Articles in Category: Imports

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The Trump administration announced after markets closed Monday that it would go through with the imposition of a 10% tariff on $200 billion worth of Chinese goods.

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The tariffs — stemming from the United States Trade Representative’s (USTR) Section 301 investigation of Chinese trade practices — will go into effect Monday, Sept. 24, and will escalate to 25% as of Jan. 1, 2019.

Taking into account the $50 billion in tariffs that have already gone into effect, the additional $200 billion means about half of the value of Chinese exports to the U.S. is now subject to tariffs (in 2017, the value of U.S. imports of Chinese goods hit just over $505 billion).

However, the tariffs don’t stop there — the U.S. will add $267 billion in tariffs if China responds with retaliatory tariffs, according to a statement from the White House.

“For months, we have urged China to change these unfair practices, and give fair and reciprocal treatment to American companies,” the White House statement read. “We have been very clear about the type of changes that need to be made, and we have given China every opportunity to treat us more fairly. But, so far, China has been unwilling to change its practices.

“To counter China’s unfair practices, on June 15, I announced that the United States would impose tariffs of 25 percent on $50 billion worth of Chinese imports. China, however, still refuses to change its practices – and indeed recently imposed new tariffs in an effort to hurt the United States economy.”

According to a USTR release, the finalized list of products in this $200 billion tranche of tariffs includes 5,745 full or partial lines out of the originally proposed 6,031 tariff lines.

“Included among the products removed from the proposed list are certain consumer electronics products such as smart watches and Bluetooth devices; certain chemical inputs for manufactured goods, textiles and agriculture; certain health and safety products such as bicycle helmets, and child safety furniture such as car seats and playpens,” the USTR release states.

U.S. Rep. Kevin Brady (R-TX), chairman of the House Ways and Means Committee, in a statement expressed support for measures aimed at addressing alleged unfair trade practices by China, but offered a cautionary note vis-a-vis the impact of tariffs.

“Any time tariffs are imposed I worry that Americans will be forced to pay extra costs – in this case on nearly half of U.S. imports from China,” Brady said. “I continue to emphasize that the ultimate means to create an effective outcome is for President Trump and President Xi to engage constructively to develop a long-term and profound solution that levels the playing field for American manufacturers, farmers, and workers.

“Until China comes to the table, one way to relieve pressure on Americans is establish an effective and timely process to allow products to be excluded from these additional tariffs if tariffs would make it harder for us to sell more ‘Made in America’ products globally.”

Thomas J. Donohue, president and CEO of the U.S. Chamber of Commerce, disapproved of the decision.

“The U.S. economy runs on pro-growth policies, but that’s not what tariffs on $200 billion worth of Chinese goods deliver,” he said in a statement. “The administration has serious issues to resolve with China on market access, unfair subsidies, technology theft, and cybersecurity. But there are less harmful ways to truly achieve free and fair trade with China.

“Today’s decision makes clear that the administration did not heed the numerous warnings from American consumers and businesses about rising costs and lost jobs on Main Street, in factories, and on farms and ranches across the country. Both countries should stay at the negotiating table, and the U.S. should continue working with its allies to seek alternative solutions.”

On the other hand, Alliance for American Manufacturing President Scott Paul supported the move to put additional pressure on China.

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“Strong trade enforcement against China’s persistent violations of trade laws, including the theft of American trade secrets, is long overdue,” Paul said. “These tariffs should compel China to finally address unfair trade practices. America has the leverage in this economic relationship, and it’s about time we use it to defend our workers and businesses who can compete with anyone on a truly level playing field.”

The full list of Chinese products included within the latest round of tariffs can be found here.

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This morning in metals news, the U.S.’s steel import market share was 21% last month, ArcelorMittal reached a provisional deal with the trade unions of Italy’s Ilva and the Bureau of Labor Statistics released U.S. employment data for August.

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Steel Import Market Share

The American Iron and Steel Institute (AISI) released its Steel Import Monitoring and Analysis (SIMA) data for August this week, reporting that steel import market share hit 21% for the month.

Market share for the year to date sits at 24%, according to the SIMA report.

ArcelorMittal Reaches Deal with Ilva Unions

As part of its takeover bid of the Italian firm Ilva, ArcelorMittal reached a provisional agreement with Ilva’s trade unions, the Luxembourg-based firm announced.

According to the ArcelorMittal release announcing the provisional agreement, the terms need to be voted on by Ilva employees before being formally ratified.

