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Chinese mills warn of Australia coal import ban

  • Market: Coking coal, Metals
  • 09/10/20

China has told some of its state-owned steelmakers and power plants to stop importing Australian coals with immediate effect, injecting more uncertainty into its spot markets that had anticipated eased restrictions into 2021.

A major northeast China state-owned steel producer received verbal notice of the ban this afternoon, but with few details available. Other details are still being communicated by authorities and will not be immediately available, a mill contact said.

Other mills in different regions of China have not been told to stop imports, but some participant said the policy could be progressively rolled out with mills notified one by one over the next few days or weeks.

A south China producer was heard to have confirmed the import curb on Australian coals, but the details could not be verified, sources said.

Tangshan and Shandong mills have yet to receive notification of the import ban, a Shanghai-based trader said. But it is having an effect as many buyers will shun Australian coal anyway, whether or not the ban is real, the trader added. "Meanwhile, enquiries on US coal are heard to be on the rise," the trader said.

US miners and traders in the Atlantic have noted more enquiries for US coking coal, particularly following the end of the national day holiday in China yesterday. US coking coal prices have lagged the September recovery in Australian prices as demand in Europe remains muted, with mills still not back to full capacity. Recent demand from Brazil, Turkey and India have offered support but there remains a $17-18/t differential between the US low-vol fob Hampton Roads price and the Australian premium low-vol price today. Freight rates in the high $20s/t for coal Panamax shipments from the US east coast to north Asia and $11/t for Australia to China also translate to a workable arbitrage opportunity.

A Singapore-based trader said the reports should be treated with caution as there is no confirmation and further details are not available. "This news has been circulating in the market for over two months now. We suspect that this might be a case of tightening import quotas rather than a complete ban," she added. "We will wait for an official statement to be communicated by the authorities, if any."

It is unclear how the policy will affect the more than 4mn t of coal in 61 vessels waiting to unload at Jingtang and Caofeidian ports in north China, a contact said.

North China private-sector steel producers have been anticipating eased restrictions after asking economic planners for more 2020 quota room. Imports will have more room when quotas reset on 1 January.

China's January-August seaborne coking coal imports have risen by 33pc to 40.1mn t despite the restrictions, as a wide domestic-seaborne arbitrage and manageable demurrage costs have driven spot trade.

The renewed interest in US coals has brought back the conversation around the impact of the US-China trade talks on the US coking coal market. In January, China committed to buying significant volumes of commodities such as crude, natural gas, coal and LPG from the US under the phase 1 trade deal that was signed in January. But Chinese imports of US coking coal have been slow to pick up this year, no doubt weighed down by Covid-19 disruptions earlier this year and long vessel queues at ports linked to the restrictions on Australian coal that have emerged since the third quarter.

US miners have also been less optimistic about how the entire allocation for coal would be fulfilled by US coking coal, with exports to China totalling just 2.7mn t in 2017, before the introduction of retaliatory tariffs on US coals in China. "I can't see how the US would be able to ship the 5-6mn t in coking coal under the deal, based on today's prices," a US miner said.


