Articles in Category: Ferrous Metals

The Department of Commerce released both the process and requirements for the submission of exclusions for the steel and aluminum Section 232 proclamations made public on March 8, 2018.

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

As published in the Federal Register, the Secretary of Commerce has the authority to grant exclusions from the duties, “if the steel or aluminum articles are determined not to be in a sufficient and reasonable available amount or of a satisfactory quality or based upon specific national security considerations.” (Editor’s Note: Italics added by MetalMiner for emphasis.)

The interim final rule went into effect on March 19, 2018.

Key Points About the Exclusion Process

Some of the key highlights of the interim rule include who can file for exemptions and who can file objections to exclusions.

First, according to the interim rule, “only individuals or organizations using steel articles in business activities or supplying steel to users in the U.S. may submit exclusion requests with respect to the Proclamation.” In other words, any non-metal-buying individual or organization can not argue nor ask for an exclusion.

However, any individual or organization in the U.S. can file objections to exclusions, but the Department of Commerce will only consider information directly related to a specific exclusion request. In other words, the DOC will ignore trade associations, lobbying groups, and media objections to an exclusion unless that objection is specifically tied to an exclusion request.

Exclusions apply on a product basis and can only be requested (and granted to) by the individual or organization that submitted the specific exclusion request. To clarify, unless the DOC approves a broader application of the specific request, each company will have to file its own exclusion request.

Taking that one step further, if additional companies seek exclusion requests for the same product, the company applying for the exclusion will not need to reference a previously approved exclusion, but can do so for its own exclusion request. Moreover, the interim rule allows for organizations and individuals to re-submit for a product exclusion, even if an earlier request is denied.

Buying organizations should note that all information included in an exclusion request is subject to public disclosure. This may prove challenging to buying organizations as some of the questions on the exclusion form appear quite detailed. For example, “all such physical properties must be defined based on actual rather than nominal measurements references to specific dimensions,” a requirement which may in fact begin touching on “secret sauce” types of information. This portion of the rule will likely receive negative market feedback during the open comment period for the interim rule.

Meanwhile, those that object to the exclusion will have 30 days to submit their objections.

Country-specific exemptions are not included in this interim rule.

Burden of Proof Appears to Lie With the Buying Organization

Companies purchasing more commodity-grade materials (i.e., standard forms, grades, alloys, sizes, etc.) need not bother with the exclusion process. However, MetalMiner sees several sub-segments of the market that will likely challenge the proclamations, particularly the markets for: grain-oriented electrical steel; tinplate; raw materials (slab, wire rod); some advanced, high-strength steels and ultra-high-strength steels, tire cord quality wire rod, etc. These individual companies purchasing these materials will each need to put their case forward.

“These requirements are much worse than trade case requirements,” said one company pursuing an exclusion to MetalMiner.

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

Key Resources

The interim rule, comment and form to file a steel exclusion request or objection can be found here:

The interim rule, comment and form to file an aluminum exclusion request or objection can be found here:

According to weekly data reported by the American Iron and Steel Institute (AISI), domestic raw steel production for the week ending March 10 hit 1,813,000 net tons.

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

The production for that week produced a capacity utilization rate of 77.8%. The numbers for that week were up year over year, compared with 1,716,000 net tons produced in the same week last year (which had a 73.6% capacity utilization rate).

Meanwhile, production for the week ending March 10 was down 1.1% from the previous week, when production was 1,834,000 net tons and the rate of capacity utilization was 78.7%.

Year-to-date production through March 10 was 17,187,000 net tons, good for a capacity utilization rate of 74.8%, which was down 0.2% from the 17,221,000 net tons during the same period last year, when the capacity utilization rate was 74.6%.

According to the data, production by region broke down as such (in thousands of net tons):

  • North East: 214
  • Great Lakes: 681
  • Midwest: 163
  • Southern: 686
  • Western: 69

Late last month, when the Department of Commerce’s Section 232 reports to the president were made public, the administration expressed the the goal of raising the capacity utilization rate for both steel and aluminum up to 80% — “the minimum rate needed for the long-term viability of the industry,” according to the Department of Commerce.

“The U.S. domestic industry is more than capable of producing at a sustained 80% or more capacity utilization rate (the report points to the 2002-2008 period, in which U.S. mills operated at an 87.4% capacity utilization rate),” MetalMiner Executive Editor Lisa Reisman wrote last month.

“When steel factory utilization falls, costs per unit of steel product rises, reducing profit margins and product pricing flexibility,” the department’s analysis stated. “Higher capacity utilization usually results in lower per-unit product costs and higher overall profit.”

