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The World Steel Association (worldsteel) 2018 World Steel in Figures report offers a sweeping view of the industry, including historical data on steel production, apparent steel use and more.

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The report, released on Tuesday, is part of what can be seen as a generally positive time for global steel.

“I am hopeful that our positive outlook for steel demand will remain,” said Edwin Basson, director general of worldsteel, in a release. “The Short Range Outlook for the next 18 months suggests 2018 growth of 1.8% followed by 0.7% in 2019. Steel demand is benefitting from the broad and favourable global economic momentum affecting both the developed and developing world at the same time. The worldsteel programmes in the automotive, construction, packaging and rail sectors all aim to maintain the role of steel as a versatile product without which modern society cannot remain sustainable.”

Going back to 1950, the report shows the rise of global crude steel production. In the last 17 years alone, global crude steel production has nearly doubled.

Source: World Steel Association

In Basson’s foreword to the report, he referred obliquely to rising trade tensions around the world.

“To say that the steel industry is experiencing interesting times would be an understatement,” Basson wrote. “However, progress is being made at various levels. At the recent meeting of the Global Forum for Steel Excess Capacity (GFSEC), a G20 initiative, six important principles were agreed by ministers of G20 countries. All are focused around ensuring that a level playing field should exist for steelmakers in all countries and that markets should remain free and fair for steel to be traded between countries.”

According to the report, in 2017 the top crude steel producers were (with tonnage, in millions, in parentheses):

  1. ArcelorMittal (97.03)
  2. China Baowu Group (65.39)
  3. NSSMC Group (47.36)
  4. HBIS Group (45.56)
  5. POSCO (42.19)

By country, China’s share of steel production has jumped significantly from 2007 to 2017, rising from 36.3% to 49.2%. The NAFTA bloc’s share declined from 9.7% to 6.8%. The European Union’s share also dropped, from 15.6% to 10.0%

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The full worldsteel report can be downloaded here.

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After recent meetings, it appeared China and the U.S. had reached somewhat of a truce in the ongoing saga of escalating trade tensions.

That changed this week.

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On Tuesday, the White House released a statement in which it said the U.S. would continue to pursue trade actions against China.

“The United States will impose a 25 percent tariff on $50 billion of goods imported from China containing industrially significant technology, including those related to the ‘Made in China 2025’ program,” the statement said. ” The final list of covered imports will be announced by June 15, 2018.”

The announcement moves the ball forward in the ongoing Section 301 investigation of Chinese trade practices launched last year. In March, President Trump announced that his administration would consider $50 billion in tariffs on Chinese goods (and later threatened an additional $100 billion in tariffs).

Recent talks between U.S. and Chinese trade officials in Beijing and Washington seemed to produce a tenuous truce, but that has apparently fizzled.

Among other actions, the White House said it will also “continue WTO dispute settlement against China originally initiated in March to address China’s discriminatory technology licensing requirements.”

The actions don’t stop there, however.

“The United States will implement specific investment restrictions and enhanced export controls for Chinese persons and entities related to the acquisition of industrially significant technology,” the statement read. “The list of restrictions and controls will be announced by June 30, 2018.”

Scott Paul, president of the Alliance for American Manufacturing, expressed cautious optimism about the announcement.

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“I hope the actions on intellectual property theft mean the mixed signals we’ve seen from the Trump administration on China are coming to an end,” he said in a prepared statement. “Punitive tariffs are always a last resort, but if Beijing is unable or unwilling to stop intellectual property theft and other unfair trade practices that cost American workers jobs and American businesses hundreds of billions of dollars every year, tariffs are the best leverage we have.

“We must vigorously defend our market and interests with every tool available, including tariffs, investment restrictions, and actions at the World Trade Organization.”

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According to a World Steel Association report on Friday, global crude steel production in April was up 4.1% compared with April 2017.

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The 64 countries reporting to the World Steel Association produced 148.3 million tons (MT) in April.

According to the report, China’s crude steel production for April 2018 was 76.7 MT, up 4.8% compared to April 2017. Japan, meanwhile, hit 8.7 MT, down 0.4% from April 2017.

India hit 8.7 MT, up 5.6% compared to April 2017. South Korea’s crude steel production, was also up, by 7.1% to 5.9 MT last month.

Domestically, the U.S. produced 6.9 MT of crude steel in April 2018, up 3.6% from April 2017.

Within the European Union (E.U.), Italy hit 2.1 MT of crude steel, up by 3.7%. France produced 1.4 MT of crude steel, up by 10.7%. Spain produced 1.3 MT of crude steel, up by 7.5%.

