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India’s trade tiff with the United States has all the hallmarks of a potential political battle — for India, at least. With general elections not too far away, it looks like Narendra Modi’s government does not want to really stir the pot, lest there is some fallout in the domestic political scene.

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That could be one of the reasons why the Indian government has chosen to defer a tit-for-tat duty on the import of over two dozen products from India, including certain flat-rolled stainless steel products. It was supposed to come into effect Aug. 8, but now the new date is Sept. 18.

Trade between India and the U.S. has been buffeted by many problems in the past few years. The hike in import duties on Indian goods coming into the U.S. a few months ago was one more such hiccup.

But the ruling dispensation here does not seem to want to take any chances. So, in a renewed effort to resolve the differences between the two countries, India’s Commerce Ministry has requested the Finance Ministry to extend the implementation of higher duties by 45 days.

The Trump administration had decided to hike the import duties on certain steel and aluminum products, not only from India but other countries, such as China, too.

Though the U.S. Trade Representative’s office had two rounds of dialogue with Indian officials, a settlement was not reached. Now, by deferring the retaliatory hike, the Indian government is hoping the issue can be resolved in the next 45 days.

On India’s list of increased duties are 29 products, which include walnuts, almonds, pulses, apples and non-iron.

Duty on flat-rolled iron products has been raised to 27.50% from 15%, while certain flat-rolled stainless steel products will now attract 22.50% duty (compared with the earlier 15%).

Besides the domestic political fallout, the Indian government may also be a bit apprehensive of the White House’s response and the potential for further targeted actions.

India is not really on the same plane as China vis-à-vis such import tariffs; Washington looks at New Delhi very differently than it does Beijing. For one, unlike China, India is not a major exporter of steel and aluminum to the U.S. In 2017, the U.S. accounted for about 2% of India’s steel exports.

Things between India and the U.S. are proceeding at a different level, evident from the fact that last week the U.S. Department of Commerce granted New Delhi a special status that gives the emerging market an automatic waiver for exports of certain military and dual-use technologies (much to the consternation of the Chinese). That could be another reason why the Indians have decided to hold off on enacting the retaliatory duties.

Steel Supplies Dumped in India

Meanwhile, some Indian newspaper reports have said following the duty hike, some countries like China and South Korea have stepped up the dumping of steel in India.

They are said to be diverting supplies from the U.S. and the European Union in massive volumes to beat the impact of a global tariff war. Quoting official data, the report said it suggested steel supplies from China, the world’s largest steel producer, surged to 362,000 tons in the April-June period, up 67% sequentially from the 217,000 tons in the previous quarter.

As Japan and Korea enjoy duty relief under their respective free-trade agreements with India, the imports from these countries are 10% cheaper than domestic steel.

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Importantly, while the combined steel exports by China, Japan and South Korea to the U.S. dropped 17%, or by 241,000 tons, in the April-June period vis-à-vis the previous quarter, their supplies to India rose by 459,000 tons, up 45% from the March quarter. This, said the report, clearly showed that Asian steelmakers were rerouting supplies, meant for the US and other nations, to India.

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This morning in metals news, China responds to the U.S.’s $16 billion in tariffs with the same amount in return, China’s additional announced $60 billion tariff threat could have a significant impact on the liquefied natural gas sector and copper traded flat yesterday.

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Back and Forth

China returned serve this week, responding to the U.S.’s announcement of $16 billion in tariffs on Chinese imports with the same amount in return, marking another escalation of trade tensions.

According to a report by the state-run Xinhua News Agency, the Customs Tariff Commission of the State Council will impose a 25% tariff on $16 billion in U.S. goods.

The list of U.S. goods targeted for tariffs (which is available on the Chinese Ministry of Finance website), encompasses 333 product lines.

Tariffs on LNG?

Liquefied natural gas (LNG) is among the items included in a $60 billion tariff list announced by China last week, CNBC reported.

The U.S. is the No. 1 producer of LNG, while China is currently the second-largest importer, according to the report.

Tensions Weigh on Copper

According to a Reuters report, LME copper traded nearly flat Wednesday, as trade tensions between the U.S. and China continue to negatively impact the metal’s price.

