Articles in Category: Imports

The Department of Commerce started investigations of imports of carbon and alloy steel wire rod from Belarus, Italy, South Korea, Russia, South Africa, Spain, Turkey, Ukraine, the United Arab Emirates, and the United Kingdom, and companion countervailing duty investigations of imports of carbon and alloy steel wire rod from Italy and Turkey. The investigations cover hot-rolled products of carbon and alloy steel.

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The alleged dumping margins range from 18.89% (Italy) to 756.93% (Russia) and both of the alleged countervailing subsidies are above de minimis (less than 2%). The U.S. International Trade Commission is scheduled to make its preliminary injury determinations on or before May 12, 2017.

The petitioners are Gerdau Ameristeel US Inc. in Florida, Nucor Corporation based in North Carolina, Keystone Consolidated Industries of Texas, and Charter Steel in Wisconsin.

President Donald Trump (R-N.Y.) is set to sign an executive order this afternoon ordering enforcement and review of the H-1B visa program, popular in the technology industry, on a visit to the headquarters of Snap-On Inc., a tool manufacturer in Kenosha, Wis., according to senior administration officials.

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He will also use what the White House called the “Buy American and Hire American” order to seek changes in government procurement that would boost purchases of American products in federal contracts, with one aim being to help U.S. steelmakers.

The moves show Trump once again using his power to issue executive orders to try to fulfill promises he made last year in his election campaign, in this case to reform U.S. immigration policies and encourage purchases of American products.

“Strong Buy America domestic procurement preferences for federally funded infrastructure projects are vital to the health of the domestic steel industry, and have helped create manufacturing jobs and build American infrastructure,” said Thomas J. Gibson, president and CEO of the American Iron and Steel Institute, the largest trade group for North American steel manufacturers. “The foundation of a strong Buy America program is the longstanding requirement that all iron and steel-making processes occur in the U.S. for a product to be Buy America compliant — from the actual steel production to the finishing processes. This ‘melted and poured’ standard has been successfully applied since 1983 and must continue to be the standard used in federal Buy America rules for steel procurement. We applaud President Trump for affirming his commitment to full and effective enforcement of our Buy America laws, and to addressing the issue of unfairly dumped and subsidized steel, in signing this Executive Order today.”

As requested by Japan, the World Trade Organization (WTO) has set up a dispute settlement panel to decide the row over India’s imposition of a safeguard duty on imports of iron and steel products.

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MetalMiner has reported on this case in the past. Japan’s request was made after New Delhi imposed safeguard duties on several iron and steel products, which India claimed violated global trade rules.

India’s finance ministry imposed definitive safeguard duties on imports of hot-rolled flat products of non-alloy steel in coils to counter a surge in imports from several countries, including Japan. India’s stand has been that such cheap imports “caused injury to domestic steel industries.”

As both the nations failed to arrive at a solution, Japan petitioned the WTO for the formation of a dispute resolution panel.

Soon after the WTO announcement, though, India objected to Japan’s WTO request for a “prompt’’ resolution of its dispute against India’s duties on steel imports.

India’s contention is that there’s “no rationale” for treating the dispute any more urgently than other WTO disputes it’s involved in and the same standard should be applied to all disputes.

In December, Japan dragged India to the WTO against measures taken on imports of iron and steel products. Incidentally, Japan is the second-largest steel producer in the world.

The dispute assumes some amount of significance as both India and Japan signed a comprehensive free trade agreement, meant to avoid this type of arbitration, in 2011.

This was Japan’s second attempt to ask the WTO to set up a panel after the first was blocked by India in March. India expressed disappointment over Japan’s insistence on the WTO panel despite its “sincere efforts” to resolve the matter in a bilateral manner.

It normally takes about 20 months to settle a dispute at the WTO, but according to WTO rules, in cases of urgency, the parties to the dispute, panels and the Appellate Body make every effort to accelerate the proceedings.

Two-Month Trial: Metal Buying Outlook

The Japanese government reportedly estimated that the tariffs could cost Japanese steel companies about $220 million through March 2018.

The safeguard duties imposed by India also gave rise to complaints from other WTO members.

Since the beginning of March, steel prices in China have fallen sharply while prices in the U.S. have risen. That is simply not sustainable.

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These price divergences happen once in a while but they don’t last long. Over the next few weeks we’ll either see a rebound in Chinese prices or weakness in US steel prices.

US HRC (in blue) vs. Chinese HRC (in purple). Source: MetalMiner IndX.

Why do we say this? Well, China’s output accounts for more than 50% of world steel production. Currently, China isn’t a major exporter to the U.S., but it is the biggest exporter to the rest of the world. Therefore, Chinese prices put a floor under international steel prices.

