This morning in metals news, U.S. energy companies haven’t had much luck in the steel tariff exemption request process, iron ore prices bounced back from a one-month low and Mexican steel exports to the U.S. plunged in June.
U.S. Energy Companies Look for Tariff Exemptions
Per a Reuters report, some U.S. energy companies are not happy that their steel tariff exemptions requests are being denied by the Department of Commerce (DOC).
According to the report, the DOC approved a request by Chevron for an exemption on Japanese steel tubes, but others making similar requests have been denied.
MetalMiner’s Take: Clearly, the DOC does not have the resources to quickly and efficiently evaluate challenges. Speaking at the Steel Market Update steel summit in Atlanta, Nucor CEO John Ferriola reported his firm has objected to 8.2% of the 25,000-plus exclusion requests; only one was overturned by the government.
The tariffs are designed to both improve the trade balance and create jobs, according to Ferriola (not to mention address national security by bringing production back to the U.S.). Speaking to the SMU audience, Ferriola answered a question on imported steel slabs subject to 25% tariffs: “Countries that don’t produce slabs should figure out how to create jobs and build the capability to make slabs. Create the jobs … that’s what 232 investing is all about.”
Ferriola also commented on the impact of tariffs on his customers: “We watch the impact of the price on our customers and their earnings. Our customer’ sales are up, their earnings are up, and their sales are booming. We can see their order entry rate and frankly today when I see how our customers are doing, I don’t get the sense that they are being squeezed today.”
Iron Ore Prices Tick Up
After hitting a one-month low, iron ore prices were up Tuesday, according to Business Insider Australia.
The price of 65% fines jumped 0.5%, according to the report.
MetalMiner’s Take: Iron ore prices are mostly trading sideways this month, in the $65-$70 band.
Chinese iron ore imports rebounded in July. The increase in iron ore imports is being supported by higher Chinese steel prices. Chinese mills are trying to increase profits and steel output.
The recent environmental campaign in China is also boosting iron ore imports versus domestic iron ore, as the imported material has a higher grade. However, Chinese iron ore imports decreased by 1.6% in the first months of 2018 when compared to the same period in 2017.
Iron ore price movements generally correlate better with steel prices in bearish markets. This means steel prices tend to increase in a bearish market if the raw material price increase in that period. In bullish markets, iron ore price movements do not have a big effect on steel prices.
Mexican Steel Exports to U.S. Fall
Mexico’s steel exports to the U.S. fell 23.9% year over year in June, according to an S&P Global Platts report.
Furthermore, June export totals were down 37.4% compared with the May total.