Articles in Category: Anti-Dumping

This week, the reality of a hard Brexit sunk in across the pond in the U.K. and Europe. The instability that might follow after elections in other European countries in the coming months could create volatility in all commodities markets, not just metals.

Click Here for Current Metal Prices

Here in the U.S., President Donald J. Trump was inaugurated today and promised “America first” in all the dealings of his new administration. In metals, this means that tariffs of 251% were confirmed on Chinese cut-to-length steel plate even before Trump even got into office. So, across the globe it looks like things are getting really, really populist. Is this good for metal prices?

Weaker Dollar

One thing that Trump has already caused, again before even being president, is a weakened U.S. dollar against other global currencies. Presidents and even presidents-elect usually refrain from even talking about the value of the currency because setting its value is seen as the job of the Federal Reserve and its chairman and the nation’s chief executive talking about the value of the dollar can cause volatile swings in the currency.

Two-Month Trial: Metal Buying Outlook

Trump, though, as everyone should know by now, does not obey convention and freely told reporters that he would like a weaker dollar. This is actually bullish for the metals we track, but our Lead Forecasting Analyst, wrote this week that the dollar’s bull run may not be over, despite Trump’s wishes.

Populism in the Far East

Indonesia tried a protectionist raw ore export policy way back in 2014 and this week finally weakened it (a little) to allow some nickel ore out of the country on certain conditions. Ironically, the country that picked up the slack as the top Chinese nickel-pig-iron raw materials supplier after the Indonesian ban, the Philippines, now has its own wildly populist leader, President Rodrigo Duterte, whose fiercely environmentalist Environment Secretary, Regina Lopez, has cancelled six mine permits.

It’s going to be an interesting few years.

The Commerce Department made final determinations today in its anti-dumping and countervailing duty investigations of carbon and alloy steel cut-to-length (CTL) plate from China.

Click Here for Current Metal Prices

The department said in a statement that it has set a final dumping margin of 68.27% for Jiangyin Xingcheng Special Steel Works Co. Ltd., the only respondent in the case, “for the China-wide entity’s failure to cooperate.”

In the countervailing duties investigation, Commerce calculated a final subsidy rate of 251% for mandatory respondents Jiangyin Xingcheng Special Steel Works Co. Ltd., Hunan Valin Xiangtan Iron & Steel, and Viewer Development Co., Ltd., based on the application of adverse facts available. All other producers/exporters in China were also assigned a final subsidy rate of 251%.

Chinese Province Admits Making Up GDP Figures

China’s northeastern Liaoning province, which relies on steel production as its growth engine, had inflated its GDP figures from 2011 to 2014, said province governor Chen Qiufa on Jan. 17 in his annual work report, according to the state newspaper People’s Daily (link in Chinese). It is the first time the Chinese government has publicly admitted to faking official statistics at any level.

Two-Month Trial: Metal Buying Outlook

Fiscal revenues were inflated by at least 20% during the period, and some other economic data were also made up, the People’s Daily said.

U.S. customs officials have seized $25 million worth of aluminum linked to a Chinese billionaire accused of stockpiling the metal across the world, the Wall Street Journal reported this morning.

Click Here for Current Metal Prices

The Obama administration also launched a formal complaint Thursday against the Chinese government with the World Trade Organization over subsidies it says Beijing provides to the country’s vast aluminum industry.

The move against the stockpile of aluminum connected to Chinese billionaire Liu Zhongtian, the owner and CEO of aluminum company China Zhongwang, is the strongest action yet by federal authorities probing whether U.S. companies connected to the Chinese magnate illegally avoided nearly 400% tariffs by routing the metal through other countries.

An aluminum stockpile like this one has been seized by Homeland Security.

We previously reported the whereabouts of the aluminum stockpile as it curiously moved around the globe. China Zhongwang has denied any connection to the stockpile or its movements, but hundreds of shipping containers of aluminum were seized this week by the Department of Homeland Security. The containers are owned by Perfectus Aluminum, Inc., a California company founded by Mr. Liu’s son, Liu Zuopeng. Perfectus is now run by one of Liu’s close business associates, Jacky Cheung, who runs several companies with connections to Liu.

Homeland Security is conducting laboratory tests on the aluminum to determine whether the metal is restricted under U.S. law, according to federal court documents. The seized aluminum is in the form of pallets and court records don’t state which company manufactured the aluminum. The WJ saw shipping records which show that a separate company called Peng Cheng — which later became part of Perfectus in a merger—imported the metal from an affiliate of China Zhongwang in 2013 and 2014.

Homeland Security and the Justice Department are investigating whether the companies committed criminal or civil violations that could include smuggling, conspiracy and wire fraud. The WSJ reported that Homeland Security agents have also questioned former employees of the companies associated with Liu, according to people familiar with the investigation.

