Articles in Category: Global Trade

More than a year and a half has elapsed since President Donald Trump, leveraging Section 232 of the Trade Expansion Act of 1962, imposed tariffs on imported steel and aluminum of 25% and 10%, respectively.

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Trump applied the tariffs using the Section 232 statute’s national security grounds language as justification. The power to adjust import levels via Section 232, while not used frequently since the passage of the 1962 legislation, falls under the authority of the president.

With that said, some members of Congress have proposed legislation that seeks to curtail the office of the president’s Section 232 authorities.

Last year, a bipartisan group of senators introduced legislation calling for congressional approval of tariffs introduced via Section 232. The bill requires the president to submit a proposal to Congress if the presidents seeks to adjust import levels. After submission of the proposal, Congress would deliberate over a 60-day period.

Earlier this year, Republican Sen. Pat Toomey of Pennsylvania sponsored the Bicameral Congressional Trade Authority Act of 2019; the bill was read twice and referred to the Senate Finance Committee on Jan. 31.

Within the metals world itself, one industry group suggests the Section 232 tariffs should come with a sunset clause.

In a letter addressed to Sen. Chuck Grassley, chairman of the Senate Finance Committee, and Sen. Ron Wyden, ranking member on the Senate Finance Committee, the Coalition of American Metal Manufacturers and Users (CAMMU) called for a “robust debate” regarding the continuation of the Section 232 steel and aluminum tariffs.

“On behalf of the members of the Coalition of American Metal Manufacturers and Users (CAMMU) and the undersigned trade associations representing industries affected by the 232 steel and aluminum tariffs, we are writing to urge you to include a sunset provision for current 232 national security tariffs in any comprehensive 232 tariff reform legislation considered by the Committee,” CAMMU wrote in the letter.

CAMMU argued the tariffs have negatively impacted the U.S. economy.

“After 18 months of the Section 232 steel and aluminum tariffs, it is clear that these tariffs are contributing to a weakening of the U.S. economy, particularly in the manufacturing sector,” the letter continued. “This is starkly reflected by the Institute for Supply Management’s key manufacturing index which fell to 47.8% in September 2019, the lowest reading since 2009. Price fluctuation, delivery delays and uncertainty caused by the tariffs are contributing factors to a slowdown in the manufacturing sector.”

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Members of CAMMU include: American Institute for International Steel, Associated Builders and Contractors, Industrial Fasteners Institute, the Hands‐On Science Partnership, the National Tooling & Machining Association, North American Association of Food Equipment Manufacturers, the Precision Machined Products Association, and the Precision Metalforming Association.

“We appreciate the desire for bipartisan, compromise legislation that has a chance of seeing Senate floor action this Congress,” CAMMU stated. “However, 232 reform legislation that does not allow for a robust congressional debate and decision on the current steel and aluminum tariffs would allow these tariffs that are causing actual harm to U.S. manufacturers to continue with no competent exclusion process in place and no future relief in sight. We urge you to include a sunsetting provision that addresses current 232 tariffs in the mark that goes before the Senate Finance Committee to allow for a debate on these harmful tariffs and to ensure all stakeholders have a voice in the process.”

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Before we head into the weekend, let’s take a look at the week that was and some of the metals coverage here on MetalMiner, including: copper prices, “Steelmageddon,” rising palladium prices, and aluminum and steel demand in Europe.

Keep up to date on everything going on in the world of trade and tariffs via MetalMiner’s Trade Resource Center.

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This morning in metals news, China again emphasized its desire for a removal of tariffs toward the goal of an initial trade deal with the U.S., U.S. Steel has laid off more workers and a Taiwanese firm is planning to invest $100 million in a new Turkish steel factory.

Keep up to date on everything going on in the world of trade and tariffs via MetalMiner’s Trade Resource Center.

Tariff Talks Continue

As U.S.-China trade talks continue, with the parties aiming to reach a “phase one” deal, China’s Commerce Ministry renewed a call for the removal of tariffs.

“The trade war was begun with adding tariffs, and should be ended by canceling these additional tariffs. This is an important condition for both sides to reach an agreement,” said Gao Feng, spokesperson for China’s Ministry of Commerce, according to a CNBC report.

More U.S. Steel Layoffs

In addition to layoffs at its Minnesota taconite plants and at its Granite City, Illinois plant, the steelmaker has also laid off workers at its Gary Works and Midwest Plant in Portage, Indiana, the Times of Northwest Indiana reported.

The steelmaker reported a net loss of $84 million in the third quarter, compared with net earnings of $291 million in Q3 2018.

Taiwan to Continue Investment in Turkey

According to a report in the Daily Sabah, the president of the Taiwan External Trade Development Council said the company will invest $100 million toward a new steel factory in northwestern Turkey.

