Articles in Category: Public Policy

We’ve seen a lot of numbers being thrown around over the past year when it comes to trade actions and enforcement.

From the steel industry’s Section 337, to a Section 201 being thrown down, right up to the 332 investigation about to get underway, there are a lot of digits but sometimes a bit less clarity on what it all means.

We thought we’d share a tiny primer on the 332 investigation of the U.S. aluminum industry’s competitiveness about to get underway before the International Trade Commission.

Here’s a quick rundown, courtesy of the Aluminum Association:

332-investigation-Aluminum-Association

The Aluminum Association’s VP of Policy, Charles Johnson, shared some more details with us on how exactly the 332 investigation came about in a recent interview:

A number of AA’s member companies, including AA President Heidi Brock, are planning to testify before the ITC this Thursday morning.

A Special MetalMiner Project: Learn why China getting market economy status may just be the biggest trade issue of our time – and how it impacts the U.S. aluminum industry – in “China vs. the World.

china shipping port title

At the International Manufacturing Technology Show in Chicago, the Reshoring Initiative‘s Harry Moser laid out what he called the “reshoring roadmap” of what congress and the next president need to do to bring manufacturing jobs back to the U.S.

MetalMiner Price Benchmarking: Current and Historical Prices for the Metals You Buy

Moser said that rapid job loss has been stemmed in the U.S. but more needs to be done to bring manufacturing jobs back to the U.S. The roadmap included corporate tax reform to make the U.S. more competitive with countries like Ireland, which boasts a 2% corporate tax rate. Republican presidential nominee Donald Trump has said he will lower the corporate tax rate of 39.1%. Democratic nominee Hillary Clinton has said she will raise taxes on “corporations and wealthy individuals.”

Don’t Drown in the VAT

Another part of Moser’s roadmap is a value-added tax in the U.S. A VAT is a type of general consumption tax that is collected incrementally, based on the “value added,” at each stage of production and is usually implemented as a destination-based tax, where the tax rate is based on the location of the customer. If I purchase something from the U.K, I would have to pay the vote to get it imported into the U.S.

16-RSI-0482-IndustryToday-FP.indd.pdf

Companies are reshoring jobs to the U.S. Source: The Reshoring Initiative.

Moser said the rest of the world has a VAT of about 15% whereas the U.S. has no VAT. 150 of the 193 countries in the world have a VAT.

There are two main methods of calculating VAT: the credit-invoice or invoice-based method and the subtraction or accounts-based method. Using the credit-invoice method, sales transactions are taxed, with the customer informed of the VAT on the transaction, and businesses may receive a credit for VAT paid on input materials and services. The credit-invoice method is the most widely employed method, used by all national VATs except for Japan. Using the subtraction method, at the end of a reporting period, a business calculates the value of all taxable sales then subtracts the sum of all taxable purchases and the VAT rate is applied to the difference. Read more

Let’s set aside Donald Trump’s one-track talk on China as a currency manipulator for just a sec, and focus on a slightly less understood, and arguably bigger, issue — the role of Chinese state subsidies and state-owned enterprises.

Using the steel industry as an example:

Top 10 Chinese Steel Companies in 2014

top 10 list china steel companies

With the exception of Shagang Group, China’s biggest steel companies are owned — therefore subsidized and otherwise supported — by Beijing. Courtesy of the American Iron and Steel Institute (AISI).

Because nine of the top 10 steel companies in China are SOEs, which get special support (read about it in our new project,China vs. the World,” here) — it ultimately spurs trends like these:

growth-china-steel-industry-vs-US-2000-2015

Almost immediately after China joined the WTO in 2001, the country’s steel industry began its exponential rise. Courtesy of AISI.

china-steel-exports-2005-to-2015

The Great Recession nipped Chinese exports a bit, but state-owned enterprises continued to be incentivized to produce by the Chinese government while domestic growth stagnated within the last few years, leading to a flood of Chinese steel being pushed outside the country’s borders. Courtesy of AISI.