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

According to the Department of Commerce’s analysis, only two countries produce at the 80% capacity utilization rate: Japan and South Korea. The U.S., on the other hand, between 2011 and 2016 had an average capacity utilization rate of 74%.


A little over two weeks ago, the MetalMiner team released its Section 232 Investigation Impact Report in response to President Trump’s initial announcement regarding the intention to impose tariffs of 25% and 10% on steel and aluminum, respectively.

Of course, time marches on and so, too, does the news.

Since then, the announcement became policy via proclamation (albeit with temporary exemptions throw in for NAFTA partners Canada and Mexico); the tariffs are set to go into effect March 23 as other countries and U.S. industry groups continue to lobby for exemptions of their own.

Thus, given the latest movements in the Section 232 news cycle, MetalMiner has updated its Section 232 report with new, fresh information on everything Section 232, including brand-new addendums on steel and aluminum.

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

To access the MetalMiner team’s full breakdown of the Section 232 issue, visit our dedicated Section 232 Report Investigation Impact page to download the full report, complete with the new sections on steel and aluminum.

Not surprisingly, any discussion of iron ore prices in top consumer China inevitably involves some reference to import stock inventory.

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

So when Reuters reports that the Dalian commodity exchange May iron ore contract price touched a low of 475.50 yuan per ton this week and China’s Qingdao port price dropped below $70 per ton — the lowest since Dec. 11 — analysts readily refer to record port stocks as being the cause.

Port inventory stood at 158.6 million tons at the end of last week, closer to the previous week’s record of 159.1 million times, according to a separate Reuters article. The article goes on to explain why headline port stocks are far from the whole story. China’s environmental crackdown on polluting industries this winter has driven steel mills to favor high-purity minimum 62% iron ore grades, supplied by firms like Australia’s Rio Tinto and BHP Billiton, Brazil’s Vale, and South Africa’s Kumba, over lower 58% Fe grades, such as Australia’s Fortescue Metals group and some Indian suppliers.

Much of the rise in import stocks has been a buildup of low-grade iron ore shunned by steel mills keen to avoid the pre-blast furnace upgrading needed for lower grades or the increased consumption of polluting coking coal that the protracted smelting of lower grades requires.

Read more

gui yong nian/Adobe Stock

Li Lizhang, the chairman of state-owned mill Fujian Sangang Group Co Ltd, is quoted in Reuters as saying exports of steel products may continue to fall this year, having plunged by over 30% last year to 75.43 million tons.

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

China produced 831.73 million tons of crude steel last year. The country has been trying to eliminate excess capacity, in part to assuage global concerns about excess capacity flooding global markets. But, in reality, it’s more because it realizes overcapacity in its steel industry leaves all domestic producers in a precarious position and sees logic in driving the cleanup in favor of its state-owned producers rather than leaving the market to possibly favor the private sector – not what an increasingly state-centered Beijing wants at all.

Whether Li is promoting the reduction in exports as a counter to allegations abroad that China is harming global steel markets with its exports or whether we should take his ongoing linkage to the fight against pollution at face value is up to the reader. It may be that it is a case of two birds with one stone, but one suspects the timing, straight after President Trump’s 25% tariff on steel imports, is no coincidence.

Li’s comments regarding further production curbs is interesting, though, saying the steelmaking hub of Tangshan in Hebei province will extend production restrictions for another eight months after current curbs expire next week, according to the Reuters report. Production curbs would not be limited to the smog-prone region of Beijing-Tianjin-Hebei, according to Li, who added “other regions will also see restrictions if pollution levels exceed the limits.”

Beijing’s drive to shutter production capacity across a range of environmentally harmful industries has been broadly successful.

But what is clear is that smog reduction was not the only objective.

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

State-owned enterprises have benefited at the expense of the private sector with new steel and aluminum capacity coming onstream to partially replace the older shuttered plants. Permits for new plants seem to have favored the state-sector producers over the private sector; contrary to the position 18-24 months ago, the state sector is doing very well at present.

This afternoon, President Trump signed a proclamation to impose the 25% tariff on imported steel and 10% tariff on imported aluminum products, both of which were announced on March 1. The tariffs will go into effect in 15 days, and will exclude Canada and Mexico for the moment, until NAFTA negotiations finish, according to several news sources.

Other countries such as China, South Korea, Japan, Germany and Brazil may be hit by these tariffs, according to the New York Times. However, the President claimed they would be flexible when imposing the tariffs, which were implemented in the wake of the Commerce Department’s Section 232 investigation.

We’re going to be very flexible,” Mr. Trump said. “At the same time, we have some friends and some enemies where we have been tremendously taken advantage of over the years.”

The President also said that the tariff order may exclude some additional countries and would give him the authority to raise or lower levies on a country-by-country basis and add or take countries off the list as he deems fit.

