Discussion in 'Commodity Futures' started by AKUMATOTENSHI, Jul 12, 2020.
Rational reasons for the price movement on the overnight?
It seems more like USD weakening causing many
commodities price ( copper, Aluminium, silver & perhaps Natural gas & crude oil ) to go up
USD weakening probably due to bullish stock markets.
Fears Rio will shut local aluminium smelters
Jul 9, 2020 – 4.38pm
Rio Tinto's closure of its New Zealand aluminium smelter is a harbinger of similar shut-downs in Australia unless there is urgent action to lower energy costs, according to the industry lobby group.
The Australian Aluminium Council (AAC), whose members include Rio and US aluminium giant Alcoa, said energy costs had to come down for smelters to survive.
Rio’s move to shut its New Zealand operations has heightened fears around the future of its three loss-making aluminium smelters in Australia, which employ about 2650 people.
It is understood the Coalition government and Rio have been in talks about a potential rescue package for the at-risk smelters as a downturn in the aluminium market linked to COVID-19 compounds the problem of globally uncompetitive power prices.
Energy Minister Angus Taylor said on Thursday that the government considered Rio’s aluminium smelters to be crucial businesses and employers in NSW, Queensland and Tasmania.
“The government is focused on delivering an affordable and reliable electricity supply, and on ensuring that our energy-intensive, trade-exposed industries like aluminium continue to be viable,” he said.
“As you would expect, we are in ongoing discussions with energy intensive industries about the role the government is playing to bring down prices and ensure reliability."
Wholesale electricity prices in Australia are the lowest they have been since 2015 and the federal government has made it clear it expects retailers to pass on savings.
Rio blamed high energy costs and a bleak lookout for the aluminium industry after setting a date for the closure of New Zealand Aluminium Smelters.
The Rio exit sent shockwaves through New Zealand energy stocks and sparked warnings of higher electricity charges across the country, where the smelter uses about 13 per cent of overall supply. Prices are expected to rise because the removal of such a large customer makes the supply of energy less cost-effective for providers.
The hydroelectric-powered NZAS smelter at Tiwai Point in New Zealand employs about 1000 people and is estimated to indirectly support an additional 1600 jobs.
There are growing doubts about the future of smelters in Australia, which chief executive Jean-Sebastien Jacques warned last year were also on "very thin ice".
The Alcoa-backed Portland aluminium smelter in Victoria is only just surviving on government-funded life support.
ACC executive director Marghanita Johnson said some of the highest energy costs in the world were crippling the industry in Australia, while high transmission costs had been a big factor in New Zealand.
“This is a reminder that for aluminium smelters everywhere it is the delivered cost of energy that counts,” she said.
“What we have seen in New Zealand is that it isn’t just the cost of energy but the transmission cost that have been part of the problem.”
Ms Johnson said aluminium smelters in Australia were like other manufacturers in that they needed well priced and reliable electricity.
“The decision in New Zealand shows that even with stable electricity, and hydro electricity at that, it is just not enough if the price isn’t right,” she said.
“Australian electricity prices are currently some of the most expensive in the world and at those prices we are seeing the risk of the same things [smelter closures] happening here.”
Rio has also talked with state governments and energy providers about its Bell Bay smelter in Tasmania, the Boyne smelters in Queensland and the Tomago smelter, near Newcastle.
Rio aluminium chief executive Alf Barrios declined to comment on the future of the Australian smelters after moving to bring down the curtain on New Zealand.
The company has not launched a formal review of the Australian smelters as it did with New Zealand.
However, its Alba aluminium smelter in Iceland is on the chopping block after Mr Barrios announced a review in February.
The survival of Rio’s smelters in Australia and the Portland smelter, where Alcoa of Australia (AoA) is the biggest shareholder, has been complicated by both companies facing big tax bills over transfer pricing allegations.
The Australian Tax Office hit AoA with a $921 million bill this week after a bribery scandal from more than a decade ago came back to haunt the Alcoa and Alumina Limited-owned entity.
The ATO is seeking $86.1 million from Rio after finding its Australian subsidiaries did not charge an appropriate price for the aluminium they sold to the company’s Singapore marketing hub between 2010 and 2016.
Both Rio and Alcoa have rejected the ATO claims.
Rio has given its chief energy supplier in New Zealand, Meridian Energy, notice to terminate a power contract, which will end in August 2021, when the wind-down of operations is expected to be complete.
The company's strategic review of NZAS concluded that the smelter, which made Rio Tinto an underlying loss of $NZ46 million ($43.3 million) in 2019, was not economically viable due to "energy costs that are some of the highest in the industry globally".
"Extensive discussions with a wide range of interested parties have failed to secure a power contract that will enable the operation to become both competitive and profitable," Rio said.
In regard to NZAS, Rio said that it intended to work closely with partners on the shutdown. NZAS is a joint venture between Rio (79.36 per cent) and Sumitomo Chemical Company (20.64 per cent).
“We recognise the decision to wind-down operations at NZAS will have a significant impact on employees, the community and our customers," Mr Barrios said.
“It is not a decision we have made lightly and without significant careful consideration. It is very unfortunate we could not find a solution with our partners to secure a power price reduction aimed at making NZAS a financially viable business."
Meridian confirmed the closure in a statement to the NZX as energy stocks plunged amid warnings all New Zealanders now faced higher power costs.
Contact Energy, another smelter supplier, blasted Rio over what it said was a "disorderly exit" that would increase transmission costs to other customers.
Contact chief executive Mike Fuge said the company was now considering the closure of the Taranaki Combined Cycle thermal power station at Stratford.
“We’ve all had a strong desire to help secure the financial sustainability of the unique low-carbon smelter at Tiwai, and retain the 1000 high-paying jobs in Southland, plus the 1600 contractor and supplier roles," he said.
“We’re very disappointed to have played our part in delivering these savings for one of the greenest smelters in the world and to have such limited engagement from Rio Tinto.
"We urge Rio Tinto to seriously consider the offer for improved electricity supply and encourage them to consider what is right for Southland, for New Zealand and for their own global environmental commitments.”
Same as toilet paper ETF's.
Should be combined into one : Tuna fisherman, bunkers labor etc - survival index/futures (smiles)
I just switched from Diet Coke to Diet Pepsi and was amazed how thin the ally is on their cans. I don't think they can get any thinner without the can caving in.
Interesting fact about ally smelting.
A lot is done in Iceland due to Iceland having almost free leccy from their thermal vents. In a round about way it's a way that Iceland can export its excess and very cheap energy.
And it's no different with Bitcoin. Bitcoin a) uses a lot of energy, but b) much of it is excess energy that has no place to go. Bitcoin to a certain degree is therefore excess energy being exported. That fact of course isn't as interesting to the media as the non-fact - 'Bitcoin wastes more energy that Belgium'. That makes a better story and brings out the EMOTIONS of the reader. Target the emotions, that's the game and to hell with the real facts.
Which source(s) are you checking for price?
Which tells us the supply chain folks at Coke aren't as bright as the supply chain folks at Pepsi. No reason to make a single use container an iota stronger than it needs to be to do its job, anything else is waste.
Kitco base, CME,LME and etc. 25% drop....
Metal prices are planetary common knowledge
Separate names with a comma.