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Softening of the U.S. dollar prevented bigger losses, according to the report. The U.S. Dollar Index fell from 95.39 to 95.03 by the end of the Wednesday; however, it has bounced back so far Thursday morning.

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This morning in metals news, the Office of the United States Trade Representative announced it will move forward with $16 billion in tariffs on Chinese imports (out of an initially announced total of $50 billion in tariffs), Chile posted solid copper exports in July and U.S. raw steel production data is in for the week ending Aug. 4.

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Trump Administration Enacts $16B in Tariffs

The Office of the United States Trade Representative (USTR) announced Tuesday afternoon that it will move forward with $16 billion in tariffs on Chinese imports (in addition to the $34 billion that went into effect July 6).

The USTR finalized the previously announced list of products. From the original list, which included 284 tariff lines, 279 made it into the final list.

Duties will be collected on the list of 279 products beginning Aug. 23.

Chile Posts Strong July in Exports, Particularly Copper

Chile boasted a trade surplus of $375 million in July, according to a Reuters report, powered in part by strong copper exports.

July copper exports were up 9.47% year over year, according to the report.

Steel Production Up 4.3% Year Over Year Last Week

According to American Iron and Steel Institute (AISI) data released this week, U.S. steel production for the week ending Aug. 4 was up 4.3% compared with the same period in 2017.

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Production for the week, however, was down 0.4% compared with the previous week.

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This morning in metals news, a recent poll indicates broad support within the U.S. business community for new tariffs on China, Novelis reported its quarterly earnings and Alcoa seeks an exemption from the Trump administration’s aluminum tariff.

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Support for Tariffs

Much has been said about the Trump administration’s program of tariffs, but what do U.S. business owners think about the strategy?

According to a recent UBS poll, 71% of respondents said they supported additional tariffs on China. That percentage fell to 66% for Mexico, 64% for Europe and 60% for Canada.

In addition, 88% of respondents said they believed China is engaging in unfair trade practices.

Novelis Posts 10% Increase in Net Income Year Over Year

Novelis reported net income (excluding special assets) increased by 10% year over year in the most recent quarter.

“Outstanding operational performance with increased asset optimization and favorable market conditions contributed to another strong quarter,” President and CEO Steve Fisher said. “Our recent investment announcements in North America and Asia, along with the pending acquisition of Aleris, will diversify our product portfolio and increase our participation in high-demand, high-value markets to meet growing customer demand.”

Alcoa Seeks Tariff Exemption

Alcoa is among the long list of U.S. companies that have applied for an exemption from the Trump administration’s metals tariffs (in this case, the aluminum tariff), The New York Times reported.

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According to the report, Alcoa is asking for the exemption because it imports much of its aluminum from Canada, which is one of the countries affected by the tariffs.

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This morning in metals, a Chinese province announced new capacity cut targets as part of the country’s overall environmental plans, copper supply-side issues and Vedanta’s quarterly earnings rise.

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Plans to Cut Steel, Coal Capacity

China’s Shandong province has new targets for cuts on steel and coal production, Reuters reported.

The plans include cuts to pig iron production capacity of 600,000 tons and crude steel of 3.55 million tons by the end of this year, according to the report.

Copper Supply-Side Issues

The copper price has been in a downtrend of late. While it remains to be seen if the downtrend will become a long-term slide, copper watchers are also paying attention to supply-side issues at Freeport-McMoRan’s Grasberg mine in Indonesia.

According to Bloomberg, the mine will see production cut by 300,000 metric tons next year as the miner transitions open pits to underground operations.

Vedanta Earnings Up

Indian miner Vedanta Resources reported a rise in quarterly earnings, Reuters reported.

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For the three-month period ending June 30, the miner reported EBITDA of $983 million, up from $778 million for the same period in 2017, according to the report.

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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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This morning in metals news, U.S. Steel reported its Q2 earnings, Century Aluminum also posted its Q2 earnings and China is preparing $60 billion in retaliatory tariffs against the U.S.

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U.S. Steel Posts Strong Q2, But Stock Drops

U.S. Steel reported better-than-expected Q2 net earnings of $214 million, albeit down from $262 million in Q2 2017.

The firm increased its 2018 full-year EBITDA guidance to $1.85-$1.90 billion.

