Articles in Category: Anti-Dumping

gui yong nian/Adobe Stock

This morning in metals news, Goldman Sachs’ chief economist said the if the U.S. imposes steel and aluminum tariffs, the decision could preceded an exit from the North American Free Trade Agreement (NAFTA); the president’s trade adviser said exceptions in the proposed new tariffs are unlikely and LME copper holds above its two-week low.

Section 232 buying strategies – grab your copy of MetalMiner’s Section 232 Investigation Impact Report for only $74.99!

Tariffs Could be Harbinger of NAFTA Exit

As the world reacted to President Trump’s announcement regarding impending steel and aluminum tariffs, many are also looking at how the development will impact the ongoing NAFTA renegotiation talks.

According to Goldman Sachs’ chief economist, Jan Hatzius, there is a “good chance” that Trump could eventually announce a withdrawal from NAFTA, according to a CNBC report.

Hatzius also said the administration’s tariff proposal “does not rely on any economic argument and instead imposes trade restrictions on national security grounds.”

Trading Partners Hope to be Spared From Tariffs

As countries like Canada and Australia, among others, continue to hold out hope that they will be spared from Trump’s announced tariffs on steel and aluminum, the president’s trade adviser said exceptions are unlikely.

Peter Navarro, the White House trade adviser, pushed back against the notion of case-by-case exceptions, saying “As soon as he starts exempting countries, he has to raise the tariff on everybody else,” according to a Washington Post report.

Copper Flattens Just Above 2-Week Low

After falling 0.4% in the previous trading session, LME copper held flat Monday, according to Reuters.

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

The metal hit $6,895 per ton as of 07:19 GMT.

President Trump’s announcement that the U.S. intends to impose 25% import tariffs on steel and 10% import tariffs on aluminum following the Departments of Commerce’s section 232 review has been met with mixed reactions.

Section 232 buying strategies – grab a copy of MetalMiner’s Section 232 Investigation Impact Report today!

Steel and aluminum producers in the U.S. applauded the move. Meanwhile, U.S. stock markets reacted negatively with the Dow plunging 586 points at one stage before managing something of a recovery to close more than 400 points down yesterday.

Markets will adjust, but foreign governments have reacted with equal dismay.

Not surprisingly China was the most diplomatic, expressing “grave concern” and according to The Guardian newspaper, adding “China urges the US to exercise self-restraint, not to implement trade protection tools, confront multilateral trading rules and make a contribution to global trade regulations,” quoting Hua Chunying, a foreign ministry spokesperson.

Japan was more specific, saying “The 25% across the board tariff on foreign steel is ill advised and naïve. Rather than saving American jobs it will destroy many tens of thousands of good, well-paying manufacturing jobs from steel consuming industries. It will inevitably invite retaliation from America’s most reliable allies, ultimately hurting American non-manufacturing industries as well.,” according to the Japan Steel Information Centre.

But the strongest criticism came from some of the U.S.’s closest allies.

CNBC quoted Canadian officials who pledged to respond to U.S. tariffs with their own measures. Canadian Trade Minister Francois-Phillippe Champagne called tariffs “unacceptable,” according to the news site, adding a pledge to defend Canadian workers in the steel and aluminum industry.

Chrystia Freeland, Canada’s minister of foreign affairs, is quoted as saying trade restrictions would hurt workers and manufacturers on both sides of the border. She raised a point that came up during the appraisal process by the Department of Commerce, saying it is inappropriate for the U.S. to view any trade with Canada as a national security threat. Both economically and politically, the two countries are such close allies it seems likely a carve-out may yet be made for the northern neighbor’s steel and aluminum industries.

As CNBC observes, Canada would be hit particularly hard by the tariffs. Between 2013 to 2016, Canada was the largest source of steel and aluminum imports to the U.S., with the trade critical to both countries.

Meanwhile Europe has reacted with similar annoyance, feeling it has been caught up in a move against China, where the E.U. is as much a victim as the U.S. from emerging market dumping.

