ArcelorMittal to idle Spanish mill

ArcelorMittal reportedly has sent a statement via email saying it plans to idle its Sestao steelmaking complex near Bilbao, Spain. The complex contains two electric arc furnace (EAF) production lines and has the ability to produce up to 1.8 million tonnes of hot-rolled steel coils each year.

A Dow Jones Business Report online article quotes the Monday, 25 January 2016, ArcelorMittal email as saying, “Our operations in Sestao are facing such challenging market conditions—caused by a significant increase in cheap steel imports from China and a heavy fall in prices—that keeping the plant open in the current economic environment is not viable.”

The announced closure adds it to a roster of mills in the United Kingdom, Canada and the United States that have been closed in the previous six months, with the accompanying announcements all pointing to overcapacity in China as an underlying reason.

Report blames nickel’s price woes on Chinese collateral holders

Chinese “shadow bankers” may have been scared away from using copper (and presumably other metals) as collateral after abuses of the practice were exposed in 2014, but the same tactics again may be in use, this time with primary nickel being held in deep inventory.

An online report posted by Reuters 9 February 2016, describes nickel pricing trends in the context of the movement of large volumes of nickel plate from Russia to China.

In the article, Reuters reporter Andy Home says the outflow of nickel plate from Russia to China is not currently matched by the consumption of such nickel in China or the listed inventories of such plate in Shanghai Futures Exchange (SHFE) warehouses.

Observers, Home writes, conclude that “much more Russian metal has entered China than has yet shown up in SHFE warehouses” and “the consensus view is that the balance is sitting in bonded warehouses in Shanghai, where it is both available for SHFE delivery and being used as collateral in the shadow lending market.”

After metals in inventory in Qingdao, China, were discovered in 2014 to have been overextended as pledged collateral, the Chinese government was thought to have reacted by restricting the practice.

“It seems, though, that while the collateral trade has been much reduced in metals such as copper, it is still flourishing for nickel, albeit with much tighter lending and storage controls,” writes Home in the Reuters article.

The notion of large amounts of nickel “overhanging” the market has created a bearish price environment for nickel.

ISRI requests South China container theft investigation

The Washington-based Institute of Scrap Recycling Industries (ISRI) has prepared an 11-page report on the problem of scrap metal—predominantly copper—stolen from shipping containers in Hong Kong and South China and is presenting the document to federal law enforcement agencies.

The document includes the results of a survey of ISRI members, who reported to the organisation having been victims in nearly 550 such incidents with a financial impact of more than $2 million from 2011 to 2013.

The information ISRI collected points to specific ports and transshipment sites as being the epicentres of the crime wave. “The surveys suggest that most cargo thefts have involved shipments that were transshipped from ports in or around Hong Kong to inland ports within the Pearl River Delta, Guangdong province,” according to the report. “For 2013, roughly 60% of the total suspected cargo theft incidents involved five ports within the Pearl River Delta: Sihui/Mafang (131 incidents), Zhaoqing (35), Sanshui (17), Wuzhou (nine) and Nanhai (six),” ISRI adds.

The number of incidents in Hong Kong and South China more than doubled in 2013 compared with 2011, according to ISRI.

ISRI says its staff members have been communicating with the U.S. State Department’s Overseas Advisory Council (OSAC) and the Federal Bureau of Investigation (FBI) to spell out the nature and the extent of the theft problem.

The San Francisco field office of the FBI has released a bulletin tilted “Organized Chinese Criminal Groups are Probably Exploiting Supply Chain Vulnerabilities to Steal Millions of Dollars in U.S.-Origin Copper Scrap,” ISRI says.

Novelis creates new sales and marketing organisation

Atlanta-based aluminium rolling and recycling company Novelis has announced the creation of two executive positions: vice president of sales and marketing for global can, and vice president of sales and marketing for global automotive. Effective 1 April 2016, Novelis says these new positions will allow the company to more seamlessly serve its global customer base and accelerate its global integration strategy.

Andy King has been named vice president, sales and marketing, global can. In the new role, King will be responsible for driving can business growth, product branding and marketing and portfolio management across all global markets. Prior to this position, King served as vice president and general manager, can, Novelis Asia. King has held a number of leadership positions with the company since 1996 and has more than 20 years of experience in the can industry.

Gary Yogan, who most recently served in the vice president, global can, position, has accepted the role of vice president, strategic projects, and will continue to report directly to Steve Fisher, Novelis president and CEO.

Pierre Labat has been named vice president, sales and marketing, global automotive. Labat will be responsible for driving global automotive strategy, portfolio management, overseeing business growth and ensuring industry projects, products and innovations meet the evolving needs of global customers.

Labat has served as vice president and general manager, automotive, Novelis Europe since 2014, where he led contract negotiations with key automotive customers, oversaw product development efforts and worked to improve product profitability. In his 16-year career with Novelis, Labat also has served in various leadership positions in can and specialty products.

All is not bearish with copper, analyst says

Global demand for copper has taken a measurable hit with China’s construction slowdown, but continued demand for the red metal in other applications may soon offer renewed price support. That is the underlying observation by Reuters columnist Andy Home, who analyses metals for the news service and diagnoses the state of the red metal in the personification of “Dr. Copper.”

Home says the current narrative on copper as its price has fallen is, “Demand growth has all but evaporated, thanks first and foremost to China,” and that China’s shift away from infrastructure and apartment tower construction “happened just as copper producers were unleashing a wave of new production to meet demand growth that is no longer there, swamping the world in surplus material.”

He says China’s shift toward economic growth more reliant on consumer spending (as in the U.S. or Western Europe), “has laid waste to those markets, such as iron and steel, that were most dependent on that binge. Copper has not been immune, but it is the nature of the metal that it has multiple usage profiles, not all of them in construction. Growth has slowed, but it has not evaporated, and even slower growth is coming from a larger base,” meaning demand for copper in China or around the world will not necessarily spike downward.

The market’s bearishness toward copper, if Home’s analysis is correct, might have peaked already.