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Light Al stockbuild reveals supply dearth

  • Spanish Market: Metals
  • 01/06/23

It is the time of year when aluminium markets are normally at their most active. As Europe warms in the spring, but before the traditionally slow summer period, automotive and construction activity often reaches its annual zenith in the second quarter.

But this year, markets are very quiet as demand has weakened throughout the year. But aluminium stock levels are not rising at nearly the rate that such low appetite would normally drive, revealing a thin supply outlook that could see prices and premiums rise swiftly in the event of any improvement in this demand. Domestic supply levels in Europe remain restricted after heavy cuts induced by high power prices.

On-warrant aluminium stocks started 2023 at relatively low levels following drawdowns late last year, but they more than doubled to 453,700t in the space of a week from 7 February and saw another significant delivery on 18 April, rising by 10.43pc to 500,300t. But levels have fallen since then, aided by a 130,000t cancellation on 11 May, although the drawdown of stocks between deliveries has slowed as end-user markets have weakened this quarter.

Additionally, a large portion of this warehouse stock is Russian metal, which western consumers are not willing to use. Russian metal has made up more than half of London Metal Exchange aluminium stocks at times this year, and further deliveries are likely from trading firms that have contracts to take Russian metal but no longer have willing buyers of the material.

"Demand is poor but aluminium is still more of a supply story," an analyst said. "The market is broadly balanced because any surplus is mostly Russian metal, which people do not want."

Construction markets in Europe are heavily depressed so far this year, while some packaging markets have also slowed significantly. Automotive markets have been stronger this year, but trading companies have noted a marked slowdown in recent weeks, with volumes for third-quarter deliveries under discussion falling significantly below the previous quarter.

But primary aluminium premiums have remained robust. The Argus weekly duty-paid P1020 ingot in-warehouse Rotterdam premium only fell for the first time on 10 May, to $280-300/t from $300-320/t previously, but still up from $250-270/t at the start of this year. Premiums remain well below 2022 peaks touching $600/t, but are still about double pre-pandemic levels and are not yet showing signs of decreasing further despite such low demand.

Western commodities markets in general are suffering from rising interest rates against high inflation, while China is also seeing low demand amid a slow recovery after lifting its zero-Covid-19 lockdown measures in the first quarter.

And the global supply issue persists. Chinese aluminium output fell on the month in April as power curbs in southwestern Yunnan province continued to hamper production. Energy-intensive industries in Yunnan have been instructed to cap production over the coming months, as lower-than-expected rainfall levels will continue to hit hydropower production.

In Europe, trading companies now do not expect any improvement in activity until September at the earliest, and yet suppliers are behaving as though the next significant shift in pricing and premium levels will be positive. There are no lowball offers in the market, and no significant stock-building. Indeed, much of the recent jockeying in stock levels has been attributed by some to large trading firms positioning for an industrial demand rebound.

"Traders still want to secure units for the European market," a European merchant said. "There are others with the opposite story, but some are very bullish."

If the Chinese arbitrage opens, allowing a margin for buying European units to sell into China, the tight supply picture in Europe would be squeezed further. And the likelihood of Chinese prices rising against the Yunnan supply restrictions and demand levels slowly improving is one that trading houses view with some confidence.

"The market is broadly balanced now, but things can get nasty if the Yunnan situation continues and the arbitrage opens," the analyst said. "It is not like there are millions of tonnes of stocks."

The more bullish trading companies are betting that tight supply markets will keep premiums and prices mostly stable even through an extended period of low demand flowing into the summer, while any subsequent improvement in demand will see a positive response in those premiums and prices.

"With Russian metal still sidelined, premiums will not fall much further," a second trading firm said. "We are stuck in a weak environment now, but when demand comes back, we will see what happens."


