The U.S. Senate today, by a vote of 75-20, passed the conference report for the Trade Facilitation and Trade Enforcement Act of 2015, known commonly as the customs bill. The measure includes the ENFORCE Act, which is critical to several metals producing industries — as well as others — to ensure that anti-dumping and countervailing duty orders against unfairly traded imports are being fully and vigorously enforced at the border.
“By approving the customs bill today a majority of U.S. Senators voted to ensure strong enforcement of our trade remedy laws,” said Thomas J. Gibson, president and CEO of the American Iron and Steel Institute (AISI). “This is an important piece of legislation that gives U.S. manufacturing industries and their workers new tools to fight back against unfair trade. Steel imports are decimating the American steel industry and it is imperative that we have the strongest tools and resources to fight back.”
The bill is expected to be signed by President Obama who has previously said he supports it.
The measure includes an overhaul of the U.S. Customs and Border Protection agency, as well as new protections for intellectual property and more tools for the government to crack down on currency manipulation.
Jay Timmons, the president of the National Association of Manufacturers, said, separately, ahead of Thursday’s vote that “if senators want to grow manufacturing in the U.S., then they should pass this bill immediately.”
Rosneft‘s CEO has floated a plan for a global, coordinated oil production cut and a vote is scheduled today in the U.S. Senate on a customs bill to better enforce U.S. trade laws.
Rosneft Supports Oil Output Cut
The head of Russian state-run oil company Rosneft on Wednesday floated the idea of a coordinated output cut by major oil-producing countries to prop up sagging prices but fell short of saying whether Moscow would contribute to such a plan.
Rosneft Chief Executive Igor Sechin, a close ally of President Vladimir Putin, told the IP Week conference in London that the global oil glut was predominantly the fault of the Organization of the Petroleum Exporting Countries (OPEC).
Senate To Vote on Customs Bill Today
The long-delayed customs bill is headed to the full U.S. Senate for approval today. If the Senate approves the conference report of the Trade Facilitation and Trade Enforcement Act (ENFORCE Act, H.R. 644), it will move on to the White House for the President’s signature.
A major customs enforcement bill could be voted on in the U.S. Senate this week and Goldman-Sachs is bearish on metals for 2016.
Customs Bill Senate Vote
American Iron and Steel Institute President and CEO Thomas J. Gibson said the U.S. Senate could vote this week on a long-delayed bill to strengthen customs and intellectual property enforcement, facilitate shipments at U.S. ports and implement a permanent ban on taxing Internet access.
“Around mid-2016 and through 2017, we expect that the oil market will adjust, while metals markets are set to weaken further, particularly copper and aluminum, resulting in substantial downside to metals prices relative to oil over the period,” the bank said.
Seven EU nations asked the European Commission to intervene to stop cheap imports of steel, particularly from China and Russia and the London Metal Exchange is giving its warehouses the chance to cut rent prices.
Help From Cheap Steel Imports
Seven countries including France, the UK and Germany, in a letter, urged the European Union to step up action to relieve an ailing steel industry suffering from tumbling prices and cheap imports from China and Russia.
Ministers from the three countries, along with Italy, Poland, Belgium and Luxembourg, sent the joint letter on Friday to the European Commission.
The letter also argued that in order to safeguard the competitiveness of sectors such as steel, the most efficient plants should not be subject to what it called undue carbon costs.
LME Gives Warehouses Option to Cut Rent
The London Metal Exchange is giving its approved warehouses the chance to cut rent and free-on-truck levels for the year starting April 1, after saying last year it would look at capping charges due to plans for large increases.
EU-based petitioners including the Celsa and Riva groups suffered “material injury” as a result of dumped imports from China, the European Commission, the 28-nation bloc’s executive arm in Brussels, said today in its Official Journal. The duties, which will take effect on Saturday, are for six months and may be prolonged for up to five years.
