Tag: Base metal

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Codelco said in end-of-year results it produced 1.59 million tonnes from its wholly owned mines in 2019, and that profits had fallen 17% from the previous year to $1.34 billion.
Codelco said in end-of-year results it produced 1.59 million tonnes from its wholly owned mines in 2019, and that profits had fallen 17% from the previous year to $1.34 billion.

SANTIAGO: Chile‘s state-run Codelco said on Friday output had dropped 5.3% in 2019, driving profits down sharply as the world’s top copper producer continues to battle with rising costs and falling ore grades at its aging deposits.

Codelco said in end-of-year results it produced 1.59 million tonnes from its wholly owned mines in 2019, and that profits had fallen 17% from the previous year to $1.34 billion. Direct cash costs rose 1.8%, the company said.

The fall in profits was due “principally to lower gross margins, the downward tendency of copper prices, a reduction in physical sales of copper and molybdenum and weak results obtained from associated investments,” the company told regulators.

The poor showing puts Codelco in a tight spot as the impact of the coronavirus outbreak begins to bite in Chile. Chile has confirmed more than 1,600 cases, among the highest tallies in Latin America, while the price of copper is at a four-year-low.

The spread of the virus earlier this week forced Codelco to put on hold parts of a 10-year, $40 billion plan to boost output from its aging mines.

“This enormous crisis has hit the copper price with force, driving it down to historic lows, while demand for the red metal decreases day after day,” the company said in a statement accompanying its results. “Codelco is working to preserve operational continuity, liquidity, and financial wellbeing.”

The mining company’s sprawling deposits, scattered across central and northern Chile, continue to operate with reduced staff, though unions this week ratcheted up pressure to shut down to safeguard workers.

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The key demand drivers construction and infrastructure sectors besides the automobile and capital goods sectors, continue to witness muted or negative growth due to coronavirus pandemic.
The key demand drivers construction and infrastructure sectors besides the automobile and capital goods sectors, continue to witness muted or negative growth due to coronavirus pandemic.

New Delhi: The performance of Indian steel players is likely to be affected in the first quarter of 2020-21 due to the coronavirus outbreak and the subsequent nationwide lockdown, according to ICRA. Domestic firms may have to face challenges such as weak domestic demand, which is likely to lead to inventory pile-up exerting pressure on steel prices, the ratings agency said in a statement.

“The outbreak of coronavirus and associated lockdown will keep both production and consumption under check in Q1 (first quarter) FY21. As a result of Covid-19 pandemic and the 21-day nationwide lockdown, the performance of domestic steel makers is likely to be adversely impacted in Q1 FY21,” it said.

Jayanta Roy, Senior Vice President and Group Head, ICRA said the Covid-19 and slowing Chinese demand will affect global steel demand-supply balance in the near term.

In the domestic scenario, the key demand drivers –construction and infrastructure sectors — besides the automobile and capital goods sectors, continue to witness muted or negative growth, Roy said.

As far as exports are concerned, Icra said, the rapid spread of the outbreak to countries other than China has disrupted the seaborne steel trade, and the same is likely to fall further amid the looming uncertainty surrounding global growth.

As for imports, the increased scrutiny of shipments and weakened position of the rupee are expected to keep them low.

The rally witnessed in domestic steel prices since November 2019 is based on supportive international prices, but this is likely to halt due to the outbreak.

The agency also noted that domestic hot rolled coil(HRC) prices stood at Rs 38,000/MT in March 2020, and given the low demand amid the lockdown, a correction looks highly likely only in the next quarter.

Roy said: “We are not expecting a rebound in steel consumption growth in FY2021. As against a growth rate of 3.8 per cent in FY2020, consumption growth is likely to settle at around 2-3 per cent in FY2021, given that Q1 could be a very weak quarter. Margin improvement is unlikely in FY2021.”

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JEE slashed its full-year earnings forecast, predicting a record $1.75 billion in net loss.
JEE slashed its full-year earnings forecast, predicting a record $1.75 billion in net loss.

TOKYO: JFE Holdings Inc, Japan’s second-biggest steelmaker, said on Friday it would cut its steel capacity by 13% by shutting a blast furnace by March 2024 due to weakening demand from manufacturers hit by the U.S.-China trade war.

“We are facing an unprecedented and extremely challenging operating environment due to slumping steel demand from manufacturing industries hit by the U.S.-China trade war and rising prices of raw materials driven by China’s increased output of steel,” JFE Steel President Yoshihisa Kitano told a news conference.

The company forecast an impairment loss of about 220 billion yen ($2 billion) on its production facilities in Chiba and Kawasaki, near Tokyo, in the current business year ending this month.

As a result, the steelmaker slashed its full-year earnings forecast, predicting a record 190 billion yen ($1.75 billion) in net loss, compared with its prior estimate of a net profit of 13 billion yen.

Under the restructuring plans, it will close a blast furnace and other facilities at the East Japan Works (Keihin) in Kawasaki in the year that ends March 2024.

Japanese steelmakers are also facing waning domestic demand due to a decline in population.

Last year, crude steel output in Japan, the world’s third-biggest steel producer, fell 4.8% to 99.28 million tonnes from a year earlier, edging below 100 million tonnes for the first time in 10 years, the Japan Iron and Steel Federation said.

In February, Nippon Steel Corp unveiled a plan to shut nearly 10% of its production capacity, an unprecedented move in the once-dominant Japanese steel industry hit by falling demand at home and competition from China.

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