Author Archives: Lisa Reisman

If you ask 100 procurement professionals whether or not the Section 232 steel and aluminum tariffs have helped or harmed them, 100% will say the tariffs harmed them.

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After fielding hundreds of calls from metal-buying organizations this past year, we here at MetalMiner can definitely say that metal-buying organizations have felt “tariff pain.”

But at the same time — and there is a big but — many companies mitigated much, if not all, of that price risk by deploying effective sourcing strategies.

The recent press attention given to the alleged “harmful effects” of Section 232 tariffs on aluminum and steel on consumers and businesses appears to be ill-informed.

Before we dive into the details, let’s set the record straight on where steel and aluminum prices appear today, where they were when tariffs went into effect and where they were before tariffs.

Let’s start with hot-rolled coil (HRC):

Source: MetalMiner IndX(SM)

Wait a Second, Rewind…

Two points if you said “wow, it looks like steel prices reached similar highs in 2011.”

To be fair, tariffs did lift steel prices in 2018 to 10-year highs, but prices have declined steadily since last July (four months after tariffs went into effect).

Today’s price levels now appear within the same range in which they traded back in 2011-2015. It’s hard to see how the consumer faces a hefty bill for HRC prices due to tariffs now or for any prior extended length of time.

A similar price dynamic applies to cold-rolled coil (CRC), with a little twist:

Source: MetalMiner IndX(SM)

What’s the twist, you might ask?

Read more

[Editor’s note: This is the third and final part of our series on tariffs. In case you missed them, read Part 1 and Part 2.]

Dmitry/Adobe Stock

2002 Bush Section 201 Steel Tariffs

All of this background analysis brings us to the heart of the current debate: are the tariffs “bad” for the economy and manufacturing?

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The only trade study published on tariffs that measures actual impact — as opposed to using models to support claims — sheds some light.

As previously reported by MetalMiner, a 2003 study used primary research with 419 steel-consuming companies, as opposed to econometric modeling.  At the time, this represented fully 22% of all steel purchased by companies in the U.S. That study concluded “overall employment of steel-consuming industries generally fell or remained flat in 2002-03” compared with the previous two years, but that productivity and wages increased over the three-year period.

Moreover, the study noted a $30.4 million GDP loss — not nothing, but insignificant against the total.

Perhaps most ironically among steel-consuming companies, “overall sales and profits increased, while capital investment fell, for most steel-consuming industries in 2002-03 – the period after the implementation of the safeguard measures.”

Not all results were positive.

Half of industry respondents reported higher steel prices and 43% said that they could not pass those costs onto their customers. Some reported that producers broke contracts.

Finally, 32% of respondents saw higher lead times, while 46% of respondents noted difficulties in obtaining materials.

Which Brings Us Back to the ‘Model’ Studies…

The use of models remains inherently flawed because most models require the use of forward-looking data and assumptions.

The Coalition for a Prosperous America conducted a trade study that generated different results from the Koch study, primarily by taking into consideration actual baseline GDP and total employment data, and CBO forecasts for GDP and employment (the CBO is considered by policy wonks to be the most neutral of all economic reporting government entities).

That study also factored in industry plans and announcements from the steel industry and used the Regional Economic Modeling Inc’s (REMI) model, which is used widely by think tanks, state and local governments, etc.

Other Government Research Debunks Broader Negative Tariff Impact Claims

A Congressional Research Service (CRS) analysis points to negative impacts from the tariffs on steel and aluminum. That analysis, however, suggests a much narrower range of impacts from higher prices of steel and aluminum to lower imports of those same commodities.

The study also claims input costs will rise for downstream manufacturers. Certainly, prices have risen with the imposition of the tariffs. However, nobody has conducted research to determine if manufacturers could pass down costs and/or if their profits were lower, higher or about the same as prior to the tariffs.

In other words, have the higher prices actually impacted GDP and employment data?

The CRS study suggests the two biggest variables to consider relates to downstream prices and availability of imports, which will depend upon the range of product and country exclusions and the degree to which other countries retaliate.