Two-Month Trial: Metal Buying Outlook

Since prices peaked in February, China’s hot-rolled coil prices have fallen nearly 15%. During the same period, U.S. HRC prices have risen nearly 8%. Interestingly, we saw a similar divergence last summer, when the U.S. imposed strong anti-dumping measures against imports. Such a wide international price arbitrage didn’t last long, as we predicted last year, this price arbitrage narrowed after that summer.

CRC price arbitrage US-China. Source:MetalMiner IndX.

U.S. steel prices are now expensive again relative to Chinese prices. In the case of cold-rolled coil, the price spread stands now at $344 per metric ton, quite high compared to historical levels and not far from last summer’s peak of $420 per mt. A level that has proven unsustainable before.

What This Means For Metal Buyers

We continue to be long-term bullish on steel markets. However, buyers should closely monitor the recent divergence between Chinese and US prices. We should see a recovery in Chinese steel prices soon, otherwise US steel mills will have a hard time justifying further price hikes. Remember that we are in a global world and although US steel prices can temporarily move apart from Chinese prices, they will eventually move in tandem because otherwise, buyers will start looking to buy steel overseas.

Secretary of Commerce Wilbur Ross recently announced the final results of an annual administrative review of the anti-dumping duty order on imports of oil country tubular goods (OCTG) from the Republic of Korea (South Korea). Commerce found that Korean steel producers have been unfairly dumping OCTG in the U.S. market, hurting American workers and businesses.

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Commerce announced, in a press release, that it is exercising its authority under Congress for the first time to address market distortions in the production of foreign merchandise, and to calculate dumping margins that “more accurately account for the unfair pricing practices of foreign exporters. Section 504 of the Trade Preferences Extension of 2015 is a vital instrument in helping to identify distortions in the market that can enable and facilitate dumping practices.”

During the period covered by the administrative review (July 2014 to August 2015), OCTG imports from South Korea were valued at an estimated $1.1 billion, accounting for nearly 25% of all U.S. imports of OCTG. The dumping margins, or the rate at which the imported materials were under sold below fair value in the U.S., were found to range from 2.76% to 24.9%.

A 24.92%t tariff rate was imposed on OCTG from Nexteel, 2.76% on SeAh Steel and 13.84% on Hyundai Steel and other South Korean steelmakers.

The review also concluded that prices of the hot-rolled coil used to produce OCTG, as well as Korean electricity prices, were distorted. Anti-dumping tariffs on Nexteel and Hyundai each increased 16.88% and 7.92%, respectively, during this review. The initial preliminary rulings and the lower percentages were announced last October.

Seah Steel, however, saw a 1.04% reduction, making it the only South Korean steelmaker that was levied a lower tariff rate.

Two-Month Trial: Metal Buying Outlook

“There is fair and unfair trade, and the distinction is not very hard to make,” Secretary Ross said in the release. “We will not stand for the distortions in foreign markets being used against U.S. businesses. The Trump Administration will continue to employ all of the tools provided under the law to take swift action against harmful trade practices from foreign nations attempting to take advantage of our markets, workers, and businesses.”

Dean A. Pinkert is a partner in Hughes Hubbard’s International Trade practice. He is a former Commissioner of the U.S. International Trade Commission. Pinkert was nominated by President Bush and confirmed by the Senate in 2007, and was designated Vice Chairman by President Obama in 2014.

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As a commissioner, Pinkert participated in numerous anti-dumping, countervailing duty, and safeguard investigations, including the special safeguard investigation of passenger tires that resulted in import relief for the domestic tire industry and was upheld by the World Trade Organization. He participated in an unprecedented number of final determinations in Section 337 investigations during his tenure, notably dissenting in an electronic devices case that went to President for policy review. President Obama, relying on many of the factors cited in the dissent, overruled the commission for the first time since 1987.

Dean Pinkert

Former ITC Vice Chair A. Dean Pinkert. Source: Hughes Hubbard.

Pinkert spoke with MetalMiner Editor Jeff Yoders by phone about several issues facing metals producers and manufacturers, including global steel and aluminum overcapacity and how the new Trump administration can approach trade and overcapacity issues. This is part two of our discussion, which focuses on cases that rise to the WTO. See part one here if you missed it.

Jeff Yoders: Is there a risk to elevating any such case to the WTO of essentially spending the money and hiring the lawyers, only to lose the case?

Dean Pinkert: First, there are two types of cases. When there’s a decision by the U.S. Trade Representative‘s office to file a case with the WTO, we’ll call those offensive cases. They are filing a complaint with the WTO saying that another country is violating its trade commitments. By the way, I think the Obama administration was very aggressive at developing and filing cases of that kind.

There is  another type, and these are what I was referring to earlier, where the U.S. has an investigation of something, concludes that a trade remedy is appropriate, imposes that trade remedy and then gets sued and it goes to the WTO. In 2002, when the steel safeguard relief was put into place, the U.S. was taken to the WTO by our trading partners and, ultimately, the WTO ruled against the safeguard. It was then withdrawn, although the Bush administration said the reason it was withdrawn was because it achieved its aim of giving the domestic industry some breathing space so that they could regain profitability, not because of the loss.

