Articles in Category: Anti-Dumping

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

Before we head into the weekend, let’s take a quick look back at the week that was here on MetalMiner:

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  • This week we wrapped up the latest round of posts for our January Monthly Metals Index (MMI) — check out this week’s posts on the following:
  • Oil and gas exploration is a topic that has both passionate supporters and detractors. President Trump’s recent proposal to open up new areas for drilling, not surprisingly, has both of those, as our Stuart Burns wrote earlier this week.
  • Sticking on the subject of oil, Burns surveyed the factors behind crude oil’s continuing rise in price. Political turmoil is one factor, among others, contributing to the increase.
  • The long wait is over … Secretary of Commerce Wilbur Ross has sent President Trump his Section 232 steel report (the statutory deadline was Jan. 15). Trump now has 90 days to decide what to do. A similar announcement for the Section 232 aluminum probe — which was launched last April, one week after the steel probe — should also be coming soon.

After a couple of self-imposed deadlines blown by and a lot of waiting, the next step in the Section 232 process has finally arrived.

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Thursday evening the Department of Commerce announced Secretary of Commerce Wilbur Ross had completed his Setion 232 steel report and sent it on to President Donald Trump. Under the statutory guidelines of Section 232 (derived from the Trade Expansion Act of 1962), Trump has 90 days to respond to the recommendations and act (or not act).

As a result of the investigation, the president could call for tariffs, quotas, or a hybrid tariff-quota solution in an effort to help domestic steelmakers dealing with rising imports.

The department’s announcement did not indicate what the contents of the report were. White House Deputy Press Secretary Lindsay Walters said the president would announce his decision “at the appropriate time,” CNBC reported.

The Section 232 probes into steel and aluminum imports were launched last April. The purpose of the investigation is to determine whether or not the imports pose a threat to the country’s national security. The last Section 232 investigation came in 2001, when it was that determined that imports of iron ore and semi-finished steel did not pose a threat to national security.

Unsurprisingly, reactions rolled in Thursday evening from the metals industry.

“The steel industry welcomes the news that the Secretary of Commerce has formally submitted his report to the president in the Section 232 investigation into the impact of steel imports on the national security,” said Thomas J. Gibson, president and CEO of the American Iron and Steel Institute (AISI), in a release. “We are confident that we have made the case that the repeated surges in steel imports in recent years threaten to impair our national security and we look forward to the president’s decision on the appropriate actions to address this critical situation.”

Scott Paul, president of the Alliance for American Manufacturing (AAM), expressed hope that Trump would not need 90 days to bring the investigation to its conclusion.

“Final resolution of the Section 232 case doesn’t need to take 90 days; we’ve seen more than six months of delays already,” Paul said in a release. “Let’s get this done by the end of January.”

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A rise in imports has been a consistent talking for Trump, with China in particular coming in for much criticism from the president and the domestic industry.

According to a recent AISI report, U.S. steel imports rose by 15.5% in 2017. The estimated finished steel import market share in 2017 checked in at 27% (22% for December 2017 alone).

The Renewable Monthly Metals Index (MMI) picked up a point for our January reading, rising from 78 to 79 (a 1.3% jump).

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Several of the heavier hitters in this basket of metals posted price increases this past month.

U.S. steel plate rose 4.0% and U.S. grain-oriented electrical steel (GOES) coil rose 3.8%. Korean steel plate also increased, rising by a whopping 8.9% for the recent monthly window.

Chinese silicon and cobalt cathodes also posted notable price jumps. Meanwhile, Chinese steel plate fell slightly, while Japanese steel plate posted a small price jump.

Continuation of Steel Plate Tariffs on the Table

U.S. Rep. Pete Visclosky (D-Merrillville, Indiana) testified before the International Trade Commission recently on the subject of extending 18-year-old duties on cut-to-length carbon-quality steel plate from India, Indonesia and South Korea, the Northwest Indiana Times reported.

Northwest Indiana, where Merrillville sits, is home to significant domestic steel industry activity, including by ArcelorMittal, which produces steel plate at its Burns Harbor Plate Mill — located in Gary, Indiana — the paper reported.