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21/02/25

Republicans target US energy rules for disapproval

Republicans target US energy rules for disapproval

Washington, 21 February (Argus) — Republican leaders in the US House of Representatives hope to disapprove at least seven energy-related measures issued under former president Joe Biden using a filibuster-proof process created under the Congressional Review Act. House majority leader Steve Scalise (R-Louisiana) on Thursday released a list of 10 rules that his party has prioritized as "potential targets" for disapproval votes, which require only a simple majority to pass in each chamber. Republicans previously used the law in 2017 to successfully unwind more than a dozen rules, and they hope to do so again to repeal Biden-era rules they say will unnecessarily raise costs on businesses and consumers. A US Environmental Protection Agency (EPA) regulation that implements a $900/t charge on oil and gas sector methane leaks is among the rules that Republicans want to disapprove. If those implementing rules are scrapped, it would provide a temporary reprieve from a 31 August deadline for operators having to pay billions of dollars in potential fees on methane emitted in 2024. Republicans hope to vote later this year to permanently end the methane charge, which was created by the Inflation Reduction Act. House Republicans also hope to disapprove an offshore oil and gas safety rule for drilling in deepwater "high pressure, high temperature" environments that Scalise's office says will increase "burdens on energy operations". Other rules that Republicans will target for disapproval are energy conservation for gas water heaters, energy efficiency labeling standards and air pollution restrictions on rubber tire manufactures. Two of the energy measures House Republicans say they plan to target might not qualify for disapproval under the Congressional Review Act, which can only be used on a "rule". The first is a waiver that would allow California to boost in-state sales of electric vehicles and plug-in hybrids, and that President Donald Trump's administration has tried to make eligible for repeal. The second is the US Commodity Futures Trading Commission's decision to release voluntary guidance for exchanges that allow trading of carbon offset futures. By Chris Knight Send comments and request more information at feedback@argusmedia.com Copyright © 2025. Argus Media group . All rights reserved.

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Global HRC quota could be workable: Eurofer


21/02/25
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21/02/25

Global HRC quota could be workable: Eurofer

London, 21 February (Argus) — A global hot-rolled coil (HRC) quota managed on a monthly basis could be a viable measure adopted by the EU steel safeguard review, according to steel association Eurofer. The idea of a global quota was proposed to the European Commission by Hyundai Steel and the Korean Iron and Steel Association, according to documents obtained by Argus . In a 13 January submission to the commission Hyundai Steel said a global quota allocated monthly would "help ensure smoother trade flows and better supply chain management, preventing distortions that could arise from uneven utilisation of the quota". The fact some countries quickly exhaust their 15pc of the other countries quota risks a "sudden influx" that can flood the EU market, Hyundai said. South Korean mills have their own quota, which typically only fills or goes critical towards the end of the quota period; it went critical earlier in this quarter, however, going critical in the second half of February. The Korean Iron and Steel institute echoed the views of its member Hyundai, suggesting there should be monthly restrictions or increasing tariffs on volumes above the quota level. In a submission to the commission earlier this month, Eurofer said this solution could be workable and prevent "gaming" of the system if accompanied by a first in-first out duty regime — meaning no pro-rata of duties on the first days of a quota — and if its earlier adjustments were adopted. In a 10 January submission Eurofer requested that the flat steel quota should be cut by 50pc to better align quotas with current demand, and that if this was not possible other measures could be taken to reduce import penetration. These measures included the introduction of individual quotas for China and a melt-and-pour rule that means any steel produced using Chinese substrate could come under this quota; this would have most impact on cold-rolled and hot-dip galvanised coil imports produced using Chinese HRC. Eurofer also asked for an increase in the 25pc duty where quotas have been filled; the introduction of first-in first-out, meaning all material pays the fully duty where quotas have been filled; the expansion of 15pc caps to other residual quotas, and the reduction of the HRC residual quota cap to 7.5pc. It also said there should be no carryover of leftover quota between quarters, that more country-specific quotas should be introduced, with a corresponding reduction in residual quotas, and that liberalisation of the quota should be removed. While Eurofer and some importers seem to see eye-to-eye on the idea of a global quota, it is likely that they hold varying views on how much tonnage should be included duty-free. By Colin Richardson Send comments and request more information at feedback@argusmedia.com Copyright © 2025. Argus Media group . All rights reserved.

