Articles in Category: Global Trade

This morning in metals news, the U.S.-China trade conflict escalated further on Thursday, ABB’s chief executive hopes some relief might be offered by the U.S. vis-a-vis Chinese steel import tariffs and Japan’s second-quarter steel outlook reflect a year-over-year increase in production but includes uncertainty about the ultimate impact of the U.S.’s Section 232 tariffs.

Trump Raises the Stakes

The U.S. and China have traded announcements of tariffs intended to be placed on the other country’s goods, with the figures rising to $50 billion.

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On Thursday, that number grew significantly when President Trump requested his trade officials to identify $100 billion more in possible tariffs on Chinese goods.

Swiss Group ABB Hopes U.S. Pulls Back on Chinese Steel Tariffs

Reuters reported the chief executive of Swiss engineering group ABB is hoping that the U.S. makes some concessions with respect to its Section 232 steel tariffs, particularly with respect to China.

According to the report, China and the U.S. are ABB’s two biggest markets.

Japan’s 2Q Steel Output Projected to Increase Nearly 1%

According to a report from Japan’s Ministry of Economy, Trade and Industry (METI), Japan’s steel output in the second quarter is expected to increase 0.9% year over year.

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While several U.S. allies have thus far received exemptions from the Section 232 tariffs, Japan has not been been among those. President Trump and Japanese Prime Minister Shinzo Abe are scheduled to meet this month, during which Abe is expected to make the case for exemption from the tariffs.

Unlike China, its neighbor India is not right now thinking on the lines of imposing retaliatory tariffs on U.S. products.

However, the Indian government has requested the U.S. to exempt it from the hefty tariffs on steel and aluminum imports.

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This was revealed by a minister in the Lower House of the Indian Parliament in a written reply to a question. Following the announcement by U.S. President Donald Trump in late March of increasing the tariffs on imports, the Indian government had also conducted a study on the impact on Indian goods and steel industry.

MetalMiner reported that the move by the U.S. government may not impact India the way it will China.

India exports around U.S. $1.5 billion of these products to America.

India said it was willing to sit with the U.S. and solve the issue bilaterally.

The U.S. president signed two proclamations that levied a 25% tariff on steel and 10% tariff on aluminum imported from all countries, except neighboring Canada and Mexico (since then, others have gained exemptions).

A news report in the business newspaper Mint has said India will seek to convince the U.S. to exempt it from these duty hikes at a bilateral meeting during a visit by Assistant U.S. Trade Representative (USTR) Mark Limscott to New Delhi next week.

The meeting scheduled for April 10, in preparation of a trade policy forum dialogue for the year’s end, will be the first opportunity for the Indian side to put across its case for an exemption.

The news report quoted an unnamed commerce ministry official as saying the U.S.’s decision to impose tariffs on the grounds of national security, and then grant exemptions to allies, was against World Trade Organization (WTO) rules.

India does not want to “retaliate” like China against the U.S., as the latter was considered to be a “valuable strategic partner.”

China recently hiked tariffs by up to 25% on 128 US products, from frozen pork and wine to certain fruits and nuts, escalating a trade dispute between the two nations.

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India is the world’s 14th-largest steel exporter, and sold iron and steel worth $320 million and aluminum worth $350 million to the U.S. in 2016-17. The U.S. ranked seventh as a destination for Indian steel, accounting for 5% of exports.

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This morning in metals news, Japan is opting for a “low-key” approach in its efforts to win Section 232 tariff exemptions, Ukraine’s steel production dropped 3% in the first quarter and Turkey sent a letter to the U.S. lobbying for tariff exemptions of its own.

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Japan Confident in Section 232 Response

In a time of escalating trade tensions and threats of retaliatory efforts, Japan’s approach to responding to the U.S.’s Section 232 aluminum and steel tariffs is notable.

The Financial Times reported that Japan’s approach is an indicator of the country’s confidence in its ability to secure product-by-product exemptions. So far, Canada, Mexico, the E.U., Argentina, Brazil, Australia and South Korea have secured exemptions (whether temporary or permanent).

Ukraine Steel Production Falls 3%

Ukraine’s steel output in the first quarter fell 3% year over year, Reuters reported.

According to the Ukrainian steel producers union, poor rail networks and lost production capacity since pro-Russian separatists took over parts of the eastern portion of the country have led to the decline.

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Turkey Lobbies for Tariffs Exemptions

Turkey has sent a letter to U.S. Secretary of Commerce Wilbur Ross outlining its request to receive exemptions from the Section 232 tariffs.

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This morning in metals news, the Office of the United States Trade Representative (USTR) releases the list of Chinese products that could be hit with tariffs (stemming from the Section 301 probe), China responds with a tariff announcement of its own and copper drops in line with escalating trade tensions.

