Japan

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After a required five-year review, existing antidumping duty orders on carbon and alloy seamless standard, line, and pressure pipe (CASSLP) from Japan and Romania were kept in place after a vote Tuesday by the U.S. International Trade Commission (USITC).

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According to the Uruguay Round Agreements Act, the Department of Commerce must revoke an antidumping or countervailing duty order, or terminate a suspension agreement, after five years unless the Department of Commerce and the USITC determine that “revoking the order or terminating the suspension agreement would be likely to lead to continuation or recurrence of dumping or subsidies and of material injury USITC within a reasonably foreseeable time.”

According to a USITC release, Chairman Rhonda K. Schmidtlein, Vice Chairman David S. Johanson, and Commissioner Irving A. Williamson voted in the affirmative. Commissioner Meredith M. Broadbent voted in the affirmative with respect to Japan and in the negative with respect to Romania.

The five-year sunset reviews in the case — Carbon and Alloy Seamless Standard, Line, and Pressure Pipe from Japan and Romania — were instituted Sept. 1, 2016.

The determination came on a third review of the orders. The second review of the orders led to a continuation of them as of Oct. 11, 2o11, for both Japanese and Romanian imports of the products.

According to the USITC’s posted notice explaining its determination to conduct full reviews for CASSLP imports from each country, it noted that it received a joint response filed on behalf of Vallourec Star, LP and U.S. Steel, domestic producers of CASSLP.

“Because these producers accounted for a substantial majority of domestic production of CASSLP pipe in 2015, the Commission determined that the domestic interested party group response was adequate,” the explanation noted.

Although the Commission did not receive a response from any interested parties in Japan, it received a joint response filed by S.C. Silcotub S.A., a Romanian producer of CASSLP pipe, and Tenaris Global Services (U.S.A.) Corporation, an affiliated U.S. importer of subject merchandise from Romania, the explanatory document said.

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The Commission’s public report containing information on the reviews will be available by Oct. 31 and can be accessed, once available, at http://pubapps.usitc.gov/applications/publogs/qry_publication_loglist.asp.

In another five-year sunset review, the Commission voted Sept. 14 to keep in place existing antidumping duty orders on steel nails from the United Arab Emirates.

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The U.S. Department of Commerce has been busy this year.

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The department added another investigation to its agenda, announcing late last week that it had launched antidumping and countervailing duty investigations into titanium sponge imports from Japan and Kazakhstan.

“The Department of Commerce intends to act swiftly to halt any unfair trade practices and will render our decisions at the earliest opportunity, while also assuring a full and fair assessment of the facts,” Secretary of Commerce Wilbur Ross said in a release. “The U.S. market is the most open in the world, but we must take action to ensure U.S. businesses and workers are treated fairly.”

The new investigation marked the 65th new antidumping or countervailing duty probe of the year by the Department of Commerce. Through Sept. 14, the number of new investigations has increased by 45% compared with the same time frame last year, according to the Department of Commerce release.

The case comes on the heels of petitions filed by Titanium Metals Corporation (TIMET) on Aug. 24.

The investigations will seek to determine whether titanium sponge from Japan and Kazakhstan is being sold at less than fair value, as well as if the imports from Kazakhstan are receiving countervailable government subsidies.

Imports of titanium sponge from Japan and Kazakhstan were valued at an estimated $144.8 million and $374,000, respectively, according to the Department of Commerce.

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The U.S. International Trade Commission (ITC) will make a preliminary determination in the cases on or before Oct. 10. Assuming the ITC determines there is a reasonable indication that imports of the product threaten the domestic industry, the Department of Commerce will then issue a preliminary determination in the countervailing duty case by Nov. 17, 2017, and the antidumping cases by Jan. 31, 2018.

TIMET, based in Exton, Pennsylvania, supplies nearly a fifth of the world’s titanium, and has production facilities in both the U.S. and Europe, according to its website.

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This morning in metals news, August has been a record month for aluminum trading in China, Japanese steelmakers’ shares are down and Chinese steel showed signs of recovery Thursday.