Chinese exporters expanded their share of the EU market for high fatigue performance steel concrete reinforcement bars — also called HFP rebars and known for their resilience — to almost 36% in the 12 months through March 2015 from 7.9% in 2013 and zero in previous years, the commission said today.
The original anti-dumping complaint was made by European steel industry group Eurofer on behalf of producers that account for more than a quarter of the EU’s output of HFP rebars. Chinese shipments of HFP rebars to the EU go to the U.K. and Ireland, Eurofer said at the time.
The finished steel import market share was an estimated 26% in December and is estimated at 29% for the full year. If the 29% figure holds up, it will be a record for the proportion of finished steel imports coming into the US from elsewhere in one year.
How to combat steel imports? Why not just ban them all? Source: Jeff Yoders
For all of 2015, US steel production hit 86,843,000 net tons, or about 71% of capacity. That’s down 9.3% from the 95,706,000 net tons in 2014 when the industry ran at nearly 78% capacity.
As sanctions against Iran came down this week, a flurry of business deals were announced by the Islamic Republic and steel production was a major beneficiary of Iran being welcomed into the world community.
Iran is the largest steel producer in the Middle East and Northern Africa and is among the 15 largest producers in the world. Even with significant domestic production capacity, Iran remains a net steel importer. Over 50% of downstream industries are currently non-operational or unable to operate at optimal capacity. This has led to a high demand, low supply situation. It is estimated that the country imports around 8 million metric tons of steel every year, mainly from China and Turkey.
That all could change, though, as Iran is in the mood to make a deal and South Korea’s Pohang Iron & Steel Co. (POSCO) and Italy’s Danieli both made announcements that they will go into business with Iran this week.
Steelmakers are eager to make deals with Iran but can new demand outstrip new supply? Source: AdobeStock/icarmen3.
POSCO plans to sign a preliminary agreement with Iranian steelmaker PKP in March to buy a stake in a $1.6 billion steel mill project in the Middle Eastern country. Read more
The London Metal Exchange‘s “ring” is being moved and steel imports into the US hit 29% of the market in 2015.
LME Moves its Ring
The 139-year-old London Metal Exchange (LME) wrapped up open outcry trading on Wednesday at its red leather couch “ring” before moving the trading floor to a new home, Finsbury Square, in London’s financial district.
The LME, the world’s biggest market for base metals such as copper and aluminum, is the only financial exchange to maintain open outcry trading in Europe. While the ring is being moved to the new location today and tomorrow, trading will take place at the LME’s disaster recovery site in Chelmsford, east of London.
Steel Imports Into the US Hit 29% in 2015
Based on preliminary Census Bureau data, the American Iron and Steel Institute (AISI) reported that the US imported a total of 2,323,000 net tons (NT) of steel in December 2015, including 2,017,000 NT of finished steel (down 5.3% and up 3.2%, respectively, vs. November final data). Full Year 2015 total and finished steel imports were 38,718,000 and 31,425,000 NT, respectively, down 13% and 7%, respectively, vs. 2014. Finished steel import market share was an estimated 26% in December and is estimated at 29% for the full year.
Key finished steel products with a significant import increase in December compared to November were wire rods (up 77%), tin plate (up 71%), cut lengths plates (up 65%), heavy structural shapes (up 46%), hot rolled bars (up 20%) and cold rolled sheets (19%). Major products with significant import increases in 2015 vs. the prior year include reinforcing bar (up 38%) and standard pipe (up 13%).
The rolling average of steel imports into the US in 2015 vs. 2014. Source: AISI
It’s no secret that for the last four years the global steel sector has been floundering and it’s been tough for producers to find any silver lining. Now, with 2016 upon us, the one question that’s been asked by everybody, even as prices plunge and the Chinese economy shows no signs of a recovery, is, what now? The unanimous response from around the globe is India.
Can Indian steel demand buoy the sector this year? Source: Adobe Stock/Jovanning.