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Walter Yeh, president of the council, added Taiwan hopes to increase its trade volume with Turkey up to $2 billion, according to the report.

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Not everyone agrees with the use of tariffs to achieve changes in trade relations.

However, a recent article in The New York Times article reports the threat of 25% import tariffs on the U.S.’s main automotive trading partners could prove to be spectacularly successful.

Keep up to date on everything going on in the world of trade and tariffs via MetalMiner’s Trade Resource Center.

Autos are the soft underbelly of major auto economies like Germany, Japan, South Korea and Mexico in their trade relations with the U.S. Although the first three have invested heavily in U.S. manufacturing facilities over the years, they still ship huge volumes into the U.S. from their home countries and have largely perpetuated an unfair reciprocal relationship in terms of tariff barriers.

The E.U., for example, exported $42.8 billion worth of motor vehicles to the U.S. in 2018 — more than one-fifth of the cars imported by the U.S. — at a tax rate of 2.5%. Meanwhile, the E.U. imposes a 10% tariff for cars exported in the reverse direction.

In response to the threat of 25% tariffs, the E.U. offered to scrap tariffs in both directions, a step it has resisted in all previous negotiations.

But with carmakers’ backs against the wall, the Trump administration was not about to let up with a simple scrapping of tariffs, long overdue as that may be.

The administration is in discussions with the E.U. and its carmakers about increasing their investment and employment in the U.S. The more cars foreign carmakers manufacture in the U.S., the less they will ship in from abroad, benefiting the balance of payments and creating employment stateside.

Consumers benefit from continued access to a wide range of manufacturers without the cost implications of the threatened tariffs being imposed, estimated to be between $1,400 and $7,000 per vehicle if applied at 25%, the article notes.

Even U.S. carmakers are in favor of removing all tariffs, as they see a reduction in overseas import tariffs as an opportunity worth the increased domestic competition that foreign carmakers setting up in the U.S. may pose.

The only losers, should the deal be agreed, could be said to be foreign carmakers who will lose domestic exports, an impact that Germany is expected to feel the significance of more than any other country. Germany runs the second-largest trade surplus after China, with autos making up a sizable portion of that mercantilist trade structure.

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Foreign carmakers are being asked to provide details of proposed investments and plans already in the pipeline.

The German car industry is promising to create 25,000 jobs at factories in the United States, according to The New York Times. However, the Trump administration is looking for new jobs and investments, not simply plans that were already in the pipeline before the current negotiations were started.

A deal has not yet been reached; unofficially, both sides are making encouraging noises, raising the prospects for some good trade news to lift the spirits of investors who have been disproportionately depressed by a barrage of negative media coverage on the topic in 2019.

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Before we head into the weekend, let’s take a look back at the week that was and some of the metals coverage here on MetalMiner, including coverage of: Freeport-McMoRan’s use of artificial intelligence (AI), U.S. steel production, aluminum prices, U.S. automotive sales, construction spending and India’s decision to back away from the proposed RCEP trade pact.

Keep up to date on everything going on in the world of trade and tariffs via MetalMiner’s Trade Resource Center.

Free Partial Sample Report: 2020 MetalMiner Annual Metals Outlook

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This morning in metals news, tensions could ease between the U.S. and China on the tariff front, ArcelorMittal reported its third-quarter financial results and copper prices made gains this week.

Keep up to date on everything going on in the world of trade and tariffs via MetalMiner’s Trade Resource Center.

U.S., China Could Roll Back Tariffs with an Initial Deal

In what would represent a significant deescalation of trade tensions, the U.S. and China have reportedly agreed to roll back tariffs if they are able to reach a first-phase trade deal.

However, according to Reuters, the proposal faces internal opposition in the White House, with officials making conflicting public statements regarding tariff rollbacks either being or not being a condition for an initial trade deal.

ArcelorMittal Reports 3Q Results

ArcelorMittal reported a net loss of $539 million in Q3, compared with a net loss of $447 million in Q2.

The firm’s steel shipments fell 7.3% compared with the previous quarter.

Copper Price Rises

The LME three-month copper price has made gains over the last month.

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The price approached the $6,000/mt as the week has come to a close, reaching $5,949/mt. The price is up 4.59% on a month-over-month basis, per MetalMiner IndX data.

For a while, whether or not India would join the Regional Comprehensive Economic Partnership (RCEP) was touch and go.

But eventually, much to the relief of domestic steel companies and those from other sectors, the Narendra Modi-led Indian government decided to sit out the controversial RCEP trade pact, which features the 10 members of the Association of Southeast Asian Nations (ASEAN), plus China, Japan, Australia, New Zealand and South Korea.

