Articles in Category: Global Trade
merger and acquisition

bas121/Adobe Stock

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 Tata Steel and its attempt to spin off its European assets, the U.S.’s rising steel capacity utilization rate, China’s economic recovery and its impact on metals prices, and much more:

We’re offering timely emails with exclusive analyst commentary and some best practice advice. Sign up today.

Week of Nov. 16-20 (Tata Steel looks for buyers, capacity utilization rises and more)

Sign up today for Gunpowder, MetalMiner’s free, biweekly e-newsletter featuring news, analysis and more.

We all remember the Obama-era Trans-Pacific Partnership (TTP) trade deal, right? The trade deal the U.S. withdrew from in early 2017 after President Donald Trump called it a disaster for American workers?

Well, Australia, Japan, and nine other countries went ahead with it, lowering tariffs and bolstering trade within the region.

But, crucially, TTP did not include China. Part of the attraction for the Obama administration was that the deal strengthened the U.S.’s role in Asian regional trade at the expense of China.

Even so, the deal was also a source of puzzlement to participants at the time. The argument went, if it did not include China, then why was the U.S. so worried about American jobs (as TTP gave no privileges to China)?

Two years on and the region has just signed an even larger agreement.

Want an occasional email from MetalMiner that highlights new content with NO sales ploys? Join that list today.

RCEP trade deal and worries over China’s dominance

The Regional Comprehensive Economic Partnership (RCEP) cuts tariffs on trade across a new trade zone larger than the E.U. in population. Gross domestic product of the zone represents some 30% of the global total, the Washington Post reports.

Unfortunately, America’s absence from this agreement has left the way clear for Chinese dominance.

The U.S.’s absence also contributed to the withdrawal of Asia’s third-largest economy India from the agreement.

There is still some trepidation, even among parties that have signed up, that without the counterbalance of the U.S., the agreement leaves China in too dominant a position.

Australian labor unions have questioned the deal. Singapore is concerned about the failure of RCEP to detail rules around issues like data privacy, IP protection, digital trade, and e-commerce. These are all issues the U.S. would have put at the top of its agenda.

Read more

India

Zerophoto/Adobe Stock

It took about eight years to negotiate the details, but eventually 15 nations from the Asia Pacific belt signed on the dotted line on the Regional Comprehensive Economic Partnership (RCEP) earlier this week.

Missing from the deal, however, were the United States and India from the agreement. The pact seeks to lower tariffs and open up services trade within the bloc.

The MetalMiner 2021 Annual Outlook consolidates our 12-month view and provides buying organizations with a complete understanding of the fundamental factors driving prices and a detailed forecast that can be used when sourcing metals for 2021 — including expected average prices, support and resistance levels.

RCEP includes 15 countries, including China

The 15 countries to sign off on the RCEP include China, Japan, South Korea, New Zealand and Australia. Together, they account for a GDP of $26.2 trillion, or 30% of global GDP. The agreement covers a market of 2.2 billion people.

The RCEP is looked upon as a cooperative union where countries are committed to protect member nations from imports of other non-members.

The aim is to give preferential treatment for trade between the member countries. That treatment comes in the form of lower tariffs, preferential market access, customs union or free trade in specific sectors.

India remains out on RCEP

After initial interest, India remains unconvinced by the RCEP.

However, experts in the country have varying opinions as to whether India made the right move.

Pro-RCEP experts said there are advantages of regional trade pacts. These types of pacts often lead to higher foreign direct investments for participating countries as supply chains reorient across the member nations.

Furthermore, signatory nations got access to otherwise closed foreign markets, leading to a higher volume of trade between countries.

India reiterated its arguments against joining this new partnership. External Affairs Minister S. Jaishankar said the effect of past trade agreements had been to deindustrialize some sectors. India had allowed other countries “unfair” trade and manufacturing advantages “in the name of openness.”

According to the Minister, this worked against India in the long run.

Read more

We wrote last month how China’s rapid recovery from the COVID-19 pandemic resulted in the country importing semi-finished products for which it previously had been self-reliant or even a net exporter for the last decade.

Some steel products and primary aluminum swung into becoming significant net inflows for the economy during the summer months.

But as we cautioned at the time, this was only expected to be a temporary phenomenon.

Are you on the hook for communicating the company’s steel performance to the executive team? See what should be in that report!

