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Source: wto.org

Norway became the latest country to request consultations at the World Trade Organization (WTO) with the U.S. over its Section 232 steel and aluminum tariffs. The dispute complaint was circulated to WTO members June 19.

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“In Norway’s view, the additional tariffs imposed by the US on steel and aluminium imports are a violation of the WTO rules,” Minister of Foreign Affairs Ine Eriksen Søreide said in a prepared statement last week. “Today we have therefore requested dispute settlement consultations with the US in the WTO. The WTO and its dispute settlement system is the established forum for handling disagreements about trade policy.”

Norway, which is home to aluminum producer Norsk Hydro, is Europe’s top aluminum producer (the country is not a member of the European Union, but has membership in the European Economic Area).

According to the release from Norway’s Ministry of Foreign Affairs, only 0.2% of Norway’s steel and aluminum exports go to the U.S.

“In the long run, we all benefit from a situation where right trumps might in international trade,” Eriksen Søreide said. “Such a disregard for WTO rules weakens the credibility of the United States in international trade, and risks undermining the rules based multilateral trading system.”

India initiated a complaint against the U.S. tariffs in May. Mexico also requested consultations, while the E.U. and Canada have also done so.

Trade tensions have picked up in recent months, as the U.S. tariffs have sparked backlash from some of the U.S.’s closest trading partners. The WTO has come in for much criticism from President Trump, but figures to be a battleground — albeit a slow-moving one — for trading partners formally objecting to the U.S. tariffs.

In addition, last weekend the G7 summit in Charlevoix, Quebec, during which trade issues were paramount, ended acrimoniously when Trump tweeted that he would withdraw his support for the summit’s communique.

The communique, among other things, addressed tariffs:

“We acknowledge that free, fair and mutually beneficial trade and investment, while creating reciprocal benefits, are key engines for growth and job creation. We recommit to the conclusions on trade of the Hamburg G20 Summit, in particular, we underline the crucial role of a rules-based international trading system and continue to fight protectionism. We note the importance of bilateral, regional and plurilateral agreements being open, transparent, inclusive and WTO-consistent, and commit to working to ensure they complement the multilateral trade agreements. We commit to modernize the WTO to make it more fair as soon as possible. We strive to reduce tariff barriers, non-tariff barriers and subsidies.”

In a meeting Monday after the G7 dust had settled, German Chancellor Angela Merkel met with several leaders of multilateral agencies to stress the importance of cooperation.

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“Rising trade tensions risk a major economic impact, undermining the strongest sustained period of trade growth since the financial crisis,” WTO Director-General Roberto Azevêdo said in a joint statement. “They also pose a real systemic threat, risking far greater impacts in the longer term. We will continue working to resolve these tensions and to avoid further, damaging escalation which draws in new sectors, potentially harming more workers.”

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India’s new steel impetus has started to pay dividends, it would seem.

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The Government of India (GoI) has claimed that not only had the new policy saved it about $739 million (Rs 5000 crore) by way of foreign exchange, it had also helped it add around 24 million tons (MT) of crude steel capacity.

Steel Secretary Aruna Sharma told reporters that India had also replaced Japan as the second-largest steel producer this year. The new National Steel Policy (NSP) announced last year had upped the ante and set a new target of raising the capacity to 300 MT by 2030, and produce 250 MT of crude steel.

Sharma said there has been a massive forex saving after the policy was rolled out in May 2017. Steel production capacity itself had increased from 110 MT in 2014-15 to 134 MT in 2017-18, while 7 MT was added in 2017 alone.

In fact, in April this year, India’s crude steel production grew 4.4% to 8.59 MT, according to GoI data. India produced 8.22 MT during the same month a year ago, the Joint Plant Committee (JPC) said in a report. During April 2018, the output of hot metal was at 5.80 MT, as compared to 5.38 MT during April 2017.

