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Report On Base Metals  01/09

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Global demand

Base metals demand is boosted up and supported by the Chinese economy data, PMI index rising to 51.6, from 51.1. This morning the prices were up average 0.1%.

 

Nickel prices were upside than down finishing with the 0.8% gain. Following with tin price up about 0.3%, while aluminium lifts up for 0.2%.

Copper price came off 0.1%, leveling $6,812 per tonne. Lead and Zinc were off 0.2%.
Trade average Volume  is with 6,588 lots as of 07:13 BST.

The Following results are coming after Thursday. When base metals closed at average 1.2% up. Zinc yesterday rose for 2.4%. Nickel and Al were up 1.6%… Tin was little changed…

 

Precious metals

Prices saw a slight volatility, with gold prices at $1,320 per oz. The palladium prices are off 0.2% at $933.50 per oz.

“This came after a day of strength on Thursday when the complex closed up an average of 0.8%, helped by a reversal in intraday dollar strength on benign inflation data. “ (Fast Markets)

 

SHFE

In The SHFE trade this morning, base metals are up across the board with average gains of 0.9%.

Nickel prices rose for 1.8%. Copper prices are lagging behind with a 0.2% gain to 52,740 yuan ($8,013) per tonne, as other metals play catch-up with it.

Changjiang spot copper prices are little changed at 52,540-52,680 yuan per tonne. While the London/Shanghai copper arb ratio is weaker at 7.74 (7.77).

Steel rebar prices on the SHFE are up a whopping 6.1%, while gold and silver prices are up by 0.7% and 0.2% respectively.

Iron ore prices, for January delivery, are up 4.5% at 584 yuan per tonne on the Dalian Commodity Exchange.

 

International markets

 

In international markets, speaking about Oil prices.. Spot Brent crude oil prices are off 0.2% at $52.64 per barrel. The yield on US ten-year treasuries has eased to 2.13%. Due to the German ten-year bund yield, which has fallen to 0.36%.

Indexes

Equities in Asia are for the most part slightly firmer this morning – both the Nikkei and the ASX 200 are up 0.2%. The Hang Seng is up 0.1%, and the CSI 300 little changed, while the Kospi is off 0.2%. In the USA, the Dow Jones closed up 0.25% at 21,948.10 on Thursday.

Euro Stoxx 50 closed up 0.52% at 3,421.47.

Observing the dollar index, it spike up to 93.35 on Thursday, before closing at 92.61, it was recently quoted at 92.77 as it consolidates ahead of today’s US employment report. The report is likely to spark a reaction from traders as they adjust their view on likely Fed monetary policy. A good report could make the market think the Fed will turn more hawkish again. This could give the dollar a lift and that could weigh on metal prices.

Currencies are recent movements are: The euro at 1.1883 is correcting some of its recent gains, the yen at 110.17 is consolidating, as are sterling at 1.2915 and the Australian dollar at 0.7935.

In emerging market currencies, the yuan is stronger at 6.5809 – another sign of confidence in the economy and for the most part the other currencies we follow are flat-to-firm. Although the peso is slightly weaker.

Finishing,

Aluminium and nickel prices have now joined copper prices in pushing the envelope on the upside and zinc prices are close to following.  Furthermore, lead and tin prices are still lagging behind. Good data out of China and a weak dollar are supporting the firmer tones in the base metals. The recent rallies are looking quite stretched, although there have been bouts of consolidation along the way.

A huge part of metal movement depends on dollar. If it avoids rebounding, then the high price levels will likely scale up selling. Then the upside movement is about to grow.

Base Metals Market Review 31/08

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Top Things to know in market on Thursday

 

  • China plans safety inspections at coal mines
  • U.S. acts to finalize duties on imports of rebar from Taiwan
  • Zambia’s CEC to restore full power to Glencore’s Mopani Copper Mine
  • Brazil judge blocks decree opening Amazon area to mining
  • Vedanta Resources names ex-CEO Kaura as interim chief exec
  • South African iron ore, chrome producer Assore posts record profit due to higher prices

 

Base Metals 

This morning, Chinese PMI manufacturing data gave the results way better than expected. Those gave the support to the base metals market. It leveled at  51.7. Which is when compared with 51.4 previous and 51.3 expected, way better result.

