Articles in Category: Ferro Alloys

The Commerce Department placed initial anti-dumping tariffs on imports of carbon and alloy steel cut-to-length plate (CTL plate) from Brazil, South Africa, and Turkey late Friday.

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For the purpose of an anti-dumping investigation, dumping occurs when a foreign company sells a product in the U.S. at less than its fair value.

n the Brazil investigation, Commerce preliminarily found that dumping has occurred by mandatory respondents, Companhia Siderurgica Nacional and Usinas Siderurgicas de Minas Gerais SA, at a preliminary dumping margin of 74.52%. The dumping margin for the mandatory respondents was based on adverse facts available (AFA) as a result of their failure to cooperate in the investigation. Commerce assigned a preliminary dumping margin of 74.52% for all other producers/exporters in Brazil. Read more

U.S. steel companies applauded as tariffs were upheld on hot-rolled steel flat products and the London Metal Exchange took a hit when it had to move its open-outcry trading to another location when its new office wasn’t ready this summer.

ITC Upholds Hot-Rolled Steel Tariffs

The U.S. International Trade Commission handed another victory to American steelmakers on Monday, affirming most of the recent anti-dumping and anti-subsidy duties on hot-rolled flat steel imports from Australia, Brazil, Britain, Japan, the Netherlands, South Korea and Turkey.

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The commission rejected anti-subsidy duties of about 6% against hot-rolled steel from Turkey, but affirmed anti-dumping duties of about 6 to 7% against Turkish-made hot-rolled steel. The rest were all upheld.

LME Trading Move Hit Volumes Hard by Move

The temporary relocation of open outcry trading at the London Metal Exchange (LME) to a disaster recovery site due to problems at its new offices hit volumes hard during the already quiet summer months, brokering sources said.

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For all contracts traded on the LME, volumes fell more than 9% year-on-year in August to 12.18 million lots, after a drop of nearly 18% in July. Volumes for aluminum and copper fell nearly 22% and seven percent respectively in August from the same period a year ago.

Many grain-oriented electrical steel market participants know that macroeconomic drivers and general steel price trends often diverge from GOES trends.

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Comments from the most recent Steel Market Update summit at the end of August suggest it may be hard to “buck the trend.”

Macro Trends

What are these macro trends?

  • Steel demand looks weak overall and overcapacity will continue unabated. According to Tony Taccone, Partner at First River Consulting, “global steel demand has stalled and there will be no growth going forward.” In addition, Taccone indicated the world has 700 million metric tons of overcapacity and the problem is set to become worse.
  • Trade cases will put the kabash on Chinese export growth. China has produced too much steel at unsustainable prices and has exported materials at the marginal cost of production, according to Taccone.
  • Automotive demand may have peaked and aluminum demand may weaken steel demand.

Despite weak demand in some sectors, others paint a more positive picture. According to Alan Beaulieu, Principal of the Institute for Trends Research, many factors look more positive for demand including light vehicle production, U.S. industrial machinery production (recently turned positive), a booming office building construction market, a stabilized oil and gas extraction market and healthy global demand for crude oil.

GOES_Chart_September_2016_FNL

In addition, Beaulieu pointed to rising mining, electricity generation and manufacturing sectors, that certainly bodes well for power equipment production and demand.

Micro Trends

With the loss of Allegheny Technologies, Inc. capacity for GOES, the uptick in electricity generation and construction, and the more bullish outlook for other commodities and non-ferrous metals, we might expect GOES prices to creep up accordingly.

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Though the macro trends paint a slightly more negative picture for steel prices in general (negative for producers, positive for buying organizations) for the near term, GOES markets don’t cleanly align with steel markets. September marks the second month of a rising price trend.

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Earlier this year, China promised it would cut steel capacity. However, despite friction with several trading partners, Chinese exports continued to look strong in the first half.

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China’s Vice Minister of Industry said in July that the country will step up efforts in the second half. The minister pointed out that focus of their work in the first half was mission planning, and in the second half they will step up implementation and enter a new stage, from allocating targets and drawing policies to actually pushing capacity cuts.