A Special MetalMiner Project: Learn why China getting market economy status may just be the biggest trade issue of our time – and how it impacts the U.S. steel industry – in “China vs. the World.

china shipping port title

Oil prices fell as Saudi Arabia poured cold water on a potential deal with other Organization of Petroleum Exporting Countries members and other countries such as Russia. China is threatening to place tariffs on sugar imports.

Crude Oil Selloff

Crude prices are selling off today, aided by Saudi comments that a decision will not be forthcoming from next week’s Organization of Petroleum Exporting Countries meeting in Algiers.

MetalMiner Price Benchmarking: Current and Historical Prices for the Metals You Buy

Many had thought that OPEC was close to reaching a deal to curtail production for up to a year with its members and non-member producers such as Russia, but the Saudi announcement makes it highly unlikely that any deal will happen soon now.

Clipperdata_OPEC_Production_500_092416

Source: Clipperdata.

Saudi Arabia has made production by regional rival Iran an issue in any deal to constrain production. The Saudis say Iran must abide by any deal just like other member-states and Iran and its allies say Iran should be allowed to bring its capacity up to full production, as it just re-entered markets after decades of sanctions, before it starts to cut.

China Explores Sugar Tariffs

China has launched a probe into soaring sugar imports following complaints by its domestic industry, the government said on Thursday, the latest sign that trade tensions between major commodities producing nations is intensifying.

Two-Month Trial: Metal Buying Outlook

The Ministry of Commerce said the probe will look at imports since 2011 and into possible protectionist measures provided by foreign countries for their producers. It will last six months, with an option to extend the deadline, it said.

china shipping port title

Whether you’re a regular MetalMiner reader, or have never heard of us before, you’re likely familiar with the outsize role China has played in trading with the Western world — and especially with the United States.

That’s why we’ve taken the opportunity to dive deep on a nuanced issue that’s central to the U.S.-China relationship, now and into the future. Our new project, China vs. the World: Why the Battle for New Trade Status is Such a Huge Deal, explores how China’s approach to global trade over the past several decades has affected American commerce (for better and worse), and how something called “market economy status” could change the rules of the game as we know it.

In the latest move, U.S. Representatives Tim Murphy (R-PA) and Peter J. Visclosky (D-IN), the chairman and vice-chairman of the Congressional Steel Caucus, respectively, introduced a House resolution calling on the current Administration to take action on this very issue. But resolving the issue will likely be a longer battle.

While the mainstream media has taken advantage of reporting presidential hopeful Donald Trump’s numerous references to China and his blunt stance on how he intends to change our relationship with that country, MetalMiner’s journalists and editors set out to unpack the tangible drivers behind these types of general sentiments, with a particular focus on — and for — U.S. manufacturing organizations.

Among the highlights:

  • The most comprehensive — yet easily understandable — exploration of what “market economy status” (MES) entails, why China is pushing the U.S. and Europe to grant the country MES, and what that would mean for trade, available today.
  • Our explainer video provides a quick ‘101’ on the topic, and an interactive timeline explores how China got from the dawn of Mao to WTO entry to today, step by step.
  • Personal video perspectives from key players across several different industries illustrate the China effect on American jobs, workers and approaches to business.

We hope you’ll find this type of project and its presentation refreshing and informative. If you like it, please share it with your networks! We welcome and value your feedback, so please feel free to send us a note at research@metalminer.com.

Thank you for reading,

Taras Berezowsky
Managing Editor

China’s steel industry will see demand drop even further in 2017 and the Federal Reserve left rates unchanged yesterday.

CISA: Chinese Steel Demand Will Fall More

China’s steel demand is likely to drop for a third year in a row, an industry official said on Thursday, as mills in the world’s top producer focus on reducing capacity.

MetalMiner Price Benchmarking: Current and Historical Prices for the Metals You Buy

China’s crude steel consumption slipped 1.9% from January to July and there may be a slight drop for the year, said Wang Liqun, vice chairman of the China Iron and Steel Association (CISA).

Fed Leaves Rates Unchanged Again

U.S. stocks marched higher on Thursday, with the Nasdaq hitting a record intraday high, as investors cheered the Federal Reserve‘s decision to not raise interest rates yesterday.

