Commodities Roundup: Aluminum production rises; tariffs to extend to steel, aluminum derivatives; coronavirus fallout; USMCA now law

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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.

MetalMiner, a sister site of ours, scours the landscape for what matters. This week:

Global aluminum production rises

Global aluminum production reached 5.44 million tons in December, according to the International Aluminum Institute, up from 5.26 million tons in November.

However, the December total was down from the 5.50 million tons produced in December 2018.

Meanwhile, No. 1 aluminum producer China saw its 2019 aluminum production decline compared with the previous year.

DOC makes dumping rulings on fabricated structural steel

The U.S. Department of Commerce issued affirmative final determinations in its anti-dumping probe of fabricated structural steel imports from China, Canada and Mexico.

The DOC calculated dumping rates of: 0-7.60% for producers and exporters from Canada; 61.71-154.14% for China; and 0-30.58% for Mexico.

The DOC also made affirmative determinations in its parallel countervailing duty case for China and Mexico but issued a negative determination with respect to Canada.

Trump expands tariffs on steel, aluminum derivatives

Nearly two years after President Donald Trump imposed Section 232 tariffs of 25% on steel and 10% on aluminum, the president recently expanded tariffs on imports of steel and aluminum derivatives.

Citing a rise in imports of a variety of steel and aluminum derivatives, the president announced an additional 25% and 10% duty on imported steel and aluminum derivatives, respectively.

The additional duties will go into effect Feb. 8.

The cost of Europe’s Green Deal

As governments around the world develop strategies aimed at combating climate change and mitigating pollution levels, Europe is forging ahead with a Green Deal of its own.

As MetalMiner’s Stuart Burns noted this week, Europe’s environmental goals will, of course, have impacts on a number of industries and trading partners, particularly Russia.

“Russia may succeed in gaining an even greater share of the European gas market by building new pipelines,” Burns wrote. “However, within a couple of decades these could become redundant as Europe embraces its green future, unless the holy grail can be found of gas being decarbonized at a competitive cost.”

U.S. steel imports decline 17%

According to recent U.S. Census Bureau data, U.S. steel imports fell by 19% through the first 11 months of 2019 compared with the same period in the previous year.

Imports reached 23.9 million tons during the period, down from 28.9 million tons during the same stretch in 2018.

“The largest commodity decreases occurred primarily in blooms, billets and slabs,” the Census Bureau said. “Increases occurred primarily in black plate, tin free steel and steel piling. The largest country decreases occurred primarily with Russia. Increases occurred primarily with Spain, Ukraine and South Africa.”

Coronavirus impact in China

Burns also weighed in on the potential economic impact stemming from the spread of the coronavirus in China, focusing primarily on the iron ore price.

“So far this northern hemisphere winter, 62% iron ore has gained 22% from its Nov. 11 low and up to the close of $95.60 on Wednesday,” Burns wrote. “This is about half of the 41% surge the steelmaking ingredient enjoyed last winter, when it went from $64.60 a ton in November 2018 to a peak of $90.75 in early February 2019.

“Taken in the round, therefore, the market appeared not as confident of rising demand this year as last, even before the coronavirus epidemic hit.

“With movement restrictions being extended almost daily, the fear is the outbreak could delay the return of workers to construction sites, in turn delaying iron ore and steel demand. One report suggests traders are taking up short positions to hedge the large physical purchases they have on the water due to arrive after the Lunar New Year holidays.”

GM to manufacture EVs at Detroit-Hamtramck

GM’s Detroit-Hamtramck assembly, currently home to the manufacturing of the Cadillac CT6 and Chevrolet Impala, is about to be electrified.

The automaker announced it will invest $2.2 billion into the plant, making it GM’s first assembly developed exclusively for the production of electric vehicles.

The plant will be temporarily idled at the end of February to allow for renovations, GM said in a statement.

Aluminum prices struggle to make gains

Circling back to aluminum, Burns zeroed in on some reasons why the aluminum price has failed to gain steam.

Burns cited planned capacity increases at Aluminum Bahrain and a ramp-up of activity at Rusal’s Boguchansk smelter.

In addition, Chinese overcapacity continues to put a lid on price rises.

“Flood damage curtailed capacity at China Hongqiao Group in August and an explosion closed potlines at Xinfa Group — both of which took months to bring back onstream in the second half of the year but are now back up and running,” he explained.

Trump signs USMCA

Earlier this month, the U.S. Senate voted overwhelmingly to approve the United States-Mexico-Canada Agreement (USMCA), the proposed successor to the 1994 North American Free Trade Agreement (NAFTA).

This week, Trump made it official, affixing his signature to the United States-Mexico-Canada Agreement Implementation Act.

With approvals in the U.S. Congress and Mexico’s Senate already in hand, Canada is the only remaining party yet to approve the deal.

"This is a pivotal moment for our country, for North America and for the furtherance of orderly, free and fair trade around the world," Deputy Prime Minister Chrystia Freeland wrote in a letter to several Canadian parties this week.