Exports Fall in August

Chinese exports decline in August. Source: Customs Dept PRC

Chinese exports decline in August. Source: Customs Dept. People’s Republic of China.

Following those comments, exports started to taper down. In August, China exported 9.01 million metric tons of steel, a year-over-year decline of 7.4%. Other than capacity cuts, the anti-dumping duties that many countries have slapped on Chinese steel products are contributing to this decline. Read more

The Department of Commerce has preliminarily found that Chinese stainless steel sheet and strip producers illegally dumped — sold at less than fair value — their products in the U.S.

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Commerce preliminarily found that dumping occurred by mandatory respondents, Shanxi Taigang Stainless Steel Co., Ltd. and Tianjin Taigang Daming Metal Product Co., Ltd. Commerce also determined that the mandatory respondents are not eligible for a separate rate, and therefore part of the China-wide entity.

Commerce calculated a preliminary dumping margin of 63.86% for the non-selected respondents eligible for a separate rate. Commerce preliminarily assigned a dumping margin of 76.64% based on adverse facts available for all other producers/exporters in China that are part of the China-wide entity due to their failure to respond to Commerce’s requests for information.

As a result of the preliminary affirmative determination, Commerce will instruct U.S. Customs and Border Protection to collect cash deposits based on these preliminary rates.

The petitioners for this investigation are AK Steel Corporation, Allegheny Ludlum, LLC d/b/a ATI Flat Rolled Products, North American Stainless, and Outokumpu Stainless USA, LLC.

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Commerce is scheduled to announce its final determination on or about November 25.

The Federal Reserve released its last assessment of the economy before its next meeting and steel imports into the U.S. were down in July.

Fed Upbeat About the Economy Ahead of Meeting

The Federal Reserve‘s Beige Book assessment of the economy is generally positive, noting a tight labor market in some areas but little evidence of wage inflation.

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It’s the latest data point for policymakers before they meet this month and decide whether to raise interest rates amid mixed signals and scant progress toward a 2% inflation target.

Steel Imports Into the US Down in July

Based on the Commerce Department’s most recent Steel Import Monitoring and Analysis (SIMA) data, the American Iron and Steel Institute (AISI) reported recently that steel import permit applications for the month of August totaled 3,028,000 net tons. This was an 8% decrease from the 3,294,000 permit tons recorded in July and a 7% decrease from the July final imports total of 3,266,000 nt.

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Import permit tonnage for finished steel in August was 2,282,000 nt, down 8% from the final imports total of 2,471,000 nt in July. For the first eight months of 2016 (including August SIMA permits and July final data), total and finished steel imports were 22,001,000 nt and 17,576,000 nt, down 22% and 23%, respectively, from the same period in 2015. The estimated finished steel import market share in August was 25% and is 25% year-to-date.

Today, the Department of Commerce placed countervailing duties on imports of carbon and alloy steel cut-to-length plate from China and cleared South Korea simultaneously.

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For the purpose of countervailing duties investigations, a countervailable subsidy is financial assistance from foreign governments that benefits the production of goods from foreign companies and is limited to specific enterprises or industries, or is contingent either upon export performance or upon the use of domestic goods over imported goods.

In the China investigation, Commerce calculated preliminary subsidy rates of 210.50% 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 have also been assigned a preliminary subsidy rate of 210.50%.

In the Korea investigation, Commerce calculated a de minimis preliminary subsidy rate of 0.62% for mandatory respondent POSCO. All other producers/exporters in Korea have been assigned a de minimis preliminary subsidy rate.

As a result of the preliminary affirmative determination for China, Commerce will instruct U.S. Customs and Border Protection (CBP) to require cash deposits based on these preliminary rates. For Korea, because its preliminary determination was negative, Commerce will not instruct CBP to require cash deposit rates.

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The petitioners are Arcelormittal USA LLC, Nucor Corporation and SSAB Enterprises, LLC. Commerce is scheduled to announce its final determinations on or about January 19, 2017, unless the statutory deadline is extended.