“The agreement we have reached with Ilva’s unions meets the two major objectives we set out at the start of negotiations: to find an acceptable solution for every employee at Ilva; and to reach an agreement that reflects Ilva’s economic reality and provides a sound base for it to have a sustainable future,” said Geert Van Poelvoorde, CEO of ArcelorMittal Europe Flat Products, in a prepared statement. “I would like to thank the Minister of Economic Development for his support and also the union representatives with whom we engaged during these discussions. They are a very important stakeholder and we will work to maintain a positive and constructive dialogue with them in the future.”

One of the terms of the agreement includes an ArcelorMittal commitment “to initially hire 10,700 workers based on their existing contractual terms of employment.”

U.S. Unemployment Flat; Jobs Added in Mining

According to the latest Bureau of Labor Statistics employment report, U.S. unemployment hit 3.9% in August, unchanged from the previous month.

Nonfarm payroll employment increased by 201,000 last month. Mining was among the sectors seeing job gains last month, having added 6,000 jobs in August.

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“Since a recent trough in October 2016, the industry has added 104,000 jobs, almost entirely in support activities for mining,” the report states.

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Before we head into the Labor Day weekend, let’s take a look back at the week that was and some of the storylines here on MetalMiner:

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  • MetalMiner’s Stuart Burns took a look at Chinese domestic consumption and its impact on commodities.
  • On Monday we delved into recent trends in the world of aluminum, from prices to company investments.
  • How big of an impact are U.S. tariffs having on Turkey? In short, a big one, given the prominent place its steel sector has in its overall economy.
  • The U.S. and Mexico announced an agreement in principle on certain NAFTA provisions, as talks awaited between the U.S. and Canada with respect to the 24-year-old trilateral trade deal.
  • You’ve probably heard President Trump’s call for a s0-called “Space Force,” touted as a sixth branch of the armed forces. Burns looked into that and what the call for a Space Force will, in all likelihood, turn out to be (if anything).
  • Not surprisingly, U.S. imports of steel are down through the first seven months of the year.
  • The Department of Commerce made an affirmative determination in a countervailing duty investigation of imports of steel wheels from China. The case will now move on to the U.S. International Trade Commission.
  • Global crude steel production was up 5.8% year over year in July, according to a World Steel Association report.
  • Sohrab Darabshaw touched on Vedanta and its plans to invest billions of dollars, namely in Indian oil and energy businesses.

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The Department of Commerce handed down an affirmative preliminary determination in its countervailing duty investigation of steel wheel imports from China.

In the preliminary determination, the Department of Commerce said the imports benefited from countervailable subsidies ranging from 58.75% to 172.51%.

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Imports of steel wheels from China in 2017 were valued at $388 million, according to the department.

The petitioners in the case were Accuride Corporation (of Evansville, Indiana) and Maxion Wheels Akron LLC (Akron, Ohio).

The Department of Commerce is scheduled to make a final determination in the case by Jan. 9, 2019. If it rules in the affirmative again, the case would move to the U.S. International Trade Commission, which would then make a determination by Feb. 21, 2019.

According to the department’s fact sheet for the investigation, it assigned:

    • A preliminary subsidy rate of 58.75% for mandatory respondent Xiamen Sunrise Wheel Group Co., Ltd.
    • A preliminary subsidy rate of 172.51% for mandatory respondent Zhejiang Jingu Company Limited and Shanghai Yata Industry Company Limited “based on total adverse facts” available
    • A preliminary subsidy rate for all other Chinese producers and exporters of 58.75%

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The scope of the products covered by the investigation includes “certain on-the-road steel wheels, discs, and rims for tubeless tires, with a nominal rim diameter of 22.5 inches and 24.5 inches, regardless of width.”

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Given the state of trade relations and the imposition of tariffs, it’s not surprising that the U.S. has imported less steel so far this year.

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According to a recent American Iron and Steel Institute (AISI) report, U.S. imports of finished steel fell 10.1% through the first seven months of the year compared to the same period last year.

Import through the first seven months hit 20,862,000 net tons (NT).

As for July, however, imports hit 2,978,000 NT, up 19.4% from the previous month.

Import market share rose in July, up from June’s 21% to 23% in July. Market share surged to 29% in April, but has been on the decline since then as tariffs have taken hold. Import market share sits at an estimated 25% in the year to date, according to the AISI report.

By product, several posted significant increases in import total from June to July, including: reinforcing bars (up 214%), heavy structural shapes (up 123%), tin plate (up 55%), hot rolled sheets (up 44%), cut lengths plates (up 31%), plates in coils (up 24%), sheets and strip all other metallic coatings (up 23%), line pipe (up 17%), cold rolled sheets (up 12%), and mechanical tubing (up 11%).

By country, South Korea led the way in July with 189,000 NT sent to the U.S., which marked a 10% decrease from June.