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USTR Announces List of Chinese Products Potentially Subject to Tariffs

Following the president’s announcement late last month regarding the administration’s Section 301 probe vis-a-vis Chinese trade practice, the Office of the United States Trade Representative (USTR) on Tuesday released a list of potential Chinese products that could get hit with tariffs.

According to the announcement, the list covers 1,300 separate tariff lines and will be subject to review and a public comment process.

China Retaliates With $50B in Tariffs

China’s Finance Ministry announced Wednesday it will impose a tariff of 25% on 106 U.S. products, Reuters reported.

The list includes products ranging from agriculture to automobiles and aircraft.

Copper Slides as Trade Tensions Heat Up

As trade tensions between the U.S. and China ramp up, the price of copper has reacted, falling more than it has since early February, Reuters reported.

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LME copper fell 2% to $6,662 per ton, Reuters reported.

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This morning in metals news, copper hits an over one-week high, President Trump is pushing for a preliminary deal on the North American Free Trade Agreement (NAFTA) by mid-April and gold could reach $1,400 if a trade war ensues.

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Copper Surges

Strong manufacturing growth in China powered the copper price to its highest level in over a week, Reuters reported.

After a sluggish March for LME copper, it jumped 1% Tuesday to $6,777/mt, according to the report.

NAFTA Deal This Month?

Canada, Mexico and the U.S. have now gone through seven rounds of renegotiation talks focused on NAFTA, the 24-year-old trilateral trade deal.

According to a Bloomberg report, President Trump wants to reach a preliminary deal on NAFTA by mid-April.

Ambitious timelines for a NAFTA conclusion have been heard before, particularly last fall when the U.S. negotiating team expressed a desire to close on a deal before the end of the 2017 calendar year. According to the Bloomberg report, the countries still remain far apart on some issues. So, for now, a deal within the next couple of weeks, while not impossible, might be seen as improbable.

Gold Could Soar if Trade War Kicks Off

The precious metal could jump over $1,400/ounce if a trade war starts, according to Rick Rule, CEO of Sprott U.S Holdings Inc., Bloomberg reported.

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Spot gold traded at $1,337.50 on Tuesday, according to the report.

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This morning in metals news, China responds to the U.S.’s Section 232 tariffs with $3 billion in tariffs on U.S. goods, several firms put in new bids for the distressed Essar Steel, and President Donald Trump and Japanese Prime Minister Shinzo Abe will meet this month to discuss trade.

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China Strikes Back With $3B in Tariffs

In response to tariffs from the U.S. on steel and aluminum, China has responded with $3 billion in tariffs on U.S. goods.

According to an NBC News report, the Community Party newspaper The Global Times said in an editorial that “Even though China and the U.S. have not publicly said they are in a trade war, the sparks of such a war have already started to fly.”

Firms Line Up for Essar Steel

Vedanta, Numetal and ArcelorMittal have put in new bids for the distressed Essar Steel, Bloomberg reported.

Earlier insolvency resolution plans were rejected by lenders, and they sought fresh bids from the six companies who put in bids in December, according to the report. In this round of bids, Tata Steel chose not to participate, according to the report, while JSW Steel was a new bidder in the process.

Trump, Abe to Talk Trade

President Donald Trump and Japanese Prime Minister Shinzo Abe plan to meet this month to discuss trade issues, Reuters reported.

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Japan is among the group of U.S. allies who have yet to receive an exemption from the Section 232 tariffs on steel and aluminum that went into effect late last month.

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This morning in metals news, 2017 was a good year for Chilean miner Codelco, the city of Handan in China has called for a 25% reduction in steel mill production and the impact on Mexico of a terminated North American Free Trade Agreement (NAFTA).

State Miner Says Profit, Output Rose Last Year

Codelco announced that its profits rose in 2017, a year in which it produced its second-largest output ever, Reuters reported.

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According to the report, the miner posted pre-tax earnings of $2.885 billion, six times its earnings in 2016.

Chinese City Calls for Steel Production Cuts

The city of Handan is ordering 25% production cuts to ease pollution from April to mid-November, Reuters reported.

The city is located in China’s Hebei province, which produces nearly a quarter of China’s steel.

What Could a Post-NAFTA World Mean for Mexico?

NAFTA has now been subject to seven rounds of talks dating back to last year; in that time, the agreement has rocked back and forth between cautious optimism and concerns that the plug could be pulled at any time on the 24-year-old agreement.

The trading partners (the U.S., Mexico and Canada) failing to reach an agreement is certainly a possibility. The impact of such an outcome on Mexican trade would be significant, Bloomberg Businessweek explained.

In 2016, 73.3% of Mexico’s total exports went to the U.S., according to the report. According to the analysis, Mexican manufacturing, retail and and real estate companies could be hit hardest by a world without NAFTA.

