Commodities Roundup: Chinese Steel Production Hits Record High, Section 232 Auto Hearings Begin

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For the buyers and category managers out there, especially those of you deep in the weeds of buying and managing commodities, here’s a quick rundown of news and thoughts from particular commodity markets.

From price movements to policy decisions, our MetalMiner editors scour the landscape for what matters. This week:

China Ramps Up Steel Production in June

June was a productive steelmaking month in China.

With winter cuts in the rear-view mirror, June production hit a record for average daily production, marking the third straight month a new record has been reached, Reuters reported.

In fact, China’s June production of 80.2 million tons was not far behind the U.S.’s total output in 2017 (81.6 million tons).

Against the Wind

Traditional energy sources are facing an ever-growing challenge from wind, which has gained in appeal for a number of reasons, MetalMiner’s Stuart Burns reports.

While a common complaint from detractors is underpinned by a general distaste for the visual of windmills on a landscape, it’s becoming more difficult to dismiss wind energy as it gets more cost-effective.

“But in the span of less than 10 years, public opposition has declined,” Burns writes. “Opposition has not gone away entirely, but it has softened as we have become more familiar with the sight of slowly rotating turbine blades on the horizon and with the realization that its costs are falling dramatically.”

Section 232 Auto Hearings Begin

Circling back to Section 232, as you may remember, in May the Department of Commerce launched an investigation of imports of automobiles and automotive components, under the aegis of Section 232 of the Trade Expansion Act of 1962 (the same statute invoked to, ultimately, impose tariffs on steel and aluminum).

More than 2,300 public comments were submitted by interested parties with respect to the automotive probe. The first of two days of hearings began Thursday, featuring comments from industry figures.

Live video of the hearing and the full agenda can be found on the Department of Commerce website, www.commerce.gov.

Concentrated Cobalt

The cobalt market is linked with the future: electric vehicles and technology — like cellphones and laptops — just to name a few.

So, what's in store for the mercurial market in the coming years?

According to an index that assesses levels of competition within a particular sector, the cobalt market is set to become even more concentrated than it already is in the new few years.

A majority of the world’s cobalt is mined in the Democratic Republic of the Congo, which has been beset with a new round of instability ever since President Joseph Kabila refused to step down at the end of his mandate at the end of 2016.

Elections are scheduled for the end of this year, but it remains to be seen whether they will happen as planned.

Nonetheless, developments in Canadian mining operations — namely, Voisey’s Bay — could be promising for those hopeful about non-DRC cobalt mining sources.

Alcoa Reports 34% Jump in Q2 EBITDA — But Isn’t As Rosy About Second Half

On Wednesday, aluminum major Alcoa reported its Q2 earnings, posting earnings before interest, tax, depreciation and amortization (EBITDA) of $904 million, up from $653 million in Q1.

However, the firm lowered its annual EBITDA forecast from between $3.5 billion and $3.7 billion down to between $3.0 billion to $3.2 billion.

The company cited tariffs and rising energy costs among the factors for the downgrade.

Europe Institutes Temporary Steel Safeguards

In an effort to deal with diverted steel — a result of the U.S. Section 232 tariff — flooding the European market, the E.U. has imposed provisional steel safeguards, which went into effect Thursday.

According to a release on the European Commission website, the measures will cover 23 steel product categories. Products included in the categories will be subject to a 25% tariff once imports have exceeded the three-year average of imports for said product.

The measures can only be in place for a maximum of 200 days, so the E.U. will have a decision to make by early 2019 vis-à-vis installation of permanent safeguards.

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