Articles in Category: Public Policy

The Renewables MMI dropped 2.5% for the month of December, ending at a value of 78.

Here’s What Happened

  • Since our recalibration of this index back in May 2017 to better take into account cobalt price fluctuations, the Renewables MMI has been slowly but surely gaining ground the latter half of 2017, hitting a high of 84 in September.
  • Within this basket of metals and materials used in the renewable energy industry, the Big Heavy is the U.S. steel plate price. Yet from November to December, that price point only dropped a single dollar per short ton.
  • The China steel plate price, however, did move much more – increasing 4.3% on the month.

What’s Going On in the Background?

  • The biggest news for the renewables industry has been the controversial tax plan put forth by legislators and still awaiting final House/Senate reconciliation – mainly, the fact that the Base Erosion Anti-Abuse Tax (BEAT) has been kept intact in the latest version of the Senate bill.
  • As Sydney Lazarus wrote in MetalMiner last week, currently, “many companies have large multinational corporations finance wind or solar energy projects, and in return, give the latter the renewable energy credit that the government provides.” But the BEAT tax, which is meant to discourage multinationals from moving profits abroad — and which the Senate bill kept intact — would make the crucial solar investment tax credit (ITC) and wind production tax credit (PTC) “unusable for multinational banks and other corporations who have low tax rates,” according to this article.
  • It’s unclear if this move was intentional or not, but regardless, it injects huge uncertainty into the renewable energy industry as the bill hurtles toward law. (Some, such as American Wind Energy Association’s Peter L. Kelley, say it “could put an end to more than half of the country’s wind projects,” as reported by Lazarus.

What Metal Buyers Should Look Out For

  • Keep an eye out on steel plate’s raw material inputs — iron ore prices increased over the past month, as we reported in our December Monthly Buying Outlook, while coal prices decreased. Although steel plate prices appear a bit sluggish at the moment, China’s demand is something worthy of paying attention.

Key Movers and Shakers: Exact Prices

Sign up or log in below to get exact pricing!

For full access to this MetalMiner membership content:
Log In |

This morning in metals, some big news on the international trade and steel imports front.

The U.S. Department of Commerce yesterday announced preliminary affirmative rulings that corrosion-resistant steel (CORE) and certain cold-rolled steel flat products (cold-rolled steel) imported from Vietnam “produced from substrate originating in…China are circumventing existing antidumping and countervailing duty (AD/CVD) orders on CORE and cold-rolled steel imported from China,” according to their news release.

The Details on Duties

“The Commerce department has directed the United States’ customs and border protection agency (CBP) to collect anti-dumping (AD) and Countervailing Duty (CVD) cash deposits from importers of CORE produced in Vietnam using Chinese-origin substrate at rates of 199.43 percent and 39.05 percent, respectively,” according to this article, writing from the release. “CBP has also been directed to collect AD and CVD cash deposits on imports of cold-rolled steel produced in Vietnam using Chinese-origin substrate at rates of 265.79 percent and 256.44 percent, respectively.”

What This Means for Metal Buyers

Many in the steel manufacturing are hailing the decision as a victory as far as solidifying the case against China when it comes to proving that country’s circumvention and “substantial transformation” tactics.

The decision on CORE and cold-rolled products may open the door for the steel pipe and tube industry to file or follow up on similar cases.

Learn more on Trade Circumvention here, including a free white paper download on the topic.

Listen to our MetalMiner Podcast series, “Manufacturing Trade Policy Confidential,” for more discussion around circumvention and other trade topics that matter to metal buyers.

Just as legislators in the U.S. and Europe are taking increasingly strident action to curb imports from countries like China under anti-dumping legislation, the tools available to them are being withdrawn.

Benchmark Your Current Metal Price by Grade, Shape and Alloy: See How it Stacks Up

Historically, China and a number of other emerging markets have been classified as non-market economies. This means that the state plays a major role in allocating resources and setting prices, making the cost of products less relevant to the economies of manufacture. Under U.S. law, a non-market economy is defined as one that does not operate on market-based principles, and therefore, its prices for final goods do not (necessarily) reflect fair value.

We talk of China in this context because the country is the world’s largest non-market economy, but it is far from alone: there are many other emerging and previously emerging markets that are classified accordingly.

There lies the problem. China is being reclassified, at least in Europe, under a deal negotiated in October. The Telegraph reports that the full European Parliament then offered its endorsement last month, just leaving national governments to give their final approval on December 4.

