Japan

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This morning in metals, the U.S. Census Bureau reported figures for August steel imports, Japanese aluminum consumers are looking to scrap and universities in the U.K. are conducting testing in the hopes of producing “greener” steel.

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U.S. Imports 2.7M Metric Tons of Steel in August

The U.S. Census Bureau reported Wednesday the U.S. imported 2.7 million metric tons of steel in August. The imports came in at a value of $2.5 billion.

The August total compares with the $2.6 billion valuation of July steel imports.

Scrap That

According to an S&P Global Platts report, scrap metal has become more appealing for Japanese consumers of aluminum.

According to the report, declining scrap prices have widened the scrap-primary spread and have pushed consumers toward the former.

Green Steel

Cheap and green steel … what’s not to like?

According to the BBC, universities in the U.K. are conducting testing to produce steel more cheaply and in a greener fashion.

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The BBC reports Swansea and Warwick universities, along with Tata Steel, have secured £7 million in funding to conduct new tests on limited quantities of new steel types.

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This morning in metals news, the U.S. and Mexico reportedly reached a deal on the North American Free Trade Agreement (NAFTA), China’s Baosteel posted a surge in first-half profits and Japan’s steel output dropped unexpectedly in July.

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NAFTA Deal

According to media reports, the U.S. and Mexico have reached a preliminary deal on NAFTA, the 24-year-old trilateral trade deal (as Canada has been on the sidelines of the recent talks).

According to Bloomberg, an announcement on the matter is expected later today, with the two countries expected to announce a bilateral agreement.

President Trump tweeted this morning: “A big deal looking good with Mexico!”

MetalMiner’s Take: “A newly negotiated NAFTA agreement that would substitute quotas for tariffs will not necessarily have a dramatic impact on either domestic steel prices or lead to dramatic steel price declines, for a host of reasons. Metal-buying organizations should expect the new NAFTA agreement to contain tougher rules on country of origin, meaning Chinese materials will need to undergo substantial value-add in Mexico before arriving to the U.S. to come in under NAFTA duty rates. If Mexico and the U.S. come to a revised NAFTA agreement as expected, buying organizations should plan on Trump staying tough on trade, as he will use the NAFTA example to support his approach.”

Baosteel Profits Surge

Chinese steelmaker Baosteel’s first-half profits jumped 62.2%, according to Reuters.
The steelmaker posted net income of $1.46 billion in the first half, buoyed by strong steel prices, according to the report.

Japan’s Crude Steel Output Drop

Japan’s crude steel output dropped unexpectedly in July, according to an S&P Global Platts report.

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According to data released by the Japan Iron and Steel Federation, output in July dropped 2% year on year and 3.8% from June.

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This morning in metals news, President Trump claimed his tariffs are saving the U.S. steel industry, steel supplies from Japan and South Korea to India have increased, and Turkey hits back with new tariffs in response to the U.S.’s doubling of the steel and aluminum tariffs.

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Saving Steel

In an interview with the Wall Street Journal, Trump argued that his tariff on steel is saving the U.S. steel industry.

He also argued that in the future U.S. steelmakers will face mostly domestic competition as a result of the tariffs.

Indian Steel Import Levels from Japan, South Korea Surge

According to a Reuters report, levels of steel heading from Japan and South Korea to India have increased significantly as a result of tariffs.

Per the report, citing government data, during the April-June period imports from South Korea were up 31%, while imports from Japan jumped 30%.

Turkey Hits Back

The recent tension between the U.S. and Turkey continued to rise Wednesday, as Turkey announced tariffs it would apply to U.S. goods.

The announcement comes after President Trump announced the U.S. would double the tariff rates on steel and aluminum for Turkey, bringing them to 50% and 20%, respectively.

Turkey announced tariffs on American automobiles, alcohol and tobacco.

The U.S. has lobbied for the release of detained American pastor Andrew Brunson, while Turkey has continued to ask for the extradition of exiled religious leader Fethullah Gulen, whom the government claims was behind the failed 2016 coup.

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The crisis has seen the value of the Turkish lira plummet in the plummet, hitting a record low against the dollar earlier this week before beginning to recover on Tuesday and Wednesday.

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This morning in metals news, a Chinese company that makes aluminum foil is suing the U.S. over anti-dumping and countervailing duties imposed on the product, Japan is concerned about a rise in Chinese steel exports and President Trump throws another supporting tweet behind his tariffs.

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Chinese Company Strikes Back at Anti-Dumping, Countervailing Duties

The subsidiary of Chinese company Shantou Wanshun Package Material Stock Co is suing the U.S. over anti-dumping and countervailing subsidy duties imposed on aluminum foil, Reuters reported.

