Articles in Category: Company News

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This morning in metals news, U.S.-China trade talks have led to a tenuous truce, Nippon Steel says strong demand is easing the blow of the U.S.’s steel tariff, and shares of US Steel and AK Steel dropped on the heels of the latest developments in the U.S.-China trade talks.

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Trade Truce

On the heels of a visit from Chinese trade officials to Washington late last week, Treasury Secretary Steven Mnuchin over the weekend announced the two countries had reached somewhat of a truce, for now.

Of course, the longevity of that truce remains in question. According to the Washington Post, Mnuchin said on Monday that the president could still impose tariffs on Chinese goods if a deal can’t be reached to scale back the U.S. trade deficit with China.

Nippon Says Demand Working to Lessen Blow of U.S. Tariffs

Japan’s Nippon Steel & Sumitomo Metal Corp said strong demand for steel has cut the impact of the U.S.’s import tariff on the metal, according to a Reuters report.

“There has been no major impact from the U.S. tariffs thanks to solid global demand,” Katsuhiro Miyamoto, Nippon Steel executive vice president, told Reuters.

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US Steel, AK Steel Shares Down After China Truce Announcement

Shares of US Steel and AK Steel fell 1.1% and 2.6%, respectively, in premarket trade Monday, according to MarketWatch. The drop came on the heels of the weekend’s announcement regarding a truce between the U.S. and China on trade.

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

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  • In case you missed it, we updated our China MES microsite this week, covering the status of China’s quest for market-economy status and the U.S.’s pushback. Check out the updated page here.
  • MetalMiner’s Stuart Burns wrote about growth in India and the country’s new bankruptcy code.
  • Staying with India, the country went to the World Trade Organization (WTO) to express concern about the U.S.’s steel and aluminum tariffs.
  • Alcoa made a big announcement about its new Elysis joint venture and new technology promising a green aluminum smelting process, but that process might not be as green as it is being billed to be.
  • Secretary of Commerce Wilbur Ross addressed the National Press Club earlier this week in a speech that saw China, Europe and the WTO come in for criticism.
  • The U.S. claimed victory after an WTO Appellate Body ruling in the long-running dispute vis-a-vis subsidies for Airbus.
  • The rising oil price could have a far-reaching impact going forward.
  • With the U.S.-China trade relationship and the role of the WTO in the news quite a bit of late, Burns took a look at the state of the modern global trading system. (Part 1, Part 2)

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This morning in metals news, Tata Steel completed its buy of the bankrupt Bhushan Steel, Chinese steel mills are turning to scrap and Turkey is preparing to respond over the U.S. tariffs on aluminum and steel.

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Tata Steel Buys Bhushan Steel

Indian firm Tata Steel completed its purchase of the bankrupt Bhushan Steel for $5.2 billion, Reuters reported.

Bhushan has an annual steelmaking capacity of 5.6 million tons, according to the report.

Scrapping Plans

Amid environmental rules, Chinese steel mills are looking to use more scrap, according to a report by the South China Morning Post.

The recycling of material comes as the government continues to crack down on “smoke-stack industries,” according to the report.

Turkey Plans Response on Section 232 Tariffs

Turkey is among the many countries not to have won an exemption from the U.S.’s Section 232 tariffs on steel and aluminum; unsurprisingly, Turkey is planning a response, according to one report.

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Turkey plans to impose tariffs worth about $266.5 million on U.S. products, including coal, paper, walnuts, almonds, tobacco and unprocessed rice, among other items, according to a report by the Hurriyet Daily News.

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The World Trade Organization’s (WTO) dispute settlement mechanism is not known for its speed. As such, it took a while for a final ruling to come down with respect to the long-running dispute over the U.S.’s claim that European subsidies of Airbus have negatively impacted Boeing’s sales.

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The U.S. initially requested consultations with the U.K., France, Germany and Spain in October 2004, arguing that they had fallen afoul of the Subsidies and Countervailing Duties Agreement and the GATT 1994. In general, the U.S. complaint focused on five general categories: what the WTO report refers to as “launch aid” or “member state financing”; loans from the European Investment Bank; infrastructure and instrastructure-related grants; corporate restructuring measures; and research and technological development funding.