China has been pushing hard for its economy to be re-classified. Some suggest that the EU agreement was in part motivated by a desire to improve trade with China. After the U.S., the EU is China’s second largest trade partner.

However, many European manufacturers are probably thinking, “Be careful what you wish for.”

As the article points out, these changes mean it will be harder for European companies to argue they are competing against subsidised competitors, with the new system being more flexible in determining whether domestic producers are being undercut. Anti-dumping measures are in place for some grades and forms of steel and for aluminium foil at present, both of which would be harder to renew if the change in status is accepted. Read more

aleciccotelli/Adobe Stock

This afternoon in metals news, the U.S. renewable energy industry has reason to worry about the Republican tax proposal, union members at the Quebrada Blanca copper mine in Chile move closer to a strike, and precious metal prices fall.

Benchmark Your Current Metal Price by Grade, Shape and Alloy: See How it Stacks Up

Renewables Market Pushes Against BEAT Tax

While the Republicans’ latest attempt at an overhaul of the U.S. tax system is receiving the usual praise and criticism, the renewable energy sector is concerned – and understandably so. As Dino Grandoni explains in the Washington Post, the bill may inadvertently end investment in wind and solar energy.

Currently, many companies have large multinational corporations finance wind or solar energy projects, and in return, give the latter the renewable energy credit that the government provides. But these credits may be cancelled out as part of the base erosion anti-abuse (BEAT) tax, which is meant to discourage multinationals from moving profits abroad.

According to the American Wind Energy Association’s Peter L. Kelley, the BEAT tax – if it is not amended to exempt renewables credits – could put an end to more than half of the country’s wind projects.

Strike Brewing at Quebrada Blanca Mine

A quarter of the workforce at the Quebrada Blanca copper mine in Chile moved closer to a strike, as the 106-member union rejected Canadian miner Teck Resources’ contract offer on Wednesday, Reuters reports. Ninety-six percent of the union voted to reject the offer and strike, said the president of the union. Read more

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

The U.S. Department of Commerce announced an action that it hasn’t taken in over a quarter of a century.

On Tuesday, the department announced it had self-initiated countervailing duty (CVD) and anti-dumping (AD) investigations with respect to Chinese common alloy aluminum sheet.

Benchmark Your Current Metal Price by Grade, Shape and Alloy: See How it Stacks Up

“These historic investigations, the first in over a quarter century, were self-initiated pursuant to the authority granted to the Secretary under the Tariff Act of 1930, as amended,” the Department of Commerce said in a prepared statement.

Secretary of Commerce Wilbur Ross underscored the administration’s goal of targeting what he called “unfair trade practices.”

“President Trump made it clear from day one that unfair trade practices will not be tolerated under this administration, and today we take one more step in fulfilling that promise,” Ross said in the release. “We are self-initiating the first trade case in over a quarter century, showing once again that we stand in constant vigilance in support of free, fair, and reciprocal trade.”

According to the department, imports of common alloy sheet from China were valued at an estimated $603.6 million in 2016.

Typically, such investigations are prompted by petitions filed by entities within the domestic industry. The secretary of commerce, however, has the authority to self-initiate a CVD or AD investigation if it is determined that such a probe is warranted.

The department last self-initiated a CVD investigation in 1991, when it investigated softwood lumber from Canada. The last self-initated AD case came in 1985, when the department looked at semiconductors from Japan.

According to the release, the merchandise subject to investigation is “common alloy aluminum sheet, which is a flat-rolled aluminum product having a thickness of 6.3 mm or less, but greater than 0.2 mm, in coils or cut-to-length, regardless of width.” The material is typically used in building and construction, transportation, basic electrical applications, and appliances.

“The Department has self-initiated these investigations based on information indicating that the United States price of common alloy sheet from China may be less than the normal value of such or similar merchandise and that imports of common alloy sheet from China may be benefitting from countervailable subsidies,” the department release added. “The Department also has evidence that imports of common alloy sheet from China may be materially injuring, or threatening material injury to, the domestic industry producing common alloy sheet in the United States.”

The domestic aluminum industry applauded the announcement from the Department of Commerce.