Regardless, the ISM Report on Manufacturing released in December, which also relies upon primary research with downstream manufacturers, reported: “Despite U.S. tariffs on foreign steel and aluminum, prices for those key materials have declined, executives said.”

Those price declines mirror current commodity market conditions in which the overall bull market appears to have run out of steam. MetalMiner’s long-term outlook for both commodities and industrial metals shifted from bullish to bearish back in December 2018 and January 2019, respectively.

It’s easy to glob onto the mainstream trade war discourse and assume the widely circulated studies must serve as the whole truth. The truth, however, requires the media and the public to acknowledge real anti-tariff media bias, the actual overcapacity conditions that led to the imposition of Section 232 in the first place, and the impacts measured post-tariff as reported by those that actually, as opposed to theoretically, felt the impact (e.g. downstream manufacturing organizations).

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The “war” on trade requires all of us to dig deeper and perhaps seek to learn what we don’t know.

[Editor’s Note: This is the second part of our three-part series on how tariff impacts — positive or negative — are perceived, the history of Section 232, and China’s role in the global steel marketplace (and how that has affected the U.S.). In case you missed it, Part 1 can be read here.]

The Bush tariffs of 2002 came as a result of a Section 201, as opposed to a Section 232 investigation. The Trade Act of 1974 covers Section 201 investigations, whereas Section 232 derives its authority as part of the Trade Expansion Act of 1962, based on national security grounds.

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MetalMiner conducted an analysis of every single Section 232 case initiated since the passage of the Trade Expansion Act of 1962. The results suggest market observers need to dig into the details further to see why various presidents have taken action on imports of particular commodities, as well as what types of action they have taken.

Section 232 has been invoked 26 times.

Source: MetalMiner analysis of ITC data

Of the seven times in which a primary metal industry initiated a Section 232 investigation, in only one case — this most recent one — did the president determine action was necessary to adjust imports. However, in one of the cases, President Ronald Reagan agreed to update the National Defense Stockpile.

Of the seven times in which a derivative metal industry (nuts, bolts, bearings, parts) initiated a Section 232 investigation, in no cases did the president conclude action was necessary to adjust imports. However, in one case, for metal cutting and metal forming machine tools, Reagan deferred a decision on Section 232 and instead sought voluntary agreements with foreign suppliers; indeed, one went into effect for a period of five years and was extended for two additional years.

In all other cases, the only industry that received Section 232 relief has been petroleum or oil. Now that the U.S. has achieved energy independence, MetalMiner suspects the U.S. will not see a case made under Section 232 for this commodity (so long as the U.S. remains energy independent).

The U.S., however, is not steel independent, meaning the U.S. does require some level of imports to satisfy domestic demand.

Historical analysis suggests the U.S. has filed about the same number of anti-dumping cases today as it did in the late 1950s-1970s. The difference today, though, comes down to the imposition of duties; far more are implemented today than during that earlier time period.

Logically, as tariffs have steadily declined, imports have grown, while today the number of products targeted for anti-dumping measures has declined since the 1980s.

What Has Changed and Why Should Anyone Care?

In a word: China.

In 1960, China produced a total of 18.5 million tons of steel, whereas the U.S. produced about 6 million tons. Incidentally, the price of a ton of steel in 1962 was $144/ton — or $1,180/ton in today’s dollars!

It wasn’t until 1996 when China first produced 100 million metric tons of steel. And the real growth happened after China ascended to the WTO in 2001, growing steel production from 128.5 million metric tons in 2000 to nearly 495 million metric tons in 2007.

Source: MetalMiner analysis of World Steel Association data

Obviously, as China’s economy began to grow, steel demand also grew. Any market observer would also expect production to increase to support economic growth.

Perhaps the more interesting statistic to examine is production against demand. By looking at the production figures above, one might assume that demand also steadily increased since 2007.

But did it?

Source: MetalMiner analysis of World Steel Association data

In a word: no.

China’s demand peaked in 2013 at 772 million tons, declined and then reached 767 million tons in 2017, whereas China produced 779 million tons in 2013 (a little higher than demand). But in 2017 China produced 831.7 million tons for a surplus of 64.7 million tons.