President Trump extolled the benefits of the tariff order and the relevance of the U.S. as a primary metal producer. The recent announcements of steel mill openings made since the President’s first comments about the tariffs on March 1 were also highlighted at the White House event.

He mentioned the United States’ current relationship with China, characterizing it as a “great” one, but noting that “something has to be done about the trade deficit,” according to the Guardian. The China question has been at the center of the tariff debate from the beginning, with that country’s metal production overcapacity and questionable trade practices spurring President Trump’s campaign promise.

Not surprisingly, organizations representing upstream steel and aluminum industries saw the results differently than those representing downstream players.

“The president’s commitment to addressing the steel crisis is already producing benefits in Granite City, Ill., where U.S. Steel will be restarting one of the blast furnaces that has been idle since December 2015 due to global excess steel capacity and unfairly traded steel imports,” said Tom Gibson, president and CEO of AISI, in a statement. “With the signing today, the steel industry can be on track to maintain our essential contributions to national security and critical infrastructure like transportation, public health and safety, energy and the power grid – all of which rely heavily on steel.”

Other sectors of the aluminum industry were opposed. For example, the Beer Institute, on behalf of U.S. brewers, implored the President to exempt aluminum can-sheet imports, making an argument based on job loss and overall economic loss, in a press release.

“We have not yet seen the order formalizing these tariffs,” said the Institute’s president and CEO Jim McGreevy, in the statement. “If possible, the Beer Institute will work with our member companies to file an exclusion request with the Department of Commerce. It is critical that if the president and his administration choose to impose any tariffs, they be carefully targeted only to protect America’s national security interests.”

For more in-depth scenario-based analysis, including buying strategies, check out MetalMiner’s report, “Section 232 Impact by Scenario on Aluminum, Stainless Steel and Steel Prices.

Liquid steel.

Photollug/Adobe Stock

The Section 232 report and subsequent briefing by the president has put global metal markets in disarray. What makes matters potentially worse: the number of mainstream media sources latching onto a couple of claims from one particular study recently published by a for-profit research and consulting firm (as opposed to a think tank or governmental source).

The findings from this oft-quoted study build upon a prior study (February 2003) conducted by the same authors on behalf of a now defunct trade group, whose original findings were challenged by the U.S. government’s own analysis published by the USITC back in 2003.

Section 232 buying strategies – grab your copy of MetalMiner’s Section 232 Investigation Impact Report for only $74.99!

When MetalMiner inquired after whether the current report had been funded by any outside interests, the report’s author Laura Baughman replied via email, “No one funded this research.”

Regardless, the 2003 USITC governmental study examines the assumptions and methodologies of the original study conducted by Baughman and her colleague Dr. Joseph Francois.

The oft-cited finding from their latest report suggests the tariffs will yield a loss of 146,000 jobs. That estimation has been cited in articles by Fortune Magazine, The Washington Post, The Fabricator, AOL as well as other policy and non-profit organizations.

The problem with all of these citations is that nobody has quoted any findings from the only governmental research published on the impact on steel-consuming industries after the imposition of steel safeguard protections. Yet such a study not only exists, but also reveals the actual impact after the last time a U.S. president implemented steel safeguard protections, such as tariffs. This last occurred on March 20, 2002, under President George W. Bush.

So What Are the Key Government Findings?

Read more

gui yong nian/Adobe Stock

This morning in metals news, Goldman Sachs’ chief economist said the if the U.S. imposes steel and aluminum tariffs, the decision could preceded an exit from the North American Free Trade Agreement (NAFTA); the president’s trade adviser said exceptions in the proposed new tariffs are unlikely and LME copper holds above its two-week low.

Section 232 buying strategies – grab your copy of MetalMiner’s Section 232 Investigation Impact Report for only $74.99!

Tariffs Could be Harbinger of NAFTA Exit

As the world reacted to President Trump’s announcement regarding impending steel and aluminum tariffs, many are also looking at how the development will impact the ongoing NAFTA renegotiation talks.

According to Goldman Sachs’ chief economist, Jan Hatzius, there is a “good chance” that Trump could eventually announce a withdrawal from NAFTA, according to a CNBC report.

Hatzius also said the administration’s tariff proposal “does not rely on any economic argument and instead imposes trade restrictions on national security grounds.”

Trading Partners Hope to be Spared From Tariffs

As countries like Canada and Australia, among others, continue to hold out hope that they will be spared from Trump’s announced tariffs on steel and aluminum, the president’s trade adviser said exceptions are unlikely.

Peter Navarro, the White House trade adviser, pushed back against the notion of case-by-case exceptions, saying “As soon as he starts exempting countries, he has to raise the tariff on everybody else,” according to a Washington Post report.

