Articles in Category: Global Trade

The Department of Commerce announced Wednesday, Dec. 13, that it had issued a preliminary affirmative determination in the countervailing duty (CVD) investigation of cast iron soil pipe fittings from China.

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The department announced the determination in a release, ruling that exporters from China received countervailable subsidies in a fairly broad range of 8.66-102.31%.

“The Trump Administration will not sit back and watch as American companies and workers are harmed by unfair government subsidies,” Commerce Secretary Wilbur Ross said in a prepared statement. “The United States is committed to free, fair and reciprocal trade, and will continue to validate the information provided to us that brought us to this decision.”

The petitioner in the case was the Illinois-based Cast Iron Soil Pipe Institute, which boasts three members: AB&I Foundry (California), Charlotte Pipe & Foundry (North Carolina), and Tyler Pipe (Texas).

According to the department, the 79 antidumping or countervailing duty investigation it initiated from Jan. 20 to Dec. 11 of this year marks a 52 percent increase from investigations started during the same period last year.

As for the respondents, according to a fact sheet provided by the Commerce Department, the following preliminary subsidies were calculated for the respondents:

  • 8.66% for mandatory respondent Shanxi Xuanshi Industrial Group Co., Ltd.
  • preliminary subsidy rate of 12.72% for mandatory respondent Wor-Biz International Trading Co., Ltd. (Anhui).
  • Commerce applied an adverse facts available rate of 102.31% for mandatory respondent Shijiazhuang Chengmei Import & Export Co., Ltd. because of its failure to respond to the Department of Commerce’s request for information.
  • 10.37% for all other Chinese producers and exporters

According to the Department of Commerce, imports of cast iron soil pipe fittings from China during 2016 were valued at an estimated $8.6 million.

A final decision in the CVD case is scheduled for April 24, 2018.

U.S. ITC Rules in 5-Year Sunset Review of Stainless Steel Pipe Fittings

The U.S. International Trade Commission (USITC) issued its own ruling Dec. 14 on stainless steel butt-weld pipe fittings from Italy, Malaysia and the Philippines.

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The USITC ruled that removing existing antidumping duty orders on the product from the trio of countries “would be likely to lead to continuation or recurrence of material injury within a reasonably foreseeable time.”

Before we head into the weekend, let’s take one last look back at the week that was:

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Free Download: The December 2017 MMI Report

With steel overcapacity touching a historic high at about 737 million tons (MT), and China adding to new capacity, this remains a huge industry concern.

Not only is the demand-supply market askew, jobs are being lost, especially in the United States, which, by one reckoning, has seen about 35% of steelmaking jobs vanish in the last two decades or so.

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So, when representatives of G20 member states met at the end of November for the Global Forum on Steel Excess Capacity in Berlin and announced they had come to a basic understanding on the need for restructuring of the sector and dismantling market-distorting subsidies to ensure a level-playing field, many welcomed the move.

In the meeting, China and the U.S. may have locked horns — but China’s neighbor, India, on the other hand, seemed more content regarding the developments coming out of the meeting.

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Pavel Ignatov/Adobe Stock

This morning in metals news, Chinese steel got a boost on the heels of another round of output cuts, Goldman Sachs executives warns about the potential of a U.S. departure from the North American Free Trade Agreement (NAFTA) and Thyssenkrupp looks to get union backing for its European merger deal with Tata Steel.

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Chinese Steel on the Rise

On the heels of output cuts, Chinese steel got a boost Monday, according to a Reuters report.

According to the report, the most-active rebar on the Shanghai Futures Exchange (SHFE) jumped 1.6%, ultimately closing at 3,912 yuan ($591.26) a ton.

Goldman Warns About NAFTA Exit

Goldman Sachs warned clients that it wasn’t optimistic regarding a positive resolution to the renegotiation talks.
“While we expect the rising odds of tax reform to put less pressure on the trade agenda, we do not expect passage of tax reform will raise the odds of a successful Nafta renegotiation,” Goldman Sachs said in a note to clients, according to Bloomberg. “And so a withdrawal announcement looks more likely than not, even if tax reform is enacted soon.”

Thyssenkrupp Looks to Win Union Favor

As German firm Thyssenkrupp works to execute a merger deal of its European operations with Tata Steel’s, the company is looking to win over its workers’ favor.