Trailing South Korea in net tons of steel shipped to the U.S. were:

  • Japan (132,000 NT, up 3%)
  • Vietnam (118,000 NT, down 4%)
  • Italy (107,000 NT, up 225%)
  • Taiwan (99,000 NT, up 7%).

South Korea has also led the way through the first seven months of the year with 1,932,000 NT, down 15% vs. the same period in 2017.

Trailing South Korea are:

  • Japan (873,000 NT, down 7%)
  • Germany (758,000 NT, up 1%)
  • Turkey (721,000 NT, down 58%)
  • Taiwan (659,000 NT, down 16%)

As noted here previously, U.S. President Donald Trump this month announced the doubling of the Section 232 tariffs against Turkey amid rising political tensions that have seen the Turkish lira post significant losses.

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As such, it’s particularly worth keeping an eye on Turkish steel export totals to the U.S. going forward. Turkey is the world’s eighth-largest steel producer, as MetalMiner’s Stuart Burns noted earlier today.

“Earlier this month, the U.S. announced plans to double tariffs on the nation’s steel to 50%, and raise the rate on aluminum to 20%,” Burns explained. “Prior to sanctions, Turkey made up 62% of rebar coming into the U.S. It also accounted for 37% of imported pipes for piling and 14% of cold-rolled sheet. Turkey exported about 500,000 tons to the U.S. in the five months to May, compared with more than 1 million tons in the same period last year; so, even before the sanctions, the U.S. has fallen from Turkey’s main steel buyer to No. 3.”

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On Monday, the U.S. announced an agreement in principle regarding aspects of the North American Free Trade Agreement (NAFTA), albeit in a bilateral sense, as Canada remained on the sidelines of the talks between the U.S. and Mexico.

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“The United States and Mexico have reached a preliminary agreement in principle, subject to finalization and implementation, to update the 24-year-old NAFTA with modern provisions representing a 21st century, high-standard agreement,” the Office of the United States Trade Representative (USTR) said in a release. “The updated agreement will support mutually beneficial trade leading to freer markets, fairer trade, and robust economic growth in North America.”

Talks to modernize the 24-year-old trilateral trade agreement began in August 2017 and underwent numerous rounds, encountering challenges along the way.

Read more

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This morning in metals news, steel scrap is competitive despite tariffs, Century Aluminum is one example of a company boosted by the Trump administration’s tariffs and China retaliates against the U.S.’s latest round of tariffs.

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Steel Scrap Still Competitive

According to an S&P Global Platts report, despite tariffs and volatility in the world’s top steel scrap consumer (Turkey), steel scrap remains competitive.

Per the report, the ratio between ferrous scrap and iron ore prices is at its lowest in half a year.

Tariff Boost

The New York Times profiled Kentucky aluminum smelter Century Aluminum and how it has benefited from the Trump administration’s tariff on aluminum.

As the report notes, Century Aluminum is planning to invest $150 million to double its output, adding 275 jobs in the process.

China Responds to U.S. Tariffs

The latest round of U.S. tariffs on Chinese goods, amounting to $16 billion, went into effect today.

Unsurprisingly, China responded in kind with $16 billion in tariffs on U.S. goods.

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According to a Politico report, China’s list features 333 tariff lines, including large passenger cars, motorcycles and baby carriages.

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When it comes to coal, India’s litany of woes continues.

Despite high prices in international markets, imports continue to rise — and there’s no letting up on that front.

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After a dip in FY 2017, overall coal imports increased 10% in FY 2018. What’s more, the situation is so bad that India’s largest power producer, the National Therma Power Corporation (NTPC), is running short on supply and has sought bids to import coal.

NTPC Ltd. is seeking 2.5 million metric tons (MT) of imported coal, according to two separate tenders on its website. The last time it sought foreign coal was in 2014.

One of many reasons for the shortage is that India’s largest coal producer, Coal India Ltd. (CIL), which produces more than 80% of India’s coal, continues to fall short in production and just cannot keep up with the rising demand, driven largely by higher electricity generation.

But if you were to ask CIL, it would in turn blame India’s congested railway network and a shortage of railway carriers to ship the coal to its customers; this, they argue, has forced consumers from power plants to aluminum smelters to purchase the fuel from overseas.

Rating agency CRISIL said here in a report that the power sector imports in India were projected to cross 75 MT by FY 2023, most of it driven by demand from imported coal-based plants. This comes even as non-power sector imports are expected to decline to 70 MT due to “improvement in domestic supply post linkage auctions and development of key captive blocks allocated to the non-regulated sector,” according to the CRISIL report.

But a report by news agency Reuters had an even more interesting explanation for the continued shortage.