China’s steel flows recalibrate

Sure enough, although volumes are still down on this time last year, exports have picked up and imports have fallen.

In a recent post, Argus Media reported China’s steel exports in October rose by 5.2% from September to 4.04 million tons. Chinese mills shifted supplies to overseas markets, enabled — or forced, depending on your point of view — by falling domestic prices.

Summertime exports rose as domestic prices fell

Falling domestic prices in the summer aided Chinese steel mills’ ability to export so aggressively.

Domestic inventory levels rose and domestic crude steel production hit record levels of 3.09 million tons a day in September, in large part to meet domestic demand. Weakness in domestic steel prices suggests overoptimism by the steel mills, inevitably resulting in excess production leaking into export markets looking for a home.

Domestic Chinese steel prices have recovered since the summer as global steel prices have risen and imports have fallen.

As the global recovery has lifted demand and prices, mills in India and elsewhere have not felt the need to distress sell metal into China. In addition, the arbitrage window has narrowed.

Imports have therefore appeared less attractive to Chinese buyers and exports more attractive to mills. That is a trend we expect to continue through Q4.

Read more

India

Zerophoto/Adobe Stock

No, we don’t mean that much-vaunted but still distant dream of India becoming a second China economically — the disparity expands rather than contracts with time — but rather could India become a pariah state after China in terms of feeling the pain of anti-dumping duties, quotas, and tariffs (particularly with respect to Indian metal exports)?

It has already happened in Europe on stainless steel long product. The E.U. has imposed an annual quota and punitive 25% tariffs for every kilogram over that limit in a bid to protect its domestic producers.

Are you under pressure to generate aluminum cost savings? Make sure you are following these five best practices!

With rise to No. 2, could Indian metal exports be next to face tariffs?

Last year, India ranked the second-largest steel producer in the world behind China. (However, India’s production totaled not much more than a tenth of China’s output.)

India is becoming a global force in many ferrous and non-ferrous metals.

Originally, the rationale was India’s huge population and low per-capita consumption of metals suggested growth prospects on a Chinese scale.

Such potential has led to considerable investment. A good level of domestic resource — iron ore in particular — has meant economies of scale have favored domestic growth prospects.

But slow GDP growth, a bureaucratic business environment and tortuous legal environment over land ownership have slowed what should otherwise have been a meteoric rise.

Read more

The widely, if not universally, held belief that globalization is a win-win panacea for growth has never looked shakier.

While President Donald Trump has led the charge on calling out the failings of unfettered engagement with China and all that entails in terms of loss of manufacturing capability and sharing of hard-won technology, he is by no means alone.

The MetalMiner 2021 Annual Outlook consolidates our 12-month view and provides buying organizations with a complete understanding of the fundamental factors driving prices and a detailed forecast that can be used when sourcing metals for 2021 — including expected average prices, support and resistance levels.

Globalization and China

There is a growing groundswell of opinion that the long-held liberal beliefs that engagement would change China’s behavior have proved flawed.

China today is arguably more centrist, more actively and belligerently nationalistic and worryingly less influenced by world opinion than it has been for decades.

And yet it has, from an economic point of view, proved remarkably successful so far.

China’s economy has bounced back faster than those in the West. Furthermore, its economy has recovered faster than even its close Asian neighbors. That is because, in part, the party’s control meant it could enforce harsh — compared to in the U.S. or Europe — lockdown measures in the face of the pandemic. That enforcement extends to continued adherence to social distancing and hygiene standards since.

It is unlikely that a change of president in January, were that to happen following the November election, would have a meaningful impact on U.S.-China relations. A Biden presidency may try to foster a more collaborative international approach. However, the direction would likely be similar.

Europe, too, is following a less bellicose but similar path.

Europe’s investments in China and reliance on China as a trading partner are greater than that of the U.S., for whom China trade still represents a modest percentage of GDP.

Yet, even in Europe, there is increasing talk of decoupling supply chains and restrictions of technology transfers to China. Furthermore, these is talk of restricting Chinese technology companies’ access to the European market.

Read more

steel shipment

Hor/Adobe Stock

This morning in metals news: U.S. Steel’s Q3 guidance included a $100 million loss despite improving conditions; the United States International Trade Commission (USITC) made a sunset review determination related to kitchen appliance shelving and racks; and a subsidiary of Norsk Hydro entered into a contract with Spanish aluminum company Alu Iberica.

