In the first 6 months of 2015, US gasoline consumption rose at the fastest rate since 1985 – another occasion on which the real price of oil halved over 12 months and stimulated demand. Not surprisingly, prime supplier gasoline sales/deliveries into US local markets are up the most over the prior year since 1988 as well. Source: Thomson Reuters.
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.
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.
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
Chinese coal imports fell in August and mining strikes in South Africa last year were not as costly as those in previous years.
Chinese Coal Imports
China imported 6.39 million metric tons of coal from its top supplier, Australia in August, down 12.8% year-on-year as low domestic prices squeezed imports, data from the customs authority showed on Monday. Australian imports fell 21.8% compared to July. For the first 8 months of the year, China’s total coal imports were 48.64 mmt, down 20.4% compared to the same year-ago period.
South African Mining Strike Less Costly
Strikes cost South Africa 6 billion rand, or $453 million, in wages in 2014, lower than the previous year despite a record 5-month strike in the mining sector, a report published by South Africa’s Department of Labour showed on Monday. In its annual report on strikes in Africa’s most advanced economy, the department found they cost the country last year 9% less than the 6.7 billion rand lost in 2013.
Based on the most recent Commerce Department Steel Import Monitoring and Analysis (SIMA) data, the American Iron and Steel Institute (AISI) reported today that steel import permit applications for the month of August total 3,009,000 net tons.
This was a 9% decrease from the 3,315,000 permit tons recorded in July and a 7% decrease from the July Preliminary imports total of 3,243,000 nt. Import permit tonnage for finished steel in August was 2,339,000 nt down 9% from the preliminary imports total of 2,578,000 in July. For the first eight months of 2015 (including August SIMA and the July preliminary number) total and finished steel imports were 27,972,000 nt and 22,779,000 nt, respectively, down 2% and up 6% from the same period in 2014.
The estimated finished steel import market share in August was 26% and is 30% on the year-to-date.
Finished steel imports with large increases in August permits vs. the July Preliminary included wire rods (up 36%), tin plate (up 21%) and oil country tubular goods (up 11%). Products with significant year-to-date increases vs. the same period in 2014 include rebar (up 46%), line pipe (up 43%), standard pipe (up 30%), tin plate (up 20%), sheets and strip hot-dipped galvanized (up 18%), wire drawn (up 11%) and cold-rolled sheets (up 10%).
In August, the largest finished steel import permit applications for offshore countries were for South Korea (317,000 NT, up 3% from July Preliminary), Japan (220,000 NT up 23%), Brazil (181,000 NT, up 92%), China (172,000, down 39%) and Turkey (141,000 NT, down 38%). Through the first eight months of 2015, the largest offshore suppliers were South Korea (3,683,000 NT, up 2% from the same period in 2014), Turkey (1,978,000 NT, up 51%) and China (1,977,000, down 2%).
India has lost a case against the US at the World Trade Organization over protection for local crystalline silicon and thin-film solar cells.
The WTO ruled that India’s domestic content requirements under its new solar power program were inconsistent with international agreements. Indian officials have said they will appeal the ruling to the WTO’s dispute panel in the next two months.
The US alleged that India’s ambitious solar program discriminates against US crystalline silicon photovoltaic and thin-film solar panel manufacturers by requiring Indian producers to use locally manufactured silicon or thin-film cells and by offering subsidies to those developers who use domestic equipment. Read more
Based on preliminary Census Bureau data, the American Iron and Steel Institute (AISI) reported that the US imported a total of 3,243,000 net tons of steel in July.
This includes 2,578,000 nt of finished steel (up 4.6% and 3.7%, respectively, vs. June final data).
On the year-to-date, through seven months of 2015, total and finished steel imports are 24,964,000 and 20,440,000 nt, respectively, no change and up 10% vs. the same period in 2014. Annualized total and finished steel imports in 2015 would be 42.8 and 35.0 million nt, down 4% and up 4% respectively vs. 2014 if they continue at this pace. The finished steel import market share was an estimated 27% in July and is estimated at 31% year-to-date.