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11/02/25

Trump imposes new tariffs on steel, aluminum

Trump imposes new tariffs on steel, aluminum

Washington, 10 February (Argus) — US president Donald Trump today imposed a 25pc tariff on all US imports of steel and aluminum, although he said he would consider making an exemption for imports from Australia. In remarks to reporters at the White House Trump complained that many of the steel and aluminum tariffs he imposed since 2018 have been moderated or reduced for some countries. Currently Australia and Canada can export any steel and aluminum they want to into the US without tariffs, while Mexico can export steel melted and poured in the US-Mexico-Canada (USMCA) agreement region into the US without tariffs, while any material with an origin outside of USMCA is subject to 25pc tariffs. "Our nation requires steel and aluminum to be made in America, not in foreign lands," Trump said. "It's 25pc without exceptions, and that's all countries, no matter where it comes from, all countries." But Trump, prompted by reporters, confirmed that he may make an exemption for Australian-sourced steel, after Canberra threatened to take reciprocal measures. "We have a surplus with Australia, one of the few," Trump said, referring to an overall trade surplus the US runs with Australia. "And the reason is they buy a lot of airplanes." Trump said he spoke with Australian prime minister Anthony Albanese earlier today. "I told him that [steel tariff exemptions] is something that we will give great consideration." A similar exemption for the UK is unlikely since the US already is running a trade deficit with that country, Trump said. Trump contended that his initial volley of tariffs in 2018 led to the creation of hundreds of thousands of jobs in the US and boosted economic growth. A 2019 study from the Federal Reserve Board that was updated in 2024 estimates that taking into account retaliatory tariffs, there was a net decrease in US jobs and economic growth from the tariffs. US oil and gas midstream companies were among the industries hit by the 2018 tariffs, which led to higher costs for pipeline steel. Most steel imports from non-tariffed US steel imports are heavily reliant on the countries that are currently not subject to US tariffs, with their volumes making up 80pc of the 26.2mn metric tonnes (t) of steel products imported in 2024, according to US Department of Commerce data. Steel tariff rate quota (TRQ) systems are in place for Argentina, Brazil, the EU, Japan, South Korea and the UK for steel products, with specifics dependent on the country. The CME Midwest hot-rolled coil (HRC) futures market jumped today, after Trump said on Sunday he would impose new tariffs, by $51/short ton (st) for March to $856/st, while April increased by $48/st to $858/st. Steel costs would rise by $6.38bn based on the $25.5bn value of 2024 steel imports from those nontariffed countries, if volumes remained the same. Those higher costs would lead to more US steel mill price increases, with one buyer expecting another round of price increases coming soon from US steelmakers. Steelmaker Nucor has increased its published hot-rolled coil (HRC) spot price by $40/short ton (st) in the last three weeks to $790/st. Other steelmakers like ArcelorMittal USA, Cleveland-Cliffs, and US Steel are at $800/st offers for their spot HRC. Canada key aluminum supplier In the aluminum market, the US imported over 6mn t of products in 2024, according to customs data. Canadian aluminum exporters currently have no restrictions on their volumes into the US. They shipped the highest volumes into the US and are responsible for an even larger share of primary aluminum imports. Current US primary aluminum smelting capacity, excluding idled operations, is around 795,000t/yr, which equaled less than one-third of Canadian imports and one-fifth of total imports. There are multiple idled primary aluminum facilities and a greenfield plant currently under construction, but observers and company representatives challenged the feasibility of idled plant restarts in the past. TRQ systems exist for US aluminum imports from Argentina, the EU, and the UK. By Haik Gugarats Send comments and request more information at feedback@argusmedia.com Copyright © 2025. Argus Media group . All rights reserved.

Trump seeks to end output of zinc-based penny


10/02/25
10/02/25

Trump seeks to end output of zinc-based penny

Houston, 10 February (Argus) — US president Donald Trump ordered the US Treasury Department to stop making the zinc-heavy penny, lamenting the coin's production costs, but any such effort may require more than just an executive directive. Trump on Sunday targeted the "wasteful" penny in a social media post, saying the US "for far too long" has minted the coin, "which literally cost us more than 2¢." The US Mint in its latest fiscal year lost $85mn producing pennies, with unit costs increasing by 20pc to 3.69¢ from 2023. Metal market participants do not expect a halt in penny production to materially reduce demand for zinc, which accounts for 97.5pc of the 1¢ piece's composition. Copper comprises the balance. "It doesn't take a whole lot of metal to make pennies," one source told Argus . The Mint shipped 3.2bn pennies last year, consuming 7,732 metric tonnes (t) in zinc from October-September. In contrast, the US imported 584,144t of unwrought zinc during the same timeframe. Tennessee-based Artazn, which provides the zinc blanks used in the Mint's penny production, did not respond to a request for comment. Conversely, the Mint lost nearly $18mn making nickels, which would become the lowest-denominated coin if Trump has his way. Unit costs for the 5¢ piece were higher than the penny's, increasing by 19pc to 13.78¢. Still, it remains unclear whether the president — through the Treasury — has the authority to unilaterally end circulation of the penny. The US Constitution gives Congress the exclusive power to "coin money" and determine values, but Treasury secretary Scott Bessent may be able to halt new minting until legislative action is taken. The Treasury and the Mint did not respond to requests for comment. Trump's efforts echo past attempts by his predecessors and other politicians to do away with the penny, but to no avail. Former president Barack Obama questioned the coin's function in 2013, and former Sen. John McCain and current Rep. Claudia Tenney (R-NY) filed bills in 2017 to suspend output for 10 years. By Alex Nicoll Send comments and request more information at feedback@argusmedia.com Copyright © 2025. Argus Media group . All rights reserved.

