This morning in metals, we’re tracking the practical effect of the steel tariffs, what China’s recent overall manufacturing slowdown could portend, and a positive outlook for oil and natural gas pipe demand.
Steel Tariff Exceptions Being Granted, But Still Confusing Buyers
- The Wall Street Journal reports that even though “the Commerce Department as of Dec. 17 granted about 75% of the 19,000 requests it processed to exclude products from tariffs on foreign steel that took effect in March … manufacturers and other importers say some of their exclusion requests are still being rejected for reasons that aren’t fully explained to them.” For example, according to the WSJ, a stainless pipe importer claims that exclusions granted to their competitor were nearly identical to those they themselves requested. MetalMiner has gotten the sense first-hand from many manufacturers that there are still many uncertainties in the exception-and-exclusion process. It goes without saying that domestic steel producers aren’t exactly happy about the exceptions granted for steel imports, according to the article.
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OCTG Realm Looking Rosy in the Future?
- According to a press release from the Freedonia Group, a Cleveland-based industrial research firm, their recent report ([hefty] paywall) states that “demand for oil and natural gas pipe is forecast to grow 11% annually to $15.4 billion in 2022.” This trend would reverse course from the period between 2012-2017, which suffered from declines. “Increased well completion in key fields like the Permian Basin is supporting gains for OCTG,” the release states, “while bottlenecks in such productive areas are encouraging pipeline construction.”
Trouble Brewing in the World’s Second-Largest Economy?
- “The slump in China’s Purchasing Managers’ Index (PMI) is likely to prove an unwelcome New Year’s gift to the world’s major exporters of bulk commodities such as iron ore and coal,” according to Reuters’ daily newsletter, referring to a column by Clyde Russell. “The manufacturing gauge compiled by Beijing’s National Bureau of Statistics dropped to 49.4 in December, dropping below the 50-level that demarcates growth from contraction, for the first time since July 2016.” The Caixin Manufacturing PMI also dropped on the month, leading to worries over consumption slowdowns in China — the Apple iPhone sales drop (paywall), as just one example.