“The Aluminum Association and its members enthusiastically support the decision announced today by the Department of Commerce and Secretary Wilbur Ross to self-initiate unfair trade investigations concerning imports of common alloy sheet from China,” said Heidi Brock, president and CEO of the Aluminum Association, in a prepared statement. “We are extremely grateful for the efforts and leadership of Secretary Ross in vigorously enforcing the U.S. trade laws.

“The Aluminum Association and its members seek to help ensure that common alloy sheet from China entering the United States is fairly traded.” 

Free Sample Report: Our Annual Metal Buying Outlook

Final determinations by the Department of Commerce in the cases are scheduled for April 2018 for the CVD investigation and July 2018 for the AD investigation.

axe_olga/Adobe Stock

This morning in metals news, the U.S. Department of Commerce launched an anti-dumping and anti-subsidy probe into Chinese aluminum imports, oil prices rise above $60/barrel and copper prices fall for a third consecutive day.

Benchmark Your Current Metal Price by Grade, Shape and Alloy: See How it Stacks Up

Commerce Dept. Launches Aluminum Probe

On Tuesday, the U.S. Department of Commerce launched an anti-subsidy and anti-dumping probe of imported Chinese aluminum alloy sheet, Reuters reports. Beijing is less than happy about the investigation and released a strongly-worded statement on Wednesday, arguing that the move 10would harm both countries.

What sets this probe apart is that it was initiated by the Commerce Department itself, whereas usually these investigations are requested by companies and industries claiming harm from imports. The last time the Commerce Department initiated an anti-subsidy probe was in 1991, on Canadian softwood lumber.

If the probe proceeds, preliminary anti-subsidy and anti-dumping duties could be issued in February and April 2018, respectively.

The End of the Global Oil Oversupply?

Is it the beginning of better days for oil exporters? OPEC and Russia’s agreement last year on oil production cuts has helped prices recover. Brent crude oil reached $64 a barrel this week, the New York Times reports, and some analysts are expecting prices to top $70 next week. Read more

We have written before about the principal of unintended consequences. Governments, companies and people do things often for the best reasons, but do not foresee occasionally tragic — but more often unfortunate — consequences.

Benchmark Your Current Metal Price by Grade, Shape and Alloy: See How it Stacks Up

Well, India’s recent amendments to the Insolvency and Bankruptcy Code (IBC) have not only practically debarred promoters from reacquiring their own assets – the intended action, but have also put the world’s largest steelmaker ArcelorMittal’s prospective bid for stressed steel assets (namely Bhushan Steel, Bhushan Power & Steel, and Essar Steel), in jeopardy, the Indian Business Standard reports last week.

Firstly, the act — as the paper explains, a new Section 29A of the IBC rules that a person and therefore company in which they are involved shall not be eligible to submit a bid for a distressed company if they are an undischarged insolvent. This prohibits promoters or sister concerns of companies with non-performing assets (NPAs) of more than a year from bidding for these companies. This quite rightly stops the practice of putting an asset into insolvency to lose its debts only to pick it up for a song from the administrators and start again without the debt.

The problem for ArcelorMittal is that in 2009 the firm picked up a stake in Uttam Galva Steels. The idea was to pave the way for the global major’s entry into India. The glitch is that last September, according to the report, Uttam Galva Steels was classified as an NPA, which means that it’s been more than a year since the account became an NPA and bars ArcelorMittal from participation in the auction.

Of the 12 companies that the Reserve Bank of India mandated India’s commercial banks to refer to bankruptcy courts the first batch include Essar Steel, Monnet Ispat, Bhushan Power & Steel, Bhushan Steel, Electrosteel Steels, Alok Industries, Amtek Auto, Jaypee Infratech, Lanco Infratech, Jyoti Structures, ABG Shipyard, and Era Infra, the Economic Times reports.

Steelmakers are likely only interested in the three steel producers: Bhushan Steel, Bhushan Power & Steel, and Essar Steel.

With steel demand rising rapidly, Indian assets should have potential, and with ArcelorMittal’s experience, deep pockets and technology, the firm makes a natural buyer, significantly better to have a trade buyer than private equity or a conglomerate – of which India has many – without the deep subject matter experience in turning around steel plants.

Free Sample Report: Our Annual Metal Buying Outlook

The authorities no doubt realize this and will be working behind the scenes to find a solution.

One option suggested is that a resolution is found to the bankrupt firm Uttam Galva Steels that is the cause of the firm’s debarring.

