China

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Before you head into the weekend, check out some of the stories that went up this week on MetalMiner:

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  • The London Metal Exchange (LME) is an institution steeped in tradition — but even the most tradition-rich entities have to change, eventually. Our Stuart Burns wrote about the LME and how it is changing (or, in some cases, staying the same).
  • The electric car industry continues to grow, but the move toward electric in China likely represents the biggest such move by a single nation to date.
  • Our Irene Martinez Canorea checked in on tin and other base metals. In short, many that boomed in August have come back down a bit this month.
  • Burns wrote about China Zhongwang and its ongoing efforts to build up its presence on the global stage.
  • The U.S. Department of Commerce opened countervailing duty and antidumping investigations into titanium sponge imports from Japan and Kazakhstan.
  • Meanwhile, the U.S. International Trade Commission, voted to uphold antidumping orders in a five-year sunset review related to CASSLP pipe from Japan and Romania.
  • The third round of North American Free Trade Agreement renegotiations kicks off tomorrow in Ottawa. United States Trade Representative Robert Lighthizer, during a question-and-answer session earlier this week, touched on the negotiations and what the U.S. is hoping to accomplish.
  • United Steelworkers issued a statement calling for the Trump administration to act vis-a-vis its ongoing Section 232 probe related to steel imports.
  • It’s been talked about for more than a year, but Tata Steel and Thyssenkrupp finally agreed to merge their European operations this week.

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The Department of Commerce issued a preliminary affirmative determination Tuesday in the countervailing duty investigation of cold-drawn mechanical tubing from China and India.

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“The Trump Administration will not sit back and watch as American companies and workers are harmed by unfair government subsidies,” Secretary of Commerce Wilbur Ross said in a prepared statement. “The United States is committed to free, fair and reciprocal trade, and will continue to validate the information provided to us that brought us to this decision.”

The Department of Commerce determined that the form of tubing from China benefited from countervailable subsidies of 33.31-35.69%, and that Indian tubing benefited from subsidies of 3.04-8.09%.

In 2016, cold-drawn mechanical tubing from China and India were valued at an estimated $29.4 million and $25 million, respectively, according to the Department of Commerce.

The petitioners in the case were ArcelorMittal Tubular Products (OH), Michigan Seamless Tube, LLC (MI), PTC Alliance Corp. (PA), Webco Industries, Inc. (OK), and Zekelman Industries, Inc. (PA).

The Department of Commerce will instruct U.S. Customs and Border Protection to collect cash deposits from importers of cold-drawn mechanical tubing from China and India based on the aforementioned preliminary rates. The department collected $1.5 billion in duties on $14 billion of imported goods found to be underpriced, or subsidized by foreign governments, according to the department’s release.

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The Department of Commerce is scheduled to announce its final determinations in the case on Dec. 4.

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This morning in metals news, China gets called out with respect to its adherence to the rules of the World Trade Organization (WTO), the housing industry is slumping and Kazakhstan is the recipient of its first WTO complaint.

Aluminum Association, AISI Call Out China

The Aluminum Association recently filed comments with the United States Trade Representative (USTR) and the Trade Policy Staff Committee (TPSC) urging the Trump administration to press China on adherence to the rules of the WTO.

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In a release Wednesday, the Association said it “believes China has failed to adhere to the letter and spirit of its WTO accession.”

In a letter to TPSC Chairman Edward Gresser, Aluminum Association President and CEO Heidi Brock said China has regressed with respect to adherence to the rules set forth by the WTO.

“Despite initial progress after China’s WTO accession, the last decade has seen a major regression, which calls into question the underlying premises for the decision by the United States and other WTO members to welcome China into the WTO’s rules-based global trading system,” Brock wrote in the letter.

A filing from the American Iron and Steel Institute (AISI) signed by Kevin Dempsey, AISI’s senior vice president of public policy and general counsel, struck a similar tone.

“Now more than 15 years after it acceded to the WTO, China continues to fail to comply with its WTO obligations,” Dempsey wrote. “This trend continues to be a major problem for steel producers in the United States, other U.S. manufacturers, and the broader U.S. economy. AISI strongly urges the U.S. government to recognize China’s compliance failures and adopt a more aggressive strategy that is commensurate with the scope and severity of China’s failure to comply with its WTO obligations.”

Housing Market Down in August

U.S. home sales slumped in August as Hurricane Harvey devastated the Houston area, one of the most robust housing markets in the country.

According to the National Association of Realtors, existing-home sales in August dropped 1.3% and were at their lowest levels in a year.

According to Reuters, Texas and Florida (which was hit by Hurricane Irma earlier this month), comprise 18% of existing-home sales.