Indian steel sector has been growing at a compounded annual growth rate (CAGR) of about 5% over the past four years on account of improvement in the overall capacity utilization, Sharma said. The GoI is hopeful that if the trend continues, the country’s steelmaking capacity would touch the expected 150 MT mark by 2020.

In 2017, India became a net exporter of steel, with exports of 8.2 MT registering 102% growth over the previous fiscal year. The exports from 5.6 MT in FY ’15 rose to 9.6 MT in FY ’18. On the other hand, the imports have declined by 36% from a level of 11.7 MT in FY 1’6 to 7.5 MT in FY ’18.

India has set a target of 300 MT of steel by 2020 and almost one-third of it alone would come from the province of Odisha in East India. Odisha is rich in raw materials needed for steel production, and has potential to produce 100 MT of steel.

About four years ago, India was fourth in global steel production behind to China, Japan and the U.S. Two months back, India’s position went up to second, moving past Japan. India’s crude steel production grew 4.4% to 8.59 MT during April 2018, according to official data.

Four years ago, the steel consumption per head in India was 58 kg. Today, it is 65 kg. The aim is to raise it to 107 kg by 2030.

On a slightly different note, Commerce Minister Suresh Prabhu was on a two-day visit of the U.S. starting June 10 to convince his counterparts that India was playing by the rules where steel and other tariffs were concerned.

Prabhu’s two-day trip to Washington included meetings with U.S. Commerce Secretary Wilbur Ross, U.S. Trade Representative Robert Lighthizer and National Economic Council Director Larry Kudlow. Prabhu’s objective was to try and get exemptions from the tariffs on steel and aluminum and save India’s benefits under the Generalized System of Preferences (GSP), which the Trump government has put under review.

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

The GoI has submitted a public comment to the U.S. government in its defense before a June 19 hearing of the GSP subcommittee, which will review India’s eligibility and decide whether New Delhi was providing “equitable and reasonable” market access in exchange for GSP benefits.

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The U.S. imported 2.5% less steel through the first five months of 2018 compared with the same period in 2017, according to a recent report from the American Iron and Steel Institute (AISI).

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Citing data from the Department of Commerce’s Steel Import Monitoring and Analysis (SIMA), finished steel imports through the first five months of the year hit 15,379,000 net tons (NT), down 2.5% from the first five months of 2017.

According to the AISI report, the finished steel import market share for May settled in at an estimated 25%, just under the 26% share for the year to date.

By products, in the year to date several have posted significant import increases, including: hot rolled sheets (up 36%), plates in coils (up 36%), mechanical tubing (up 22%), line pipe (up 22%) and oil country goods (up 19%).

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

By country, the largest finished steel import permit applications in May came from:

  • Germany (138,000 NT, up 15% from April preliminary)
  • Japan (123,000 NT, up 25%)
  • South Korea (113,000 NT, down 76%)
  • Italy (80,000 NT, up 34%)
  • Taiwan (76,000 NT, down 34%)

Through the first five months, however, South Korea led the way with 1,531,000 NT (down 1%), followed by Japan (615,000 NT, down 7%) and Germany (547,000 NT, up 13%).

The Raw Steels Monthly Metals Index (MMI) increased three points this month, moving up for a June reading of 92.

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Domestic steel price momentum seems to keep going, with domestic steel prices increasing again. Chinese steel prices also increased in May, adding support to higher domestic steel prices.

Domestic steel prices remain at more than seven-year highs.

Source: MetalMiner data from MetalMiner IndX(™)

Steel prices also increased at the beginning of June. The pace of the increases seems to have slowed down, but prices remain in an uptrend.

Tariffs

June 1 served as the latest steel and aluminum tariff exemption deadline. However, on May 31 President Trump announced that no country exemptions will continue. Therefore, Canada, Mexico and the E.U. became subject to the steel and aluminum tariffs of 25% and 10%, respectively.

