Articles in Category: Imports

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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 storylines here on MetalMiner®:

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Announced by the European Commission yesterday, provisional steel safeguard measures went into effect today, covering 23 steel product categories.

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The measures were instituted in response to a challenge about which European leaders have frequently expressed concern: diverted steel as a result of the U.S.’s Section 232 steel tariff.

The provisional measures can only remain in place for a maximum of 200 days. After review, the European Commission will decide by early 2019 if permanent measures are needed.

“There are already indications that, as a consequence, steel suppliers have diverted some of their exports from the US to the EU,” the European Commission release states. “In order to avoid a sudden increase of imports that would cause further economic problems for EU steel producers – who are already suffering from global overcapacity – the Commission considers that provisional safeguard measures are necessary and justified.”

A 25% quota will be imposed on products from each of the 23 categories once imports have exceeded the previous three-year average.

Members of the European Economic Area (EEA) — including Norway, Iceland and Liechtenstein — are exempted from the measures, in addition to “some developing countries with limited exports to the EU.”

E.U. Trade Commissioner Cecilia Malmström emphasized that the U.S.’s steel tariff has left Europe with no choice but to act.

“The US tariffs on steel products are causing trade diversion, which may result in serious harm to EU steelmakers and workers in this industry,” Malmström said in a prepared statement. “We are left with no other choice than to introduce provisional safeguard measures to protect our domestic industry against a surge of imports. These measures nevertheless ensure that the EU market remains open, and will maintain traditional trade flows.

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“I am convinced that they strike the right balance between the interest of EU producers and users of steel, like the automotive industry and the construction sector, who rely on imports. We will continue to monitor steel imports in order to take a final decision by early next year, at the latest.”

Axel Eggert, director general of the European Steel Association, offered praise for the institution of the safeguard measures.

“The Commission has received overwhelming support for this vital safeguard measure from both member states and business,” Eggert said in a prepared statement. “The measure will go someway to ensuring the continued stability of the internal market for steel and ensure that EU steel producers do not suffer extreme surges of imports of steel deflected away from the now constricted US market.”

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This morning in metals news, the U.S. and China trade tariff jabs, the steel import market share numbers for June are in and thyssenkrupp CEO Heinrich Hiesinger offers his resignation just days after the German firm’s finalization of a merger deal with Tata Steel.

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Trade Tensions Rise

At midnight, $34 billion of the U.S.’s previously announced $60 billion tariff package on Chinese goods went into effect. As previously indicated, China responded in kind, placing $34 billion in tariffs on American goods.

According to the Xinhua news agency, China’s 25% tariff will include agricultural products, vehicles and aquatic products. A China Ministry of Commerce spokesperson said the U.S. has acted like a “trade bully” that poses a “great threat to the security of global industry and value chains.”

Echoing previous comments from Chinese government officials, Premier Li Keqiang said that no one will win a trade war, but that China is “prepared to take countermeasures in the face of unilateral moves.”

Steel Imports Hit 22% Market Share in June

According to the American Iron and Steel Institute’s (AISI) report on steel imports in June, import permit applications were down 3.7% compared with the previous month. Steel import permit applications for June totaled 2,894,000 net tons (NT).

The countries with the largest finished steel import permit applications in June were: South Korea (206,000 NT, up 88% from May preliminary), Japan (134,000 NT, up 11%), Germany (105,000 NT, down 25%), Taiwan (103,000 NT, up 32%) and Vietnam (88,000 NT, up 18%).

Thyssenkrupp CEO Offers Resignation

It’s been a busy week for the German steelmaker.

Heinrich Hiesinger, CEO of thyssenkrupp AG since 2011, has offered up resignation just days after the German company finalized a merger deal with Indian firm Tata Steel, Reuters reported (the deal would merge the firms’ European operations to create Europe’s second-largest steelmaker, behind ArcelorMittal).

“Today I informed the Supervisory Board that I would like to step down from my position as CEO of thyssenkrupp,” Heisinger said in a prepared statement. “I take this step very consciously to enable a fundamental discussion in the Supervisory Board on the future of thyssenkrupp. A joint understanding of Board and Supervisory Board on the strategic direction of a company is a key pre-requisite for successfully leading a company. The broad support of our shareholders and the Supervisory Board was the basis for the success of our Strategic Way Forward since 2011.