Keep up to date on everything going on in the world of trade and tariffs via MetalMiner’s Trade Resource Center.

As Prime Minister Narendra Modi told the delegates at a negotiation meeting in Bangkok, “Neither the talisman of Gandhiji nor my own conscience permits me to join the RCEP.”

India’s decision comes seven years after negotiations over the free trade agreement began.

The RCEP covers trade in goods and services, in addition to investments, economic-technical cooperation, competition and intellectual property rights.

If India had joined RCEP, it would have become the largest trade agreement in the world, accounting for one-third of global economic output and half of the world’s population.

The remaining 15 nations have decided to go ahead with the deal, led by China.

According to some media reports, like one by India Today, the RCEP was a Chinese game plan to “save its manufacturing industries from folding under their own weight.”

India decided not to join the RCEP for several reasons. Among them, India wanted an important clause included for an auto-trigger mechanism as a shield against sudden and significant import surge from countries.

President of Indian Chambers of Commerce and Industry Sandip Somany was quoted in The Hindu as saying serious apprehensions on the RCEP had been expressed by several sectors, including steel, plastics, copper, aluminum, machine tools, paper, automobiles, chemicals, petro-chemicals and others.

For the domestic steel industry, the Indian prime minister’s announcement was music to its ears. The Indian steel industry had, from the start, opposed what it had dubbed a one-sided pact.

Speaking to LiveMint, Bhaskar Chatterjee, secretary general and executive head for Indian Steel Association, said representatives of the steel industry had met with the Indian Ministries of Commerce and Steel and the Indian Steel Association, where they asserted that if the signing the RCEP was inevitable, then steel items should be kept out of the agreement.

In addition to steel, other sectors that had expressed reservations about joining the RCEP were aluminum, petro-chemicals, agriculture, dairy, steel, rubber and textiles.

Experts were of the view that if other nations were allowed to ship their goods to India without absolutely any duty, they would obviously price them cheaper than their Indian counterparts, creating a market skewed against Indian producers and manufacturers. Playing at the back of the mind of Indian steel companies was 2016-17, when Chinese companies dumped steel in Indian markets in large volumes.

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One other reason behind Modi’s decision to walk away from the deal is the fact that the Indian economy today is particularly vulnerable and weak, with GDP growth stagnating and unemployment at new highs.

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This morning in metals news, miner Rio Tinto has advanced work on its Oyu Tolgoi copper and gold mine project, the U.S. is reportedly considering rolling back some tariffs against China, and Novelis announced its quarterly financial results.

Keep up to date on everything going on in the world of trade and tariffs via MetalMiner’s Trade Resource Center.

Rio Tinto Reaches ‘Significant Milestone’

Earlier this year, MetalMiner’s Stuart Burns weighed in on delays at Rio Tinto’s massive Oyu Tolgoi project in Mongolia, citing possible delays of 16-30 months.

This week, however, the miner offered positive news, announcing the completion of a portion of the project.

“Rio Tinto has achieved a significant milestone at the Oyu Tolgoi mine in Mongolia with the completion of Shaft 2, which enables the acceleration of work on the underground development,” the miner said. “Shaft 2, a 10 metre diameter shaft sunk to approximately 1.3 kilometres below the surface, has now entered into the final stages of commissioning.

“This is a critical piece of infrastructure and will enable a step change in terms of delivering the underground mine. Shaft 2 can carry 300 people per cage cycle versus a maximum of 60 people per cage cycle through Shaft 1. The 48 tonne capacity cage can now be used to support logistics, transporting supplies and components for development of the mine.”

Tariff Talks

Among other issues, tariffs remain at the center of the trade dispute between the U.S. and China.

China has asked the U.S. to drop tariffs in exchange for an initial deal. In that vein, according to several media reports, the U.S. is considering rolling back approximately $112 billion worth in tariffs on Chinese goods toward a first-phase trade deal.

Novelis’ Net Income Rises 31% YoY

For the second quarter of Novelis’ fiscal year 2020, the firm reported net income of $160 million, marking a 31% year-over-year increase.

Adjusted EBITDA reached $374 million, up 5% year over year.

In addition, Novelis’ acquisition of Aleris Corporation is expected to close in the coming months.

Keep up to date on everything going on in the world of trade and tariffs via MetalMiner’s Trade Resource Center.

“On July 26, 2018, Novelis announced it signed a definitive agreement to acquire Aleris Corporation,” the company said. “Having received conditional approval in the European Union, as well as a clear path forward for approval in the U.S., Novelis continues to work closely with the Chinese State Administration for Market Regulation to receive its approval. The company expects to close the transaction by January 21, 2020, the outside date under the merger agreement.”