European Commission President Jean-Claude Juncker issued a strongly worded statement, saying the E.U. “will not sit idly” following the U.S. leader’s decision to slap tariffs on all imports. The E.U. had been hoping for a carve-out similar to that expected by Canada. CNBC quotes Juncker saying “we strongly regret this step, which appears to represent a blatant intervention to protect U.S. domestic industry and not to be based on any national security justification.”

Most countries say they will take cases to the World Trade Organization (WTO), but that has always proved to be a long, drawn out affair.

In the meantime, you can be sure there is intense diplomatic activity going on to make special cases of just about everyone.

Free Sample Report: Our Annual Metal Buying Outlook

The probability is this is far from the end of this story. There will likely be adjustments to the blanket position indicated as an opening gambit, so this is more like the beginning of a much longer  — and possibly increasingly acrimonious — process.

gui yong nian/Adobe Stock

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

Need buying strategies for steel? Try two free months of MetalMiner’s Outlook

Want to a see Cold Rolled price forecast? Get two monthly reports for free!

If you’re in the metals industry, you have likely been waiting a long time for word from the White House on what the president will do vis-a-vis the U.S. Department of Commerce’s Section 232 investigations of aluminum and steel imports.

Section 232 buying strategies – grab a copy of MetalMiner’s Section 232 Investigation Impact Report today!

The probes, launched last April, fell under Section 232 of the Trade Expansion Act of 1962, which grants the president authority to limit imports if they are determined to be detrimental to national security.

After many months, the president announced Thursday that his administration plans to implement tariffs of 25% on steel and 10% on aluminum next week. More details still need to emerge — for example, will any countries, like Canada or Australia, garner exemptions? — but the announcement yesterday had the whole metals world talking.

Further news should be coming next week, when Trump’s announcement could become an actual legal proclamation. Until then, the MetalMiner team broke down the Section 232 landscape, including what the announcement might mean for you.

To access the MetalMiner team’s full breakdown of the Section 232 issue, visit our dedicated Section 232 Report Investigation Impact page to download the full report.

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

After a hectic morning during which it seemed like a Section 232 announcement from President Trump was coming, before it then it seemed like it would be postponed, an announcement did finally come.

Section 232 buying strategies – download MetalMiner’s Section 232 Investigation Impact Report today!

CNN reported earlier today that Trump said his administration will put tariffs on steel and aluminum imports of 25% and 10%, respectively, next week. The numbers as announced today differ from those offered up in the Section 232 recommendations produced by Secretary of Commerce Wilbur Ross (which were made public in mid-February).

Unsurprisingly, the announcement was felt throughout the metals world, up and down the value stream.

“We appreciate the President’s commitment to strengthening the U.S. aluminum industry,” said Heidi Brock, president and CEO of the Aluminum Association, in a prepared statement. “We look forward to working with the President on implementation and to creating a more level playing field.”

Scott Paul, president of the Alliance for American Manufacturing, expressed support but urged Trump to follow through with a broad action.

“We’re on the brink of a potentially historic rebalance of America’s trade priorities,” Paul said in a prepared statement. “As we noted in a letter to the president this week and our cable TV ad, we are confident a robust steel trade action is good for our economy. A decision to retore sanity to global steel markets will help create domestic jobs and preserve our national security.

“But to achieve those results, the president’s enforcement action must be broad, robust and comprehensive. We urge the president to stand by our nation’s steel communities. They are counting on him to follow through on this.”

The announcement was not met positively by everyone, however.

“Today’s decision by the Administration to implement new tariffs severely harms the $37 billion U.S. recreational boating industry and the 650,000 American workers it supports,” said Thom Dammrich, president of the National Marine Manufacturers Association, in a statement. “While these tariffs are meant to protect American manufacturing, they do just the opposite. U.S. manufacturers, like those in our industry, which use American-made aluminum, depend on a competitive global market and fair pricing. What’s more, U.S. aluminum manufacturers are at capacity and unable to supply the aluminum sheet used by our members, forcing them to seek it overseas.”

