Articles in Category: Public Policy

SSAB released a new high-temperature steel in its Hardox line, well suited to abrasive conditions in hot environments, back in April.

But evidently they REALLY want buyers and manufacturers to know about it, as their message hit the wires again today.

According to SSAB Product Manager Jenny Brandberg Hurtig, Hardox HiTemp wear plate’s “high temperature performance is achieved by using high-quality raw material in combination with a carefully controlled manufacturing process.

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Hardox HiTemp can be cut, welded, machined and cold formed by the same kind of workshop machinery and technology as other Hardox grades and conventional steel.

All this adds up to making Hardox HiTemp an ideal choice for high temperature wear applications in many areas—particularly in process industries such as steel, cement and coal power plants, and recycling and asphalt industries.”

AEC Ups the Fight vs. China Aluminum Subsidies

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Will Europe’s more collaborative approach to stemming China’s steel exports to the region have more success than the U.S.’s downright combative use of anti-dumping legislation?

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Both Europe and China are trying to portray this summer’s moves — to form a joint team to monitor bilateral steel trade data and to supervise China’s moves to address overcapacity — positively as the European Union engages China in a constructive dialogue rather than publicly berate the People’s Republic.

Steel mills creating Chinese steel overcapacity

No matter where China closes mills, there will be pain for those displaced as overcapacity is finally dealt with. But is any pace, at this point, fast enough? Or are import barriers the only remedy? Source: Adobe Stock/zjk.

Behind the scenes, the E.U. is every bit as desperate — arguably more desperate — than the U.S. to stem the flow of cheap steel imports. European steel producers are constantly berating their own governments — and particularly the E.U. — for not doing more to reduce the threat. At the recent G20 Summit, European Commission president Jean-Claude Juncker pressured China to address its steel overcapacity saying at a press conference in Hangzhou last week that the summit “must urgently find a solution to the problems facing the steel industry,”  according to the South China Morning Post.

G20 Frustration Over Steel Overcapacity

Juncker wasn’t finished. He went on to say China’s steel exports to the E.U. increased 28% in the first quarter while prices fell 31% in the same period. He said steel overcapacity in China was twice the output in the E.U. and this was “a serious problem” adding the European steel sector had lost 10,000 jobs in recent years. Read more

Prescient hedge or foolish waste of money?

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Recent history has been on Mexico’s side on that one. As a significant oil producer, Mexico’s oil price hedging program has been the worst kept secret in the market recently, although it has been going on for a dozen years according to Reuters.

Trimming the Hedges

When it started, disclosure requirements were more lax and the volumes were lower making it easier to keep it under wraps, but the Dodd-Frank Act and success of the program has resulted in larger volumes that just can’t be kept under wraps. The 2015 hedge netted Mexico a record windfall of more than $6 billion last year as oil prices continued a three-year slide.

This year, Mexico has covered 250 million barrels of crude, more than last year’s 212 million but has been forced to accept a lower price at $42/barrel for 2017. The hedge is covered by 46 trades, the article states, with $38 per barrel covered by put options with seven derivatives traders. The remaining $4 per barrel is to be covered from money set aside in a government stabilization fund.

Why Hedge?

With some 20% of government revenue coming from oil, the purpose of the hedges is to help protect public finances for an economy which has already twice downgraded growth estimates for this year and is acutely sensitive to potential rate rises in the U.S. and the forthcoming U.S. presidential elections.

With previous years hedged at $76.40 in 2015 and $49.00 for this year, 2017 is already certain to show a lower revenue than this, yet time will tell if Mexico’s insurance policy is going to pay off. It has cost them over a $1 billion in fees but, arguably, the confidence it gives international bond investors in Mexico’s finances as a result of having the hedge in place has helped lower financing costs by a significant amount.

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It is not unlike major gold miners forward selling or hedging output, there is the potential to lose out if prices rise, sure, but of more importance to investors is the confidence of knowing revenues will meet budget commitments. That keeps ratings agencies grades up and borrowing costs down.

The annual jamboree for central bankers at Jackson Hole, Wyo., is always a cause for considerable speculation in terms of clues that may be dropped as to future policy direction, particularly from the Federal Reserve.

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Every word of the Fed Chairman address is keenly shifted, every nuance carefully weighed to see what clues it gives to future policy direction. This time is no different but markets have been curiously sanguine since last month after considerable volatility earlier in the year. The Vix volatility index slid to its lowest level last week since August 2014

Source: Financial Times

Source: Financial Times

That is peculiar because the direction of interest rates at the Fed has been the cause of considerable volatility for emerging market exchange rates, bonds and precious metals in recent years. Read more

This election season, infrastructure investment has become the belle of the ball, putting blighted manufacturing towns such as Monessen, Pa. and Granite City, Ill., not only on the map, but they’ve become the go-to backdrop for both candidates as they criss-cross the nation trying to win votes.

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But what do candidates Hillary Clinton and Donald Trump’s plans really mean for the roads, bridges and infrastructure that everyone agrees need to be repaired? Can they even be successfully executed?


Construction unemployment rates in all states and the U.S., overall. Source: Associated Builders and Contractors of America, Markstein Advisors.

Politico reports that Clinton has proposed a five-year, $275 billion plan. Trump suggested he would double her proposal. Clinton’s website touts a White House report that every $1 billion in infrastructure spending creates 13,000 jobs.