 

Metal prices

The trade today was not so agitated, but as we observe the happenings.. The Zinc leads with 0.4% rise. Later comes copper with 0.3% rise. Pricing at $6,794 per tonne. Aluminium rose for 0.2%, while nickel was up for 0.1%.

Lead and Tin show the downwards movement, with lead lower for 0.3%, while tin is lower for 0.2%. The summary volume is average, with 6,267 lots.

Yesterday’s trade was generally weaker. It had the base metals complex close down by an average of 0.3%. It came after nickel price drop of 1%, and 0.8% fall in zinc prices.

Copper prices closed at $6,776 per tonne.

Tin had the gain of 1%, while aluminium prices changed a bit.

 

Precious metals

Generally, precious metal prices are lower, with gold, silver and platinum prices falling for 0.4% all. Gold spot price reached the price of $1,302.62. Palladium prices are 0.2% up, leveling $932.20.

Yesterday, the complex closed with 0.6% down.

SHFE

This morning in SHFE, Nickel and Zinc prices were off by 0.4% and 0.1%. Following, the tin and copper prices came at 52,800 yuan per tonne.

“Spot copper prices in Changjiang are up 0.2% at 52,250-52,700 yuan per tonne and the London/Shanghai copper arb ratio is weaker at 7.77. “

Steel rebar prices on the SHFE are up by 0.7%, gold and silver prices are off by 0.8% and 0.7%, respectively, while January 2018 iron ore prices on the Dalian Commodity Exchange have rebounded by 3.6% to 571.50 yuan per tonne.  (FastMarkets)

 

Currencies/Data/Indices

Finishing with international markets, the spot Brent crude oil prices are up 0.2%. They are now at $50.70 per barrel. And the yield on US ten-year treasuries is unchanged at 2.15%. German ten-year bund yield is firmer at 0.37%.

Observing equities this morning, gains are being seen on the Nikkei (0.72%). The ASX 200 (0.79%), while loses are being seen on the Hang Seng (-0.68%), the CSI 300 (-0.42%) and on the Kospi (-0.38%). In the USA. T

The Dow Jones closed up 0.12% at 21,892.43 on Wednesday, while in Europe, the Euro Stoxx 50 closed up 0.46% at 3,403.71. (Indexes data from Fast Markets)

 

Hurricane in Gulf Coast damaging Gasoline & Oil Markets

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Hurricane Harvey

During the weekend a huge hurricane hit U.S. Gulf coast!

It crippled Houston and flooded the Texas area. The port in Houston is damaged really serious and it knocked down the crude production in numerous refineries along the shore.

Gasoline prices hit two-year highs, influenced by massive floods caused by the storm. It forced U.S. Gulf Coast to ship orders from across the sea.

 

Oil market

Observing crude markets, U.S. futures fell. Later, U.S. refinery shutdowns could cause the reduced demand for American crude.

Brent futures also eased.

The Harvey hurricane killed at least 2 people, and it is the strongest hurricane in last half a century. It caused a Houston port closure, while it shut down numeros refineries.

“The U.S. National Hurricane Center (NHC) said on Monday that Harvey was moving away from the coast but was expected to linger close to the shore through Tuesday.”

“The floods would spread from Texas eastward to Louisiana.”

 

Oil refining in Texas 

Oil refining in Texas composes of 5.6 million barrels of refining capacity daily. Louisiana has 3.3 million barrels. The storm shut down over 2 million bpd.

“Spot prices for U.S. gasoline futures surged 7 percent to a peak of $1.7799 per gallon, the highest level since late July 2015, before easing to $1.7281 by 0703 GMT.” (Reuters)

To replace the lost outputs, and in order to avoid fuel shortage, U.S. traders were shipping cargoes from North Asia.

