Articles in Category: Exports

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

The U.S. Department of Commerce announced Wednesday that it made a final affirmative determination in its anti-dumping investigation of stainless steel flanges from China.

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According to a release, Commerce determined Chinese exporters sold the product at 257.11% less than fair value.

Imports of the stainless steel flanges from China in 2017 amounted to 2,964 metric tons and were valued at $21.8 million, according to the DOC. The 2017 import total marked a 20.8% increase from the 2,454 metric tons imported from China in 2016.

The Coalition of American Flange Producers and its individual members — Core Pipe Products, Inc. (Carol Stream, Illinois) and Maass Flange Corporation (Houston, Texas) — were the petitioners in the case (the petitions were filed in August 2017).

The DOC assigned the rate specifically to China’s Shanxi Guanjiaying Flange Forging Group Co., “based on adverse facts available due to the respondent’s failure to provide complete responses to certain sections of Commerce’s questionnaire.” Similar reasoning was made for the China-wide rate — also 257.11% — which several other companies fall under. The DOC fact sheet on the probe also names the following Chinese firms: Hydro-Fluids Controls Limited; Songhai Flange Manufacturing Co., Ltd.; and Dongtai QB Stainless Steel Co., Ltd.

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The case now moves to the U.S. International Trade Commission. If that body also rules in the affirmative, the DOC will issue an anti-dumping duty order. A decision is expected by July 19.

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This morning in metals news, Chinese steel exporters are looking for new destinations for their products, U.S. Steel is planning on restarting another Illinois blast furnace and steel production is up 1.9% in the year to date.

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Looking For Buyers

On the heels of U.S. trade actions, Chinese steelmakers are looking to find buyers in Africa and South America for their products, Reuters reported.

According to the report, Chinese exports to markets like South Korea and Vietnam have dropped by double digits since last year.

U.S. Steel to Restart Another Blast Furnace in Illinois

After an announcement of the restarting of a blast furnace earlier this year, on Tuesday U.S. Steel announced plans to restart another blast furnace at its Granite City plant in Illinois, MarketWatch reported.

The steelmakers plans to have the furnace up and running by Oct. 1, bringing on 300 more workers in the process, according to the report.

Steel Production on the Rise

U.S. steel production for the year to date is up 1.9%, the Times of Northwest Indiana reported, citing American Iron and Steel Institute (AISI) data.

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For the week ending June 2, production was up 0.76% from the previous week, according to the report.

Steelmakers’ fortunes are up, and for that we should all rejoice; an industry fighting bankruptcy or suffering long-running losses is not an industry that invests in its products or services.

But questions remain about how long the current run of good fortune will continue for Western steelmakers.

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Source: Financial Times

Posting Profits

On the plus side ArcelorMittal has just posted its best quarter since 2011 with EBITDA quarterly core profits rising 17% year on year to $2.5 billion for the January-March period.

Analysts quoted in the Financial Times put the recovery down to rounds of cost-cutting and efficiency instigated after the downturn of 2015-16. Rising global GDP and, hence, demand has built on these improvements to raise prices for steelmakers and, in particular, the delta between raw material costs and finished steel prices, lifting profitability to the highest in a decade.

Source: Financial Times

ThyssenKrupp of Germany posted a tripling of half-year earnings on the back of better sales prices and reduced losses, having offloaded its South American slab mill to Siderúrgica do Atlântico (CSA) and its Calvert, Alabama carbon and stainless mills to ArcelorMittal/Nippon Steel and Outokumpo, respectively.

Some would argue it got out at the bottom of the market and would have lost less if it had held on for a better price when the market turned, but both plants were making losses and ThyssenKrupp was under pressure from shareholders to turn the group around.

ThyssenKrupp is not alone — many steel mills have demerged, shuttered, divested or otherwise re-structured in order to focus on their more profitable opportunities in recent years and are reaping the benefits.

Eyes on Chinese Exports

However, the extent to which this happy state of affairs can continue lies, at least in part, in China.

As the Financial Times points out, a combination of industrial reform in China and positive profit margins has lifted steelmakers’ focus on the domestic market and reduced exports. From a peak of 110 million tons in 2015, China’s steel exports have shrunk by one-third to 73.3 million tons in 2017. The Financial Times credits this restriction of supply as helping restore a sense of balance to the steel market, which is reflected in regional price rises in Europe and North America.

There remains dispute about the depth and speed of the steel market restructuring program in China, but even if it is not as radical as the authorities claim it has contributed to sentiment and supported prices. The questions the Financial Times poses is thus: how long will this new balance last and, with prices falling in China, will exports rise later this year?

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Making Moves

An indication of European concern is a new registration program started just this month that requires importers to register all incoming shipments by origin, value and tariff code.

