Articles in Category: Exports

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While the U.S. and China earlier this year announced a so-called “phase one” trade deal, questions remained about commitments and the enforcement of the deal’s provisions.

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As such, despite forestalling the implementation of new planned tariffs, the U.S. opted to maintain the bulk of the previously imposed tariffs on Chinese goods, amounting to roughly $370 billion.

At the time, President Donald Trump said the U.S. would leave the tariffs in place, but could remove them if a phase two deal is struck; however, it remembers to be seen when, or if, such a deal will be reached between the world’s two largest economies.

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This morning in metals news, the U.S. International Trade Commission (USITC) made a negative determination in the ongoing anti-dumping probe of fabricated structural steel imports, the Pilbara Ports Authority released January shipment data and Norsk Hydro will offer aluminum solutions for ships under construction for a Norwegian shipowner.

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Steel rebar is a crucial material for its use in construction, which is often cited in surveys of general economic health and activity.

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For instance, U.S. construction spending in December reached a seasonally adjusted annual rate of $1,327.7 billion, down 0.2% from November and up 5.0% compared with December 2018 spending.

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The Financial Times reported the eurozone’s economy is growing at the slowest rate since the bloc’s debt crisis seven years ago, according to data published late last week.

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The Eurozone grew at a quarterly rate of 0.1% in the fourth quarter, its slowest rate of expansion since early 2013.

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Before we head into the weekend, let’s take a look at the week that was and some of the metals storylines here on MetalMiner, including coverage of: copper prices and the coronavirus’ impact; European steel consumption; Jingye’s British Steel takeover bid; U.S. steel production; automotive sales and more.

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This morning in metals news, the U.S. steel sector’s capacity utilization rate reached 82.1% as of Jan. 11, Pilbara Ports Authority throughput in December 2019 rose 2% and the U.S. removed the label of currency manipulator it had imposed on China last year.

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U.S. steel capacity utilization rate hits 82.1%

According to the American Iron and Steel Institute (AISI), the U.S. steel industry’s capacity utilization rate for the year through Jan. 11 reached 82.1%.

During the period, mills produced a total of 3.01 million tons, which marked a 2.3% year-over-year increase (last year during the same period, the capacity utilization rate was 80.4%).

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This morning in metals news, President Donald Trump won’t go through with a previous tariff threat on Brazilian steel and aluminum, Chinese stainless steel production growth is forecast to drop in 2020, and a power outage impact Norsk Hydro operations last week.

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U.S. backs off tariff threat

After President Trump met with Brazilian President Jair Bolsonaro last Friday, Trump agreed not to follow through on a previous threat to impose steel and aluminum tariffs on Brazilian exports, the Wall Street Journal reported.

The news comes less than a month after the initial threat, which would have reversed an exemption granted to Brazil (and Argentina) when the Trump administration initially imposed Section 232 steel and aluminum tariffs in March 2018.

Chinese stainless production growth to drop in 2020

China’s stainless steel production growth is forecast to drop in 2020, according to the Hellenic Shipping News.

Growth is expected to hit 5% next year, down from 11% this year.

Norsk Hydro hit with power outages

Norway’s Norsk Hydro saw power outages impact its operations at Alunorte and Paragominas last week.

Keep up to date on everything going on in the world of trade and tariffs via MetalMiner’s Trade Resource Center.

“On December 18, a transmission tower overturned, ceasing power supply to Hydro’s Paragominas bauxite mine in Brazil, temporarily halting the production at the mine,” Norsk Hydro said. “Regular power supply to Paragominas is expected to resume within 5-10 days.”

The firm said capacity at the Alunorte alumina refinery will be temporarily reduced to 50-70% in order to extend the life of bauxite inventories there.

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In a year full of stops and starts, false dawns and setbacks, it appears the world’s top two economic superpowers could have some form of a partial trade deal on the table.

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According to Bloomberg, the tentative agreement would avert the imposition of approximately $160 billion in tariffs on Chinese goods in exchange for Chinese pledges to purchase more U.S. agricultural goods.

“Getting VERY close to a BIG DEAL with China,” Trump tweeted Thursday morning, sending stocks soaring. “They want it, and so do we!”

Talks between the two countries picked back up in October and have continued since. That same month, Trump outlined a potential phase one deal, but said the two side still had to work out details in the ensuing weeks.

In August 2017, the United States Trade Representative launched its Section 301 investigation into alleged Chinese trade practices, including forced technology transfers and intellectual property theft, among other U.S. grievances.

