Articles in Category: Anti-Dumping

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

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

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

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

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

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

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

Stock markets in the West react to peaks and troughs on the Shanghai stock market as if the market were a true indicator of the health of the Chinese economy. Shanghai has been down since talk of sanctions has spooked markets in China, Europe and the U.S.

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But in some parts of the world, where dependence on China is more than a simple +/- 0.1% of GDP, whole economies are reacting to the fear of a slowdown in China.

A recent Financial Times report details how the Aussie dollar has slumped 4.5% in just two weeks. Trade tensions have risen over investors’ fear for the prospects of the country’s largest trading partner, an indicator of how dependent has Australia become on China’s health and prosperity.

Likewise, copper, which for decades has been dubbed “Dr. Copper” for its supposed sensitivity to the health prospects for global growth, should maybe be renamed “Sino Copper” for the way in which it increasingly has become tied to the fortunes of one country (China) rather than the global economy.

After touching a four-year high of $7,348 a ton on June 7, copper has plunged 14%, or more than $1,000 to $6,303 a ton, the Financial Times reported, as investors fear a slowing China will be detrimental for copper demand later this year and next.

China is the world’s largest importer of copper, and Australia — the fifth-largest copper producer — is intimately tied to the world’s second-largest economy. China is its biggest customer, not just for copper but also for iron ore, coal, aluminum, bauxite and a range of other materials.

A follow-up article will analyze a wider range of metrics to better understand the state of the Chinese economy and to what extent the country’s growth trend for 2018 is a direct result of tariffs (compared to factors in play before April).

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What that will show is that China had much to contend with prior to tariffs and a trade war broke out. While massive foreign exchange reserves and a well-funded banking system means the economy is essentially sound, the current trade issues have come at a bad time for policymakers in Beijing and may partly explain the relatively restrained response from the authorities.

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This morning in metals news, a Chinese company that makes aluminum foil is suing the U.S. over anti-dumping and countervailing duties imposed on the product, Japan is concerned about a rise in Chinese steel exports and President Trump throws another supporting tweet behind his tariffs.

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Chinese Company Strikes Back at Anti-Dumping, Countervailing Duties

The subsidiary of Chinese company Shantou Wanshun Package Material Stock Co is suing the U.S. over anti-dumping and countervailing subsidy duties imposed on aluminum foil, Reuters reported.

The subsidiary, Jiangsu Zhongji Lamination Materials, was subjected to a countervailing duty of 17.14% and an anti-dumping duty of 37.99% earlier this year, according to the report.

Eyes on Chinese Steel Exports

Japan’s Iron and Steel Federation is keeping tabs on Chinese steel exports levels, particularly as U.S.-China trade relations deteriorate and, thus, could have a significant impact on the Chinese economy and steel demand within China.

“Our biggest worry is a scenario that the U.S.-China trade wars would dent China’s local demand, leading to a surge in China’s steel export,” said Koji Kakigi, the federation’s chairman, as quoted by Reuters.

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Trump Praises Tariff Tool

As the Office of the United States Trade Representative kicked off public hearings on proposed Section 301 tariffs worth $16 billion, President Trump again affirmed his stance on the trade tool, tweeting “Tariffs are the greatest!” on Tuesday morning.

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This morning in metals news, China initiated an anti-dumping probe of stainless steel imports worth a total of $1.3 billion, LME copper held above its one-year low Monday and President Trump will visit the Granite City steelworks in Southern Illinois this Thursday.

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China Investigates Stainless Imports

According to Reuters, China has initiated an investigation of stainless steel imports from Indonesia, Japan, Korea and the E.U.

The imports are worth a total of $1.3 billion, according to the report.

LME Copper Staves Off Further Losses, For Now

After hitting a one-year low, LME copper held above that level on Monday, Reuters reported.

London copper traded at $6,154/mt on Monday after falling to $5,988/mt on Thursday.

Trump to Visit Granite City

Announcements of the restarting of blast furnaces at U.S. Steel’s Granite City steelworks in Southern Illinois have represented a victory for the Trump administration, which has embarked on a program of tariffs and other trade remedies (including a 25% tariff on steel imports).