While the Fed said the risks to economic outlook were roughly “balanced”, it left rates unchanged for want of “further evidence of continued progress”. Inflation remains below the central bank’s target of 2 percent and members saw room for improvement in the labor market.

Two-Month Trial: Metal Buying Outlook

Even if the Fed raises rates at its last meeting of the year in December, many are worried that Central Banks toolkit for hitting inflation targets is ineffective.

So, will aluminum receive a similar tariff shield as steel has enjoyed in India? The shield refers to a minimum import price (MIP) that is generally imposed on cheap commodities entering India, just like cheap steel from China.

MetalMiner Price Benchmarking: Current and Historical Prices for the Metals You Buy

In the case of aluminum, too, the main “culprit” seems to be China. Yet, the stance of the Indian government vis-à-vis an MIP is still not clear, as various ministries concerned with the development have given divergent opinions. Read more

There have been many among the advocates of Brexit and even more than a few among those opposed to it who have pointed out the relative stability in both U.K. GDP growth and the reaction of the stock markets to say that it wasn’t such a disaster after all, was it? Where is the economic collapse so many forecast?

MetalMiner Price Benchmarking: Current and Historical Prices for the Metals You Buy

Of course, we all like reassurance that all in the world is well but the reality is we are living in a phony war. The armies are massing but little engagement has taken place yet. The initial shots have been fired. The British pound dropped 10-20% against most currencies, notably the U.S. dollar and the euro. Japan sent an uncharacteristically strongly worded 15-page memo to the British government warning them of the consequences should negotiations lead to Britain leaving the single market. Jean-Claude Juncker, president of the European Commission with a long history of bitter antagonism towards the U.K., has uttered countless dire warnings as to life for the U.K. post-Brexit. But so far, in spite of these initial salvos, little has changed. Read more

China is planning a bailout of sorts for Bohai Steel Group and standards organization ASTM International wants to develop certifications for commercial space flight.

A New Lifeline for Bohai Steel

Financial authorities in Tianjin, China, plan to convert a portion of debt-stricken Bohai Steel Group‘s liabilities into bonds, according to rescue plans drawn up recently, the online financial magazine Caixin reported on Monday.

MetalMiner Price Benchmarking: Current and Historical Prices for the Metals You Buy

According to the plan, high-quality assets from Bohai Steel will be restructured to form a new company, which will take on 50 billion Chinese yuan of the total debt. Officials met last week to discuss a comprehensive restructuring plan for the firm, which has liabilities of $28.78 billion (192 billion yuan) from 105 creditors.

ASTM Seeks To Develop Private Space Travel Standards

ASTM International will host an organizational meeting to potentially create a new technical committee that develops voluntary consensus standards for commercial spaceflight.

Free Download: The September 2016 MMI Report

This meeting comes in part as a result of the updated U.S. Commercial Space Launch Competitiveness Act of 2015 (SPACE Act). The U.S. Federal Aviation Administration’s Commercial Space Transportation Advisory Committee (COMSTAC) Standards Working Group is recommending the organization of the new group.

Republican Presidential Nominee Donald Trump recently said he would scrap some controversial EPA plans and rules and allow more drilling for oil and gas on federal lands. Steel companies applauded the Senate’s passage of a new water reclamation bill.

Trump Would Scrap Clean Power Plan

Republican presidential nominee Donald Trump released details Thursday of his proposed energy policy, which includes scrapping the Environmental Protection Agency‘s controversial Clean Power Plan and Waters of the United States rule.

MetalMiner Price Benchmarking: Current and Historical Prices for the Metals You Buy

He also promised to open more federal lands and waters to oil and gas development.

Steel Companies Praise Water Bill

The American Iron and Steel Institute (AISI) recently applauded the U.S. Senate’s passage, by a vote of 95-3, of the Water Resources Development Act (WRDA), which will authorize more than $10 million worth of projects to improve navigation, replace and restore aging locks and dams, and provide aid to Flint, Mich. and other communities in need of replacing pipes, sewers and other drinking water infrastructure.