This morning in metals news, China went to the World Trade Organization to file a complaint regarding the U.S.’s $200 billion worth of tariffs announced Monday, Nucor resumes operations in the Carolinas following Hurricane Florence and copper prices rally.

Need buying strategies for steel? Request your two-month free trial of MetalMiner’s Outlook

China Goes to the WTO

Following the U.S.’s announcement Monday of its intention to slap $200 billion worth of tariffs on imports from China as of Sept. 24, China has gone to the World Trade Organization (WTO) to file a complaint, Reuters reported.

The U.S. announced plans to impose a 10% tariff on $200 billion worth of Chinese imports on Monday.

Nucor Operations Restart in North Carolina, South Carolina

After halting its operations in the Carolinas last week ahead of Hurricane Florence, Nucor’s plants in the two states are back up and running, S&P Global Platts reported.

Copper Prices Rise

Despite an escalation in trade tensions between the U.S. and China, the price of copper rallied Tuesday, Reuters reported.

Want to a see Cold Rolled price forecast? Get two monthly reports for free!

LME copper jumped 1.4% Tuesday, according to the report.

Dmitry/Adobe Stock

The Trump administration announced after markets closed Monday that it would go through with the imposition of a 10% tariff on $200 billion worth of Chinese goods.

Need buying strategies for steel? Request your two-month free trial of MetalMiner’s Outlook

The tariffs — stemming from the United States Trade Representative’s (USTR) Section 301 investigation of Chinese trade practices — will go into effect Monday, Sept. 24, and will escalate to 25% as of Jan. 1, 2019.

Taking into account the $50 billion in tariffs that have already gone into effect, the additional $200 billion means about half of the value of Chinese exports to the U.S. is now subject to tariffs (in 2017, the value of U.S. imports of Chinese goods hit just over $505 billion).

However, the tariffs don’t stop there — the U.S. will add $267 billion in tariffs if China responds with retaliatory tariffs, according to a statement from the White House.

“For months, we have urged China to change these unfair practices, and give fair and reciprocal treatment to American companies,” the White House statement read. “We have been very clear about the type of changes that need to be made, and we have given China every opportunity to treat us more fairly. But, so far, China has been unwilling to change its practices.

“To counter China’s unfair practices, on June 15, I announced that the United States would impose tariffs of 25 percent on $50 billion worth of Chinese imports. China, however, still refuses to change its practices – and indeed recently imposed new tariffs in an effort to hurt the United States economy.”

According to a USTR release, the finalized list of products in this $200 billion tranche of tariffs includes 5,745 full or partial lines out of the originally proposed 6,031 tariff lines.

“Included among the products removed from the proposed list are certain consumer electronics products such as smart watches and Bluetooth devices; certain chemical inputs for manufactured goods, textiles and agriculture; certain health and safety products such as bicycle helmets, and child safety furniture such as car seats and playpens,” the USTR release states.

U.S. Rep. Kevin Brady (R-TX), chairman of the House Ways and Means Committee, in a statement expressed support for measures aimed at addressing alleged unfair trade practices by China, but offered a cautionary note vis-a-vis the impact of tariffs.

“Any time tariffs are imposed I worry that Americans will be forced to pay extra costs – in this case on nearly half of U.S. imports from China,” Brady said. “I continue to emphasize that the ultimate means to create an effective outcome is for President Trump and President Xi to engage constructively to develop a long-term and profound solution that levels the playing field for American manufacturers, farmers, and workers.

“Until China comes to the table, one way to relieve pressure on Americans is establish an effective and timely process to allow products to be excluded from these additional tariffs if tariffs would make it harder for us to sell more ‘Made in America’ products globally.”

Thomas J. Donohue, president and CEO of the U.S. Chamber of Commerce, disapproved of the decision.

“The U.S. economy runs on pro-growth policies, but that’s not what tariffs on $200 billion worth of Chinese goods deliver,” he said in a statement. “The administration has serious issues to resolve with China on market access, unfair subsidies, technology theft, and cybersecurity. But there are less harmful ways to truly achieve free and fair trade with China.

“Today’s decision makes clear that the administration did not heed the numerous warnings from American consumers and businesses about rising costs and lost jobs on Main Street, in factories, and on farms and ranches across the country. Both countries should stay at the negotiating table, and the U.S. should continue working with its allies to seek alternative solutions.”

On the other hand, Alliance for American Manufacturing President Scott Paul supported the move to put additional pressure on China.

