This morning in metals news, Australia is relieved to have reportedly secured an exemption from protectionist measures that may come to pass as a result of the Trump administration’s Section 232 investigations into steel and aluminum imports; the bourbon industry might be subject to retaliatory measures from the EU if Section 232 hits Europe; and U.S. steel production is on the rise.
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Australia Secures Exemption from Section 232 Measures
Although Chinese steel and aluminum overcapacity have been at the center of the Trump administration’s Section 232 investigations, producers from around the world have expressed concern about being caught in the crossfire.
The EU, for example, has said that it might turn to retaliatory measures if Section 232 affects European producers.
This week, however, it was reported that Australia will be exempted from any Section 232 protectionism that might come down the pipeline.
According to The Guardian, Australian Prime Minister Malcolm Turnbull and Finance Minister Mathias Cormann lobbied President Donald Trump during the G20 this past week in Hamburg, Germany. The Guardian reports Australia “has been assured that Australia will be exempt from any trade sanctions.”
“We are an open economy, we don’t manipulate the steel market and North America has much to gain from the continued access to Australian steel,” trade minister Steven Ciobo told The Australian. “It is less than 1% market share in the North American market.”
Obviously, this is a big victory for Australian steel and aluminum, should it hold true. However, the world won’t know the true scope of the Section 232 measures until they are actually announced, which is expected to happen in the coming weeks.
Whether or not further exemptions will be carved out for other recognized market economies remains to be seen. Surely, the European Union is keeping tabs on Australia’s reported exemption and hoping to secure an exemption of its own.
Bourbon Industry Prepares for 232 Blowback
As mentioned, the EU has expressed concerns about the negative effects Section 232 measures would have on its producers. That sentiment has transformed into talk of retaliation (with some even pondering the possibility of a trade war ensuing).
One possible target of retaliatory measures, according to The Guardian, is the American bourbon industry.
European Commission President Jean-Claude Juncker said Friday at the G20 summit that if the U.S. enacted trade measures against China and Germany’s steel industries, the EU would respond with retaliatory measures within a few days, The Guardian reported.
Bourbon, a popular European import, is produced almost entirely in Kentucky. The Guardian reported that in 2016, U.S. spirit exports to the EU were valued at $654 million, 20% of which came from bourbon whiskey, according to the Distilled Spirits Council of the United States (DISCUS).
This could just be the tip of the iceberg (or ice cube) with respect to talk of retaliation against sectors of U.S. industry.
U.S. Steel Production Up 3.1% in May
Protection of American steel and aluminum producers is at the heart of the Section 232 investigations — and speaking of domestic production, U.S. steel production was on the upswing in May.
According to a American Iron and Steel Institute (AISI) report this week, U.S. steel mills shipped more than 7.66 million net tons in May, a 3.1 percent increase from the more than 7.43 million net tons shipped the previous month.
In the first five months of 2017, U.S. shipments amounted to 37.7 million net tons, a 3.3 percent increase from the 36.5 million net tons shopped through the first five months of 2016.
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According to the report, in May shipments of hot-rolled sheets and cold-rolled sheets were up by 4% and 3%, respectively, from the previous month.