2018 statistics show China produced more steel than any year in its history — 923 million metric tons, according to Reuters, against a demand projection that is at best flat to slightly up from 2017, based on a MetalMiner analysis. Assuming demand of 780 million tons, that would suggest a surplus of over 140 million metric tons.

U.S. demand and production, in contrast, appears paltry.

It should come as no surprise that the Trump administration has taken significant steps to shore up the domestic industry against Chinese imports.

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The only study that takes into consideration these factors, such as actual demand and actual supply, involved the original Department of Commerce studies on Section 232.

[Editor’s Note: This is the first part of a three-part series that will analyze the state of mainstream perspectives of the impact of tariffs, as well as delve further into the history of Section 232 and China’s role in the current trade dialogue.]

Consultants internally often pose a question to one another – do you want a client who knows he doesn’t know something, or would you rather have a client who doesn’t know what he doesn’t know?

It turns out that phrase came from the famed economist John Kenneth Galbraith, who actually used it to describe forecasters: “We have two classes of forecasters: Those who don’t know … and those who don’t know they don’t know.”

Most consultants (and forecasters) would likely argue one would rather have the former — it’s better to work with someone who knows he doesn’t know something than one who doesn’t know what he doesn’t know.

The same argument applies to trade and tariffs.

The mass media and much of the public has embraced the notion that tariffs are bad and continued “free trade” — with China — is good.

But is it? Does the mainstream press know what it doesn’t know?

We will come to this question shortly — but first, the conventional thinking.

Koch Companies Trade Study

According to a recent Koch Companies study on trade, the U.S. economy will see some very negative impacts on the economy as a result of President Donald Trump’s trade war, including:

  • Macroeconomic losses, which project declining GDP of 1.78% and a long-term impact in 2030 of 1.25%
  • Household financial losses of $2,357 per household in 2019, which compound to $17,276 in spending power over a 12-year time frame (2018-2030) in the form of lower wages, higher prices and lower investment returns
  • Increased unemployment
  • Production losses by 2030 modeled as a loss of 1% against the baseline for agricultural and services sectors and a manufacturing production decline of 2.5% from baseline

All of the above appear as reasonable conclusions one might make based on a standard methodology using the GTAP model and database, which ironically was the very same model used by the Department of Commerce to come up with the rationale for imposing Section 232 tariffs in the first place! Other countries have also used the GTAP model to formulate trade policies.

The Koch Companies’ study stands in good company. Multiple additional governmental and pay-to-play studies have come out arguing similarly against tariffs. Here are just a few:

So why in the world should we question these studies?

Because the studies don’t tell the whole story.

Media Bias, Not Fake News

Forget about fake news: legitimate studies have confirmed anti-tariff media bias.

A study conducted in 2005 — after the Bush steel tariffs of 2002 — sought to test a prediction that, “newspapers will devote more space to the costs of tariffs than to their benefits…” The study sampled 123 stories on trade from The New York Times and 177 stories from the Wall Street Journal (the stories ran during the Bush steel tariffs of 2002 from Jan. 1 through Sept. 10).

The WSJ also showed a “slant” toward free trade as measured by more sentences criticizing tariffs than supporting them, compared to The New York Times, according to the study methodology.

Not surprisingly, the results showed newspapers covered the “costs” of steel tariffs more than the benefits and the authors concluded the results suggest “that mass media will weaken the power of special‐interest lobbies relative to unorganized interests.”

Simply put, one should expect more anti-tariff media coverage than pro-tariff coverage.

Before we dive further into the studies, let’s re-examine the history of Section 232 and what cases have resulted in presidential trade action.

Part 2 of this series will be published Friday, Feb. 7. 

The partial government shutdown has meant large power equipment manufacturers and their suppliers can submit exclusion requests and comments, but the government’s main site that tracks such requests, regulations.gov, has not been updated since the shutdown began Dec. 22.

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Meanwhile, large power equipment manufacturers have negotiated for their 2019 contract requirements.

AK Steel did achieve some price increases, according to an industry source, likely due to the Section 232 tariffs. However, buying organizations still have the flexibility to shift production of wound cores to other locations, particularly Canada and Mexico.

