Some Japanese aluminium buyers agree Q2 premium at $129/T, up 25 pct from Q1 –sources

Date Mar 13 2018 16:06:45 Source:Reuters

TOKYO, March 12 (Reuters) - Some Japanese aluminium buyers have agreed to pay a premium of $129 per tonne for shipments from global producers in the April to June quarter, reflecting soaring U.S. spot premiums, two sources directly involved in the pricing talks said on Monday.

    The new premium is 25 percent higher than the $103 per tonne premiums  PREM-ALUM-JP  in the current quarter. The premium is the highest in three years and marks the second quarterly increase in a row.

    Japan is Asia's biggest importer of aluminium and the premiums for primary metal shipments it agrees to pay each quarter over the London Metal Exchange (LME) cash price set the benchmark for the region.

    The quarterly pricing negotiations began last month between Japanese buyers and global producers, including Alcoa Corp AA.N , Rio Tinto  RIO.L   RIO.AX  and South32 Ltd  S32.AX ,

with initial offers for premiums ranging between $132 and $135 a tonne.

    The increase reflects a surge in U.S. spot premiums to the highest in almost three years after U.S. President Donald Trump flagged a 10 percent import duty, as buyers sought to secure metal before higher costs come into force.

    Trump pressed ahead last Thursday with the import tariffs but exempted Canada and Mexico and offered the possibility of excluding other allies, backtracking from an earlier "no-exceptions" stance.

    U.S. spot premiums for Comex aluminium reached to around 18.5 cents a pound  1AUPc1  ($408 a tonne) last week, highest since April 2015.

    "We struck deals at $129 per tonne with three producers last week after securing that level below their initial offers," a source at a Japanese trading house said.     

    A source at another trading company said his company agreed to $129 per tonne for some of its contracts, but other buyers said they were still negotiating as fallout from the U.S. tariffs was not entirely clear.

    On Friday, Trump said he has spoken with Australian Prime Minister Malcolm Turnbull and that they are working on an agreement so Australia would not be subject to U.S. tariffs on steel and aluminium. 

    "Global suppliers which have smelters in Australia may raise their offers once the exemption is confirmed as it is by far more profitable to bring metals to the U.S. than to Asia even after paying transportation costs now," the first trading house source said.

    "But we may see higher supply in Asia as some metals to be shut out from the U.S. may head to Asia, which could weigh on premiums," a source at a fabricator said.


Edited by SHMET

Anglo American halts output at Brazil ore unit after duct failure

Date Mar 13 2018 16:04:41 Source:Reuters

SAO PAULO, March 12 (Reuters) - Global diversified mining company Anglo American Plc  AAL.L  halted iron ore production at its mine in Brazil's Minas Gerais state after a mineral duct used to transport the product to an export terminal broke down, the company said in a statement on Monday.

    Anglo said there was leakage of a mixture of iron ore and water to a local watershed. It asked the local water company to stop using that water to supply residents and it is paying for water trucks to serve the local population for now. It said production at the Conceição do Mato Dentro mine is halted until they can determine what caused the duct's accident.

Edited by SHMET

Gold inches lower ahead of key U.S. data

Date Mar 13 2018 16:03:38 Source:Reuters

March 13 (Reuters) - Gold prices crept lower on Tuesday on a firmer dollar as investors waited for U.S. consumer price data due later in the day to gauge the outlook for inflation and the Federal Reserve's rate hike stance.

    Spot gold  XAU=  dipped 0.1 percent to $1,321.34 per ounce at 0359 GMT.   

    U.S. gold futures  GCcv1  for April delivery rose 0.1 percent to $1,321.60 per ounce.

    The dollar index  .DXY , which measures the U.S. Dollar against a basket of currencies, was up 0.1 percent at 89.977.

    "Gold traders are adopting a more neutral stance ... While a March hike is fully priced in, traders usually get a bit anxious awaiting the Fed statement and key forward guidance," said Stephen Innes, APAC trading head at OANDA.

    "We should expect interest rate uncertainty to weigh on prices over the short term."   

    The U.S. government is expected to release consumer price index (CPI) data at 1230 GMT, a key focus for the day. The median forecast by economists polled by Reuters points to annual core CPI inflation of 1.8 percent in February, which would be flat from January.

    A higher reading could stoke expectations that the Federal Reserve will likely raise interest rates four times, rather than three times, this year. Higher interest rates increase the opportunity cost for non-yielding bullion.   

    Any outcome above expectations will put gold under pressure, said Richard Xu, a fund manager at HuaAn Gold, China's biggest gold exchange-traded fund.   

    In the longer term, Xu expected gold to be range bound this year, although an expected slowdown in the Chinese economy will provide support.

    In February, growth in China's manufacturing sector cooled to the weakest in over 1-1/2 years, raising concerns of a sharper-than-expected slowdown in the world's second biggest economy this year as regulators tighten the screws on financial risks.      

    Spot gold looks neutral in a range of $1,318-$1,327 per ounce and an escape could suggest a direction, according to Reuters Technical analyst, Wang Tao.

    In other precious metals, silver  XAG=  rose 0.2 percent to $16.52 per ounce.

    Platinum  XPT=  fell 0.4 percent, to $959.00 per ounce, the highest since Sept. 8, while palladium  XPD=  remained unchanged at $978.50 per ounce.


