Articles in Category: Imports

The U.S. Department of Commerce took another step forward in its investigation of steel flanges from China and India, announcing affirmative preliminary determinations in its countervailing duty (CVD) investigation on Wednesday evening.

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In its release covering the announcement, the department once again touted its uptick in trade cases considered since President Trump took office.

“With a 58 percent increase in trade cases initiated since President Trump took office, this Administration has made it a clear priority to defend domestic businesses from unfair trade practices,” Secretary of Commerce Wilbur Ross said in the release. “Today’s preliminary decision allows U.S. producers to receive relief from the market-distorting effects of potential government subsidies while we continue our investigation.”

The department calculated countervailable subsidies of 174.73%, and from 5.00% to 239.61%, for China and India, respectively. A countervailable subsidy is “financial assistance from a foreign government that benefits the production of goods from foreign companies and is limited to specific enterprises or industries, or is contingent either upon export performance or upon the use of domestic goods over imported goods,” the department’s fact sheet on the case explains.

Imports of steel flanges in 2017 were estimated to be valued at a total of $48.4 million from the two countries, according to the release.

The domestic petitioners in the case are the Coalition of American Flange Producers and its individual members: Core Pipe Products, Inc. (of Carol Stream, Illinois) and Maass Flange Corporation (of Houston, Texas). The petitions were filed Aug. 16, 2017, and the Department of Commerce initiated its investigation Sept. 5. The U.S. International Trade Commission then delivered its preliminary determinations Sept. 30.

The Chinese respondents in the case were: Both Well (Jiangyan) Steel Fittings Co., Ltd., Hydro Fluid Controls Ltd., Jiangyin Shengda Brite Line Kasugai Flange Co., Ltd., and Qingdao I-Flow Co., Ltd.

According to the department, it calculated the countervailable subsidy rate based on “adverse facts available” due to the companies’ “failure to fully cooperate” in the investigation.

Commerce calculated a rate for the Indian respondents under similar circumstances.

“In the India investigation, Commerce has calculated a preliminary subsidy rate of 239.61 percent for mandatory respondent Bebitz Flanges Works, based on adverse facts available due to the company’s failure to fully cooperate in the investigation., and a preliminary subsidy rate of 5.00 percent for mandatory respondent Echjay Forgings Private Limited,” the department’s fact sheet states. “Commerce preliminarily determined a rate of 5.00 percent for all other Indian producers and exporters.”

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The Department of Commerce is scheduled to make a final CVD determination in the case against China on April 3, and May 29 for India.

Last week, the U.S. International Trade Commission (ITC) voted to continue the AD and CVD investigations into common alloy aluminum sheet from China — a decision met with favor by some and concern by others within domestic industry.

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Unlike most such cases, the Department of Commerce self-initated the investigations, marking the first time it had done so since 1991.

Heidi Brock, president and CEO of the Aluminum Association, lauded the decision to continue the investigations.

“The Aluminum Association and its members are encouraged by today’s unanimous preliminary finding by the U.S. International Trade Commission that imports of common alloy aluminum sheet from China are a cause of injury to the domestic industry and their workers,” Brock said in a release. “U.S. companies that make common alloy aluminum sheet have suffered extensive injury thanks to unfairly traded imports from China for many years. Our members are participating in the trade cases initiated by the Department of Commerce to return fair pricing to the U.S. market, and to allow the U.S. industry to make needed investments to further strengthen its competitiveness.”

Not everyone is happy about the decision, however.

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The above headline is true, assuming the U.S.’s avowed aim is the health and future of the American steel industry and its workers.

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No one would dispute the idea that the world has too much steelmaking capacity. Many emerging markets and all mature markets are in agreement that excess steelmaking capacity depresses global prices and begats a beggar-thy-neighbor attitude to world trade.

Even taking the elephant in the room out of the assessment, The Economist estimates, by excluding China, global capacity use fell from 86% in 2004 to 69% in 2016, underlining how severe and widespread the problem is.

Source: The Economist

Recent cutbacks in China, recent research from Bank of America Merrill Lynch suggests, mean it is on track to use a full 88% of its capacity in 2018. Steel prices have rallied, mostly due to broad-based rising global growth.

While there are no guarantees that older, less environmentally friendly steel plants closed in the last 12 months will not be replaced by new, more efficient and less-polluting steel plants in the future, recent directives from Beijing suggest it is applying pressure to state governments to limit the permitting of new steel mills.