Grain-oriented electrical steel (GOES) remains subject to both Section 301 and Section 232 tariffs.

Europe Set to Limit Steel Imports, Too

To stem the flood of imports that can no longer readily come to the U.S., the European Commission will vote on a measure next week to set quotas for 23 steel products, a list which includes GOES.

Similar to how the U.S. determines quota levels, the E.U. will take the average of the prior three years plus 5% and set a cap in which any volume above the cap will receive a 25% import duty, according to Reuters.

Interestingly, and different from how the U.S. sets quotas, the E.U. will set the quotas in three-month increments to prevent stockpiling.

China, however, has not served as a large exporter of GOES to the U.S. market:

Source: MetalMiner analysis of ITC data

MetalMiner does not see the European safeguard measure as having much impact on GOES prices. The measures will, however, help support European prices for other forms of steel.

Exact GOES Coil Price This Month

The U.S. grain-oriented electrical steel (GOES) M3 coil price remained flat moving slightly from $2,462/mt to $2,465/mt. The GOES Monthly Metals Index (MMI) moved up one point to 179.

MetalMiner’s Annual Outlook provides 2019 buying strategies for carbon steel

The GOES MMI® collects and weights 1 global grain-oriented electrical steel price point to provide a unique view into price trends over a 30-day period. For more information on the GOES MMI®, how it’s calculated or how your company can use the index, please drop us a note at: info (at) agmetalminer (dot) com.

For large power equipment manufacturers, Section 232 comes down to two little words: core loss.

The GOES M3 Monthly Metals Index increased 1.1% to a value of 178 for December 2018.

Nobody explains the situation better than SPX Transformer Solutions in their Section 232 exclusion request for two grades of domain-refined GOES:

“DR-GOES is one of the most expensive materials used in the manufacture of power transformers, and its cost equates to 10-20% of the overall cost of a transformer…When SPXTS was using U.S.-produced DR-GOES, we were rapidly losing market share on LPTs [Ed. note: large power transformers] and SPXTS was at a decision point to stop producing LPTs in 2016.”

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The company went on to explain that by using low-loss steel from Posco at its Waukesha, Wis., factory, the company began to gain back market share from foreign large power equipment manufacturers.

The need for material with lower core loss rests at the heart of most companies’ exclusion requests. Of course Posco material falls under quota rules (South Korea) as opposed to the 25% tariff and so can come into the U.S. duty-free.

Meanwhile, AK Steel continues to submit objections to the exclusion requests claiming their material does meet core loss requirements. However, given the multiple exclusion requests coming from large power equipment producers challenging that assumption – and willing to pay more for foreign material – suggests those filing objections have a strong argument.

New Section 232 Exclusion Requests

 Meanwhile, Sumitomo has filed an exclusion request for domain-refined electrical steel, also arguing that they need this material because of its “domain-refining properties for all sizes of transformer cores, post anneal.”

Import data continues to support the assertion that large power equipment manufacturers depend upon Japanese-produced domain-refined grain-oriented electrical steel as Japanese imports represent the bulk of all grain-oriented electrical steel imports:

Source: MetalMiner Analysis of ITA Data

 In the meantime, according to a recent TEX Report, Japanese mills are offering prices in the range of $50-100 mt more in 2019 than in 2018, while U.S. producer AK Steel has requested a smaller increase. Meanwhile, Korean GOES imports to the U.S. will increase as the quotas for 2019 open. The producer to watch, however, remains Baosteel in China as the company will focus on higher-quality GOES materials with increased production capacity. Market participants will want to track if that material remains in China or shifts to exports.

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Exact GOES Coil Price This Month

The U.S. grain-oriented electrical steel (GOES) M3 coil price moved up slightly from $2,434/mt to $2,462/mt. The MMI increased two points from 176 to 178.

The GOES MMI® collects and weights 1 global grain-oriented electrical steel price point to provide a unique view into price trends over a 30-day period. For more information on the GOES MMI®, how it’s calculated or how your company can use the index, please drop us a note at: info (at) agmetalminer (dot) com.

The much-publicized joint venture between Tata Steel and Thyssenkrupp will now go under the magnifying glass of the European Commission due to “preliminary competition concerns” around steel for automotive applications, metallic coated steel for packaging and grain-oriented electrical steel (GOES).