It cites Tim Buckley, Director of Energy Finance Studies at the Institute for Energy Economics and Financial Analysis (IEEFA), as saying that a large part of India’s coal imports was used by consumers other than on-grid power plants. Buckley pointed out to Reuters that there were about 30 gigawatts (GW) of coal-fired generation capacity that was used by captive power plants.

They included aluminum smelters, cement makers and other industrial users, more reliant on coal imports as their demand wasn’t prioritized by Coal India; meaning, these folks were last in the queue.

According to Buckley’s calculation, if this 30 GW was run at 61% capacity, it would need about 96 MT per annum, which represents about two-thirds of current thermal coal imports. So, captive power plants had to resort to imports when Coal India couldn’t meet their needs.

However, the shortages are not limited to just power stations. Coking coal, used in steelmaking, has also seen a sharp surge.

Left with little choice for now, the Indian government has directed CIL to raise daily output and sales to 2 MT from 1.4 MT achieved in the last quarter.

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The coal ministry told Coal India that it must produce and sell 1.9 MT and 1.94 MT, respectively, throughout the year. In the June quarter, CIL managed daily production and sales of 1.4 MT and 1.61 MT, respectively.

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This morning in metals news, $16 billion in tariffs on imports of Chinese goods will go into effect tomorrow, optimism from the Mexican side is high with respect to a NAFTA deal and steel demand in India is pushing the global total toward a new record.

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Tariffs Going into Effect

The U.S. earlier this month announced it would impose an additional $16 billion in tariffs, on top of the $34 billion that went into effect in July. The new round of tariffs is set to go into effect Thursday, Aug. 23.

According to CNN, 80 industry groups testified during hearings on the tariffs held by the Office of the United States Trade Representative.

The list of items features 279 tariff lines (the originally proposed list featured 284 items), including electric motors, motorcycles and agricultural equipment (including irrigation equipment), among other things.

Making a Deal

Talks focused on renegotiating the North American Free Trade Agreement (NAFTA) began in August 2017 and have undergone round after round since then, with no resolution.

According to a Reuters report, however, Mexican trade officials were optimistic about a solution being reached in the near term.

“We hope that we’ll have a solution in the next couple of hours, or the next couple of days,” Mexican Economy Minister Ildefonso Guajardo was quoted as saying (prior to a meeting with U.S. Trade Representative Robert Lighthizer).

Chatter surrounding the 24-year-old trilateral trade deal has picked up in the weeks since the July 1 Mexican presidential election. Reshaping the trade deal, which accounts for over $1 trillion in annual trade, has been a stated goal of President Trump (who has referred to NAFTA as the “worst trade deal ever made”).

The U.S. has sought to win concessions for a more favorable NAFTA, including a higher rules of origin auto content percentage. Under NAFTA, 62.5% of the auto content of a vehicle must originate in the U.S., Canada or Mexico in order to avoid tariffs in the North American market. That percentage was 50% upon NAFTA’s inception in 1994 and rose to 56% in 1998.

Global Steel Demand Surges

Demand for steel is set to reach a record high for the second year in a row, partially thanks to surging demand in India, according to the Nikkei Asian Review.

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Demand is projected to hit 1.61 billion tons this year, according to World Steel Association data cited by the report.

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This morning in metals news, President Trump claimed his tariffs are saving the U.S. steel industry, steel supplies from Japan and South Korea to India have increased, and Turkey hits back with new tariffs in response to the U.S.’s doubling of the steel and aluminum tariffs.

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Saving Steel

In an interview with the Wall Street Journal, Trump argued that his tariff on steel is saving the U.S. steel industry.

He also argued that in the future U.S. steelmakers will face mostly domestic competition as a result of the tariffs.

Indian Steel Import Levels from Japan, South Korea Surge

According to a Reuters report, levels of steel heading from Japan and South Korea to India have increased significantly as a result of tariffs.

Per the report, citing government data, during the April-June period imports from South Korea were up 31%, while imports from Japan jumped 30%.

Turkey Hits Back

The recent tension between the U.S. and Turkey continued to rise Wednesday, as Turkey announced tariffs it would apply to U.S. goods.

The announcement comes after President Trump announced the U.S. would double the tariff rates on steel and aluminum for Turkey, bringing them to 50% and 20%, respectively.

Turkey announced tariffs on American automobiles, alcohol and tobacco.

The U.S. has lobbied for the release of detained American pastor Andrew Brunson, while Turkey has continued to ask for the extradition of exiled religious leader Fethullah Gulen, whom the government claims was behind the failed 2016 coup.

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The crisis has seen the value of the Turkish lira plummet in the plummet, hitting a record low against the dollar earlier this week before beginning to recover on Tuesday and Wednesday.