Many associations and government officials alike have warned that the tariffs could set off a trade war, cautioning retaliation should the U.S. impose the tariffs. The European Steel Association (EUROFER), responded to the president’s announcement on Thursday.

 “From one day to the next, EU steel exports to the US – which were at 5 million tonnes in 2017 – will be cut drastically by an estimated 50% or more. The same will happen with all other countries exporting steel to the US. We expect that the tariff could restrict US imports by up to 20-25 million tonnes overall. This would represent a volume representing more than half the total EU imports of 2017 (40 million tonnes),” said Axel Eggert, director general of EUROFER, in a prepared statement. “In the current context of massive global excess steel capacity, markets will be forced to take preventive contingency actions to avoid domestic market disruption from trade deflection.”

The announcement from Trump roiled the markets today. The CBOE’s Volatility Index — or VIX, by its ticker symbol, surged Thursday afternoon, indicating greater volatility.

The VIX shot up Thursday following Trump’s announcement on the intention to impose steel and aluminum tariffs next week. Source: CBOE

Elsewhere, the Dow Jones dropped more than 400 points after Trump’s announcement, CNBC reported.

Steel and aluminum stocks, however, received a boost from the announcement.

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

As of just after 3 p.m. Eastern Time, Nucor Corporation was up 3.04%, while AK Steel was up 7.36%. Century Aluminum was up 8.24% for the day, and U.S. Steel posted a 6.09% increase.

stockquest/Adobe Stock

This morning in metals, the president tweets about steel and aluminum (current Section 232 probes under his consideration), Apple’s move on cobalt and China plans to crack down on aluminum price speculation.

Section 232 buying strategies – download MetalMiner’s Section 232 Investigation Impact Report today!

Trump Tweets About Steel, Aluminum; Announcement Possibly Coming Today

According to the Washington Post, during a planned announcement today the president could announce plans for steel and aluminum trade action.

This morning, the president tweeted on the subject, writing:

According to the Washington Post report, there is a chance the announcement might still be postponed.

Apple and Cobalt

Last week, Apple announced it would be seeking to buy cobalt — coveted for its application in things like electric car batteries and cellphones, among other things — directly from miners, as Bloomberg reported.

According to the report, Apple is looking to buy several thousand metrics tons of cobalt for five years or more.

China Targets Excessive Nonferrous Metals Speculation

China’s Ministry of Industry and Information Technology MIIT is looking to crack down on excessive speculation in nonferrous metals, like aluminum, according to a Reuters report.

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

According to the report, the MIIT plans to work nonferrous metals associations and other departments to tamp down speculation.

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

This morning in metals news, China’s Ministry of Commerce expressed displeasure with the U.S. Department of Commerce’s ruling Tuesday on aluminum foil, the European Union will retaliate if the U.S. imposes steel tariffs and the copper price takes a dip.

Buying Aluminum in 2018? Download MetalMiner’s free annual price outlook

China Expresses Dissatisfaction with Aluminum Foil Ruling

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

Unsurprisingly, the Chinese government is not pleased about the decision.

In a statement from China’s Ministry of Commerce, Wang Hejun, the head of the ministry’s Trade Remedy and Investigation Bureau, was quoted by CNBC as saying, “The U.S. has disregarded the WTO rules and seriously damaged the interests of China’s aluminium foil exporters. China is strongly dissatisfied with this.”

German Deputy Economy Minister Warns of E.U. Response to Possible U.S. Steel, Aluminum Tariffs

As nations around the world prepare for the U.S. decision on steel and aluminum tariffs (stemming from the Department of Commerce’s Section 232 investigations, launched in April 2017), some are warning the U.S. of retaliation.

Germany’s deputy economy minister, Matthias Machnig, said E.U. trade ministers agreed Tuesday to respond to U.S. steel or aluminum tariffs, according to a Reuters report.