According to a press release from the European Commission, the commission has concerns about reduced choice of suppliers and higher prices impacting buying organizations.

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The commission has until March 19, 2019 to make a decision on the planned venture.

The concerns remain valid, as GOES remains a highly concentrated supply market (as well as buying market). Any reduction in the number of European players will add pricing power to producers.

ABB, AK Steel Battle on Exclusion Request

Tracking the exemption requests from Section 232 steel tariffs remains a challenge.

MetalMiner missed the fact that ABB had initially received an exclusion from the Department of Commerce for GOES this summer. That exclusion request was granted and then denied once AK Steel filed an objection.

As we reported last month, ABB challenged AK’s objection. In a series of rebuttals, AK recently filed another comment challenging ABB’s arguments that AK material does not meet its performance and quality requirements around “white edge,” that AK’s material is, “more prone to creating holes than the process employed by Nippon.”

AK took issue with these assertions by filing a comment challenging the fact that no country standard or other customer has a requirement or references “white edge” and that, therefore, the argument appears arbitrary.

However, ABB will likely respond with the regulatory threshold argument required for making exclusion requests: “Specifically, ABB used the BIS standard for exclusion requests regarding product substitution, “a ‘substitute product’ must meet “quality (e.g., … internal company quality controls or standards) … or testing standards, in order for the U.S. produced steel to be used in that business activity in the United States by that end user” (83 Fed. Reg.46026, 46058).

In addition, as MetalMiner reported previously, ABB argued that the actual data from 2016-2018 certified test reports using ASTM A804 test standards did not meet iron loss and core loss requirements.

The parties have until Nov. 12 to submit additional comments.

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Exact GOES Coil Price This Month

The U.S. grain-oriented electrical steel (GOES) M3 coil price held relatively flat moving from $2,421/mt to $2,434/mt.

The GOES Monthly Metals Index (MMI) moved one point from 175 to 176. MetalMiner received additional data after last month’s publication that lowered the GOES M3 MMI from 182 to 175.

The GOES MMI® collects and weights 1 global grain-oriented electrical steel price point to provide a unique view into price trends over a 30-day period. For more information on the GOES MMI®, how it’s calculated or how your company can use the index, please drop us a note at: info (at) agmetalminer (dot) com.

GOES Monthly Metals Index (MMI) spot prices took a big drop while large power equipment manufacturers went head to head with the sole U.S. producer of grain-oriented electrical steel (GOES), AK Steel.

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GOES appears more challenging under Section 232 because both producers and manufacturers make the same national security argument. The sole producer of GOES wants tariff protections pitting supplier against customer, yet the power equipment manufacturers make an equally compelling case.

At issue is that the power equipment manufacturers want an exclusion for GOES not currently produced in the U.S. and the sole domestic producer has argued its products provide an “equal” substitute.

Last month, MetalMiner covered the specific Section 232 exemption requests and responses from ABB and Cooper Power. Posco has also made a notable exclusion request, and more recently SPX Transformer Solutions.

In its surrebuttal (a rebuttal to a rebuttal), ABB argued that AK Steel does not produce a substitute for Nippon Steel’s product. Specifically, ABB used the Bureau of Industry and Security (BIS) standard for exclusion requests regarding product substitution, which notes “a substitute product” must meet “quality (e.g., … internal company quality controls or standards) … or testing standards, in order for the U.S. produced steel to be used in that business activity in the United States by that end user” (83 Fed. Reg.46026, 46058).

Whereas AK Steel focused its argument against ABB on the issue of core loss data — suggesting its products meet the equivalent performance standards of Nippon Steel’s product — ABB argued that the actual data from 2016-2018 certified test reports using ASTM A804 test standards did not meet iron loss and core loss requirements. ABB also submitted confidential data not available for public review.

ABB also claims AK Steel does not meet internal quality controls and standards. This point appears significant, as ABB states,“ABB’s transformers are based on proprietary designs that incorporate quality requirements, including burr height, ‘white edge’ and holes, which have significant impacts on the performance of the transformers.” The company goes on to claim that AK’s manufacturing process is “more prone to creating holes than the process employed by Nippon,” and “white edge is an ABB internal measurement of coating adhesions to GOES products,” of which the coatings are important to prevent transformer failures.

