US Fed cuts rate by quarter point, 2nd cut this year

: Metals
24/11/07

The US Federal Reserve cut its target interest rate by 25 basis points today, its second cut since 2020, as it said inflation has "made progress" towards its 2pc target.

The Fed's Federal Open Market Committee (FOMC) lowered the federal funds rate to 4.50-4.75pc from the prior range of 4.75-5pc. This followed a half-point cut made in mid-September, the first cut since 2020. The Fed has been cutting its target rate from two-decade highs as inflation, which peaked at 9.1pc in mid-2022, has come down to near the Fed's 2pc target.

"The Committee will carefully assess incoming data, the evolving outlook, and the balance of risks" in considering additional adjustments to the target rate, the FOMC said in its statement after the two-day meeting. "Inflation has made progress toward the Committee's 2 percent objective but remains somewhat elevated," it said, adding that the unemployment rate "has moved up but remains low."

The rate cut comes two days after Republican Donald Trump, a vocal critic of the Federal Reserve during his first term in office from 2017-2021, was elected president. With vote counting ongoing, the Republicans appeared set to win both houses of Congress, giving Trump virtually unrestrained powers.

By Bob Willis

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24/11/07

US W mining essential after Trump victory: ITIA

London, 7 November (Argus) — The rise of protectionism and prospects of increasing tariffs between the US and China prompted discussions about the need to mine tungsten domestically in the US during the International Tungsten Industry Association (ITIA) conference in Barcelona this week. "The development of domestic tungsten production in North America is critical," a US tungsten consumer told Argus . The hard metal is gaining attention from the Department of Defence (DoD) owing to its applications within defence industries and potential future use in nuclear fusion. The lack of domestic tungsten is considered a significant risk to US national security. The US introduced a 25pc tariff on imported Chinese tungsten-related products effective from 1 August 2024. Furthermore, imports of tungsten-mined ore from China and Russia for DoD procurement will be banned from 2027. The DoD is providing an increasing number of grants for companies to establish domestic manufacturing. It is doing so through programmes such as the Defence Production Act Investments (DPAI), which, since the beginning of the fiscal year 2024, issued 55 awards totalling $555mn. "Many parties want us to move this project forward as quickly as we can," said Oliver Friesen, executive director of junior miner Guardian Metal, which is developing the largest tungsten deposit in the US, Nevada. "If we were to start production today, the tungsten concentrate from (our project) Pilot Mountain would represent the only primary domestic production in the US," Friesen said. Guardian Metal anticipates it can source 20pc of US tungsten consumption within three years. This funding initiative for domestic manufacturing has bipartisan support from both Republicans and Democrats, but it could accelerate with Donald Trump in the White House. The president-elect proposed tariffs of up to 20pc on all foreign goods and 60pc tariffs on all imports from China on the campaign trail. China accounts for more than 80pc of global tungsten production. One conference attendee told Argus he anticipates the tariffs to be a reality and not mere rhetoric. Any measures could provoke a retaliatory response from China, which has already imposed export controls on dual-use materials such as antimony, gallium and germanium. Despite this, some traders express scepticism about the need for the US to produce its tungsten, as consumers are sourcing material from "friendly jurisdictions" and political allies such as Portugal and Spain, and have plans to buy from South Korea. Additionally, the demand for virgin material may decrease, given the increasing viability of recycling, suggesting that less material may be necessary. However, amid regional shifts, one participant emphasised, "If the US becomes isolated, the material needs to be produced domestically." By Cristina Belda Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

