

Nickel ore production in the Philippines fell 11% year on year to 19.01 million dry metric tonnes (dmt) in January-September in 2017 partly due to suspended operations at a number of nickel mines in the country.

But Lopez’s departure did not mean it was all smooth sailing for Philippine miners.

Lopez’s successor and ex-army general, Roy Cimatu, was expected to take a more moderate position towards mining relative to Lopez, but his public statements during the year have largely been in line with President Rodrigo Duterte’s stance on mining.

In the third quarter of this year, Duterte said he was planning a new mining law, with input from mining stakeholders and Lopez, and considering banning ore exports to encourage domestic processing.

Politicians in the country jumped on the bandwagon and called for the country to ban ore exports, with 22 congressmen filing a bill in late August seeking to halt the export of unprocessed mineral ores and mining in watershed areas.

Late this year, Duterte rejected the recommendation of the Mining Industry Coordinating Council (MICC) to lift the Lopez-initiated ban on new domestic open-pit mining.

A majority of the MICC, which is co-chaired by the Philippines Department of Finance and the DENR, had voted to remove the ban on open-pit mining.

The MICC is still reviewing the 22 mines which Lopez had ordered to shut and/or suspend, with preliminary results due in January 2018. But judging from Duterte’s rejection of the MICC’s recommendation on new domestic open-pit mining, it is now uncertain if Duterte would revoke Lopez’s order even if the MICC endorses a restart for the mines.

The developments in the Philippines’ mining industry over the past year suggest mining policy changes in the country remain unpredictable.

Indonesia 
At the beginning of this year, Indonesia announced that it will relax export restrictions on unprocessed ore exports subject to certain conditions, including requiring miners to complete smelter projects within five years.

While there had been rumors of a possible removal of the ore export ban prior to Indonesian government’s announcement, the policy change still created shockwaves in the industry as Indonesia’s export ban since 2014 had provided support for nickel prices, particularly in the initial year of the ban.

Indonesia gradually approved export quotas to various companies following the end of the ban. To date, Indonesia has awarded quotas for more than 15 million tonnes of nickel ore exports to nickel miners and smelters. Further quotas are expected to be approved in the near future, bringing the total export volumes close to 20 million tonnes, Metal Bulletin understands.

Impact on prices 
Laterite ore prices sank in the first half of the year alongside Lopez’s dismissal and Indonesia’s restart of ore exports. The price of laterite ore with 1.5% nickel content fell to as low as $28 per tonne cif China in June from as high as $49 per tonne in the beginning of the year.

But the developments in the Philippines and Indonesia had less of an impact on London Metal Exchange nickel prices in the second half of the year as focus turned to the optimism over EV battery and stainless steel demand, and the global macroeconomic outlook. This boosted the LME three-month nickel price to as high as $13,030 per tonne in November this year, the highest since June 2015.

The demand-side narrative for nickel proved stronger than that on the supply-side in the second half of 2017. But with the Philippines and Indonesia still the largest producers of nickel ore in the world and biggest suppliers of nickel ore to China, both countries’ mining and ore export policies can still sway the nickel market, as they have proven in the past. 

The post 2017 REVIEW: Philippines, Indonesia play lesser role in nickel volatility, but policy shifts still sway market appeared first on FastMarkets.

Categories: Metals Industry News

2017 REVIEW: Philippines, Indonesia play lesser role in nickel volatility, but policy shifts still sway market

Base Metals Market - Wed, 12/27/2017 - 03:00
With the nickel market focused on the electric vehicle (EV) battery story this year, changes in nickel ore-producing countries such as Indonesia and the Philippines have lessened their effect on nickel prices.
Categories: Metals Industry News

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