More important, ABB claims that 11 of 12 suppliers, with AK as the lone exception, agree to ABB’s quality requirements on these specific parameters.

The argument is analogous to stating that a steak is a steak, whether you are at Peter Luger or Ponderosa. Sorry, folks, but I’m pretty sure that a Peter Luger filet mignon is going to be tastier than Ponderosa’s version of the same cut (with all due respect to Ponderosa).

Meanwhile, Eaton Corp (Cooper Power), although notably with much less detail, made a similar argument: “The AK Laser scribed material if post annealed, loses ALL of the benefits of the laser scribing process, which is to further align the grain structure to a more efficient configuration. The Japanese product that is Chemically or Mechanically etched retains these important properties even after post annealing. The Japanese material is designated as Permanent Domain Refined Electrical Steel.”

SPX and Posco

Meanwhile, SPX imports the following from Posco: “0.23mm thick DR-GOES of Grade 23PHD080 with guaranteed maximum losses of 0.96 W/Kg @ 1.7 kilogauss and 60HZ.” SPX has requested the exclusion for lack of availability of a similar substitute product.

Posco, meanwhile, like ABB, has outlined a series of arguments supporting its exclusion request.

Import Data Supports OEM Claims

MetalMiner has long reported that the lion’s share of GOES imports come from Japan (versus China, the primary target of the Section 232 steel and aluminum tariffs), suggesting that AK’s material may indeed not be a like-for-like substitute product.

A similar pricing-per-ton analysis would also show that Japanese imports are not “dumped” into the U.S:

MetalMiner’s Annual Outlook provides 2018 buying strategies for carbon steel

Exact GOES Coil Price This Month

The U.S. grain-oriented electrical steel (GOES) coil price fell for the third month in a row, down from $2,763/mt to $2,446/mt. The MMI fell 18 points to 182.

The GOES MMI® collects and weights 1 global grain-oriented electrical steel price point to provide a unique view into price trends over a 30-day period. For more information on the GOES MMI®, how it’s calculated or how your company can use the index, please drop us a note at: info (at) agmetalminer (dot) com.

Grain-oriented electrical steel (GOES) prices fell for the second month in a row, with multiple large power equipment manufacturers requesting exclusions from the Section 232 tariffs.

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What makes these requests noteworthy involves the arguments made by each of the firms. One of the most interesting arguments pits two different firms on opposite ends of the national security argument – Eaton Corp (parent company of Cooper Power Systems) and AK Steel.

The Section 232 exemption request form asks a specific question with regard to whether the steel is used to support national security requirements. Cooper Power responded by stating the materials in the exemption are used to make transformers for the electrical grid, of which infrastructure is considered essential to national security: “This product allows Cooper Power Systems, LLC to meet federally maintained efficiency requirements in Liquid Filled Transformers as published by the D.O.E.”

The Cooper Power request involved, “chemically etched or mechanically scribed Domain Refined Grain Oriented Electrical Steels, capable of retaining domain refined properties post anneal, used in the manufacture of Distribution Transformers,” according to its exemption request. Cooper Power argued “the only domestic producer of electrical steels in the U.S., does not manufacture a Domain Refined Electrical Steel capable of being annealed after Transformer core production, while still retaining the Domain Refined properties.”

Ironically, Metglas, and not AK Steel, offered a rebuttal to the Cooper Power exclusion request that specifically addressed alternative products, notably amorphous ribbon, that could meet DOE requirements. Metglas also challenged the volumes Cooper Power had indicated – specifically that the volumes requested in the exclusion far exceed Cooper Power’s actual volume requirements.

Meanwhile, ABB’s exclusion request cited insufficient U.S. availability of 27M-0H, which it claims is not manufactured in the U.S. (This grade is high-permeability GOES.)

