China blames market, not politics, for lower RE exports

  • Market: Metals
  • 08/21/20

The fall in China's rare earth exports to the US this year has been driven by market factors, China's commerce ministry (Mofcom) said, denying suggestions that political tensions are to blame.

"Chinese [rare earths] companies deal with international trade according to changes in global demand and market risks. The Covid-19 pandemic has affected production and operating activities at rare earths firms this year," Mofcom said at a regular briefing this week.

China's rare earth exports fell by 20.2pc from a year earlier to 22,800t in January-July 2020, with revenues down by 26pc to $211mn over the same period, Mofcom said, quoting latest customs data. Shipments of rare earth compounds to the US fell by 36pc to 5,084t in January-June from 7,901t a year earlier, according to the most recent data on exports by destination.

Rare earths exports in July fell by 69pc from a year earlier to 1,620t, the lowest level since February 2015. Weaker international demand because of the Covid-19 pandemic was behind the fall, Chinese market participants said.

The Covid-19 pandemic has slowed global economic growth and manufacturing activity, particularly in Europe and the US. Buyers of Chinese rare earth exports have cut operating rates and kept rare earths feedstock inventories low because of uncertainty created by the coronavirus crisis.

US-China tensions

But some industry participants have suggested that the fall in China's rare earth exports could be a retaliatory measure against the US.

Relations between Beijing and Washington have worsened, after the US administration last month closed China's Houston consulate and removed Hong Kong's preferential trade status. The US has also rejected China's offshore oil and gas claims in the South China Sea, adding to tensions.

US President Donald Trump early this month signed an executive order banning any US transactions with the Chinese technology firm that owns mobile application TikTok, and issued a similar order against owner of messaging app WeChat.

Trump said this week that he had postponed scheduled talks to review the US-China trade agreement because of his anger over how China handled the Covid-19 outbreak. Asked if he would pull out of the trade deal, Trump said: "We'll see what happens."

China's commerce ministry said yesterday that the two nations have agreed to hold trade talks in the coming days, without providing details. US exports of crude oil and other commodities to China have picked up in recent months but are still well below levels required to meet China's purchase commitments under the deal.

Chinese president Xi Jinping visited a rare earths plant in Jiangxi in May 2019, a move seen by market participants as a sign that Beijing might use rare earths to pressure Washington in its trade war with the US. The Beijing authorities and state-run People's Daily newspaper in the same month gave a strong hint that China might restrict exports of rare earths to the US as part of the trade war between the countries.

China accounts for more than 90pc of global supplies of rare earths, while 70-80pc of all US imports of rare earth oxides and metals come from the country.

The US has sought to find access to alternative rare earth resources to reduce its dependence on China's supplies. The US Department of Defense (DoD) in July signed contracts with Australian rare earth producer Lynas and US producer MP Materials to carry out design and engineering work for two US heavy rare earth separation plants.

Trump last year also signed documents freeing up funds under the US Defence Production Act to develop US capacity to separate and process heavy rare earths, light rare earths, the production of neodymium-iron-born NdFeB magnets, samarium-cobalt magnets and rare earth metals and alloys.


Sharelinkedin-sharetwitter-sharefacebook-shareemail-share

Related news posts

Argus illuminates the markets by putting a lens on the areas that matter most to you. The market news and commentary we publish reveals vital insights that enable you to make stronger, well-informed decisions. Explore a selection of news stories related to this one.

