Articles in Category: Exports

A report released recently concludes that treating China as a market economy in anti-dumping investigations would “severely damage the North American Free Trade Agreement (NAFTA) steel industries and harm NAFTA economies.”

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The study, composed of three economic analyses, was conducted by leading economists from Capital Trade Incorporated in Washington, DC;  the Centre for Spatial Economics in Ontario, Canada; and IMCO in Mexico City, Mexico.

Six steel industry groups — the American Iron and Steel Institute, the Steel Manufacturers Association, the Canadian Steel Producers Association, CANACERO, the Specialty Steel Industry of North America and the Committee on Pipe and Tube Imports — sponsored the report. They issued the following statement:

“China is a state-run economy and does not operate on market principles, yet it argues that it must be treated as a market economy as of the 15th anniversary of its accession to the WTO in December 2016. This third-party report found that granting China market economy status is premature and would lead to significant job losses in our sector, and in steel communities where plants are being idled and jobs are already being decimated. This is unacceptable.”

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The Automotive MMI bounced 1.4% this month but we would caution metal buyers to wait a bit longer before calling this anything close to a market bottom.

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As MetalMiner co-founder Stuart Burns adroitly pointed out this week, no two metals’ bottoming out experiences will be the same. Some will be sharp and some, particularly steel, could be fat and flat. It should come as no surprise to our readers that steel and aluminum were, again, the laggards in our automotive metals index.

Automotive_Chart_November-2015_FNLA mini-surge from copper and relative strength in platinum and palladium were able to collectively raise the index to its small gain this month. Therein lies the true problem for long-term Automotive MMI growth: there are signs that PGM prices will not be able to hold the modest gains they’ve made in recent weeks.

Eeek… TFs

Platinum- and palladium-backed exchange-traded funds tracked by Reuters were facing their biggest monthly outflows at the end of October since the data series began in 2010.

Platinum flowing out of ETFs is good news for the dollar and bad news for dollar-denominated commodities, such as precious metals. The bulk of the selling was seen from the Johannesburg-listed NewPlat ETF operated by Absa Capital, which saw its holdings fall 134,000 ounces in October, according to Reuters.

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While the Volkswagen scandal did not cause the price losses some expected for exhaust system metals such as platinum and palladium, the muted market reaction may still be growing. ETF outflows have also pushed gold to 4-week lows, too, and we would expect more losses for automotive metals as aluminum and steel have very little upside right now and the rug very much looks like it’s finally being pulled out from under PGMs.

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It was a big week for government regulatory bodies here at MetalMiner.

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States 1, EPA 0

Things got started Monday when the Sixth Circuit Court of Appeals stayed the Environmental Protection Agency’s new controversial Waters of the US rule in all 50 states. EPA has been accused over overstepping its authority to regulate new bodies of water and 16 states have already challenged the new water rules in court. The circuit court’s action extends a stay on the rules in those states to the entire nation.


While Back to the Future day is over, our producers would like to go back to the days when cheap imports weren’t killing their markets.

The National Association of Manufacturers called it a “tremendous victory,” as the rule would put manufacturers on the hook to get permits for storm drains, manmade ponds and other “waters.” Good luck in court, EPA. You’re going to need it. Expect more skirmishes like this in the months ahead before the full court decides on the legality of the law.

Speaking of Waters, Alcoa Owns a Riverbed

That’s right, not only is Alcoa, Inc., a huge primary aluminum smelter, and an added-value services provider but it’s also in the hydroelectric power business!

In another case of a court saying “not yours, government,” the state of North Carolina was on the receiving end of the legal smackdown as Alcoa successfully argued it owns the bottom of the Yadkin River, where the aluminum giant was attempting to renew its federal hydroelectric license.

Alcoa had a smelter along the river in Badin, North Carolina for decades before they closed it in 2010. Hydroelectric dams on the river fueled its operations. Since then, Alcoa has taken the power the dams generated and sold it on the wholesale market as Alcoa Power Generating, Inc. Read more

This is part 2 of a post on what the International Monetary Fund‘s recent global growth forecast means for purchasers in major and developing economies. Here’s part 1 if you missed it

Overall the world economy is now expected to expand by 3.1% in 2015, the London Telegraph reports down from an earlier forecast of 3.3% in July. This represents the slowest expansion since 2009, when global growth ground to a halt.

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Growth in 2016 is expected to pick up to 3.6%, itself downgraded from a previous forecast of 3.8% and not much above the 3.1% considered stall speed for the global economy as a whole.

