Commodities Roundup: Tata Steel looks for buyers; Asia-Pacific nations ink massive RCEP trade deal; oil price gains

commodities

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, including Tata Steel and its plans to spin off its European assets, a European steel survey and more.

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

Tata Steel looks for buyers for European assets

Tata Steel is looking to spin off its European assets in the UK and the Netherlands, MetalMiner’s Stuart Burns explained this week.

The strategy comes after the European Commission blocked a merger of Tata Steel’s European business and German firm ThyssenKrupp’s steel unit.

Sweden’s SSAB is reportedly a suitor for Tata Netherlands, Burns noted. The main asset of Tata's operations in the country is the IJmuiden integrated steel plant.

The fate of Tata’s UK operations is less clear.

“What will happen to Tata Steel’s Port Talbot integrated steel plant is up in the air,” Burns wrote.

“Furthermore, buyers are no doubt put off by the uncertainty of Brexit and what a post-Brexit manufacturing landscape in the UK will look like.

“Port Talbot is the UK’s largest steel plant. The plant employs thousands of workers and is a cornerstone for employment in the South Wales economy.”

European steel picture

Aside from Tata Steel but sticking in Europe, MetalMiner contributor Christopher Rivituso surveyed the Central and Eastern European steel scene in the first of a two-part series.

“Steel plants in Central and Eastern European states that are members of the European Union face not only higher costs, but also environmental restrictions that could eventually mean an additional $30-40 per tonne to make steel.

“China’s recovery from the coronavirus pandemic has led to increases there in steel production and cheaper imports.

“As a result, China’s rebound has further impacted European steelmakers in Central and Eastern Europe.”

Ukraine’s steel situation

Meanwhile, in the second part of Rivituso’s European steel survey, he outlines challenges faced by Ukraine’s steel sector.

“Donetsk region, once Ukraine’s industrial heart and the location for the majority of steelmaking and rolling assets, is now the within the breakaway and unrecognized Donetsk People’s Republic,” Rivituso explained. “The republic contains Donetsk Steel, integrated metal and mining group Metinvest’s Yenakievo and Makeyevo plants and the Khartzysk pipe plant."

According to one analyst Rivituso spoke with, “nobody knows what’s going on there.”

India, US sit out RCEP trade deal

Earlier this week, 15 Asia-Pacific nations signed the Regional Comprehensive Economic Partnership (RCEP), a trade pact that includes approximately 30% of global GDP.

“The aim is to give preferential treatment for trade between the member countries," MetalMiner’s Sohrab Darabshaw wrote. "That treatment comes in the form of lower tariffs, preferential market access, customs union or free trade in specific sectors.”

Notably, China is a signatory to the massive trade deal, in addition to Japan South Korea, New Zealand and Australia.

Absent, however, are the US and India.

In a statement, Association of Southeast Asian Nations (ASEAN) leaders indicated the door is still open for India to join.

Oil price inches up

While still languishing well below pre-pandemic levels, the WTI crude oil price closed Monday at $41.82 per barrel, up by $0.37 from the previous week, according to the Energy Information Administration (EIA).

However, the Monday closing price marked a decline of $13.39 per barrel from the previous year.

Meanwhile, U.S. crude oil inventories have declined but still remain well above 2019 levels. Inventories for the week ending Nov. 13 totaled 484.4 million barrels. The weekly totaled dipped by 8.0 million barrels from the previous week. However, inventories were up 37.6 million barrels from the previous year.

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