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The results signaled robust earnings for other Australian iron ore miners, which are likely to see a boost to coffers from the surging prices of the steel-making commodity, even as production dipped due to the impact of a cyclone. Prices of iron ore have spiked this year after disruptions caused by a cyclone in Western Australia added to a supply cut from the world’s top iron ore miner Vale. Rio Tinto’s underlying earnings for the six months ended June 30 rose to $4.93 billion from $4.42 billion a year earlier, the company said.”
Of note, the World Steel Association recently reported that Chinese crude steel production during the first half of 2019 reached a remarkable 492.2 million metric tons, up 9.9% from the record output in the corresponding period last year.
Nonferrous – Reuters reports that China’s “refined copper imports fell by 12% to 1.60 million tonnes in January-June with net imports sliding harder by 16% thanks to slightly higher exports relative to 2018. China’s net draw on units from the rest of the world dropped by 266,000 tonnes, which helps explain the 155,000-tonne rise in London Metal Exchange (LME) stocks over the same period. Anemic demand is being compounded by another growth spurt in the country’s domestic refining capacity. Increased competition for mined concentrates remains the driver of rising raw material imports. They jumped by 10% to 10.6 million tonnes (bulk weight) in the first half of 2019, extending an uptrend that has been running continuously since 2011. It’s possible that falling scrap imports are also forcing more smelters to turn to the concentrates market for raw material. Scrap imports slumped by 32% last year as the Chinese authorities raised purity threshold requirements and imports fell another 25% in the first half of this year as Beijing steadily tightens the quality rules.”
Among the major base metals at the London Metal Exchange, only nickel prices were in positive territory as of the end of July 2019 as compared to the end of 2018. At the end of July, nickel prices were up 34 percent for the YTD, while copper and aluminum prices were off slightly and tin prices declined 11 percent for the year to date. At the LME, 3-month nickel futures traded as high as $15,115 per tonne in July but have subsequently pulled back below $14,400 per tonne. Even still, that’s up significantly from the beginning of the year when nickel prices were trading around $10,500 per tonne.
The rise in nickel prices has come despite widespread concerns about the U.S.-China trade war and rising nickel production. According to Macquarie Capital (Europe), global nickel production increased 8.9 percent year-on-year during the first half of 2019. Although primary nickel production has been on the rise, nickel consumption has reportedly outpaced the supply gains. The International Nickel Study Group estimates that global refined nickel demand exceeded supply by 27,000 tonnes during the first four months of 2019, Reuters reports. The global deficit in the nickel market comes at a time of increased stainless steel production in China. Metal Bulletin reports that for the first half of the year, stainless steel mills in China produced 14.35 million tonnes of crude stainless steel, an increase of 8.5 percent from the first half of 2018, based on data from the China Stainless Steel Council.
Recovered Paper and Fiber – PPI Pulp and Paper Week recently reported that “Consumption of total U.S. recovered fiber for much of 2019 has followed suit with the slump industry paper and board producers have seen this year in pricing and demand -- slipping every month so far halfway through the year except for January, according to data from the American Forest & Paper Association (AF&PA). This dramatic decline results from a 911,000-ton reduction in first-half containerboard production, ongoing decreased demand from the U.S.'s No. 1 export market in China since third-quarter 2017, and a resulting and ongoing landfilling and warehousing of extra recovered paper. This has widely opened the demand door for a first decline in years -- that possibly could total as much as a 1.5-million to 2.0-million-tons drop in 2019 vs 2018 in total US recovered paper demand from 52 million to roughly 50 million tons. At 15.172 million tons, consumption of total recovered fiber is down 3.5% in June 2019 year-to-date, according to the AF&PA figures. Like the 3.5% drop in consumption through June, exports of all recovered fiber also are down 3.5% year-to-date through May at 8.04 million tons, according to the most recent US trade statistics (P&PW, July 19, p. 13).
When it comes to specific recovered fiber grades, old corrugated container (OCC) and high deinking grades also saw year-to-date drops in consumption at US mills every month in 2019 after January. Old newspaper (ONP) domestic mill consumption has been curbed every month so far this year, the only recovered fiber grade to see a drop in consumption each month, as North American newsprint mill production and demand for the end grade continues to decline.”