For the purpose of anti-dumping investigations, dumping occurs when a foreign company sells a product in the U.S. at less than its fair value.
In the Brazil investigation. Commerce found dumping has occurred by Companhia Siderurgica Nacional and Usinas Siderurgicas de Minas Gerais SA, at a final dumping margin of 74.52%. The dumping margin for the mandatory respondents was based on adverse facts available (AFA) they did not cooperate in the investigation. Commerce established a final dumping margin of 74.52% for all other producers/exporters in Brazil.
In the South Africa investigation, commerce found dumping occurred by Evraz Highveld Steel and Vanadium Corp., at a final margin of 94.14%. They also did not cooperate in the investigation. Commerce calculated a dumping margin of 87.72% for all other producers/exporters in South Africa.
In the Turkey investigation, Commerce found dumping occurred by Ereğli Demir ve Çelik Fabrikalari T.A.Ş., at a dumping margin of 50%. It, too, did not cooperate in the investigation. Commerce calculated a final dumping margin of 42.02% for all other producers/exporters in Turkey.
The pictures that the Washington, D.C. media are portraying are quite dramatic and some of them engage in a level of speculation about funding mechanisms that likely only have a tangential relationship to what is being discussed right now at Trump Tower.
Could more transit projects be part of a Trump infrastructure plan? Source: Jeff Yoders.
Politico’s analysis is a case in point, with speculation and quotes from both democrats and republicans about everything from a new gas tax indexed to the inflation rate to a quote from U.S. Rep. Peter DeFazio (D. Ore.), the top Democrat on the Transportation Committee, who said that public-private partnerships “won’t do much for the 143,000 bridges that need work nationwide unless you’re going to toll 143,000 bridges… it’ll help with individual sorts of big projects, but it’s not any kind of cure-all, and it certainly isn’t going to get the big bang that Trump has talked about in infrastructure.”
Federal Infrastructure Bank?
Yet, a mere 45-minute drive away, the Baltimore Sun praised another idea supposedly being debated by President-elect Trump and his advisors. U.S. Rep. John K. Delaney (D. Md.)’s Partnership to Build America Act would use repatriated corporate profits now held overseas (made available by a reduced tax rate on overseas earnings brought home and a larger tax on profits that remain off-shore) to put billions into the Highway Trust Fund and to create a new U.S. investment bank — with a $750 billion infrastructure fund — that would be available to state and local governments. Read more
India’s mining sector has the potential to contribute as much as $70 billion to the country’s economy by 2030 and generate about 6 to 7 million jobs, believes the country’s industry association, the Confederation of Indian Industry.
A report titled, Mining Opportunities – Realizing Potential was recently released by the CII, though with an added a cautionary note: clearances “still remain an impediment for a smooth transition from auction stage to implementation stage.”
Mining Reforms Having an Effect
The current Modi government initiated reforms in the mining sector, which underperformed during the previous regime, many say, due to red tape. One of the most important steps was the clearance of the National Mineral Exploration Policy (NMEP) by the government in.
NMEP has the following main features for facilitating exploration in the country:
The Ministry of Mines will carry out auctioning of identified exploration blocks for exploration by the private sector on a revenue-sharing basis. If exploration leads to auctionable resources, the revenue will be borne by the successful bidder of those auctionable blocks.
Creation of baseline geoscientific data as a public good for open dissemination free of charge.
A National Geoscientific Data Repository was supposed to be set up to collate all baseline and mineral exploration information generated by various central and state government agencies and also mineral concession holders and to maintain these on a geospatial database.
While these policy changes have been welcomed overall, there has been some criticism over the implementation. The CII report, for example, talks of the “inordinately long time that is required for obtaining this clearance and the cumbersome process involved therein.”
Why Can’t Companies Start Mining Faster?
The report was recently released at the International Mining and Machinery (IMME) and Global Summit 2016. It said that the Environment and Forest clearance processes take a long time and added that there was significant room for improvement in the clearance system in terms of efficiency, speed of decision making, predictability and transaction.
There’s also unexpected criticism from another quarter on the new mining policy. A report in the DNA newspaper, quoting global miner Anglo American PLC, said the Indian auction system discourages foreign direct investment as the auction process does not provide adequate risk-reward incentive.
In the report, John Vann, group head of exploration at Anglo, said the auction system makes it difficult to see India competing with other countries where Anglo American invests. According to him, the granting of licenses rather than auctioning off mines would give confidence to foreign investors.
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.
Commerce calculated preliminary subsidy rates of 2.76% and 3.66% for mandatory respondents Norma (India) Ltd., its three cross-owned affiliates, and RN Gupta & Company Limited, respectively. Commerce established a preliminary subsidy rate of 3.21% for all other producers/exporters in India.