EU minor metal markets await US reaction to Trump win

24/11/07

EU minor metal markets await US reaction to Trump win

London, 7 November (Argus) — Europe's minor metal markets have been slow to react to Donald Trump's re-election as US president, and any price movement in response is pending a reaction from US consumers and further details of Trump's tariff plans. The biggest point of interest for European market participants is the potential impact of Trump's tariff plans and whether they would apply to critical minerals. Trump in the past has said his administration would apply tariffs upwards of 60pc on all US imports from China and a 20pc tariff on imports from the rest of the world to protect American manufacturing. But this also runs the risk of driving up inflation. Minor metals trading firms are hopeful that exceptions will be made for critical minerals and that Trump's plans could be watered down and take some time to implement. "Knowing Trump, there will be a lot of negotiating and country blackmailing before the final list is established. I would also expect a lot of exceptions for critical metals that are needed for aerospace, military, space and other high-tech industries," a minor metals trading company told Argus this week. "He certainly announced increased tariffs for several products of Chinese origin, but it could take months for any plan to actually be implemented," another market participant said, noting that they would take a more watchful approach rather than follow any knee-jerk reactions from the market. In addition to higher prices for metals imported from China, the other major risk factor associated with a more intensified US protectionist policy is that China will ramp up retaliatory measures in the form of export restrictions on metals for which it holds a dominant supply position. China has instituted export controls on gallium, germanium and antimony since the middle of last year, contributing to a dramatic surge in import prices for the latter two metals in the rest of the world. Supply of tungsten, a critical metal for the mining and aerospace industry, is also dominated by China, and it is widely viewed as the next most likely candidate for export controls. If geopolitical tensions escalate, tungsten supply chains may attempt to relocate to countries that have better relationships with the US. "Countries such as Thailand and South Korea are going to get real busy," a US tungsten recycling company told Argus . Meanwhile, the new US administration could benefit sectors that consume tungsten carbide, including energy and mining. "We will probably see more stability in mining projects in the US and a fast-tracking of permits for strategic metals," a supplier said. Faster permits could also boost the domestic production of antimony in North America, even though most products are still in the early stages of development. Despite hopes that the new US administration could make some tariff exceptions for critical minerals, many such minerals are already subject to import tariffs in the US. On 27 September, president Joe Biden's administration implemented 25pc tariffs on some chromium, cobalt, indium, tantalum and tungsten products imported to the US from China, despite strong opposition from stakeholders across the markets. All five of these metals were included in the US Secretary of the Interior's 2022 critical minerals list. Furthermore, Trump previous administration imposed tariffs on 5,745 items in 2018, including but not limited to, battery metals such as nickel, cobalt, lithium and manganese, as well as key electronics and aerospace metals such as gallium, germanium, bismuth and certain tungsten products. Trump did make exceptions for antimony and rare earths at the time, which he removed from its initial tariff list of more than 6,000 items. Many of these tariffs started out at 10pc in September 2018 but rose to 25pc by May 2019, with mixed impacts. The most recent wave of tariffs from the Biden administration prompted an uptick in demand from US consumers and trading companies between the announcement of the tariffs and their implementation. In the first half of this year, Chinese exports of chromium to the US surged to 6,221t, up by 417pc from the same period a year earlier, as exporters rushed to get material on the water before the tariffs came into force and US chromium buyers sought to build stocks. Likewise, US demand drove up exports of Chinese unwrought tantalum to 162t in January-August, more than doubling from 63t a year earlier, customs data show. The US is highly dependent on unwrought tantalum metal imported from China, with China's supplies accounting for more than half of its total imports in recent years. But in the days immediately following Trump's win, US demand has remained steady. "I expect that only the people who are the most risk-prone or certain about the duties will want to stockpile this early," a trading firm said. By Sian Morris and Cristina Belda Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

