US to negotiate new trade agreements with Japan, the EU and the UK

At the direction of the President, United States Trade Representative Robert Lighthizer notified Congress that the Trump Administration intends to negotiate three separate trade agreements with Japan, the European Union and the United Kingdom.

“Under President Trump’s leadership, we will continue to expand U.S. trade and investment by negotiating trade agreements with Japan, the EU and the United Kingdom,” said Ambassador Lighthizer.  “Today’s announcement is an important milestone in that process. We are committed to concluding these negotiations with timely and substantive results for American workers, farmers, ranchers, and businesses.” The USTR will also publish notices in the Federal Register requesting the public’s input on the direction, focus and content of the trade negotiations.

Canadian government to conduct a full review on imports of Chinese silicon

The Canadian International Trade Tribunal (CITT) today said it would initiate an expiry review on imports of silicon metal from China. The Canadian Border Services Agency (CBSA) will first determine whether the expiry of the duty will likely result in the continuation or resumption of dumping by China. If the CBSA determines that the elimination of the duty will result in dumping then the CITT will conduct a review to see if the dumping will result in injury to the domestic industry.

The CITT will hold a hearing on the case on June 10, 2019. The final determination will be made on Aug. 22, 2019.

As one participant said the full review was expected since the case has garnered a great deal of interest.

For the official statement and review schedule:

Notice of Expiry Review of Findings

EU imports of steel examined

August imports of finished steel into the EU fell -12% MoM on a daily basis as flat products plunged (-17% MoM) and longs stabilized 25% below their record high second quarter 2018 average, according to Jefferies. However, the YTD trend only contracted modestly from 11% to 10% as imports remained elevated on a YoY basis for flats (+4%) and longs (+19%).

While all flat product categories fell sequentially in-line with seasonality, HRC stood out (+21% YoY) as elevated Turkish volumes stayed firm, rising to 41% of total HRC imports (vs. 27% in 2017 and 32% for rebar). Although HRC was one of the few remaining product categories not experiencing a QoQ decline in volumes both license and quota allocation data paint a more reassuring forward picture. On the long products side, even though rebar rebounded (+37% MoM) from depressed levels, the YTD trend moderated from 74% to 69%. Lastly, imports of semis reached their lowest level of the year as Iran exited the market due to uncertainty around US sanctions.

Jefferies said: Stainless imports in Aug rose +9% MoM, or +3% on a finished basis, as a significant slab shipment from the US drove semis to a record high. Finished-steel imports were up +21% YoY, with the YTD trend accelerating to +12% vs. 10% in July. By product category, CR stainless volumes showed some signs of moderation (-16% MoM; +1% YoY) but HR imports surged (+57% MoM; +69% YoY) to 55kt, just 3% shy of their March peak.

While this can be partly explained by China’s bounce off unusually weak July volumes (+91% MoM), Jefferies noted that shipments from Indonesia increased more than fivefold to grab 10% of the finished stainless import supply (vs. 2% in July). With summer a usually quiet period for imports, the presence of aggressively-priced Indonesian material provides some explanation for recent Euro base price weakness.

Albachrome expanding HC FeCr production, shipping more to the US

BALFIN (Balkan Finance Investment Group) said it would invest E10-million at its Burrel ferrochrome plant with an eye towards adding a third furnace.  BALFIN took over the Albanian producer in 2006 and has so far invested $11-million, most of which went to the construction of a second high-carbon ferrochrome furnace which doubled capacity it to 36,000 mtpy from about 17,000 mtpy.

Albachrome also has a smelter in Elbasa that is expected to produce 42,000 mtpy from about 34,000 mtpy.

In the first five months of 2018, Albachrome exported 12,219 mt of high-carbon ferrochrome to the US vs. 7,527 mt in all of 2017. The US will probably be a target market for the expansion.

Vale Ni/Co output sinks in Q3

Vale reported a significant drop in third-quarter nickel and cobalt production compared to the second quarter at nearly all of its operations. The third-quarter production problems guaranteed that Vale’s nickel and cobalt output for the first nine months was lower than in the comparable period last year.

Vale’s nickel production fell to 55,700 mt in the third quarter, down 15.9% from production of 66,200 mt in the second quarter and 23.4% lower than production of 72,700 mt in the third quarter of 2017. For the first nine months of the year, Vale’s nickel production fell 14% to 180,600 mt compared to 210,100 mt in the first nine months of 2017.

Vale’s cobalt production was 1,028 mt in the third quarter, down 21% compared to the previous quarter and 31% lower than in the third quarter of 2017. In the first three quarters, Vale produced 3,657 mt of cobalt, 12% less than in the first nine months of 2017 when it produced 4,160 mt.

Vale’s Canadian operations accounted for the biggest production shortfalls, with a annual scheduled maintenance shutdown at Sudbury and the transition of Thompson, Man., to a mine-mill operation (Thompson’s concentrates are being sent to the Sudbury smelter for further processing).

Vale expects fourth-quarter nickel production to be 60,000 mt compared to 55,700 mt in the third quarter.