At present, there is no requirement for a license or any cases of approval not being given, but many see it as a first step to Brussels more closely monitoring steel (and aluminum) imports from China, Russia, etc., with a view to introducing quotas or tariffs if volumes rise.

For once, Brussels can be said to be ahead of the game.

Does your company strategy call for a European manufacturing base but you worry you have missed the boat in terms of accessing lower-cost opportunities created when eastern European countries like Poland and the Czech Republic came into the E.U.?

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Lower land and labour costs, aligned with ample financial support from the E.U. to the poorer parts of Europe created a fertile investment environment for new business growth in these eastern European states. With a good standard of education, generally good rule of law and a high work ethic, it is not surprising eastern Europe has gone through something of an industrial revolution over the last 20 years.

But for firms looking to set up in those markets now, they are the Johnny-come-latelies to a maturing investment environment.

But fear not — a new wave of entrants may be on the horizon.

Read more

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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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This morning in metals news, Chinese exports of steel and aluminum were up in April, copper prices fell and negotiators are working to reach a deal on the North American Free Trade Agreement (NAFTA) this month.

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Chinese Steel, Aluminum Exports Jump in May Despite Section 232 Tariffs

China saw an increase in its steel and aluminum exports in April as U.S. sanctions on Russia canceled out the impact of the Section 232 tariffs, Reuters reported.

China’s steel exports rose to their highest level since August, according to customs data cited by Reuters.

Copper Price Falls

Copper prices dropped as the inversely correlated U.S. dollar gained strength, Reuters reported.

LME three-month copper dropped to $6,758 per ton, according to the report.

NAFTA Talks

Renegotiation efforts around NAFTA began last fall, but last week U.S. Trade Representative Robert Lighthizer said he hopes to reach a deal this month.

However, according to a Bloomberg report, Lighthizer hasn’t given any ground on some proposals with which Mexico and Canada are unlikely to agree.

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Lighthizer met with Mexican Economy Minister Ildefonso Guajardo on Monday and was scheduled to meet Canadian Foreign Affairs Minister Chrystia Freeland this morning.

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A new report in HSBC’s Navigator series focuses on the long-term ascendancy of the Asian region as it explores both anticipated and actual trends in India’s trade patterns with its nearby neighbors.

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India enjoys a balance of trade surplus in services but a deficit in goods with much of its services focused on Western tech and B2B markets. But that pattern is not changing, surprisingly, partly due to government encouragement and partly due to the relative size of the economies closer to home.

Largely as a result of fears of protectionism in the West, India’s policy has been to work closely with neighbors to develop regional trade opportunities.

However, despite the South Asia Free Trade Agreement (SAFTA) and the ASEAN-India Free Trade Area (AIFTA), progress in increasing trade with Asian neighbours has been slow. Now exporters are looking to the Regional Comprehensive Economic Partnership (RCEP), to which India is an intended signatory, in order to create opportunities in what will be the world’s largest trading block.

India’s exports are changing, partly under government encouragement but mostly in response to changing global demand. Traditional products like clothing and apparel are declining. Currently in third place, they are expected to slip to 10th over the next decade, as this table shows.

The reports estimates that by 2030, India will be increasingly exporting goods within the Asian region, with export growth to Asia Pacific outpacing India’s exports to Europe and North America. In terms of individual countries, the U.S. and UAE will remain the top two export destinations, but China will rise in importance and Vietnam will also join the top five list. The top 10 fastest growing exports destinations will almost all be in Asia up to 2020, with growth in some markets rising at 12-13% per year.

Firms looking to export to India will face growing competition from China. But with a rising middle class and strong demographics, India represents an important export market for Western firms in the decade ahead. Navigator estimates that the greatest opportunities will remain in machinery, as this graph illustrates:

Perhaps more surprising is the expected static nature of India’s exports. The report sees little change in the mix of destinations, with India’s top service exports destinations remaining largely unchanged between 2017 and 2030, with the U.S. and the U.K. occupying the top two spots. Read more

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This morning in metals news, India wants to get a waiver from the U.S.’s Section 232 tariffs on steel and aluminum, uncertainty for craft beverage makers, and the U.S. Trade Representative said he is hopeful a new North American Free Trade Agreement (NAFTA) deal can be reached soon.

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Another Country Wants Out of 232 Tariffs

Count India among the group of countries looking to be exempted from the U.S.’s new tariffs on steel and aluminum.

According to Reuters, Indian government officials are saying that Indian exports of steel and aluminum to the U.S. do not post a national security threat. Steel exports to the U.S. amount to 2% of India’s total steel exports, according to the report.

