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Goldman Sachs Says You Must Own Commodities in These Tense Times – by Pratish Narayanan (Bloomberg News – April 13, 2018)

https://www.bloomberg.com/

The case for owning commodities has rarely been stronger, according to Goldman Sachs Group Inc. With raw materials rallying on escalating political tensions across the globe and economic growth remaining strong, the bank’s analysts including Jeffrey Currie doubled down on their “overweight” recommendation.

They reiterated a view that commodities will yield returns of 10 percent over the next 12 months, according to an April 12 note.

The Bloomberg Commodity Index is up more than 2.5 percent this week, the most in two months. Another raw materials gauge, the S&P GSCI Index, has rallied over 5 percent this week to levels last seen in 2014.

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Commentary: U.S. sanctions are an aluminium-tipped precision strike – by Andy Home (Reuters U.K. – April 13, 2018)

https://uk.reuters.com/

LONDON (Reuters) – When it comes to U.S. sanctions, it seems not all Russian oligarchs are created equal. Seven were designated by the Treasury Department for sanctions along with 17 Russian government officials.

But one has been singled out for special treatment: Oleg Deripaska, owner of the world’s largest aluminium producer outside of China. Of the 12 companies subject to sanctions, eight are controlled by Deripaska.

United Company Rusal, which produces 6 percent of the world’s aluminium in any year, takes centre stage.

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Can China fill aluminum shortage after Rusal sanctioned? – by Eric Onstad and Melanie Burton (Reuters U.S. – April 12, 2018)

https://www.reuters.com/

LONDON/MELBOURNE (Reuters) – Dominant aluminum producer China may help fill a gap in global supply after the United States slapped sanctions on Russia’s aluminum giant Rusal.

But a tangle of tariffs will obstruct flows to the United States so aluminum consumers will need to find other solutions as well, industry experts said.

International prices, which have shot up more than 10 percent since the sanctions were announced, will have to rise further to lure exports from China, whose metal faces a range of tariffs and duties.

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Deripaska’s empire under threat as U.S. hits Russia with sanctions – by Eric Reguly (Globe and Mail – April 11, 2018)

https://www.theglobeandmail.com/

Only six months ago, Russian billionaire Oleg Deripaska, said to be President Vladimir Putin’s favourite oligarch, was on top of the world. He had just pulled off a remarkable feat: the listing of his hydropower and aluminum holdings company EN+ Group on the London Stock Exchange, the first Russian company to do so since Russia’s invasion of Crimea in 2014.

Today, he is fighting to save his empire from destruction. On Friday, he and eight of his industrial companies were hit with punishing U.S. sanctions that could last years.

While Mr. Deripaska was only one of seven Russian oligarchs and a dozen of their business to land on the sanctions list, he has the most to lose, given the vast scale of his Russian holdings, which have 150,000 employees.

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Aluminum Set for Biggest Winning Streak in 30 Years on Sanctions – by Thomas Wilson (Bloomberg News – April 11, 2018)

https://www.bloomberg.com/

Aluminum is heading for its biggest winning streak since 1988 in the four days since the U.S. slapped sanctions on United Co. Rusal and as top exchanges said they’ll stop accepting metal from the Russian smelting giant.

The metal advanced 3 percent on Wednesday to $2,266.50 a metric by 11 a.m. on the London Metal Exchange. That’s up 13 percent since Thursday, before the U.S. announced sanctions.

Both the LME and CME Group Inc.’s Comex have said they won’t allow new deliveries of metal from Russian billionaire Oleg Deripaska’s Rusal, the biggest aluminum producer outside of China.

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Rusal bonds slump, customers review contracts as U.S. sanctions bite – by Polina Ivanova (Reuters U.S. – April 10, 2018)

https://www.reuters.com/

MOSCOW (Reuters) – Rusal’s (0486.HK) dollar bonds slumped to record lows, two major customers said they were reviewing their contracts, and the London Metal Exchange distanced itself from the aluminum giant on Tuesday, in the latest aftershocks from U.S. sanctions.