Fast forward more than 13 years to Tuesday, when the WTO’s Compliance Appellate Body ruled that the European states have fallen short of compliance with WTO rules by virtue of subsidies to Airbus, which the U.S. has argued have materially harmed Boeing.

According to the WTO’s appellate report released Tuesday, “the European Union had failed to comply with the recommendations and rulings of the DSB (Dispute Settlement Body) in the original dispute because the underlying subsidies continued to exist and cause adverse effects.”

According to a 2011 appeal, the European states argued they had taken steps to remove $18 million in subsidized financing, but the U.S. in 2016 filed a formal appeal disagreeing with that motion.

This week, the WTO ruled in the U.S.’s favor on appeal — albeit not on every single complaint —  arguing that the European communities are still out of compliance.

It didn’t take long after the report’s release for the threat of retaliation to surface.

“This report confirms once and for all that the EU has long ignored WTO rules, and even worse, EU aircraft subsidies have cost American aerospace companies tens of billions of dollars in lost revenue,” U.S. Trade Representative Robert Lighthizer said in a prepared statement on the verdict Tuesday. “It is long past time for the EU to end these subsidies. Unless the EU finally takes action to stop breaking the rules and harming U.S. interests, the United States will have to move forward with countermeasures on EU products.”

Subsidies to the A350XWB and A380 aircraft negatively impacted the sales of Boeing’s 787 and 747 aircraft, respectively, the Appellate Body’s decision said.

Boeing celebrated the ruling in a statement Tuesday.

“Today’s final ruling sends a clear message: disregard for the rules and illegal subsidies is not tolerated. The commercial success of products and services should be driven by their merits and not by market-distorting actions,” said Dennis Muilenburg, Boeing chairman, president and CEO. “Now that the WTO has issued its final ruling, it is incumbent upon all parties to fully comply as such actions will ultimately produce the best outcomes for our customers and the mutual health of our industry. We appreciate the tireless efforts of the U.S. Trade Representative over the 14 years of this investigation to strengthen the global aerospace industry by ending illegal subsidies.”

According to the Boeing statement, retaliatory tariffs could be scheduled as early as 2019.

The Boeing-Airbus saga, however, is far from over.

Another case on the WTO docket, in which Boeing is the respondent and the European states are complainants, looms on the horizon. The point in question involves tax reduction benefits from Washington state, which is expected to be ruled upon by the WTO later this year.

“Today’s significant legal success for the European aviation industry confirms our strategy which we have followed over all those years of the dispute,” Airbus CEO Tom Enders said in a prepared statement. “Of course, today’s report is really only half the story – the other half coming out later this year will rule strongly on Boeing’s subsidies and we’ll see then where the balance lies.”

E.U. Trade Commissioner Cecilia Malmström also addressed the Appellate Body decision in rosier terms for the Europeans.

“Today the WTO Appellate Body, the highest WTO court, has definitively rejected the US challenge on the bulk of EU support to Airbus, and agreed that the EU has largely complied with its original findings,” she said. “Significantly, it dismissed the vast majority of the US claims that this support had damaged Boeing’s aircraft sales. The EU will now take swift action to ensure it is fully in line with the WTO’s final decision in this case. Also, we look forward to the upcoming ruling by the Appellate Body on US compliance with the WTO findings of the massive and persistent government support to Boeing.”

Tuesday’s decision only contributes to the increasingly simmering cauldron of global trade relations.

The E.U. has yet to negotiate a long-term exemption from the U.S.’s Section 232 tariffs on steel and aluminum; the 28-member bloc initially won a temporary exemption until May 1, then received a 30-day extension less than 24 hours before the tariffs were set to go into effect.

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In comments at a National Press Club luncheon earlier this week, Secretary of Commerce Wilbur Ross focused largely on China, but the E.U. also came in for criticism, as he argued both China and the E.U. are “far more protectionist” than the U.S.