News
02/28/24

All steel coil import quotas should be reviewed: ISTA

All steel coil import quotas should be reviewed: ISTA

London, 28 February (Argus) — Quotas for all steel coil products imported to the UK should be reviewed in light of Tata Steel's transition from producer to importer, the International Steel Trade Association (ISTA) has said in response to the Trade Remedies Authority (TRA). The ISTA said Tata's imports of hot-rolled coil to enable the production of cold-rolled and hot-dip galvanised coil (CRC, HDG) could affect imports of the latter, meaning that volumes will also need to be reviewed. ThyssenKrupp Materials Trading said all flat-rolled steel quotas should be suspended during Tata's transition to an electric arc furnace, as its "lack of feedstock" could affect production of downstream products, such as CRC and HDG. Trading firm Kromat said the TRA's idea of apportioning quotas to importers based on historical volumes "potentially denies market opportunities to others and goes against the principle of fair trade". The TRA had initially said it was considering changing the quota for HRC to global, rather than country by country, and giving importers their own slice of this quota. The TRA is meeting ISTA members in London today, 28 February. A number of newer businesses, or those that historically purchased from Tata but will now increase imports, are concerned about individual importers receiving their own volumes. Steel service centre Sebden said a quota for individual importers is "deeply anti-competitive" as it could "place too much power in too few hands", referring to the large traders importing to the UK. Sebden also questioned whether slab should be given its own quota, although this is not possible as there is no domestic production. "As there are no safeguard or anti-dumping measures in place for slabs then there is a very real anti-competitive risk that Tata could, for instance, import cheap Chinese slabs, free from duty, then reroll into HRC or other downstream products", it said. It also argued that Tata could use "cheap Chinese slab" to feed its own distribution arm, which would then "have an unfair price advantage in the UK for sales to end-users". Chinese majority-owned trading firm Duferco, a supplier to Sebden and one of the biggest importers to the UK, said the TRA's proposed suspension of import quotas for HRC should be extended to nine months to "promote purchasing activity". Customers buy imported steel on a three-to-six month lead time, so a three-month suspension is insufficient, it said. Sebden echoed this, suggesting that the suspension should be for nine months. Trading firm Stemcor, which is owned by a Chinese state-owned entity, said there should be a review into dumping duties against China. "How can Chinese imports represent a danger to the UK steel industry if there is no such industry", it said. By Colin Richardson Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

Read More
News

Taiwan's scrap imports rebound in January


02/28/24
News
02/28/24

Taiwan's scrap imports rebound in January

Singapore, 28 February (Argus) — Taiwan's ferrous scrap imports in January rebounded from a low year-on-year base to increase by nearly 30pc against the previous year on rising demand, as seaborne scrap prices bottomed out in late October. Scrap imports were 278,214t in January, up by 13.8pc from the previous month and up by 28.3pc against a year earlier, customs data show. The higher scrap imports were attributed to relatively low seaborne scrap prices in late October that picked up in early November, said market participants. The imported scrap price hit a five-month low of $530/t on 25 October 2023 and was last at parity on 12 May 2023. The loading and lead time for HMS 1/2 80:20 scrap from the US west coast take about 8-10 weeks typically, which meant that scrap arrivals in January were booked across October-November. Rising scrap prices from 1 November may have also spurred more buying interest, participants said. "When prices are falling, not many buyers will bid because they believe prices will fall more," a trader said. "But when prices start rising, that's when the buying interest builds up because nobody wants to be caught securing scrap at peak prices." Buyers may also have wanted to restock their scrap inventories ahead of Taiwan's week-long lunar new year holiday over 8-14 February. The US remained the top supplier of ferrous scrap to Taiwan in January, supplying 120,483t. This was a 33.4pc rise from December and a 35.5pc increase from a year earlier. Imports from Japan also rebounded from a low 2023 base to 61,884t in January, a 45.6pc increase from a year earlier. But this was down by 19.4pc from December because of the impact of the strengthening of the yen against the US dollar. The yen was ¥146.82 to the dollar on 1 December but firmed to ¥141.02 on 30 December. The lead time for Japanese scrap flows to Taiwan is typically less than a month. Other major exporters of ferrous scrap to Taiwan include Australia and the Dominican Republic, which accounted for 11,987t and 16,395t respectively in January, or 4.3pc and 5.9pc of its net scrap imports for the month. A firmer domestic market may also lift Taiwan's broader steel and scrap sector. The index for the domestic property sector saw a third consecutive monthly gain in January and rose by 0.65 points from a month earlier to 106.49, the Taiwan Institute of Economic Research said on 26 February. The positive sentiment in the housing market was influenced by a recovery in the domestic economy and the stable performance of the stock market, it added. Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

