Commodities Roundup: Trade Trip in Beijing, Section 232 Exemptions and Nickel Prices

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:

Section 232 Update

Continuing the ongoing Section 232 metals tariffs saga, the U.S. announced this week that three countries now have permanent exemptions from the 25% steel and 10% aluminum tariffs: Argentina, Australia and Brazil. (South Korea previously negotiated a long-term exemption, as well.)

However, the E.U., Canada and Mexico remain on the temporary side of exemptions ledger.

The trio had temporary exemptions, which were set to expire May 1, but the U.S. this week announced a 30-day extension of the exemption, now set to expire June 1.

The E.U. remains adamant that it seeks to win a long-term exemption from the tariffs. As for Canada and Mexico, renegotiation talks vis-à-vis the North American Free Trade Agreement (NAFTA), which began last fall, continue. U.S. Trade Representative Robert Lighthizer said this week that he hopes to reach an agreement on NAFTA this month.

In other news, Peter Navarro, trade adviser to President Trump, said this week that every country with an exemption will still be subject to a quota or restrictions of some kind.

The U.S. Goes to China

As tensions between the U.S. and China have ramped up in recent weeks, U.S. officials headed to Beijing this week to talk trade.

According to Business Insider, the U.S. delegation includes Lighthizer, Navarro, Commerce Secretary Wilbur Ross, Treasury Secretary Steven Mnuchin and National Economic Council Director Larry Kudlow.

Meanwhile, aluminum prices jumped over 3% on Thursday, Business Insider reported.

The issue of sanctions on Russian companies and individuals — namely, on Russian aluminum giant Rusal — have also impacted prices in recent weeks.

In any case, the world will be monitoring the meetings in Beijing in the coming days for hints of possible de-escalation on the trade front with China.

Nickel Prices

MetalMiner’s Stuart Burns delved into what is going on with the nickel price earlier this week.

According to his report, the International Nickel Study Group projects nickel production and usage to rise by more than 2.3 million tons this year.

“As a perspective on fundamentals reasserts itself, the nickel price has recovered, rising back about $14,000 per ton,” Burns wrote. “Demand has remained robust among stainless producers, with production forecast to rise 4% this year to over 52 million tons, while fears remain around supply.”

Meanwhile, in the Philippines, Burns notes that Nickel Asia, the country’s top nickel ore producer, intends to increase its tonnage shipped this year by 17%. That effort could be complicated, he notes, by government regulations on land use by miners.

Elsewhere, Burns writes that Indonesia has reasserted itself as the top supplier to China following the end of a 2014 ban.

Even so, he adds: “Further increases in output, however, are limited, and investment in new reserves has been poor, while the nickel price was lower over recent years so the ability of the market to respond to predicted increases in demand from electric car and battery makers is in question.”

Not So Precious?

In the world of precious metals, MetalMiner’s Taras Berezowsky notes that for the seventh month in a row, palladium continues to trade at a premium to platinum, which continues to buck the historical trend.

Per his report, platinum is facing headwinds from the diesel emissions scandal, according to Julius Baer, an analyst at Carsten Menke, in addition to a lagging jewelry market.

As for gold, demand in Q1 fell to its lowest point since 2008, according to the World Gold Council.

For MetalMiner’s May 1 Monthly Metals Index (MMI) reading, the gold price hit $1,314.90/ounce, its lowest of the year.

“On the supply side, the money that exploration firms are spending to discover new ounces of gold — to the tune of $54.3 billion allocated over the next decade, according to S&P Global Market Intelligence — has not resulted in more new discoveries over the last decade, compared to the previous 18 years,” Berezowsky wrote.