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This morning in metals news, two new vehicles made mostly with steel represent a victory for the steel industry, iron ore prices are down and the U.S. International Trade Commission (ITC) voted to continue its investigation into common alloy aluminum sheet from China.

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New Ram Pickup, Chevy Silverado Made with Steel

As the steel industry battles to remain the dominant material in automotive construction, the news of two new models constitutes a win for the industry.

Fiat Chrysler‘s new Ram pickup and General Motors‘ new Chevrolet Silverado truck are made mostly with steel, Reuters reported. The announcements represent a big win for steel, which is seeing increasing competition from aluminum within the automotive industry.

As Reuters reported, in late 2014 Ford launched the all-aluminum body F-150. While the versatile metal offered improved fuel economy, it comes at a premium to steel. The interplay between steel and aluminum vis-a-vis automobile construction is something that will need to continue to be monitored going forward.

Iron Ore Prices Drop

As Chinese rebar steel futures fell, so too did prices of iron ore in the face of flagging demand, Reuters reported.

Iron ore on the Dalian Commodity Exchange dropped 2.3% to 535 yuan per ton, according to the report.

ITC Continues Aluminum Sheet Investigation

The U.S. ITC announced Friday that it voted to continue its investigation of common alloy aluminum sheet from China.

“The United States International Trade Commission (USITC) today determined that there is a reasonable indication that a U.S. industry is materially injured by reason of imports of common alloy aluminum sheet from China that are allegedly subsidized and sold in the United States at less than fair value,” the ITC release covering the announcement states.

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Now, a preliminary countervailing duty determination is due Feb. 1 from the Department of Commerce.

The U.S. Department of Commerce. qingwa/Adobe Stock

Before we head into the weekend, let’s take a quick look back at the week that was here on MetalMiner:

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  • This week we wrapped up the latest round of posts for our January Monthly Metals Index (MMI) — check out this week’s posts on the following:
  • Oil and gas exploration is a topic that has both passionate supporters and detractors. President Trump’s recent proposal to open up new areas for drilling, not surprisingly, has both of those, as our Stuart Burns wrote earlier this week.
  • Sticking on the subject of oil, Burns surveyed the factors behind crude oil’s continuing rise in price. Political turmoil is one factor, among others, contributing to the increase.
  • The long wait is over … Secretary of Commerce Wilbur Ross has sent President Trump his Section 232 steel report (the statutory deadline was Jan. 15). Trump now has 90 days to decide what to do. A similar announcement for the Section 232 aluminum probe — which was launched last April, one week after the steel probe — should also be coming soon.

After a couple of self-imposed deadlines blown by and a lot of waiting, the next step in the Section 232 process has finally arrived.

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Thursday evening the Department of Commerce announced Secretary of Commerce Wilbur Ross had completed his Setion 232 steel report and sent it on to President Donald Trump. Under the statutory guidelines of Section 232 (derived from the Trade Expansion Act of 1962), Trump has 90 days to respond to the recommendations and act (or not act).

As a result of the investigation, the president could call for tariffs, quotas, or a hybrid tariff-quota solution in an effort to help domestic steelmakers dealing with rising imports.

The department’s announcement did not indicate what the contents of the report were. White House Deputy Press Secretary Lindsay Walters said the president would announce his decision “at the appropriate time,” CNBC reported.

The Section 232 probes into steel and aluminum imports were launched last April. The purpose of the investigation is to determine whether or not the imports pose a threat to the country’s national security. The last Section 232 investigation came in 2001, when it was that determined that imports of iron ore and semi-finished steel did not pose a threat to national security.

Unsurprisingly, reactions rolled in Thursday evening from the metals industry.

“The steel industry welcomes the news that the Secretary of Commerce has formally submitted his report to the president in the Section 232 investigation into the impact of steel imports on the national security,” said Thomas J. Gibson, president and CEO of the American Iron and Steel Institute (AISI), in a release. “We are confident that we have made the case that the repeated surges in steel imports in recent years threaten to impair our national security and we look forward to the president’s decision on the appropriate actions to address this critical situation.”

Scott Paul, president of the Alliance for American Manufacturing (AAM), expressed hope that Trump would not need 90 days to bring the investigation to its conclusion.

“Final resolution of the Section 232 case doesn’t need to take 90 days; we’ve seen more than six months of delays already,” Paul said in a release. “Let’s get this done by the end of January.”

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A rise in imports has been a consistent talking for Trump, with China in particular coming in for much criticism from the president and the domestic industry.

According to a recent AISI report, U.S. steel imports rose by 15.5% in 2017. The estimated finished steel import market share in 2017 checked in at 27% (22% for December 2017 alone).