News

Industria automotriz impulsaría nearshoring en México


02/26/24
News
02/26/24

Industria automotriz impulsaría nearshoring en México

Houston, 26 February (Argus) — Los fabricantes de automóviles ayudarán a determinar el alcance de las inversiones del nearshoring en México a medida que el impacto de este fenómeno sea más claro a lo largo de 2024 . México ha visto casi $60 mil millones en planes de inversión relacionados con el nearshoring en tan solo 10 proyectos anunciados en los últimos 12 meses. Si bien el alcance del desarrollo del nearshoring en México dependerá en gran medida de políticas generales este año, la atención ya se centra en los grandes proyectos de fabricantes de automóviles como Nissan de Japón, Kia de Corea del Sur y en los de un floreciente sector integrado por 13 fabricantes más pequeños de origen chino, como Chirey, MG, BYD, Geely, Omoda, Jetour, entre otros. La industria nacional de autopartes (INA) estima que México podría atraer hasta $44 mil millones de inversión en autopartes y proveedores automotrices a través del nearshoring en los próximos años. La reubicación o expansión de las cadenas de producción a México para estar más cerca de Estados Unidos atrae inversiones en toda la industria, dijo recientemente el presidente del INA, Francisco González. Teniendo en cuenta que el gobierno estima que México ya ha recibido $110 mil millones del nearshoring desde que comenzó el fenómeno, la asociación ha estimado que alrededor de 40pc de eso está relacionado con el sector automotriz. Nuevo León favorecido Solo el estado de Nuevo León, en la frontera norte de Texas, podría recibir $23 mil millones en los próximos años, en gran parte debido a la construcción de una gigafábrica planificada por el fabricante de vehículos eléctricos Tesla fuera de la ciudad Monterrey. Además de la inversión estimada de aproximadamente $5 mil millones de Tesla, esto atraería a una serie de fabricantes de equipos originales y otros proveedores de piezas y servicio, lo que podría llevar la inversión total hasta $15 mil millones. Sin embargo, la gigafábrica de Tesla que se construiría en Santa Catarina, en los suburbios de Monterrey, tendrá el visto bueno hasta que la planta de la misma empresa en Austin, Texas, haya completado el desarrollo de un modelo de construcción de menor costo para 2025. Pero esto no ha impedido que un gran número de fabricantes de equipos originales y otros integrantes de la cadena de suministro estén empezando a planificar la construcción de nuevas instalaciones cerca del sitio de la gigafábrica para estar listos cuando Tesla construya su planta. Entre ellos, está AGP eGlass que dijo que planea gastar $800 millones en la construcción de una planta de vidrio automotriz de alta tecnología para suministrar a fabricantes como Tesla. De los 278 proyectos automotrices registrados en 2023, un total de 54 se encuentran en Nuevo León, que lo sitúa en segundo lugar nacional, solo por debajo de Coahuila con 56 proyectos en total, y por encima de Guanajuato con 49 y Querétaro con 28. Y de las 54 inversiones registradas en Nuevo León, 23 están enfocadas en la movilidad eléctrica. Esto convierte a Nuevo León en la entidad que atrajo más proyectos de electromovilidad en 2023, por encima de Coahuila, con 19 proyectos y Guanajuato, que registró 13 proyectos de este tipo. En cuanto a la generación de empleos que se anticipa como resultado del nearshoring, el gobierno de Nuevo Leon afirma que ya ha generado más de 42,000 puestos de trabajo directamente relacionados con el sector automovilístico. By James Young Inversiones anunciadas de nearshoring para México $mn Compañía Tipo de proyecto Inversión Ubicación Anuncio Tesla** Fabricación de autos eléctricos 15,000 Nuevo León 28 Feb 23 Kia Unidad de producción 3,000 Nuevo León 15 May 23 Volkswagen Fabricación de autos eléctricos 942 Puebla 16 Feb 24 BMW Ensamblaje autos eléctricos 865 San Luis Potosí 23 Feb 23 AGP Glass Proveedor Tesla 800 Nuevo León 27 Sep 22 Volkswagen Automotriz / cadena suministro 764 Puebla 27 Oct 22 Nissan Planta de ensamblado 700 Aguascalientes 24 Dic 23 Ningbuo Tuopo Group (NTG) Ensamblaje automotriz 700 Nuevo León 28 Oct 23 ELAM-FAW Autopartes 407 Colima 30 Ene 24 Unison Shanghai Componente de autos y partes de aluminio 400 San Luis Potosí 18 Ene 24 Empresas automotrices, Análisis Económico Banorte Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