Vale’s nickel sales fell to 57,300 mt in the third quarter, down 7% compared to the prior quarter and nearly20% below sales of 71,300 mt in the third quarter of 2017. Vale’s nickel sales for the first nine months fell 17.7% to 176,800 mt compared to 214,800 mt in the year-ago period.

Vale noted that nickel production at the Voisey’s Bay mine dropped by 1,100 mt to 8,400 mt in the third quarter compared to the prior quarter mostly because of “the strategic decision to decrease production output to extend the mine’s lifespan to match the Voisey’s Bay mine extension. Vale has revived the plan to invest $1.7-billion in expanding the mine life of Voisey’s Bay by 15 years through an underground mine expected to come onstream in April 2022.

While nickel production from Voisey’s Bay dropped 28.8% in the first nine months of the year to 38,600 mt, cobalt production from Voisey’s Bay jumped 30.6% in the first nine months to 1,345 mt compared to 1,030 mt in the first nine months of 2017.

Vale said it is currently studying options at its New Caledonia operations including “a revamped mining plan to enhance value generation from the asset and explore its cobalt potential in support of the EV batteries market.” The company hopes to reach a decision on plans for New Caledonia by yearend. Production of nickel oxide and nickel hydroxide cake at New Caledonia fell 8% to 6,900 mt compared to the previous quarter mainly because of lower ore deliveries from the mine and refinery limitations.

DLA’s FeCr sale–less than expected

DLA is only offering 750 tons of high-carbon ferrochrome (64.38% Cr and 6.46% C) from Hammond, IN, at tomorrow’s BOA sale. In addition, the agency is offering 581,644 lb of 0.15% C, 66.08% Cr low-carbon ferrochrome from Pt Pleasant, WV. It will be the agency’s first sale of fiscal 2019 and also its first sale since July. DLA normally sold at least 1,000 tons of high carbon and about 40% more low carbon but the US ferrochrome market is considered to be weak and there wasn’t much interest in the material. As a result, even the smaller tonnages may not be sold.

DCC to expand its Barry, Wales silicones plant

Dow Corning is looking to expand its Barry, Wales silicones plant. The project is part of a series of “low-capital-intensity, high-return” investments in its upstream and downstream silicones franchise by adding a new installation to develop and establish the “most effective technology” for compounding high consistency rubber and fluorosilicone rubber.

The company expects to improve product quality and consistency, worker safety, productivity and cost structure. The new facility is expected to come online in mid-2019.

DCC also started  construction of a new silicone resin plant at its existing manufacturing site in Zhangjiagang, China. The facility is set for startup in 2021.

With the UK in the process of exiting the EU, its Barry plant could be free from all the European penalty duties on silicon metal, which makes the Barry plant more attractive to expansion.

EU could be the dumping ground for Chinese ferroalloys

With the high likelihood of the US government increasing the penalty duty on most Chinese ferroalloys from the current 10% level to 25% on Jan. 1, 2019, sellers say the ferroalloys will be diverted from the US to Europe. “It’s one thing to absorb or pass along a 10% duty, but 25% is impossible,” one seller said.

The fallout is that European ferroalloy producers are expected to fight by going to the EC for protection. Already, there are rumors that EU chromium metal producers are readying a suit to protect their market. There is currently only a 3% duty on Chinese metal.

Vekselberg still pissed at US over sanctions, risks opening up a can of worms

Viktor Vekselberg, the owner of Renova, is still pissed at the US government for imposing sanctions on him and his group of companies, including South Africa’s Transalloys. Vekselberg was quoted in Russian publications that he wants to appeal the US sanctions, but didn’t say where, i.e., what court or country, or the legal basis.

Vekselberg might be playing with fire however. Some of his companies, including Transalloys, avoid the sanctions by “selling” to new majority owners, reportedly related parties. “It was such a transparent move to get off the list,” one lawyer said. “If pressed by Vekselberg the US government might investigate as to whether effective control really passed to the new majority, not only in name but in also in substance.”

Credit Suisse throws cold water on the US steel industry

In a blow to the US steel industry Credit Suisse today downgraded the US steel sector as it expects prices to fall due to oversupply and falling demand coupled with rising interest rates. The financial house also cut its rating on the sector to “market weight” from “overweight”, saying capital spending by the mills has “disappointed” investors. Credit Suisse also downgraded Nucor, Steel Dynamics and Cleveland Cliffs to “neutral”. However, the mini mills are expected to weather the storm without any major financial repercussions.

Credit Suisse also pointed to USX’s decisions to restart a second furnace at Granite City that will put 2.1-million mt of new hot rolled steel into the market. Also, the bank predicted that agreements would be reached with Canadian steel mills which will add to the expected US surplus.

On a brighter noted, Credit Suisse was high on AK Steel, believing that the mill will be able to negotiate higher prices with US auto manufacturers. The financial house said about 25% of AK’s auto steel business already reset on Oct. 1 at higher prices and 50% are expected to reset at the beginning of 2019.

However, US auto sales don’t look as strong as they did in early 2018.