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This morning in metals news, South Korea will no longer seek to benefit from special treatment granted to developing countries vis-a-vis WTO rules, iron ore exports from Australia’s Port Hedland are surging and Rio Tinto has commissioned new press filter technology at its Quebec alumina refinery.

Keep up to date on everything going on in the world of trade and tariffs via MetalMiner’s Trade Resource Center.

South Korea to Give up Seeking Developing Country Treatment

According to a Reuters report citing South Korea’s finance minister, the country will give up seeking the special treatment afforded to developing countries.

“The government decided not to seek special treatment as a developing country from future negotiations at WTO,” Finance Minister Hong Nam-ki was quoted as saying.

Developing country status is self-designated; however, other WTO members can challenge a country’s claim to the status.

Earlier this year, the White House released a memorandum calling for reforms to developing country designations.

“While some developing-country designations are proper, many are patently unsupportable in light of current economic circumstances,” the memorandum stated. “For example, 7 out of the 10 wealthiest economies in the world as measured by Gross Domestic Product per capita on a purchasing-power parity basis — Brunei, Hong Kong, Kuwait, Macao, Qatar, Singapore, and the United Arab Emirates — currently claim developing-country status.  Mexico, South Korea, and Turkey — members of both the G20 and the Organization for Economic Cooperation and Development (OECD) — also claim this status.”

Through the first half of 2019, South Korea accounted for 9% of U.S. steel imports (1.3 million metric tons).

Port Hedland Iron Ore Exports Rising

Iron ore exports from Australia’s Port Hedland are expected to hit a record high this fiscal year, according to a Bloomberg report.

According to the report, iron ore volumes from the port last year reached 508.5 million tons.

Rio Tinto Announces New Press Filter Tech at Quebec Refinery

Rio Tinto has commissioned new press filter technology at its Vaudreuil alumina refinery in Quebec.

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“The new filter presses will deliver environmental benefits by moving the refinery to dry stacking of bauxite residue and extend the life of the operation, which supports 1,000 jobs in the Saguenay-Lac-St-Jean region,” the company said. “The presses will ramp up to being fully operational in early 2020.”

The new presses will be able to dry bauxite residue — preparing it for storage — in just 17 minutes, according to Rio Tinto, down from the three years it currently takes to dry the material.

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This morning in metals news, the United States Trade Representative will soon consider whether to extend tariff exclusions granted last year for imports of certain products from China, the GFG Alliance is aiming to consolidate its steel operations and make the new consolidated entity carbon-neutral by 2030, and LME copper prices continue to make gains this month.

Keep up to date on everything going on in the world of trade and tariffs via MetalMiner’s Trade Resource Center.

USTR to Consider Tariff Exclusion Extensions

Last December, the USTR granted tariff exclusions on $34 billion worth of imports from China.

With those exclusions set to expire later this year, the USTR will soon initiate a process to consider whether or not to extend them.

“The United States Trade Representative (USTR) will commence on November 1, 2019 a process for considering extending for up to twelve months certain exclusions from additional tariffs on Chinese imports that were granted last December and are set to expire on December 28, 2019,” the USTR said.

“In a Federal Register notice to be published this week, USTR will provide details on the process for submitting comments favoring or opposing specified tariff exclusions. The period for submitting comments will run from November 1, 2019 to November 30, 2019.”

GFG Alliance Eyes Carbon-Neutral Future

The GFG Alliance, which includes Liberty House steel plants around the world, is aiming to consolidate its steel production into a single global company: the Liberty Steel Group.

“A single global company with 18 million tonnes of rolled steel capacity annually is to be launched through a consolidation of GFG Alliance’s steel businesses, with an ambition to lead the industry towards a carbon-neutral future,” Liberty House announced Tuesday.

“The family-owned alliance led by Sanjeev Gupta today announces that Liberty Steel Group, which altogether employs 30,000 people in 10 countries, will be incorporated by the end of this year through a merger of GFG’s upstream and downstream steel manufacturing, mining and distribution businesses around the world.”

The new group will aim to be carbon-neutral by 2030.

“At the heart of the group’s mission will be an ambition to build on GFG’s existing GREENSTEEL strategy to aim for net carbon neutral status by 2030 – placing Liberty Steel Group on a pathway to become the first carbon neutral steel company in the world,” the company said. “This will include exploration of the best use of new technologies such as hydrogen generated from renewable power to produce steel.”

LME Copper Rises

The LME three-month copper price, after approaching MetalMiner’s short-term support price in early October, has since made incremental gains throughout the month.

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As of Monday, the LME three-month price rose to $5,910/mt, marking a 2.91% month-over-month increase, according to MetalMiner IndX data.