News

Liberty Steel targets Australian hydrogen, CCS deals


02/26/24
News
02/26/24

Liberty Steel targets Australian hydrogen, CCS deals

Sydney, 26 February (Argus) — UK-owned producer Liberty Steel has signed separate agreements with the South Australia (SA) state government and domestic independent Santos to respectively explore the use of hydrogen and discuss carbon capture and storage (CCS) opportunities for its Whyalla steel plant in SA. Liberty could become the first domestic third-party customer for the Santos-operated 1.7mn t/yr Moomba CCS project in SA's onshore Cooper basin, which is on track to start injection in mid-2024. Santos has secured finance for its $150mn share of the $220mn project, it said on 26 February, following an initial deal signed with Liberty over the weekend. Santos and Liberty will now enter discussions for a potential term natural gas supply deal that could include abated gas from Moomba. This could help reducing residual emissions from the Whyalla steelworks during a transition period, before the plant fully moves to green hydrogen once that is available at scale, Liberty's owner GFG Alliance said on 25 February. Liberty's separate agreement with the SA government, also signed on 25 February, is for potential supplies from the government's planned 250MW green hydrogen facility near Whyalla in the Spencer Gulf region. The SA government last October chose a consortium comprising Canadian-owned infrastructure group Atco and German firm Linde's subsidiary BOC as preferred contractors for the plant, which is expected to come on line by the end of 2025 . "Today's agreement gives us and our stakeholders confidence to ramp up our efforts and commitment to the production of our 4bn t of high-quality magnetite, the establishment of a state-of-the-art green iron and green steel plant which will ultimately be powered by renewable energy and green hydrogen," GFG Alliance chairman Sanjeev Gupta said. Liberty plans to build an electric arc furnace (EAF) at Whyalla , which will replace the existing coke ovens and blast furnace and lift steel production capacity to more than 1.5mn t/yr from 1mn t/yr. The company has received a A$63.2mn ($41.4mn) grant from the Australian federal government to support the purchase and installation of the EAF. It also has A$50mn committed by the SA government for use towards the EAF, pending approval. GFG Alliance also plans to produce 7.5mn t/yr of iron pellet from locally-sourced magnetite from 2030 in a direct reduced iron plant, which would initially use a mix of natural gas and green hydrogen as the reducing agent before fully transitioning to the latter. Santos is also targeting to offer CCS services from Moomba to reduce emissions from other hard-to-abate industries such as aluminium and cement, as well as from fuels like LNG, it said. Santos owns 66.7pc of Moomba with the balance controlled by Australian independent Beach Energy, which anticipates 30pc of its equity greenhouse gas emissions will be offset by the storage . By Juan Weik Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

News

Tata Steel headed towards 'major industrial dispute'


02/23/24
News
02/23/24

Tata Steel headed towards 'major industrial dispute'

London, 23 February (Argus) — Tata Steel is heading "towards a major industrial dispute" if it does not "listen" to the multi-union proposal for the decarbonisation of its Port Talbot plant in south Wales, Roy Rickhuss, general secretary of Community Trade Union, said in a note to members yesterday. The National Trade Union Steel Coordinating Committee met with Tata Steel executives, including managing director TV Narendran, in London yesterday, where the unions responded to the company's restructuring proposals — namely the closure of both its blast furnaces and total hot-end. The primary "red line" for unions is keeping blast furnace number 4 operational until 2032, Rickhuss said. However, this is not possible with the 3mn t/yr electric arc furnace (EAF) proposed by Tata, partly because of space and safety constraints when construction is under way. And the EAF will only enable the company to produce around 2.5mn t/yr of hot-rolled coil (HRC), impacting Tata's downstream operations, union sources suggest, citing information from consultancy Syndex. Syndex's plan devised for unions had suggested Tata should move to two smaller EAFs and retain blast furnace number four until 2032. The plan also recommended the construction of a direct reduced iron plant, although Syndex has told unions the business case for this is "weak" because of costly UK energy, and issues with supply. By Colin Richardson Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.