Meanwhile, the company’s stock price dropped more than 8% Thursday on the New York Stock Exchange.

Century Aluminum’s Adjusted EBITDA Up to $54.5M

Century Aluminum reported net income of $19.4 million in Q2 2018, up from a net loss of $0.3 million in Q1 2018.

EBITDA hit $54.5 million, up from $32.7 million in Q1.

China Prepares to Strike Back With Retaliatory Tariffs

In response to the U.S. announcement regarding an increase of the tariff rate on $200 billion worth of Chinese imports (from a previously announced 10% to 25%), China has announced it has prepared tariffs on approximately $60 billion worth of U.S. goods, according to a statement from China’s Ministry of Commerce.

“China decided to impose additional tariffs of four different rates on about 60 billion U.S. dollars worth of products imported from the United States, a spokesperson of the Ministry of Commerce said Friday,” the release states. “The decision was made in response to U.S. plan to raise tariffs to be imposed on 200 billion dollars of Chinese goods from 10 percent to 25 percent.”

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According to a report by the state-run Xinhua News Agency, the tariff rates with be 5%, 10%, 20% and 25%, and will cover 5,207 items imported from the U.S.

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Mining for gold is an expertise of which not too many Indian miners can boast. In fact, it makes up a minuscule portion of overall annual mining activities in the country.

With neighboring China on the prowl for gold mining projects internationally, some recent news has brought some cheer to the gold sector in India.

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For the first time, a state-owned miner will take up gold mining in India. Earlier this month, India’s National Mineral Development Corporation (NMDC) won the rights to it at an e-auction. In the process, it beat several biggies, such as Vedanta and Adani. NMDC will dig up a gold mine located in the southern Indian state of Andhra Pradesh.

NMDC is not a newcomer to gold mining. It is developing a gold mine in Tanzania, while its Australian subsidiary, Legacy Iron Ore, is currently in the process of testing as many as 17 gold tenements in the Western Australian region.

The Chigargunta-Bisanatham mine will be an underground operation. First-phase production is expected to begin two years after the permitting process.

According to a report by the Press Trust of India (PTI), the initial investment is estimated to be about U.S. $4.5 billion. The Indian government stands to earn 38.25% revenue on sale value. It has estimated reserves of 1.83 million tons containing 5.15 grams of gold per ton.

Incidentally, India is on the way to formulating a new gold policy, which will promote domestic gold mining.

Industry experts believe that at least 100 tons of gold can be mined annually in India, from the present level of about 1.5 tons (as compared to China’s 450 tons a year). Geologists believe that India sits on vast deposits of gold, as the terrain from Australia to China is very similar, so they see no reason why India cannot step up its gold mining.

Experts want the Indian government to factor in the complete journey of gold, from mines to market, under the new policy.

Very slowly, after a court-imposed e-auction for mining, gold mining has picked up.

One of the first in this business was Vedanta. In February 2016, Vedanta Resources became the first private company to successfully bid for a gold mine in India, in the central Indian state of Chhattisgarh. The mine has gold reserves of 2.7 tons.

Other Indian private miners, in collaboration with international players, have started to move in. More and more are expected to follow in the footsteps of Vedanta and NMDC.

Gold mining will also save the country foreign exchange, since it imports most of its gold at the moment.

A previous government report identified the unrefined gold resource base in the country at 658 tons of metallic gold. The report also stated that this tonnage is spread over 13 different states.

India needs to get its act together on the gold mining front, especially since China is already well on its way. Since 2013, when gold prices plunged 30% in a year, China has been ramping up overseas gold-mining investments.

There is no doubt that developing gold mines is a long-term, risky process requiring years of planning, research and infrastructure development. Miners also need to conduct analyses on how much gold a ton of ore actually contains.

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But for Indian companies interested in this, several bottlenecks, including environment permissions, remain.

If a miner has to apply for a gold mining license, it has to take over 100 permissions before getting a permit — a process that takes over seven years.

Hopefully, experts say, this will be history once the new policy is adopted.

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This morning in metals, United States Trade Representative Robert Lighthizer released a statement regarding the news of a potential increase in the tariff rate on the previously proposed list of $200 billion worth in Chinese goods, China responds and Secretary of Commerce downplays the potential impact of the tariffs.