The Renewable Monthly Metals Index (MMI) picked up a point for our January reading, rising from 78 to 79 (a 1.3% jump).

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Several of the heavier hitters in this basket of metals posted price increases this past month.

U.S. steel plate rose 4.0% and U.S. grain-oriented electrical steel (GOES) coil rose 3.8%. Korean steel plate also increased, rising by a whopping 8.9% for the recent monthly window.

Chinese silicon and cobalt cathodes also posted notable price jumps. Meanwhile, Chinese steel plate fell slightly, while Japanese steel plate posted a small price jump.

Continuation of Steel Plate Tariffs on the Table

U.S. Rep. Pete Visclosky (D-Merrillville, Indiana) testified before the International Trade Commission recently on the subject of extending 18-year-old duties on cut-to-length carbon-quality steel plate from India, Indonesia and South Korea, the Northwest Indiana Times reported.

Northwest Indiana, where Merrillville sits, is home to significant domestic steel industry activity, including by ArcelorMittal, which produces steel plate at its Burns Harbor Plate Mill — located in Gary, Indiana — the paper reported.

“As a representative and resident of Northwest Indiana, I am acutely aware of the challenges facing the American steel industry due to the onslaught of illegal steel imports,” the Times quoted Visclosky as saying during testimony at a hearing in Washington, D.C. “The ArcelorMittal facility at Burns Harbor in Northwest Indiana makes cut-to-length carbon-quality steel plate, and every one of those dedicated workers deserve to be able to continue to fairly compete and make the best steel to the best of their ability in our global economy.”

Of course, the issue is one of many metals-related trade issues before U.S. trade bodies (the most headline-grabbing being the Section 232 probes into steel and aluminum imports, for which a ruling is expected this month).

Like the Section 232 probes, which seek to determine whether those imports negatively impact the country’s national security, Visclosky also cited national security concerns vis-a-vis steel plate imports.

“It is essential for both our national defense and our national economy, and we cannot afford to threaten our production capabilities,” the paper quoted Visnosky as saying.

GOES Gets a Boost

As reported by our Lisa Reisman yesterday, grain-oriented electrical steel (GOES) got a boost this past month.

GOES prices, as Reisman noted, usually don’t move in tandem with other forms of steel — but it didn’t play out that way in December.

Import levels, however, are something to monitor going forward.

“In addition to prices moving in a similar direction, import levels also followed similar patterns, although GOES imports showed a dramatically higher increase whereas finished steel imports grew by 14.5% on an annualized basis according to the American Iron and Steel Institute (AISI),” Reisman added.

While China is often the subject of much discussion regarding a flood of imports into the U.S., when it comes to GOES, Japan is actually the leader in exports to the U.S.

Source: International Trade Administration and MetalMiner analysis

Japan owns about two-thirds of the U.S. GOES import market share, rising significantly despite a drop in overall finished steel sent to the U.S.

The explanation for that disparity?

“Increased domestic efficiency standards have led to the development of higher performance electrical steels (HB), which have taken share away from the more conventional grades produced by the sole U.S. producer,” Reisman wrote. “With no U.S. producer of these grades, the market has become more reliant on exports from Japan.”

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This morning in metals news, imports of steel into the U.S. are up 18% through the first 11 months of the year, Rio Tinto completed a $1.5 billion buyback of its shares, and Japan’s biggest copper smelter expects copper price to continue to rise in 2018 and beyond.

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Imports Up 18% Through November

Imports of steel in the U.S. are up 18% through the first 11 months of the year, according to preliminary Census Bureau data cited by the American Iron and Steel Institute (AISI).

The U.S. imported a total of 2,718,000 net tons (NT) of steel in November 2017, including 2,126,000 net tons (NT) of finished steel (down 14.6% and 16.8, respectively, versus October final data).

Total and finished steel imports through 11 months are 35,632,000 and 27,637,000 net tons (NT), up 17.5% and 14.3%, respectively, versus the same period in 2016. 

Rio Tinto Finishes Major Buyback

Mining firm Rio Tinto said it had completed a $1.5 billion share buyback, with more to come, according to a Nasdaq report.

According to the report, Rio Tinto said today that it will commence a further $1.925 billion on-market buyback of Rio Tinto plc shares, to be completed no later than Dec. 31, 2018.

Copper on the Rise

According to a Japanese copper smelter, 2018 offers a healthy diagnosis for “Dr. Copper.”