Edited by SHMET

Canada's Trudeau tells metal workers: 'We have your backs'

Date Mar 13 2018 16:00:35 Source:Reuters

MONTREAL, March 12 (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.   

    In a phone call from the smelter town, Trudeau thanked Trump for the "special consideration" extended to Canada on the tariffs, and emphasized the importance of preserving "mutually beneficial" supply chains to support jobs and businesses on both sides of the border, his office said.

    It was the second call in a week that Trudeau made to Trump on the tariffs issue.

    Canada, the biggest supplier of steel and aluminum to the United States, escaped Trump's import duties along with Mexico, but the two countries could still face duties if they fail to reach a deal with the Trump administration on modernizing the North American Free Trade Agreement .

    Trudeau said Canada had a lot more work to do and would press Washington to ensure the exemptions were permanent. Canada has said that tariffs would hurt both the United States and Canada.

    The Canadian government has vowed to retaliate if duties are imposed, but the prime minister did not answer directly when asked what measures it might take.

    Trudeau rejected calls by some Quebec union leaders to take a harder line in NAFTA talks and leave the table if Canada cannot get a better deal.

    "We are negotiating the NAFTA accord in good faith and we will continue to do so, but I don't want the president to think he can bring tariffs on Canadian steel and aluminum without there being consequences," he told Radio-Canada earlier in the day.

    Later this week, Trudeau is due to visit the Ontario steel city of Hamilton, where workers are on edge.


Edited by SHMET

Tesla's electric motor shift to spur demand for rare earth neodymium

Date Mar 13 2018 15:59:38 Source:Reuters

LONDON, March 12 (Reuters) - Tesla's shift to a magnetic motor using neodymium in its Model 3 Long Range car adds to pressure on already strained supplies of a rare earth metal that had for years been shunned because of an export ban by top producer China.

    Efforts by governments around the world to cut noxious emissions produced by fossil fuel-powered cars is driving demand for electric vehicles and the metals used to make them, such as lithium and cobalt which are key ingredients for batteries.

    Now the spotlight is on neodymium. Several auto makers already use permanent magnet motors that rely on the metal because they are generally lighter, stronger and more efficient than induction motors that are based on copper coils.

    But it is the switch to neodymium by Tesla, an auto maker that has staked its future solely on the electric vehicle, that is showing the way the industry is moving and the direction of demand for the rare earth metal.

    Research group imarc estimates the market for the neodymium-iron-boron magnet used in the motors is now worth more than $11.3 billion, with demand for the magnets rising at a compound annual growth rate of 8.5 percent between 2010 and 2017.

    "Some electric car motors use the permanent magnet technology, probably the most famous is the Tesla Model 3 Long Range. All the other Tesla models -- Model X and Model 3 standard -- use induction motors," said David Merriman, a senior analyst at metals consultancy Roskill.

    Global demand of 31,700 tonnes for neodymium last year already outstripped supply by 3,300 tonnes, he said. Demand was expected to climb to 34,200 tonnes this year and 38,800 tonnes in 2018, leaving larger deficits.

    "Tesla's decision to switch to permanent magnets has completely changed the dynamics of the market," said a source at a fund manager that specialises in metals.

    The price of neodymium is now about $70 a kg, well below the $500 hit after China held back shipments to Japan in 2010 during a row over disputed islands but it is still 40 percent higher than at the start of 2017.

    China, which resumed neodymium exports in 2015, imposed strict export quotas across a range of rare earth metal in 2010, saying it wanted to curtail pollution and preserve resources.



    "People seem to have forgotten China's export ban. It could happen again. China is really the main producer, no one else has invested as much in rare earths," a rare earth trader said.

    Despite their name, rare earths are found in many places around the world, but the process of extraction is difficult and expensive, as it requires separating multiple different metals from a single deposit. This is unlike the much simpler process, for example, of recovering copper from ore.

    China has invested heavily in the rare earth metals process but its crackdown on mining, smelting and other polluting industries is forecast to slow supply. It already helped push the neodymium price to a two-year high of $96 in September.

    "Rare earth production is as bad as you can get in terms of environmental damage," the trader said. "China used its dominant position before, what's to stop it doing so again?"

    Such supply concerns are encouraging automakers to search for ways of cutting down neodymium use. Toyota Motor Corp 7203.T  said last month it had found a way to cut use of the metal in electric motors by about a fifth. 

    The Japanese firm said it had developed a magnet which replaced some of the neodymium with more abundant and cheaper rare earths -- lanthanum and cerium. Toyota aims to use the

magnets in electric vehicle motors within the next 10 years.

    Other manufacturers of electric vehicles that use permanent magnets include BMW  BMWG , Nissan  7201.T  and Geely  0175.HK .

    Several companies produce rare earth metals outside China, including London-listed Rainbow Rare Earths  RBWR.L , Canada-listed Namibia Rare Earths  NRE.V  and Australia's Spectrum Rare Earths  SPX.AX .

    But, for now, auto makers making permanent magnet motors remain heavily reliant on China, which according to Roskill accounted for 85 percent of global output of rare earth oxide

estimated at 161,700 tonnes in 2017.

    Morgan Stanley analysts estimate electric vehicles will total 50,000 units in 2020 or 2.3 percent of the total, rising to 400,000 in 2025 or 17.4 percent, and 975,000 in 2030 or 40.9




Edited by SHMET