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Aluminium/Bauxite

LMEWEEK-Macro disquiet drowns out signs of base metals shortages – by Eric Onstad (Reuters U.K. – October 4, 2018)

https://uk.reuters.com/

LONDON, Oct 4 (Reuters) – Uncertainty about how metals demand will be hit by trade wars, rising U.S. interest rates and a slowdown in China is weighing on industrial metals prices, submerging signals pointing to potential shortages.

The index of copper and five other top industrial metals traded on the London Metal Exchange has shed 11 percent this year while prices for the worst-performing metals, zinc and lead, have tumbled by about a fifth.

But as speculators pile on bearish positions and investors flee from the metals market during tit-for-tat trade volleys, signs of metals shortfalls are building.

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Guinea’s bauxite boom upending rural communities – HRW – by Joe Bavier (Reuters Africa – October 4, 2018)

https://af.reuters.com/

JOHANNESBURG, Oct 4 (Reuters) – As mining companies in Guinea ramp up bauxite production, they are upending rural communities and undermining air and water quality while government authorities fail to rein in abuses, Human Rights Watch (HRW) said in a report on Thursday.

In the past three years, the West African nation, Africa’s biggest producer of the aluminium ore, has seen bauxite output explode, mainly on the back of demand from China.

Despite the growth in economic activity however, Guinea’s bauxite mining heartland has been racked by unrest in recent years, fuelled by the frustrations of the local population.

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Ford CEO says Trump’s metal tariffs cost auto maker $1-billion – by Nick Carey and David Shepardson (Globe and Mail/Reuters – September 27, 2018)

https://www.theglobeandmail.com/

Steel and aluminum tariffs imposed by the Trump administration have cost Ford Motor Co about $1-billion in profits, its chief executive officer said on Wednesday, while Honda Motor Co said higher steel prices have brought “hundreds of millions of dollars” in new costs.

“From Ford’s perspective the metals tariffs took about $1-billion in profit from us,” CEO James Hackett said at a Bloomberg conference in New York, “The irony of which is we source most of that in the U.S. today anyway. If it goes on any longer, it will do more damage.”

Hackett did not specify what period the $1-billion covered, but a spokesman said the automaker’s CEO was referring to internal forecasts at Ford for higher tariff-related costs in 2018 and 2019.

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NEWS RELEASE: NAFTA Deal a Sell-Out for Canadian Steel, Aluminum Workers

TORONTO, Oct. 1, 2018 /CNW/ – Tens of thousands of Canadian families have been left in the lurch from concessions made by the Liberal government to get a deal with the Unites States on a renegotiated North American Free Trade Agreement.

“Time and time again during the NAFTA renegotiations, the Liberal government assured Canadians that it was defending our steel and aluminum sectors and the livelihoods of tens of thousands of Canadian families,” said Ken Neumann, United Steelworkers (USW) Canadian Director.

“Given the Liberal government’s rhetoric throughout the process, it was inconceivable that it would agree to any deal that harms Canada’s steel and aluminum sectors,” Neumann said.

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U.S. `Takes Grenade Off the Table’ With Tweak to Rusal Sanctions – by Jack Farchy and Yuliya Fedorinova (Bloomberg News – September 18, 2018)

https://www.bloomberg.com/

The U.S. has laid the groundwork to avoid a brewing crisis in the global aluminum market. By making a technical tweak to sanctions on United Co. Rusal on Friday, the U.S. Treasury handed a potential lifeline to buyers of aluminum whose annual contracts with the Russian company are soon due to expire.

That makes it less likely there will be a repeat of the chaos that gripped the aluminum market in April when the curbs were first imposed.

Crucially, the U.S. said that Rusal’s existing customers could negotiate some new contracts, but stopped short of lifting the aggressive sanctions off Oleg Deripaska, the Russian billionaire who has been accused by the U.S. of links to organized crime and bribery.

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Canada’s Aluminum Valley grapples with U.S. tariffs – by Emma Jacobs (Market Place.org – September 17, 2018)

https://www.marketplace.org/

Canada’s Aluminum Valley is a two-hour drive north of Quebec City, in the region of Saguenay—Lac-Saint-Jean. Five aluminum smelters along a 50-mile stretch of the Saguenay River account for almost half of Canada’s aluminum production.