Boeing workers approve contract, end strike: Update

24/11/05

Boeing workers approve contract, end strike: Update

Includes additional contract details in 3rd and 4th grafs, and background on Boeing. Houston, 5 November (Argus) — Union-backed machinists approved a new labor contract with aircraft manufacturer Boeing, ending a seven-week work stoppage that halted production of major jet programs and disrupted aerospace supply chains. More than 32,000 factory workers represented by the International Association of Machinists and Aerospace Workers (IAMAW) voted by 59pc to ratify the deal, the local union said late Monday. Employees secured a general wage increase (GWI) of 38pc spread out over the contract's four-year life, a one-time $12,000 ratification bonus and greater 401(k) contributions, among other retirement and health care benefits. The pay raise — a sticking point in prior rounds of negotiations — improved upon Boeing's first two offers of 25pc and 35pc but fell short of the 40pc sought by workers. Still, the union touted that the GWI in the new contract amounts to 43.65pc when compounded. Boeing chief executive Kelly Ortberg acknowledged the past few months "have been difficult" in expressing his appreciation that both sides were able to come to terms. Workers began their strike on 13 September, effectively shutting down Boeing's final assembly lines in Renton and Everett, Washington, where the company produces its flagship 737 MAX aircraft, along with its 767 and 777 programs. That stoppage further exacerbated issues within Boeing's operations that have been under heightened scrutiny since January, when a midair panel blowout led to a mandated production cap on the 737 MAX. Additionally, parts shortages and other supply chain challenges have constrained output of the company's main widebody program, the 787 Dreamliner, this year. The strike itself compelled Boeing to initiate cost-cutting measures with the production halt weighing on its finances . The company on 11 October announced it would lay off 10pc of its total workforce, while confirming on 23 October that it had stopped shipments from certain suppliers to conserve cash. The latest estimate from Anderson Economic Group, which does not account for last week, puts Boeing's losses at $5.5bn and its suppliers' losses at $2.3bn because of the work stoppage. All workers must return to their positions by 12 November but can return as early as Wednesday, the union said. Still, Boeing cautioned that it would take time for operations to stabilize, saying it would have to retrain and recertify employees who did not "get enough time on an airplane" before they went on strike. The company also will have to contend with a supply chain that it "turned off in many cases" because of the work stoppage. By Alex Nicoll Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

Boeing workers approve contract, end strike

24/11/05

Boeing workers approve contract, end strike

Houston, 5 November (Argus) — Union-backed machinists approved a new labor contract with aircraft manufacturer Boeing, ending a seven-week strike that halted production of major jet programs and disrupted aerospace supply chains. More than 32,000 factory workers represented by the International Association of Machinists and Aerospace Workers voted by 59pc to ratify the deal, the local union said late Monday. Employees secured a general wage increase of 38pc spread out over four years and a $12,000 ratification bonus, along with other retirement and health care benefits. All workers must return to their positions by 12 November but can return as early as Wednesday, the union said. By Alex Nicoll Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

US railroad-labor contract talks heat up

24/11/04

US railroad-labor contract talks heat up

Washington, 4 November (Argus) — Negotiations to amend US rail labor contracts are becoming increasingly complicated as railroads split on negotiating tactics, potentially stalling operations at some carriers. The multiple negotiating pathways are reigniting fears of 2022, when some unions agreed to new contracts and others were on the verge of striking before President Joe Biden ordered them back to work . Shippers feared freight delays if strikes occurred. This round, two railroads are independently negotiating with unions. Most of the Class I railroads have traditionally used the National Carriers' Conference Committee to jointly negotiate contracts with the nation's largest labor unions. Eastern railroad CSX has already reached agreements with labor unions representing 17 job categories, which combined represent nearly 60pc of its unionized workforce. "This is the right approach for CSX," chief executive Joe Hinrichs said last month. Getting the national agreements on wages and benefits done will then let CSX work with employees on efficiency, safety and other issues, he said. Western carrier Union Pacific is taking a similar path. "We look forward to negotiating a deal that improves operating efficiency, helps provide the service we sold to our customers" and enables the railroad to thrive, it said. Some talks may be tough. The Brotherhood of Locomotive Engineers and Trainmen (BLET) and Union Pacific are in court over their most recent agreement. But BLET is meeting with Union Pacific chief executive Jim Vena next week, and with CSX officials the following week. Traditional group negotiation is also proceeding. BNSF, Norfolk Southern and the US arm of Canadian National last week initiated talks under the National Carriers' Conference Committee to amend existing contracts with 12 unions. Under the Railway Labor Act, rail labor contracts do not expire, a regulation designed to keep freight moving. But if railroads and unions again go months without reaching agreements, freight movements will again be at risk. By Abby Caplan Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

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