For more efficient carbon steel buying strategies, take a free trial of MetalMiner’s Monthly Outlook!

“Strong trade enforcement against China’s persistent violations of trade laws, including the theft of American trade secrets, is long overdue,” Paul said. “These tariffs should compel China to finally address unfair trade practices. America has the leverage in this economic relationship, and it’s about time we use it to defend our workers and businesses who can compete with anyone on a truly level playing field.”

The full list of Chinese products included within the latest round of tariffs can be found here.

Dmitry/Adobe Stock

This morning in metals news, President Donald Trump again expressed support for imposing tariffs on imports (as the U.S. considers further tariffs on Chinese goods), shares of the Chinese aluminum giant China Hongqiao fell, and base metals prices are down on the prospect of escalating tariffs between China and the U.S.

Need buying strategies for steel? Request your two-month free trial of MetalMiner’s Outlook

Tweeting for Tariffs

On Monday morning, President Trump expressed support yet again for his administration’s strategy of tariffs:

Tariffs have put the U.S. in a very strong bargaining position, with Billions of Dollars, and Jobs, flowing into our Country – and yet cost increases have thus far been almost unnoticeable. If countries will not make fair deals with us, they will be “Tariffed!”

He also made direct reference to the steel industry:

Our Steel Industry is the talk of the World. It has been given new life, and is thriving. Billions of Dollars is being spent on new plants all around the country!

The U.S. has already slapped a total of $50 billion worth of tariffs on Chinese goods, and, according to The New York Times, the president is expected to announce an additional $200 billion in tariffs on Chinese goods this week, which would mark a significant escalation in tensions between the two countries.

China Hongqiao Shares Fall

Shares in Chinese aluminum maker China Hongqiao dropped on the news of new fees announced by Shandong province, Reuters reported.

Shares fell by as much as 8.5% Monday after falling nearly 16% Friday, according to the report.

Base Metals Prices Drop

Speaking of trade tensions, said tensions have had a depressive effect on base metals prices, according to Reuters.

For more efficient carbon steel buying strategies, take a free trial of MetalMiner’s Monthly Outlook!

Base metals prices fell across the board Monday in anticipation of an expected announcement this week from the U.S. regarding an additional $200 billion in tariffs on Chinese goods.

The markets appear strangely relaxed about the growing economic and political standoff between the U.S. and China.

Maybe because it has been a slow burn over the last six months or maybe because no one quite believes either side would be stupid enough to allow a full-blown trade war to develop, but markets are generally quite sanguine … so far.

Buying Aluminum in 2018? Download MetalMiner’s free annual price outlook

Yes, the Chinese stock market is down. In addition, commodity prices are depressed relative to where we would have expected them to be back in Q1, when global growth was strong and there appeared little to deflect both mature and emerging markets from enjoying another couple of years of robust growth.

Gideon Rackman, writing in the Financial Times, argues that we are being far too relaxed about this, that for a number of reasons the prospect of these initial $50 billion of tariffs escalating to $200 billion — or worse — is real and the consequences should worry us.

For a number of reasons, neither side is likely to back down.

Read more

Tomasz Zajda/Adobe Stock

This morning in metals news, Nucor announced plans late last week to invest $650 million in its Kentucky sheet mill, ArcelorMittal put in a revised bid for Essar Steel and China warns it will retaliate if the U.S. imposes further tariffs.

Need buying strategies for steel? Try two free months of MetalMiner’s Outlook

A Big Investment

The Nucor Corporation announced Friday that it planned to invest $650 million in to expand the production capability of Nucor Steel Gallatin, its flat-rolled sheet steel mill in Ghent, Kentucky.

“This investment is another major component of our planned strategy for long-term profitable growth,” said John Ferriola, chairman, CEO and president of Nucor. “Together with the new galvanizing line, this expansion increases our presence in the important Midwest market, specifically in the automotive, agriculture, heavy equipment, and energy pipe and tube sectors.”

According to the release, Nucor acquired the former Gallatin Steel Company in late 2014 for approximately $780 million.

ArcelorMittal Revises Essar Bid

ArcelorMittal submitted a higher bid for the bankrupted Essar Steel, the Economic Times reported.

According to the report, the new bid is higher than the bid submitted by another suitor, Numetal.

China Warns of Tariff Retaliation

As the U.S. mulls whether to impose tariffs on Chinese goods worth approximately $200 billion, China warned it would retaliate against additional tariffs, ABC News reported.

