Articles in Category: Public Policy

Chinese authorities recently presented a draft plan to reduce heavy metal emissions by 5% by 2025.

As noted previously here, the move comes after Beijing moved to stabilize surging coal prices. The government moved to increase both coal imports and domestic output.

The Dalian coking coal price surged to $694 per metric ton in late October. However, the key steelmaking input has plunged by approximately 33% since then. Coking coal this week week fell to $464 per metric ton.

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China’s metals emissions plan

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The government posted the plan on the Ministry of Ecology and Environment website, inviting the general people to comment.

The plans includes language indicating it will take efforts to eliminate obsolete and excess capacity in the heavy metals sector, Chinese tabloid the Global Times reported.

China will accelerate the transfer of professional electroplating companies to special industrial parks, the Global Times reported.

China is the world’s biggest emitter of greenhouse gases. Much of China’s emissions come from coal-fired power generation.

In October, as we noted in previous reports and the Monthly Metal Outlook (MMO), Beijing moved to stabilize the coal market amid supply fears. As a result, China increased imports and ramped up domestic output.

Long road ahead on emissions

China’s State Council, however, seems a little skeptical about the new anti-pollution targets.

A report by news agency Reuters recently said in a report that China had a long road ahead on environmental protection.

The Chinese news agency Xinhua reported that according to the State Council, while there had been some improvement in the country’s ecological situation since the launch of its anti-pollution campaign, it would be tough to tackle pollution and ensure that carbon emissions peaked in 2030. Furthermore, China has also pledged to achieve carbon neutrality by 2060.

Data by the Ministry of Ecology and Environment show that China’s emissions of heavy metals in waste water decreased from 167.8 tons in 2016 to 120.7 tons in 2019. That marked a decline of 28%, the Global Times reported.

Some of the heavy metal pollutants on China’s control and prevention list include lead and mercury. Those are largely used by the electroplating industry, the chemical manufacturing industry and the leather tanning business.

Pollution problem

Environment pollution has been troubling China for a long time. A study by a USC-led team in 2020 illustrated the severity of the problem.

The team had found that emissions from coal-fired power plants in China were “fertilizing” the North Pacific Ocean with a metal nutrient important for marine life.

“This work shows fossil fuel burning has a side effect: the release of iron and metals into the atmosphere that carry thousands of miles and deposit in the ocean where they can impact marine ecosystems,” said Seth John, lead author of the study and an assistant professor of Earth sciences at USC Dornsife. “Certain metal deposits could help some marine life thrive while harming other life.”

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Inflation is currently a hot topic on Wall Street and in Washington. For many, it’s a much more immediate issue than other major issues, like the impact of climate change.

A recent Financial Times post in the paper’s Trade Secrets newsletter posed a somewhat controversial but not inappropriate question: could removing tariffs be the answer to lowering inflation?

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Inflation and tariffs

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Tariffs are certainly in the spotlight, the Financial Times suggests.

U.S. Trade Representative Katherine Tai was apparently asked by reporters in a roundtable last week if removing the Trump-era tariffs on Chinese imports was now under consideration. The U.S. Consumer Price Index showed a 6.2% gain in October from the previous year, its fastest increase since 1990. Treasury Secretary Janet Yellen, the former Federal Reserve chair, acknowledged this week that removing the tariffs would provide a one-off supply chain cost reduction that would “make some difference.”

Inflation is clearly a concern. However, why would you conflate one issue – protecting domestic intermediate product manufacturing – with the separate issue of wider economic inflation?

Then and now

There is little evidence that the original Trump tariffs resulted in inflation in the wider economy. Certainly, within the metals supply chain costs were passed directly down the line. Costs filtered down from either importers or by domestic mills opportunistically raising prices to the level of imports. But the impact proved relatively minor on the cost of a finished washing machine or an earth mover, the Financial Times reported, citing research results.