Brazil’s production rose 1.9% to 3.0 MT, while Ukraine saw a 6.0% increase up to 1.7 MT.

Production in Turkey was down for the month, dropping 3.1% to 3.0 MT.

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The global crude steel capacity utilization rate was up 2.4 percentage points from April 2017, at 76.9% for April 2018.

Source: World Steel Association

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It was a report in the Hong-Kong-based newspaper, the South China Morning Post that sparked it all off.

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The report claimed that India’s neighbor, China, had started large-scale mining operations in Lhunze county on its side of the “disputed border” with India in the Himalayas.

It said the area was literally a “treasure trove,” having gold, silver and other precious minerals, valued at about U.S. $60 billion according to Chinese state geologists.

On the face of it, at least, the report and the development seems to have caught Indian authorities by surprise.

On its part, China tried to downplay the report, to a degree rubbishing the claims made in the Post report. A report in The Economic Times quoted an editorial in the Global Times tabloid that questioned the news report’s motive, at the same time hoping that India would not be “provoked” by it.

“It is to be hoped that India will not be provoked by this report, lose focus on the big picture of the relationship between Beijing and New Delhi and get off the track of Sino-Indian cooperation,” said the editorial titled “Dodgy report disturbs Sino-Indian ties.”

In fact, the editorial also said to many Chinese people, their first impression was that the report is not credible, given the vague facts in the story.

It’s hardly a secret that the Himalaya region, from India, Tibet and all the way to Afghanistan, has massive reserves of mineral oil, gold and many precious materials. Arunachal Pradesh is said to have vast reserve of mineral oils and even coal reserves. Coal is explored from Namchik-Namphuk mines in Tirap district. In addition, there are huge reserve of dolomite, limestone, graphite, marble, lead, zinc, etc.

Indian newspapers were full of reports talking of a new flashpoint between the two neighboring countries following the South China Morning Post report. India has not yet reacted officially to the news report.

Last year, there was a major standoff between the armies of both countries at the border area of Doklam, which is a triangle area disputed by three countries: India, China and Bhutan. The standoff emerged after China’s People’s Liberation Army (PLA) construction party attempted to build a road near the Doklam area. Bhutan claims Doklam is its area while China claims it as part of its Donglang region.

A few decades ago, India claimed China had illegally occupied Aksai Chin — an area of 38,000 square kilometers, part of India’s Jammu and Kashmir province — and had its eyes on Ladakh because the area was rich in minerals and natural resources.

For over a year now, China has been setting up infrastructure in this mountainous region, including Doklam, leading to India registering its protests over the move to remove the status quo of the disputed border maintained all these years.

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What seems to have gotten China’s goat was the fact that the Post report also claimed that China was rapidly building infrastructure to turn the area into another South China Sea scenario, which the Global Times editorial dubbed an absurd observation. In fact, the editorial also said Lhunze county was not a disputed region at all, as it “fell entirely within China’s sovereignty.”

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The U.S. Department of the Interior on Friday published a final list of minerals deemed “critical to the economic and national security of the United States.”

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According to a United States Geological Survey (USGS) announcement, the list will be the “initial focus of a multi-agency strategy due in August this year to implement President Donald J. Trump’s Executive Order to break America’s dependence on foreign minerals.”

Earlier this year, the Interior published a draft list of minerals and kicked off a window for public comment. After the public comment window closed — which saw submission of 453 comments — the Interior decided to finalize the original list.

“The expertise of the USGS is absolutely vital to reducing America’s vulnerability to disruptions in our supply of critical minerals,” said Dr. Tim Petty, assistant secretary of the Interior for Water and Science, in the prepared statement.

A Department of Commerce report is due to President Trump by Aug. 16. According to the USGS release, the report will include:

  • a strategy to reduce the nation’s reliance on critical minerals
  • the status of recycling technologies
  • alternatives to critical minerals
  • options for accessing critical minerals through trade with allies and partners
  • a plan for improvements to mapping the United States and its mineral resources
  • recommendations to streamline lease permitting and review processes,
  • ways to increase discovery, production, and domestic refining of critical minerals

The full list of minerals is as follows:

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It is a question we often see on the financial pages of newspapers or news sites, but rarely take time to seriously consider the consequences – why is the West apparently in a period of stagnant productivity growth?

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A recent article in The Telegraph explores the position for the U.K., but many of the trends observed — and, likely, reasons behind — Britain’s poor productivity growth are very similar to those in the U.S. and the rest of Europe.