WTO Case Against Chinese Aluminum Subsidies

As for the subsidies case, the U.S. Trade Representative‘s office said in a formal complaint that China’s actions in the aluminum sector violate WTO rules prohibiting subsidies that cause “serious prejudice” to other members of the trade body. Read more

Average grain-oriented electrical steel surcharges fell for the third year in a row. 2016 average surcharges took the biggest hit because Allegheny Technologies stopped production of GOES. AK Steel did not implement a surcharge until July 2016.

MetalMiner Price Benchmarking: Current and Historical Prices for the Metals You Buy

Our own GOES M3 MMI showed only small price movements from month to month. The index hit a low of 181 back in July and today shows a modest recovery to 192, a 5% gain.

GOES follows its own fundamentals (e.g. supply and demand) and does not always follow the price arc of other more common forms of steel such as cold-rolled coil or hot-rolled coil. In fact, some of the wider trade dynamics for those forms of steel had little to no impact on GOES.

Which brings us to a larger issue. Will President-elect Trump, who is arguably pro-steel and who has gone on record against China’s trade practices, implement any policies that will likely impact GOES markets?

To begin, the nature of trade between the two countries, the U.S. and China, appears more complicated than what can be seen by the naked eye. Raw material/commodity-like supply chains lack the complexities of supply chains found in industries such as electronics. Blanket tariffs are easy to issue and calculate for commodities that move from point A to point B. But electronics industry supply chains involve components, parts, sub-assemblies, final assembly, etc. across multiple countries and locations. A blanket tariff on electronics will harm China much more than other countries as the tariff would apply to the “final point of assembly.” This could create all sorts of electronics shortages and problems here in the U.S.

Why Are We Discussing Electronics Supply Chains?

Because it would be easier to get tougher on China for commodities such as steel. And though China has curbed excess capacity in recent years, we could see a scenario in which tough trade policies such as a tariffs could significantly limit Chinese imports, which currently make up about 10% of domestic steel demand according to a recent analysis by Stratfor.

China will retaliate but a scenario exists that China could account for far less steel imports into the U.S. than it currently does (China has cut excess capacity already). In terms of grain oriented electrical steel, however, China does not represent the bulk of GOES imports into the U.S., in fact, Japan, Russia and the U.K. are far bigger GOES exporters to the U.S.

Two-Month Trial: Metal Buying Outlook

Therefore, any President Trump trade policy that goes into effect (no pun intended) will likely have a bigger impact on the broader steel markets and a far less significant impact on the U.S. GOES market.

Next month, we will examine the potential impact of NAFTA changes on GOES markets.

Grain-Oriented Electrical Steel M3 retook last month’s loss rising by more than 3%.

For full access to this MetalMiner membership content:
Log In |

There are many in the business community who share a sense of anxiety as to what trade policies the new administration of President-elect Donald Trump will introduce in the year ahead but, if it’s any consolation, the U.S. is not alone in pandering to populist calls for limits on free trade.

MetalMiner Price Benchmarking: Current and Historical Prices for the Metals You Buy

Here in Europe there is a quieter but no less disturbing war being fought between the European Union Commission and the European Parliament and the E.U. member states. Historically, the European Commission handled trade negotiations on behalf of the single market, but the 2009 Lisbon Treaty, intended to make the EU more efficient and transparent, also gave all the EU’s 38 National and regional parliaments essentially the right of veto on any new trade accord.

Anyone Can Veto… Anything

As Carnegie Europe in a recent post observed the sheer complexity of trade deals, which cover many topics that are not included within the European Commission’s powers, means that ratification is becoming a de facto requirement of any new trade deal. As politics becomes more populist in the E.U., as in the U.S., an array of interest groups can challenge any deal on the grounds of environmental, health, cultural, employment concerns, or any combination of the above. Read more

If there is one area in which 2017 is going to be a momentous year, it is in trade.

MetalMiner Price Benchmarking: Current and Historical Prices for the Metals You Buy

The incoming Trump administration campaigned on and has, since winning the election, robustly promoted an anti-free trade platform saying the North American Free Trade Agreement is “the worst trade deal maybe ever signed anywhere,” bullying GM, Ford Motor Company and various other multinationals into rethinking strategic investments planned for Mexico and forcing them to be shelved or amended. Read more

After President-elect Donald Trump targeted Toyota Motor Corp. yesterday with a taunt about the Japan-based multinational’s plan to build a new plant in Baja, Mexico, to build the Corolla model, both Toyota and Japan are fighting back.

MetalMiner Price Benchmarking: Current and Historical Prices for the Metals You Buy

Trump warned Japan’s biggest automaker that it will face heavy penalties if it chooses to make cars for the U.S. market in Mexico, writing “Toyota Motor said will build a new plant in Baja, Mexico, to build Corolla cars for U.S. NO WAY! Build plant in U.S. or pay big border tax.”

The president-elect’s tweet sent shares of Japanese automakers makers sliding today. An angry Japanese government and corporate establishment pushed back against Trump’s criticism of Toyota.

“Toyota is responsible for large employment at U.S. plants such as in Kentucky. It’s questionable whether the new U.S. president has a grasp of how many vehicles Toyota builds in the U.S.,” said Taro Aso, Japan’s finance minister.  Hiroshige Seko, minister for trade and industry, added that the Japanese government would do its part to explain to the new U.S. administration about the contribution of the country’s car industry to the U.S. economy.