In our currently much more supply chain constrained and inflationary economic environment, removing the tariffs would result in a one-off modest drop in prices for many goods. The post makes an observation that savings rates remain high. The public has not spent all the savings accumulated during the lockdowns. Furthermore, the inflationary global logistics constraints abated. As such, demand in a constrained environment is likely to persist for some time.

In short, inflation isn’t going away any time soon.

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This morning in metals news: U.S. President Joe Biden signed the over $1 trillion infrastructure bill into law Monday; meanwhile, import prices rose by 1.2% in October, the Bureau of Labor Statistics reported today; and, lastly, manufacturers’ and trade inventories increased in September.

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Biden signs infrastructure bill

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In a ceremony Monday, President Joe Biden signed the infrastructure bill most recently passed by the House of Representatives on Nov. 5.

The bill, the Infrastructure Investment and Jobs Act, includes $550 million for infrastructure improvements, from roads and bridges to electric grid improvements.

“This law makes this the most significant investment in roads and bridges in the past 70 years,” Biden said during remarks on the South Lawn on Monday. “It makes the most significant investment in passenger rail in the past 50 years and in public transit ever.

“So, what — what that means is you’re going to be safer, and you’re going to get there faster, and we’re going to have a whole hell of a lot pollution — less pollution in the air.

“The bipartisan law will modernize our ports, our airports, our freight rail to make it easier for companies to get goods to market; reduce supply chain bottlenecks, as we’re experiencing now; and lower cost for you and your family.”

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Before we head into the weekend, let’s take a look back at the week that was and the metals storylines here on MetalMiner, including softening steel prices, the House’s passage of the over $1 trillion infrastructure bill and more:

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Week of Nov. 8-12 (steel prices, infrastructure bill and more)

  • Limited inventory and semiconductor shortages continue to weigh on U.S. automotive sales.
  • The House of Representatives voted to pass the Infrastructure Investment and Jobs Act last Friday. President Joe Biden will sign the bill during a ceremony Monday, Nov. 15.
  • MetalMiner’s Nichole Bastin delved into recent copper market trends.
  • Steel prices have started to soften.
  • Earlier this week, we broke down the infrastructure funding categories within the Infrastructure Investment and Jobs Act.
  • U.S. steel capacity utilization fell to 83.4% last week, the American Iron and Steel Institute reported.
  • Meanwhile, U.S. construction spending dipped in September, the Census Bureau reported.
  • A strong aluminum market has been a boon for Novelis, as reflected by its most recent quarterly report.
  • The Consumer Price Index rose by 0.9% in October, the Bureau of Labor Statistics reported. Furthermore, the index is up by 6.2% over the last 12 months.
  • The Greenland parliament this week voted to ban uranium mining and exploration, effectively halting the Kvanefjeld project.
  • Automotive sales in China fell by 9.4% year over year in October, the China Association of Automobile Manufacturers reported.
  • The Global Precious MMI rose by 5.8% for this month’s reading.
  • Lastly, German firm Aurubis AG announced plans to invest €300 million to build a metals recycling plant in the U.S.

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After months and months of debate, the House of Representatives on Friday voted to pass an over $1 trillion infrastructure bill to repair the country’s roads and bridges, improve the rail system, and expand clean water access, among other investments.

The vote proved bipartisan, with a number of Republicans voting in favor of the bill. Ultimately, the bill passed the chamber by a vote of 228-206.

infrastructure

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The spending package includes funding for a variety of critical infrastructure, from roads and bridges to broadband and electric grid improvements.

“Generations from now, people will look back and know this is when America won the economic competition for the 21st Century,” President Joe Biden said.

So, what’s in the bill, exactly?

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Funding for roads, bridges

Although the country’s roads and bridges did not get as much traffic as usual on the heels of the coronavirus pandemic in 2020 — with many workers trading their commute to the office for remote work — motorists these days are seeing traffic levels return to pre-pandemic levels.