Tantalite prices surge on DRC conflict


10/02/25
10/02/25

Tantalite prices surge on DRC conflict

London, 10 February (Argus) — International tantalite prices rose sharply over the past two weeks following renewed violence in the Democratic Republic of Congo (DRC) and the end of the lunar new year public holiday in China. Argus last assessed prices for minimum 25pc tantalite at $80-88/lb cif main ports on 6 February, up by around 8pc and in a larger range compared with $75-81/lb on 28 January. And prices are expected to continue to rise in the near term. The Argus index surged as Chinese consumers returned to the market after the lunar new year holiday with limited stocks, urgently looking to secure material from central Africa amid escalating conflict in eastern DRC. The M23 militant group took control of Goma in North Kivu province at the end of January, and has advanced towards Bukavu in South Kivu in recent days, despite announcing a ceasefire last week. An emergency summit of African leaders on 8 February urged all parties involved in the conflict to hold peace talks within five days and to open humanitarian corridors. M23 have captured or surrounded several mine sites for the 3T conflict minerals — tantalum, tungsten and tin — prompting local artisanal mining companies to flee and due diligence organisation ITSCI to withdraw from multiple territories in the region. Most recently, M23 took control of Nyabibwe town in South Kivu, close to the Nyabibwe tin mine. The extraction, transport, trade, handling and export of minerals produced at mines occupied by non-state armed groups goes against OECD guidelines for responsible mineral sourcing, which means most smelters and downstream original equipment manufacturers (OEMs) will not accept material mined in areas under M23 control. The rapid advance of M23 has prompted a push among mining firms to export material from DRC to avoid possible looting, market participants said. And banks in South Kivu are out of cash, further encouraging artisanal mining firms in the area to sell material quickly. Challenging year ahead M23's expansion in DRC has come at a time when global tantalite supply is already squeezed. The militant group's takeover of the mining town of Rubaya in May last year, a recognition dispute between ITSCI and the responsible minerals initiative, the implementation of the US' section 301 tariffs on Chinese tantalum products, and generally sluggish demand from the downstream electronics industry meant that many smelters worked through their stocks in 2024 and started this year with limited inventories. "Compared to last year, there's not much material sitting in the supply chain. 2024 was the year of decreasing inventory and now we are starting to pick up more units," a tantalite consumer said. OEMs and smelters have over the past year faced pressure from major technology companies such as Apple to cut Rwandan and DRC tantalite from the supply chain, because of the increased risk of mineral fraud. Some tantalite consumers have aimed to diversify their supply chains with material produced in other African countries including, Ethiopia, Mozambique and Sierra Leone. But political unrest has also disrupted supply from Mozambique in recent months, and much less material is available from other origins compared with mines in the Great Lakes region. "This is a challenging year for tantalum. We are facing very restricted supply chains," a consumer said. By Sian Morris Argus Tantalite Prices Feb 2025 $/lb Send comments and request more information at feedback@argusmedia.com Copyright © 2025. Argus Media group . All rights reserved.