MetalMiner considered different policy scenarios with regard to tariffs. All of them — except a continued exemption of the steel tariffs — supported the U.S. domestic steel price increase. The current situation will support steel prices further.

Mexico has already hit back with trade tariffs on some other products (such as pork and bourbon) from the U.S.

Chinese Steel Prices

Chinese steel prices recovered from a  previous downtrend and increased again in May. Early June price indications also show higher prices and a recovery in Chinese steel prices.

Source: MetalMiner data from MetalMiner IndX(™)

Chinese steel prices fell in conjunction with their historical seasonal cycle, which appeared stronger due to the overcapacity closures and higher-than-expected production during the winter season in China. However, prices usually start to increase again around April-May, signaling the start of the construction season, when steel demand is high.

Despite recent price increases, Chinese steel remains cheaper than U.S. domestic steel (even with a  25% steel tariff). This comes down to the price run-up of U.S. domestic steel prices, which have moved toward 2012 highs.

Scrap Steel

Contrary to domestic steel price movements, domestic shredded scrap traded more sideways at the beginning of June. Price increases have slowed down, as shredded scrap prices moved toward 2014 levels.

Source: MetalMiner data from MetalMiner IndX(™)

However, given the current domestic steel price movements, buying organizations can expect higher shredded scrap prices in the coming months.

What This Means for Industrial Buyers

As steel prices remain high, buying organizations may want to follow price movements closely to decide when to commit to mid- and long-term purchases.

Buying organizations looking for more clarity on when to buy and how much to buy may want to take a free trial now to our Monthly Metal Buying Outlook.

Actual Raw Steel Prices and Trends

The U.S. Midwest HRC 3-month futures price increased this month by 12.4%, going up to $905/st.

Chinese steel billet prices decreased by 0.2%, while Chinese slab prices rose by 1.2%, moving to $665/mt.

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

The U.S. shredded scrap price closed the month at $370/st, trading flat from last month’s reading.

Based on a quick search of exemption requests to the Section 232 steel tariffs, the Department of Commerce received 9,935 requests as of press time. However, MetalMiner could not find any additional grain-oriented electrical steel (GOES) requests since last month, when Nachi American Incorporated filed four requests on grounds that the only domestic GOES producer can not produce in the widths required.

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 Before Trump’s May 31 announcement that country-specific exemptions for Canada, Mexico and the E.U. would no longer be honored, AK Steel announced a new, high-permeability GOES product family, Trancor X, “for use in high and ultra-high voltage power transformers. High permeability GOES products represent the most technologically-advanced and highest-efficiency electrical steels in the world,” according to the company.

Time will tell if this new product offering will make it more difficult for companies to challenge the Section 232 tariffs covering GOES. As of press time, AK had not published additional technical data on Trancor X.

Meanwhile, imports notched back up in May, as did imports from Japan: 

Source: ITA

New Round of Pricing

U.S. GOES M3 prices jumped 8% this past month while Japanese mills have begun their GOES negotiations for the second half of this year, with anticipated price increases of over $100, according to a recent TEX Report.

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Exact GOES Coil Price This Month

The U.S. GOES coil jumped from $2,474/mt to $2,712/mt. The MMI increased 18 points from 179 to 197.

The GOES MMI® collects and weights 1 global grain-oriented electrical steel price point to provide a unique view into price trends over a 30-day period. For more information on the GOES MMI®, how it’s calculated or how your company can use the index, please drop us a note at: info (at) agmetalminer (dot) com.

The Renewables Monthly Metals Index (MMI) gained three points this month, rising for a June reading of 108.

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Interior Releases Critical Minerals List

Last month, the U.S. Department of the Interior published a finalized list of 35 minerals deemed to be critical to the U.S.’s national security and economy.

The list matches a draft list released earlier in the year. With respect to our Renewables MMI, cobalt, unsurprisingly, made the list.

The full list of minerals can be found here.