MetalMiner’s Annual Outlook provides 2018 buying strategies for carbon steel

In addition, President Donald Trump indicated Friday he was considering tariffs on an additional $267 billion worth of goods (in addition to the aforementioned $200 billion currently under review).

gui yong nian/Adobe Stock

This morning in metals news, Argentina sets exports tariffs, LME copper drops and China’s biggest aluminum-producing city is getting set to roll out high-end aluminum projects.

Need buying strategies for steel? Try two free months of MetalMiner’s Outlook

Argentina Slaps Exports with Tariffs

Argentina added export tariffs to all products, including steel, according to S&P Global Platts.

According to the report, the country’s steel exports to the U.S. in the year to date are down 11.9%.

Copper Falls

LME copper reached a nearly two-week low Tuesday, Reuters reported.

However, the metal stabilized, ultimately trading flat on Tuesday, according to the report, while SHFE copper fell 0.4%.

High-End Aluminum

The Chinese city of Binzhou, home to aluminum major China Hongqiao Group, is planning projects to encourage growth in high-end aluminum production, according to a Reuters report citing a local government document.

MetalMiner’s Annual Outlook provides 2018 buying strategies for carbon steel

One of the projects includes an aluminum alloy plant of 10,000 tons per year, according to the report.

Argus/Adobe Stock

Just last year, the U.S. Department of Commerce kicked off an investigation of imports of aluminum foil from China; in February, it issued a final affirmative determination in its anti-dumping and countervailing duty cases.

Buying Aluminum in 2018? Download MetalMiner’s free annual price outlook

Last week, Mexico announced it was going in a similar direction.

The Mexican government launched an anti-dumping investigation of imports of aluminum foil from China. Mexican firm Almexa Aluminio was the petitioner in the case, according to the government release.

The products referred to in the company’s petition are “aluminum foil coils for domestic and/or industrial use with a thickness equal to or less than 0.080 millimeters (mm), without support, simply laminated, with an external diameter equal to or greater than 100 mm and weighing more than 5 kg,” according to the release.

The Aluminum Association, a U.S. industry group, expressed support for the Mexican government’s decision.

“The Aluminum Association is pleased by the Government of Mexico’s decision to launch an antidumping investigation on imports of certain Chinese aluminum foil,” said Heidi Brock, president and CEO of the Aluminum Association. “The North American aluminum market is highly integrated, and it is vital the region work together to combat unfair trade practices and enforce rules-based trade. The U.S. aluminum industry has already seen real results from targeted and durable trade enforcement actions, and we are glad to see trading partners like Mexico demonstrate their commitment to rigorous and timely enforcement of global trade rules.”

MetalMiner’s Annual Outlook provides 2018 buying strategies for carbon steel

Per the Mexican government release, “non-market economy conditions prevail in China” for some several reasons, including:

  • the artificial reduction of prices
  • the role of “industrial associations as tools of the state”
  • and the “control and state direction of foreign direct investment abroad and the direction and control of the State in the entry of investment and property”

In a world of increasing trade tensions, sometimes involved parties just want to talk.

Need buying strategies for steel? Try two free months of MetalMiner’s Outlook

Such was the case last week, as China initiated a World Trade Organization (WTO) dispute complaint seeking consultations with the U.S. over the $16 billion in tariffs that went into effect Aug. 23.

The U.S. announced an initial $50 billion in tariffs earlier this year, which went into effect in two tranches. First, $34 billion in tariffs on imports from China began July 6. Following a review period, the remaining $16 billion went into effect last month.

According to China’s request for consultations, the U.S. measures — which were pursuant to Section 301 of the Trade Act of 1974 — are inconsistent with some provisions of the WTO’s General Agreement on Tariffs and Trade (GATT) 1994.

The measures go against Article I.1, China argues, because they “fail to extend immediately and unconditionally to the products originating in China an ‘advantage, favour, privilege or immunity’ granted by the United States ‘[w]ith respect to customs duties and charges of any kind imposed on or in connection with’ the importation of products originating in the territories of other Members.”

China’s request was circulated to WTO members Aug. 27.

In response to both U.S. tariff tranches, China has responded in kind with a total of $50 billion in tariffs on U.S. goods. That included a retaliatory $16 billion in tariffs, a 25% rate on 333 U.S. products that included motorcycles and passenger cars.

As for the WTO itself, it is an organization that has come in for criticism on numerous occasions from President Donald Trump. In March, during the announcement kickstarting the process that produced the aforementioned tariffs on China, Trump said the WTO has been very “unfair” to the U.S.

