Articles in Category: Public Policy

This morning in metals news: the U.S. Court of International Trade granted defendants’ motion for partial dismissal of a challenge to the U.S.’s Section 232 duties on Canadian steel; the Midwest is the heart of U.S. wind capacity; and, lastly, U.S. Steel released its second-quarter guidance.

Each month, MetalMiner hosts a webinar on a specific metals topic. Explore the upcoming webinars — including the next one scheduled for Thursday, June 24 — and sign up for each on the MetalMiner Events page.

Court of International Trade rejects Section 232 challenge

U.S. trade

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The U.S. Court of International Trade on Tuesday rejected a challenge to the Section 232 duties on Canadian steel.

Maple Leaf Marketing, based in Midland, Texas, filed the complaint. The company is the U.S. agent for EndurAlloy™ production tubing for Calgary-based Endurance Technologies Inc.

Maple Leaf challenged the “constitutionality and lawfulness of duties imposed on re-imported steel tubing” pursuant to Section 232. 

Midwest wind

Since 2011, most U.S. wind capacity has been built in the Midwest, the Energy Information Administration reported.

“The Texas, Midwest, and Central regions—home to some of the country’s most prolific wind resources—combined accounted for the largest share of U.S. wind capacity growth from 2011 to 2020 with 73% of additions,” the EIA reported. “At the beginning of 2011, the Texas region (which covers the area served by ERCOT) had 9.4 GW of wind capacity; by the end of 2020, capacity had grown to 27.9 GW.”

Furthermore, Midwest wind capacity tripled, from 8.6 GW in 2011 to 26.9 GW in 2020.

Meanwhile, in 2011, the Central region had about half the wind capacity of the Texas and Midwest regions, the EIA added. The Central region added 20.5 GW of wind capacity over the last decade, more than any other region.

U.S. Steel releases Q2 guidance

U.S. Steel released its Q2 guidance, estimating adjusted EBITDA of $1.2 billion.

In addition, the steelmaker projected net income of $880 million.

“Higher steel prices and strong flat-rolled steel demand coupled with well-run operations are expected to deliver adjusted EBITDA that more than doubles our first quarter performance,” U. S. Steel President and CEO David B. Burritt said. “Continued strong demand and low steel inventories are empowering today’s ongoing market improvements. These market fundamentals are showing no signs of slowing down and have us increasingly confident of another strong year in 2022.”

See why technical analysis is a superior forecasting methodology over fundamental analysis and why it matters for your steel buy.

It would seem Beijing only has to speak and the market reacts — this time, it’s about base metals.

Worried by what it sees as excessive inflation in commodity prices, which it fears will lead through into factory gate increases, China warned speculators last month over “excessive speculation.” The warning from China’s National Food and Strategic Reserves Administration hit the iron ore market hard, the Financial Times reports, sending the price 10% lower.

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China turns to base metals

China aluminum

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This month, Beijing has turned its attention to base metals.

The authorities have hinted they may release metal from their strategic reserves. The move would be an overt attempt to dampen further price rises in what it sees as a speculator-fueled rally. Where applicable, it would provide additional supply for those metals where supplies are genuinely tight.

The country holds strategic reserves in copper built up over decades. During slumps, like after the financial crisis, Beijing has stepped in to support domestic producers.

State secrets

As a strategic reserve, copper stocks are a state secret.

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This morning in metals news: production has resumed at Tenaris‘ steel plant in Koppel, Pennsylvania; meanwhile, Anglo American said it has demerged its thermal coal operations in South Africa; and, lastly, the United Steelworkers union commented on the Biden administration’s recently released supply chain review.

Each month, MetalMiner hosts a webinar on a specific metals topic. Explore the upcoming webinars and sign up for each on the MetalMiner Events page.

Tenaris steel plant in Pennsylvania resumes production

Tenaris logo

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Luxembourg-based Tenaris’ steel plant in Koppel, Pennsylvania, has resumed production after a yearlong hiatus for upgrades.

“Steel production is now underway at Tenaris’s first melt shop in the United States that will soon supply steel bars for its seamless pipe mills in the States and Canada,” Tenaris said in a press release.

“The steel shop in Koppel, PA, part of the company’s strategic acquisition of IPSCO, completed in 2020, has started producing steel bars following a year-long investment of more than $15M USD in upgrades to integrate the facility into Tenaris’ global network of steel mills.”