“As a representative and resident of Northwest Indiana, I am acutely aware of the challenges facing the American steel industry due to the onslaught of illegal steel imports,” the Times quoted Visclosky as saying during testimony at a hearing in Washington, D.C. “The ArcelorMittal facility at Burns Harbor in Northwest Indiana makes cut-to-length carbon-quality steel plate, and every one of those dedicated workers deserve to be able to continue to fairly compete and make the best steel to the best of their ability in our global economy.”

Of course, the issue is one of many metals-related trade issues before U.S. trade bodies (the most headline-grabbing being the Section 232 probes into steel and aluminum imports, for which a ruling is expected this month).

Like the Section 232 probes, which seek to determine whether those imports negatively impact the country’s national security, Visclosky also cited national security concerns vis-a-vis steel plate imports.

“It is essential for both our national defense and our national economy, and we cannot afford to threaten our production capabilities,” the paper quoted Visnosky as saying.

GOES Gets a Boost

As reported by our Lisa Reisman yesterday, grain-oriented electrical steel (GOES) got a boost this past month.

GOES prices, as Reisman noted, usually don’t move in tandem with other forms of steel — but it didn’t play out that way in December.

Import levels, however, are something to monitor going forward.

“In addition to prices moving in a similar direction, import levels also followed similar patterns, although GOES imports showed a dramatically higher increase whereas finished steel imports grew by 14.5% on an annualized basis according to the American Iron and Steel Institute (AISI),” Reisman added.

While China is often the subject of much discussion regarding a flood of imports into the U.S., when it comes to GOES, Japan is actually the leader in exports to the U.S.

Source: International Trade Administration and MetalMiner analysis

Japan owns about two-thirds of the U.S. GOES import market share, rising significantly despite a drop in overall finished steel sent to the U.S.

The explanation for that disparity?

“Increased domestic efficiency standards have led to the development of higher performance electrical steels (HB), which have taken share away from the more conventional grades produced by the sole U.S. producer,” Reisman wrote. “With no U.S. producer of these grades, the market has become more reliant on exports from Japan.”

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This morning in metals news, a law proposed in the U.K. could have a negative impact on the domestic steel industry as the country moves forward with Brexit talks, steel production in the U.S. Great Lakes region has jumped to start the year, four firms have submitted resolution plans for Electrosteel Steels and the U.S. Department of Commerce announced affirmative final determinations in the antidumping duty investigations of imports of carbon and alloy steel wire rod from South Africa and Ukraine.

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Union Warns About Proposed U.K. Law

A U.K. bill that aims to institute trading provisions for after the U.K.’s exit from the European Union could prove to offer fewer protections than existing E.U. tariffs, members of the Community trade union warned, according to the BBC.

Community union members wrote to Chancellor Philip Hammond, warning that the Customs Bill would not prove as strong as E.U. safeguards against antidumping already in place.

In the letter, quoted by the BBC, the members wrote: “When the UK leaves the European Union we will of course need to set up our own way of preventing unfair trade or dumping of goods. We understand this Customs Bill is putting down the framework for that to happen. But as it is currently written, we fear it will not be effective.”

Steel Production Up in the Great Lakes

Steel production has gotten off to a fast start in the U.S.’s Great Lakes region, the Northwest Indiana Times reported.

Production rose to 640,000 tons for the first week of 2018, constituting a 7.7% jump, the paper reported. Steel mills in the Great Lakes produced 594,000 tons of steel the previous week.

Companies Bid for Debt-Laden Electrosteel

Tata Steel, Vedanta and two other bidders are vying for the acquisition of Electrosteel Steels, which is currently involved in an insolvency resolution process, the Economic Times reported.

Electrosteel was one of 12 companies sent to insolvency proceedings by the Reserve Bank of India, the Economic Times reported.

DOC Makes Affirmative Determination on Wire Rod Imports

The U.S. Department of Commerce announced this morning that it had made affirmative determinations in its antidumping investigation of carbon and alloy steel wire rod from South Africa and Ukraine.