Industry Groups Still Challenging EPA Mercury Rule
The U.S. Environmental Protection Agency‘s additional, court-ordered justification of its rule limiting mercury and other toxic emissions from coal-fired power plants fails to show how the rule’s benefits outweigh its compliance costs, states and industry groups fighting the revamped rule told the D.C. Circuit on Friday.
President-elect Donald Trump’s recent announcement that he is “all for NATO” may have offered some comfort, but his repeated statements during the campaign regarding the North Atlantic Treaty Organization and Europe’s responsibility to look after its own defense have sent a shiver down the collective spines of E.U. countries, the likes of which they have not felt since the formation of NATO in 1949.
While very few in Europe would agree, it is possible that the President-to-be’s position on NATO may ultimately be to Europe’s greater good. A recent article in Carnegie Europe entitled “America’s European Allies” highlights not just the issue of underfunding, but the appalling state of European defense structures and the inherent inefficiencies that result mean that of the $214 billion (€200 billion) that EU member states collectively spend each year on defense, much is wasted.
Would you rather a standing personnel group? Or an F35?
More troubling even than that failure of accounting is that some states don’t even spend the agreed-upon 2% of gross domestic product on defense, an egregious violation of the compact of being an E.U. member-state. These structural issues undermine the region’s ability to effectively mount a unified defense.
People vs. Weapons
The first issue is high personnel costs. According to the article, cash-strapped Greece spends some 2.38% of the country’s GDP on defense, significantly in excess of the 2% minimum agreed by NATO members summit in Wales in 2014. Unfortunately, out of its total defense budget of $4.6 billion (€4.2 billion), Greece spends almost 70% on personnel alone. No weapons. Read more
Investors expect Trump’s proposals to boost fiscal spending, cut taxes and loosen regulation. They also believe he will accelerate economic growth and boost inflation, bolstering the case for the Federal Reserve to lift U.S. interest rates. Expectations for an interest-rate hike in December’s meeting have risen to more than 80%, up from 30% at the beginning of the month. Higher rates make the currency more attractive for yield-seeking investors.
Is The US Dollar’s Rally Sustainable?
Investors are pricing in the effects Trump’s proposed new measures, way before we actually see implementation. Moreover, Trumps’ proposals to renegotiate key trade agreements could be negative for global growth, which could weigh on the domestic economy and the dollar.
Also, it’s important to note that the U.S. dollar is near long-term resistance, a level that prevented the index from rising several times in previous years. Investors might be getting ahead of themselves by driving the dollar up so sharply without waiting for the actual effects of Trump’s proposals. Investors might want to think twice before pushing the dollar above current levels.
The US dollar index might struggle near long-term resistance levels. Source: MetalMiner analysis of @stockcharts.com data.
The Dollar and Metals Lose Correlation
The dollar and metals tend to move in opposite directions. This inverse correlation hasn’t worked lately. This is because the dollar is rising on expectations of higher rates but, at the same time, metal prices are getting a boost on China’s strong demand and Trump’s plans to spend big on the nation’s infrastructure. See the post my colleague, Jeff Yoders, recently wrote about InfraTrumpture.
Metal buyers need to watch the performance of the industrial metals complex first and then look for secondary indicators such as the dollar. This is particularly true during this period, in which the relationship between the dollar and metal prices seems to be weakening for the reasons explained above.
What This Means For Metal Buyers
In theory, a rising dollar is bearish for metal prices. However, this might not hold true in the short- to mid-term. On top of that, there are reasons to question the sustainability of the dollar’s rally. To conclude: It’s important to keep a close eye on the recent dollar strength. However, it is first and most important to focus on the overall metal complex, which is in full bull mode.
Many of the promises made by Donald Trump in the recent presidential election campaign have been vague on detail and promptly been followed by backtracking or denial, but one of the policies president-elect Trump as espoused consistently from the beginning has been his position on the Transpacific Trade Partnership (TPP).
President Obama saw TPP as a key component of his pivot to Asia. The agreement was intended to lower tariffs and sets standards on a broad range of trade issues, from labor and environmental regulations to the treatment of intellectual property. More than anything, TPP was intended to create the framework for developing free-trade within Southeast Asia and, in partnership with the U.S., that most closely adhered to U.S. policies. It was intended to establish U.S. economic leadership in the region.
Trump, on the other hand, saw TPP as a threat to U.S. industry and, as part of his wider objection to globalization, he has been adamant since the start of his campaign that he would sooner see hell freeze over than TPP, in its current form, implemented.
Is this the exit for the U.S. and free trade in Asia? Source: Adobe Stock/Argus.