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USTR to Mull Increasing Tariff Rate from 10% to 25%

Per a statement from the Office of the United States Representative (USTR), President Donald Trump has directed USTR Robert Lighthizer to consider increasing the tariff rate on a previously announced list of Chinese imports worth $200 billion that have been targeted for duties.

According to the announcement, the president directed Lighthizer to consider increasing the rate from the initially announced 10% to 25%.

“The Trump Administration continues to urge China to stop its unfair practices, open its market, and engage in true market competition,” Lighthizer said in the release. “We have been very clear about the specific changes China should undertake.  Regrettably, instead of changing its harmful behavior, China has illegally retaliated against U.S. workers, farmers, ranchers and businesses.

“The increase in the possible rate of the additional duty is intended to provide the Administration with additional options to encourage China to change its harmful policies and behavior and adopt policies that will lead to fairer markets and prosperity for all of our citizens.

“The United States has joined forces with like-minded partners around the world to address unfair trade practices such as forced technology transfer and intellectual property theft, and we remain ready to engage with China in negotiations that could resolve these and other problems detailed in our Section 301 report.”

China Responds

According to a spokesperson for China’s Ministry of Commerce, the U.S.’s actions on trade are “futile, “according to a report on the state-run Xinhua News Agency.

The “two-faced” approach referred to in the report points to the U.S. announcement regarding the potential increase in the tariff rate combined with the U.S.’s recent announcement that it wants to restart negotiations with China.

The spokesperson added the U.S. is acting against the interests of its farmers, business owners and consumers.

“Facing such an escalating trade war threat, China has made full preparations and will be forced to take countermeasures in order to defend national dignity, the interests of its people, free trade, and the multilateral system, as well as the common interests of all countries,” the spokesperson said.

Ross Says Tariffs Not ‘Cataclysmic’

In a television interview, Secretary of Commerce Wilbur Ross said a move to a 25% tariff on $200 billion in Chinese imports would not be “cataclysmic,” saying it would have a relatively small impact on the Chinese economy, Reuters reported.

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According to the report, Ross added that Trump thinks it is potentially time to apply more pressure on China in order to “modify” the country’s “behavior.”

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This morning in metals news, media reports indicate President Donald Trump could up the ante regarding a previously announced $200 billion tariff proposal, ArcelorMittal announced strong second-quarter financial numbers and Mexican officials are optimistic about reaching a deal on a renegotiated North American Free Trade Agreement (NAFTA).

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Raising the Stakes

According to media reports, President Trump plans to bump up the tariff rate on a previously proposed list of $200 billion in Chinese imports targeted by the administration from 10% to 25%.

The change has yet to be formally announced, but would further fan the flames of a burgeoning trade conflict between the U.S. and China.

The news comes as $34 billion in tariffs on Chinese imports already went into effect last month, while an additional $16 billion in tariffs remain under review.

ArcelorMittal Has Strong Q2

ArcelorMittal posted strong financial numbers for the second quarter, boasting net income of $1.9 billion, up 56.4% from 1Q 2018. The steelmaker’s 1H 2018 net income hit $3.1 billion, up 31.5% year-over-year.

Earnings before depreciation, interest, taxes, depreciation and amortization (EBITDA) hit $3.1 billion in Q2, a 22.3% increase from Q1. First-half EBITDA hit $5.6 billion, marking a 28.6% increase year-over-year.

“This is an encouraging set of results reflecting the structural improvements in both the global steel industry due to supply reform dynamics and within ArcelorMittal as a result of Action 2020,” said Lakshmi N. Mittal, ArcelorMittal chairman and CEO, in a press release. “The significant improvement in our balance sheet and earnings outlook has been recognised by the main credit agencies and the Company has achieved its stated aim of regaining its investment grade credit rating.”

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Optimism on NAFTA

According to a Reuters report, there is optimism vis-a-vis NAFTA, the trilateral trade agreement that has undergone several rounds and approximately a year of talks.

Juan Carlos Baker, Mexico’s deputy economy minister, commented that there is optimism regarding the talks and said that there will “hopefully” be “news coming out of Washington in the next few days.”