Author Archives: Fouad Egbaria

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Before we head into the weekend, let’s take a look back at the week that was and some of the metals-related storylines here on MetalMiner:

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This morning in metals, U.S. Steel announced a large investment at its flagship steel plant, the U.S. and China will resume talks on trade, and copper is set to finish the week with its biggest weekly loss since early July.

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U.S. Steel Announces $750M Investment

U.S. Steel announced it plans to invest $750 million in its flagship plant in Gary, Indiana, the Chicago Tribune reported Thursday.

According to the report, the firm credited the Trump administration’s trade policies in helping to facilitate the company’s modernization of its plants, while President and CEO David Burritt said the company is experiencing a “renaissance.”

U.S., China to Restart Trade Talks

Trade tensions between the U.S. and China have continued to grow, as the U.S. has in recent weeks imposed a total of $50 billion in tariffs ($16 billion of which will go into effect Aug. 23), with China responding in kind.

According to several reports, officials from the two countries plan to meet later this month to talk trade in hopes of deescalating the situation.

Copper Slides Again

It has been a tough couple of months for copper, which continued its slide this week, posting its biggest weekly loss since early July, Reuters reported.

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According to the report, the LME copper price fell 4.5% this week.

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This morning in metals news, President Trump claimed his tariffs are saving the U.S. steel industry, steel supplies from Japan and South Korea to India have increased, and Turkey hits back with new tariffs in response to the U.S.’s doubling of the steel and aluminum tariffs.

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Saving Steel

In an interview with the Wall Street Journal, Trump argued that his tariff on steel is saving the U.S. steel industry.

He also argued that in the future U.S. steelmakers will face mostly domestic competition as a result of the tariffs.

Indian Steel Import Levels from Japan, South Korea Surge

According to a Reuters report, levels of steel heading from Japan and South Korea to India have increased significantly as a result of tariffs.

Per the report, citing government data, during the April-June period imports from South Korea were up 31%, while imports from Japan jumped 30%.

Turkey Hits Back

The recent tension between the U.S. and Turkey continued to rise Wednesday, as Turkey announced tariffs it would apply to U.S. goods.

The announcement comes after President Trump announced the U.S. would double the tariff rates on steel and aluminum for Turkey, bringing them to 50% and 20%, respectively.

Turkey announced tariffs on American automobiles, alcohol and tobacco.

The U.S. has lobbied for the release of detained American pastor Andrew Brunson, while Turkey has continued to ask for the extradition of exiled religious leader Fethullah Gulen, whom the government claims was behind the failed 2016 coup.

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The crisis has seen the value of the Turkish lira plummet in the plummet, hitting a record low against the dollar earlier this week before beginning to recover on Tuesday and Wednesday.

The U.S. Department of Commerce. qingwa/Adobe Stock

The U.S. Department of Commerce (DOC) announced this week that it had made a final affirmative determination in its anti-dumping and countervailing duty investigations of steel flanges imported from India.

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Stainless steel flanges from India were sold in the U.S. at less than fair value, ranging from 19.16% to 145.25%, according to the DOC. In addition, the DOC determined India has providing countervailable subsidies to its producers of stainless steel flanges, at rates ranging from 4.92% to 256.16%.

Imports of stainless steel flanges from India were valued at $44 million in 2017, according to the DOC. In 2015, the U.S. imported 10,584 metric tons of the product from India, coming in at a value of just over $54.8 million. That dropped to 8,031 metric tons in 2016 ($32.1 million) before moving back up to 10,975 metric tons last year.

The petitioners in the case were the Coalition of American Flange Producers and its two members: Core Pipe Products, Inc. (of Carol Stream, Illinois) and Maass Flange Corporation (of Houston, Texas).

The case now moves to the U.S. International Trade Commission, which is expected to make a final determination by Sept. 24. If it also rules in the affirmative, the DOC will issue anti-dumping and countervailing duty orders.

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The ruling marks a continuation of the Trump administration’s aggressive stance on trade. According to the DOC release, the Trump administration to date has launched 120 new anti-dumping or countervailing duty investigation, marking a 216% increase in such cases compared with the same time period during the Obama administration.