On that front, the bill includes $110 billion in funding for roads and bridges. Furthermore, the White House said the funding will go in part toward rebuilding the country’s “most economically significant” bridges, plus thousands of smaller bridges.

According to a report earlier this year by the American Road and Transportation Builders Association, more than 220,000 U.S. roads and bridges are in need of repair or replacement.

“ARTBA finds that while the number of structurally deficient (SD) bridges declined 2.5 percent last year to 45,000, the number of bridges falling into fair condition grew more than 3,600 to almost 295,000,” the association said.

“At the current pace, it would take 40 years to repair the current backlog of SD bridges.”

Further driving the point home, the American Society of Civil Engineers in March gave U.S. infrastructure a C- grade.

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This morning in metals news: the House of Representative on Friday passed a $1.2 trillion infrastructure bill, sending the bill to the desk of President Joe Biden; meanwhile, the American Iron and Steel institute reacted to the infrastructure bill’s passage; and, lastly, nonfarm payroll employment rose by 531,000 in October.

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House passes $1.2T infrastructure bill

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After a long and winding road, the House of Representatives voted to pass a $1.2 trillion infrastructure bill.

The bill includes funding for roads, bridges, broadband, lead pipe replacements and the electrical grid, among other things. The bill passed Friday by a bipartisan vote of 228-206.

In comments Saturday morning, President Joe Biden said the bill helps put the U.S. on the right path to win the “economic competition” of the 21st century.

AISI comments on infrastructure bill

The American Iron and Steel Institute (AISI) touted steel’s role in the infrastructure bill’s projects.

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This morning in metals news: the U.S. and E.U. have struck a deal that will see to the former resuming imports of duty-free steel and aluminum from the E.U.; battery storage applications have shifted, the Energy Information Administration explained; and, lastly, compensation costs increased during Q3 2021.

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US, EU reach deal on Section 232 tariffs

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In a move toward deescalating transatlantic trade tensions that have simmered since the Trump administration imposed Section 232 steel and aluminum tariffs in 2018, the Biden administration announced a deal over the weekend that will see to the U.S. once again importing duty-free European steel and aluminum.

In March 2018, former President Donald Trump used Section 232 of the Trade Expansion Act of 1962 to impose tariffs on imported steel and aluminum, citing national security concerns. Canada, Mexico and the E.U. initially had exemptions to the tariffs. However, those exemptions eventually expired.

As a result, tensions between the U.S. and E.U. grew, as the latter imposed retaliatory tariffs on U.S. goods.

On Saturday, however, the parties announced a step toward trade deescalation.

“The agreements announced today delivers on President Biden’s vision to repair relationships with our European partners while also helping to ensure the long-term viability of our steel and aluminum industries, the communities they support, and most importantly, the workers in these industries on both sides of the Atlantic,” U.S. Trade Representative Katherine Tai said. “In addition to the EU eliminating the retaliatory tariffs against the United States, we have agreed to suspend the WTO disputes against each other related to the 232 disputes.

“With this dispute behind us, we are in a stronger position to address global overcapacity from China with an enhanced enforcement mechanism to prevent leakage of Chinese steel and aluminum into the U.S. market. And the deal is a significant win on one of President Biden’s top priorities – fighting climate change.”

The U.S. will resume importing duty-free free aluminum and steel from the E.U. “in line with historical trade flows.”

Changing battery storage applications

Battery storage applications have shifted, the Energy Information Administration reported today.

For example, utility-scale battery storage for frequency regulation accounted for 59% of total battery capacity reporting this use.

“Frequency response is a service that maintains grid frequency as close to 60 hertz (Hz) as reasonably possible,” the EIA said. “Deviations below 60 Hz can lead to protective generator trips that result in a subsequent decline in system stability. Batteries are particularly well suited for frequency regulation because their output does not require any startup time and batteries can quickly absorb surges.”

Compensation costs rise

Compensation costs during the quarter ending in September rose by 1.3%, the Bureau of Labor Statistics reported.

