• New Outlook Report

    Grab our NEW 2018 annual metals outlook report – budget, forecast, strategize.

    Free Download >
  • MetalMiner Benchmarking

    Benchmark your metal spend against more than 31 million price benchmarks from 1,300+ companies in 25 industries.

    Try it now >
  • GET TWO ON US!

    Receive 2 monthly metal buying outlooks at no cost to you. Understand the market in which you’re buying. Formulate your 2018 strategy.

    Sign Up Now >

Pavel Ignatov/Adobe Stock

This morning in metals news, China’s scrap steel exports surged last year, two popular American non-metal products could be affected by steel and aluminum tariffs, and a miner of gold and silver looks to get into copper and zinc.

Need buying strategies for steel? Try two free months of MetalMiner’s Outlook

Chinese Scrap Steel Exports Jump in a Big Way

Scrap steel exports from China amounted to 2.2 millions tons in 2017, according to a Reuters report citing the Xinhua news agency.

Bourbon, Cheese Getting Caught in a Hypothetical Trade War?

As President Donald Trump mulls steel and aluminum tariffs — as part of the Department of Commerce’s Section 232 probes — many have pondered if such tariffs would mark the start of a new trade war.

According to a report by NPR, Kentucky bourbon and Wisconsin cheese could be affected in such a trade war. While China is often the primary focus of the 232 discussion, according to the report European allies are warning of possible retaliation.

Hochschild Looks to Get Into Copper, Zinc

Hochschild, a miner of gold and silver, is interested in moving into other sectors, like copper and zinc, according to a Reuters report.

MetalMiner’s Annual Outlook provides 2018 buying strategies for carbon steel

Gold and silver will continue to buy the miner’s top priority, according to the report.

(Editor’s Note: In case you missed the previous installments of this series, check out Part 1 and Part 2.)

What About the Impact on U.S. Production?

The U.S. Department of Commerce. qingwa/Adobe Stock

First, the recommendations from the Department of Commerce apply to both primary (or upstream) and downstream production.

The upstream production refers to unwrought production, while downstream production consists of processing aluminum into semi-finished aluminum goods (such as rods, bar, sheets, plates, castings, forging and extrusions). The U.S. remains remains the second-largest aluminum producer, just behind  China.

Buying Aluminum in 2018? Download MetalMiner’s free annual price outlook

The main objective of the actions proposed by the Department of Commerce focused on downstream production. As previously stated, the Section 232 outcome seeks to restore the industry to 80% capacity utilization.

Therefore, aluminum production could increase (at least, domestically). Increasing the domestic capacity utilization rate up to 80% would mean more aluminum will be produced and consumed domestically.

Aluminum Carve-outs?

President Trump has yet to determine if all the report recommendations will be applied. MetalMiner believes that even if the quotas/tariffs implemented are lower than that indicated in the Section 232 aluminum report — meaning a lower tariff and, therefore, a reduced capacity utilization rate — aluminum products may not receive as many exemptions as steel products.  

Contrary to steel, most aluminum products can be produced domestically and therefore, aluminum would potentially require fewer carve-outs than steel.

Timing becomes an issue when considering the impact of the Section 232 aluminum investigation outcome.

For the aluminum industry, restarting idled capacity takes around 9 months. After that, each smelter needs to start running toward its optimal capacity, which also takes time. Realistically it may take 12-15 months of time to reach optimal production.

Trump will need to consider that timing in his decision. Without careful consideration, reducing aluminum imports could have a negative impact for U.S. aluminum buyers in the short term. 

Therefore, the president might need to take this into account and give some time for the industry to adapt to the new measures.

Want to see an Aluminum Price forecast? Take a free trial!

Trade Wars: Hype or Reality?

We will address this issue in an upcoming post.