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Aluminium/Bauxite

China Speculators Swarm to Aluminum as Cuts Spur Supply Bet (Bloomberg News – August 23, 2017)

https://www.bloomberg.com/

With a week to go, it’s already the heaviest month ever for trading aluminum in China.

The metal has typically been one of the quieter contracts on China’s mercurial futures markets, but supply reforms in the top producer and consumer have caught the attention of the nation’s speculators and sent prices to the highest in almost six years. Trading in August has already surpassed the previous monthly record set in November.

While the frenzy is raising concern aluminum’s just the latest Chinese commodity bubble that will be deflated by regulators before it bursts, there’s also optimism that investors are tapping into a real shift in the fundamental outlook for the metal. The Shanghai Futures Exchange has already stepped in to calm trading in steel and zinc this month as a surge in volume propelled prices to multi-year highs.

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COLUMN-Repricing aluminium’s supply risks is a chaotic work in progress – by Andy Home (Reuters U.K. – August 14, 2017)

http://uk.reuters.com/

LONDON, Aug 14 (Reuters) – Aluminium was the standout performer among the major industrial metals last week. On the London Metal Exchange (LME) three-month metal jumped by more than 7 percent to reach its highest in nearly three years at $2,048 a tonne.

China outdid even that, with the most actively traded contract on the Shanghai Futures Exchange (ShFE) hitting a five-year high of 16,480 yuan a tonne amid an explosion in trading volumes and open interest. There is much speculative froth in these moves, particularly in Shanghai, but there is also a collective attempt to reassess this market’s supply risks.

China has embarked on a policy of closing “illegal” smelter capacity, meaning that which has been constructed without the full gamut of official approvals. This being China, the largest producer of aluminium in the world, there are big implications for supply.

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Aluminum Leaps Past $2,000 a Ton After China Deepens Capacity Cuts – by Mark Burton (Bloomberg News – August 8, 2017)

https://www.bloomberg.com/

Aluminum cemented its spot as the best commodity this year as prices jumped to over $2,000 a metric ton for the first time since 2014.

Prices have rallied as China ramps up efforts to curtail illegal or polluting capacity. The metal added 2.2 percent to $2,008 as of 3:58 p.m. in London, bringing gains for the year to about 19 percent, the biggest rally among 22 raw materials on the Bloomberg Commodity Index.

“It does feel like China’s supply-side reform is deepening, and aluminum is definitely one of our favorite metals,” Xiao Fu, head of global commodities strategy at BOCI Global Commodities U.K., said by phone.

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China aluminum capacity cuts boost market leaders, prices – by Tom Daly and Melanie Burton (Reuters U.S. – August 3, 2017)

https://www.reuters.com/

BEIJING/MELBOURNE (Reuters) – China’s crackdown on its bloated aluminum industry is driving up the share price of the country’s major producers and raising the specter of a tighter global market that could buoy prices.

China is forcing the suspension of aluminum plants that have not obtained proper permits to build or expand, or that have not met strict environmental standards, as Beijing pushes to clear its skies and shore up loss-making industries.

China accounts for nearly 60 percent of global aluminum output and analysts estimate some 3-4 million tonnes of capacity could close this year, around a tenth of the country’s total, tightening the global market.

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Hydro-powered smelters charge premium prices for ‘green’ aluminum – by Peter Hobson (Reuters U.S. – August 2, 2017)

https://www.reuters.com/

LONDON (Reuters) – Producers of “green” aluminum – made using renewable energy rather than fossil fuels – are starting to charge premium prices thanks to rising demand from industrial customers under pressure to reduce their carbon footprints.

Operators of smelters powered by hydro-electricity in the likes of Norway, Russia and Canada are promoting their environmental credentials – and stealing a march on others that rely on coal or gas, notably in China and the Gulf.

The competitive edge lies not in the metal itself, but the fact that its production requires far lower total emissions of greenhouse gases including carbon dioxide. While they do not use the term “green” aluminum, a number of producers are offering low-carbon guarantees on their metal, although they refuse to say how much more they charge for this beyond saying the premiums are relatively modest.

