Articles in Category: Imports

A quiet revolution is going on in India’s defense sector.

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It is set to give an impetus to steel, aluminum and composite materials demand in the country. Recently, US aircraft manufacturer Boeing Co. and India’s Tata Advanced Systems Ltd. (TASL) announced a joint venture to manufacture aerostructures for aircraft beginning with the reputed AH-64 Apache fighter helicopter.

AH-64 Apache

Make in India, in this case, means making Apache helicopters there thanks to a joint venture with Boeing. Source: Adobe Stock / VanderWolf Images

The joint venture, according to media reports, would also then compete for additional manufacturing work packages across Boeing platforms, both commercial and defense.

Burgeoning Private Defense Industry

Currently, as many as 14 Tata companies are providing support to India’s defense and aerospace sector. In addition to TASL. The list also includes Tata Advanced Materials, a company that has delivered composite panels for cabinets and auxiliary power unit door fairings for the P-8I long-range maritime surveillance and anti-submarine warfare aircraft.

Another company, TAL Manufacturing Solutions, has manufactured floor beams out of composite materials for the Boeing 787-9, and provided ground support equipment for the C-17 Globemaster III strategic airlifter. Read more

The Department of Commerce yesterday announced the initiation of anti-dumping and countervailing duty investigations of imports of circular welded, carbon-quality, steel pipe from Pakistan and anti-dumping investigations of imports of the same merchandise from Oman, the Philippines, the United Arab Emirates, and Vietnam.

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The investigations cover welded, carbon-quality steel pipe and tube, of circular cross-section, with an outside diameter not more than 16 inches, regardless of wall thickness, surface finish, end finish, or industry specification.

Welded carbon steel pipe

Welded carbon steel pipe from five nations could face US import duties. Source: Adobe Stock/Sasint.

The products are generally known as standard pipe, fence pipe and tube, sprinkler pipe, and structural pipe and are intended for the low-pressure conveyance of water, steam, natural gas, air and other liquids and gases in plumbing and heating systems, air conditioning units, and automatic sprinkler systems. The products may also be used for light load-bearing and mechanical applications, such as for fence tubing.

Anti-Dumping vs. Countervailing Duties

For the purpose of anti-dumping investigations, dumping occurs when a foreign company sells a product in the US at less than its fair value. For the purpose of countervailing duty investigations, countervailable subsidies are financial assistance from foreign governments that benefit the production of goods from foreign companies and are limited to specific enterprises or industries, or are contingent either upon export performance or upon the use of domestic goods over imported goods.

The petitioners for these investigations are Bull Moose Tube Company of Chesterfield, Mo.; EXLTUBE of N. Kansas City, Mo.; Wheatland Tube of Chicago; and Western Tube & Conduit of Long Beach, Calif. Many of the countries being investigated have also been accused of shipping Chinese goods from their ports to the US so as to conceal the origin of the shipments.

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The US International Trade Commission (ITC) is scheduled to make its preliminary injury determinations on or before December 14, 2015. If the ITC determines that there is a reasonable indication that imports of the pipe from Oman, Pakistan, the Philippines, the United Arab Emirates, and/or Vietnam materially injure — or threaten material injury to, the domestic industry — the investigations will continue and Commerce will be scheduled to make its preliminary countervailing duty determinations in January 2016 and its preliminary anti-dumping determinations in April 2016, unless the statutory deadlines are extended.

Please follow Jeff Yoders on Twitter @jyoders19.

This week started with the horrible Samarco mine disaster in Brazil. Two mine dams burst and waste from tailings ponds created to service the iron ore mine flooded local villages and affected water supply within a 60-plus-mile area. The death toll has now reached eight people.

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My colleague, Stuart Burns, warned that the co-owners of the mine, BHP Billiton and Vale SA, could be in deeper water than anyone. Remember BP after the oil spill?

BHP CEO Andrew Mackenzie hopped the first flight to Brazil to put as best a face as he can on the response. Yet the Brazilian government has already set its sights on Vale and BHP as the responsible parties and literal owners of the disaster.

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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 Raw Steels MMI fell 5.9% to 48 points, the first time our index has ever fallen below 50 points and, of course, another all-time low.

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Steel prices continued to fall in October, stressing the risks of buying large quantities when prices look “cheap” while the market is in bearish mode.

Raw-Steels_Chart_November-2015_FNLAs with any other metal, China continues to be the main price driver. Chinese exports of finished steel keep rising. The latest figures showed a 27% increase on the year-to-date compared to the same period last year. Moreover, while exports keep increasing, production in the country hasn’t declined significantly, underscoring that the extra material is a direct result of weaker demand in China.