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Big Month for Aluminum Trading in China

According to Bloomberg, even with time to spare August has already been the heaviest month of aluminum trading ever in China.

China has undergone a series of supply-side reforms aimed at reducing oversupply, reducing pollution and alleviating pressure from abroad (particularly the U.S., which has pending Section 232 steel and aluminum investigations).

The Bloomberg report notes China is “shutting down unlicensed aluminum production capacity estimated by Citigroup Inc. to be about 4 million metric tons a year.”

Japan Steel Shares Down

Meanwhile, shares for Japanese steelmakers are down, according to a Reuters report.

The shares backtracked because the country’s biggest producer of steel, Nippon Steel, agreed on price cuts for the six months through September with Toyota Motor.

Chinese Steel Futures Looking Bright

According to a Reuters report, Chinese steel futures bounced back Thursday based on domestic demand spurring positive investor sentiment.

A dip in the temperature is expected to yield more construction and, thus, greater steel demand, the report says.

Rebar futures have surged this year by 50%, according to Reuters.

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This morning in metals news, the chairman of the Japan Iron and Steel Federation warns that U.S. tariffs on its steel imports could lead to retaliation, copper hit its five-month high and aluminum producer Norsk Hydro expects 2017 to present a balanced aluminum market.

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Section 232 Tariffs, If Instituted, Could Lead to Blowback

The world continues to wait for the Trump administration’s announcement regarding the conclusion of its Section 232 investigation into steel imports. Most, however, predict that tariffs will be the remedy President Donald Trump chooses, a course of action which EU Trade Commissioner Cecilia Malmstrom in recent weeks said would lead to retaliatory measures from the EU.

Japan has also joined the fray in warning of retaliation if tariffs are slapped onto steel coming into the U.S.

In a report from Industry Week, Kosei Shindo, chairman of the Japan Iron and Steel Federation, told reporters Monday that other countries could respond with protectionism on products other than steel, opening Pandora’s box.

Copper Riding High

Copper continues its strong run, hitting a five-month high Tuesday, Reuters reported.

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Positive news on the Chinese economy and a weak U.S. dollar contributed to the rise for copper.

Earlier today, our Stuart Burns wrote about copper’s big year to date.

A Balanced Market

Norsk Hydro CEO and President Svein Richard Brandtzaeg said he expects a “largely balanced” global aluminum market this year.

“We see a global primary aluminium deficit in the quarter. This is driven by increasing deficit outside China. For the full year, we are maintaining our 4-6 percent annual aluminium demand growth outlook for 2017 and expect a largely balanced, global aluminium market,” Brandtzæg said in the aluminum producer’s second-quarter results announcement.

Hydro, which earlier this month announced the acquisition of Sapa, reported second-quarter earnings of NOK 2,930 million.

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Anxiety is rising among Europe’s steelmakers that a potential U.S. plan to levy steel tariffs, on national security grounds, could have a disastrous impact on the region’s sales into the market.

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Reuters reported that the European steel association Eurofer is worried that “….measures potentially stemming from the U.S. section 232 investigation may lead to a proliferation of disastrous global trade flow distortions.”

Eurofer is worried on two counts. First, it is worried that with China largely already cut out of the U.S. market by anti-dumping legislation, the axe will fall on imports from other regions, of which Europe is a major supplier. Many European countries are already experiencing steep declines in sales to the U.S. between 2015 and 2016 — in some cases of 50% — but the largest, Germany, remains the fifth-largest external supplier to the U.S. of flat-rolled products, according to International Trade Administration data.

The second worry is that should the investigation support bans or large duties, suppliers in the affected countries will look for alternative mature, high-value markets for their products, namely the EU. This would potentially flood an already overcrowded market with more low-priced material.

Having championed free trade in recent statements, Europe may have to eat its own words if it is forced to find ways to counter such a flood. Reuters reports that moves are already afoot, at the G20 summit in Germany last weekend, leaders from the world’s 20 leading economies set an August deadline for an OECD-led global forum to compile information about steel overcapacity. That also includes a report on potential solutions, due in November, which could result in the region acting of its own.