In 2018, the Trump administration rolled out initial tariff tranches of $34 billion and $16 billion. Those tranches were followed by an additional $200 billion in tariffs last September.

The Trump administration’s fourth tariff list encompassed $300 billion worth of Chinese goods —including a wide variety of common consumer goods, from toys to washing machines — at a 10% rate. Those tariffs were scheduled to go into effect Sept. 1; however, some of those tariffs were eventually delayed, leading to Sunday’s Dec. 15 deadline.

Through the first 10 months of the year, the U.S. has a trade in goods deficit of $294.5 billion with China, with exports worth $87.6 billion and imports worth $382.1 billion, according to Census Bureau data. The U.S. deficit with China came in at $419.5 billion in 2019.

The exact details of the reported agreement remain to be seen, particularly in light of the often topsy-turvy, back-and-forth nature of the negotiations to date; a deal in principle today might not be one tomorrow. In fact, during the NATO summit last week in London, Trump mused it might be better to wait to sign a deal until after the 2020 elections.

Nonetheless, the news marks another milestone in a busy week of trade news.

Earlier this week, the White House and House Democrats announced an agreement on revisions to the United States-Mexico-Canada Agreement (USMCA), the proposed successor to the North American Free Trade Agreement (NAFTA).

Stocks reacted positively to the U.S.-China trade news Thursday.

Keep up to date on everything going on in the world of trade and tariffs via MetalMiner’s Trade Resource Center.

The S&P 500 index closed up 0.9% to 3,168.57. The NASDAQ Composite closed up 0.7% to 8,717.32, while the Dow Jones Industrial Average closed up 0.8% to 28,132.05.

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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, including our coverage of: ArcelorMittal’s plant closure in South Africa, the oil price outlook, U.S. steel capacity utilization and steel prices, CAMMU’s call for a Section 232 sunset provision, and more.

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Not everyone agrees with the use of tariffs to achieve changes in trade relations.

However, a recent article in The New York Times article reports the threat of 25% import tariffs on the U.S.’s main automotive trading partners could prove to be spectacularly successful.

Keep up to date on everything going on in the world of trade and tariffs via MetalMiner’s Trade Resource Center.

Autos are the soft underbelly of major auto economies like Germany, Japan, South Korea and Mexico in their trade relations with the U.S. Although the first three have invested heavily in U.S. manufacturing facilities over the years, they still ship huge volumes into the U.S. from their home countries and have largely perpetuated an unfair reciprocal relationship in terms of tariff barriers.

The E.U., for example, exported $42.8 billion worth of motor vehicles to the U.S. in 2018 — more than one-fifth of the cars imported by the U.S. — at a tax rate of 2.5%. Meanwhile, the E.U. imposes a 10% tariff for cars exported in the reverse direction.

In response to the threat of 25% tariffs, the E.U. offered to scrap tariffs in both directions, a step it has resisted in all previous negotiations.

But with carmakers’ backs against the wall, the Trump administration was not about to let up with a simple scrapping of tariffs, long overdue as that may be.

The administration is in discussions with the E.U. and its carmakers about increasing their investment and employment in the U.S. The more cars foreign carmakers manufacture in the U.S., the less they will ship in from abroad, benefiting the balance of payments and creating employment stateside.

Consumers benefit from continued access to a wide range of manufacturers without the cost implications of the threatened tariffs being imposed, estimated to be between $1,400 and $7,000 per vehicle if applied at 25%, the article notes.

Even U.S. carmakers are in favor of removing all tariffs, as they see a reduction in overseas import tariffs as an opportunity worth the increased domestic competition that foreign carmakers setting up in the U.S. may pose.

The only losers, should the deal be agreed, could be said to be foreign carmakers who will lose domestic exports, an impact that Germany is expected to feel the significance of more than any other country. Germany runs the second-largest trade surplus after China, with autos making up a sizable portion of that mercantilist trade structure.

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Foreign carmakers are being asked to provide details of proposed investments and plans already in the pipeline.

The German car industry is promising to create 25,000 jobs at factories in the United States, according to The New York Times. However, the Trump administration is looking for new jobs and investments, not simply plans that were already in the pipeline before the current negotiations were started.

A deal has not yet been reached; unofficially, both sides are making encouraging noises, raising the prospects for some good trade news to lift the spirits of investors who have been disproportionately depressed by a barrage of negative media coverage on the topic in 2019.