According to a department release, it determined that exporters from South Africa and Ukraine sold wire rod in the United States at 135.46-142.26% and 34.98-44.03% less than fair value, respectively.

The petitioners in the case are companies from four states: Gerdau Ameristeel US Inc. (Florida), Nucor Corporation (North Carolina), Keystone Consolidated Industries (Texas) and Charter Steel (Wisconsin).

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Now that the New Year has begun, we’re getting ever closer (hopefully) to the Commerce Department’s final recommendations on the Section 232 investigation.

Today we continue our podcast series that we’re calling “Manufacturing Trade Policy Confidential,” in which we turn our focus to the aluminum industry. Our guest is Heidi Brock, the president and CEO of the Aluminum Association, whom we spoke with just before the winter holidays. She works tirelessly on behalf of the association’s members, which span the entire value chain. Heidi does find moments, however, to take a step back and see the bigger picture.

Recently, she got to see the newly commissioned USS Gabrielle Giffords, a warship named after the former Arizona congresswoman, and it left her with a sense of awe. “I just can’t tell you what an amazing experience it was,” she said.

To hear more on what a strong domestic aluminum sector has to do with national security, and how the aluminum sector views other hot trade issues of the moment and why, listen in to Lisa Reisman’s conversation with Heidi Brock.

Here’s Heidi in front of the U.S. Navy littoral combat ship USS Gabrielle Giffords:

Courtesy of Heidi Brock

For an additional sense of scale, here’s an “aerial view of the ship during its launch sequence at the Austal USA shipyard, Mobile, Alabama,” according to Wikipedia, from a photo provided by the U.S. Navy:

Source: U.S. Navy/Wikipedia

Manufacturing Trade Policy Confidential: Background

With everything that’s been happening on the international trade policy front over the past year, we wanted to give metal buying organizations more insight into the issues they may not be reading or hearing enough about — or at all — in the mainstream B2C media.

What better way to do so than go straight to the source — or sources — and interview some key movers and shakers on the manufacturing and policy fronts? So we’ve started a brand-new series called “Manufacturing Trade Policy Confidential.”

If you’ve visited MetalMiner’s digital pages over the past several months, you’re no stranger to the phrase “Section 232” — shorthand for the U.S. Department of Commerce investigation into whether certain steel imports constitute a national security risk, under the namesake section of the U.S. Trade Expansion Act of 1962.

The outcome of the investigation (findings from which were slated to come down last summer but have been delayed) could have significant effects on upstream and downstream manufacturing organizations, ranging from metal producers to buying organizations – even the mom-and-pops.

But Section 232 is only one small part. Trade circumvention, China’s non-market economy status, domestic uncertainty amidst proposed tax plans and many other issues have pushed us to start this new podcast series.

We’ll be publishing several more interviews in the coming weeks and months – stay tuned!

Listen to more episodes and follow the MetalMiner Podcast on SoundCloud.

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

Do we have a case of genuine material injury to U.S. jobs or do we have a case of commercial shenanigans in Boeing’s application to the U.S. Department of Commerce reported imposition of triple digit duties on Bombardier’s sale of new C-Series jets to number two U.S. airline Delta Air Lines?

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Boeing had called for countervailing duties of 79.41% to offset what it described as harmful Canadian subsidies to Bombardier. It also identified a “dumping margin” of 80.5%, based on the unpublished prices at which it claims Bombardier sold the C-Series planes to Delta, for a combined border charge of just under 160% on the Bombardier jets.

Delta, placed an order for 75 of the 100- to 150-seat single aisle C-Series jets some 18 months ago, according to Reuters. While the list price starts at $79.5 million, new project early sales typically enjoy substantial discounts to generate interest in the program and generate an early start to production. In that respect, initial launch discounts are common in the airline industry — whether they constitute dumping is debatable. It may be simplistic, but if all airlines do it then no one airline should be penalized.

Boeing claims that Delta received the planes for $20 million each, well below an estimated cost of $33 million and below what Bombardier charges in Canada. So far inconclusive, the numbers suggest — possibly, if correct — extreme discounts and some action may be valid.