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COLUMN-All eyes on China’s aluminium sector but little clarity – by Andy Home (Reuters U.k. – July 28, 2017)

http://uk.reuters.com/

LONDON, July 28 (Reuters) – It’s all about China. This has been the mantra of the industrial metal markets for over a decade. The country’s industrialisation and urbanisation programmes have been the core driver of demand growth across the metallic spectrum.

In the case of aluminium, however, China’s influence on the global supply chain is double-edged. As well as being the biggest user of aluminium, China is by some margin the largest producer, accounting for over 50 percent of global output.

That dominant role is now in focus as Beijing launches what looks like a multi-pronged attack on its aluminium producers. Production cuts in regions around the capital have been mandated for the coming winter heating season, which starts in November.

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China’s steel, aluminum output at record as U.S. mulls penalties – by Muyu Xu and Melanie Burton (Reuters U.S. – July 16, 2017)

https://www.reuters.com/

BEIJING/MELBOURNE (Reuters) – China churned out record amounts of steel and aluminum in June as producers rushed to cash-in on rallying prices in the wake of a drive by Beijing to crack down on output of low-grade metal.

That could fuel concerns the world’s top steel producer will export more metal, stoking global oversupply and fanning tensions with the United States after it accused the nation of flooding international markets with cheap aluminum and steel.

U.S. President Donald Trump has threatened to use a Cold War-era law to restrict imports for national security reasons as bilateral talks between Washington and Beijing continue. China has long-denied that it has been offloading metals abroad at the expense of foreign producers.

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Can Trump resurrect U.S. aluminum, and who killed it anyway? – by Andy Home (Reuters U.S. – July 13, 2017)

https://www.reuters.com/

LONDON (Reuters) – Alcoa is bringing one of its U.S. aluminum smelters back from the dead. The Warrick smelter in Indiana has annual capacity of 269,000 tonnes, its own coal-based power source and is integrated with a rolling mill.

None of which saved it from Alcoa’s scramble down the cost curve in the face of falling prices, culminating in its permanent closure in January 2016. That’s different from what the industry calls a “curtailment”, a temporary idling for possible restart.

But now, miraculously, Warrick is back and Alcoa will fire up three of the plant’s five production lines, with capacity of 161,400 tonnes of aluminum. The other two will be classified as “curtailed”. The timing of this resurrection is politically charged.

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Rusal resumes Taishet aluminum project, sees deeper global deficit – by Anastasia Lyrchikova(Reuters U.S. – July 12, 2017)

https://www.reuters.com/

MOSCOW (Reuters) – Russia’s Rusal has resumed construction of its long-stalled Taishet aluminum smelter project in Siberia in expectation of a widening global aluminum deficit, the company said on Wednesday.

The world’s second-largest aluminum producer behind China’s Hongqiao needs a further $700 million to complete the project, having invested about $800 million in Taishet before it was halted because of falling aluminum prices.

Aluminum prices have jumped by 12 percent to $1,887 a tonne since the start of January and Rusal expects them to climb above $1,900 by the end of the year, said Deputy Chief Executive Oleg Mukhamedshin, citing the company’s belief that the global deficit will reach 1.8 million tonnes in 2018, up 500,000 tonnes this year.

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Malaysia’s bauxite exports rise despite mining ban – by Emily Chow (Reuters U.S. – July 5, 2017)

http://www.reuters.com/

KUALA LUMPUR – A year and a half after banning bauxite mining to force miners to meet environmental standards, Malaysia’s exports to main customer China are again growing, raising public anger over illegal mining.

Residents and politicians in the east coast bauxite mining region are calling for a total export ban of the aluminum raw material, but industry figures and analysts say shipments are likely to continue.

Malaysia halted bauxite mining in January last year, but allowed exports to continue to deplete vast stockpiles at ports where run-off after monsoon rains had polluted waters and led to a public outcry.

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Trump Is Wrong About Aluminum Imports – by Shelley Goldberg (Bloomberg News – June 27, 2017)

https://www.bloomberg.com/

Plan for restrictions is based on a nonexistent national security threat.

President Donald Trump is using national security to kowtow to an industry in a conundrum. In April, the administration opened an investigation into the impact of imported steel and aluminum that is expected to result in tariffs or quotas on imports of these important metals.

