We recently received a comment on this site (which we published) accusing us of failing to be objective on the subject of trade policy because, according to the commentator, You’re a website for traders who import steel and make their living off of volume. We thought it prudent to clarify our conflicts of interest so that readers know exactly where our biases lie because trade policy, as it turns out, will severely impact metals buyers around the globe not only for the next few months, but perhaps a lot longer than that.
Stuart and I run a consulting firm called Aptium Global Inc. We work only on behalf of US manufacturing or process industry firms (though we do have a couple of overseas clients). We typically get paid in one of two ways ” on contingency, as a percentage of savings or on a fixed fee. We do not work for, or receive any payments from any importer, producer, distributor or supplier for anything we do. We currently have no vested interest in the metal supply community. In the name of full disclosure, we are, however, actively seeking sponsors of MetalMiner and will continue to monetize the site through added features and tools based on a subscription or fee-for-download basis.
On the back of two US anti-dumping cases against China (one for steel line pipe and the other for OCTG), China’s steel industry has pressed its government for additional export tax rebates which would have the effect of making some Chinese steel and stainless products more competitive in the US market, according to this recent story. These export tax rebates have become one of the key arguments made by the domestic steel industry in the anti dumping cases. The Chinese aluminum industry would like to see a similar increase in the size of the export tax rebate as well.
Last Wednesday, the US filed an appeal to a case in which the WTO had ruled against it for the practice of zeroing, (which refers to how the US excludes certain items in the calculation of duty) which we recently reported on. The specific case involving bearings from Japan to the US would allow Japan to seek $250m a year in retaliatory actions meaning it could retaliate against goods imported from the US, according to this recent Reuters article.
This past Friday, the International Trade Commission ruled unanimously that it would take on an investigation of the OCTG anti dumping case filed by several US steel producers and the United Steelworkers union. According to this Reuters article, the Commerce Department can investigate potential harm and put in place countervailing duties by July and anti dumping duties by September for steel pipe imports. Also quoted in the Reuters article, steel analyst Michelle Applebaum of Steel Market Intelligence said, “We suspect the ‘end game’ in this path will be a negotiated settlement where China keeps its high-cost steel home,” she said, noting China has been a net importer of steel during the past two months for the first time in years. This case will see three additional decisions before any final duties would go into effect.
The US petitioners may end up winning this battle, but we don’t predict China will go quietly into the night (witness the Japanese bearing case) US domestic manufacturers of value-add products will pay the price when China retaliates for surely it will.