AK Steel — the only mill that challenged the ABB exclusion — made several arguments in its rebuttal, including:

ABB has moved away from several suppliers in the US and globally over the past few years. Changing suppliers and materials seems to be less of a concern to ABB when it achieves a financial return by purchasing foreign GOES. AK Steel is, and has been for many years, the largest supplier of GOES to the U.S. market. ABB knows AK Steel’s product very well and both ABB and its customers can plan to incorporate AK Steel GOES with little effort or hardship, just as they have in the past.

The company goes on to say, “As the largest domestic producer of GOES, a large percentage of transformers utilize AK Steel GOES products and it is a very well-known and broadly utilized product, both by ABB and their customers.” However, neither the buyer or supplier has explained fully why the GOES market appears more opaque than many other steel markets.

The Takeaway

In reality, power equipment manufacturers deploy a more multifaceted approach to the GOES sourcing decision. In fact, multiple GOES grades can meet various requirements as established by the DOE but the ultimate award decision made by a buyer considers many variables, such as: core loss, regulatory requirements, and the price arbitrage among alternative GOES products at any one given time. Together, these variables impact the buying decision.

From a sourcing perspective, manufacturers want and need the ability to maintain flexible sourcing options, not only to mitigate risk but to minimize the pricing power of a monopoly supplier. Moreover, the transformer market is dominated by global players who can easily shift production of transformer cores elsewhere (as they did after the unsuccessful 2014 anti-dumping case brought by AK Steel).

Buying organizations will continue to shift production away from the U.S. if the sourcing equation does not make economic sense. Regardless, should Big River Steel indeed move into this market —  as many hope that they will — AK Steel will need more than Section 232 to defend its market position.

In a subsequent post, MetalMiner will address the exemption request from Posco and the Section 301 tariffs.

Exact GOES Coil Price This Month

The U.S. grain-oriented electrical steel (GOES) coil price fell for the second month in a row from $2,857/mt to $2,763/mt. The MMI fell seven points from 207 to 200.

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The GOES MMI® collects and weights 1 global grain-oriented electrical steel price point to provide a unique view into price trends over a 30-day period. For more information on the GOES MMI®, how it’s calculated or how your company can use the index, please drop us a note at: info (at) agmetalminer (dot) com.

The headline news for grain-oriented electrical steel (GOES) involves the continued drop in total import levels into the U.S.

The U.S. had imported at least 2,500 metric tons per month since the start of this year, but after the announcement of tariffs, imports shrank to 411 metric tons in July.

However, some steel pundits speculate imports will begin to notch up, particularly for the wider steel market.

While total U.S. import volumes fell in July, Japan still held 59% of total import volume, up 1% from June’s import levels.

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In the meantime, companies continue to file exclusion requests.

Interestingly, only three companies have filed the bulk of exclusion requests for grain-oriented electrical steel and no firm received an approved exemption.

The only exclusions within the broader GOES HTS codes includes Nachi America Incorporated for hot-rolled M2 high speed steel sheet on the basis of insufficient domestic capacity.

Meanwhile, Electrical Mechanical Corporation filed approximately 34 exclusion requests for GOES M6 and M4, arguing that longer lead times from the sole domestic supplier, AK Steel (2-3 times longer) have led to increased manufacturing costs, delayed shipments and a weaker competitive position in the market.

So far, companies have filed nearly 25,000 exclusion requests and MetalMiner is aware of some companies obtaining exemptions — approximately 1,400-plus exemptions have been granted — but none have been for GOES.

AK Still Looking for Import Relief

In AK Steel’s most recent earnings report, on a trade update slide the company pointed to not only GOES products but also stated that it is, “Critical that downstream electrical steel products be adequately addressed.”

Next month, MetalMiner will address 301 exemptions, which also include GOES.

Exact GOES Coil Price This Month

The U.S. grain-oriented electrical steel (GOES) coil price fell from $2,914/mt to $2,857/mt. The GOES Monthly Metals Index (MMI) fell four points from 211 to 207.

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The GOES MMI® collects and weights 1 global grain-oriented electrical steel price point to provide a unique view into price trends over a 30-day period. For more information on the GOES MMI®, how it’s calculated or how your company can use the index, please drop us a note at: info (at) agmetalminer (dot) com.