Ukraine, Kazakhstan Enter WTO Dispute

Ukraine is taking Kazakhstan to the WTO over a dispute regarding duties on steel pipes, Reuters reported. Ukraine argues that Kazakhstan is using antidumping duties on certain types of steel pipe imported from Ukraine.

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According to the report, the dispute is the first targeting Kazakhstan, which has been a WTO member since 2015.

This morning in metals news, a new European steel giant could be coming on the scene, that giant could result in the loss of thousands of jobs and aluminum hits a five-year high ahead of further Chinese supply cuts.

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Tata Steel, ThyssenKrupp Agree to Merge European Operations

The New York Times reported Wednesday that Tata Steel and ThyssenKrupp had agreed to a deal to merge their European steel operations — a merger that has been in the news for more than a year.

According to the report, while there are still some obstacles to completion of the merger, if it goes through the merged operation would make the second-largest steelmaker in Europe, behind only ArcelorMittal.

Merger Could Yield Loss of 4K Jobs

While the potential merger of the Indian steel giant Tata and German firm ThyssenKrupp’s European operations might be cause for celebration for some, it won’t be for a considerable number of workers, according to one report.

The merger of the two firms’ European operations could lead to the loss of 4,000 jobs, according to CNNMoney.

The merger is expected to cut costs by between €400 million and €600 million ($720 million) a year, according to the report.

Aluminum Soars to Five-Year High

Aluminum continued its strong 2017, hitting a five-year high, Reuters reported.

Not surprisingly, news from China has much to do with the rise, as supply cuts are forthcoming from Chinese producer Chinalco, according to the report.

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LME aluminum traded at $2,191 per ton, its highest since September 2012, according to Reuters.

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The announcement by the U.K. and France that they would prohibit the production of diesel and petrol cars by 2040 made for good headlines, but came as little surprise when you consider the pace of change in the automotive industry.

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China’s announcement last week that it was considering setting a timeline for phasing out traditional fuel cars will likely have a more profound effect on the development of new energy vehicles (NEV), for two reasons.

First, China is already the world’s largest car market, producing over 28 million vehicles in 2016, according to the Financial Times. Significant changes in a market of that size causes more than just ripples in the global automotive market.

Second, a centrally controlled command economy such as China’s has shown that policies that are robustly pursued by Beijing can achieve rapid change over short time frames. More than any other country in the world, with the possible exception of India, China has an imperative to address atmospheric pollution. The incentives in China to switch from traditional combustion engines to NEVs has already made China the world’s leading electric car market, with 507,000 NEVs sold domestically in 2016.

Beijing’s announcement, however, should not be seen as a purely altruistic move to improve the environment.

Read more

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India’s recent decision to impose an additional import tax on a number of stainless steel flat products from China for five years has generally been welcomed by the Indian steel industry and trade bodies.

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The tax, said the Government of India, was to curb the influx of cheaper foreign imports.

A countervailing duty of 18.95% has been imposed on some hot-rolled and cold-rolled stainless steel flat products. This is aimed at helping local steelmakers benefit when there is a surge in imports, the government said.

A statement by the government said Chinese imports “were distorting the domestic market, which was under huge stress and led to financial stress in the industry.”

In the past, too, India has imposed a slew of anti-dumping duties on imports of steel and stainless steel products from China, Japan and South Korea.

According to a Reuters report, the U.S. Department of Commerce also said it would be looking into possible dumping and subsidization of stainless steel flanges from China and India.

Steel producers in India have welcomed the move.

According to Jindal Stainless Vice-Chairman Abhyuday Jindal, the decision will encourage production of the metal within the country and will provide some relief to the domestic industry.

India’s apex stainless steel industry body, the Indian Stainless Steel Development Association (ISSDA), has also welcomed the imposition of countervailing duty, President KK Pahuja said.

Due to the subsidized imports from China, the domestic players were facing huge losses. Industry experts have claimed several MSME segment businesses were forced to shut down due to subsidized imports from China. The imposition of a countervailing duty would help revive the industry, regain lost ground and create jobs, the Pahuja added.

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The CVD investigation was initiated on April 12, 2016, by the Directorate General of Anti-Dumping and Allied Duties (DGAD) in response to a surge in subsidized imports of stainless steel flat products from China.

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This morning in metals news, Chinese steel production once again hit a record last month, copper took a dip, and the gap between high-grade and low-grade iron ore grew larger as China attempts to combat its smog problem.

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Steel Output Hits New Record in China

Steel mills in China cranked up production levels en route to hitting a new monthly production record, according to Bloomberg.