Mexico inflation slows to 4-year low in January


10/02/25
10/02/25

Mexico inflation slows to 4-year low in January

Mexico City, 10 February (Argus) — Mexico's consumer price index (CPI) eased to an annual 3.59pc January, the lowest in four years, as deceleration in agriculture prices offset faster inflation in energy and consumer goods prices. This marks the lowest annual inflation since January 2021 and a significant slowdown from July's annual peak of 5.57pc, which was driven by weather-impacted food prices. The result, reported by statistics agency Inegi on 7 January, was slightly below than the 3.63pc median estimate from 35 analysts polled in Citi Research's 5 February survey. It compares with the 4.21pc headline inflation in December, marking five months of declines in the past six months. Mexican core inflation, which excluded volatile energy and food, sped slightly to 3.66pc in January from 3.65pc in December, while non-core inflation decelerated to 3.34pc from 5.95pc the previous month. Movement, in the non-core, said Banorte, was mostly explained by a positive basis of comparison, and "will reverse as soon as the second half of February to push the headline metric above 4pc," said Banorte. Core inflation accelerated slightly to 3.66pc in January from 3.65pc in December, marking the second uptick after 22 consecutive months of deceleration. Services inflation slowed to 4.69pc from 4.94pc, while consumer goods inflation ticked up to 2.74 from 2.4pc. Non-core inflation slowed sharply to 3.34pc from 6.57pc in December. This was largely due to base effects, Banorte said, adding these base effects are likely to fade this month to speed headline annual inflation back above 4pc. The base effects most clearly impacted fruit and vegetable price inflation, contracting 7.73pc in January from 6.65pc annual inflation the previous month. Moving forward, agriculture prices are highly exposed to the coming hot, dry season in Mexico, with the La Nina climate phenomenon, adding a layer of uncertainty. Meanwhile, energy inflation accelerated to 6.34pc in January from 5.73pc the previous month, driven by higher LPG prices. Electricity inflation, meanwhile, sped to 4.32pc in January from 2.65pc in December, while inflation slowed to 0.02pc in January for domestic natural gas prices from 5.67pc in December. Monetary policy The January inflation report followed the central bank's decision Thursday to reduce its target interest rate to 9.50pc from 10pc. This was the bank's sixth rate cut since March 2024, winding down from 11.25pc. The 4-1 decision marked an acceleration in the current rate cycle, opting for a half-point reduction rather than the previous five 25-basis-point cuts. In board comments with the announcement, the bank cited "significant progress in resolving the inflationary episode derived from the global shocks" in 2021 and 2022. These triggered rate hikes from 4pc in June 2021 to 11.25pc in April 2022, the target rate's historic high. Taking into account the "country's weak economic activity" and this progress in reducing inflation, the board said it would "consider adjusting [the target] by similar magnitudes" at upcoming meetings. By James Young Send comments and request more information at feedback@argusmedia.com Copyright © 2025. Argus Media group . All rights reserved.

US tariffs could impact 15pc of EU HRC exports


10/02/25
10/02/25

US tariffs could impact 15pc of EU HRC exports

London, 10 February (Argus) — US 25pc blanket tariffs, expected later today , could affect around 15pc of EU hot-rolled coil (HRC) exports, according to latest data for 2024. This will depend on whether the current quotas system is replaced, and if exclusions are again granted. The EU exported 325,843t of HRC in January-November 2024 to the US, out of total exports of 2.16mn t. Currently the EU is one of few exporters that are subject to tariff-rate quotas, of around 270,000 t/yr for HRC, divided by country. Any material imported above the quotas is subject to a 25pc tax. In addition, exclusions from the measures in the US have been granted to specific buyers for a total of just under 200,000 t/yr of EU HRC. EU cold-rolled exports to the US in the same period amounted to 229,851t and hot-dipped galvanised to 386,082t, 19.2pc and 14pc of the total, respectively. Rebar and wire rod exports constituted 15.8pc and 12.2pc of the total each. Market participants said this morning that assessing the impact of such measures is impossible without details if the quotas will remain in place. The move is however likely to weigh on the European market, which has already been experiencing slowed demand. One trader noted that most of the bloc's flat steel exports are specialties, for which there are no alternatives available in the US market, and as such will be subject to exclusions. Most notably, protectionist measures from the US are likely to incentivise the European Commission, which is currently conducting a review of its steel safeguard measures, to be more stringent with it. The commission is examining the effectiveness of its tariff-rate-quotas, imposed in 2018 as a response to the US' Section 232 measures, which were expected to divert steel destined to the US to the EU instead. The outcome of the review is expected by 31 March. The commission said today that it would not respond to "broad announcements without details or written clarification". But there is no justification for the imposition of tariffs on its exports and the EU will "react". The commission further noted that the imposition of tariffs would be "unlawful and economically counterproductive, especially given the deeply integrated production chains of the EU and US". Speaking to public television, French foreign minister Jean-Noel Barrot said Europe will "react" as it did in 2018, adding that the commission had given assurances that it would act once at the right moment. "The moment has come," Barrot said. By Lora Stoyanova and Dafydd ab Iago Send comments and request more information at feedback@argusmedia.com Copyright © 2025. Argus Media group . All rights reserved.

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