The Mitsui Daily Ni-Co-Sn Wrap 8-Nov-19

Table Of Contents Page

Trump Sows Doubt on Trade Talks With Pushback on Tariff Unwind 2
Indonesia’s Tin Exports Rise to 5,816.08 Tons in Oct.: Ministry 2
Giant Steelmakers Raise U.S. Prices After Giving Deep Discounts 2
Preliminary Nov. Michigan Sentiment Rose to 95.7, Est. 95.5 3
U.S. Wholesale Inventories Fell 0.4% in Sept. vs -0.3% Forecast 3
ICBC Standard Bank Plans to Shut Base Metals, Equities Units 4
China Is Considering Cutting Electric-Car Subsidies Again 4

Attention readers: Please feel free to contact us if you have any questions about an article.

LME Select 3M Range Official Cash & 3M Averages (Ask Price)

Cash Cash 3M 3M 3M SHFE
Open High Low Last 1D Δ Settlement MTD YTD Offer MTD YTD US$
Nickel
16220.00 16300.00 15845.00 16180.00 -35.00 16190.00 16410.83 13895.34 16120.00 16383.33 13919.38 19364.2
Cobalt
- - - 36000.00 0.00 35500.00 35500.00 33153.67 36500.00 36500.00 33535.32
Tin
16615.00 16775.00 16585.00 16775.00 200.00 16675.00 16547.50 18946.40 16675.00 16568.33 18878.78

Other Base Metals Currencies U.S. Futures

LME 3M Close 1D Δ High Low Contract Settle 1D Δ
Aluminium 1807.50 -3.00 EUR 1.1055 1.1017 Copper DEC 19 268.20 (4.55)
Copper 5923.00 -78.00 JPY 109.48 109.08 Gold DEC 19 1,462.90 (3.50)
Lead 2111.00 -1.50 AUD 0.6906 0.6848 Silver DEC 19 16.82 (0.19)
Zinc 2494.00 3.00 CNY 7.0006 6.9685 Plat. JAN 20 893.10 (20.90)
Tin 16775.00 200.00 CAD 1.3237 1.3172 Pall. DEC 19 1,708.60 (69.20)
Molybdenum 0.00 0.00 GBP 1.2825 1.2769 Crude DEC 19 57.43 0.28

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 Press Cuttings
Trump Sows Doubt on Trade Talks With Pushback on Tariff Unwind
Bloomberg

President Donald Trump said that the U.S. hasn’t agreed to roll back all tariffs on China, diluting hopes the U.S. would
make such a concession to secure a trade deal. “They’d like to have a rollback, I haven’t agreed to anything,” Trump
told reporters Friday. “China would like to get somewhat of a rollback -- not a complete rollback, because they know I
won’t do it.”

U.S. bonds rallied and stocks slipped after the president’s remarks reduced some of the optimism that had been
increasing around the prospects for a truce. On Thursday, signs were pointing toward a first-phase deal that would
include a tariff rollback. China’s Ministry of Commerce spokesman Gao Feng said negotiators had discussions and
“agreed to remove the additional tariffs in phases as progress is made on the agreement.” White House economic
adviser Larry Kudlow also said Thursday that “if there’s a phase one trade deal, there are going to be tariff agreements
and concessions.”

Trump made clear Friday that the U.S. hasn’t yet reached an agreement and emphasized that he wouldn’t eliminate all
tariffs. There is an expectation that tariffs scheduled for Dec. 15, which would hit popular consumer items like
smartphones and toys, won’t take effect as part of an initial deal. But a lot of tariffs remain in place including a 15%
tariff on an additional $110 billion in goods that took effect Sept. 1. China’s exports and imports continued
to contract in October, data released Friday showed, though slightly less than forecast by economists.

The escalating trade war between the two countries has also taken a toll on U.S. manufacturing and business
investment. Trump also revived questions Friday about the location for signing any deal with his Chinese
counterpart Xi Jinping. The leaders had initially expected to meet at an international summit in Chile this month, but
the gathering was canceled because of protests in the capital, Santiago.

Reports earlier this week indicated any finalization of a first-phase agreement might slip until December and that some
U.S. locations had been ruled out. “Assuming we get it, I don’t like to talk about things until they happen, but it could
be Iowa or farm country or some place like that,” the president said Friday. “It will be in our country, but it could be
some place like that.”

Indonesia’s Tin Exports Rise to 5,816.08 Tons in Oct.: Ministry

Bloomberg

The shipments increased from 5,225.26 Tons in September, according to data from the trade ministry.

Giant Steelmakers Raise U.S. Prices After Giving Deep Discounts

Bloomberg

Steelmakers are raising U.S. prices as they test customers’ ability to take on higher prices after heavy discounts enticed
buyers. Nucor Corp. said Thursday it was raising prices by at least $40 a ton, according to the company’s letter to
customers seen by Bloomberg News. ArcelorMittal, the world’s biggest steelmaker, sent out a similar notice to
American clients on the same day, while U.S. Steel Corp. and units of Swedish producer SSAB, Russian
company NLMK sent letters to their customers a day later.