For the sake of good order, we should define productivity growth. Simply put, it is a measure of the efficiency of production, usually measured as the ratio of inputs to outputs, or output per unit of input. Clearly, for workers to be paid more without a firm going bankrupt, just as for a country to raise living standards without living beyond its means, productivity per unit of labour has to increase over time. And so it has broadly over time, but not in a straight linear fashion, and therein lies a clue to our current malaise, the authors of the article suggest.

The article draws substantially on comments made and work done by Ben Broadbent, the Bank of England’s deputy governor. Broadbent fears Britain is past its peak and destined for a sustained period of poor growth in living standards due to stagnant productivity growth. Measuring productivity growth is far from easy, not least because “work” changes. In the days when most outputs were delivered by the manufacturing industry, it was easier to measure inputs and outputs; in today’s digital world, many services, like the internet, are largely free at the point of use.

Yet even so, the trend is clear: over the past decade, productivity has grown by just 2.1%, according to the Office for National Statistics as quoted by the news source. That is compared to before the financial crisis, when it typically grew by more than 2% every year. As a result, for much of the 2008-2014 period, real wages were in negative territory, a situation that was variously blamed on the financial crash, low interest rates perpetuating companies that would otherwise go bust, and lack of finance to allow firms to invest.

But Broadbent believes it is more deep-seated than those reasons, saying the wave of benefits seen from digitization we accrued in the 1990s and early 2000s has now passed. In addition, he argues, our position now is more akin to the industrial world’s lull between the age of steam and the onset of electricity – the big gains arising from steam had all been made yet and the benefits of electrification had not been felt, such that firms did not have a technological advantage encouraging investment, growth and expansion or face the threat of being left behind.

So far, there is limited evidence of new technologies like the mobile internet, artificial intelligence and mass automation transforming productivity. Broadbent believes it is simply too soon, but that given time and further technological progress, we could see these technologies having a transformational impact.

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Let’s hope so. Combined with the impact on traditional manufacturing jobs that globalization has had in mature markets and the growing disparity in incomes during this century, populist politics could have a destabilizing effect on Western societies, which will only be encouraged by a prolonged period of flat, or worse, negative growth in standards of living.

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Even as news came in late last week that some of India’s biggest steelmakers were set to expand production after reporting solid quarterly earnings amid strong steel prices, well-known research agency CRISIL has said in a report that resolution of stressed steel assets – those that are bankrupt – will “alter” the Indian steel sector irrevocably.

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Steel companies with about 22 million tons (MT) of crude steel capacity have been referred to the National Company Law Tribunal (NCLT) in the first round of the stressed assets resolution process by India’s apex bank, the Reserve Bank of India (RBI).

The CRISIL research report said the resolution of these cases would alter India’s steel sector landscape in three ways:

  • Over half of steel sector’s outstanding debt would stand resolved
  • About a fifth of India’s crude steel capacity held by these companies will move to stronger hands, resulting in better working capital and liquidity management (which, in turn, would lead to improving utilization levels)
  • The flat steel segment would consolidate further and be controlled by fewer players – both domestic and global

“For acquirers of these assets, apart from attractive product portfolios & locational advantages, these assets also offer easy scalability,” said Prasad Koparkar, senior director of CRISIL Research. “The 22 MT of capacities under resolution have brownfield expansion potential of another 20-21 MT – based on their environment clearance and regulatory filings.”

India’s flat steel market is dominated by six players that account for 85% of the capacity, with the rest being distributed between smaller players and re-rollers. Of the six, three are currently part of the NCLT I resolution process.

Many, as reported by MetalMiner earlier, were being eyed by large domestic and international steelmakers for expansion or entry strategies.

The CRISIL report further claimed that based on various acquisition scenarios, the flat steel market in India was expected to consolidate further from the current scenario — of 85% being controlled by six players — to three or four players.

Already, India’s biggest steelmakers, such as JSW Steel Ltd., posted record net income last Wednesday and outlined a $6 billion plan to raise output. Tata Steel Ltd., which aims to double domestic capacity, swung to profit, helped by a one-time gain. Both are ramping up to meet an anticipated surge in domestic consumption, with the government set to spend trillions of dollars on expanding infrastructure.

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The Bloomberg report said JSW has forecast Indian steel consumption to rise by about 7.5% in the 2019 financial year.

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(Editor’s Note: This is the first of two posts addressing the global trading system. Check back tomorrow for Part 2.)