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“This path always balanced the interests of our customers, employees and shareholders. Today thyssenkrupp is a completely different company regarding culture, values and performance. The joint venture of our steel activities with Tata is the next significant step to turn thyssenkrupp into a strong industrial company. We can be proud of what we achieved until now. For this I would like to thank all employees. They are the most valuable capital of thyssenkrupp.”

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This morning in metals news, E.U. states have thrown their support behind measures to curb steel imports, Indian steel demand could double by 2025, and copper and zinc prices continue to drop.

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E.U. Backs Steel Import Curbing Measures

E.U. states voted to approve provisional measures to curb steel imports on the heels of the U.S.’s steel tariff, Reuters reported.

E.U. industry members have warned about the potential for steel, once destined for the U.S. market, to flood the European market after the U.S. imposed a 25% global steel import tariff (which included exemptions for a few countries).

According to the report, 25 E.U. member states voted for the provisional measures, while three abstained from the vote.

Indian Steel Demand on the Rise

Demand for steel could be set to double by 2025, according to a report by the Economic Times.

Per the report, BHP Billiton said demand in the country could hit 170 million tons (MT) by 2025.

Copper, Zinc Prices Continue to Fall

Prices of copper and zinc hit multimonth lows yesterday, Reuters reported.

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Per the report, the zinc price dropped to its lowest since June 2017, while copper fell to an 11-month low.

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This morning in metals news, thyssenkrupp CEO Heinrich Hiesinger said European lawmakers need to protect the steel industry from China, copper plummets to a seven-month low and President Donald Trump responded to a European threat of retaliatory tariffs (in response to potential U.S. tariffs on auto imports).

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Protecting European Steel

In comments to CNBC, thyssenkrupp CEO Heinrich Hiesinger said European lawmakers need to protect the European steel industry from Chinese imports, particularly on the heels of the U.S.’s imposition of a 25% tariff on steel.

“We are much more concerned about the likelihood that a lot of the volume (of steel) which cannot come in to the U.S. market might be re-directed to Europe and further increase the already really high imports here,” Hiesinger was quoted as saying in the interview.

Copper Drops

The copper price fell to a seven-month low on Monday, Reuters reported.

The metal fell 1.6% on Monday, hitting its lowest price since early December, according to the report, as a result of weaker demand in China.

Trump, the WTO and Europe

The saga of trade tensions, manifested by both a war of words and actions, continued on this week.

After Europe threatened to impose retaliatory tariffs should the U.S. impose tariffs on automobiles (as a result of its recently initiated Section 232 investigation on automobiles and automotive parts), President Trump decried the World Trade Organization’s (WTO) treatment of the U.S.

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Claiming that the U.S. has a “big disadvantage” at the WTO, he added “we’re not planning anything now, but if they don’t treat us properly, we’ll be doing something,” according to a Reuters report.

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This morning in metals news, ThyssenKrupp and Tata Steel have come to a final agreement on their joint venture deal, Canada hits the U.S. with tariffs on $13 billion in goods and President Trump says he will not agree to a new deal on the North American Free Trade Agreement (NAFTA) until after the midterm elections.

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Making a Deal

In September 2017, Indian firm Tata Steel and German firm ThyssenKrupp announced they had signed a memorandum of understanding to merge their European steel operations, thus forming the No. 2 steelmaker in Europe (behind ArcelorMittal).

Almost a year later, the two announced they have reached a final deal on the merger, Bloomberg reported.

However, according to the report, some of ThyssenKrupp’s biggest investors are arguing the deal is skewed in Tata’s favor.

Canada Hits U.S. With Tariffs

The trade tensions continued apace, as Canada announced it was placing about $12.5 billion in tariffs on U.S. goods.

According to CNN, more than 40 steel products will be hit with a 25% duty, while over 80 other products will get a 10% duty.

Trump Says No Deal on NAFTA … Until After Midterms

Talks about NAFTA have somewhat fallen under the radar in recent weeks, as heated debate regarding immigration and the Supreme Court Justice Anthony Kennedy’s retirement announcement have dominated headlines.

As for the 24-year-old trilateral trade deal, President Trump indicated that he will not sign a new NAFTA deal until after the midterm elections in November, the Washington Post reported.