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“This is not a call on real demand,” Phil Gibbs, an analyst at KeyBanc Capital Markets, said, as he cited aggressive
discounts implemented by steelmakers in October just before a first round of price hikes. “Apparent demand is
showing that their order books are stronger now. The question is how long the order books stay as decent.” Prices
have tumbled 32% in the U.S. this year, hurting producers’ profits amid a dimming economic growth outlook.
Demand has slowed particularly from key end-markets such as automobiles at a time of abundant domestic supply,
worsening the glut.

“I think what you are seeing is mills are really trying to stop the bleeding,” Andrew Cosgrove, global metals and mining
senior analyst at Bloomberg Intelligence, said by phone. “Demand is not great. Nothing would warrant people rushing
back to materially increase orders.” Last month, Nucor said third-quarter adjusted earnings fell in the third quarter as
“market conditions softened.” The Charlotte, North Carolina-based producer also warned that profit in the last three
months of year will decline on lower steel prices. The company didn’t immediately comment on the price hike notice
sent out to customers.

ArcelorMittal said earlier this week that it sees demand in the U.S. shrinkingthis year as buyers reduce stockpiles. The
company also cut its forecast for Europe and trimmed the top end of the global demand outlook range. Excluding
China, consumption is seen flat year-on-year. A spokesman at Arcelor declined to comment on the price increase
detailed in the notice sent to clients.

SSAB Americas is boosting prices for new spot orders effective immediately, a spokeswoman said in an email Friday,
confirming the company’s letter to customers seen by Bloomberg News.
Lead times on Nucor orders have extended to about six weeks, compared with less than four weeks prior to
a first price hike, Gibbs said. In October, Nucor Chief Executive Officer John Ferriola expressed optimism that
business will improve next year for all the company’s products.

Preliminary Nov. Michigan Sentiment Rose to 95.7, Est. 95.5

Bloomberg

The preliminary University of Michigan consumer sentiment survey for Nov. rose to 95.7 vs. 95.5 prior month.
 Forecast range 92.0 to 98.5 from 52 estimates
 Current economic conditions index fell to 110.9 vs. 113.2 last month.
 Expectations index rose to 85.9 vs. 84.2 last month.
 Expected change in median prices during the next year unchanged at 2.5% vs. 2.5% last month.
 Expected change in median prices during the next 5-10 years rose to 2.4% vs. 2.3% last month.
 Below are comments from the report:
o The early November data found that consumers were more likely to anticipate good rather than bad
times in the overall economy during the year ahead and were more likely to expect a continuous
expansion rather than a downturn sometime in the next five years.
o Householders below age 45 anticipated annual gains in household incomes of 4.4% in early
November, up from 3.9% in last November’s survey

U.S. Wholesale Inventories Fell 0.4% in Sept. vs -0.3% Forecast

Bloomberg

Sept. wholesale inventories decreased to $676.7b vs $679.5b in prior month, the Census Bureau said
 Wholesale inventories forecast range -0.3% to -0.1% from 14 economists
 Aug. inventories revised to 0.1% rise from 0.0%
 Wholesale inventories excluding oil fell 0.4% in Sept.

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  Wholesale sales unchanged in Sept. after falling 0.1% the prior month
o Wholesale sales excluding automobiles rose 0.3% in Sept.
 Inventory/Sales ratio at 1.36 in Sept. after 1.36 in the prior month
o Auto inventory/sales ratio at 1.80 in Sept., highest since May 2009

ICBC Standard Bank Plans to Shut Base Metals, Equities Units

Bloomberg

ICBC Standard Bank, a venture between the biggest lenders in China and Africa, will close its base metals and equities
businesses because of poor performance and difficult market conditions. The changes will affect 150 jobs and will take
place in the first half of 2020, according to a statement from the London-based lender. The bank will keep other
businesses, including precious metals and energy, and the decision is subject to shareholder approval.

“We are addressing our cost base and are taking measures against a backdrop of continuing unfavorable market
conditions to ensure a position of long-term, sustainable strength,” said Chief Executive Officer Wenbin Wang. “If the
closures are approved, we will work on an orderly wind down of client positions.”

The closure comes amid a period of heightened turmoil in the raw materials industry as the trade war, slowing
economic growth and shifts in technology disrupt traditional markets. Other commodity traders have struggled in the
current environment. Cargill Inc. said in August that it’ll close the base-metals desk at its risk-management unit.
Goldman Sachs Group Inc., for decades Wall Street’s dominant commodities trader, also made cuts to the division
earlier this year, a person familiar with the matter told Bloomberg News in March.