The subsidiary, Jiangsu Zhongji Lamination Materials, was subjected to a countervailing duty of 17.14% and an anti-dumping duty of 37.99% earlier this year, according to the report.

Eyes on Chinese Steel Exports

Japan’s Iron and Steel Federation is keeping tabs on Chinese steel exports levels, particularly as U.S.-China trade relations deteriorate and, thus, could have a significant impact on the Chinese economy and steel demand within China.

“Our biggest worry is a scenario that the U.S.-China trade wars would dent China’s local demand, leading to a surge in China’s steel export,” said Koji Kakigi, the federation’s chairman, as quoted by Reuters.

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Trump Praises Tariff Tool

As the Office of the United States Trade Representative kicked off public hearings on proposed Section 301 tariffs worth $16 billion, President Trump again affirmed his stance on the trade tool, tweeting “Tariffs are the greatest!” on Tuesday morning.

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This morning in metals news, Japan is considering retaliation over the U.S.’s Section 232 metals tariffs, copper gains slowed in the face of a strengthening U.S. dollar, and South Korea initiated a complaint at the World Trade Organization (WTO) over the U.S. duties on solar cells and washing machines.

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Section 232 Retaliation

Several U.S. trading partners have negotiated long-term exemptions from its Section 232 tariffs. A notable name not on that list yet? Japan.

As such, the Wall Street Journal reported that Japan is considering retaliatory measures.

Copper Rise Slows

LME copper’s rise slowed Thursday as the U.S. dollar rose to a five-month high against the euro, Reuters reported.

South Korea Goes to WTO Over U.S. Duties on Washing Machines, Solar Cells

South Korea has initiated a WTO complaint against the U.S. with respect to the latter’s duties on South Korean washing machines and solar cells.

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“Korea has requested WTO dispute consultations with the United States regarding US safeguard duties imposed on imports of large residential washers and crystalline silicon photovoltaic products,” a notice on the WTO website states. “The requests were circulated to WTO members on 16 May.”

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This morning in metals news, the parent company of Japan’s second-largest steelmaker said the U.S. steel tariff on steel had yet to impact its exports, Novelis breaks ground on a new automotive aluminum facility in Kentucky and a NAFTA deal is unlikely to happen by the May 17 deadline put forth by U.S. House Speaker Paul Ryan, according to the Mexican economy minister.

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JFE President: U.S. Tariff Hasn’t Impacted Firm’s Steel Exports

According to Eiji Hayashida, president of JFE Holdings Inc. (the parent company of Japan’s second-biggest steelmaker), the U.S. tariff on steel has yet to impact its exports, but that U.S. trade policy in general poses the biggest risk to the Japanese economy, Reuters reported.

Hayashida said the biggest threat to Japan’s economy is “Trump risk,” according to the report.

Breaking Ground

Novelis broke ground on a new $300 million automotive aluminum facility in Kentucky, Business Facilities reported.

The facility is scheduled to open in 2020, according to a Novelis release, and will boast an annual nameplate capacity of 200,000 metric tons.

NAFTA Deal This Week? Unlikely, Says Mexican Economy Minister

Earlier this month, U.S. Trade Representative Robert Lighthizer said he wanted to see a deal on the North American Free Trade Agreement (NAFTA) this month, with House Speaker Paul Ryan setting a May 17 deadline for a deal in order for it to be approved by the current Congress.

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According to Mexican Economy Minister Ildefonso Guajardo on Tuesday, however, a deal is unlikely to happen this week, but that it could happen this year, Reuters reported.

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This morning in metal news, Chinese iron ore futures rebound from a 10-month low, Saudi Arabia emerges as OPEC’s leading supporter for further reducing oil supply, and researchers discover a major supply of rare earth minerals in the seabed near a remote Japanese island.

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Chinese Iron Ore Rebounds from 10-Month Low

After dropping to a 10-month low on Tuesday, Chinese iron ore has rebounded somewhat, Reuters reported.

The price of iron ore had dropped nearly 15% this year as a result of oversupply, with stocks totaling 161 million tons. As the Wall Street Journal’s Rhiannon Hoyle wrote, “there’s enough iron ore sitting at Chinese ports right now to produce more than 100 million automobiles, in theory.” However, experts say that most of the iron ore is likely of low-quality.

A $100/Barrel Oil Price

Saudi Arabia wants to see the price of crude to rise to $80 to $100 per barrel. Reuters reported that these were the figures discussed by senior Saudi officials in recent closed meetings.