Copper Takes a Dip

The copper price fell to a two-week low Wednesday on account of a strengthening dollar and disappointing Chinese data, according to a Reuters report.

Want to see an Aluminum Price forecast? Take a free trial!

The price fell to $6,988 per ton, according to the report.

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

The Department of Commerce on Tuesday issued a final affirmative determination in its anti-dumping and countervailing duty investigation of aluminum foil imports from China.

Buying Aluminum in 2018? Download MetalMiner’s free annual price outlook

“This Administration is committed to trade that is fair and reciprocal, and we will not allow American workers and businesses to be harmed by unfair imports,” Secretary of Commerce Wilbur Ross said in a department release.

The foil products covered in the investigations are of a thickness of 0.2 mm or less, in reels exceeding 25 pounds (regardless of width). Foil products excluded from the scope of the probes are “aluminum foil backed with paper, paperboard, plastics, or similar backing materials on one side or both sides of the aluminum foil, as well as etched capacitor foil and aluminum foil that is cut to shape.”

A petition was filed by the Aluminum Association’s Trade Enforcement Working Group on March 9, 2017, marking the first time the association had filed a petition on its members’ behalf in its 85-year history, according to an Aluminum Association release.

The department calculated the following dumping rates:

Meanwhile, the department calculated the following subsidy rates:

  • Dingsheng Aluminum Industries (Hong Kong) Trading Co., Ltd.: 19.98%
  • Jiangsu Zhongji Lamination Materials Co., Ltd.: 17.16%
  • Loften Aluminum (Hong Kong) Limited: 80.97%
  • Manakin Industries LLC and Suzhou Manakin Aluminum Processing Technology Co., Ltd.: 80.97%
  • All others: 18.57%

Heidi Brock, president and CEO of the Aluminum Association, praised the Department of Commerce’s ruling.

“The Aluminum Association and its foil-producing members are extremely pleased with the Commerce Department’s final determinations that aluminum foil from China is being sold unfairly in the United States,” she said.  “We appreciate Secretary Ross’s leadership in enforcing rules-based global trade. U.S. aluminum foil producers are among the most competitive producers in the world, but they cannot compete against products that are sold at unfairly low prices and subsidized by the Government of China.”

The U.S. International Trade Commission is scheduled to make final determinations in the anti-dumping and countervailing duty cases April 12, after which — should it rule in the affirmative — anti-dumping and countervailing duty orders would be issued April 19.

Want to see an Aluminum Price forecast? Take a free trial!

Imports of aluminum foil from China in 2016 were estimated at a value of $389 million, according to the Department of Commerce.

Although my colleagues have written in detail exploring the specifics of the Section 232 investigations in steel and aluminum, recently completed by the U.S. Department of Commerce, it is worth considering the likely outcomes.

This is particularly true for aluminum, because the production market is not as integrated as it is for steel. Often, primary producers and downstream are not vertically integrated, making decision-making more complex.

Section 232 buying strategies – download MetalMiner’s Section 232 Investigation Impact Report today!

One can understand why President Trump is taking his time to make a decision on the twin section 232 investigations.

Although the premise of both investigations is the same — namely that steel and aluminum imports threaten to impair the national security of the United States — the two industries and their respective supply chains differ considerably.

A Background of Decline

The U.S. aluminum industry has a primary smelting sector that has been in decline since the turn of the century, but particularly in the last five years, as this graph from Statista illustrates.

Today, the U.S. has just eight plants with a combined annual production capacity of 1.82 million tons. According to Reuters, actual production last year was 785,000 tons, translating into a capacity utilisation rate of 43.2%.

That’s dire by any industry standards and qualifies the Commerce Department’s argument that at such levels an industry cannot be profitable, cannot invest in the future, and cannot afford research, development or innovation.

Yet to get it to the 80% target espoused in the report would require only 669,000 tons of idled capacity to be brought back onstream. We will come back to that shortly, but not before we take a quick look as to where some 90% of U.S. primary aluminium imports are coming from.

