Commodities Roundup: U.S. Mining, Toyota Invests in U.S., Oil 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, we scour the landscape for what matters. This week:

U.S. Mining in 2018

Last year proved to be a relatively productive time for the U.S. mining sector.

According to a recent report from the U.S. Geological Survey’s National Minerals Information Center, mines in the U.S. produced $82.8 billion worth of minerals last year, a 3% increase from 2017.

Other highlights from the report include the U.S.’s reliance on foreign sources for a number of critical minerals. The report indicated the U.S. imports more than half of the consumption of 48 nonfuel minerals, with 100% reliance on imports for 18 of those minerals.

Furthermore, 14 of those 18 minerals on which the U.S. is totally import-reliant were included on the Department of the Interior’s critical minerals list from May 2018.

Unsurprisingly, China was the biggest exporter to the U.S.

By state, 12 U.S. states produced more than $2 billion worth of minerals last year, with Nevada taking the top spot (followed by Arizona and Texas).

Toyota Announces Strengthened U.S. Investments

As President Donald Trump this week renewed public criticism of General Motors for its decision to close several U.S. assembly plants — this week specifically referring to GM’s shuttered Lordstown, Ohio, plant — Toyota announced it would be increasing a previously announced $10 billion investment in the U.S.

The automaker said it would increase its U.S. investment pledge to $13 billion, adding jobs and increasing capacity at operations in Alabama, Kentucky, Missouri, Tennessee and West Virginia.

“Congratulations @Toyota! BIG NEWS for U.S. Auto Workers! The USMCA is already fixing the broken NAFTA deal,” Trump tweeted March 14. (It should be noted, however, that the United States-Mexico-Canada Agreement, or USMCA, has yet to be ratified by the three countries’ legislatures.)

A Copper Deficit

The copper price has been trending upward for most of the year to date.

The global supply-demand balance for the metal could offer a bit of additional support too.

According to a Reuters report this week, Chilean miner Antofagasta forecasts a 2019 global copper deficit between 100,000 and 300,000 tons.

U.S. Steel Production

Checking in on the weekly U.S. steel production report, U.S. steel mills produced 1.93 million tons of steel for the week ending March 16.

For the year up to March 16, U.S. mills have produced 20.3 million tons, which marks a 6.7% increase compared to production during the same period in 2018.

In that year-to-date period, the capacity utilization rate has reached 81.4%, up from 76.6% from the same period last year.

Oil Price Balance … For Now

MetalMiner’s Stuart Burns checked in on oil prices, which have made gains this quarter and are approaching the $70 per barrel mark.

Announced production cuts by OPEC, Russia and other oil-producing nations have been largely successful, he explained, tamping down supply and offering price support.

However, the oil price’s ability to rally past the $70/barrel mark will be inextricably linked to the booming U.S. shale sector.

“There is little OPEC and its partners can do to squeeze the market further,” Burns wrote. “Deeper cuts are unlikely to garner support, but there is the option to extend the current cuts beyond the June deadline.

“All eyes will, therefore, be on U.S. tight oil production numbers in the months ahead. The medium-term oil price is largely down to shale oil producers' enthusiasm to increase production at current prices.”

An Eventful Week for Norsk Hydro

Norwegian aluminum maker Norsk Hydro had a busy week with the release of its annual report March 15, the announcement of a new CEO on Monday and a cyberattack on Tuesday that disrupted operations.

Hydro reported net income of 4,232 NOK ($505 million), down from 9,184 NOK ($1.07 billion) in 2017.

The ongoing situation at Hydro’s Alunorte alumina refinery continues to impact the company’s Brazil operations.

“The curtailment at Alunorte has weakened our financial results and progress of our improvement program,” the annual report stated. “In addition, different tariffs and sanctions have influenced global markets and trade flows over the past year, also affecting our industry.”

According to the firm’s annual report for 2018, it remains in contact with Brazilian authorities with respect to the embargoes in place on the refinery, which is operating at 50% capacity. The company said it would take approximately two months to ramp up to 75-85% capacity once embargoes are lifted.

In that vein, the company announced the resignation of its CEO of 10 years.

Lastly, the company was forced to respond to a cyberattack Tuesday morning.

“Hydro's technical team, with external support, has succeeded in detecting the root cause of the problems and is currently working to validate the plan and process to restart the company's IT systems in a safe and sound manner,” the company said in an update on its website Wednesday. “However, it is still not clear how long it might take restore stable IT operations.

“As communicated on Tuesday, Hydro was subject to an extensive cyberattack, impacting operations in several of the company's business areas.”

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