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Mexico central bank slashes '25 GDP outlook on tariffs


20/02/25
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20/02/25

Mexico central bank slashes '25 GDP outlook on tariffs

Mexico City, 20 February (Argus) — Mexico's central bank slashed the country's growth outlook for 2025 by half, citing potential US tariffs. The central bank cut its forecast for gross domestic product (GDP) growth to 0.6pc for the year, from a prior 1.2pc estimate. Growth was 1.5pc in 2024. In making the revision, the central bank said the weaker growth outlook is due to "high uncertainty" over potential US tariffs and other measures taken by the new US administration. The threat of tariffs alone will impact investment and consumption in Mexico this year, the bank added in its quarterly inflation presentation Wednesday, with the uncertainty potentially extending into upcoming discussions over the USMCA free trade agreement. The central bank provided a range of between -0.2pc and 1.4pc for 2025 growth, while 2026 growth should fall within a range of 1pc and 2.6pc. The central bank updated its inflation outlook, with Mexico's year-end annual consumer price index (CPI)estimated at 4.5pc, slower than its previous 4.7pc estimate. However, the bank said more time is needed to bring CPI down to its goal of 3pc, projecting this will occur in the fourth quarter of 2026, a year after its previous estimate. CPI eased to an annual 3.59pc in January, the lowest in four years, as deceleration in agriculture prices offset faster inflation in energy, consumer goods and services. In a 6 February decision, the central bank accelerated its current rate easing cycle, cutting its target rate by a half point to 9.5pc. It said the board is considering cuts of similar magnitudes in coming months, with the next meeting set for 27 March. Board governors addressed the potential inflationary impact that could occur with the enactment of major US tariffs on Mexico, arguing the flexibility of the Mexican peso-US dollar exchange rate should help absorb some tariff impacts. "Conceptually there would be no reason to rule out a scenario where tariffs materialize and at the same time the central bank could cut the target rate by 50 more [basis] points," said deputy governor Gabriel Cuadra, who joined the board earlier this month. Cuadra added the Mexican economy has proven resilient to complex challenges, adding the bank is ready to confront any eventuality with the trade dispute, citing solid foreign reserves and multiple tools for confronting inflationary spikes. By James Young Send comments and request more information at feedback@argusmedia.com Copyright © 2025. Argus Media group . All rights reserved.

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EU CBAM to halve S African aluminium export value


20/02/25
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20/02/25

EU CBAM to halve S African aluminium export value

Cape Town, 20 February (Argus) — South Africa's aluminium exports could lose more than half their value to levies under the EU's Carbon Border Adjustment Mechanism (CBAM), according to manufacturer Hulamin. South African products exported to the EU are assumed to have embedded greenhouse gas (GHG) emissions of around 18t CO2 equivalent (CO2e)/t on average, Hulamin environmental sustainability head Hendrik de Villiers said. Hulamin is Africa's largest aluminium manufacturer, with a capacity of 200,000 t/yr. The exact CBAM levy is not known yet, but a rate of €80/t CO2e would translate into €1,440/t for unprocessed South African aluminium, De Villiers noted. Assuming an LME aluminium price of €2,500/t, CBAM could absorb well over 50pc of the value of unprocessed South African product by 2034, he said, adding: "This is, of course, the worst-case scenario, where no mitigating actions are taken." De Villiers was speaking during a webinar hosted by the EU Chamber of Commerce and Industry in Southern Africa and the European Delegation to South Africa. CBAM's transition phase — during which EU importers must provide greenhouse gas (GHG) emissions data to the EU — ends on 31 December 2025. From 1 January 2026, EU importers will have to surrender CBAM certificates for emissions embedded in their products. By 2034, it is assumed CBAM will be levied on Scope 1 and Scope 2 emissions. Scope 1 emissions are direct GHG emissions from a company's operations, while Scope 2 are from the generation of a firm's purchased electricity. In 2023, South Africa's CBAM-affected exports to the EU had a total value of €1.1bn, or 5pc of the total value of the country's exports, according to the European Commission's directorate of taxation and customs. "CBAM will have an important impact on South Africa, because around 4pc of the country's global exports are iron and steel and around 1pc is aluminium," the directorate's CBAM unit head, Vicente Hurtado Roa, said. The EU also receives some 35pc of South Africa's aluminium exports, he said. The European Commission's own figures show South African exports of CBAM goods to the EU running at 1.09mn t/yr — with 900,000t of this iron and steel, and the rest aluminium. De Villiers outlined measures that could help mitigate CBAM costs. Manufacturers could cut their energy intensity through efficiency improvements, for example. Scope 2 emissions can be reduced by integrating renewables and other low-carbon generation sources into the aluminium supply chain. "However, this cannot be done independent from the national grid," De Villiers pointed out. De Villiers also suggested that the South African government should use the country's carbon tax to offset CBAM and retain tax revenues locally. Since CBAM takes into account carbon taxes paid in the country of origin, the government should tax emissions and use the revenue to support decarbonisation of domestic industry, especially energy-intensive users that benefit the economy but are at risk from the high grid emission factor. Around 80pc of South Africa's electricity is coal-fired and the country is the 15th largest GHG emitter, according to the World Resources Institute. This means the inclusion of Scope 2 emissions in CBAM is South African energy-intensive manufacturers' "biggest concern", De Villiers said. South Africa's carbon tax was phased in from June 2019 at 120 rand/t CO2e ($7/t CO2e), and had increased to R134/t CO2e by the end of 2022. The Treasury is targeting $30/t CO2e by 2030. By Elaine Mills Send comments and request more information at feedback@argusmedia.com Copyright © 2025. Argus Media group . All rights reserved.