Import Sources

Source: Reuters

As this graph from Reuters shows, Canada, Russia and Brazil are by far the largest suppliers of primary aluminum into the U.S. market. There is no suggestion as to clawing significant chunks of this production back to U.S. shores; 669,000 tons is just the tip of the iceberg.

Sector Snapshot

The major part of the U.S. aluminum industry is made up of downstream suppliers producing semi-finished products, from plate and bar down to sheet, foil, wires, tubular products, and cast and forged parts.

This downstream sector faces a different set of challenges from the primary producers.

Some semis manufacturers rely on competitively priced imports of primary metal or billets in order for them to compete in export markets or domestically against foreign suppliers for the same finished goods. Other semi-finished manufacturers, arguably more at the commodity end of the market, face intense competition from imported semi-finished products depressing domestic U.S. price levels. The supply base for semi-finished products is different from the primary market, as the below graph from Reuters shows.

Source: Reuters

Here China, despite previous anti-dumping actions, remains a major supplier and is likely the main target for the Commerce Department’s actions.

Winners and Losers

A blanket tariff increase across the board would clearly create massive winners and losers because of the complexity of the aluminium market.

The Commerce Department is proposing either an across-the-board import tariff of 7.7% or a quota system limiting imports to 86.7% of  last year’s levels. A third option would be to target five countries with a draconian 23.6 % tariff, with everyone else subject to a quota also set at last year’s imports. Clearly, in the primary market Canada is going to be given an exemption, so rather than across the board, any tariffs or quotas are more likely to be country specific.

Likewise, with semi-finished products China and its intermediary shipping points, such as Vietnam and Hong Kong, are also likely to be the principal targets. Not surprisingly, the prospect of China being partially shut out of the U.S. market is sending shivers through governments in other parts of the world, fearful of where those redirected trade flows will end up.

Of course, it’s entirely possible nothing will be done.

Blocking Russian and Venezuelan imports of primary aluminum will not immediately make U.S. smelters viable again. Smelter closures have more to do with power costs than solely foreign competition. In addition, as my colleagues Lisa Reisman and Irene Martinez wrote this week, to bring an idled smelter back onstream is a medium-term proposition. A decision in April would not see capacity come back onstream this year, so any action has to be timed carefully.

Want to see an Aluminum Price forecast? Take a free trial!

The LME spiked on the release of the investigation’s findings and CME physical delivery premiums have climbed. For now that’s probably it, but be prepared for further volatility as the decision deadline of April 20 approaches.

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

Need buying strategies for steel? Try two free months of MetalMiner’s Outlook

  • What’s up with aluminum? After a strong 2017 the metal hasn’t seen as much upward movement as some other base metals. Our Stuart Burns looked into why that might be.
  • Meanwhile, the British steel industry could be due for a jolt of investment, leading to some signs of a recovery, Burns writes.
  • There’s a new name entering the electric vehicles fray, Burns writes, and it might not be a brand you’d associate with the automotive sector.
  • In light of the markets’ recent volatility, Irene Martinez Canorea surveyed the relationship between the VIX — the ticker symbol for the CBOE’s Volatility Index — and commodities.
  • In case you missed it, last Friday the Department of Commerce made public it Section 232 reports and recommendations on steel and aluminum (the reports had already been sent on to the president last month). Lisa Reisman and Irene Martinez Canorea broke down the reports and their implications for aluminum, specifically. Check out the three-part series at the following links: Part 1, Part 2 and Part 3.
  • Lithium is a material that’s both rare and increasingly coveted for applications like electric vehicle batteries. So, is the world doomed to run out of it, or will demand encourage investment in finding new supply? Burns delved into the matter earlier this week.
  • The U.S. International Trade Commission voted last week that imports of carbon and alloy wire rod from South Africa and Ukraine are injurious to the domestic industry.
  • We touched on Section 232 aluminum above — what about steel? Reisman added her thoughts on the steel investigation, ranging from capacity utilization rates to trade remedies to talks of a looming trade war.

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