Last year, on the heels of the outset of the COVID-19 pandemic, Tenaris announced idling of a number of U.S. plants. In April 2020, the company said declining oil and gas prices, oversupply in the oil market and COVID-19 operational restrictions underpinned its decision.

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This morning in metals news: the United States International Trade Commission made determinations in a five-year sunset review covering imports of cut-to-length carbon steel plate; meanwhile, United States Trade Representative Katherine Tai will outline the Biden-Harris administration’s “worker-centered trade policy” today; and, lastly, the Consumer Price Index for All Urban Consumers rose by 0.6% in May.

The MetalMiner Best Practice Library offers a wealth of knowledge and tips to help buyers stay on top of metals markets and buying strategies.

USITC rules on cut-to-length carbon steel plate imports

United States International Trade Commission

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The USITC recently made determinations in a five-year sunset review regarding an existing anti-dumping duty order on cut-to-length carbon steel plate from China and terminating suspended investigations on imports of the product from Russia and Ukraine.

In its vote, the USITC said revoking the anti-dumping duty order on the carbon steel plate from China “would be likely to lead to continuation or recurrence of material injury within a reasonably foreseeable time.”

It also voted to maintain existing suspension agreements for the imports from Russia and Ukraine.

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China’s rare earth (RE) oxides market is a controlled market — or at least it is today.

There was a time it was the mining equivalent of the wild west with multiple operators. There were once zero controls and, as a result, the sector’s operations led to massive environmental damage.

The authorities stepped in, consolidated the operators and enforced licences.

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Managing the rare earth oxides market

rare earths loaded on cargo ship in China

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Today, Beijing’s Ministry of Industry and Information Technology (MIIT) with the Ministry of Natural Resources sets quotas every half year for how much can be produced.

Market prices remain volatile, though. A half yearly quota set by government officials is not the optimal system to match supply, demand and prices. As the economy bounced back last year, the rare earths market was caught on the hop and prices rose strongly.

Some light rare earths, like praseodymium-neodymium (PrNd) oxide, reached multiyear highs.

As a result, the MIIT relaxed quotas this year. It raised the quota from 66,000 tons in the second half of 2020 to 84,000 tons in the first half of 2021. Prices continued to rise as global demand roared back. China’s exports are also controlled (the country still produces something like 90% of global supply). Grateful producers elsewhere have made up the shortfall.

MetalMiner tracks Chinese rare earths prices on a daily basis and produces a rare earths Monthly Metals Index (MMI) displayed above. After rising strongly in Q1, the index took an unexpected reversal in April and again in May, as my colleague Fouad Egbaria posted at the time.

The index has dropped again for the start of June. This suggests the MIIT’s loosening of production limits has had the desired impact and availability is proving sufficient to meet demand.

Last year, rare earth element refiners operated at just 45% of capacity, the Global Times reported. Even with higher output this year, there is still substantial spare capacity. With exports likewise controlled, producers’ enjoyment of higher output permits look like they will be mitigated by lower prices.

Each month, MetalMiner hosts a webinar on a specific metals topic. Explore the upcoming webinars and sign up for each on the MetalMiner Events page.

This morning in metals news: US personal consumption expenditure rose in April; meanwhile, Norsk Hydro is teaming up on an offshore wind project in the Norwegian North Sea; and, lastly, the United Steelworkers asked the Biden administration for clarification on its domestic mining stance.

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US personal consumption expenditures rises 0.5% in April

personal consumption expenditure

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US personal consumption expenditure increased by $80.3 billion in April, or by 0.5%, the Bureau of Economic Analysis reported.

However, personal income decreased by $3.21 trillion, or 13.1%.

Meanwhile, disposable personal income (DPI) decreased by $3.22 trillion, or 14.6%.

Norsk Hydro, Equinor, RWE team up on offshore wind

Oslo-based Norsk Hydro announced it is teaming up with Equinor and RWE on a new offshore wind project in the Norwegian North Sea.

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Before we head into the weekend, let’s take a look back at the week that was here on MetalMiner, which included coverage of the Section 232 tariffs, the recent metals price pullback, China’s warning to commodity speculators and much more:

Each month, MetalMiner hosts a webinar on a specific metals topic. Explore the upcoming webinars and sign up for each on the MetalMiner Events page.