The probe fits with Trump’s core trade pledge to shake up the old order while trumpeting “America First.” But proving metal imports pose a national security threat will be a considerable challenge.

Although much of the focus has been on steel, the ramifications for aluminum are also significant and could have broad repercussions for many other industries and for the U.S. economy as a whole. The amount of aluminum consumed by the U.S. military is insignificant in the scope of the total. Most of the metal imported by the U.S. comes from nations such as China and Canada, and typically serves civilian uses for automobiles, packing, roofing, road signs and consumer durables, none of which implicate national security.

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Aluminum industry scrambles to align Trump’s trade guns – by Andy Home (Reuters U.S. – Jun 22, 2017)

https://www.reuters.com/

LONDON -Aluminum industry executives will line up on Thursday to have their say on whether foreign imports into the United States pose a threat to the country’s security. The Section 232 investigation was announced by the Department of Congress on April 27 and follows hot on the heels of a similar probe into U.S. steel imports, the results of which are pending.

Section 232 of the Trade Expansion Act of 1962, to give its full title, was last used in 2001 against imports of iron ore with a “no action necessary” outcome.

This time around, everyone’s expecting a different result. The Trump administration has pledged to stem the rising metallic import tide and reverse the ebbing of the country’s primary aluminum production capacity.

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Rio Tinto, Canada aluminum’s good guys in Commerce Department probe – by Suzanne O’Halloran (June 21, 2017)

http://www.foxbusiness.com/

The world’s biggest aluminum players want to set the record straight: they say they shouldn’t be lumped in with China, Russia and other alleged “bad actors” whose imports may be a threat to the security of the United States.

Among those Rio Tinto (RIO), the largest producer of aluminum in North America, via its operations in Quebec and British Columbia. “Rio Tinto’s operations, such as those in Utah, California and Arizona are strong contributors to the United States economy and employment” Rio Tinto CEO Alf Barrios said in prepared remarks viewed by FOX Business, to be delivered Thursday during a scheduled hearing.

Barrios also defended the miner’s long history as a U.S. defense ally dating back to World War II. “Our smelters have a long history of supplying U.S. manufacturers – particularly U.S. defense-related manufacturing” he notes.

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China’s Biggest Aluminum Producer to Cut Outdated Capacity (Bloomberg News – June 20, 2017)

https://www.bloomberg.com/

China Hongqiao Group Ltd., the nation’s biggest aluminum smelter, is curtailing outdated capacity amid a broader crackdown by the government on illegal production. Shares of aluminum makers gained in China.

The company, the main aluminum arm of Shandong Weiqiao Pioneering Group Co., declined to give the scale or timing of the reduction in an emailed statement. Two people with knowledge of the situation said Weiqiao’s aluminum business started cutting 250,000 metric tons of annual capacity from Tuesday, declining to be identified as the information is private. A Weiqiao spokesman couldn’t be reached for comment.

China, the world’s top producer of the lightweight metal, has stepped up efforts this year to prune capacity to reduce excess supply. Its top economic planning agency issued an order in April for local governments to halt smelters that violate environmental guidelines, while a plan earlier in the year called for capacity to be shuttered during the peak pollution season over the winter. China’s total smelting capacity last year was about 40 million tons.

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Lawmakers urges U.S. Treasury to reject Aleris sale to China aluminum giant – by Diane Bartz and Lesley Wroughton (Reuters U.S. – June 10, 2017)

https://www.reuters.com/

More than two dozen U.S. lawmakers have urged U.S. Treasury Secretary Steven Mnuchin to reject the proposed sale of U.S. aluminum products maker Aleris Corp (ALSD.PK) to China Zhongwang Holdings Ltd (1333.HK) to protect U.S. security interests.

In a June 9 letter to Mnuchin shared with Reuters, the 27 lawmakers said it would be a “strategic misstep” to allow the $2.33 billion sale to go ahead.

“It is critical that CFIUS (Committee on Foreign Investment in the United States) exercise extreme caution when a foreign investment transaction includes the transfer of military proficiencies and sensitive technology to China,” the lawmakers wrote.

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