We’re offering timely emails with exclusive analyst commentary and some best practice advice – and you choose how often you receive it. Sign up here.

U.S. Steel’s Q3 guidance

U.S. Steel said it expects a loss of approximately $100 million in Q3.

“Improving market conditions experienced in June and July have accelerated through August and September,” U.S. Steel President and CEO David B. Burritt said. “Strengthening steel fundamentals and our ability to respond quickly to increasing customer demand are expected to result in significantly improved adjusted EBITDA in the third quarter. We have grown confident in the recovery that is underway in North America and Europe. While we believe this recovery is enduring, we remain relentlessly focused on what we can control, including management actions to stay nimble, reduce costs, and preserve cash.”

In addition, U.S. Steel expects a Q3 diluted loss per share of $1.45.

USITC makes determination on kitchen appliance shelving, racks

The USITC recently conducted a five-year sunset review related to existing countervailing duty and antidumping orders on kitchen appliance shelving and racks from China.

Read more

steel

gui yong nian/Adobe Stock

This morning in metals news: U.S. steel capacity utilization reached 65.1% for the week ending Sept. 12, the World Trade Organization released a report covering the U.S.’s Section 301 tariffs on Chinese goods; and the copper price approached a two-year high.

Does your company have an aluminum buying strategy based on current steel price trends?

U.S. steel capacity utilization rises to 65.1%

The U.S. steel sector’s capacity utilization rate reached 65.1% for the week ending Sept. 12, the American Iron and Steel Institute (AISI) reported.

Production during the week totaled 1.46 million net tons, down 19% year over year but up 2.2% from the previous week. Capacity utilization for the week ending Sept. 5 reached 63.7%.

However, production for the same week in 2019 reached 1.80 million net tons.

WTO releases report on U.S.’s China tariffs

The WTO this week released a report of its findings related to the U.S.’s Section 301 tariffs on Chinese goods, which amounted to hundreds of billions of dollars.

The report comes more than two years after China requested consultations — in April 2018 — related to the U.S. tariffs.

Read more

cars on the road in Shanghai, China

eyetronic/Adobe Stock

Before we head into the long Labor Day weekend, let’s take a look back at the week that was in the world of metals.

Automakers released August sales reports, mostly showing sales remain down compared with 2019 levels.

Meanwhile, for the week ending Aug. 29, U.S. steel mills’ capacity utilization fell compared with the previous week, interrupting an extended stretch of weekly capacity increases.

In other news, President Donald Trump took aim at steel imports from Brazil and Mexico. With respect to Brazil, Trump opted to cut Brazil’s semi-finished steel quota for the remainder of the year down to 60,000 tons from 350,000 tons.

Stay up to date on MetalMiner with weekly, monthly, or quarterly updates – without the sales pitch. Sign up now.

Week of Aug. 31-Sept. 4

Sign up today for Gunpowder, MetalMiner’s free, biweekly e-newsletter featuring news, analysis and more.

copper smelter

Bombardho/Adobe Stock

This morning in metals news: copper on the SHFE is headed for its fifth straight month of price increases; a Swedish joint venture is ramping up its efforts toward producing fossil-fuel-free steel; and Mexico is instituting a new export pre-approval process to avoid reimposition of steel tariffs by U.S. President Donald Trump.

Do you know the 5 best practices of sourcing metals including steel?

SHFE copper on the rise again

The SHFE copper price is headed for a fifth straight month of price rises, Reuters reported.

According to the report, the five-month streak marks the longest such upward rise in 11 years.

Swedish JV eyes fossil-fuel-free steel production

A joint venture in Sweden, Hybrit, is looking to make big changes to how steel is produced.

In particular, the JV is looking to remove coking coal from the equation, Bloomberg reports. Instead, the steel production process would feature hydrogen and other forms of clean energy.

SSAB AB, LKAB and Vattenfall AB are the operators of the JV.

Mexico to institute steel export pre-approval process

On the heels of President Donald Trump’s recent reimposition of the 10% Section 232 tariff on some Canadian aluminum, the Mexican government is hoping to avoid a similar outcome for its steel exports to the U.S.

According to Bloomberg, Mexico is putting into place a new pre-approval process for steel exports.

In short, the approval process — which would go into effect Sept. 4 — would confirm the steel exports did not pass through a third country.

Does your company have a steel buying strategy based on current steel price trends?

1 2 3 243