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In other NAFTA-related news, Mexico has chosen a new president, as leftist candidate Andrés Manuel López Obrador — typically known simply as “AMLO” — won Sunday’s election by a landslide.

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This morning in metals news, U.S. Trade Representative Robert Lighthizer lashed out at the E.U.’s retaliatory tariffs, the Section 232 exclusion request process has allowed for some commercial gamesmanship and automakers warns against potential tariffs on imports of foreign cars.

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Lighthizer Tut-Tuts E.U. For Retaliatory Tariffs

Lighthizer was deeply critical of the European Union and the global trading system at large, calling out the “hypocrisy” of the latter in a statement Wednesday.

“President Trump has taken actions on trade in steel and aluminum to protect our national security interests,” he said. “These actions are wholly legitimate and fully justified, both as a matter of U.S. law and WTO rules. By contrast, the European Union has concocted a groundless legal theory to justify immediate tariffs on U.S. exports. Other WTO Members, including China, have adopted a similar approach.

“These retaliatory tariffs underscore the complete hypocrisy that governs so much of the global trading system. For months, the EU, China, and others have criticized the trade policy of the United States, while claiming to champion the WTO. But their recent tariffs prove that they simply ignore WTO rules whenever doing so is convenient.”

While other nations subjected to the Section 232 steel and aluminum duties have argued that the U.S. is in violation of WTO rules and are stretching the definition of national security vis-a-vis application of the tariffs, Lighthizer reciprocated with a similar accusation.

“When the EU and others falsely assert the U.S. steel and aluminum duties are safeguard measures, and impose retaliatory duties under this pretense, they do great damage to the multilateral trading system,” his statement continued. “Indeed, they show that they are willing to distort WTO rules to mean whatever they want, whenever they want.

“Faced with these unjustified tariffs, the United States will take all necessary actions under both U.S. law and international rules to protect its interests.”

Section 232 Exclusion Process and Sensitive Info

The Section 232 exclusion process has allowed domestic businesses to apply for the chance to be exempted from the tariffs on the grounds that a certain product is not made in enough quantity or quality in the U.S.

According to Reuters, more than 22,500 requests have been filed so far. As we noted last week, the Department of Commerce announced it had approved 42 requests and denied 56.

In the process, sensitive information is being information is being broadcasted, information that competitors can potentially use to their advantage, according to the report, particularly related to company supplies and, potentially, imminent price hikes.

Pump the Brakes on Tariffs, Automakers Say

The U.S. Department of Commerce last month launched a new Section 232 investigation into auto imports, beginning a new round of speculation regarding the potential imposition of tariffs.

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Unsurprisingly, automakers think tariffs would be a bad idea, with industry groups saying they could cost hundreds of thousands of jobs and hike prices, Reuters reported.

Nations around the world have worked to formulate their responses to the U.S.’s Section 232 steel and aluminum tariffs of 25% and 10%, respectively, since they were instituted earlier this year.

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Domestically, businesses have had the opportunity to file tariff exclusion requests with the U.S. Department of Commerce, as they attempt to prove that certain products they import are not made in the appropriate quantity or quality here in the U.S.

But what about a domestic legal challenge to the steel tariff by virtue of a challenge of the statute that made the trade measure possible?

That, of course, would be Section 232 of the Trade Expansion Act of 1962, an infrequently used but powerful presidential tool that has dominated headlines since the Section 232 investigation was launched in April 2017.

In a press briefing Wednesday morning, the American Institute for International Steel (AIIS) — along with member companies Sim-Tex, LP, of Waller, Texas, and Kurt Orban Partners, LLC, of Burlingame, California — announced it filed a legal challenge to the Section 232 statute. In the motion filed with the United States Court of International Trade, the plaintiffs argue the statute is unconstitutional.

According to the AIIS, Section 232 “violates the doctrine of separation of powers and the system of checks and balances that the Constitution protects: there is no provision for judicial review of the President’s decisions in how he responds to the perceived threat to national security from imported steel.”

“In addition to the totally open-ended choice of how to counter any threat that imports may present, Section 232 allows the President to consider virtually any effect on the U.S. economy as part of ‘national security,’” AIIS President Richard Chriss said.

The suit, however, lays the blame on Congress’ shoulders.