In reality, Europe may not be the primary target of the president’s 232 action. Supplies from Canada, Brazil, Mexico, South Korea, Japan and Russia dwarf those from Europe, but that will not necessarily stop the region from suffering considerable collateral damage.

The move would come at an unfortunate time for the European steel industry.

After prices rose nearly 50% last year, they have since fallen back some 10% this year, according to Reuters. Demand, however, is recovering with a 1.9% rise forecast for this year, according to Eurofer, suggesting prices could stabilize (although demand growth is expected to ease again next year, with only 1% growth forecast).

EU Strikes Back?

However, The Guardian reports Europe is also looking at retaliatory measures, should they suffer exclusion or tariffs because of the 232 action. The paper quotes the European Commission president, Jean-Claude Juncker, who is reported to have said that if the U.S. took measures against Germany and China’s steel industries, the EU would “react with counter-measures.”

The article says one industry in the Europeans’ crosshairs is Kentucky bourbon, worth $166 million to the state last year and directly employing some 17,500.

Kentucky was staunchly supportive of Trump during his campaign, with 62.5% of the electorate voting for him.

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“I am telling you this in the hope that all of this won’t be necessary,” Juncker said during the G20 summit. “But we are in an elevated battle mood.”

Bellicose talk, indeed.

After a 17-point leap in our Renewables MMI from April to May, the sub-index — which tracks metals and materials going into the renewable energy industry — posted no movement for our June reading, standing at 71.

(A quick note: Last month, the sub-index rose to 71 after a recalibration of our index to better account for cobalt price fluctuations.)

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But that doesn’t mean there were not big swings within the sector — far from it.

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As requested by Japan, the World Trade Organization (WTO) has set up a dispute settlement panel to decide the row over India’s imposition of a safeguard duty on imports of iron and steel products.

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MetalMiner has reported on this case in the past. Japan’s request was made after New Delhi imposed safeguard duties on several iron and steel products, which India claimed violated global trade rules.

India’s finance ministry imposed definitive safeguard duties on imports of hot-rolled flat products of non-alloy steel in coils to counter a surge in imports from several countries, including Japan. India’s stand has been that such cheap imports “caused injury to domestic steel industries.”

As both the nations failed to arrive at a solution, Japan petitioned the WTO for the formation of a dispute resolution panel.

Soon after the WTO announcement, though, India objected to Japan’s WTO request for a “prompt’’ resolution of its dispute against India’s duties on steel imports.

India’s contention is that there’s “no rationale” for treating the dispute any more urgently than other WTO disputes it’s involved in and the same standard should be applied to all disputes.

In December, Japan dragged India to the WTO against measures taken on imports of iron and steel products. Incidentally, Japan is the second-largest steel producer in the world.

The dispute assumes some amount of significance as both India and Japan signed a comprehensive free trade agreement, meant to avoid this type of arbitration, in 2011.

This was Japan’s second attempt to ask the WTO to set up a panel after the first was blocked by India in March. India expressed disappointment over Japan’s insistence on the WTO panel despite its “sincere efforts” to resolve the matter in a bilateral manner.

It normally takes about 20 months to settle a dispute at the WTO, but according to WTO rules, in cases of urgency, the parties to the dispute, panels and the Appellate Body make every effort to accelerate the proceedings.

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The Japanese government reportedly estimated that the tariffs could cost Japanese steel companies about $220 million through March 2018.

The safeguard duties imposed by India also gave rise to complaints from other WTO members.

The Department of Commerce today announced its affirmative final determinations that steel producers in Austria, Belgium, France, Germany, Italy, Japan, the Republic of Korea (South Korea), and Taiwan are dumping imports of carbon and alloy steel plate in the U.S.

