Freeport Curbs Ready, Plains Pipe Cost: Commodity Tariff Effects

(Bloomberg) -- As commodity companies report quarterly earnings, here are some of the highlights on what’s being said about tariffs.

Freeport Ready to Tweak Copper Output (July 25)

Freeport-McMoRan Inc. says rising global protectionism hasn’t hurt demand for its copper yet -- but it’s prepared to adjust production if that changes.

“To date, we have not experienced a decline in demand for our products, but will be prepared to adjust our plans if necessary to respond to market conditions,” the world’s largest publicly trader copper producer said in a statement.

Tariff Adds $40 Million ‘Tax’ to Pipe (July 24)

Plains All American Pipeline LP will pay an additional $40 million because it wasn’t able to get an exemption to steel tariffs for its Cactus II oil pipeline in the Permian Basin. Willie Chiang, chief operating officer at Plains, told Congress at a hearing that the Trump administration should exempt materials needed to build energy pipelines, allow steel orders already made to stand unchallenged and limit further levies until companies can get steel made in the U.S. to the precise specifications needed.

Chile Cuts Copper Price Outlook (July 24)

Chile, the world’s largest producer, trimmed its price forecast for the first time since early 2016 amid concerns that escalating trade friction will curb demand. The metal will average $3 a pound in 2018, government agency Cochilco said, down from the $3.06 it projected in April.

Alcoa Takes a Hit (July 18)

Alcoa Corp., the largest U.S. producer of aluminum, took a $15 million tariff hit in the second quarter, mostly from moving material from its Canadian facilities into the U.S. “Everyone assumed as did we that there would be an exception in place for Canadian production, so that has turned out not to be the case and that is a pretty significant impact for us,” Chief Executive Officer Roy Harvey said in a phone interview.

Kinder Morgan Has the Pipe (July 18)

Kinder Morgan Inc.’s CEO said that the company’s $1.75 billion Gulf Coast Express project, which will transport natural gas from the booming Permian Basin in Texas, isn’t being affected so far by problems getting steel pipeline.

“But the steel tariffs are enough to make us spend some extra time to make sure that we’ve got a clear supply chain that gets that pipe to us at a predictable price and on time,” Steven Kean said on an earnings conference call. “It has an effect, it’s created uncertainty, there is no question about it. And so, it’s an uncertainty that we are actively managing and working on.”

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