However, dumping prices are usually imposed on products imported into a country. In this case, Delta’s order is to be manufactured on a new assembly line at Airbus’ factory in Mobile, Alabama, technically making it a U.S. airplane.

But this assembly option has arisen only in recent months following Airbus’ surprise move last October buying a majority stake in the struggling C-Series program.

At root, this could be a large part of the issue.

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It is often easier to criticize from the outside than to resolve from within — that is as true of boardrooms as it is of government.

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It should come as no surprise that President Trump’s well-intentioned claims during his election campaign to bring American jobs back to American steel mills — “When I’m president, guess what, steel is coming back to Pittsburgh,” he said during an April 2016 rally — have proved much harder to achieve in office than may have appeared to him and his supporters on the campaign trail.

Some believe the protectionist, low-hanging fruit of withdrawing the U.S. from the Trans-Pacific Partnership and ordering investigations into trade pacts such as NAFTA and the KORUS FTA have, if anything, exacerbated problems for domestic steel mills by prompting a flood of steel imports from firms trying to bring in steel before tariffs are hiked or other barriers are imposed. The New York Times has been accused — with some justification — of running an agenda counter to the Trump administration’s policies, but the facts are clear: steel imports have boomed since Trump came into power.

Source: New York Times

U.S. steel imports were up 19.4% in the first 10 months of 2017, compared to last year’s figures, according to the American Iron and Steel Institute (AISI). The New York Times points to ArcelorMittal’s decision to close a furnace at its Conshohocken, Pennsylvania steel plant in the new year, laying off 150 of the plant’s 207 workers as evidence of the impact. ArcelorMittal blamed low-priced imports, as well as low demand for steel for bridges and military equipment — both areas Trump promised he would make a key focus for investment if elected.

Although progress on trade issues has come too late for workers at Conshohocken, it is not too late for the industry as a whole.

The administration appears at odds over how to achieve control over imports, with some advocating hefty tariffs, others quotas, and all awaiting the results of the Department of Commerce’s 232 investigation by Jan. 15. The president will then have 90 days to decide what to do, the New York Times states.

If supportive and the report is acted on, plants like Conshohocken stand to benefit the most. Although underutilized at present, its speciality is ultra-strong, military-grade steel (a national security requirement if ever there was one).

Blocking imports, though, is not universally popular.

The auto industry frets that reducing imports will raise prices and impact competitiveness among domestic automakers, resulting in job losses worse than those experienced by the steel industry.

Source: New York Times

The steel industry itself has largely maintained employment over recent years after recovering from the financial crisis of 2008, despite investing in automation, which has helped improve efficiencies and productivity in the face of significant imports from Canada, eastern Europe and elsewhere (China features less nowadays and is well down the list due to earlier anti-dumping legislation).

Quite how the administration balances these competing priorities of domestic steel producers versus domestic steel consumers remains to be seen. Rhetoric so far this year suggests sympathies lie firmly with producers, but legislation needs to be finessed enough not to cause more damage than it intends to avoid.

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As we say, criticizing from the outside is much easier than finding solutions from within. Coming up with viable solutions will be the administration’s big challenge in 2018.

Ricochet64/Adobe Stock

Last week, China issued a global call to for countries to support the World Trade Organization (WTO) and the principles of global trade in the face of a perceived pullback from the U.S.

This week, China is risking another trade dispute by cutting export taxes on some steel products and fertilizers while completely canceling those for sales abroad of steel wire, rod and bars from Jan. 1, according to a Ministry of Finance announcement on Friday reported by Reuters. With the move, it appears, comes the expressed intention of boosting exports into markets already perceived as oversupplied.

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Just last month, the G20 convened a meeting in Berlin which included discussion of how to tackle excess global steel capacity over widespread fears China is using export markets to sell excess capacity.

That is a position China denies and points to the enforced closure this year of 100 million tons of legal and 120 million tons of illegal steel production. In reality, though, although the closure of illegal capacity — much of it scrap-based electric arc furnace (EAF) plants — the “closure” of legal capacity has been a mixed bag. Much of it was the permanent shuttering of already idled, older steel capacity.

