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Hopes rise on improved US-China relations

The first quarter of 2020 will see some notable political milestones. On the one hand, the beginning of an agreement in the trade dispute between the USA and China appears within reach. As RI went to press, the first stage was due to be signed.

Existing tariffs of 25% were retained but China’s proposed increases of 5% for several materials including aluminium were called off. The 25% rate on aluminium has been in force since April 2018.

China GDP

China’s gross domestic production continued to slow in 2019, according to an unofficial but authoritative report from Renmin University in China. Ahead of official annual figures, the report indicates a GDP of 6.1%, well down on 6.6% reported in 2018.

On the business front, China has approved Novelis’ takeover of the Aleris Corporation, a move seen by the company as clearing the way to close the transaction. As part of the approval, Novelis has agreed to sell the Aleris plant in Duffel, Belgium to an independent third party.

China’s State Administration for Market Regulation (SAMR) announced support for the acquisition shortly before Christmas, which Novelis president and ceo Steve Fisher called ‘a significant step forward in uniting these two world-class manufacturing companies’.

Following the SAMR decision, and having received conditional approval in the EU as well as ‘a clear path forward’ in the US, the company expected to close the transaction by 21 January.

Aluminium

Prices for aluminium high grade and aluminium alloy continued the positive trend of December and rose accordingly. In early January, the price for aluminium high grade was around US $ 1 826 while that for aluminium alloy ranged from US $ 1 390 – 1 400. The LME stocks at this time were 1.4 million tonnes.

At the same time, wire scrap from pure aluminium in Germany cost around US $ 1 620 – 1 730. Prices for aluminium profile scrap ranged from US $ 1 550 to US $ 1 660. Aluminium chips ranged between US $ 620 and US $ 820.

Copper

The International Copper Study Group (ICSG) released its 2019 Statistical Yearbook in December covering world copper supply and demand data for the 10-year period 2009-2018. It provides an assessment of how the market has evolved over the last 10 years, including trends in global copper production, usage, stocks and trade.

World copper mine production rose from 15.9 million tonnes in 2009 to 20.6 million tonnes in 2018. Secondary refined production (from scrap) increased from 2.87 million tonnes in 2009 to just over four million tonnes in 2018 – and annual growth of around 4% per year. The share of secondary production in total refined production increased gradually from 15.5% in 2009 to 18% over 2010-2013 before stabilising at around 17%.

Data from ICSG for the first nine months of 2019 indicates that world mine production declined by about 0.4%. Secondary production from scrap increased by 1.6%. The three-month price for copper was around US $ 6 158 in early January.

Copper stocks in the licensed warehouses of the LME totalled 140 925 tonnes, a slight decrease compared to the end of last year.

You can read the full market analysis in our latest issue.

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