ICBC Standard Bank, also known as ICBCS, is 60% owned by Industrial & Commercial Bank of China Ltd. and 40%
by Standard Bank Group Ltd. The bank suffered a $15 million loss last year after declining appetite for emerging-
market risk and reduced investment flows hit its trading business. U.S. sanctions against aluminum producer United
Co. Rusal also sparked volatility in its base-metals business.

Market conditions have continued to deteriorate for the group. Standard Bank wrote down the value of its holding in
ICBCS to $220 million at the end of September, from $383 million previously. It’s engaging with ICBC to determine
the best way forward for the business, it said in a filing last month. The base metals business includes aluminum,
cobalt, copper, nickel, lead, tin and zinc, according to its website. It also has precious metals, crude oil and refined oil
products businesses with offices in London, New York, Singapore and Shanghai.

China Is Considering Cutting Electric-Car Subsidies Again

Bloomberg

China is considering further cuts to subsidies for electric-vehicle purchases, according to people familiar with the
matter, threatening to deal another blow to a once-burgeoning industry that’s facing an unprecedented slump. Industry
regulators in the world’s largest EV market have been discussing the proposal but are holding off on a decision until
they weigh car sales data over the coming months, according to the people, who asked not to be identified because the
discussions are private.

The plan involves reducing subsidies on consumers’ purchases of EVs next year but discussions are still at an early
stage so there’s no guarantee the cuts will happen then, two of the people said.
China, which began subsidizing EV purchases in 2009 to promote the industry, has been gradually reducing handouts
in the past few years to encourage automakers compete on their own. But the last time the government cut subsidies it
triggered the country’s first drop in EV sales on record, exacerbating what had already been the most prolonged
downturn in the world’s largest auto market.
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Electric automobiles sit connected to a charging station at an underground parking lot in Beijing.
The slump in China has dragged down the global EV sector as the country accounts for about half of the world’s sales
of electrified cars. Still, regulators continue to face pressure to reduce handouts as state support helped bankroll the
livelihood of hundreds of local startups and fueled concerns about a bubble in the industry. But here’s the dilemma:
Pull the levers too fast and it risks undermining China’s bigger ambitions of leading the world away from fossil-fueled
gas guzzlers. China considers EVs as a strategically important sector and is mulling a target for 60% of all automobiles
sold in the country to run on electric motors by 2035, people familiar with the matter have said.

China’s finance ministry, which has been overseeing the discussions, didn’t immediately respond to faxed queries.
Though China announced four years ago it would gradually eliminate subsidies for new energy vehicles — EVs, plugin
hybrids and fuel-celled vehicles — after 2020, details have been vague and it didn’t always stick to the plan. Policy
makers have been surprised by the sudden, prolonged downturn that resulted from the latest subsidy cut in June,
prompting them to debate whether another cut would be too much for automakers to handle, the people said.

The latest cut took effect in June, when the government cut subsidies of as much as 50,000 yuan ($7,165) per EV by
half. Chinese NEV sales then began falling in July and have been dropping since. China’s top EV makers have
since slashed their earnings outlooks and analysts have recently questioned whether the likes of Shanghai-based NIO
Inc., once regarded by many as China’s Tesla Inc., will survive.

A NIO Inc. EP9 electric sports vehicle stands on display at the automaker’s showroom in Beijing.
Warren Buffett-backed BYD Co., the country’s biggest maker of new energy vehicles, or NEVs, last month reported
an 89% slump in third-quarter earnings and warned profit could fall as much as 43% this year. BAIC BluePark New
Energy Technology Co. also forecast a 2019 loss in a grim earnings update.

Subsidies have played a vital role in making electric cars more affordable to consumers. While up-to-date data aren’t
publicly available, China’s central government disclosed last month it handed out 22 billion yuan in EV subsidies to
companies in 2017. Some municipalities also offer additional incentives. To be sure, subsidy cuts aren’t likely to deter
carmakers from China and analysts at Sanford C. Bernstein say they continue to be positive on long-term EV demand.
Tesla is putting the finishing touches on a multibillion-dollar factory near Shanghai as it prepares to start production in
the country later this year. Global heavyweights such as Daimler AG and BMW AG are also planning to bring in new
EV models.

Separately, China’s Passenger Car Association said Friday that NEV deliveries fell for a fourth-straight month,
plunging 45% in October, as subsidy cuts made it harder for the country’s hundreds of EV makers to convince
consumers that they’re worth paying higher prices for than regular cars. The gloom in China’s overall car market
continued too, with sales of sedans, sport utility vehicles, minivans and multipurpose vehicles dropping for the 16th
time in the past 17 months. Some have weathered the slowdown better than most, such as Japan’s Honda Motor Co.
Sales of premium brands rose 14% last month, with Volvo Cars seeing a 27% surge.

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