As stainless steel suppliers in the UK, we’re keeping our finger on the British Steel pulse. Ongoing trade wars are putting aluminium prices under severe pressure. And the trend is supported by the price of copper, a powerful a barometer for the global economy. Copper prices have dropped to a two year low thanks to fears of more trade wars and even worse trading conditions.
In short, things are looking ‘interesting’ out there. Luckily we’re carrying on regardless, supplying metals of all sorts, at great prices, to our loyal UK customers. Here’s what’s going on in our world right now.
Turkish pension scheme vehicle Ataer Holding courts British Steel
According to the FT an investor-owned by Turkey’s military pension fund is in talks about a British Steel take-over, the latest interested party to give it a whirl. If the deal goes ahead, it’ll save thousands of jobs. Ataer Holding AS is a financial vehicle of Turkey’s state military retirement scheme, Oyak. It also just happens to be the biggest shareholder in the Turkish steel group Erdemir.
The hunt for a buyer has been going on since British Steel went into insolvency this May, following the failure of pleas from private equity owner Greybull Capital for a government bail-out. There’s another offer on the table as well thanks to the British industrial conglomerate Liberty House, led by the metals magnate Sanjeev Gupta.
We could see a decision at any time, but negotiations are nothing if not delicate. There’s a potential problem on the horizon in the shape of taxpayer support potentially falling foul of EU rules restricting state aid for businesses. Workers at British Steel’s huge Scunthorpe plant in Lincolnshire, who operate one of the country’s two remaining blast furnace steelworks, are hoping against hope that one of the deals will come to fruition.
Apparently, as we write, the terms of the Ataer Holding deal are still being negotiated bit by bit, in fine detail. All this is going on against a landscape where India’s Tata Steel’s net profits plummeted 63% thanks to low demand and prices hitting a 52 week low.
Aluminium prices pressured by trade wars and exports from China
We might be UK aluminium stockists but our sector is international. So we’re fascinated to hear about the American prosecutors who say the founder of China Zhongwang Holdings, Liu Zhongtian, has avoided paying just under two billion dollars’ worth of import duties on aluminium in an effort to inflate sales. It’s part of a hefty 24-count indictment looking into a ten year alleged conspiracy to sell aluminium to US organisations secretly controlled by China Zhongwang Holdings. As a result of it the company’s shares fell as much as 21% on the Hong Kong exchange.
The US attorney Nick Hanna claims Mr Liu is a ‘corrupt businessman’ who has defrauded America out of billions of dollars of tariffs. Plus, bogus sales of vast amounts of aluminium artificially inflated one publicly traded company, putting investors at risk worldwide. This is yet another hitch in a hitch-rich landscape that has seen base metals prices dropping through the floor, the lowest for weeks. Trump’s threats about a new 10% tariff on the remaining US$ 300 billion of Chinese imports from September 1st are not helping matters, and the last round of talks failed.
The trade war between the US and China is affecting global growth, with lasting negative effects on demand for many metals. Global aluminium production dropped half a per cent in the first 6 months of 2019. While worldwide output hasn’t declined year-on-year since 2009, output in China fell by just over 3% compared to June 2018 and 0.4% from January to June 2019. At the same time, Alcoa dropped its own worldwide demand forecast for the second time in three months during July, pinning its flag on a forecast that’s substantially less optimistic.
What’s the solution to all this uncertainty? There’s only one: stop the trade wars, and stop them fast.
Copper prices drop to a two year low
Copper tends to be a barometer metal, a reliable predictor of the state of the world’s economies. So it’s bad news to see copper prices drop to a two-year low as investors prepare for a full-blown trade war between the US and China. The metal hit a low of 2.5315, its lowest level since June ’17, and this so-called ‘summer breakdown’ means the markets will probably stay volatile for the remainder of this year. And that means, according to some, that there might be another dive into recession on the cards.
Our metal supplier promise – Something to cheer you up
It’s good to know that whatever Trump does, whatever China comes up with, whatever happens to metal prices, metals supply and demand, we will always do everything we can to give you the best prices, the best quality and the best service.
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