So what are the risks? Well to the pattern of a gradually slowing global economy should be overlaid the risk of an outright recession in South America’s big 5 of Brazil, Chile, Colombia, Mexico and Peru, while Russia’s recession is expected to extend on into 2016 as oil prices are not predicted to average above $55 a barrel through 2017.

Source Telegraph

Source: London Telegraph

The risk of recession in mature economies is rising, although still believed to be unlikely at the moment.

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Some US steelmakers recently urged regulators to impose anti-dumping duties on Indian exports of welded stainless pressure pipes.Turkish and South Korean producers recently got hit with tariffs for similar products.

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Synalloy Corp.’s unit Bristol LLC, along with Marcegaglia US, and a few others, have petitioned the Department of Commerce and the US International Trade Commission (ITC) to take action against Indian companies dumping the pipes at less than market prices in the US.

According to reports, Synalloy officials said the import of the pipes from India had increased at an “unbelievable rate” over the past 3 years at prices well below US rates.

Exports to the US Rise

Welded stainless pressure pipe imports from India climbed to 12,101 metric tons from 281 mt between 2012 and 2014.

While US companies that make these products are well within their rights to file such a complaint, ironically, in India, the multi-million Rupee pipe industry is in the doldrums, no thanks to cheaper imports from China.

Stainless steel tubing comes in two forms – seamless and welded. The seamless pipes sector, especially, was recently looking at plant shutdowns and large-scale job cuts.

Chinese Producers Undercut Domestic Indian Steelmakers

Leading producers such as Jindal Saw and Indian Seamless Metal Tubes (ISMT) see practically no demand for their products in the domestic Indian market, due to the large-scale availability of cheaper products from China. So drastic is the situation that Vice President of the Association of Seamless Pipes and Tubes S. Sarkar recently told the Press Trust of India that if there was no improvement in the current situation in the next 3 months, in addition to shutdowns, the sector could see almost 8,000 job cuts. The Indian seamless pipe industry has an installed annual capacity of 1.5 million mt, and provides employment to about 25,000 people.

The source of the rise in Indian pipe exports to the US… is that Chinese imports are undercutting Indian producers at home. Exported pipe is, seemingly, always cheaper to produce somewhere else.

With the downturn in its economy, China, like India, is saddled with a vast inventory of both seamless and welded pipes, largely used in the oil and gas industries, but also for filtration and refrigeration purposes, among others. China is facing anti-dumping and safeguard duties from countries such as the US, the European Union, Canada, Indonesia and Brazil.

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In the US case, the ITC is required to make a preliminary ruling on the companies’ petition within 45 days. The Commerce Department will likely issue preliminary duty rulings in early 2016, with final rulings by both agencies due by late 2016.

This is part 2 of a 2-part series on scrap recycling in India, check out part 1 if you missed it yesterday.

The overall Indian recycling rate is about 25%. Compare this to the US – which is a net exporter of scrap with recycling rates of 80 – 90% and Europe, which has recycling rates in excess of 70%.

India’s annual scrap consumption is about 21 million metric tons while its imports are about 7 mmt a year, making it the world’s third-largest importer of scrap. A Frost & Sullivan report claimed India’s metal recycling industry had the potential to grow 11.4% per year until 2020 – but that comes with a big rider. Growth can only happen once the import duty and other free trade hurdles have been removed.

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India, incidentally, is perhaps the only country in the world to impose an import tax on steel scrap. This happened 2 years ago. The Metal Recycling Association of India has been on the forefront of a campaign to get the import tax stricken, with the current political administration even agreeing to look at the demand favorably.

So, while semi-finished products can be imported duty-free into the country, there is a 5% import duty on steel scrap, thus impacting the profitability of recyclers.

But the story on aluminum scrap is the exact opposite. India’s aluminum demand has been growing at an annual rate of about 11%, compared to a global growth of 6%. Part of the growth is fueled by imports including of aluminum scrap, especially from China.

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Indian Commerce Minister Nirmala Sitharaman recently told parliament that the government was considering a request for doubling the duty on aluminum imports to 10%, following representations that imports of aluminum scrap, especially from China, and the metal’s decreasing global prices were adversely impacting the industry in India.

What India Must Do to Increase Scrap Recycling

Essentially, for the Indian recycling sector to get an impetus and turn into a net earner, analysts including Frost & Sullivan, recommended the Indian Government initiate the following:

  • Removal of  the basic scrap import duty
  • Offer Special Economic Zones, the benefits of which will enable industry status for the metal recycling sector
  • Subsidize lending rates which will add more financial muscle in this sector

The CEO of Volkswagen Group stepped down in the wake of the company’s diesel vehicle emissions scandal and the China Iron and Steel Association vowed to break its own steel export records.