The sanctions imposed on Rusal and its boss, metals magnate Oleg Deripaska, mark the first time a major international company has been targeted by Washington in its moves to punish Russia for alleged meddling in the 2016 U.S. election.

While Russian markets, including the rouble, fell across the board on Monday, Rusal assets were hardest hit, with its Hong Kong-listed shares halving in value and the company warning it risked tipping into technical default.

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Rio Tinto stands to win from Rusal sanctions; U.S. consumers to lose – by Melanie Burton (Reuters U.S. – April 9, 2018)

https://www.reuters.com/

MELBOURNE (Reuters) – Rio Tinto will be among the biggest winners from the U.S. sanctions imposed on Russian aluminum giant United Company Rusal as the penalties further shake up the global metals trade and boost costs for U.S. consumers, industry sources said on Monday.

The United States on Friday imposed the sanctions against businessmen, companies and government officials that are considered associates of Russian President Vladimir Putin in one of Washington’s most aggressive moves to punish Moscow for a range of activities.

Rusal, the world’s second-largest aluminum producer, and its former President Oleg Deripaska were included on the list. Rusal said the sanctions “may be materially adverse to the business and prospects of the group.” Shares plunged 50 percent in Hong Kong on Monday.

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COLUMN-Aluminium through the looking glass after Trump’s tariffs – by Andy Home (Reuters U.K. – March 13, 2018)

https://uk.reuters.com/

LONDON, March 13 (Reuters) – In a little more than a week’s time the United States will impose a tariff of 10 percent on all aluminium imports and 25 percent on all steel imports.

Except for those from Canada and Mexico. For now. Their exemptions have been folded into separate negotiations on the North American Free Trade Agreement.

Other countries may receive exemptions as well, depending on who qualifies as a “real” friend in the eyes of U.S. President Donald Trump. So far, only “our ally, the great nation of Australia” has been given the Presidential nod.

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Kitimat would be biggest loser if U.S. revokes tariff exemption – by Nelson Bennett (Business Vancouver – March 13, 2018)

https://biv.com/

Rio Tinto Alcan aluminum smelter employs 1,000, exports $600 million annually to U.S.

Vancouver’s shipbuilding and construction industries could pay more for steel and aluminum if the U.S. revokes an exemption granted to Canada under plans to impose 25% tariffs on steel imports and 10% tariffs on aluminum imports.

But no community in B.C. would suffer more than Kitimat under the tariffs if they result in a worst-case scenario: layoffs or even a complete shutdown of the Rio Tinto Alcan (NYSE:RIO) smelter there.

The smelter is Kitimat’s biggest employer and taxpayer. With a workforce of 1,000, it employs one out of every six people in the town of 6,400 inhabitants. It sells roughly $600 million worth of aluminum to the U.S. annually, so a 10% tariff would add $60 million to U.S. prices.

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Canada’s Trudeau tells metal workers: ‘We have your backs’ – by Allison Lampert (Reuters Canada – March 12, 201)

https://ca.reuters.com/

MONTREAL (Reuters) – Canadian Prime Minister Justin Trudeau promised aluminum and steelworkers on Monday he would defend them against possible U.S. tariffs and called U.S. President Donald Trump to stress that“mutually beneficial” cross-border supply chains should be preserved.

Trump said last week he would impose import tariffs of 25 percent on steel and 10 percent for aluminum, effective later this month, but exempted Canada after an intense lobbying campaign arranged by Ottawa.

“We are ready to take action whenever action is required … we had your backs last week and we always will,” Trudeau said after visiting a Rio Tinto Ltd (RIO.AX) (RIO.L) smelter in Alma, Quebec, his first stop on a tour this week of Canada’s steel and aluminum regions.