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I was talking more about that more defensive posture in the WTO when I was talking about safeguards.

JY: There’s a lot of talk about a border-adjustment tax right now. Many policy papers are calling the scheme very similar to a value-added tax but only on companies. Is there a chance that such an idea might run afoul of WTO rules?

DP: We don’t now exactly what it would look like or what the final measure, if there is one, would be. We don’t know how the WTO would react to it, either, but it’s possible that the WTO would consider it an export subsidy and, if it did, then that would have some serious consequences because there is a list of various kinds of subsidies, particularly export subsidies, in the WTO agreement. If it was found to be an export subsidy there would be considerable consequences for the U.S.

But, it’s important to note that we don’t even know what the border adjustment tax will look like yet. We would have to see. Read more

The U.S. is preparing a review of China’s bid for market-economy status in the World Trade Organization, the Wall Street Journal reported today. Finishing a busy day in trade, Trump also signed two executive orders designed to enhance enforcement of current trade pacts and promised to end “the theft of American prosperity.”

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The Trump administration appears ready to formalize China’s unfavorable status in trade cases, which means the country’s goods would be eligible for higher U.S. tariffs, the paper said, citing documents from the Commerce Department website. The review is expected to be announced as early as this week, it said.

The first of the two trade orders Trump signed today calls for completion of a large-scale report to identify “every form of trade abuse and every non-reciprocal practice that now contributes to the U.S. trade deficit,” Commerce Secretary Wilbur Ross told the Washington Post.

Read more

Here at MetalMiner, we occasionally write about our favorite TV shows, especially when they shed light on the metals and other commodity markets that we cover in depth today.

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Never could there be a better examination of how commodities and commerce changed the New World, with a hand from new technology, than the Starz drama, “Black Sails,” which ends its fourth season and its series run Sunday night.

Black Sails courtesy of Starz network

What’s a pirate show without Blackbeard? Image courtesy of Starz.

What does a dark and very adult prequel to Robert Louis Stevenson’s “Treasure Island” have to do with metals, you might ask? Just that the prices of the metals we track today are the same type of information that buccaneers based in the Caribbean in the 18th Century tracked for rum, tea and other shipments marked for plunder in the new world.

Commerce Creates Disruption

The series stars Toby Stephens as Captain Flint, a former British naval officer turned pirate who leads a crew based out of New Providence Island in the Bahamas. His co-star, Luke Arnold, plays young Quartermaster Long John Silver whose adventures begin 20 years before the events of “Treasure Island” and centuries before his name would ever grace a chain of fast food restaurants known for battered fish. Read more

The seesaw battle between steelmakers in China and India took a new twist recently with a report in a Chinese newspaper calling the Indian government on its “protectionist” stance on steel.

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The state-run Global Times newspaper said in a report, referring to India’s decision to award its first bullet train project to Japan, that India needed to have a “sober” look vis-a-vis China when it came to solutions for India’s proposed railway network revamp or its entirely new high-speed rail project.

The high-speed “bullet train” project is likely to commence in 2018 on a 315-mile (508-kilometer) route between Mumbai and Ahmedabad. It’s slated to be completed by 2023.

India has been waging a war against cheap steel imports into the country for some time now, with Chinese steel companies high on their bad guy list. The government imposed taxes in various forms not to protect its own steel industry, but to equalize import prices to production costs. Over 80% of the funding for the project is coming from Japanese investments. Read more

We had a chance to sit down and discuss the issues facing members of the Steel Manufacturers Association with SMA President Philip K. Bell at the recent S&P Global Platts Steel Markets North America conference here in Chicago. Bell also currently serves on the  Department of Commerce International Trade Advisory Committee on Steel (ITAC 12), advising the Secretary of Commerce and United States Trade Representative on trade policy, trade agreements, and other trade related matters that benefit U.S. businesses, workers, and the economy.

Philip K. Bell

Philip K. Bell. Source: SMA

Jeff Yoders: We’ve heard a lot about North American Free Trade Agreement and what changes to it might mean in the last two days. How do your members feel about reopening NAFTA to changes?

Philip K. Bell: NAFTA is over 20 years old and it’s probably time to look at it again. A lot has changed over the last two decades. We hope the approach that the administration takes is one that’s more methodical and takes into account that not only are Canada and Mexico two of our biggest trade partners but, when it comes to the steel industry, they ARE our two largest trade partners.

There is a lot of integration in this area. You have a lot of steel producers that either have businesses in Mexico such as Gerdau, ArcelorMittal and Nucor — through its joint venture JFE — and you have a lot of companies that want to do business there like Steel Dynamics which is hoping to increase its presence in that market by importing flat-rolled into Mexico. Read more