 

Base Metal Markets – August the 23rd

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Wednesday, the 23rd of august – Top 5 things to be aware of:

  1. Trump’s policy focusing on different fronts
  2. Worldwide manufacturing data shows resilience; U.S. in focus
  3. Mario Draghi avoids policy indication ahead of Jackson Hole
  4. Risk interested wavers standing in front of Central Bankers
  5. Oil prices trading lower

 

Volatility of Metals

Metal prices are following some very inspiring movement these days. The early morning trade on LME today went this way:  

We are speaking about morning trade:

This comes after yesterday’s split performance.

When lead led the gains with a 3.2% rally, nickel prices closed up 1% and copper closed up 0.2%. The rest were led lower by a 0.8% decline in tin prices. (Fast Markets data in numbers)

Speaking about precious metals, the prices are up across the board this morning by an average of 0.3%. Inspired by a 0.4% rise in silver prices, spot gold prices are up 0.2% at $1,285.86 per oz. This follows a down day on Tuesday when the complex closed off 0.6% on average, led by a 1% fall in palladium prices. (FM)

 

SHFE today 

Observing the morning trade on the SHFE, the base metals complex is for the most part weaker with prices off an average of 0.4%. Led by a 1.7% drop in tin prices, aluminium and zinc prices are off 1.1% and copper prices are off by 0.1%. 

 

Pointing at 51,570 yuan ($7,739) per tonne. 

Bucking the trend are lead and nickel prices, up by 1.5% and 0.1%, respectively.

Other metals in China are showing some down movement. SHFE rebar prices are down 4.9% and iron ore prices on the Dalian Commodity exchange are down 3.7% at 580 yuan per tonne on the January 2018 contract. The gold and silver prices on SHFE are both down 0.4%.

 

International Markets

In international markets, spot Brent crude oil prices are up by 0.2% at $51.71 per barrel. The income on US ten-year treasuries is firmer at 2.21%, and the German ten-year bund yield is at 0.40%

 

Indexes 

In the end, observing the Indexes and their market movement:

Firstly, the Hang Seng Index is up (+0.9%), the Nikkei (+0.2%), the CSI 300 (0.1%). All of these are higher, while the ASX 200 is off 0.3% and the Kospi is off 0.1%. In the USA, the Dow Jones closed up 0.9% at 21,799.89 and in Europe, the Euro Stoxx 50 closed up 0.94% at 3,455.59.

(Exact Numbers in the Article coming from the Fast Markets.)

 

Oil Production; Summary of Main Oil News this week

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Russian energy ministry and output cut talks

The main official of Rosneft, Igor Sechin, said on Saturday that the Russian energy ministry had his backup in discussions over oil production cuts.

“The most important thing is to have a mechanism to defend our interests.”

In previous months, Sechin has expressed some suspicions about the ability of the OPEC. And its power to influence oil markets amid a shale oil production boom in the United States.

The countries: Oil producers, including OPEC and non-OPEC; agreed to cut output for 1.8 a day. This decision dates from last year, and will be active till June the 30th. It aims to reduce global oil inventories.

The Oil producing countries will meet later this month in Vienna, to discuss a possible extension of the deal.

 

Georgia nuclear plant construction (Southern Co)

Georgia Power and Westinghouse decided to transfer the Project management of Georgia nuclear power plant expansion, to Southern Co.

 

The temporary agreement until June 3 will allow construction of the plant expansion to continue.

Westinghouse Electric Co filed for bankruptcy in March, was hit by billions of dollars of cost overruns. At four nuclear reactors under construction, including at the Georgia project and another in South Carolina.

The Georgia project is owned by a group of utilities led by Southern Co.

Gasoline in India

Firstly, the gasoline consumption growth has been slowing since the middle of 2016, after rising for the previous two years.

Secondly, observing the last 9 months we see that consumption growth for most other fuels used for cooking and transportation is also slowing down.

 

Based on the current data, demand for liquefied petroleum gas and kerosene used for cooking, heating and lighting as well as diesel used for transport; all show signs of leveling off or falling in the first four months of 2017.

These trends maybe come from the demonetisation of large-denomination bank notes in India. They were announced at the start of November as part of the government’s anti-corruption campaign.