The Economist asked the question in a debate that has been running over the last few weeks, stimulated in part by President Trump’s unprecedented actions on tariffs and quotas aimed at perceived cheaters of the global trading system.

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The article summarizing the debaters’ arguments (with contributions by guest contributors) makes fascinating and very appropriate contemporary reading for anyone interested in the topic. Few would argue that in its earliest guise the multilateral, rules-based system managed by the World Trade Organization (WTO), to lift the article’s words, has built up and delivered unprecedented prosperity across the world.

But even ardent supporters would also concede it has contributed to the decimation of the industrial base in many rich countries. Other factors have played a role, like automation and environmental policies, but the global trading system has played its part in this transfer for manufacturing capability and accompanying jobs.

The article questions whether the global trading system is broken, whether we should do away with it altogether, and whether a return to national tariffs and bilateral trade agreements is the solution to the perceived problems it has caused.

But the reality is that while the WTO and its rules-based system has significant faults, it is not bust in the way the world order of the 1930s, which was complete chaos and, as one of the arguments points out, fraught with government-imposed tariffs, quantitative limits on trade, discriminatory deals and foreign-exchange controls. It got so bad at times that some international commercial relationships even devolved into barter. This writer can remember his firm dealing with the Soviets in the 1980s, bartering ship loads of hot rolled coil steel from Russia and shipping back cold rolled steel coil from British Steel in the U.K.

But if the system is not busted it is certainly flawed, and those flaws have resulted in multiple problems.

Read more

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The World Trade Organization’s (WTO) dispute settlement mechanism is not known for its speed. As such, it took a while for a final ruling to come down with respect to the long-running dispute over the U.S.’s claim that European subsidies of Airbus have negatively impacted Boeing’s sales.

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The U.S. initially requested consultations with the U.K., France, Germany and Spain in October 2004, arguing that they had fallen afoul of the Subsidies and Countervailing Duties Agreement and the GATT 1994. In general, the U.S. complaint focused on five general categories: what the WTO report refers to as “launch aid” or “member state financing”; loans from the European Investment Bank; infrastructure and instrastructure-related grants; corporate restructuring measures; and research and technological development funding.

Fast forward more than 13 years to Tuesday, when the WTO’s Compliance Appellate Body ruled that the European states have fallen short of compliance with WTO rules by virtue of subsidies to Airbus, which the U.S. has argued have materially harmed Boeing.

According to the WTO’s appellate report released Tuesday, “the European Union had failed to comply with the recommendations and rulings of the DSB (Dispute Settlement Body) in the original dispute because the underlying subsidies continued to exist and cause adverse effects.”

According to a 2011 appeal, the European states argued they had taken steps to remove $18 million in subsidized financing, but the U.S. in 2016 filed a formal appeal disagreeing with that motion.

This week, the WTO ruled in the U.S.’s favor on appeal — albeit not on every single complaint —  arguing that the European communities are still out of compliance.

It didn’t take long after the report’s release for the threat of retaliation to surface.

“This report confirms once and for all that the EU has long ignored WTO rules, and even worse, EU aircraft subsidies have cost American aerospace companies tens of billions of dollars in lost revenue,” U.S. Trade Representative Robert Lighthizer said in a prepared statement on the verdict Tuesday. “It is long past time for the EU to end these subsidies. Unless the EU finally takes action to stop breaking the rules and harming U.S. interests, the United States will have to move forward with countermeasures on EU products.”

Subsidies to the A350XWB and A380 aircraft negatively impacted the sales of Boeing’s 787 and 747 aircraft, respectively, the Appellate Body’s decision said.

Boeing celebrated the ruling in a statement Tuesday.

“Today’s final ruling sends a clear message: disregard for the rules and illegal subsidies is not tolerated. The commercial success of products and services should be driven by their merits and not by market-distorting actions,” said Dennis Muilenburg, Boeing chairman, president and CEO. “Now that the WTO has issued its final ruling, it is incumbent upon all parties to fully comply as such actions will ultimately produce the best outcomes for our customers and the mutual health of our industry. We appreciate the tireless efforts of the U.S. Trade Representative over the 14 years of this investigation to strengthen the global aerospace industry by ending illegal subsidies.”

According to the Boeing statement, retaliatory tariffs could be scheduled as early as 2019.

The Boeing-Airbus saga, however, is far from over.

Another case on the WTO docket, in which Boeing is the respondent and the European states are complainants, looms on the horizon. The point in question involves tax reduction benefits from Washington state, which is expected to be ruled upon by the WTO later this year.