Copper Flattens Just Above 2-Week Low

After falling 0.4% in the previous trading session, LME copper held flat Monday, according to Reuters.

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

The metal hit $6,895 per ton as of 07:19 GMT.

If you’re in the metals industry, you have likely been waiting a long time for word from the White House on what the president will do vis-a-vis the U.S. Department of Commerce’s Section 232 investigations of aluminum and steel imports.

Section 232 buying strategies – grab a copy of MetalMiner’s Section 232 Investigation Impact Report today!

The probes, launched last April, fell under Section 232 of the Trade Expansion Act of 1962, which grants the president authority to limit imports if they are determined to be detrimental to national security.

After many months, the president announced Thursday that his administration plans to implement tariffs of 25% on steel and 10% on aluminum next week. More details still need to emerge — for example, will any countries, like Canada or Australia, garner exemptions? — but the announcement yesterday had the whole metals world talking.

Further news should be coming next week, when Trump’s announcement could become an actual legal proclamation. Until then, the MetalMiner team broke down the Section 232 landscape, including what the announcement might mean for you.

To access the MetalMiner team’s full breakdown of the Section 232 issue, visit our dedicated Section 232 Report Investigation Impact page to download the full report.

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

After a hectic morning during which it seemed like a Section 232 announcement from President Trump was coming, before it then it seemed like it would be postponed, an announcement did finally come.

Section 232 buying strategies – download MetalMiner’s Section 232 Investigation Impact Report today!

CNN reported earlier today that Trump said his administration will put tariffs on steel and aluminum imports of 25% and 10%, respectively, next week. The numbers as announced today differ from those offered up in the Section 232 recommendations produced by Secretary of Commerce Wilbur Ross (which were made public in mid-February).

Unsurprisingly, the announcement was felt throughout the metals world, up and down the value stream.

“We appreciate the President’s commitment to strengthening the U.S. aluminum industry,” said Heidi Brock, president and CEO of the Aluminum Association, in a prepared statement. “We look forward to working with the President on implementation and to creating a more level playing field.”

Scott Paul, president of the Alliance for American Manufacturing, expressed support but urged Trump to follow through with a broad action.

“We’re on the brink of a potentially historic rebalance of America’s trade priorities,” Paul said in a prepared statement. “As we noted in a letter to the president this week and our cable TV ad, we are confident a robust steel trade action is good for our economy. A decision to retore sanity to global steel markets will help create domestic jobs and preserve our national security.

“But to achieve those results, the president’s enforcement action must be broad, robust and comprehensive. We urge the president to stand by our nation’s steel communities. They are counting on him to follow through on this.”

The announcement was not met positively by everyone, however.

“Today’s decision by the Administration to implement new tariffs severely harms the $37 billion U.S. recreational boating industry and the 650,000 American workers it supports,” said Thom Dammrich, president of the National Marine Manufacturers Association, in a statement. “While these tariffs are meant to protect American manufacturing, they do just the opposite. U.S. manufacturers, like those in our industry, which use American-made aluminum, depend on a competitive global market and fair pricing. What’s more, U.S. aluminum manufacturers are at capacity and unable to supply the aluminum sheet used by our members, forcing them to seek it overseas.”

Many associations and government officials alike have warned that the tariffs could set off a trade war, cautioning retaliation should the U.S. impose the tariffs. The European Steel Association (EUROFER), responded to the president’s announcement on Thursday.

 “From one day to the next, EU steel exports to the US – which were at 5 million tonnes in 2017 – will be cut drastically by an estimated 50% or more. The same will happen with all other countries exporting steel to the US. We expect that the tariff could restrict US imports by up to 20-25 million tonnes overall. This would represent a volume representing more than half the total EU imports of 2017 (40 million tonnes),” said Axel Eggert, director general of EUROFER, in a prepared statement. “In the current context of massive global excess steel capacity, markets will be forced to take preventive contingency actions to avoid domestic market disruption from trade deflection.”

The announcement from Trump roiled the markets today. The CBOE’s Volatility Index — or VIX, by its ticker symbol, surged Thursday afternoon, indicating greater volatility.

The VIX shot up Thursday following Trump’s announcement on the intention to impose steel and aluminum tariffs next week. Source: CBOE

Elsewhere, the Dow Jones dropped more than 400 points after Trump’s announcement, CNBC reported.

Steel and aluminum stocks, however, received a boost from the announcement.

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

As of just after 3 p.m. Eastern Time, Nucor Corporation was up 3.04%, while AK Steel was up 7.36%. Century Aluminum was up 8.24% for the day, and U.S. Steel posted a 6.09% increase.