Any outside observer (or inside observer for that matter) may struggle to keep up with the continuous stream of trade complaints filed by practically everyone involved in the global trade of grain-oriented electrical steel.
Consider the following:
- US producers AK Steel and Allegheny Technologies filed (and lost) a trade case against multiple producers from multiple geographies and in a stunning decision last year, the domestic producers were found not to have been “materially injured” by foreign imports of GOES produced by Japan, Germany and Poland.
- Back in May, European GOES producers asked the European Commission to investigate dumping by producers from several countries including: Russia, USA, Japan, Korea and the People’s Republic of China.
- China appears to be working on its second anti-dumping case in a year – the first against imports from the US (in which the WTO recently ruled against China) and a new case against producers in Japan, South Korea and the EU.
- Please note who has not filed trade cases – producers from Japan and South Korea. We will come to why in a moment.
But First: What the August 2015 GOES Price Index Did
Based on the latest M3-grade pricing, MetalMiner’s monthly GOES MMI® registered a value of 190 in August, a decrease of 3.5% from 197 in July:
Are you new to the GOES market and trends? Listen to our recent podcast in which I give listeners a “GOES Market 101.”
Back to trade: If we go back in time, we’d see that electrical steel serves as one of the most popular metals involved in all metal trade-related cases.
If Only Free Markets Prevailed
One might think all of these trade cases actually helped producers, but we are coming to the conclusion that they are all likely an enormous waste of time and taxpayer dollars. Here in the US, GOES prices have largely traded sideways and certainly well off 2011 highs. Global transformer and power equipment producers shifted their transformer production to both Canada and Mexico in anticipation of a favorable trade ruling.
Moreover, the battle really centers on which producers can make the highest-performing grain-oriented electrical steels around a few parameters – high permeability, low core loss and low magnetostriction.
Here, the Japanese, Germans and South Koreans rule the day. For their capability in producing the higher-performing materials, they have earned handsome price increases for the second half of this year, according to TEX Reports (in the $700-$1,000/mt range).
The balance of the producers taking their case to the streets in the form of dumping cases do not have suitable high-end products to fill the “growth” portion of the market and have, instead, only received “lower” prices for their efforts.
Meanwhile, New Government Policies…
The US government has upped the ante by implementing a range of regulations and rules that require these transformer and power equipment producers to adhere to new more stringent efficiency standards. The new EPA Clean Power Plan final rule will also put pressure on power producers to make pollution cuts and become more efficient – driving more demand for transformers and power equipment using higher-performing raw materials.
If I were Big River Steel, I’d be seriously looking at how to create my GOES lines to compete head-on with the Japanese producers. In fact, it makes little sense that AK Steel and Allegheny Technologies haven’t done that already. It’s clear that playing at the low- and mid-ends of the markets yields poor price realization.
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The GOES MMI® collects and weights 1 global grain-oriented electrical steel price point to provide a unique view into price trends over a 30-day period. For more information on the GOES MMI®, how it’s calculated or how your company can use the index, please drop us a note at: info (at) agmetalminer (dot) com.