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

This morning in metals news, the Department of Commerce launched another Section 232 investigation, the Section 232 auto probe hearings kicked off earlier this morning and Turkish steel production increased during the first six months of the year.

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Commerce Launches Uranium Investigation

As the Department of Commerce prepared to host hearings related to its automotive probe, the DOC announced yesterday that it was launching an investigation of uranium imports.

“Our production of uranium necessary for military and electric power has dropped from 49 percent of our consumption to five percent,” Secretary of Commerce Wilbur Ross said in a release. “The Department of Commerce’s Bureau of Industry and Security will conduct a thorough, fair, and transparent review to determine whether uranium imports threaten to impair national security.”

In January, U.S. uranium mining companies, UR-Energy and Energy Fuels, formally petitioned the DOC, asking it to initiate a Section 232 investigation into imports of uranium ore and products.

Section Auto Hearings Underway

Speaking of the automotive and automotive parts probe, public hearings began earlier this morning.

Those interested can check out the live stream of the hearing on the DOC website, www.commerce.gov.

Turkish Steel Production on the Rise

Steel production in Turkey through the first six months of the year jumped 3.7%, according to a report from the Anadolu Agency.

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Production through the six-month period hit 18.9 million tons, according to Turkish Steel Producers’ Association data cited by the report.

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Announced by the European Commission yesterday, provisional steel safeguard measures went into effect today, covering 23 steel product categories.

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The measures were instituted in response to a challenge about which European leaders have frequently expressed concern: diverted steel as a result of the U.S.’s Section 232 steel tariff.

The provisional measures can only remain in place for a maximum of 200 days. After review, the European Commission will decide by early 2019 if permanent measures are needed.

“There are already indications that, as a consequence, steel suppliers have diverted some of their exports from the US to the EU,” the European Commission release states. “In order to avoid a sudden increase of imports that would cause further economic problems for EU steel producers – who are already suffering from global overcapacity – the Commission considers that provisional safeguard measures are necessary and justified.”

A 25% quota will be imposed on products from each of the 23 categories once imports have exceeded the previous three-year average.

Members of the European Economic Area (EEA) — including Norway, Iceland and Liechtenstein — are exempted from the measures, in addition to “some developing countries with limited exports to the EU.”

E.U. Trade Commissioner Cecilia Malmström emphasized that the U.S.’s steel tariff has left Europe with no choice but to act.

“The US tariffs on steel products are causing trade diversion, which may result in serious harm to EU steelmakers and workers in this industry,” Malmström said in a prepared statement. “We are left with no other choice than to introduce provisional safeguard measures to protect our domestic industry against a surge of imports. These measures nevertheless ensure that the EU market remains open, and will maintain traditional trade flows.

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“I am convinced that they strike the right balance between the interest of EU producers and users of steel, like the automotive industry and the construction sector, who rely on imports. We will continue to monitor steel imports in order to take a final decision by early next year, at the latest.”

Axel Eggert, director general of the European Steel Association, offered praise for the institution of the safeguard measures.

“The Commission has received overwhelming support for this vital safeguard measure from both member states and business,” Eggert said in a prepared statement. “The measure will go someway to ensuring the continued stability of the internal market for steel and ensure that EU steel producers do not suffer extreme surges of imports of steel deflected away from the now constricted US market.”

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This morning in metals news, British Steel is set to make a big investment, steel production for the week ending July 14 dropped from the previous week and BHP Billiton’s iron ore production is up.

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British Steel to Invest £50M

According to the Financial Times, British Steel is set to drop £50 million into its Scunthorpe steelworks’ rod mill.

The firm’s earnings rose 48% in the 2018 financial year, per the report.

U.S. Steel Production Drops Last Week

According to the American Iron and Steel Institute (AISI), for the week ending July 14 domestic raw steel production was 1,783,000 net tons, at a capability utilization rate of 76.1%.

While the week’s production represents a 2.9% increase from the same period in the previous year, it marked a 0.5% decline from the previous week (ending July 7). 

More Iron Ore

BHP Billiton’s iron ore output was up 3% for the year as June 30, according to data released by the mining firm Wednesday. Q2 2018 ore output was also up 10% compared with Q1 2018.

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According to the announcement, the company exceeded full-year production guidance for copper, iron ore, petroleum and energy coal.

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This morning in metals news, Canada is considering new tariffs or quotas to protect itself from steel diverted from the U.S., the U.S. goes at it with several WTO members and a major energy project in the U.S. is denied a tariff exclusion request.

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Canada Considers Tariffs, Quotas

Canada could turn to tariffs or quotas as it looks to deal with the possibly of diverted steel from the U.S. (as a result of the U.S.’s Section 232 tariff).

