Articles in Category: Anti-Dumping

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This morning in metals news, an NFL franchise’s new stadium project in Las Vegas is facing delays in steel deliveries, Indonesia and China have taken anti-dumping action against each other’s steel products, and Ford earlier this week announced workers in southeast Michigan will make the automaker’s first autonomous vehicles in 2021.

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Steel Deliveries Delayed at Raiders’ Las Vegas Stadium

The National Football League’s Oakland Raiders are scheduled to make the move to Las Vegas in 2020, when the franchise’s new stadium is scheduled to open.

However, completion of the stadium project — for which taxpayers are contributing $750 million — is expected to be pushed back due to recent delays in deliveries of steel components, the Associated Press reported.

Indonesia, China Take Aim at Each Other’s Steel

Sticking with steel, Reuters reported Indonesia and China have slapped anti-dumping duties on each other’s steel products.

According to the report, Indonesia opted to extend an existing 20% duty on flat-rolled steel products, which targeted imports from China and six other countries.

Ford Announces Battery Electric, Autonomous Vehicle Moves

Automakers around the world are preparing for an increasingly electrified and/or autonomous vehicle market.

In that vein, Ford Motor Co. recently announced moves related to those two next-generation vehicle segments.

Ford announced it is expanding its electric vehicle production to a second plant, its Flat Rock Assembly plant in southeast Michigan.

“We’ve taken a fresh look at the growth rates of electrified vehicles and know we need to protect additional production capacity given our accelerated plans for fully electric vehicles,” said Joe Hinrichs, Ford’s president of global operations, in a company release. “This is good news for the future of southeast Michigan, delivering more good-paying manufacturing jobs.”

In addition, Ford said it will begin production of the automaker’s first autonomous vehicles at a new production center in southeast Michigan.

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“As we ramp up AV production, this plan allows us to adjust our investment spending to accommodate the pace of growth of this exciting new technology,” Hinrichs said in the prepared statement. “This new plan combines our core strength in mass manufacturing with the agility and leanness we’ve shown with our modification centers for specialty manufacturing.”

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

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This morning in metals news, Chile’s Codelco announced its underground Chuquicamata mine will open later this year, United States Trade Representative Robert Lighthizer testified before the House Ways and Means Committee on Wednesday and the U.S. Department of Commerce issued an affirmative preliminary determination in an anti-dumping investigation related to China.

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Chuquicamata to Open this Year

Chilean state-owned miner Codelco announced the underground Chuquicamata copper mine will open for operations in the middle of the year, Reuters reported.

As the report notes, the miner last year announced plans to transform the mine site from an open cast setup to an underground mine, coming in at an investment of $5.55 billion.

Lighthizer at Ways and Means

As trade meetings between the U.S. and China continue, USTR Robert Ligthhizer offered testimony Wednesday before the House Ways and Means Committee.

“We are here to talk about China,” Lighthizer said during his opening remarks. “I agree with those who see our large and growing trade deficit and their unfair trade practices – including technology transfer issues, failure to protect intellectual property, large subsidies, cyber theft of commercial secrets and other problems – as major threats to our economy.  We can compete with anyone in the world but we must have rules – enforced rules – that make sure market outcomes, not state-capitalism and technology theft, determine winners.”

Lighthizer continued, saying the negotiating teams had made progress but that there is still much work left to do.

“Let me close by saying that we have engaged in a very intense, extremely serious, and very specific negotiation with China on crucial structural issues for several months now,” he said. “We are making real progress. If we can complete this effort – and again I say ‘if’ – and can reach a satisfactory solution to the all-important outstanding issue of enforceability as well as some other concerns, we might be able to have an agreement that helps us turn the corner in our economic relationship with China.

“Let me be clear: much still needs to be done both before an agreement is reached and, more importantly, after it is reached, if one is reached.”

DOC Rules in Steel Rack Case

The U.S. Department of Commerce issued an affirmative preliminary determination in its anti-dumping investigation of steel racks from China.

According to the DOC, exporters have been dumping the steel racks at margins ranging from 18.08- 144.50%.

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The value of steel rack imports from China in 2017 hit $200 million, according to an estimate by the Coalition for Fair Rack Imports (the petitioner in the case).

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

The U.S. Department of Commerce (DOC) announced this week that it had launched anti-dumping and countervailing duty investigations related to imports of fabricated structural steel from Canada, Mexico and China.

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The investigation comes on the heels of a petition filed by the Chicago-based American Institute of Steel Construction Full Member Subgroup.

The total value of imports of fabricated structural steel from the three countries in 2017 is approximately $1.9 billion, according to the DOC. By country, the values are estimated at $658.3 million for Canada, $841.7 million for China and $406.6 million for Mexico.

By quantity, the U.S. imported 213,279 tons of fabricated structural steel from Canada during the January-October 2018 period, up 10.3% from 193,412 tons for the same period in 2017. Mexico’s imports for the period were also up in 2018, at 265,700 tons, up 43.1% from 185,700 tons for the same period in 2017.

Import levels from China actually dipped in 2018, hitting 419,948 tons during the January-October 2018 period, down 2.5% from 430,899 tons in the same period in 2017.