In January 2017, OPEC, Russia and other producers had agreed to reduce supply, a pact that extends until December 2018. Although the original goal of the pact is in sight, with oil prices currently at $73 a barrel, Saudi Arabia is emerging as the OPEC’s leading supporter for further supply cuts.

Off the Coast of Japan, a Rare Earths Find

A team of Japanese researchers recently discovered a treasure trove of rare earth minerals in the Pacific Ocean seabed near Minamitori Island, a small Japanese island about 1,150 miles from Tokyo, CNN reported. Read more

This morning in metals news, the U.S.-China trade conflict escalated further on Thursday, ABB’s chief executive hopes some relief might be offered by the U.S. vis-a-vis Chinese steel import tariffs and Japan’s second-quarter steel outlook reflect a year-over-year increase in production but includes uncertainty about the ultimate impact of the U.S.’s Section 232 tariffs.

Trump Raises the Stakes

The U.S. and China have traded announcements of tariffs intended to be placed on the other country’s goods, with the figures rising to $50 billion.

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On Thursday, that number grew significantly when President Trump requested his trade officials to identify $100 billion more in possible tariffs on Chinese goods.

Swiss Group ABB Hopes U.S. Pulls Back on Chinese Steel Tariffs

Reuters reported the chief executive of Swiss engineering group ABB is hoping that the U.S. makes some concessions with respect to its Section 232 steel tariffs, particularly with respect to China.

According to the report, China and the U.S. are ABB’s two biggest markets.

Japan’s 2Q Steel Output Projected to Increase Nearly 1%

According to a report from Japan’s Ministry of Economy, Trade and Industry (METI), Japan’s steel output in the second quarter is expected to increase 0.9% year over year.

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While several U.S. allies have thus far received exemptions from the Section 232 tariffs, Japan has not been been among those. President Trump and Japanese Prime Minister Shinzo Abe are scheduled to meet this month, during which Abe is expected to make the case for exemption from the tariffs.

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This morning in metals news, Japan is opting for a “low-key” approach in its efforts to win Section 232 tariff exemptions, Ukraine’s steel production dropped 3% in the first quarter and Turkey sent a letter to the U.S. lobbying for tariff exemptions of its own.

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Japan Confident in Section 232 Response

In a time of escalating trade tensions and threats of retaliatory efforts, Japan’s approach to responding to the U.S.’s Section 232 aluminum and steel tariffs is notable.

The Financial Times reported that Japan’s approach is an indicator of the country’s confidence in its ability to secure product-by-product exemptions. So far, Canada, Mexico, the E.U., Argentina, Brazil, Australia and South Korea have secured exemptions (whether temporary or permanent).

Ukraine Steel Production Falls 3%

Ukraine’s steel output in the first quarter fell 3% year over year, Reuters reported.

According to the Ukrainian steel producers union, poor rail networks and lost production capacity since pro-Russian separatists took over parts of the eastern portion of the country have led to the decline.

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Turkey Lobbies for Tariffs Exemptions

Turkey has sent a letter to U.S. Secretary of Commerce Wilbur Ross outlining its request to receive exemptions from the Section 232 tariffs.

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This morning in metals news, Japan is calling for the U.S. to ditch its recently imposed Section 232 aluminum tariff, U.S. steel exports were up 13% last year and Texas Gov. Greg Abbott announced a $500 million investment from JSW Steel for its facility in Baytown, Texas.

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Japanese Aluminum Industry Calls Out Section 232 Tariff

Japan’s aluminum industry on Thursday called for the U.S. to ditch its recently imposed 10% tariff on aluminum imports, Reuters reported.

According to the report, Japan is concerned that global supplies of aluminum could now be redirected from the U.S. and flood the Asian market.

U.S. Steel Exports Jumped 13% Last Year

The U.S. saw its steel exports rise 13% in 2017, according to a report by the Northwest Indiana Times citing American Iron and Steel Institute (AISI) data.

The U.S. also once again led the way in imports, taking in a world-leading 34.6 million tons of steel last year.

Texas Governor Touts $500M Investment by India’s JSW

India’s JSW Steel is investing $500 million in its Baytown, Texas facility, Texas Gov. Greg Abbott said Thursday.

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“JSW’s motto is ‘Better Everyday,’ and that’s the same approach we take in Texas,” said Abbott, as quoted by Click 2 Houston. “The $500 million investment from JSW Steel to expand its operations in Texas shows what we can achieve when we work to be better every single day. Made in Texas is a powerful label, and I thank JSW for investing in our great state. We look forward to forging an even stronger partnership and continuing economic and job growth in the Lone Star State.”

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