As Bloomberg reported, Industry Minister Navdeep Bains said Canada is considering expansion of a previously announced list of products that could be subject to the safeguard measures (rebar, steel plates and energy tubular).

U.S. Challenges Retaliatory Tariffs at WTO

Several countries have responded to the U.S.’s steel and aluminum tariffs with retaliatory tariffs. The U.S.’s back-and-forth exchange of tariffs with China is the most high-profile example, but several other countries have also hit the U.S. with retaliatory tariffs of varying levels.

The U.S., however, is challenging those tariffs at the World Trade Organization (WTO), arguing they go against WTO rules, particularly referring to measures from China, the E.U., Canada, Mexico and Turkey, according to the South China Morning Post.

No Tariff Exclusion for Shale Pipeline Project

A $1.1 billion shale pipeline project was denied a steel tariff exclusion request, Reuters reported, marking the first such decision vis-a-vis a major energy project.

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The request from Plains All American Pipeline LP was denied because the Department of Commerce ruled the the company can find suitable products domestically.

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This morning in metals news, China hit a record vis-a-vis steel production, China responded to the U.S.’s threat of $200 billion in tariffs and copper continues its slide.

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A Record June

China steelmakers put out a record amount of steel, on a daily basis, in June, Reuters reported.

According to National Bureau of Statistics data, the country churned out 80.2 million tons of crude steel last month, according to the report.

China Goes to the WTO

Speaking of China, as trade tensions continue to rise with the U.S. (particularly in light of the U.S.’s most recent threat of $200 billion in tariffs), China has decided to take its case to the World Trade Organization (WTO).

China is seeking to combat the proposed tariff barrage by filing a complaint at the WTO, alleging the tariffs fall afoul of WTO rules.

Copper Price’s Slide Continues

The arrow has been pointing down on the copper price this year.

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That trend continued Monday, as the copper price fell 1%, Reuters reported. According to the report, the copper price is down 14% so far in 2018.

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.

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The U.S. and India are scheduled to sit across the table this week in Geneva to discuss the case filed by India with the World Trade Organization’s (WTO) dispute settlement mechanism over the U.S.’s imposition of import duties on steel and aluminum.

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The talks will be held under the aegis of WTO’s dispute settlement mechanism, according to a news report by the Press Trust of India.

India is part of the group of nations — which includes China, Russia and Norway, among others — to have filed separate dispute claims on the topic with the WTO. The meeting is part of the consultations the U.S. will be holding with all such countries on July 19-20.

It may be recalled that the U.S. had imposed a 25% tariff on steel and a 10% tariff on aluminum imports from India. India’s exports of the two commodities to the U.S. stands at about U.S. $1.5 billion per annum. India had initially tried to raise the issue with the U.S., and then informally with the WTO, calling the move an “abuse of global trade provisions that could spiral into a trade war,” — sentiments similar to the one expressed by India’s neighbor, China.

In May, India dragged the U.S. to the WTO dispute settlement mechanism over the imposition of import duties.

Consultation is the first step of the dispute settlement process. Incidentally, both the countries are already involved in disputes at the global trade body in the areas of poultry, solar, and export subsidies, to name a few.

According to another news report, senior trade officials of India and the U.S. will meet later this month in Washington to conclude negotiations on a “mutually-acceptable trade package.” Quoting an unnamed official source, it said the meeting comes amid an escalation of the global trade war.

Since India’s proposed additional tariff worth U.S. $235 million on 29 U.S. goods — including almonds and apples — are retaliatory in nature, any rollback of the additional duty on Indian steel and aluminum by the U.S. will lead to a withdrawal of corresponding taxes by the Indian Government on U.S. goods, too.

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The U.S. sees good prospects for its companies in the Indian civil aviation, oil and gas, education service, and agriculture segments.

It was another busy month in the world of metals.

Then again, these days quiet months in metals or in trade, generally, are few and far between.

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Trade tensions continued to rise, as $34 billion in tariffs on Chinese goods went into effect (China responded in kind), and an additional $16 billion in tariffs are under review. This week, President Donald Trump announced the intention to impose an additional $200 billion in tariffs on China, ratcheting up the stakes even further.

Meanwhile, a Section 232 investigation focusing on imports of automobiles and automotive components is unfolding. More than 2,300 public comments were submitted as part of the U.S. Department of Commerce’s review process, and public hearings are scheduled for next week.

Meanwhile, in metals markets, most base metals were down last month, with steel being the exception.