This has residents here following negotiations between Canada and the United States over a new North American Free Trade Agreement especially closely, with hopes an accord will clear the way to lifting tariffs on Canadian steel and aluminum in place since June.

The first smelter opened in this region in 1926 was built by Americans, attracted by plentiful hydroelectricity. The adjoining company town was named Arvida, after industrialist Arthur Vining Davis. The structures from the Arvida smelter are still part of the large Jonquière Complex, which includes two of the smelters and a refinery.

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Commentary: Relief for Rusal, but aluminium’s political risks remain – by Andy Home (Reuters U.K. – September 17, 2018)

https://uk.reuters.com/

LONDON The United States has thrown Russian aluminium company Rusal a lifeline by loosening sanctions imposed on the company in April. Critically, the U.S. Treasury has tweaked its sanctions to allow Rusal to enter into new contracts with existing customers.

This is good news for the Russian company, which has been shunned by buyers negotiating 2019 shipments. It’s also good news for the aluminium market, which was facing the prospect of 3.7 million tonnes of Rusal product being locked out of the supply chain.

However, the broader sanctions threat against Rusal, a by-product of the sanctions against its oligarch owner Oleg Deripaska, remains. An Oct. 23 deadline for customers to wind down business with the company still stands, leaving any new contracts still beholden to the same underlying uncertainty about when sanctions will be fully lifted.

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Simmering Alcoa Labor Dispute Morphs Into ‘Clash of the Titans’ – by Sandrine Rastello and Joe Deaux (Bloomberg News – September 11, 2018)

https://www.bloomberg.com/

Workers of the Alcoa Corp.-controlled Becancour smelter in Quebec stand guard under umbrellas outside the gates. Whenever a vehicle approaches, a pair scurries to take down the driver’s details and make sure there’s no scab laborer in disguise.

The ritual, witnessed on a rainy August morning, has become part of life at the aluminum plant since January, when the company locked out more than 1,000 employees represented by the United Steelworkers union. The entrance is also where tensions have flared as the conflict, which started over pensions and recruitment rules, turned into a deadlock.

For Pittsburgh-based Alcoa, the dispute has resulted in a production decline at the plant, adding to pressures resulting from U.S. aluminum tariffs that have hit its three smelters in Canada. The company is now seeking deeper changes — including reduced payrolls — to make the plant more competitive. For their part, workers say they’ve already made concessions and are fighting to retain seniority rights.

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Aluminum Risks Return to Crisis With Rusal Left Out in the Cold – by Mark Burton and Yuliya Fedorinova (Bloomberg News – September 10, 2018)

https://www.bloomberg.com/

The aluminum industry is running out of time to avoid another crisis as U.S. sanctions leave United Co. Rusal locked out of crucial contract negotiations kicking off this week in Berlin.

The U.S. allowed Rusal customers with existing supply deals to keep doing business with the company until Oct. 23, but not to sign new contracts.

Unless the U.S. Treasury lifts the sanctions in time — which remains a possibility — the No. 2 supplier of aluminum will be sidelined from the annual negotiations and could soon be forced to scale back output of products used in everything from alloy wheels to airplane fuselages.

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Aluminum Seen Facing ‘Doomsday’ If Rusal Sanctions Proceed (Bloomberg News – September 7, 2018)

https://www.bloomberg.com/

Aluminum faces a “doomsday scenario” if the U.S. proceeds with sanctions on United Co. Rusal in October, according to Wood Mackenzie Ltd., which says prices could exceed their seven-year highs in April.

The market outside China is already in deficit, and would go “into a massive shortage” if a producer the size of Rusal can’t supply metal, Julian Kettle, vice chairman of metals and mining, said in an interview in Singapore. “Prices will move to a level where you will get demand destruction” as buyers start switching to alternative materials, he said.

Aluminum spiked in April after U.S. sanctions on Rusal upended global supply chains, which were already under pressure from lower output at Alunorte in Brazil.