“Today’s significant legal success for the European aviation industry confirms our strategy which we have followed over all those years of the dispute,” Airbus CEO Tom Enders said in a prepared statement. “Of course, today’s report is really only half the story – the other half coming out later this year will rule strongly on Boeing’s subsidies and we’ll see then where the balance lies.”

E.U. Trade Commissioner Cecilia Malmström also addressed the Appellate Body decision in rosier terms for the Europeans.

“Today the WTO Appellate Body, the highest WTO court, has definitively rejected the US challenge on the bulk of EU support to Airbus, and agreed that the EU has largely complied with its original findings,” she said. “Significantly, it dismissed the vast majority of the US claims that this support had damaged Boeing’s aircraft sales. The EU will now take swift action to ensure it is fully in line with the WTO’s final decision in this case. Also, we look forward to the upcoming ruling by the Appellate Body on US compliance with the WTO findings of the massive and persistent government support to Boeing.”

Tuesday’s decision only contributes to the increasingly simmering cauldron of global trade relations.

The E.U. has yet to negotiate a long-term exemption from the U.S.’s Section 232 tariffs on steel and aluminum; the 28-member bloc initially won a temporary exemption until May 1, then received a 30-day extension less than 24 hours before the tariffs were set to go into effect.

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In comments at a National Press Club luncheon earlier this week, Secretary of Commerce Wilbur Ross focused largely on China, but the E.U. also came in for criticism, as he argued both China and the E.U. are “far more protectionist” than the U.S.

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U.S. Secretary of Commerce Wilbur Ross delivered wide-ranging remarks at the National Press Club Headliners Luncheon this week, touching on Chinese (and even European) trade protectionism, the World Trade Organization (WTO) and the North American Free Trade Agreement (NAFTA), among other things.

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“Both China and Europe eloquently espouse free-trade rhetoric, but — in actual practice — are far more protectionist than the United States,” Ross said, according to a transcript posted on the Department of Commerce website. “Our trade policy’s main objective is to make their real-world behavior match their free-trade speeches.”

Ross’ speech comes as tensions between the U.S. and China on trade have ramped up in recent weeks. Last month, President Trump announced the possibility of $50 billion in tariffs on Chinese, which yielded a reciprocal response from Beijing. Not long after, Trump raised the threat of a potential additional $100 million in tariffs. U.S. and Chinese trade officials met in China earlier this month to discuss trade, meeting that yielded little in the way of breakthroughs, according to media reports.

Ross called out China for not abiding by WTO rules, forced technology transfers for companies looking to do business there and outright intellectual property theft.

Times have changed since World War II, and old negotiations and concessions are no longer appropriate for the current trade landscape, he argued.

“Just after World War II, it was U.S. policy to rehabilitate Europe and Asia suffering from the ravages of war,” he said. “At that time, the United States was the unchallenged world economic power and had regular trade surpluses. We created GATT, which morphed later into the WTO. We made systematic trade concessions to which we remain bound today, decades later. The policy error was that we did not time-denominate those concessions, or provide other mechanisms to adjust policy as conditions changed.

“Concessions made to China or Europe that might have been totally correct 50 years ago are simply no longer appropriate today. Yet, we are locked into the present trading system with rules created for a different era.”

Ross also lamented the fact that despite the U.S.’s economic stature, it only has one vote at the WTO.

Ross also went on the attack with respect to NAFTA, which has been the subject of renegotiation talks since last fall.

“NAFTA was to become a protective wall around the United States, Canada, and Mexico, for our collective benefit,” he said. “But NAFTA did not stop Mexico, which then had high auto tariffs on non-NAFTA countries, from signing a Free Trade Agreement with Europe.That agreement permits Mexican-produced autos to enter Europe duty-free while auto producers making cars in the United States remain subject to Europe’s 10 percent tariff.

“Automakers seeking exports to Europe derive several times more benefit from this tariff anomaly than from lower Mexican labor costs when they move a plant to Mexico.”

The secretary also addressed the recent meetings between U.S. and Chinese trade officials in China.

“We negotiated with a delegation of senior Chinese leaders from its Ministries of Finance and Commerce, and the People’s Bank of China, led by Vice Premier Liu He,” he said. “Before landing in China, we sent them an extremely detailed list of our needs, and they responded with a similarly detailed, but quite different list of proposals. The gap is wide.”

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Chinese officials are expected to be in Washington, D.C., this week to continue the discussion on trade.