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Q&A: Aço Brasil to ask for steel tariff adjustment

  • Spanish Market: Metals
  • 24/10/24

Little has changed in the Brazilian steel market after nearly four months of a new tariff system intended to curb the increase of imported products. January-September imports rose by 24pc from the same period a year ago, totaling 4.6mn metric tonnes (t), surpassing what was expected for the full year. The tariffs, hailed by some market participants as missing the mark, was followed by other government measures, such as temporary antidumping measures and antidumping reviews. Industry group Aço Brasil's executive president Marco Polo de Mello Lopes spoke to Argus about the recent measures taken by the Brazilian government. This interview has been translated from Portuguese and edited for clarity.

The government's June decision imposed a quota system for importers, along with a tariff increase. How does Aço Brasil see that decision's effects now?

We are only four months into the tariff quota system. We have been following everything with a very large magnifying glass and we have some concerns.

The tariff quota system has not brought the expected reduction [to import volumes], though it is too early to reach a conclusion. But it brought a change in the trend of what had been happening.

At the beginning of the year there was an increase in products in general, but when you check June, July, August and September, you see that imports are decreasing every month.

As we had a very high first half, we did not reach what was expected in terms of imports. So far, we see that we have not achieved the reduction objective, but we have achieved the objective of stopping the escalation in relation to these imports.

What are Aço Brasil's main concerns with the June policy?

It was identified that there was an increase in imports from Egypt and Peru. Egypt has a preferential agreement in relation to what would be a Mercosur-Egypt agreement. We are already evaluating to see what to do specifically regarding the fact that imports are increasing using the trade agreement umbrella.

Another area of ​great concern is the excessive volume of imports that are entering through Manaus [the capital of northern Amazonas state]. It is strange that imports have increased without corresponding [demand] growth [at] the industrial park in Manaus. We continue monitoring to hold new meetings with the government.

Brazil's executive management committee of the chamber of foreign trade (Gecex) last week ruled on the tariff increase for some steel products regardless of the import volume, unlike the first decision by the committee earlier this year. What is Aço Brasil's view on that decision?

We understand that it is positive — it means there is recognition from the government that there are predatory imports that cause great concern in the sector. It couldn't have been any other way.

So [we see it as a] very positive [measure]. The claim that had been made since the beginning was a 25pc [tariff hike]. It was always 25pc because it is what the world has been practicing. If the government approves it, it is within what was expected.

What are the next steps for Aço Brasil to improve the situation for Brazilian steelmakers?

We will certainly make requests to change the system.

We are going to make some kind of movement, but it cannot be done now because there is already an [established] system. Imagine if companies that invested and spent energy and obtained a quota then had the government saying that they no longer have a quota, and could not challenge the decision in the courts.

Any changes that may be made must be made following the renewal process of the current system, which would be in June 2025.


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12/12/24

Rio Tinto to invest $2.5bn in Argentina lithium mine

Rio Tinto to invest $2.5bn in Argentina lithium mine

Montevideo, 12 December (Argus) — International miner Rio Tinto will invest $2.5bn to expand its Rincon lithium operation, potentially increasing Argentina's production of the metal six-fold in the next decade, it said today. The company began initial production at Rincon's 3,000 metric tonnes (t)/yr starter plant in November. Rincon in Argentina's northern Salta province is Rio Tinto's first commercial lithium operation. It taps brine lithium. In October, it finalized the acquisition of Rincon from US-based Arcadium Lithium. The new investment will increase annual production to 60,000t of battery grade lithium carbonate. Construction on the expansion should start in mid-2025 and ramped-up production using direct lithium extraction (DLE) technology should start in 2028, eventually reaching capacity early in the next decade. The project will add to Argentina's efforts to become a world-class energy player with lithium, LNG and oil exports transforming the country in the coming years. Argentina was the fourth lithium producer in 2023, with 9,600t, according to the US Geological Survey. It has 3.6mn t of lithium reserves and 22mn t of lithium resources, second only to neighboring Bolivia. Argentina, Bolivia and Chile form the "lithium triangle," which holds around 60pc of the world's lithium resources. Chile is the world's second producer after Austria, while Bolivia's production is negligible. Rio Tinto referenced Argentina's economic reforms, including an incentive mechanism for long-term investments, known as the RIGI, as providing a new environment for investment. The RIGI is applicable to investments over $200mn and provides tax and customs benefits, as well as legal stability. Rio Tinto would join eight projects that have already applied for RIGI approval. President Javier Milei announced on 10 December, his first anniversary in office, that the government was planning sweeping tax reforms that would lower 90pc of the country's taxes, and elimination of exchange rate and customs controls. Monthly inflation in November was 2.4pc, down from 25.5pc in December 2023. In a September 2024 report, the Argentinian government listed 50 lithium projects, with 6pc producing the white metal, 10pc under construction and 14pc in the feasibility phase. The rest were in the initial development stage. By Lucien Chauvin Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