 

Crude Oil prices Impact:

 

Rising crude oil and refined fuel prices over the last year are also likely to have constrained the growth in consumption and other fuels.

Observing the retail gasoline prices, we note that they rose by around 10 percent between January 2016 and January 2017. While diesel prices climbed by almost 8 percent. (Ministry of Petroleum and Natural Gas)india

India’s middle class is pretty sensitive to increases in prices & costs, so they are curbing a demand for Oil. Their middle class, urban as well as rural, is emerging very fast.

Nevertheless the recent slowdown in consumption growth for gasoline and other fuels, it is too early to determine if the deceleration is temporary linked to demonetization and price rises or something more lasting.

India as a source of oil demand:

Noteworthy, India has been one of the most important sources of oil demand growth during the cuts. So any extended slowdown in consumption growth, would make the mission of global market harder. The rebalancing will be way more complicated.

 

Oil prices VOLATILE; firstly UP on positive expectations, then falling DOWN after overnight gains

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Top 5 things about Monday’s Market:

  • Macron cruises to victory in France
  • Euro SLIPS as Macron relief rally loses steam
  • Global stocks mixed; Europe trades lower after French election
  • Oil gives up strong overnight gains
  • China’s april exports, imports rise less than expected

More info on these 5 from: www.investing.com

Prices; Monday Overnight Gains

Saudi Arabia’s energy minister stated that OPEC is seriously discussing the idea to prolong output cuts. The extension of oil output cuts will happen in June. And it would also likely cover all the year long period of time. It will maybe even enter the 2018. Despite U.S. production and drilling which is constantly increasing their margins and profits, the oil sector is limited. And the U.S. drilling can’t be permanent.

Brent crude futures were at $49.48 per barrel at 0652 GMT (2.52 a.m. ET). That is up for 38 cents, or 0.75 percent, from their last close.

U.S. West Texas Intermediate futures were at $46.52 per barrel. Which is up 30 cents, or 0.7 percent from their previous price.

Energy Minister of Saudi Arabia Speaking

Today, Khalid-Al-Falih, Saudi’s energy minister explained that oil market is now rebalancing. After long years of oversupply and overstressed ambient on this market. He said they are still expecting OPEC’s decision to bring the bright trends for future oil prices.

“Based on the consultations I have had with participating members, I am rather confident the agreement will be extended into the second half of the year and possibly beyond.” (Reuters)

His speech was held during an industry event in Kuala Lumpur. In Malaysia’s capital, on Monday.

 

Exports:

The Organization of the Petroleum Exporting Countries  along with other producers, together with Russia, agreed to cut output by almost 1.8 million barrels per day (bpd) during the first half of the year. In ordet to prop up the stressed market. Saudi Arabia is de-facto leader of all the producing countries. With the biggest stake with its individual oil outputs.

 

The positive comments and upward prices came after a long last week’s plummeting trends, which pumped the negative speculations into the Oil market. The countries who are not included in this output cut deals, also contributed to low prices. Including the United States, where output is simply exalted. It has took off in recent period so strongly, that it has a huge impacts on market.

 

Bringing the decision

Next official OPEC’s meeting will be on May the 25th. And finally, decision on whether to continue the cuts will be brought out to light. Officially.

“Oil may have seen the worst of the selloff for now, as the market turns its attention to the OPEC meeting at the end of the month.” said Jeffrey Halley, senior market analyst at futures brokerage OANDA in Singapore. ( Reuters)

French Election Impact on Oil Prices

Some of the market participants say that the victory of Emmanuel Macron in the French presidential election against far-right Marine Le Pen also supported oil prices. Bringing the hopes of more stable European economy, which automatically added to positive speculations. And implemented great hopes into the markets.

Still, both Brent and WTI crude are holding below $50 for now.

U.S. drilling continued to pick up last week, with the rig count climbing by 6 to 703.

Since a low point in May 2016, U.S. producers have added 387 oil rigs, or about 123 percent, Goldman Sachs said. (Reuters)

 

Change of trends:

Finishing with info that Oil price again edged lower, erasing strong overnight gains !! U.S. crude was at $46,17 a barrel, down 5 cents, or around 0.1% . While Brent Shed 6 cents to $49.04!

