This morning in metals news, two prominent Chinese economists have been publicly critical of China’s economic model, the U.S. Department of Commerce has launched an audit of tariff waivers received by companies, China’s steel demand appears to be a boon for the Indian iron ore sector and U.S. Steel shares dipped after hours Thursday following the firm’s third-quarter earnings release.
As reported by the Financial Times this week, two Chinese economists were publicly critical of China’s economic model, arguing that China is to blame for the current trade crisis.
Zhang Weiying, a professor at Peking University’s National School of Development, delivered a speech in which he outlined his criticism.
“In the eyes of westerners, the so-called ‘China model’ is ‘state capitalism’, which is incompatible with fair trade and world peace and must not be allowed to advance triumphantly without impediment,” Zhang was quoted as saying.
Commerce Department Launches Audit of Tariff Waivers
The Section 232 tariff exclusion request process has been rife with complaints since it began in June, as companies sought exclusions in order to import products they argued are not made in the necessary quantity or quality within the U.S.
This week, CNBC reported that the Department of Commerce has launched an audit of the tariff waivers.
According to the report, the Department of Commerce has received nearly 50,000 tariff exemption requests.
MetalMiner’s Take: The process in which buying organizations request exclusions from the Department of Commerce has indeed come under much criticism.
The criticism appears to be justified.
The sheer number of exclusion requests and the time necessary to evaluate the requests could take many months at a minimum and, second, the fact that the exclusions granted to date appear to get awarded to only those who do not have a mill or producer arguing against the request.
In other words, if the request goes unopposed, the exclusion request has a higher likelihood of being granted. MetalMiner is not aware of any exclusion request being granted in which a mill or producer has opposed the request.
The audit process should provide clarity around the provisioning of exemptions when mills/producers object to the request. But buying organizations should not expect any quick answers or resolution to their requests — audits take time to conduct and any recommended process changes will take time to implement.
Chinese Steel and Indian Iron Ore
According to a Bloomberg report, China’s steel mills have been searching for higher quality iron ore, part of the country’s battle against pollution.
As a result, the Indian iron ore sector has sought to ramp up its capacity to meet that demand, particularly in the form of iron ore pellets.
U.S. Steel Shares Fall
Shares of U.S. Steel fell Thursday after the firm’s Q3 2018 earnings release, MarketWatch reported.
Shares fell 1.6% after hours Thursday, according to the report. U.S. Steel reported third-quarter net earnings of $291 million, up from $147 million in 3Q 2017.