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This morning in metals news, the parent company of Japan’s second-largest steelmaker said the U.S. steel tariff on steel had yet to impact its exports, Novelis breaks ground on a new automotive aluminum facility in Kentucky and a NAFTA deal is unlikely to happen by the May 17 deadline put forth by U.S. House Speaker Paul Ryan, according to the Mexican economy minister.

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JFE President: U.S. Tariff Hasn’t Impacted Firm’s Steel Exports

According to Eiji Hayashida, president of JFE Holdings Inc. (the parent company of Japan’s second-biggest steelmaker), the U.S. tariff on steel has yet to impact its exports, but that U.S. trade policy in general poses the biggest risk to the Japanese economy, Reuters reported.

Hayashida said the biggest threat to Japan’s economy is “Trump risk,” according to the report.

Breaking Ground

Novelis broke ground on a new $300 million automotive aluminum facility in Kentucky, Business Facilities reported.

The facility is scheduled to open in 2020, according to a Novelis release, and will boast an annual nameplate capacity of 200,000 metric tons.

NAFTA Deal This Week? Unlikely, Says Mexican Economy Minister

Earlier this month, U.S. Trade Representative Robert Lighthizer said he wanted to see a deal on the North American Free Trade Agreement (NAFTA) this month, with House Speaker Paul Ryan setting a May 17 deadline for a deal in order for it to be approved by the current Congress.

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According to Mexican Economy Minister Ildefonso Guajardo on Tuesday, however, a deal is unlikely to happen this week, but that it could happen this year, Reuters reported.

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Full disclosure – I am an owner of an iPhone, iPad and Macbook — and I don’t mind admitting it, a  longtime fan of Apple’s products — but even I cringe when the firm claims to have “worked with other metal companies to develop the proprietary technique, which allows for the generation of ‘green’ aluminium for the first ever time.”

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The claim follows the announcement late last week that at its Pittsburgh research center, Alcoa has developed a replacement for the carbon anodes used in the smelting of alumina to aluminium.

The carbon anode has the important role of delivering a strong electric current through the melt, but in the process carbon is converted to carbon dioxide and considerable levels of greenhouse gas emissions are produced.

But although Apple is said to be investing C$13 million (U.S. $10 million) in the joint venture called Elysis, it is a drop in the ocean compared to the C$120 million of funding from the governments of Canada and Quebec and, further, the C$55 million invested by Alcoa and Rio Tinto in order to achieve commercialization of the technology over the next five years.

Indeed, Alcoa and Rio each have a 48% stake in the JV, with the rest owned by the government of Quebec, so quite how Apple can claim any fame in this venture is hard to see.

OK, Apple’s hubris aside: is this a step forward in lowering aluminum’s carbon footprint?

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Major metals industry players Alcoa and Rio Tinto last week announced the world’s first carbon-free aluminum smelting process, which the firms billed as “the most significant innovation in the aluminium industry in more than a century.”

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The firms announced the innovation, which is the development of a smelting process that yields oxygen and removes greenhouse gas emissions from the traditional smelting process, according to a joint announcement from the companies.

“To advance larger scale development and commercialization of the new process, Alcoa and Rio Tinto are forming Elysis, a joint venture company to further develop the new process with a technology package planned for sale beginning in 2024,” the Alcoa release stated.

“Elysis, which will be headquartered in Montreal with a research facility in Quebec’s Saguenay–Lac-Saint-Jean region, will develop and license the technology so it can be used to retrofit existing smelters or build new facilities.”

According to the release, Alcoa and Rio Tinto are investing $55 million (CAD) in the venture, with Canada and Quebec investing $60 million (CAD) each.

Apple is also in on the venture, investing $13 million (CAD). Apple will also contribute technical support to the joint venture partners, according to the release.

“This discovery has been long sought in the aluminum industry, and this announcement is the culmination of the work from many dedicated Alcoa employees,” Alcoa President and CEO Roy Harvey said in the prepared statement. “Today, our history of innovation continues as we take aluminum’s sustainable advantage to a new level with the potential to improve the carbon footprint of a range of products from cars to consumer electronics.”

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The announcement certainly would mark a victory for greener processes — and with the reported investment totals going into Elysis, there is quite a bit of institutional support behind it.