Doing businesses in the markets these days (the upcoming week) would certainly be very challenging for all the race participants. Rather than last week, which was filled out with suspicions on whether the oil prices will go a bit higher & what would happen in European market.

Oil prices lower every day; OPEC’s effective and efficient decisions needed

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Today, it was a day of 5-month lows in Oil prices. This happened because of bothers on OPEC glut, and whether it would be extended. Nevertheless promises from Saudi Arabia about Russia’s preparation to join OPEC’s future cuts.

 

Low Prices of Oil

U.S. West Texas Intermediate crude oil futures  were more than 3 percent down in early trading. They came to a price of less than $44 a barrel. Which makes it the lowest since Nov 14. Yesterday, oil was down for 4 percent.

Brent Crude also went down for 3%. It went to a price less than $47. The lowest since november the 30th. The 30th of November was the date when OPEC activated a price rally. The day they announced that the output cuts are to start in the first half of 2017.

Trade losses

Both landmarks sleeked losses to trade near Thursday’s close by 1320 GMT. “OPEC and non-OPEC nations were really near to agreeing a deal on supply cuts.” said Adeeb Al-Aama, Saudi’s OPEC Governor.

  • “Based on today’s data, there’s a growing conviction that a six-month extension may be needed to rebalance the market, but the length of the extension is not firm yet.”

Deeper cut is not so likely. Speculations say that OPEC indeed will extend the cuts on May 25th. But the question is what is initially good about this. The 1017 has and will have 1.8 million bpd. That is the agreement which OPEC countries made in the beginning.

Hedge funds had speeded up decrease of their long positions. Thursday was a day when Brent crude trading volumes came to a record high. Counting about 542,000 contracts.

Pierre Andurand is the official in one of the worlds largest funds specialising in oil. He busted up his fund’s last long positions in oil last week. He is now running a very reduced risk at the moment.

“It is now-or-never for oil bulls,” said U.S. commodity analysis firm The Schork Report. They either put up a defense here or risk further emboldening the bears for a run at the $40 threshold (for WTI).” (Reuters)

 

Brend And WTI Futures

Both Brent and WTI futures are down about 17 percent so far this year despite OPEC efforts to support prices. The benchmarks are trading around levels last seen before the joint deal to cut output was first announced.

“So far OPEC’s strategy to draw down inventories has not worked.” (Neil Beveridge)

” If their strategy is to have any chance of success.. It is evident to us that OPEC will need to keep the output cuts active way more than the next six months. ”

Adding to cares about protruding inventories, traders pointed to exalted U.S. oil output. It is up more than 10 percent since mid-2016 to 9.3 million bpd. Which makes it almost matching output of top producers Russia and Saudi Arabia.

“Any likelihood of an increase in the level of cuts remains slim with OPEC officials playing down this possibility.” said James Woods, global investment analyst at Rivkin Securities. (Reuters)

 

Bar nickel inch higher; beside multi-week lows, and oil price collapse

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SHFE

 

Marginally higher trade among base metals traded on the SHFE. Due to weaker dollar during Asian morning trade on Friday May 5. But there remained near multi-week lows following an overnight collapse in the oil price. Nickel took the uptrend, as expectations of increased supply continued to push prices down.

“European markets are buoyed by the prospects of centrist Emmanuel Macron winning the second round in the French presidential election on Sunday. [May 7]”

The strength in the European markets had pushed the dollar down yesterday’s night. Reaching a November 2016 low of 98.695. Dollar index had recently rebounded to 98.78 as of 04:32 BST. But it was still much lower compared with 99.38 at approximately the same time on Thursday.

Overnight Oil Collapse

Following, an overnight collapse in the price of oil continues to keep SHFE base metals prices under pressure this morning.

The oil price is now back to its lowest point since mid-November with WTI oil sitting at $45.51 a barrel and below the level that prevailed before the OPEC’s oil production ceiling. (According to NAB.)