According to the report, Chinese crude steel output hit 74.59 million metric tons in August, surpassing the previous peak of 74.02 million in July.

Copper Falls Back

Copper has been having a good year, but it fell to a four-week low Thursday as a result of what Reuters calls lackluster Chinese economic data.

What appears to be slowing demand from China, the world’s top metals consumer, contributed to the metal’s drop, according to the report.

Premiums Soar for High-Grade Iron Ore

Sticking with the China theme, Reuters reported the gap between high-grade and low-grade iron ore in China grew as a result of the country’s efforts to fight pollution.

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The trading gap between the two forms of ore was at its highest since August 2011, according to the report.

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This morning in metals news, U.S. primary aluminum is still low despite an increase in prices, China Zhongwang Holding announced it had purchased a German aluminum producer and associations representing steel, soybeans and poultry were united by the issue of steel tariffs.

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U.S. Primary Aluminum Production

Aluminum prices have been on a steady climb in recent months, but primary aluminum production remains low, according to a report in Hellenic Shipping News.

In fact, since January 2015, the country’s primary aluminum production has dropped 50%.

Zhongwang Makes Investment

China Zhongwang Holding announced Wednesday that it is making an investment in a German aluminum producer Aluminiumwerk Unna AG, according to state-owned news agency Xinhua.

The value of the deal has yet to be disclosed, according to the report, but the acquisition is part of Zhongwang’s effort for an increased presence in the aircraft aluminum market.

Steel, Soybeans and Chicken

Associations representing steel, soybeans and chicken came together this week to express their belief regarding the potential negative impact of steel tariffs.

Platts reported that the American Institute for International Steel, the National Chicken Council and the American Soybean Association published a new report covering the impacts of steel tariffs on supply chains.

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The Trump administration’s Section 232 investigation into steel imports is ongoing. The probe, launched in April, has a January deadline for completion.

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This afternoon in metals news, steel imports are up 21.4% through the first eight months of the year, a report considers whether copper’s run will last and China has agreed to loan Guinea $20 billion in exchange for concessions on the country’s bauxite reserves.

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Steel Imports Up 21.4% This Year

The American Iron and Steel Institute (AISI) released steel import data earlier this week showing that total steel imports have risen 21.4% through the first eight months of this year compared with the same time frame in 2016.

According to the report, steel import permit applications in August totaled 3,572,000 net tons (NT).

The largest finished steel import permit applications for offshore countries in August were for: South Korea (418,000 NT, up 24% from July preliminary), Germany (141,000 NT, down 5%), Turkey (132,000 NT, down 48%), Taiwan (115,000 NT, down 4%) and Japan (107,000 NT, down 22%).  Through the first eight months of 2017, the largest offshore suppliers were South Korea (2,683,000 NT, down 1% from the same period in 2016), Turkey (1,855,000 NT, up 9%) and Japan (1,044,000 NT, down 18%).

Can Copper Keep Up the Pace?

Copper has been on a tear, earlier this week hitting a three-year high.

But can it last? Is the metal due for a market correction?

A report on nasdaq.com speculated about the future of the metal.

“While copper has lately been enjoying a stellar run, analysts are skeptical about the sustainability of the recent price rally,” the report states. “Many believe that prices of the metal will come under pressure as the market remains adequately supplied and demand is not strong enough.”

China Makes Deal on West African Nation’s Aluminum Ore

On Wednesday, China agreed to loan Guinea $20 billion over 20 years in exchange for concessions on the country’s bauxite reserves, Reuters reported.

Guinea is Africa’s leading bauxite producer.

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According to Guinean Mines Minister Abdoulaye Magassouba, the revenues generated from the mines would be used to pay for infrastructure in the country.

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This morning in metals news, positive Chinese economic data means good things for metals found in steel, a former Alcoa aluminum plant site in Tennessee is being redeveloped for a new purpose and copper demand from electric carmakers is set to surge in a big way over the next two decades.

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China Industrial Outlook Offers Boost

Postive indicators for Chinese industrial activity are yielding good news for steel-related metals, according to Reuters.

The official Purchasing Managers’ Index (PMI) jumped to 51.7 in August (from 51.4 the previous month), according to the report.

Alcoa Redevelops Old Plant Site

A former Alcoa aluminum plant site will soon be used for a new purpose.

According to a Knoxville News Sentinel report, the former Alcoa West Plant site in Tennessee will be lined with retail and office space.

Copper Cars

Certain metals will see their stocks soar as electric cars build momentum.

One of those metals, according to a report in The Street, is copper.

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Quoting a Bloomberg Intelligence analyst, the report says demand from electric carmakers could grow 6,100% by 2040.