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This morning in metals news, Tata Steel plans to offload some of its European businesses, copper prices bounced back and Mexico is reportedly open to a compromise on auto content as part of the North American Free Trade Agreement (NAFTA) renegotiation talks.

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Tata Steel Looking to Sell

Tata Steel is looking to offload some of its European operations, The Telegraph reported.

According to the report, the sale would affect 1,100 workers at the five businesses, which includes Cogent in Wales.

Copper Recovers

Copper prices recovered Wednesday after dipping Tuesday, Reuters reported.

However, according to the report the gains were limited because of investor caution on the heels of President Trump’s decision to withdraw from the Iran nuclear deal.

An Auto Compromise

As NAFTA renegotiation talks continue, Mexico has come to the table with a compromise on auto content, Bloomberg reported.

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According to the report, Mexican negotiators have put forward a 70% figure for automotive content, which would represent an increase from the current level (62.5%) but is lower than the more recent 75% level proposed by U.S. negotiators.

Before we head into the weekend, let’s take a look back at the week that was.

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But first, if you plan on partaking in Cinco de Mayo celebrations tomorrow, you might want to check out our post from 2016 about stainless steel and … tequila.

“Why is stainless steel in tequila production? Of course, stainless vats are a sanitary choice; however, stainless does not impart any additional flavors into the mixture of blue agave juice and the distinctive water called the mosto,” MetalMiner’s Katie Benchina Olsen wrote in the 2016 post.

Check out the entire post for more about the link between stainless steel and tequila.

Now, to recap the week:

  • MetalMiner’s Stuart Burns touched on nickel fundamentals on Monday.
  • The United States Trade Representative’s office released its annual Special Section 301 report, in which countries are identified for special monitoring with respect to IP enforcement. Unsurprisingly, China made the Priority Watch List.
  • Remember Brexit? Well, that hasn’t gone away — in two parts, Burns offers an update on Britain’s Brexit effort and all it entails. (Part 1, Part 2.)
  • In the ongoing Section 232 saga, the U.S. announced earlier this week that the temporary tariffs exemptions for the E.U., Canada and Mexico, which were set to expire May 1, would be extended 30 days.
  • Kicking off our Monthly Metals Index (MMI) series for the month, we looked at the automotive market, which saw sales slump in April.
  • U.S. construction spending in March dropped from the previous month.
  • MetalMiner’s Katie Benchina Olsen delves into the case for a Section 232 exemption for the joint venture between ATI Metals and Tsingshan Stainless.
  • Demand for gold in Q1 this year was at its lowest since 2008, MetalMiner’s Taras Berezowksy noted.
  • So-called “floating solar plants” are gaining momentum in India as the country increasingly looks to grow its supply of renewable energy sources.

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

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On March 26, ATI Metals filed an exemption to the Section 232 tariffs on behalf of its joint venture (JV) with Tsingshan Stainless called Allegheny & Tsingshan Stainless.

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In November 2017, the JV sought to produce and market 60” wide sheet in the North American market, a width ATI can no longer melt and cast due to the idling of its Midland, Pennsylvania, melt shop. Chinese company Tsingshan, the largest stainless steel producer in the world, has supplied the slab since Q4 2017 from its vertically integrated mining, refining and casting assets in Indonesia.

ATI has been converting slab using its state-of- the-art Hot Rolling and Processing Facility (HRPF) in Brackenridge, Pennsylvania, and the JV’s Direct Rolled Anneal and Pickle (DRAP) facility in Midland.

Although ATI has long supported anti-dumping and countervailing lawsuits in the United States to combat unfairly traded imports, the JV presents a unique situation.

Although the final hot and cold rolled stainless steel is produced in western Pennsylvania, the slab is currently subject to the 25% Section 232 tariff because it is of Indonesian origin. To claim an exemption from the tariff, ATI must prove that there are no viable alternatives available in the United States.

In last week’s earnings call, Outokumpu’s CEO Roeland Baan stated that they could supply slab from its Calvert, Alabama, facility, and, thus, ATI should not receive an exemption. Others have proposed that ATI could restart its 60” wide melt shop in Midland, Pennsylvania, idled three years ago.

Are these options feasible?

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