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Now, the president has announced he plans to visit the facility this Thursday.

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

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

Last week, the U.S. Department of Commerce announced it had launched anti-dumping (AD) and countervailing duty investigations of steel rack imports from China.

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The alleged dumping margins in the AD case are 130.0-144.5%, according to a DOC release.

The DOC added there 28 alleged subsidy programs for steel racks, “including five preferential loan and interest rate programs, one debt-to-equity swap program, six income tax and other direct subsidy programs, two indirect tax programs, seven less than adequate remuneration (LTAR) programs, as well as seven grant programs.”

The petition in the case was filed by the Coalition for Fair Rack Imports, which estimates that imports of steel racks in 2017 were valued at approximately $200 million.

Products covered in the investigation includes “steel racks and parts thereof, assembled, to any extent, or unassembled, including but not limited to, vertical components (e.g., uprights, posts, or columns), horizontal or diagonal components (e.g., arms or beams), braces, frames, locking devices (i.e., end plates and beam connectors), and accessories (including, but not limited to, rails, skid channels, skid rails, drum/coil beds, fork clearance bars, pallet supports, column and post protectors, end row and end aisle protectors, corner guards, row spacers, and wall ties).”

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The U.S. International Trade Commission is scheduled to make a preliminary ruling by Aug. 6, with the DOC following suit Sept. 13.

Steel giants Tata Steel and thyssenkrupp have been talking about it since 2016, but now they have finally managed to reach an agreement to merge their European operations into a 50-50 joint-venture, according to the BBC.

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The merged business, to be called thyssenkrupp Tata Steel, will have annual sales of about £13 billion (U.S. $17 billion) and be able to produce 21 million tons of steel per year. The delays in reaching an agreement have in part been due to intense union lobbying to protect the two companies’ 48,000 workers.

The agreement is said to protect jobs with no compulsory redundancies for the next eight years, according to The Telegraph. While no compulsory redundancies have been agreed upon, the tie-up is expected to lead to about 4,000 voluntary redundancies as overlaps are eliminated between the three main hubs of the combined group – IJmuiden in the Netherlands, Duisburg in Germany and Port Talbot in South Wales — with the head office based in the Netherlands.

It is hoped the merged group will make cost savings of between £350-£440 million a year (approximately U.S. $520 million), although unions have secured an agreement for the first £200 million of operating profits to be reinvested back into the business. thyssenkrupp Tata Steel will be the second-largest steel producer in Europe after ArcelorMittal and it is hoped its size will help it compete against rising competition from Chinese imports (made worse by President Donald Trump’s recent imposition of a 25% import tariff on steel made in the European Union).

Heinrich Hiesinger, thyssenkrupp CEO, is quoted by the BBC as saying even prior to the U.S. import duty the two companies needed to consolidate and become more efficient because of increasing pressure from imports and an overcapacity within the industry. The loss of the two companies’ largest export market just makes matters worse.

The consequences for the combined group’s profitability in the event of Brexit have not, at least publicly, been discussed, probably because no one knows what the impact will be on moving products and people across borders post-Brexit. The only comment from the company came from Tata Steel UK CEO Bimlendra Jha who said it would be a “sorry state of affairs” when asked what a hard Brexit would mean.

Importantly, it gives the two companies an increased scale and opportunity to achieve some economies as a result.

Steel prices have picked up this year. Generally, Europe’s steelmakers are doing better, but they face considerable uncertainty as to the impact and duration of the current U.S.-European trade conflict, the level of increased Chinese imports and the possible impact of Brexit.

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All in all, the merger may prove timely; the challenges ahead are many.

The president’s assertion that trade wars are easy to win is — at this stage, at least — looking a little less certain than it was at the outset.

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Not surprisingly, exporters to the U.S. impacted by actual and proposed import tariffs are threatening to retaliate with tariffs of their own.

The Financial Times reports comments from global automakers warning that plans to impose tariffs on auto imports could raise prices of imported vehicles by as much as $6,000 per car and raise the cost of locally made cars, most of which include some foreign content.