TPP was to have been the biggest regional free-trade agreement in history and the biggest trade deal struck since the 1994 completion of the Uruguay round of the General Agreement on Tariffs and Trade (GATT) world trade talks that created the World Trade Organization.
China Steps In
According to Reuters, the 12 countries involved include Australia, Canada, Chile, Japan, Malaysia, New Zealand, Peru, Singapore, Vietnam and Mexico in addition, of course, to the U.S.A, but pointedly excluding China. The hope was, at some stage, that China would join the agreement as well but now with the prospects looking so negative for the U.S. to take TTP forward, China is stepping into the vacuum and seeking support for a Beijing-led Asia-Pacific Free-Trade area at an upcoming regional summit in Peru later this month.
President Xi Jinping’s personal involvement illustrates how seriously China is backing this idea. As the U.S. turns it back on TPP this is an opportunity for Beijing to set the agenda. China has proposed the Free Trade Area of the Asia-Pacific (FTAAP) and the Regional Comprehensive Economic Partnership (RCEP), which includes an even larger group than would have been involved in TPP. The 10 members in the Association of Southeast Asian Nations would be joined by China, Japan, South Korea, India, Australia and New Zealand to form the RCEP Group.
All this may not bother Trump, but in the years to come it may bother U.S. companies that find themselves on the outside of a trade club they could have established more to their own agenda. Not all free trade is good trade, but at least if you get to shape the rules you can mitigate the downside and maximize the upside. As Britain will find with the European single market post-Brexit, if you are outside the club you get no say in the rules.
Our November metal price trends report showed an industrial metals complex buoyed by strong Chinese demand and bullish on the future, thanks to the election of republican presidential candidate Donald Trump who promises to curtail regulations on metals producers and the energy suppliers that provide power for smelting, steelmaking and mining.
While some of the metals turned in a flat performance during the month of October, almost all quickly took off after the election. Now, as our lead forecasting analyst, Raul de Frutos, recently wrote, the industrial metal bulls are in full charge.
The minor metals remained flat, but that’s no surprise to any buyer at this point. The fact that rare earth miner Lynas Corp. received a lifeline from a hedge fund and a Japanese state-owned enterprise was a minor (metals) surprise itself.
It’s a good time to be a producer of base metals as it looks like the bulls may continue to run in 2017. For more information on how to plan your purchases well into the New Year, consult our monthly metal buying outlook.
Republican control of the White House and both chambers of Congress in January will put the GOP in a tenable position to pass significant tax reforms it has been pushing for years, such as lower corporate rates and a simpler tax code, experts say.
It could be the most significant rewrite of the tax code since the Reagan administration.
The House Republican overhaul of the tax code is being written to expand the economy and avoid increasing budget deficits, U.S. Rep. Kevin Brady (R., Texas), who is leading the effort said on Tuesday.
“We designed our blueprint to break even within the budget, considering that economic growth,” said Brady, the chairman of the House Ways and Means Committee,at The Wall Street Journal’s CEO Council. At the same time, Brady said, if there are some deficits, he would accept them if the result was stronger growth. Avoiding long-run deficits could make it easier for Republicans to pass their plan under budget rules that avoid a Senate filibuster and forbid increasing future deficits.
Johnson-Matthey: Platinum Could See Surplus Next Year
The platinum market could return to surplus for the first time in six years in 2017 as lower auto catalyst loadings and weakness in Chinese jewellery purchases pull demand lower, refiner Johnson Matthey said in a report on Monday.
The Wall Street Journal said last week that his $1 trillion building proposal relies entirely on private financing, which industry experts say is likely to fall far short of adequately funding improvements to America’s crumbling roads, bridges and airports.
Is it a brand new day for privately funded public infrastructure projects? Or can only direct federal spending fix our roads, rail stations, bridges and airports? Source: Jeff Yoders.
Trump wants private investors to put money into projects in exchange for tax credits totaling 82% of the equity amount. His plan anticipates that lost tax revenue would be recouped through new income-tax revenue from construction workers and business-tax revenue from contractors, making the proposal essentially cost-free to the government.
The Trump/Navarro PPP Plan
Peter Navarro — a public-policy professor at the University of California, Irvine, and an adviser to Trump — wrote on his personal website that, “For infrastructure construction to be financeable privately, it needs a revenue stream from which to pay operating costs, the interest and principal on the debt, and the dividends on the equity… The size of the required equity cushion will, of course, vary with the riskiness of the project. However, we are assuming that, on average, prudent leverage will be about five times equity. Therefore, financing a trillion dollars of infrastructure would necessitate an equity investment of $167 billion, obviously a daunting sum.” Read more