Ironically, Uttam Galva Steels is on the list for the second round of forced auction. However, some are asking if Arcelor couldn’t, or wouldn’t, turn around Uttam Galva Steels, then why should they be given the chance to bid to do the same for this new batch of assets?

A fair question, indeed.

Zerophoto/Adobe Stock

Indian industry is in the midst of a mini-crisis — more specifically, a power crisis.

Benchmark Your Current Metal Price by Grade, Shape and Alloy: See How it Stacks Up

In fact, both industrial and retail consumers in many parts of the country are reeling from electricity cuts, due to a shortage in supply of coal to thermal plants.

Incidentally, Piyush Goyal, India’s coal minister, was also appointed railway minister recently. The railways transport a bulk of the coal to power plants around the country.

Yet, not much is coming out of the minister’s office regarding the coal shortage. In fact, in his role as coal minister, Goyal earlier declared India’s “independence” from imported coal.

Some time in June this year, the coal secretary announced India did not need to import coal from anywhere in the world, as it had sufficient capacity.

Now, all that seems so far away.

Read more

In case you missed it, just before President Trump went on his Asia tour (including a state visit with China’s President Xi Jinping), the U.S. finally went on record in ruling that China is still not a market economy for purposes of determining anti-dumping duties.

To folks inside the Beltway on the front lines of trade policy, this is a big deal.

In fact, it’s China’s single-biggest trade issue, said Tim Brightbill, partner at Wiley Rein LLP in Washington, D.C., in the second episode of our series, “Manufacturing Trade Policy Confidential.”

So what will this mean for the U.S.-China relationship?  What will happen if the U.S. slaps China with even bigger tariffs after the Section 232 investigation is completed? Will China retaliate? How?

Listen to the full episode!

Manufacturing Trade Policy Confidential: Background

With everything that’s been happening on the international trade policy front over the past year, we wanted to give metal buying organizations more insight into the issues they may not be reading or hearing enough about — or at all — in the mainstream B2C media.

What better way to do so than go straight to the source — or sources — and interview some key movers and shakers on the manufacturing and policy fronts? So we’ve started a brand-new series called “Manufacturing Trade Policy Confidential.”

If you’ve visited MetalMiner’s digital pages over the past several months, you’re no stranger to the phrase “Section 232” — shorthand for the U.S. Department of Commerce investigation into whether certain steel imports constitute a national security risk, under the namesake section of the U.S. Trade Expansion Act of 1962.

The outcome of the investigation (findings from which were slated to come down last summer but have been delayed) could have significant effects on upstream and downstream manufacturing organizations, ranging from metal producers to buying organizations – even the mom-and-pops.

But Section 232 is only one small part. Trade circumvention, China’s non-market economy status, domestic uncertainty amidst proposed tax plans and many other issues have pushed us to start this new podcast series.

We’ll be publishing several more interviews in the coming weeks and months – stay tuned!

Listen to more episodes and follow the MetalMiner Podcast on SoundCloud.

gui yong nian/Adobe Stock

This morning in metals news, U.S. Steel faces a potential lawsuit for dumping toxic materials into Lake Michigan, a Chinese aluminum producer cuts smelter capacity and NAFTA renegotiation talks resume.

Benchmark Your Current Metal Price by Grade, Shape and Alloy: See How it Stacks Up

U.S. Steel Could Face Lawsuit for Chromium Dumping

U.S. Steel faces a lawsuit after dumping toxic chromium in Lake Michigan, the Chicago Tribune reported.

According to the report, the 56.7 pounds of chromium released in late October by the company’s Midwest Plant was 89% higher than its water pollution permit allows over 24 hours.

Luoyang Xiangjiang Wanji Aluminium Cuts Back Smelter Capacity

Winter is coming, which means it’s time for those capacity cuts in China.

According to a report by Platts, China’s Luoyang Xiangjiang Wanji Aluminium, located in the Henan province, announced major capacity cuts. On Wednesday, the firm announced 30% cuts of aluminum and alumina capacity, running from today through March 15, 2018, according to the report.

Time For Another Round

Yet another round of talks focused on renegotiating the North American Free Trade Agreement (NAFTA) kicked off Wednesday in Mexico City.

Tensions have ramped up of late from all sides, according to the report, as the U.S. tries to  push through a set of demands being balked at by China and Mexico.

Free Download: The November 2017 MMI Report

Although the hope was that a deal could be reached by the end of the year, the teams agreed to extend talks into next year.