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Despite tariff reprieve, aluminum industry expected to keep investment under wraps – by Niall McGee (Globe and Mail – March 12, 2018)

https://www.theglobeandmail.com/

After receiving a stay of execution on punitive import tariffs imposed by the United States the Canadian aluminum industry can breathe a little easier, but companies are unlikely to make major investment decisions under the status quo.

On Thursday, U.S. President Donald Trump exempted Canada and Mexico from new 10-per-cent aluminum tariffs that will soon apply to the rest of the world. The final outcome for Canada will depend on how the ongoing North American free-trade agreement talks proceed, the President said.

Mr. Trump justified the tariffs on national security grounds, specifically the need to secure a domestic supply of metals such as aluminum, for the manufacture of military equipment.

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China’s aluminum exports rise, steel down as Trump prepares tariffs – by Staff (Reuters U.S. – March 8, 2018)

https://www.reuters.com/

BEIJING (Reuters) – China’s aluminum exports grew more than 25 percent in the first two months of 2018, but steel exports fell by nearly a third, as the world’s top producer of the two metals faces scrutiny amid U.S. plans to impose hefty tariffs later on Thursday.

The rise in aluminum shipments suggested winter production cuts by Beijing to battle air pollution had not been as deep as expected, analysts said, depressing local prices and leaving producers with excess supplies to sell offshore.

In contrast, the fall in steel exports extended a steady decline in recent years as local demand has grown and China reins in its domestic steel capacity to curb stifling smog.

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Canada, Mexico to gain temporary exemption from U.S. tariffs on steel – by Adrian Morrow, Lawrence Martin and Rachelle Younglai (Globe and Mail – March 8, 2018)

https://www.theglobeandmail.com/

Canada and Mexico will be spared from President Donald Trump’s tariffs on steel and aluminum while the three countries renegotiate NAFTA, with a permanent exemption if they agree to a deal that satisfies the President, the White House said on Wednesday.

The move allows Mr. Trump to avoid slamming the heavily integrated continental steel and aluminum industries while still using the threat of tariffs to crank up the pressure on his negotiating partners to agree to his protectionist demands at the bargaining table.

The President took to Twitter on Thursday morning to say he would hold a meeting at 3:30 p.m. at the White House over the planned tariffs of 25 per cent on steel and 10 per cent on aluminum, and that the United States must show flexibility toward its allies.

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Trump waves threat of steel tariffs over NAFTA talks – by Adrian Morrow (Globe and Mail – March 6, 2018)

https://www.theglobeandmail.com/

U.S. President Donald Trump is threatening to hit Canada and Mexico with hefty tariffs on steel and aluminum until the two countries agree to a renegotiated NAFTA, rolling two looming trade battles into a single protectionist attack.

Canada and Mexico are pushing back, insisting the two fights must not be linked and keeping up a full-court press to stop Mr. Trump’s tariffs. Prime Minister Justin Trudeau tried to warn Mr. Trump off tariffs, telling him in a telephone call on Monday that levies would make it harder to strike a deal.

Canada and Mexico have powerful allies in the United States, with senior Republican politicians demanding that he change his mind and mulling passing a law to stop him.

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How should Canada respond to Trump’s tariffs? First, do nothing – by Andrew Coyne (National Post – March 6, 2018)

http://nationalpost.com/

With the world on the brink of a global trade war, the president of the United States turned to Twitter to broadcast his delight.

“When a country (U.S.A.) is losing many billions of dollars on trade with virtually every country it does business with, trade wars are good, and easy to win,” he advised. “Example, when we are down $100 billion with a certain country and they get cute, don’t trade anymore — we win big. It’s easy!”

Don’t trade any more. As always with Donald Trump, nothing about any of this is normal. The decision to impose tariffs on imports of steel and aluminum from every other nation on earth, proximate cause of the latest crisis, was made on the fly, without a word of warning to allies, Congress or his own officials, reportedly because the president was in a bad mood.

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