The largest copper smelter in Japan, Pan Pacific, says copper prices will continue to rise next year, according to a Reuters report.

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Executive officer Satoshi Arai said the firm expects copper prices to average $7,280 a ton in 2018 and $7,720 a ton in 2019 (compared with $6,100 a ton this year).

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It is often easier to criticize from the outside than to resolve from within — that is as true of boardrooms as it is of government.

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It should come as no surprise that President Trump’s well-intentioned claims during his election campaign to bring American jobs back to American steel mills — “When I’m president, guess what, steel is coming back to Pittsburgh,” he said during an April 2016 rally — have proved much harder to achieve in office than may have appeared to him and his supporters on the campaign trail.

Some believe the protectionist, low-hanging fruit of withdrawing the U.S. from the Trans-Pacific Partnership and ordering investigations into trade pacts such as NAFTA and the KORUS FTA have, if anything, exacerbated problems for domestic steel mills by prompting a flood of steel imports from firms trying to bring in steel before tariffs are hiked or other barriers are imposed. The New York Times has been accused — with some justification — of running an agenda counter to the Trump administration’s policies, but the facts are clear: steel imports have boomed since Trump came into power.

Source: New York Times

U.S. steel imports were up 19.4% in the first 10 months of 2017, compared to last year’s figures, according to the American Iron and Steel Institute (AISI). The New York Times points to ArcelorMittal’s decision to close a furnace at its Conshohocken, Pennsylvania steel plant in the new year, laying off 150 of the plant’s 207 workers as evidence of the impact. ArcelorMittal blamed low-priced imports, as well as low demand for steel for bridges and military equipment — both areas Trump promised he would make a key focus for investment if elected.

Although progress on trade issues has come too late for workers at Conshohocken, it is not too late for the industry as a whole.

The administration appears at odds over how to achieve control over imports, with some advocating hefty tariffs, others quotas, and all awaiting the results of the Department of Commerce’s 232 investigation by Jan. 15. The president will then have 90 days to decide what to do, the New York Times states.

If supportive and the report is acted on, plants like Conshohocken stand to benefit the most. Although underutilized at present, its speciality is ultra-strong, military-grade steel (a national security requirement if ever there was one).

Blocking imports, though, is not universally popular.

The auto industry frets that reducing imports will raise prices and impact competitiveness among domestic automakers, resulting in job losses worse than those experienced by the steel industry.

Source: New York Times

The steel industry itself has largely maintained employment over recent years after recovering from the financial crisis of 2008, despite investing in automation, which has helped improve efficiencies and productivity in the face of significant imports from Canada, eastern Europe and elsewhere (China features less nowadays and is well down the list due to earlier anti-dumping legislation).

Quite how the administration balances these competing priorities of domestic steel producers versus domestic steel consumers remains to be seen. Rhetoric so far this year suggests sympathies lie firmly with producers, but legislation needs to be finessed enough not to cause more damage than it intends to avoid.

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As we say, criticizing from the outside is much easier than finding solutions from within. Coming up with viable solutions will be the administration’s big challenge in 2018.

The U.S. Department of Commerce ruled Wednesday, Dec. 20, that Quebec-based Bombardier sold 100- to -150-seat large civil aircraft at less than fair value in the U.S., and also benefited from unfair government subsidies.

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“This decision is based on a full and unbiased review of the facts in an open and transparent process.” Commerce Secretary Wilbur Ross said in a prepared statement. “The United States is committed to a free, fair, and reciprocal trade and will always stand up for American workers and companies being harmed by unfair imports.”

The Department of Commerce determined that exporters from Canada sold the aircraft at 79.82% less than fair value and that Canada is providing unfair subsidies to producers of the aircraft at a rate of 212.39%.

The ruling makes for a big win for Boeing, the petitioner in the case.

It has been a busy year for the Department of Commerce. In its releases announcing trade cases throughout 2017, the department has touted the significant uptick in anti-dumping or countervailing duty cases taken up compared with last year.

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From Jan. 20 until Dec. 18, the department launched 79 anti-dumping and countervailing duty investigations. That total amounts to a 52% increase from last year’s total during the same time period, the department release announcing the Bombardier ruling stated.

The United States International Trade Commission (ITC) is scheduled to make its final determinations on or about Feb. 1, 2018.

If the ITC makes affirmative final determinations that the imports of aircraft from Canada “materially injure, or threaten material injury to, the domestic industry,” the Department of Commerce will issue anti-dumping and countervailing duty orders. If the ITC makes negative determinations of injury, however, the investigations will be terminated.