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Aluminum products maker Arconic in talks to sell itself: sources – by Harry Brumpton and Greg Roumeliotis (Reuters U.S. – August 24, 2018)

https://www.reuters.com/

(Reuters) – Aluminum products maker Arconic Inc is discussing acquisition offers for the entire company, even though it announced a sale process last month only for its building and construction systems unit, people familiar with the matter said.

The move comes after Arconic, which was spun out of Alcoa Corp in 2016, said in February it would carry out a “strategy and portfolio review,” to be completed by the end of 2018, but has provided little detail about what this entails.

Arconic is speaking with private equity firms that have shown interest in acquiring the company, including a consortium of Blackstone Group LP and Carlyle Group LP, another consortium of KKR & Co and Onex Corp, as well as Apollo Global Management LLC, the sources said on Friday.

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COLUMN-U.S. disrupts aluminium supply chain, but not where it counts – by Andy Home (Reuters U.K. – August 23, 2018)

https://uk.reuters.com/

LONDON, Aug 23 (Reuters) – In the United States, old aluminium smelters are being brought back to life. On Wednesday Century Aluminum held an official ceremony to celebrate the reactivation of the first of three idled potlines at its Hawesville plant in Kentucky.

The smelter, which first started production in 1969, has been running at just 40 percent of its 252,000 tonne annual capacity since 2015 and was teetering on the edge of full closure.

Hawesville’s life-line has come from the imposition of 10-percent tariffs on U.S. imports of aluminium and Commerce Secretary Wilbur Ross was guest of honour at yesterday’s official bash. In Russia, meanwhile, old aluminium smelters are being closed down.

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Commentary: China may end up inadvertent winner from Trump’s aluminium tariffs – by Clyde Russell (Reuters U.K. – August 13, 2018)

https://uk.reuters.com/

LAUNCESTON, Australia (Reuters) – It’s probably not what U.S. President Donald Trump had in mind when imposing tariffs on aluminium imports, but it looks likely that some of the big winners from the 10 percent import tax will be China’s producers.

While Chinese aluminium companies now face the same tariff obstacle as other exporters to the United States, they appear better placed to benefit from some of the (most likely) unintended consequences of the Trump administration’s policies.

The Trump tariffs and measures against major Russian producer Rusal, along with a strike at Alcoa’s alumina and bauxite operations in Western Australia are combining to roil aluminium markets.

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Ford Calls Rising Steel, Aluminum Prices ‘Significant Headwind’ – by Keith Naughton (Bloomberg News – August 8, 2018)

https://www.bloomberg.com/

Rising steel and aluminum prices, driven up by President Donald Trump’s tariffs on those commodities, are a substantial drag on Ford Motor Co.’s business, though a top executive said the company doesn’t plan to pass higher costs on to consumers.

“The escalation of steel and aluminum prices is really significant,” Jim Farley, Ford’s president of global markets, said after a factory ceremony near Detroit to commemorate building the 10 millionth Mustang muscle car. “It’s a significant headwind for us. It’s something that puts pressure on our own costs.”

Ford began the year by warning that rising costs for raw materials like steel and aluminum, coupled with unfavorable exchange rates, would add $1.6 billion to its costs this year.

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Soup, pop and beer companies to increase prices to combat aluminum tariffs – by Tara Deschamps (Canadian Press/Toronto Star – August 7, 2018)

https://www.thestar.com/

Soup, pop and beer makers can’t seem to put a lid on the effects of the recent aluminum tariffs. The 10 per cent fees that were slapped on imports of the metal by U.S. President Donald Trump in early July are making cans more expensive and forcing food and beverage companies that rely on them for packaging to consider price increases and other ways to offset the costs.

The Campbell Company of Canada, which produces canned soup at its soon-to-close Etobicoke plant, is set to jack up prices in late August on a “broad range of products.”

The exact amount by which prices will be increased is still under consideration, but the tariffs combined with raising freight, packaging and ingredient costs are to blame, company spokesperson Alexandra Sockett told The Canadian Press in an email.

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