Syrah declares Mozambique graphite plant force majeure


12/12/24
12/12/24

Syrah declares Mozambique graphite plant force majeure

Singapore, 12 December (Argus) — Sydney-based graphite producer Syrah Resources has declared a force majeure for its Balama operations in Mozambique and defaulted on US government-backed debt, given post-election civil unrest in Mozambique. This came as Syrah is unable to carry out production at Balama throughout October-December to replenish inventory and to sell to customers, because of a protest that had began at the site in late September, forcing a force majeure event. Syrah back in October said the protest is disrupting site access and causing production uncertainty. The firm is one of the few established non-Chinese graphite producers. The protest was originally linked to farmers with "historical farmland resettlement grievances", Syrah said. But it has persisted and worsened after Mozambique's general election in October, which triggered violent protests across the country's major cities given claims of electoral fraud. "The protest actions have been peaceful with no evident actions to deliberately damage property, plant or equipment at Balama," said Syrah. But efforts to reach a positive resolution have been "unsuccessful to date", it added. Syrah is still working on restoring operations "as quick as possible" but has acknowledged that any resolution will be a lengthy process. The Balama site has not been producing graphite since July, according to Syrah, owing to sufficient inventory for sales and low graphite fines demand. Balama produced around 24,000t of natural graphite during the April-June quarter. Syrah has been operating Balama in short "campaign" stints this year owing to insufficient market demand at times. The protest also triggered events of default on its loans with the US International Development Finance (DFC) and the US Department of Energy (DOE), given the "impacts and duration" of the protest. The US DFC pledged its first loan to a graphite operation to Syrah, which amounted to $150mn. Syrah also received a $102mn loan facility with US DOE for the expansion of its Syrah Vidalia anode active material facility in US. Syrah is engaging with US DFC and DOE on its defaults, it said.Australian mining company South32 earlier this month withdrew the production guidance for its Mozal Aluminium smelter in Mozambique because of riots and road blockages. By Joseph Ho Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

US inflation rises to 2.7pc in November


11/12/24
11/12/24

US inflation rises to 2.7pc in November

Houston, 11 December (Argus) — Headline US inflation ticked higher in November, largely on food and shelter costs, suggesting the Federal Reserve still has work to do to reach its inflation target. The consumer price index rose by an annual 2.7pc in November after rising by 2.6pc through October, the Labor Department said. The gain matched expectations in a survey of economists by Trading Economics. So-called core inflation, which strips out more volatile food and energy, rose by 3.3pc, matching the prior month's gains. Services less energy services rose by 4.6pc following a 4.8pc increase the prior period. Today's report is the last consumer price index (CPI) reading before Federal Reserve policymakers meet next week to assess progress in bringing down inflation to their 2pc long term goal and release economic projections. The CME FedWatch tool today gave a 96pc probability the Federal Reserve will cut its target rate by a quarter point at its last meeting of the year, up from nearly 89pc Tuesday. The Fed began cutting its target rate in September after holding it at a 23-year high for more than a year. The energy index contracted by 3.2pc for the 12 months ending in November after falling by 4.9pc through October. Gasoline fell by 8.1pc and the fuel oil index declined by 19.5pc. The food index rose by 2.4pc over the past year, following a 2.1pc gain through the prior month. Transportation services rose by 7.1pc. Shelter slowed to 4.7pc from 4.9pc The CPI rose by 0.3 in November from the prior month, after rising by 0.2pc in each of the prior four months. The shelter index rose by 0.3pc for the month, accounting for nearly 40pc of the total monthly gain in the headline index, Labor said. By Bob Willis Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