“Unlike most cases brought against actions of the Trump administration, it is Congress—through its delegation of unfettered discretion to the President in this statute—and not the President that is the violator of the Constitution,” said Alan Morrison, lead counsel for the plaintiffs, in the prepared statement. “The President simply took advantage of the opportunity to impose his views on international trade on the American people, with nothing in the law to stop him.”

The American Iron and Steel Institute (AISI) responded to the announcement, defending the constitutionality of the Section 232 statute and dismissing the AIIS challenge.

“We believe this case is without merit and we are confident the court will reject this challenge to the constitutionality of the Section 232 statute,” said Thomas J. Gibson, president and CEO of AISI, in a prepared statement. “Congress acted within its constitutional authority when it authorized the president to take action to adjust imports when the Secretary of Commerce has determined that such imports threaten to impair the national security.”

The plaintiffs have asked for a three-judge panel to consider the motion.

“Plaintiffs believe that if the case is decided by a three judge court, there is a direct appeal to the Supreme Court, without having to go to the Federal Circuit, which is the normal review court for the Court of International Trade,” the AIIS release states. “That route would provide a speedier means of resolving this case, which is in the interest of all concerned.”

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Check back here for updates as the legal challenge develops.

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This morning in metals news, miners in the Philippines are calling for an end to the country’s ban on new large-scale projects, President Donald Trump tweeted his administration is finishing a study regarding potential tariffs on imported cars, and Russia’s prime minister called for retaliation against the U.S.’s steel and aluminum tariffs.

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Miners Calls for End to Ban on Big Projects in Philippines

Miners in the Philippines, a major producer of nickel, are lobbying for the end to a ban on new large projects in the country, Reuters reported.

The government recently announced that a ban was lifted regarding smaller projects, but environmental concerns remain vis-a-vis large-scale projects.

Studying Import Tariffs on Cars

Trump this week said his administration is working toward completion of a study regarding potential tariffs on imports of cars, Reuters reported.

“We are finishing our study of Tariffs on cars from the E.U. in that they have long taken advantage of the U.S. in the form of Trade Barriers and Tariffs. In the end it will all even out – and it won’t take very long!” the president wrote in a tweet.

Russian PM Says Country Should Retaliate Again U.S. Tariffs

Russian Prime Minister Dmitry Medvedev asked the country’s Ministry of Development to come up with proposals for potential retaliatory tariffs on U.S. goods in response to its steel and aluminum tariffs, CBS News and the Associated Press reported.

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“These measures have a discriminatory character,” Medvedev was quoted as saying. “They cannot remain without consequences. The European Union, China, and we need to think about response measures.”

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U.S. imports of steel dropped 23.2% in May compared to the previous month, according to an American Iron and Steel Institute (AISI) report citing U.S. Census Bureau data.

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The U.S. imported a total of 2,887,000 net tons of steel in May.

The finished steel market share hit 25%, just under the 26% for the year to date.

Germany led the way with 140,000 NT, up 16% from April. Trailing Germany were: Japan (120,000 NT, up 22%), South Korea (110,000 NT, down 77%), Turkey (92,000 NT, down 37%) and Taiwan (77,000 NT, down 33%).

Meanwhile, for the first five months of the year, South Korea led the way with 1,532,000 NT, down 1% versus the same period in 2017), followed by: Japan (612,000 NT, down 7%), Turkey (567,000 NT, down 50%), Germany (549,000 NT, up 13%) and Taiwan (467,000 NT, down 6%).

Imports of wire rods increased 61% from April to May.

In the year to date, other products posting increases compared with the same period in 2017 were: hot rolled sheets (up 38%), plates in coils (up 36%), mechanical tubing (up 23%), line pipe (up 20%) and oil country goods (up 19%).

Of course, the U.S. imposed tariffs of 25% on steel and 10% on aluminum for most countries back in March, with exemptions having been negotiated for a small group of countries. Notably, the European Union, Canada and Mexico were not exempted long term, as the U.S. announced at the end of May that it would not extend the short-term exemption for the trio.

Raw Steel Production

For the week ending June 23, U.S. raw steel production inched up 1.4% from the same week in 2017, and jumped 1.8% for the week ending June 16, according to AISI data.

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The capacity utilization rate was 75.6% for the week.