Despite the pressure, SHFE bases metals prices are inching higher. The exception is nickel, which is bucking the uptrend based on fears over increased supply following the rejection of Regina Lopez as the Philippines Environment Minister on Wednesday May 3.


Nickel below 76,000 yuan per tonne

September nickel contract on SHFE stood at 75,340 yuan per tonne as of 03:54 BST. Down 930 yuan compared with the previous session’s close.

“Nickel led the sector lower as the market reacted to the failure of the Philippines Environment Minister to be confirmed by lawmakers. Ms Lopez had been spearheading the closure of the nickel mining industry due to new environmental laws.”
Appointment of  Lopez as DENR secretary came as a glimmer of hope for nickel prices amid a weakened Chinese stainless steel sector. Also a number of China-backed nickel pig iron projects coming on stream in Indonesia.

Since the country relaxed its ban on the export of unprocessed ores in January, Indonesia’s first nickel ore shipment arrived in China on Monday May 1.

A possibility that Indonesia may expand its export quota, is adding to fears of increased supply in the market.
Union workers at Glencore plc’s Raglan nickel mine

have voted 99.6% in favour of a strike mandate. Means that the USW’s negotiation committee for the mine has the authority to initiate a strike if they consider it suitable. The Raglan mine, located in the Nunavik region of northern Quebec, produces more than 37,000 tonnes of nickel-in-concentrate annually.

Copper up marginally, but the pressure is present

June copper contract on SHFE stood at 45,200 yuan per tonne as of 03:54 BST. Up 20 yuan compared with the previous session’s close.


In the mean time, the LME’s three-month copper price stood at $5,530 per tonne as of 04:48 BST. Down 0.19% from last close.  LME copper inventories rose a net 32,925 tonnes to 317,850 tonnes, with 29,275 tonnes going into Busan, after a rise of 31,250 tonnes on Thursday.
Observing the supply side, Southern Copper said a strike at its Peruvian operations in April caused a production loss of

“only 1,418 tonnes of copper”.

Base metal prices keeping a downward trend (info & data)

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Important to know of Today’s market:

  • European CB President Mario Draghi Speaks
  • Bank of Canada Governor Poloz Speaks
  • UK Services Purchasing Managers Index rose to actual 55.0 (forecast was 53.3)

For more info: https://www.investing.com/

 

LME Today:

All base metal prices on the London Metal Exchange humbled today in morning trade, May 4. After a significant sell-off on Wednesday that saw copper prices down 3.7% and nickel falling 3.3%.

Three-month copper price fell further this morning as it began trading below $5,600 per tonne. Nickel price fell additionaly $150 per tonne. All other base metals saw a slight decline.

Metal Bulletin senior analyst, William Adams, said:

“The battering the base metals suffered on Wednesday has poured cold water on last week’s attempted rebounds and has opened the way for more price weakness, especially in the case of nickel where prices have dropped to levels not seen since June last year.”  (Metal Bulletin)

Copper inventories on the LME have risen by over 60,000 tonnes over the last two days.

 

Copper below $5,600/t

On Wednesday, the LME copper price plummeted by over $200 per tonne at the close of trading. Three-month copper price is down $39.50 to $5,560.50 per tonne.
Copper inventories up 32,925 tonnes to 317,850 tonnes, with 29,275 of this in Busan. It follows a rise of 31,250 tonnes yesterday.

  • Reuters wrote that German copper products group Wieland will be acquiring the copper and steel tube business Wolverine Tube as part of its plans to expand internationally.

Workers at PT Freeport Indonesia still continuing with the one-month announced strike. They are persistent & not giving up their ideas. This is reducing the copper outputs. And will surely lead to lower supplies.
 

Other base metals fall

Three-month aluminium price fell $12.50 to $1,911 per tonne.  Stocks declined 1,175 tonnes to 1,609,925 tonnes. 