Assad regime end to alter Mena steel trade flow


10/12/24
10/12/24

Assad regime end to alter Mena steel trade flow

London, 10 December (Argus) — The ousting of Syrian president Bashar al-Assad is likely to open up export opportunities for Turkish steelmakers, but this hinges on the political stabilisation of the country. The fall of the al-Assad regime came after opposition forces led by militant group Hayat Tahrir Al-Sham (HTS) launched a sudden military offensive in late November, seizing some of the country's biggest cities over the past week. A former al-Qaeda affiliate, HTS is thought to maintain close ties with Turkey, along with the Syrian National Army (SNA), while the outgoing Assad regime was a close ally of Iran and Russia. Iran not only sold rebar and wire-rod products on occasion to Syria, but also used the country as a transit route for its business into Lebanon and Turkey. With the toppling of the al-Assad regime, steel trade from Iran to Syria has been halted as sellers wait for further developments. Turkish steel mills are expected to benefit from the regime overthrow, and to fill the potential gap left by Iran, market participants said. In a response to this, various construction and iron and steel companies listed on the Istanbul stock exchange appreciated significantly when the markets opened on Monday morning. Rebuilding efforts are likely to present sales opportunities for Turkish longs producers, located in the southern Iskenderun region of the country, market participants said. Turkey exported 17,900t of rebar to Syria in October, an annual increase of 80pc. Industry sources noted the considerable potential for Turkish suppliers to ramp up sales, depending on the developments in Syria. In addition to the political instability, airstrikes were carried by Israel on military assets in Syria in the past couple of days. Market sources expressed a consensus that the rise in stock prices since 9 December in Turkey is speculative. Domestic rebar prices in the Iskenderun region in southern Turkey picked up today and could pick up across the country tomorrow. The Syrian regime change was cited as a smaller factor, alongside the signs of a recovery in global steel prices owing to favourable policies signalled by the Chinese government. Turkish domestic rebar buyers have delayed restocking this winter until signs of a price recovery emerged. "People need to see finance first for construction, the country has no cash so if some other country covers the finance, then demand might increase," one market participant said. HTS is currently designated as a terrorist organisation by the US and various European countries. At the time of writing the UK is reviewing its prescription of HTS as a terrorist group. By Carlo Da Cas and Brendan Kjellberg-Motton Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

Moselle river crash to have limited impact on AM


10/12/24
10/12/24

Moselle river crash to have limited impact on AM

London, 10 December (Argus) — A collision at a lock gate in the river Moselle near the German-Luxembourg border will have a limited impact on nearby steelmaker ArcelorMittal, the company said, despite ship transportation likely to be disrupted for months. On Sunday 8 December, a vessel carrying 1,500t of scrap metal en route to Mertert, Luxembourg, collided with and broke the lock gate at Muden, southwest Germany. The accident has resulted in the halting of continuous shipping traffic on the Moselle, the German Waterways and shipping Authority (WSA) said. ArcelorMittal said the accident should have a limited impact on its Luxembourg business, and is currently working on alternative short-and-medium term transport solutions to offset disruptions caused to incoming and outgoing flows. "To date, only 10pc of scrap supplies to ArcelorMittal's electric furnaces in Luxembourg and 10pc of shipments pass through the port of Mertert," the steelmaker said. Work is already under way by the authorities to mend the broken lock, but it is estimated repairs will not be completed until March 2025. Under WSA estimates around 70 vessels are stuck in that area of the Moselle up to the French border, no longer able to leave the Moselle valley towards the Rhine. Authorities also said they are looking at ways to release the trapped ships so they can leave the river in the direction of the Rhine. A meeting is scheduled for Wednesday to discuss whether this could be done, the WSA added. Gummed vessels and halted shipping transportation along the Moselle will probably have some impact on scrap metal transport logistics in the region, market participants told Argus . The Moselle is a main waterway to Luxembourg with metal transported via barges. Large scrap metal recycler Theo Steil operates one of its larger yards in Trier, a town in southwestern Germany, which the Moselle runs through. By Corey Aunger Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

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