There’s a lot riding on India, both domestically as well as internationally. Ironic, since both China and India are the world’s top two emerging economies, and with the collapse of China, the world turns to its neighbor India, in these times of stress.
India to the Rescue?
Edwin Basson, Director-general of the World Steel Association (WSA) echoes these voices in this article in The Gulf News where he was quoted as saying that there was really only one location that had the long-term potential to pull the global steel market out of its current slump, and that was India.
The over $100 billion Indian steel industry is placing bets on rising domestic demand in 2016, even as local players try to combat cheap imports. Last year saw a deflation of global commodity prices, including steel and other industrial metals. This affected the Indian market, like all of the others, leading to severe pressure on the operating margins of steel plants.
Ravi Uppal, Managing Director and Group CEO, JSPL, believes that the Indian steel industry would be able to recover and show growth in 2016. He told the Economic Times that even if the industry could grow at 6% to 7%, that would translate into additional demand of 4 to 5 million metric tons of steel, which is good news for Indian steel. However, this will only be possible if adequate precautions are taken against reckless dumping by the foreign producers.
Can Indian Steel Demand Deliver?
Spoiler alert! Even if there’s unanimity on India being in the sweet spot this year, one big question remains: When will the world’s largest democracy deliver? Yes, it has a huge unfilled demand and an even bigger economy, but when will the benefits start accruing? We have long heard of the potential of mass industrialization in India.
In 2015, India became the third-largest steel producer globally, bypassing the US, with demand between April and November going up by 5.3%, and production by 2.4% in the same period. India is now positioned just after China and Japan as a steel producer.
Yet, prices of some steel products in India hit a 10-year low in 2015, no thanks to the cheap exports from China, Japan and South Korea.
Financial Pressure Via Dumping
This has also jeopardized billions of dollars in loans raised by domestic steel producers for capacity expansion. Already, the steel sector is a leading contributor to the bad loan woes of Indian banks, and some sector experts fear that this would come in the way of capacity addition.
Global ratings agency Moody’s expects profitability of Indian steel firms to be lower this year as compared to the previous years, but the country would be better placed than its peers in Asia.
The government still seems confident that India will, indeed, overcome many of these hurdles. Recently, Steel Minister Narendra Singh Tomar told news agency Press Trust of India that the steel industry was “tense” not just in India, but in the world over. In his opinion, India is better placed this year compared to other countries since both production and demand are likely to go up.
Increased Production… and Increased Tariffs
India’s top three steel producers — state-run Steel Authority of India Ltd. (SAIL), and private players Tata Steel and JSW Steel — are expected to ramp up production capacity in the next two years to capture domestic demand growth propelled by demand in the automotive, consumer durable goods and construction sectors.
Of late, the Indian government has taken steps to protect the domestic steel industry, including raising import duties on long and flat products.
The Department of Commerce announced affirmative preliminary determinations in the countervailing duty (CVD) investigation of imports of hot-rolled steel flat products from Brazil yesterday. It also announced negative preliminary determinations in the investigations of imports of hot-rolled steel flat products from the South Korea, and Turkey.
Countervailable subsidies are financial assistance from foreign governments that benefit the production of goods from foreign companies.
In the Brazil investigation, Commerce preliminarily determined that mandatory respondents Companhia Nacional Siderurgica (CSN) and Usinas Siderurgicas de Minas Gerais SA (Usiminas) both received a subsidy rate of 7.42%. All other producers/exporters in Brazil were assigned a preliminary subsidy rate of 7.42%.
The subsidy rates in the South Korea and Turkey investigations were all found to be less 1% or “de minimis” meaning that no import duties will be due and no cash deposits will be necessary.
As a result of the preliminary affirmative determination for Brazil, Commerce will instruct US Customs and Border Protection to require cash deposits based on the preliminary rates, 7.42%, established for producers and exporters of hot-rolled steel flat products from Brazil.