“Held well against yesterday’s sell off, trading in a $19 range (vs copper that spanned $196) with evidence of consumer buying via the spreads market. Light turnover in comparison to the copper and nickel.” (F.M.)
Nickel plunged another $150 to $9,080 per tonne. Yesterday nickel prices declined $285.  Inventories were up 30 tonnes to 380,502 tonnes.
The 3month zinc price fell $26.50 to $2,548.50 per tonne. Inventories for zinc fell 2,250 tonnes to 342,475 tonnes. Glencore’s zinc production rose 9% y-o-y, with the company adding that it currently has no plans to restart idled capacity in Australia and Peru.
Lead started trading today at $2,167.60 per tonne – a decline of $34.50 on yesterday’s close. Stocks were up 5,550 tonnes to 174,250 tonnes.
The three-month tin price decreased just $60 to $19,830 per tonne as it consolidates around the $19,800-19,900 mark.
Tin stocks on the LME fell to the lowest recorded since 1980 yesterday. Stocks declined a further 35 tonnes today and currently stand at 2,630 tonnes. (Numbers from Fast Markets)

Finishing

Metal Bulletin wrote an article on data about: Spanish unemployment, services PMI across Europe, data on UK lending, EU retail sales and a host of US data including: Challenger job cuts, initial jobless claims. Also non-farm productivity, labour costs, the trade balance. Paying attention to factory orders and natural gas storage. There’s many going on today, it will also be a challenging trade for next few days.

Weaker Chinese data; U.S. aluminium sector asks Britain & EU to unite against China

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U.S. Representatives

Spokesman of the U.S. aluminum industry are speaking to EU counterparts. They have written to British Prime Minister Theresa May. Asking urgent action against “massive illegal subsidies” in China that bluster Western jobs.

Trade lawyers and some governments accuse China of unfairly subsidizing major industries in breach of the rules of the World Trade Organization (WTO). While China became part of the World Trade Organization in 2001.

 

Shifting focus to Aluminium

 

U.S. this year has reversed the focus to aluminum. Following European and U.S. action to protect their steel industries from China speaking about steel and copper of earlier times.

It has lodged a query with the WTO and launched an investigation into whether Chinese imports compromise national security.

“The WTO and U.S. and European leaders must act quickly to ensure a fair playing field.” Michael Bless, CEO CENX.O, told a news conference in London yesterday. China says it supports the work of the WTO.

  • The aluminum industry, represented by the China Trade Taskforce, has written to May urging her “to actively engage with the WTO on this matter and press for action”.

“A strong WTO that acts swiftly in situations such as this will be a vital part of securing Britain’s post-Brexit future” (Reuters)

The prime minister’s office had no immediate comment.

The industry leaders were also speaking to Brussels officials and to the Russian government. This floated the idea of an OPEC-style body for the aluminum industry.

They could not endorse that, but it was an

“acknowledgement of the severity of the issue”.

 

China’s Act

 

When China, the biggest aluminum consumer, joined the WTO it represented just over 10 percent of aluminum production worldwide. Now it is the world leader, accounting for more than 50 percent of global output and China’s Hongqiao has overtaken Russia’s Rusal as the biggest producer, while the U.S. and European sectors have gathered.

Industry body European Aluminium said the number of primary European aluminum smelters fell by nearly 40 percent between 2002 and 2015.

Trade lawyers say the ascendancy of China’s aluminum sector defies commercial logic as it faces higher bills for energy than the U.S. and Europe. It has the biggest input costs.

“China has no natural advantages other than illegal state support,” Alan Price of Washington law firm Wiley Rein said. (Reuters)

 

Main areas

 

Century Aluminum, which is majority-owned by Glencore, reported a first-quarter net loss. Part of the justification for the U.S. investigation into whether Chinese aluminum is a threat. It is that Century’s smelter in Kentucky is the only producer of high-purity aluminum required for U.S. combat aircraft.

In Europe, the main concern is how to maintain smelting capacity as part of a strong value chain, creating thousands of indirect jobs, rather than security, European Aluminium said in an email.

EU trade ministers, meeting in Brussels next week, are expected to discuss new rules on dealing with anti-dumping, which are likely to have most impact on Chinese imports.

In conclusion, the idea of OPEC-like association in the Aluminium market would impact prices in a really good way. That would make producers happy. But it will also have a great impact on Chinese economy. Mostly their imports, and also their production.