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This morning in metals news, the workers at the Escondida mine in Chile will consider a new proposal as the threat of a strike looms at the world’s largest copper mine, Canada is considering safeguard mechanisms to combat U.S. tariffs and copper continues to struggle.

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Labor Talks Continue at Escondida

Negotiations between BHP Billiton and the union representing workers at the Escondida mine in Chile continued, as the union is now bringing a new proposal back to the workers, Reuters reported.

As the world’s largest copper mine, a potential strike would have a devastating impact on supply. A 44-day strike at the mine last year saw copper prices skyrocket.

Canada Mulls Safeguard

Canada is considering steel safeguards for seven steel products in response to the U.S. tariff on steel (which Canada remains subject to).

According to Reuters, officials will begin a 15-day consultation period, during which potential safeguards will be considered for the steel categories of: steel plate, rebar, energy tubular product, hot rolled sheet, pre-painted steel, stainless steel wire and wire rod.

Bearish Sentiment

According to Bloomberg, tremors in emerging markets — namely Turkey’s lira crisis and the ongoing trade war between the U.S. and China — have affected metals markets, with many approaching bearish territory.

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Per the Bloomberg report, base metals markets across the board have struggled today, with copper dropping below $6,000/mt and most others dropping.

The Trump administration’s Section 232 investigation led to new steel and aluminum tariffs on China, but an even bigger trade decision is looming.

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In August 2017, the Office of the U.S. Trade Representative (USTR) launched a Section 301 probe, which sought to assess unfair Chinese trade practices with respect to technology transfer and intellectual property. The office’s findings led to additional tariffs on some 1,300 Chinese products valued at $50 billion. In early July 2018, a first tranche of $34 billion in tariffs went into effect, with the remaining $16 billion being approved in August. In addition, President Donald Trump instructed USTR Robert Lighthizer to draw up a list of additional Chinese products, worth approximately $200 billion, to potentially target for duties.

The proposed product list includes exports from vaccines to nuclear reactors to numerous forms of metals used by manufacturers. With such an extensive list of potential new duties, companies have their work cut out for them identifying supply-chain risks, especially with China’s deep integration into the murky lower tiers of many supply chains.

To help assess the risks and recommended preventative strategies, MetalMiner sat down with Bindiya Vakil, CEO and founder of Resilinc, to discuss the implications of the Section 301 investigation and how supply-chain risk and resiliency solutions such as hers are helping companies prepare for impacts.

For businesses looking to navigate the tariffs and be proactive about limiting their exposure to risk, Vakil says it’s all about one thing: data.

Read more

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This morning in metals news, domestic raw steel production for the week ending Aug. 11 jumped 5% compared with the same week last year, the U.S. has raked in more than $1.4 billion from its steel and aluminum tariffs, and China’s aluminum production surged in July.

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U.S. Raw Steel Production Surges Last Week

According to data released by the American Iron and Steel Institute (AISI), U.S. raw steel production jumped 5% year over year for the week ending Aug. 11.

Production for the week hit 1,855,000 net tons at a capacity utilization rate of 79.1%. Production was also up 1.5% from the previous week ending Aug. 4.

Tariff Windfall

The Trump administration’s tariffs on steel and aluminum have yielded revenue amounting to more than $1.4 billion, according to a recent Congressional report cited by CNBC.

As for the much-criticized tariff exclusion process — many have lamented the slow rate at which the Department of Commerce has processed the requests — as of Aug. 6. the Department of Commerce had received 33,099 requests, approving 1,428 requests and denying 702.

Chinese Primary Aluminum Production Rises

July proved to be a productive month in China for primary aluminum production.

The country saw production surge 12% year over year, according to a Reuters report.

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According to the report, citing National Bureau of Statistics data, China produced 2.93 million tons of primary aluminum in July. The output marked a 3.4% increase from the previous month, according to the report.

The August Monthly Metal Index (MMI) report is in the books.

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This month saw all 10 of our MMI subindexes posting declines. U.S. steel prices continue to hover around seven-year highs, but the rest of the metals complex (more or less) has been down of late.