Craft Beer Makers Wary of Tariffs’ Effect

For craft beer makers, the new tariff on aluminum means either smaller margins or passing extra costs on to consumers.

According to a Vermont Public Radio report quoting several executives in the local craft beer industry, the tariff adds uncertainty, especially for distributors who have already seen increases this year in canning costs.

Justin Heilenbach, president and co-founder of Citizen Cider, referred to the tariffs’ impact relative to the federal tax plan passed in December.

“This whole thing is like robbing Peter to pay Paul,” Heilenbach said, “because, you know, we get a tax incentive over here, and then we pay more for materials over there. … It’s gonna net out neutral or probably be, you know, work against us.”

Lighthizer Hopeful for New NAFTA

In a television interview with CNBC on Wednesday, U.S. Trade Representative Robert Lighthizer said he is hopeful the U.S. can renegotiate a new NAFTA “in the next little bit,” Bloomberg reported.

Earlier this week, a deal was reached on an adjusted deal on the U.S.-Korea Free Trade Agreement (KORUS), which also saw South Korea receive exemptions from the steel and aluminum tariffs (in addition to a 70% quota).

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According to the report, Lighthizer also raised concerns brought up during the negotiations last year regarding the timeline for reaching a deal, given that there is a Mexican presidential election in July and U.S. midterm elections in November.

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This morning in metals news, the U.S. and South Korea reach a revised trade agreement, the E.U. started a study on possible steel import limits and copper slides to a 3 1/2-month low.

U.S. Gives South Korea Steel Tariff Exemption

The U.S. and South Korea reached an agreement on steel tariffs, with the U.S. exempting South Korea from the tariff but also imposing a quota, according to reports.

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The quota is equivalent to 70% of South Korea’s average exports to the U.S. from 2015-2017.

E.U. Studies Possible Steel Import Limits

According to Reuters, the E.U. began a study Monday looking into whether the U.S. steel import tariffs will lead to a flood of steel into Europe from Asian producers.

The European Commission said total steel imports jumped from 17.8 million tons in 2013 to 29.3 million in 2017.

Copper Fall to 3 1/2-Month Low

Copper dropped to its lowest price since Dec. 8, falling to $6,532/ton, according to Reuters.

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Rising stockpiles and increasing U.S.-China trade tensions — amid President Trump’s announcement last Thursday, which could pave the way for $60 billion in tariffs on Chinese products — led to the depression of the copper price, according to the report.

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This morning in metals news, Canadian Prime Minister Justin Trudeau says the Canadian steel industry can breath a sigh of relief after obtaining an exemption from the U.S.’s recently announced 25% steel tariff, the tariffs throw a wrench into India’s export plans and Reuters’ Andy Home opines on the way forward for the aluminum market in a post-U.S.-tariff world.

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Canadian Steel Industry Enjoys Tariff Exemption (For Now)

Canadian Prime Minister Justin Trudeau said members of the Canadian steel industry can breath a sigh of relief, CNN reported.

North American Free Trade Agreement (NAFTA) partners Canada and Mexico received temporary exemptions from the U.S.’s forthcoming tariffs of 25% and 10% on steel and aluminum imports, respectively. However, the key word is “temporary,” particularly as NAFTA renegotiation efforts continue and the U.S. hopes to win concessions from its NAFTA peers.

In an interview Monday with CNN’s Anderson Cooper, Trudeau addressed the notion that the temporary exemption would serve as a bargaining chip for the U.S. in the NAFTA talks.

“We’ll just respond the way we have, with focus on the work we do together and not too much worry about the rhetoric,” Trudeau told Cooper.

India’s Export Ambitions Complicated by Tariffs

Steel Minister Chaudhary Birender Singh said the U.S. tariff on steel could disrupt India’s efforts to become a major steel exporter, Reuters reported.

India expects a loss of $130 million due to the U.S. import tariffs, according to a note prepared by the steel ministry, Reuters reported.

What’s Next for the Aluminum Market?

Canada, Mexico and Australia have secured exemptions of some form from the U.S.’s announced tariffs, and other countries and trading blocs (namely the European Union) are lobbying for exemptions of their own.

So, given the climate of negotiations, both economic and inherently political in nature, what does that mean for the global aluminum market going forward?

Thus far, the LME price hasn’t changed much, Reuters’ Andy Home wrote, while the CME Midwest Premium has nearly doubled since the beginning of the year.

On a production level, already announced and forthcoming capacity restarts in the U.S. will inch the capacity utilization rate closer to the previously announced goal of 80%.

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The tariff, of course, will lead to a rise in costs for consumers. As Home writes, the beverage industry and can makers will seek exemptions on the grounds that domestic production won’t be able to meet their demand, while also arguing that imported aluminum for their purposes doesn’t constitute a national security threat.