According to the DOC, the alleged dumping margins for the three countries are:

  • 30.41% for Canada
  • 222.35% for China
  • 30.58% for Mexico

Meanwhile, on the countervailing duty side, the DOC said there are 44 alleged subsidy programs for Canada, including “tax programs, grant programs, loan programs, export insurance programs, and equity programs.” For China, that number is 26, which include “tax programs, grant programs, debt restructuring programs, export subsidy programs, as well as the provision of goods and services for less than adequate remuneration.” Lastly, 19 subsidy programs are alleged for Mexico, including “grant programs, tax programs, export programs, and loan programs.”

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Next, the International Trade Commission will make a preliminary determination by March 21. If it rules in the affirmative — that is, that the imports are injurious to U.S. industry and its workforce — then the DOC will continue its investigations. The DOC would then be scheduled to make its preliminary determinations in the countervailing duty and anti-dumping investigations by May 1 and July 15, respectively.

This morning in metals news, the U.S.’s Section 232 automotive investigation moves forward, Tokyo Steel announces its prices will remain steady next month and the copper price got a boost from an Indian Supreme Court ruling.

Section 232 Report Sent to the President

On May 23, 2018, the Trump administration initiated a Section 232 investigation to determine whether imports of automobiles and automotive parts are negatively impacting national security.

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Pursuant to Section 232 of the Trade Expansion Act of 1962, Commerce Secretary Wilbur Ross then had 270 days to send the president a report with recommendations vis-a-vis the probe.

According to Reuters, Ross sent his report to the president Sunday, two hours before the close of the deadline.

Steady Steel

For the third month in a row, Tokyo Steel has opted to keep its prices steady, Reuters reported, citing a weaker overseas market and slower winter construction demand.

Per the report, rebar will remain at 69,000 yen ($624) per ton.

Court Ruling Boosts Copper

According to another Reuters report, the copper price got a boost after the Indian Supreme Court reversed an environmental court’s prior ruling that would have allowed a Vedanta copper smelter to reopen.

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The smelter was closed last May after a protest over pollution from Vedanta’s Sterlite copper plant turned deadly; authorities fired on the protestors, resulting in 13 deaths.

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A recent article by CBC in Canada highlights the mess that has resulted from the imposition of steel and aluminum tariffs between the U.S. and Canada.

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It is fair to say the same mess is almost certainly prevailing on the U.S. side of the border.

The only winner seems to be the Canadian Treasury —and, likewise, the U.S. Treasury — which is raking in tariff duties from consumers having to pay more money on imported steel and aluminum.

CBC quotes Finance Canada data suggesting $839 million has been collected; the figure will hit over $1 billion by the time Canadian Finance Minister Bill Morneau announces his pre-election budget this spring.

Quite how he will handle this unexpected windfall remains to be seen.

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This morning in metals news, the Aluminum Extruders Council (AEC) won a transshipment case, copper prices dropped to a five-week low, and Tata Steel and thyssenkrupp announced the leadership team for their proposed European joint venture.

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AEC Claims Victory

The AEC celebrated a win after U.S. Customs and Border Protection determined two companies imported aluminum extrusions from China that had been transshipped through Malaysia in order to circumvent anti-dumping and countervailing duties.

“We want to thank U.S Customs and Border Patrol for this fantastic outcome, and victory for the EAPA program,” said Jeff Henderson, president of the AEC, in a statement. “Transshippers like these companies should know we will continue to locate and bring to justice those that seek to evade U.S. trade laws and the AEC’s aluminum extrusion orders against China.”

The two companies in question are Sun Bright International Corporation and Fair Importing Corporation.

Copper Hits Five-Week Low

Copper prices dipped to their lowest level in five weeks Tuesday, Reuters reported.

LME copper dropped 0.9% Tuesday, according to the report, down to $6,070/mt.

Tata, thyssenkrupp Announce JV Leadership Team

Tata Steel and thyssenkrupp, which earlier this year signed agreements to form a 50-50 joint venture (JV) in Europe, on Monday announced the leadership team for the proposed JV.

According to a thyssenkrupp release, Andreas Goss, CEO of thyssenkrupp’s steel division, will be the future CEO of the planned JV, which will be called thyssenkrupp Tata Steel B.V.

Hans Fischer, currently the CEO of Tata Steel Europe, will be the deputy CEO and chief technology officer for the proposed JV.

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“I firmly believe that the designated Management Board has a strong combination of industry and leadership experience needed to ensure a successful and sustainable future for the proposed thyssenkrupp Tata Steel Joint Venture,” said TV Narendran, CEO and managing director of Tata Steel. “This marks an important step forward in our preparations towards establishing the planned Joint Venture.”

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

This morning in metals news, the Department of Commerce issued an affirmative determination its investigation of imports of common alloy aluminum sheet from China, China boasted strong October exports despite the U.S. tariffs, and aluminum prices are too low for such a tight market, according to analysts.

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DOC Rules on Common Alloy Aluminum Sheet

The U.S. Department of Commerce announced a final affirmative determination in its anti-dumping and countervailing duty investigations of imports of common alloy aluminum sheet from China.