Here are a few highlights from this month’s round of MMI reports:

  • U.S. auto sales were down for many major automakers last month, but Fiat Chrysler saw its sales grow 6% year over year.
  • U.S. construction spending dropped 1.1% in June from the previous month.
  • U.S. steel prices continue to be at seven-year highs, but price momentum slowed last month and many forms of steel are trading sideways.
  • Copper prices have been sliding for the past couple of months, but a labor standoff at BHP Billiton’s Escondida mine in Chile could offer price support (if the union at the mine ultimately goes on strike).

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Read about all of the above and much more by downloading the August 2018 MMI Report below:

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This morning in metals news, the crossfire of tariffs and counter-tariffs between the U.S. and trading partners around the world has put the World Trade Organization in a difficult spot, President Donald Trump backed a boycott of Harley-Davidson on Sunday and LME copper drops amid the recent uptick in tensions between the U.S. and Turkey.

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A World of Problems

The U.S., using Section 232 of the Trade Expansion Act of 1962, argued for its imposition of steel and aluminum tariffs on the grounds of national security. On the other hand, trading partners around the world have balked at the invocation of national security, and have responded with counter-tariffs against the U.S., which the U.S. has then contested at the WTO.

As such, the global body is in a difficult place, one in which any decision it makes will make someone unhappy.

A report in The New York Times outlines the difficulties the WTO faces.

Roberto Azevêdo, the WTO’s director general, is quoted as saying: “Whatever the outcome — regardless of how objective, balanced and unbiased it is — somebody is going to be very unhappy.”

Backing a Boycott

President Trump expressed support for a boycott of Harley-Davidson, which earlier this year announced intention to move production overseas, citing the Trump administration’s metal tariffs as the reason for the decision.

The president tweeted support for a boycott of the American company, writing: “Many @harleydavidson owners plan to boycott the company if manufacturing moves overseas. Great! Most other companies are coming in our direction, including Harley competitors. A really bad move! U.S. will soon have a level playing field, or better”

London Copper Slides

The flare-up of tensions between the U.S. and Turkey has had another consequence, beyond the impact on the Turkish lira: the strengthened dollar has seen copper prices slide.

Turkey’s detainment of American pastor Andrew Brunson led to the U.S. imposing sanctions on two Turkish cabinet ministers. In addition, last week Trump announced the U.S. would double the Section 232 metals tariffs rates on Turkey, bringing them to 50% and 20% for steel and aluminum, respectively.

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As a result, the Turkish lira plummeted, while the dollar has strengthened. The dollar historically correlates inversely with copper and, as such, London copper was down 0.8% on Monday, Reuters reported.

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This morning in metals news, U.S. steel mills shipped 3.2% more steel in June 2018 than in June 2017, President Donald Trump announced the doubling of steel and aluminum tariff rates against Turkey, and Ford is feeling the effects of rising metals prices.

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Steel Mills See Year-Over-Year Shipment Rise

U.S. steel mills shipped 7,988,026 net tons of steel in June, according to data released by the American Iron and Steel Institute (AISI).

The total marks a 0.8% decrease from the previous month, but a 3.2% increase from June 2017.

In the year to date, shipments have amounted to 47,304,057 net tons, a 4.1% increase compared with the first six months of 2017.

Trump vs. Turkey

While much of the focus has been on the deterioration of relations or escalation of tensions with China and even the E.U., in recent weeks the U.S.’s relationship with Turkey has taken a hit.

President Donald Trump announced Friday that his administration will double the steel and aluminum tariffs on Turkey, bringing them to 50% and 20%, respectively.

The relationship between the two countries has taken a hit in recent months following the U.S.’s imposition of Section 232 tariffs on steel and aluminum. In addition, last week the U.S. imposed sanctions on Turkish officials in relation to Turkey’s detainment of American pastor Andrew Brunson on charges of espionage.

Price Pressure

Rising steel and aluminum prices are weighing on Ford’s business, one Ford official said this week.

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Jim Farley, president of global markets, called the rising costs a “significant headwind,” as quoted by Bloomberg, but added the automaker does not plan on passing on the added costs to consumers.