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According to Reuters, Thyssenkrupp is offering workers commitments on jobs and investments to get union backing for the deal (which was agreed to in September by the two companies in September).

This morning in metals, some big news on the international trade and steel imports front.

The U.S. Department of Commerce yesterday announced preliminary affirmative rulings that corrosion-resistant steel (CORE) and certain cold-rolled steel flat products (cold-rolled steel) imported from Vietnam “produced from substrate originating in…China are circumventing existing antidumping and countervailing duty (AD/CVD) orders on CORE and cold-rolled steel imported from China,” according to their news release.

The Details on Duties

“The Commerce department has directed the United States’ customs and border protection agency (CBP) to collect anti-dumping (AD) and Countervailing Duty (CVD) cash deposits from importers of CORE produced in Vietnam using Chinese-origin substrate at rates of 199.43 percent and 39.05 percent, respectively,” according to this article, writing from the release. “CBP has also been directed to collect AD and CVD cash deposits on imports of cold-rolled steel produced in Vietnam using Chinese-origin substrate at rates of 265.79 percent and 256.44 percent, respectively.”

What This Means for Metal Buyers

Many in the steel manufacturing are hailing the decision as a victory as far as solidifying the case against China when it comes to proving that country’s circumvention and “substantial transformation” tactics.

The decision on CORE and cold-rolled products may open the door for the steel pipe and tube industry to file or follow up on similar cases.

Learn more on Trade Circumvention here, including a free white paper download on the topic.

Listen to our MetalMiner Podcast series, “Manufacturing Trade Policy Confidential,” for more discussion around circumvention and other trade topics that matter to metal buyers.

Just as legislators in the U.S. and Europe are taking increasingly strident action to curb imports from countries like China under anti-dumping legislation, the tools available to them are being withdrawn.

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Historically, China and a number of other emerging markets have been classified as non-market economies. This means that the state plays a major role in allocating resources and setting prices, making the cost of products less relevant to the economies of manufacture. Under U.S. law, a non-market economy is defined as one that does not operate on market-based principles, and therefore, its prices for final goods do not (necessarily) reflect fair value.

We talk of China in this context because the country is the world’s largest non-market economy, but it is far from alone: there are many other emerging and previously emerging markets that are classified accordingly.

There lies the problem. China is being reclassified, at least in Europe, under a deal negotiated in October. The Telegraph reports that the full European Parliament then offered its endorsement last month, just leaving national governments to give their final approval on December 4.

China has been pushing hard for its economy to be re-classified. Some suggest that the EU agreement was in part motivated by a desire to improve trade with China. After the U.S., the EU is China’s second largest trade partner.

However, many European manufacturers are probably thinking, “Be careful what you wish for.”

As the article points out, these changes mean it will be harder for European companies to argue they are competing against subsidised competitors, with the new system being more flexible in determining whether domestic producers are being undercut. Anti-dumping measures are in place for some grades and forms of steel and for aluminium foil at present, both of which would be harder to renew if the change in status is accepted. Read more

Media coverage of the Section 232 investigations — which could potentially curb imports of steel, stainless steel and aluminum into the U.S. — have spooked importers, consumer groups and some manufacturing industries.

These fears are misplaced, according to Barry Zekelman, executive chairman and chief executive officer of Zekelman Industries. “Steel has been the most abused product on the planet,” he says.

What makes Zekelman’s point of view on trade so fascinating?

The fact that he is not a steel producer! (That, and his ever-colorful examples…our headline above is a case in point.) Take a listen to our conversation:

The Rise of Zekelman Industries

His story sounds like the American dream – a tale of how Zekelman and his brothers were thrust into their father’s fledgling business after their father’s sudden passing. He left college as a freshman to help save the pipe manufacturer.

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

The U.S. Department of Commerce announced an action that it hasn’t taken in over a quarter of a century.

On Tuesday, the department announced it had self-initiated countervailing duty (CVD) and anti-dumping (AD) investigations with respect to Chinese common alloy aluminum sheet.

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“These historic investigations, the first in over a quarter century, were self-initiated pursuant to the authority granted to the Secretary under the Tariff Act of 1930, as amended,” the Department of Commerce said in a prepared statement.

Secretary of Commerce Wilbur Ross underscored the administration’s goal of targeting what he called “unfair trade practices.”