Individual Steel Product Import Increases
Key finished steel products with a significant import increase in July compared to June are reinforcing bars (rebar). up 57%; plates in coils, up 29%; sheets and strip hot-dipped galvanized, up 26%; cold-rolled sheet, up 25%; heavy structural shapes, up 12%; sheets, strip and all other metallic coatings are up 12%; and cut-length plates are up 11%.
Major products with significant year-to-date import increases vs. the same period last year include line pipe, up 55%; rebar, up 51%; standard pipe, up 33%: sheets and strip hot-dipped galvanized, up 22%: tin plate, up 17%; plates in coils, up 16%; cold-rolled sheets, up 14%; heavy structural shapes, up 13%; and cut-length plates, up 12%.
China’s currency, the yuan/renminbi, fell further this week after the International Monetary Fund dealt a setback to the currency’s role on the global stage.
The IMF pushed back the date that the yuan would be added to the IMF’s basket of reserve currencies, known as the Special Drawing Right currencies. Originally scheduled to become a reserve currency at the end of December, the yuan will now have to wait until at least September 30, 2016.
The IMF said in a release that the postponement would allow “the continued smooth functioning of SDR-related operations and responds to feedback from SDR users on the desirability of avoiding changes in the basket at the end of the calendar year.” Read more
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:
- Should I be approaching all of my Chinese suppliers for a 3.5% price reduction?
- 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.
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
The Commerce Dept. has begun an anti-dumping investigation of imports of heavy walled rectangular welded carbon steel pipes and tubes from South Korea, Mexico, and Turkey, and a countervailing duty investigation of imports from Turkey.
The products subject to the investigations are heavy walled rectangular welded steel pipes and tubes of rectangular (including square) cross section, having a nominal wall thickness of not less than four millimeters. Such pipes are used as structural members in construction and industrial manufacturing.
The products include, but are not limited to, the American Society for Testing and Materials (ASTM) A-500, grade B specifications, or comparable domestic or foreign specifications.
The domestic manufacturers petitioning for the investigations are Atlas Tube, a division of JMC Steel Group; Bull Moose Tube Company; EXLTUBE; Hannibal Industries, Inc.; Independence Tube Corporation; Maruichi American Corporation; Searing Industries; Southland Tube; and Vest, Inc.
They are alleging dumping margins of 53.8% for imports from South Korea, 11.9% from Mexico and 102.1 to 113.7% for the Turkish welded carbon steel pipes. Turkey is also accused of illegally subsidizing its exports, hence the countervailing investigation.
Anti-dumping petitions from US producers AK Steel, Nucor Corp., ArcelorMittal USA, SSAB Enterprises, U.S. Steel and Steel Dynamics charge that imports hot-rolled steel flat products from Australia, Brazil, Japan, South Korea, the Netherlands, Turkey and the United Kingdom are causing material injury to the domestic industry or being “dumped.
The petitions allege that producers in each of the seven countries are selling hot-rolled steel in the US market at less than fair value, with the following substantial margins of dumping:
Japan: 19.53% – 30.90%
South Korea: 86.96% – 158.93%
Netherlands: 55.21% – 173.17%
Turkey: 96.44% – 200.78%
The United Kingdom: 50.63% – 161.75%
The petitions also allege that the foreign producers in Brazil, South Korea, and Turkey benefit from numerous countervailable subsidies provided by their governments. The petitions identify 33 different subsidy programs in Brazil, 41 subsidy programs in South Korea, and 17 subsidy programs in Turkey.
China is not one of the countries named in these petitions because imports of hot-rolled steel from China are already subject to an anti-dumping order. The petitions were filed concurrently with the Department of Commerce and the US International Trade Commission.
This is the third filed flat-rolled sheet trade case in the last three months as US producers filed petitions against corrosion-resistant imports at the start of June and followed that with petitions against cold-rolled imports at the end of July.