Our Raw Steels MMI fell 7% to 53 points last month. This is the first time we have seen a significant decline in steel prices this year. August brought some interesting developments for the steel industry.

Raw-Steels_Chart_September-2016_FNLUS prices Down, While China’s Prices Rise

By the end of the first half, domestic hot-rolled coil prices had risen 70% while prices in China were up by just 30%. The main driver of this price gap was trade cases, which made U.S. steel imports plunge this year, inflating prices domestically. Read more

Two major manufacturing indexes fell in July, prompting concern about the U.S. economy and nine steel trade organizations praised recent G20 action on overcapacity.

Manufacturing Indexes Fall

The Institute of Supply Management‘s manufacturing index turned negative in July for the first time since February. And the services gauge fell last month to the lowest level since early 2010.

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The manufacturing index dropped to 49.4% from 52.6% in August and the ISM services gauge retreated to 51.4% from 55.5%. The combined reading of two indexes was also the weakest in six years.

Steel Groups Praise G20 Action on Steel, Express Cautious Optimism

Nine steel groups in North, South and Latin America, and Europe, expressed cautious optimism for the outcomes at the G20 leaders meeting that concluded Monday in Hangzhou, China.

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“We are grateful that the leaders of the G-20 governments have recognized the severe impacts that global steel overcapacity in the steel sector around the world are causing to our industry. This is an important first step, but it must be followed with concrete policy actions by governments to reduce excess capacity, end subsidies and government measures that distort markets, and guarantee a level playing field driven by market forces in the near term. We appreciate the commitment expressed in the G-20 leaders’ statement for ‘collective responses’ to address excess capacity in the steel industry. This excess capacity and the government interventionist policies that have fueled it are the root cause of the surge of steel imports currently being experienced in many of our home markets,” the industry groups said in a news release.

“We are encouraged that the G-20 leaders are committed to forming a Global Forum on steel excess capacity, and that the leaders expect a continuing relationship with the Global Forum at relevant upcoming G-20 ministerial meetings.  We are hopeful that the creation of a robust Global Forum, that includes participation by all major steelmaking economies, will be a substantive outcome of the meetings later this week in Paris of the OECD Steel Committee,” the groups continued.

“Our industry is at a crossroads. Governments must take action or we will remain in crisis. It is now up to the governments and the industry to work in partnership to create the Global Forum and define an agenda and process that will result in substantive policy actions to solve this crisis. The Global Forum has to start working as soon as possible, as the G-20 Leaders’ Communique clearly states that a progress report has to be ready for the relevant G-20 ministers in 2017,” the industry groups concluded.

The industry group includes representatives of the American Iron and Steel Institute (AISI), EUROFER (European Steel Association), the Steel Manufacturers Association (SMA), the Canadian Steel Producers Association (CSPA), CANACERO (the Mexican steel association), Alacero (the Latin American Steel Association), the Brazilian Steel Institute, the Committee on Pipe and Tube Imports (CPTI) and the Specialty Steel Industry of North America (SSINA).

 

News from the G20 summit includes Russia and Saudi Arabia agreeing to create an oil task force and all of the G20 condemned steel overproduction and promised tough measures against it.

Russia and Saudi Arabia Create Oil Task Force

Saudi Arabia and Russia said they will work together in global oil markets through a newly-announced joint task force.

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The two top oil-producing countries plan to hold a Russia-Saudi Arabia task force on oil and gas next month, the Russian and Saudi energy ministers Alexander Novak and Minister Khalid al-Falih announced Monday in a joint statement at the G-20 summit in China.

G20 Pledges to Curb Steel Overproduction

G20 leaders have pledged to work together to address excess steel capacity that has punished the global industry with low metal prices for years while raising tensions between China and other major producers.

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A statement from the White House said that leaders at the G20 summit in Hangzhou, eastern China, on Monday accepted that overcapacity in steel and other industries is a global issue that requires a collective response.

European Commission President Jean-Claude Juncker warned Chinese officials Sunday that Brussels was devising a tough scheme of anti-dumping tariffs that would penalize Chinese producers for failing to rein in overcapacity.