“President Trump made it clear from day one that unfair trade practices will not be tolerated under this administration, and today we take one more step in fulfilling that promise,” Ross said in the release. “We are self-initiating the first trade case in over a quarter century, showing once again that we stand in constant vigilance in support of free, fair, and reciprocal trade.”

According to the department, imports of common alloy sheet from China were valued at an estimated $603.6 million in 2016.

Typically, such investigations are prompted by petitions filed by entities within the domestic industry. The secretary of commerce, however, has the authority to self-initiate a CVD or AD investigation if it is determined that such a probe is warranted.

The department last self-initiated a CVD investigation in 1991, when it investigated softwood lumber from Canada. The last self-initated AD case came in 1985, when the department looked at semiconductors from Japan.

According to the release, the merchandise subject to investigation is “common alloy aluminum sheet, which is a flat-rolled aluminum product having a thickness of 6.3 mm or less, but greater than 0.2 mm, in coils or cut-to-length, regardless of width.” The material is typically used in building and construction, transportation, basic electrical applications, and appliances.

“The Department has self-initiated these investigations based on information indicating that the United States price of common alloy sheet from China may be less than the normal value of such or similar merchandise and that imports of common alloy sheet from China may be benefitting from countervailable subsidies,” the department release added. “The Department also has evidence that imports of common alloy sheet from China may be materially injuring, or threatening material injury to, the domestic industry producing common alloy sheet in the United States.”

The domestic aluminum industry applauded the announcement from the Department of Commerce.

“The Aluminum Association and its members enthusiastically support the decision announced today by the Department of Commerce and Secretary Wilbur Ross to self-initiate unfair trade investigations concerning imports of common alloy sheet from China,” said Heidi Brock, president and CEO of the Aluminum Association, in a prepared statement. “We are extremely grateful for the efforts and leadership of Secretary Ross in vigorously enforcing the U.S. trade laws.

“The Aluminum Association and its members seek to help ensure that common alloy sheet from China entering the United States is fairly traded.” 

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Final determinations by the Department of Commerce in the cases are scheduled for April 2018 for the CVD investigation and July 2018 for the AD investigation.

In case you missed it, just before President Trump went on his Asia tour (including a state visit with China’s President Xi Jinping), the U.S. finally went on record in ruling that China is still not a market economy for purposes of determining anti-dumping duties.

To folks inside the Beltway on the front lines of trade policy, this is a big deal.

In fact, it’s China’s single-biggest trade issue, said Tim Brightbill, partner at Wiley Rein LLP in Washington, D.C., in the second episode of our series, “Manufacturing Trade Policy Confidential.”

So what will this mean for the U.S.-China relationship?  What will happen if the U.S. slaps China with even bigger tariffs after the Section 232 investigation is completed? Will China retaliate? How?

Listen to the full episode!

Manufacturing Trade Policy Confidential: Background

With everything that’s been happening on the international trade policy front over the past year, we wanted to give metal buying organizations more insight into the issues they may not be reading or hearing enough about — or at all — in the mainstream B2C media.

What better way to do so than go straight to the source — or sources — and interview some key movers and shakers on the manufacturing and policy fronts? So we’ve started a brand-new series called “Manufacturing Trade Policy Confidential.”

If you’ve visited MetalMiner’s digital pages over the past several months, you’re no stranger to the phrase “Section 232” — shorthand for the U.S. Department of Commerce investigation into whether certain steel imports constitute a national security risk, under the namesake section of the U.S. Trade Expansion Act of 1962.

The outcome of the investigation (findings from which were slated to come down last summer but have been delayed) could have significant effects on upstream and downstream manufacturing organizations, ranging from metal producers to buying organizations – even the mom-and-pops.

But Section 232 is only one small part. Trade circumvention, China’s non-market economy status, domestic uncertainty amidst proposed tax plans and many other issues have pushed us to start this new podcast series.

We’ll be publishing several more interviews in the coming weeks and months – stay tuned!

Listen to more episodes and follow the MetalMiner Podcast on SoundCloud.

President Donald Trump may not have said much, if anything, about China’s steel exports during his recent tour. Both European and U.S. legislators, however, are carrying out investigations into not just simple dumping but more complex and illegal activities, such as shipping via third parties to hide the origin and avoid pre-existing dumping tariffs.

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A Reuters article this week explains how the European Union’s anti-fraud office (OLAF) said it has found Chinese steel was shipped through Vietnam to evade the bloc’s tariffs.

In part, the current case may be a matter of timing.

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