Everyone is Employed Now

Only one problem: That report is from 2011 when the construction industry was in the midst of one of its worst economic years in its history. Five years later, there’s actually a shortage of skilled construction laborers as construction has enjoyed robust growth every year since. Although spending has recently declined both home construction and nonresidential have posted strong gains this year. Read more

The U.S. Senate will not vote on the Trans-Pacific Partnership this year and the General Accounting Office found that most companies still can’t source their conflict minerals.

No TPP Vote This Year

Senate Majority Leader Mitch McConnell said on Friday that passage of the Trans-Pacific Partnership will be the next president’s problem, saying that the Senate will not vote on the treaty this year.

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McConnell’s comment comes despite an Obama administration push to at least attempt a TPP vote during congress’ lame-duck session after the November elections.

GAO Says Conflict Minerals Reporting Still Inaccurate

Less than half of all companies required to track down the source of key minerals potentially central to war-torn parts of Africa have been able to do so, according to a new government study.

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The Government Accountability Office (GAO) reported on Tuesday that 67% of companies that rely on so-called “conflict minerals” to make products have been unable to determine whether their supply has come from parts of Africa where armed groups profit from their production.

In a speech in Tampa, Fla., Wednesday afternoon, Republican Presidential Nominee Donald Trump outlined a seven-point plan to bring millions of jobs to the U.S. that involved labeling China a currency manipulator.

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He proposed renegotiating unconfirmed trade agreements such as the Trans-Pacific Partnership and told his audience he would pull the U.S. out of the North American Free Trade Agreement. In a first, Trump challenged China for “illegal activities” and vowed to label the country he did real estate business with a currency manipulator.

“I am going to instruct my Treasury Secretary to label China a currency manipulator,” he said. “Any country that devalues their currency in order to take unfair advantage of the United States — and all of its companies who can’t (then) compete —will face tariffs and to stop the cheating.”

Getting Tough With China

Trump also vowed to instruct the office of the U.S. Trade Representative to bring trade cases against China, both in this country and at the World Trade Organization. Read more

Apparently, when the government is a shareholder in your business. Questions are being raised as to why the French government has gone soft on Renault‘s emissions probe, omitting crucial details a Financial Times article states.

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The government report, published last month, concluded that some Renault models emitted nitrogen oxide at nine to 11 times higher than European Union limits, the article states. But three of the 17 members of the commission said that the published report did not include the full details of their findings, including the fact that a NOx “trap” in the Renault Captur went into overdrive when the sport-utility vehicle was prepared for emissions testing but not during normal driving conditions.

It was similar software that induced changes in behavior that tipped off U.S. authorities investigating Volkswagen “defeat devices” last year.

Apparently, Renault was not the only manufacturer to fare badly in the probe, which covered some 86 vehicles from a dozen automakers; yet the report did not find any cases of intentional attempts to cheat emissions, admitting that the government tries to give a positive brand image to firms it was invested in and hoped to push manufacturers in the right direction rather than seek prosecution.

One wonders what their attitude would be if it were Toyota or General Motors found to be posting erroneous data? The same article said the Fiat 500x registered NOx emissions almost 17 times European Union limits.

In Renault’s case, the Captur’s NOx trap purged five times in rapid succession at the end of scripted test preparations, allowing the car to produce much lower emissions than on the road the article explained, suggesting the car’s software could have detected that a test was being performed.

“Everything in a car is controlled by software now,” one commission member said, many of whom asked to remain anonymous. “We can’t be sure that Renault’s software detected the test like Volkswagen’s, but it seems that Renault has optimized the NOx filter to target this very specific set of conditions.”

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It would seem it may well have benefited Renault to have both the judge and jury in the dock with you, but does it benefit the wider community the government was elected to represent? This story, no doubt, has further to run.

The Office of the U.S. Trade Representative recently sent to Congress a draft Statement of Administration Action for the Trans-Pacific Partnership, a procedural step necessary before a draft implementing bill is sent to Congress.

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According to the fast-track law, the trade rep must send a draft SAA to Congress at least 30 days before it submits a draft implementing bill, but that does not mean it will be submitted in that timeframe, that’s just merely the minimum before a bill can be sent. The trade rep sent notification August 12th. Read more

Another Chinese steelmaker, Bohai Steel Group, has been given a bailout and Japan’s Tokyo Steel Manufacturing has left prices unchanged for three months.

Bohai Bailout

Bohai Steel Group, the indebted state-owned conglomerate, may receive help from a local government bailout fund to restructure its debts, the online financial magazine Caixin said over the weekend.

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Bohai Steel, which was created in 2010 through the combination of four manufacturers, holds liabilities of $28.9 billion (192 billion CNY) from 105 creditors, alongside assets of nearly CNY 290 billion, Caixin reported.

The Tianjin government plans to create a local asset manager to assist in the debt workout of Bohai Steel, alongside other troubled Tianjin enterprises, the magazine said.

Restructuring of the group represented the biggest since the global financial crisis, Standard & Poor’s analyst Christopher Lee told Reuters in March.

Tokyo Steel Leaves Prices Unchanged

Tokyo Steel Manufacturing, Japan’s top electric arc furnace steelmaker, said on Monday it would keep product prices unchanged for the third month in September, reflecting a slow recovery in its local market.

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Tokyo Steel’s pricing strategy is closely watched by Asian rivals such as POSCO, Hyundai Steel Co. and Baosteel, which all export to Japan.