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EU HRC futures jump on likely safeguard tightening


20/02/25
News
20/02/25

EU HRC futures jump on likely safeguard tightening

London, 20 February (Argus) — European hot-rolled coil (HRC) futures and equities rallied this morning, in expectation of a tightened steel safeguard. The European Commission is due to inform the WTO next week of the results of its functional safeguard review, and some buyers believe mills are anticipating a strong cut in imports, given their toughened pricing stance. The market leader has informed buyers it will be seeking €680/t in the coming days, potentially moving to €700/t in the next week or two. Other mills have also pulled their offers in expectation of stronger pricing. Trade was brisk on the CME Group's north EU HRC contract this morning, with increased buying interest on the comparatively flat curve. Two March-April spreads traded at -€10/t, with the outright prices at €625-635/t, while a 5,000t April trade concluded at €643/t, up by €8/t on yesterday's settlement. May nudged up by €5/t to €645/t, for 2,000t, before trading a minute later at €648/t, again for 2,000t. On screen, March and April both rose by €10/t to €635/t and €645/, respectively. Some mill equities also rallied, with ThyssenKrupp rising by over 3pc as of 11:25 GMT and Salzgitter rising by almost 4.5pc by 11:23 GMT. EU HRC futures appear to have shrugged off the initial malaise following the news of new US import tariffs , with volume also rising today; almost 19,000t had traded by 11:24 GMT, the highest daily volume since 4 December. The likelihood of a tighter safeguard, and the fresh increases sought by mills, bolstered the curve, which had been constrained somewhat by active selling from traders hedging their physical inventories, sources said. Service centres of late have noted an increased number of domestic offers from traders, which bought material — normally from service centres — in the weak fourth-quarter market. Some of that inventory has been offered at a fixed price recently, with deals concluded around €570-580/t ex-stock, while some has been offered at a discount to Argus ' north EU HRC index, the underlying settlement basis for the CME contract. Physical HRC prices have increased quite sharply in the past five weeks, largely driven by a reduction in import volumes, despite underlying demand remaining weak. Argus ' north EU HRC index jumped by €52.50/t from €558.25/t on 6 January to €610.75/t on 19 February, while the daily Italian index rose by €40.50/t from €566.75/t to €607.25/t, over the same period. Margins for north EU HRC producers have increased by €49.44/t over the same period to over €122/t, their highest level since 10 September last year. By Colin Richardson Send comments and request more information at feedback@argusmedia.com Copyright © 2025. Argus Media group . All rights reserved.

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