China is not alone in having excess steel capacity — it arguably is not even in the forefront of global low-cost suppliers.

Read more

Arcane as it sounds, by refusing to approve new judges to the World Trade Organization’s (WTO) appellate panel (a form of supranational court in all but name, a Telegraph article explains) the U.S. is depriving the panel of the resources to function.

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The panel should have seven judges, such that at least three are always available to hear cases. With one judge having retired, the panel is down to six; by the end of this month, it will be down to four.

There is already a 40-case backlog and resolutions are taking too long, the Telegraph reports. Reducing the panel’s capacity further would effectively disable one of the WTO’s most important and successful functions, which is to settle disputes between states in a rules-based environment.

The U.S. action is driven by a deep-rooted dissatisfaction with the way the WTO operates and is aimed at achieving change rather than a desire to leave – despite what President Donald Trump tweets in soundbites.

Not Playing by the Rules

Firstly, the U.S. believes — with considerable justification — that some large developing countries do not abide by the rules, or rather hide behind the rules.

China, for example, is the world’s second-largest economy and has a disproportionate share of global trade. Yet, its status as an emerging economy allows it to avoid many of the constraints placed on developed economies.

Even after 16 years of WTO membership, China still has a massive state sector enjoying far-reaching subsidies and favored treatment by the state. In fact, recent actions in the name of combating pollution have, if anything, concentrated steel production even more among state producers as China, has shut 100,000 tons of electric arc furnace (EAF) private production capacity, thus concentrating and supporting power among the largely state-owned traditional blast furnace producers.

U.S. Perception of WTO Activism

The second issue is the U.S. believes the WTO has become more activist over time, deliberately dismantling protectionist measures in its rulings, ostensibly in the name of promoting global trade but to the detriment of major importers (like the U.S.).

Some will undoubtedly criticize the U.S. for its actions, but better to force through change than wholesale resignation from the organization and the rules-based system that has done so much over the last 20 years to resolve disputes amicably and avoid trade wars.

Even if changes are accepted to the WTO rules, patterns of global trade will take time to adjust.

Steel jobs are not going to flood back to the U.S., regardless of the president’s assurances. As the article points out, the U.S. already has massive tariffs in place against Chinese steel, but the U.S. steel industry is not powering back to employment levels seen before the WTO.

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Trade imbalances within the North American Free Trade Agreement (NAFTA) fall outside of the WTO remit and are a topic in their own right, but arguably the U.S. imbalances with the rest of the world have gone on for long enough.

Providing a ready and reliable export market to emerging economies has lifted hundreds of millions out of poverty and achieved an industrial revolution in Asia and South America; that should now allow those countries to trade on equal terms.

This morning in metals, some big news on the international trade and steel imports front.

The U.S. Department of Commerce yesterday announced preliminary affirmative rulings that corrosion-resistant steel (CORE) and certain cold-rolled steel flat products (cold-rolled steel) imported from Vietnam “produced from substrate originating in…China are circumventing existing antidumping and countervailing duty (AD/CVD) orders on CORE and cold-rolled steel imported from China,” according to their news release.

The Details on Duties

“The Commerce department has directed the United States’ customs and border protection agency (CBP) to collect anti-dumping (AD) and Countervailing Duty (CVD) cash deposits from importers of CORE produced in Vietnam using Chinese-origin substrate at rates of 199.43 percent and 39.05 percent, respectively,” according to this article, writing from the release. “CBP has also been directed to collect AD and CVD cash deposits on imports of cold-rolled steel produced in Vietnam using Chinese-origin substrate at rates of 265.79 percent and 256.44 percent, respectively.”

What This Means for Metal Buyers

Many in the steel manufacturing are hailing the decision as a victory as far as solidifying the case against China when it comes to proving that country’s circumvention and “substantial transformation” tactics.

The decision on CORE and cold-rolled products may open the door for the steel pipe and tube industry to file or follow up on similar cases.

Learn more on Trade Circumvention here, including a free white paper download on the topic.

Listen to our MetalMiner Podcast series, “Manufacturing Trade Policy Confidential,” for more discussion around circumvention and other trade topics that matter to metal buyers.