Wages and salaries increased by 1.5% from June 2021. Meanwhile, benefit costs increased by 0.9%.

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Talk of trade meetings are usually met with a yawn and click to the next news item. However, last week’s meeting between the E.U. and the U.S. in Pittsburgh may be one event worth following.

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E.U., U.S. and the fate of Section 232

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The inaugural Trade and Technology Council (TTC) meeting was attended by both Secretary of Commerce Gina Raimondo and U.S. Trade Representative Katherine Tai, while the EU delegation included trade chief Valdis Dombrovskis.

So, in theory at least, that is enough political heft to have meaningful negotiations.

And what is there to negotiate, you may ask? In short, those Trump-era U.S. tariffs on European steel and aluminium.

Back in 2018, former President Donald Trump imposed hefty duties on imports of steel 25% and aluminium 10% from Europe and other countries based on national security grounds (using Section 232 of the Trade Expansion Act of 1962). While a solution has been reached with Canada and Mexico, there isn’t one with Europe, a recent Financial Times report states.

Back in May this year, the two sides reached a detente. Europe agreed to delay the ratcheting up of its retaliatory tariffs on clothing, bourbon, and motorcycles until Dec. 1.

But the clock is ticking.

E.U. trade chief Dombrovskis is says the E.U. needs to decide what it’s going to do about that deadline by early November.

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The Department of Commerce has initiated a Section 232 investigation covering neodymium-iron-boron magnets, the department announced Sept. 24.

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Section 232 investigation to cover neodymium magnets

neodymium magnet

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The Trump administration used Section 232 of the Trade Expansion Act of 1962 to investigate whether steel and aluminum imports are having a harmful impact on national security. Ultimately, as metals buyers know, the former president opted to slap tariffs on steel and aluminum of 25% and 10%, respectively.

Meanwhile, neodymium magnets go into a wide variety of applications, including wind turbines, electric vehicles and cordless tools, among many others. In addition, as the DOC noted, neodymium magnets also have military applications in fighter aircraft and missile guidance systems.

“The Department of Commerce is committed to securing our supply chains to protect our national security, economic security, and technological leadership,” Secretary of Commerce Gina Raimondo said. “Consistent with President Biden’s directive to strengthen our supply chains and encourage investments to shore up our domestic production, the Department initiated a Section 232 investigation on imports of NdFeB permanent magnets to determine whether U.S. reliance on imports for this critical product is a threat to our national security.”

The DOC asked interested parties to submit written comments, data, analyses, or other information to the Bureau of Industry and Security by Nov. 12, 2021.

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This morning in metals news: the U.S. Senate on Tuesday voted to pass a $1 trillion infrastructure bill; the Consumer Price Index for All Urban Consumers rose once again in July; and, finally, the Energy Information Administration forecast lower-than-average natural gas inventories heading into the winter heating season.

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Senate passes $1T infrastructure bill

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After a lengthy back and forth, the U.S. Senate passed a $1 trillion infrastructure bill Tuesday by a vote of 69-30.

“There is a discrepancy in historical Federal investment between highways, aviation, and intercity passenger rail,” the bill text reads. “Between 1949 and 2017, the Federal Government invested more than $2 trillion in our nation’s highways and over $777 billion in aviation. The Federal Government has invested $96 billion in intercity passenger rail, beginning in 1971 with the creation of the National Railroad Passenger Corporation. Intercity passenger rail Federal investment is only 12 percent of Federal aviation investment and less than 5 percent of Federal highway investment.”

United States Trade Representative Katherine Tai said the deal marked a step closer to “historic, once-in-a-generation infrastructure investments.”

“The bill will improve our roads, bridges and ports, build resilient energy networks that combat climate change, and strengthen our supply chains,” Tai said. “Finally, the strong Buy America provisions will support our workers and revitalize domestic industries while maintaining America’s competitive edge.”

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