Week of May 24-28 (Section 232 tariffs, price pullback and more)

tariffs overlaid on US currency

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The MetalMiner Best Practice Library offers a wealth of knowledge and tips to help buyers stay on top of metals markets and buying strategies.

Over three years later, analysis, assessments and calls for removal or maintenance continue to pour in with respect to the former Trump administration’s Section 232 tariffs on steel and aluminum.

In 2018, former President Donald Trump used Section 232 of the Trade Expansion Act of 1962 to impose tariffs on steel and aluminum of 25% and 10%, respectively, citing national security concerns. The administration sought to boost domestic industry and bring capacity utilization rates up to around 80% (considered a barometer of industry health).

With respect to aluminum, the Economic Policy Institute (EPI), in a white paper released this week, argues for the success of the Section 232 aluminum duty.

Do you know the five best practices of sourcing metals, including aluminum?

EPI: Section 232 aluminum tariff spurred investment, jobs growth

tariffs overlaid on US currency

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Among its primary conclusions, the EPI white paper argues the 10% duty has led to job growth in the sector and increased production.

“Projects, investments, jobs, and capacity are on the rise since the initiation of the Section 232 aluminum tariffs,” the EPI argued. “At least 57 new and expansion projects are in downstream aluminum industries producing extruded (rod and bar, pipe and tube, and extruded shapes) and rolled (sheet and plate) products. These new and expanded facilities will employ more than 4,500 additional workers, generate $6 billion in new investments, and add more than 1.1 million metric tons of annual rolling and extrusion capacity to the downstream domestic aluminum industry.”

Furthermore, the EPI argued US primary aluminum production increased on the heels of the Section 232 tariff.

US primary aluminum production increased by 37.6% from March 2018-February 2020 compared with the previous two-year period, the EPI said.

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It is no secret that, on the whole, Europe was backing a Joe Biden win in the 2020 US presidential election.

A few eastern European countries, like Hungary and Poland, rather warmed to former President Donald Trump’s narratives. However, on the whole, socialist Europe saw more of a kindred spirit in Biden. In that vein, it expected his election would see a thawing of US-EU trade relations.

With volatile steel markets, knowing which strategy to execute and when can make all the difference. See how MetalMiner looks at different market scenarios.

US-EU relationship under Biden

US and EU flags

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To some extent, Biden has not disappointed.

A rapid return to the 2016 Paris climate change agreement and last week’s removal of sanctions on the company behind the all-but-completed NordStream 2 gas pipeline from Russia were expected and welcomed.

But two linked and particularly thorny issues remain.

The first is as much commercial as political. We’ve covered it before: the decades-long dispute between Boeing and Airbus over claims and counter-claims of unfair state support and subsidy rumbles on.

In March, the EU and US agreed to suspend all retaliatory tariffs on EU and US exports imposed in the Airbus and Boeing disputes for a four-month period. The pause allows both sides to focus on resolving the dispute.

Arguably, Trump’s hard-nosed approach is what ultimately brought both sides to the table. Biden’s approach may find a solution. Neither side has gained from the sanctions since 2018.

As such, a solution is to everyone’s benefit.

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The phrase “be careful what you wish for” is often used by those who smirk at an unexpected outcome from a decision.

But some in the British Conservative party’s so-called Red Wall – those former Labour or center-left voters who swung behind the Conservative, or center-right, party in supporting Britain’s departure from Europe — must be wondering why the land of milk and honey is not by now the norm.

The industrial middle and north of England overwhelmingly voted for Brexit, as it quickly became termed. Those voters narrowly swinged the vote in favor of leaving, over the wishes of London, the southeast, Wales and Scotland.

But those same voters are increasingly facing several changes that threaten their livelihoods.

Do you know the five best practices of sourcing metals, including steel?

Protectionism and UK steel

First up is a preliminary decision by the UK Department for International Trade to remove a number of products from so-called import “safeguards” adopted from Britain legacy rules in the European Union. The safeguards aimed to protect domestic producers from cheap imports.

The system sets quarterly quotas for steel products that come in with nominal duty. When the country reaches the quota, a massive 25% tariff comes into play to dissuade larger volumes.

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