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A few highlights from this month’s round of Monthly Metal Index (MMI) reports:

• Since peaking at $7,316/mt in June, the LME copper price dropped 12%.
• The subindex for grain-oriented electrical steel was the only MMI to post an increase on the month.
• The U.S. silver price hit its lowest level since January 2017, while U.S. gold bullion dropped to a one-year low.
• Aluminum prices were also part of the general downtrend, as prices continued to move away from this year’s April peak (after Russian companies and their owners, including aluminum giant Rusal, were slapped with sanctions by the U.S.).

Read about all of the above and much more by downloading the July MMI report below.

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This morning in metals news, President Donald Trump threatened China with an additional $200 billion in tariffs, copper fell to a one-year low and Glencore released a statement regarding the subpoena it received from the U.S. Department of Justice in its corruption probe.

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Tariff Saga Escalates

Trade tensions continue to rise as the U.S. and China trade tariff threats, which have evolved from mere threats to reality (as a batch of $34 billion in tariffs on Chinese goods went into effect Friday, July 6).

Now, Trump has threatened China with an additional $200 billion in tariffs, Reuters reported, as China has vowed to protect itself in response.

Per a release from U.S. Trade Representative Robert Lighthizer, the announcement comes after China retaliated to the aforementioned $34 billion in tariffs with matching tariffs of their own “without any international legal basis or justification.”

According to the state-run Xinhua News Agency, a Chinese Foreign Ministry spokesperson said the U.S.’s actions represent “trade bullying.”

“This is a war between unilateralism and multilateralism, between protectionism and free trade, and between power and rules,” spokesperson Hua Chunying said. “China will work with the international community to jointly safeguard the multilateral trading system and rules.”

Copper Slides

London copper dropped to a one-year low on the heels of the Trump administration’s $200 billion tariff threat, Reuters reported.

LME copper fell to to its lowest level since July 25, 2017, according to the report.

Glencore Issues Statement on DOJ Subpoena

As our Stuart Burns discussed on Monday, Glencore has found itself under the microscope of late, particularly the microscope of the U.S. Department of Justice.

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Glencore is being investigated for its dealings in Nigeria, the Democratic Republic of the Congo and Venezuela. In response to a subpoena, Glencore released a statement on its next steps.

“Glencore takes ethics and compliance seriously throughout the Group,” Chairman Tony Hayward. “The Company will cooperate with the DOJ, while continuing to focus on our business and seeking to maximise the value we create for our diverse stakeholders in a responsible and transparent manner.”

According to the release, Glencore has formed a committee to coordinate the firm’s response to the subpoena.

The Stainless Steel Monthly Metals Index (MMI) fell slightly this month, down to 82 from 84.

Despite the fall in the Stainless Steel MMI, the index remains at February 2015 highs.

The index dropped due to a slight decrease in LME nickel prices in June. However, stainless steel surcharges inched higher again this month, remaining in a strong uptrend.

LME Nickel

In June, nickel price momentum slowed down slightly. However, the short-term slide in June came as a result of a general downtrend in base metals. LME nickel prices remain in a long-term uptrend since June 2017.

Nickel long-term prices. Source: MetalMiner analysis of FastMarkets

Buying organizations can expect higher prices in the coming months.

MetalMiner previously recommended buying some volume forward. Given the current uncertainty in the steel and stainless industries, nickel prices remain supported for the short term.

A fundamental tightness in the nickel market has also added support to the latest nickel price increases.

President Rodrigo Duterte of the Philippines announced a possible halt to mining in the country due to environmental damage. In June, 23 out of 27 mines passed an environmental review, easing the uncertainty of supply. However, nickel supply uncertainty still remains as a result of environmental measures.

Domestic Stainless Steel Market

Following the recovery in stainless steel momentum, domestic stainless steel surcharges increased again this month.

The 316/316L-coil NAS surcharge reached $1.06/pound, while the 304/304L went up to $0.7698.

Source: MetalMiner data from MetalMiner IndX(™)

The pace of stainless steel surcharge increases appears to have recovered its previous level again this month. Stainless steel surcharges remain in a clear uptrend and appear well above 2015-2017 lows.

What This Means for Industrial Buyers

Stainless steel momentum slowed down slightly this month. However, both steel and nickel remain in a bull market. Therefore, buying organizations may want to follow the market closely for opportunities to buy on the dips.

To understand how to adapt buying strategies to your specific needs on a monthly basis, take a free trial to our Monthly Outlook now.

Actual Stainless Steel Prices and Trends

Chinese 304 stainless steel coil prices fell this month by 5.91%, while Chinese 316 stainless steel coil prices fell by 4.98%.

Chinese Ferrochrome prices decreased this month by 1% to $1,970/mt. Nickel prices fell 1.38% to $15,000/mt.