The most alarmist comments are, not surprisingly, from the Alliance of Automobile Manufacturers, which is quoted as saying that buyers of imported vehicles would face an average $5,800 price rise from a 25% tariff.

“Nationwide, this tariff would hit American consumers with a tax of nearly $45bn, based on 2017 auto sales. Not included in this figure are costs from tariffs on auto components,” the industry group said.

In reality, such a significant price increase on imported cars would push the market in favor of domestic manufacturers. So, 2017 auto sales are probably not an exact benchmark; however, even the cost of the Honda Odyssey produced in the U.S. would rise by $1,500-$2,000 because of its imported content, the Financial Times reports.

Should, as seems likely, overseas markets impose retaliatory tariffs, this could have a significantly negative impact on U.S. auto exports, which totaled $99 billion last year.

Not surprisingly, figures vary widely as to the likely impact on U.S. vehicle production and the potential for loss of American jobs.

The Alliance of Automobile Manufacturers, citing data from the Peterson Institute, suggests a 25% tariff on imported vehicles and components would result in a 1.5% decline in U.S. vehicle production and a loss of 195,000 American jobs over a period of one to three years; if other countries retaliate, job losses could increase to 624,000.

Economists at Oxford Economics, on that other hand, said new U.S. auto tariffs would have a modest direct impact on the economy, suggesting a 0.1% reduction in GDP in 2019 and 0.2% in 2020, representing 100,000 job losses in the first year.

Either way, outside of political circles there seem to be few suggesting it will be good for jobs or auto production in the short to medium term. Should tariffs remain in place in the medium to long term, they would almost certainly boost prospects for domestic automakers and hasten the realignment of supply chains to domestic component suppliers.

So far, of course, it is unclear if the president really intends tariffs to be a long-term feature or rather a tactic he has deployed as part of a negotiating strategy to force changes in the terms of trade with America’s partners. Should the strategy be successful, it’s possible some tariffs will never be applied or could be rescinded within a matter of months. Businesses, of course, can only afford to sit and wait so long before they have to take action after the point at which tariffs are actually applied.

After the president’s unprecedented tariffs on steel and aluminum, few are doubting his resolve. Component suppliers throughout the supply chain are no doubt busy evaluating the implications for their business.

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Tariffs or no tariffs, that process alone will encourage the reshoring of component supplies over the coming years.

Supply chain vulnerability has taken on a whole new urgency.

gui yong nian/Adobe Stock

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®:

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

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This morning in metals news, Canada could respond to the U.S. steel tariff with a broad global tariff of its own, the governor of Texas says the metals tariffs could harm the oil and gas sectors, and India could be the recipient of a flood of redirected Chinese steel.

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Canada Weighs Broad Tariff Option

The Canadian government is considering slapping tariffs or quotas on some steel imports from all of its trading partners, the Wall Street Journal reported.

The measures would seek to protect the Canadian industry from materials flooding the market as a result of the U.S.’s 25% steel tariff and subsequent redirected supplies.

Texas Gov. Warns of Tariffs’ Impact on Oil, Gas

Texas Gov. Greg Abbott, in a letter to President Trump, argued the steel and aluminum tariff enacted by the current administration will negatively impact the oil and gas sectors, the Texas Tribune reported.

“Our country’s steel and aluminum workers are a vital part of the national workforce, and creating jobs in that industry must be a top priority,” he said in the letter, according to the report. “But attempting to protect these jobs through the new tariffs could jeopardize the livelihoods of hundreds of thousands of Texans and other Americans employed in the oil and gas industry.”

Tariff Fallout

The U.S. tariff on steel only discourages imports — of course, it doesn’t make those physical totally disappear into the ether.

With that in mind, one asks: where will steel products previously destined for America now go in this post-Section-232 world? Particularly, where will Chinese inventory go?

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According to Bloomberg, India could be the destination for much of that supply. According to the report, as much as 80 million tons of steel (17% of global supply) could be diverted to other markets, including the fast-growing India.