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In addition, the report cites an Oxford Economics estimate projecting a 4 percentage point decrease in the country’s GDP by 2022.

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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 stories here on MetalMiner:

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  • March has been a turbulent month in the world of commodities — MetalMiner’s Irene Martinez Canorea looked back at the month that was.
  • Volkswagen had its own Dieselgate scandal, and now BMW is in hot water for its own emissions rigging issues, MetalMiner’s Stuart Burns explained.
  • Earlier this week, the U.S. and South Korea announced an agreement in principle regarding tweaks to the two countries’ free trade agreement, in addition to exemptions for the latter vis-a-vis the recently announced Section 232 tariffs on steel and aluminum (including a 70% quota).
  • An effort to curb pollution by cargo ships will likely lead to rising shipping costs, Burns wrote earlier this week.
  • The U.S.’s recently announced tariffs are part of a bigger play in the game of global trade relationships, Burns writes.
  • Burns looked into rising Shanghai Futures Exchange stocks, on the heels the winter’s environmental crackdown on smelter production by Beijing.
  • A new African free trade agreement could increase and harmonize trade among African nations.
  • U.S. imports of steel through the first two months of the year are down 5.3% year over year, according to an American Iron and Steel Institute (AISI) report this week.
  • According to a World Steel Association report, global crude steel production in February was up 3.5% year over year.

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This morning in metals news, Japan is calling for the U.S. to ditch its recently imposed Section 232 aluminum tariff, U.S. steel exports were up 13% last year and Texas Gov. Greg Abbott announced a $500 million investment from JSW Steel for its facility in Baytown, Texas.

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Japanese Aluminum Industry Calls Out Section 232 Tariff

Japan’s aluminum industry on Thursday called for the U.S. to ditch its recently imposed 10% tariff on aluminum imports, Reuters reported.

According to the report, Japan is concerned that global supplies of aluminum could now be redirected from the U.S. and flood the Asian market.

U.S. Steel Exports Jumped 13% Last Year

The U.S. saw its steel exports rise 13% in 2017, according to a report by the Northwest Indiana Times citing American Iron and Steel Institute (AISI) data.

The U.S. also once again led the way in imports, taking in a world-leading 34.6 million tons of steel last year.

Texas Governor Touts $500M Investment by India’s JSW

India’s JSW Steel is investing $500 million in its Baytown, Texas facility, Texas Gov. Greg Abbott said Thursday.

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“JSW’s motto is ‘Better Everyday,’ and that’s the same approach we take in Texas,” said Abbott, as quoted by Click 2 Houston. “The $500 million investment from JSW Steel to expand its operations in Texas shows what we can achieve when we work to be better every single day. Made in Texas is a powerful label, and I thank JSW for investing in our great state. We look forward to forging an even stronger partnership and continuing economic and job growth in the Lone Star State.”

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This morning in metals news, India wants to get a waiver from the U.S.’s Section 232 tariffs on steel and aluminum, uncertainty for craft beverage makers, and the U.S. Trade Representative said he is hopeful a new North American Free Trade Agreement (NAFTA) deal can be reached soon.

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Another Country Wants Out of 232 Tariffs

Count India among the group of countries looking to be exempted from the U.S.’s new tariffs on steel and aluminum.

According to Reuters, Indian government officials are saying that Indian exports of steel and aluminum to the U.S. do not post a national security threat. Steel exports to the U.S. amount to 2% of India’s total steel exports, according to the report.

Craft Beer Makers Wary of Tariffs’ Effect

For craft beer makers, the new tariff on aluminum means either smaller margins or passing extra costs on to consumers.

According to a Vermont Public Radio report quoting several executives in the local craft beer industry, the tariff adds uncertainty, especially for distributors who have already seen increases this year in canning costs.

Justin Heilenbach, president and co-founder of Citizen Cider, referred to the tariffs’ impact relative to the federal tax plan passed in December.

“This whole thing is like robbing Peter to pay Paul,” Heilenbach said, “because, you know, we get a tax incentive over here, and then we pay more for materials over there. … It’s gonna net out neutral or probably be, you know, work against us.”

Lighthizer Hopeful for New NAFTA

In a television interview with CNBC on Wednesday, U.S. Trade Representative Robert Lighthizer said he is hopeful the U.S. can renegotiate a new NAFTA “in the next little bit,” Bloomberg reported.

Earlier this week, a deal was reached on an adjusted deal on the U.S.-Korea Free Trade Agreement (KORUS), which also saw South Korea receive exemptions from the steel and aluminum tariffs (in addition to a 70% quota).

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According to the report, Lighthizer also raised concerns brought up during the negotiations last year regarding the timeline for reaching a deal, given that there is a Mexican presidential election in July and U.S. midterm elections in November.