The case is particularly notable because it marked the department’s first self-initiated investigation since 1985.

China October Exports Chug Along

According to Reuters, China posted higher-than-expected exports to the U.S. in October.

The U.S. announced tariffs on Chinese goods worth about $200 billion in September at a rate of 10%, but that rate is set to jump to 25% in January.

A Tight Aluminum Market

According to another Reuters report, prices are too low for what is in fact a tight aluminum market.

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Citing analysts, the report states approximately 40% of the world’s aluminum production is losing money.

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Criticism of Donald Trump’s tariff action, particularly by archrival Sen. Elizabeth Warren, is too often cast as simply political maneuvering, but there is a very real issue underpinning this current argument. That is, to be successful tariffs need to block imports and support domestic production — otherwise, what’s the point?

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Unfortunately, the consequences of tariffs are not that simple.

Some domestic mills will object to imports of certain products on the grounds that they manufacture the same product. But as my colleague Lisa Reisman pointed out so eloquently in a recent post last month, quality comparisons are analogous to the quality of your steak joint: they all serve meat, but what do you want a Peter Luger or Ponderosa?

CNBC reports Warren’s criticism of the tariff waiver program, citing research done by her staff, that foreign-headquartered companies received more than 80% of all exemption requests (of 909 decisions posted by the Commerce Department in the first 30 days after the tariffs were announced).

The majority of waivers — almost 52% — went to Japanese-owned companies, and overall 84% of their requests were approved, the article states. The implication being the waiver program is in crisis and exemptions are being granted in favor foreign firms, undermining the objectives of the tariff program.

By way of background perspective, CNBC reported that as of of Oct. 29, 43,634 steel and 5,667 aluminum exclusion requests have been filed. Overall, 15,662 steel exclusion decisions have been posted (and 11,281 were approved), while 905 aluminum decisions have been posted (and 763 approved).

Yet, as Reisman pointed out, not all grades are equal, even if they are nominally manufactured to the same standard.

Taking her example, grain-oriented electrical steel (GOES) manufactured by a Japanese mill is superior, you cannot fault consumers for applying for tariff exemptions if the domestic product is below global standards. Of course, GOES and Japanese material in particular, is arguably a unique example (it is hardly vanilla HRC).

From a quality perspective, it is easy to understand why Japan has more exemptions than other countries: they simply make grades and materials that are not produced elsewhere in the world.

So, the number of exemptions by country doesn’t tell a complete story. By comparison, Turkey is having a tougher time because their products are, to put it bluntly, lower on the food chain and there are undoubtedly many top-quality producers in the U.S. of comparable material.

What does require further investigation, though, is why firms based in the U.S. but with foreign headquarters — essentially, subsidiaries of overseas firms — should be more successful than domestic consumers in achieving waivers.

As this graph from the Financial Times shows, Japan and Thailand have been by far the most successful in achieving waivers.

While material from Japan and Thailand has been the most successful, imports from Turkey, Canada and Brazil have been among the least successful.

There have been 135 requests decided for tariff exclusions for imports from Turkey, 32 from Canada and 23 from Brazil. The administration has granted just one request for Turkey, none for Canada and none for Brazil, the Financial Times reports.

These figures in themselves, though, do not explain why foreign-owned subsidiaries have had greater success in achieving waivers than U.S.-owned businesses.

The Commerce Department accuses Warren of misunderstanding the process — it wouldn’t be the first time a politician misunderstood a piece of legislation — but you would hope she was receiving expert advice, so let’s assume she has it right. If that is the case, the Commerce Department has a case to answer, and an audit is apparently underway.

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If these tariffs are to achieve the desired effect and if they are to be worth the cost to American firms and consumers (Ford Motor said it expects the steel and aluminum tariffs to cut $1 billion from its profits by the end of next year), then waiver decisions cannot be made in an arbitrary manner. These decision should work to an overall strategy that furthers the president’s aims, rather than hinders them.

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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 storylines here on MetalMiner:

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  • Nucor reported net earnings of $676.6 million in the third quarter.
  • Global zinc and lead demand is forecast to rise this year and next, according to the International Lead and Zinc Study Group.
  • MetalMiner’s Stuart Burns wrote about the power dynamics currently at play between Rome and Brussels, as Italy’s new ruling coalition has markedly different perspectives on the country’s economic direction.
  • The U.S. steel capacity utilization rate hit 77.7% as of Oct. 20, according to a recent American Iron and Steel Institute (AISI) report.
  • Palladium prices continue to rise.
  • The U.S. Department of Commerce issued preliminary determinations in its anti-dumping and countervailing duty investigations of steel propane cylinder imports from China.
  • The U.S.’s metals tariffs have had ripple effects around the world — India is among the countries looking to protect its steel sector in the tariffs’ wake.
  • Sticking in India, the gold buying during the country’s festival season isn’t quite as busy as it usually is, Sohrab Darabshaw explains.
  • Ford Motor Co. released its third-quarter earnings results earlier this week, which prompted a surge in its stock price yesterday.

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