Declining Market-Based Production

Cheap Chinese imports combined with the glut of inventory explains the decline in US steel production. Capacity utilization fell to 71.3% in October. Adjusted year-to-date production through October is down 8% while capacity utilization is also significantly down from the same period last year. Capacity utilization remains persistently below 80% this year, hurting the revenues of American steel mills.

Not only domestically, but low prices continue to hurt steel manufacturers around the globe. In October, steelmaker Tata Steel announced 1,200 job cuts in the UK. The decision came only weeks after Sahaviria Steel Industries announced 2,200 job cuts due to the closure of one of its facilities. It is estimated that less than 50% of global steelmakers are profitable at current levels. High-cost mill closures have already taken place, but they are minimal in the context of overall capacity.

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Other than the oversupply, and the continuous lack of demand, production costs are also helping bring prices down. In October, crude oil was unable to rise, remaining below $50/barrel for the third consecutive month. In addition, iron ore prices remain at low levels and capacity expansions won’t likely help to push iron ore prices up. Total iron ore supply is estimated to increase by 105 million metric tons in 2015 with more to come in the following years, with some analysts calling for iron ore prices below $40/ metric ton next year.

What This Means For Metal Buyers

Steel prices are at very low levels but that doesn’t mean that we’ve hit bottom. Other than lower production costs, steelmakers keep producing in order to avoid job destruction and giving away market share. Hopes that demand improvements will help prices might never become a reality. Prices might have to drop further down until forcing a tide of closures.

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The Department of Commerce has released affirmative preliminary determinations in the countervailing duties investigations of imports of corrosion-resistant steel products from China, India, Italy, and South Korea, and a negative preliminary determination in the countervailing duties investigation of imports of corrosion-resistant steel from Taiwan.

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The investigations cover corrosion-resistant steel including flat-rolled products that have been clad, coated or plated with corrosion- or heat-resistant metals (usually zinc or aluminum) to prevent corrosion and thereby extend the service life of products made from the steel. Corrosion-resistant steel products are typically used in the manufacture of trucks and automobiles, appliances, agricultural equipment, and industrial equipment.

Imports Found to Be Subsidized

Commerce preliminarily determined that producers/exporters in China, India, Italy, and Korea received local and national government subsidies ranging from 26.26% to 235.66%, 2.85% to 7.71%, de minimis (less than 2%) to 38.41%, and de minimis to 1.37%, respectively. 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.

Based on the Commerce Department’s most recent Steel Import Monitoring and Analysis (SIMA) data, the American Iron and Steel Institute (AISI) reported that steel import permit applications for the month of September total 2.89 million net tons. That was an 8% decrease from the 3.13 million permit tons recorded in August and a 6% decrease from the August final imports total of 3.06 nt.

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Import permit tonnage for finished steel in September was 2.22 million nt down 10% from the final imports total of 2.47 nt in August. For the first 9 months of 2015 (including September SIMA and August Final), total and finished steel imports were 30.95 million nt and 25.18 million nt, respectively, down 5% and up 3% from the same period in 2014. The estimated finished steel import market share in September was 25% and is 30% year-to-date.

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Finished steel imports with large increases in September permits vs. the August final included standard rail (up 334%), cut length plates (up 59%) and cold-rolled sheets (up 19%). Products with significant year-to-date increases vs. the same period in 2014 include reinforcing bar (up 48%), line pipe (up 35%), standard pipe (up 21%), tin plate (up 15%), sheets and strip hot-dipped galvanized (up 13%) and wire drawn (up 11%).

The Commerce Department announced final determinations in the anti-dumping investigations of imports of welded line pipe from South Korea and Turkey, and the countervailing duties investigation of imports of welded line pipe from Turkey.

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Commerce also announced a negative final determination in the countervailing duties investigation of imports of welded line pipe from Korea. This means the countervailing investigation is terminated and no Korean producers or exporters will be subject to cash deposits for countervailing duties.

The investigations cover circular welded carbon and alloy steel line pipe not more than 24 inches in nominal outside diameter. Such welded line pipe is typically used in oil and gas pipelines.

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Commerce determined that imports of welded line pipe from South Korea and Turkey have been sold in the US at dumping margins ranging from 2.53% to 6.19% and 6.66% to 22.95%, respectively. Commerce also determined that imports of welded line pipe from Turkey have received countervailable subsidies ranging from 1.31% to 152.20%.