China Vows More Steel Exports

China’s total steel product exports are likely to exceed 100 million metric tons this year, Wang Liqun, the vice-chairman of the China Iron and Steel Association, told reporters on Wednesday.

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Volkswagen CEO Steps Down

Martin Winterkorn, the embattled chief executive of Volkswagen, announced that he will resign following the scandal surrounding doctored emissions reports of its diesel cars.

In a statement issued by the company, Winterkorn said he was “shocked by the events of the past few days.”

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“Above all, I am stunned that misconduct on such a scale was possible in the Volkswagen Group.”

Regulators discovered that VW’s diesel vehicles, in the US, had software on their internal computers designed to defeat proper vehicles emissions tests.

This is part 2 of a blog on a possible ban of “unqualified” Chinese petcoke and how it relates to global aluminum prices. Check out part 1 if you missed it.

Let’s just examine prior history… prior Chinese history….prior Chinese history involving reducing pollution and emissions.

We have to look no further than the rare earths market – one in which China controls a lot more of the global supply than it does aluminum.


Can an “unqualified” Chinese petcoke ban cause the cost of smelting to go up? Is the ban even real?

For several years China implemented controls to help “clean up” the rare earths processing industry.

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The scare had many pundits suggesting that quotas would cause rare earth metals price spikes. Guess what? It never happened. Instead, prices have plunged. They have plunged farther than any other group of metals we track.

What if the Ban Really Happens?

Going back to our criteria, could this impact one of the metals markets we track? Absolutely. How big is the order of magnitude impact? Well, without even being able to validate that China’s supposed new law banning unqualified petcoke was published, the fact that there is no clarity on what the Chinese authorities consider to be “unqualified” and that we haven’t even discussed the fact that there are likely dozens, if not tens of dozens, of refiners who would jump into this market if there was a supply squeeze, could we see rising aluminum prices?

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Sure, but there are many other reasons we may see rising aluminum prices in the coming years. It might be hard to ascertain the causal factor.

Therefore, unless/until we see evidence of enforcement, this “petcoke” supply shortage will stay firmly in the “low impact” category to metal buying organizations.

Carry on with business as usual.

The Aluminum Association, which represents producers and suppliers to the North American aluminum industry, expressed strong concern today about a recent call for the removal of a long-standing 15% tax on primary aluminum exported from China.

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The call came from the Chinese Non-Ferrous Metals Industry Association and “appealed to all relevant national authorities to eliminate as soon as possible the provisional export tariff on aluminum to achieve integration of domestic and international aluminum markets.”

The Chinese government, which relies heavily on imported bauxite, has long applied export taxes on primary aluminum as part of a broader strategy to discourage exports of energy-intensive products and emphasize sustainable, quality growth. The unilateral removal of these taxes could have unforeseen impacts on the balance of trade and the global aluminum market.

In the US, domestic primary aluminum production is an essential element to American manufacturing. According to an economic analysis by John Dunham & Associates, this segment of the industry is responsible for a minimum of 10,600 jobs and $6 billion in economic output. The domestic aluminum industry could come under additional pressure should China remove the export taxes on primary aluminum.

“We strongly encourage the Chinese government to consider both the impact on the global aluminum market as well as the impact on their country’s own sustainability goals before heeding any call to remove export taxes on primary aluminum,” said Aluminum Association President & CEO Heidi Brock. “During a time when China is making global commitments to reduce greenhouse gas emissions, it would be a serious mistake to change course on this long-standing policy.”

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According to Aluminum Association data, from 2012 through 2014, US imports of semi-fabricated aluminum products (semis) from China increased 115%, growing China’s share from roughly 14% to nearly 28% over that period. Imports of Chinese semis totaled 675 million pounds year-to-date, an increase of 75% over the same period in 2014.

We recently received a note from a reader with questions regarding the recent Chinese remninbi currency devaluation and how sourcing professionals ought to engage with their Chinese metals suppliers. The questions included:

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  1. Should I be approaching all of my Chinese suppliers for a 3.5% price reduction?
  2. Should I expect to get it?

There are several ways to answer that question. So let’s start with the narrow answer and then expand into other aspects of China’s currency announcements.

US dollar vs. RMB

What will the devalued yuan mean for your metal buying strategy?

The Basics

First, if you pay your Chinese metal suppliers in RMB (yuan) then you ought to expect an automatic price reduction of 3.5% because the currency has depreciated. In other words, when you convert your dollars to RMB, you should see a 3.5% advantage (or whatever the newest/latest currency exchange rate is). Read more