Two-Month Trial: Metal Buying Outlook

Other Japanese CEOs also chimed in in support of Toyota including Sony’s Kazuo Hirai and Nissan’s Carlos Ghosn in what seemed like a full-court press from “Japan, Inc.” condemning Trump’s tweet.

Welcome to the first MetalMIner Week-in-Review of 2017!

This week, trade issues came to the forefront as President-elect Donald Trump, now just two weeks from his inauguration, named veteran trade lawyer and former Reagan administration official Robert Lighthizer as his U.S. Trade Representative.

MetalMiner Price Benchmarking: Current and Historical Prices for the Metals You Buy

While nobody could accuse China of getting a free ride from the current administration, I think it’s safe to say the U.S. Trade Rep’s office website won’t have an endorsement of the Trans-Pacific Partnership on it come January 20th.

Michigan or Michoacan?

Who gets hurt the most by a bunch of fair trade hardliners coming into office with Trump? It might look like Mexico right now — Ford Motor Company just pulled up stakes on a new facility there and instead invested in Michigan — but it’s actually China, as the U.S. trade deficit with them is our largest and the director of Trump’s National Trade Council, Peter Navarro, is a longtime critic of the way the People’s Republic trades with the U.S. and the entire world. Expect Navarro, Lighthizer and Commerce Secretary nominee Wilbur Ross to set their sights squarely on China’s trade with the U.S.

Also, China says it’s really serious about cleaning up its dirty steel mills and smelters this time.

From Russia with Hard-to-Find Oil

President-elect Trump has had mostly good things to say about Russia and he’s even boasted that he’d “get along well” with Russian Federation President Vladimir Putin, despite intelligence community accusations that Russia “hacked” the recent election by providing information from the Democratic National Committee and Democratic Nominee Hillary Clinton’s campaign manager, John Podesta, to organizations such as Wikileaks for wide distribution and dissemination. Trump may get tested early on that Russian reset, anyway, because Russia is already reclassifying its biggest shale oil find to avoid sanctions placed on the federation when it annexed Crimea.

Two-Month Trial: Metal Buying Outlook

If Russia can avoid sanctions on its oil exports what will that say about any other country thumbing its nose at international law? Interesting trade times coming up.

As President-elect Donald Trump fills out the remaining cabinet posts in his administration before taking office in a little more than two weeks, it’s become abundantly clear that Trump meant business when he said his administration would pursue better deals for the American people.

MetalMiner Price Benchmarking: Current and Historical Prices for the Metals You Buy

Recently, Trump named University of California-Irvine Economist Peter Navarro, the co-author of the trade “Death by China” as head of his newly created National Trade Council. He also received widespread praise from the domestic steel industry for naming longtime trade attorney and former Reagan administration official Robert Lighthizer as the new U.S. Trade Representative. If there really was any doubt going in — and, after that campaign, who really thought there was? — it’s become obvious that Trump does, indeed intend to go after China on its trade policies and possibly even upend existing trade deals such as NAFTA.

Is the Trump administration the end of free trade? It already is the demise of free trade as a platitude. Source: Adobe Stock/Argus.

In addition to being a longtime China critic, Navarro is an interesting appointment by Trump because he also happens to be a democrat. Trump’s populist policies were always built for a general election win and they eschewed traditional republican stances that supported free trade and, generally, trade pacts such as NAFTA.

Read more

President-elect Donald Trump named Robert Lighthizer, a former trade official in the Reagan administration and a harsh critic of China’s trade practices, to be his U.S. Trade Representative today, the chief trade negotiator responsible for better deals aimed at reducing U.S. trade deficits.

MetalMiner Price Benchmarking: Current and Historical Prices for the Metals You Buy

Trump, who promised during his presidential campaign to renegotiate international trade deals like NAFTA and punish companies that ship work overseas, said in announcing his choice that Lighthizer would help “fight for good trade deals that put the American worker first.”

Lighthizer is a former deputy U.S. trade representative under former Republican President Ronald Reagan who helped to stem the tide of imports from Japan in the 1980s with threats of quotas and punitive tariffs. His return to the agency follows nearly three decades as a lawyer representing U.S. steelmakers and other companies in anti-dumping and anti-subsidy cases.

“The American Iron and Steel Institute welcomes the president-elect’s nomination of Robert Lighthizer as the U.S. Trade Representative,” said Thomas J. Gibson, president and CEO of the AISI. “Bob’s nomination sends a strong signal regarding the incoming administration’s commitment to address the injury that the steel industry has suffered from unfairly traded imports.”

Gibson went on to say Bob Lighthizer is eminently qualified to serve in this position and his dedication not only to the steel industry — but to the manufacturing sector as a whole — will enable him to have a strong and prominent role in addressing the critical issues that face our companies and workers. He also said AISI looks forward to working with Lighthizer and the new administration on trade enforcement issues in the new year.