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Margins in the dumping investigations ranged from 3.62% to 148.02%, and were, in certain instances, based on adverse findings against non-cooperative responding parties. Commerce also determined that critical circumstances exist in three investigations, allowing for collection of duties for a retroactive period of 90 days before the preliminary determination, spanning back to August 16. Commerce also found that South Korea is providing unfair subsidies to its producers of steel plate at a countervailable duty rate of 4.31%. As a result of these final affirmative determinations, Commerce will instruct Customs and Border Protection to collect cash deposits based on these final rates. Read more

In the ongoing dispute between Japan and India over cheap steel imports, Japan has requested that the World Trade Organization set up a panel to resolve the dispute.

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Early indications are that the move will be opposed by India. Japan’s request comes after New Delhi imposed safeguard duties on several iron and steel products, which India claimed violated global trade rules.

India’s finance ministry imposed definitive safeguard duties on imports of hot-rolled flat products of non-alloy steel in coils to counter a surge in imports from several countries, including Japan. India’s stand has been that such cheap imports “caused injury to domestic steel industries.”

New Delhi would have taken recourse to the safeguard measures on grounds that the import surge in hot-rolled flat products is the result of unforeseen developments. India levied 20% safeguard duties ad valorem minus anti-dumping duties on Japanese imports of hot-rolled flat products between September 2015 and September 2016; 18% between September 2016 and March 2017; 15% between March 2017 and to expire by September 2017; and 10% for a future period in September 2017 and March 2018.

As reported by MetalMiner, despite the excellent trade relations between the two nations, Japan is unhappy with India’s decisions to place a minimum import price and other assorted duties to protect its domestic steel industry. Japan claims this has halved its steel exports to India in the last year.

Japan requested the panel came after India’s failure to provide “convincing reasons” for its safeguard and anti-dumping actions. It’s said the request will come up before the dispute settlement body (DSB) meeting today.

According to a report in the Financial Express, India opposes Japan’s move. Quoting experts, the report said since WTO cases can be settled with rulings that were “prospective,” any adverse judgment would not affect India significantly.

In a parallel development, there are reports coming in that India would use make it compulsory for Indian customers to use domestically produced steel, to stop inroads made by steel products from other countries including China.

India may soon mandate the use of local steel in government infrastructure projects worth billions of dollars, pitching it as a WTO-compliant protectionist measure.

Quoting news agency Reuters, the report said the Indian Government expects to move to boost sales of local companies such as JSW Steel and Tata Steel and eventually attract global steelmakers such as ArcelorMittal and POSCO to invest in the country.

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India is the world’s third-largest steel consumer, but its current level of capacity utilization by domestic steel producers is below 80%.

The Chinese government is attempting to support domestic businesses by shoring up rare earths market conditions.

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This includes stepped up enforcement of environmental rules at rare-earth metal plants and crackdowns on illegal mining and smuggling.

Rare-Earths_Chart_December-2016_FNL

Beijing carried out a series of spot inspections on environmental measures at factories last summer. Teams of experts tested wastewater and examined pollution-reduction measures at rare-earths smelting and separation plants. Operations at facilities that did not meet standards were suspended.

Those inspections covered a total of eight provinces and regions, such as Inner Mongolia, Heilongjiang and Jiangsu.

Japan is still wary of Chinese production due to a 2011 unofficial boycott of selling raw rare earths to the islands by Chinese producers. So much so that the Japanese have taken an interest in keeping Australian rare earths miner Lynas Corp. alive and helped it restructure its debts last month.

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The Rare Earths MMI did not move for the sixth consecutive month, showing just how much the market has stabilized since the last China-Japan rare earths dust up.

Correction: A previous version of this post referenced a patent expiration this month for neodymium and cobalt motors. That patent expired in 2011 and was later rejected outright. We regret the error. 

Actual Rare Earths Prices

Chinese neodymium prices increased to $47,351.99 per metric ton this month, up from $47,071.53/mt in November, an increase of .5%. Dysprosium oxide increased to $181.56 per kilogram this month, up from $178.55/kg in November, a increase of 1.7%.

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