Meanwhile, in an interview with Bloomberg News last week, Trump threatened to pull the U.S. out of the global trading body and called the decision to form it “the single worst trade deal ever made,” harkening to his comments throughout the past year on the 24-year-old North American Free Trade Agreement (NAFTA).

“If they don’t shape up, I would withdraw from the WTO,” Trump said.

Bluster or not, a U.S. withdrawal would have a significant impact on the trading body.

Similarly, according to a number of media reports, the president last week indicated he wanted to move forward with the previously announced additional $200 billion in tariffs on Chinese goods.

MetalMiner’s Annual Outlook provides 2018 buying strategies for carbon steel

With respect to what has already gone into effect, $50 billion is positively minuscule in comparison. Like the WTO threat, it remains to be seen if the U.S. will be riding this particular $200 billion tariff train.

The proposed list of products that could be slapped with tariffs as part of the $200 billion grouping can be found here.

gui yong nian/Adobe Stock

This morning in metals news, some steel stocks fell on the heels of President Trump’s proclamation on targeted tariff relief for quota countries, China looks to speak with its domestic aluminum foil makers as Mexico recently launched an anti-dumping probe and European Commission President Jean-Claude Juncker responds on the subject of automotive tariffs.

Need buying strategies for steel? Try two free months of MetalMiner’s Outlook

Tough Thursday

U.S. steel stocks struggled yesterday on the heels of Trump’s proclamation affording “targeted relief” to three countries currently with steel quotas.

Companies in South Korea, Argentina and Brazil can apply for steel tariff exclusion requests, per the proclamation.

According to Markets Insider, U.S. Steel dropped 6%, AK Steel fell 4% and Steel Dynamics dropped 2%.

Beijing to Meet with Foil Makers

On the heels of Mexico’s announcement that it had launched an anti-dumping probe of aluminum foil imports from China, the Chinese government plans to meet with foil producers early next week, according to Reuters.

Back and Forth

The U.S. and E.U. remain at odds over automotive tariffs; the disparity in automotive tariff rates is a subject Trump has harped upon on numerous occasions.

Per a CNBC report, European Commission President Jean-Claude Juncker said the 28-member bloc would increase its automotive tariffs if Trump reneges on a previous reached agreement to not increase auto tariffs.

MetalMiner’s Annual Outlook provides 2018 buying strategies for carbon steel

MetalMiner’s Take: Not for the first time there appears to be contrarian positions, even within the European Commission.

Hours after European Trade Commissioner Cecilia Malmstrom offered to cut auto tariffs to zero if the US would do the same (see our post earlier this morning), cantankerous European Commission President Jean-Claude Juncker was issuing threats to reciprocate with higher auto tariffs if the U.S. went ahead with threats made last month to raise tariffs on E.U. cars coming into the U.S.

In practice, neither side should panic; the threat of tariffs on E.U. cars is a powerful bargaining tool the U.S. appears willing to use. But in reality a zero or tariff-free deal would be a major achievement for President Trump and could lay the groundwork for similar bilateral deals with Europe for other industries.

The Department of Commerce handed down an affirmative preliminary determination in its countervailing duty investigation of steel wheel imports from China.

In the preliminary determination, the Department of Commerce said the imports benefited from countervailable subsidies ranging from 58.75% to 172.51%.

Need buying strategies for steel? Try two free months of MetalMiner’s Outlook

Imports of steel wheels from China in 2017 were valued at $388 million, according to the department.

The petitioners in the case were Accuride Corporation (of Evansville, Indiana) and Maxion Wheels Akron LLC (Akron, Ohio).

The Department of Commerce is scheduled to make a final determination in the case by Jan. 9, 2019. If it rules in the affirmative again, the case would move to the U.S. International Trade Commission, which would then make a determination by Feb. 21, 2019.

According to the department’s fact sheet for the investigation, it assigned:

    • A preliminary subsidy rate of 58.75% for mandatory respondent Xiamen Sunrise Wheel Group Co., Ltd.
    • A preliminary subsidy rate of 172.51% for mandatory respondent Zhejiang Jingu Company Limited and Shanghai Yata Industry Company Limited “based on total adverse facts” available
    • A preliminary subsidy rate for all other Chinese producers and exporters of 58.75%

MetalMiner’s Annual Outlook provides 2018 buying strategies for carbon steel

The scope of the products covered by the investigation includes “certain on-the-road steel wheels, discs, and rims for tubeless tires, with a nominal rim diameter of 22.5 inches and 24.5 inches, regardless of width.”