China Eyes Cobalt, Lithium Supplies

Speaking of cobalt, China has its eyes on cobalt and lithium supplies, according to a report in the South China Morning Post.

The materials are coveted for their application in electric vehicle batteries. According to the report, however, securing supplies of cobalt will prove to be more challenging than for lithium.

Met with the reality of burgeoning cobalt demand (expected to rise to 300,000 tons by 2030, according to an International Energy Agency report cited by the Post), that could lead to a procurement problem and even higher prices (which are already soaring).

Tariff Times

By now, you’ve probably heard that the U.S. allowed the temporary exemptions from its steel and aluminum tariffs to expire for the E.U., Canada and Mexico.

Unsurprisingly, the trio was not exactly happy about the news, and announcements of retaliatory efforts weren’t far behind.

For example, Mexico announced it would impose new tariffs on the U.S., including on an array of steel products. Included on the list was steel plate, according to an NPR report.

Meanwhile, Liam Fox, the U.K.’s international trade secretary, called the tariffs illegal, according to a BBC report.

Fox, like officials in other countries subjected to the tariffs, questioned the national security argument underpinning the U.S.’s trade measures, and said the U.K. is still working to secure exemptions, the BBC reported.

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

Actual Metal Prices and Trends

Japanese, Korean and Chinese steel plate all posted month-over-month price increases as of June 1. Japanese plate rose 0.6% to $735.67/mt. Korean plate jumped 0.4% to $647.72/mt. Chinese plate increased 4.7% to $758.64/mt.

U.S. steel plate, meanwhile, fell 1.1% to $937/st.

Chinese neodymium fell 4.0% to $64,390.40/mt, while silicon fell 1.1% to $1,607.81/mt.

Chinese cobalt cathodes rose 6.4% to $103,805/mt.

The Rare Earths Monthly Metals Index (MMI) dropped one point this month for a June reading of 19.

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Under the Sea

In April, researchers announced that a massive source of rare earths had been located just over 1,000 miles southeast of Tokyo. The catch? Current technology is not advanced enough to mine that underwater cache of valuable materials.

Nonetheless, a piece by WIRED showcases the technological buildup that could, one day, allow for such deposits to be mined.

Naturally, in a world that is increasingly looking to automation and artificial intelligence, robots figure into this technological scaling up.

As WIRED reports, several companies are competing to produce the technology that will allow for extraction of these deposits, while also attempting to limit deleterious environmental impacts to the ocean floor.

Australian Rare Earths Plant Scheduled for Completion This Month

According to a report by Australian Mining, a pilot plant rare earths project by Northern Minerals is scheduled to be completed by June 30.

The Browns Range project is located in Western Australia.

Rare Earths Search in New Zealand

Staying in the same part of the world, a recent New Zealand Herald piece delves into the search for rare-earth elements in the country.

According to the report, a study commissioned by the Ministry of Business, Innovation and Employment has identified several areas in the country that could have lithium.

”We now have a sound base to inform decisions on these strategic minerals which are widely used for energy storage in electric vehicles and other low emission technologies,” Megan Woods, the energy and resource minister, was quoted as saying.

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Actual Metal Prices and Trends

Yttrium dropped 1.1% month over month to $35.12/kilogram as of June 1. Terbium oxide, meanwhile, rose slightly, increasing 0.5% to $476.10/kilogram.

Neodymium oxide dropped 1.9% to $50,341.60/mt.

Europium oxide dropped 1.1% to $60.88/kilogram. Dysprosium oxide fell 1.1% to $180.29/kilogram.

The Copper Monthly Metals Index (MMI) held steady in May at 84 points.

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The sideways trend came as a result of a combination of some elements of the metal basket increasing, such as LME copper, and others falling (such as scrap copper prices).

Source: MetalMiner analysis from FastMarkets

LME copper prices increased during the first week of June. Copper prices now appear headed toward the $7,000/mt ceiling. Copper prices breached that ceiling several times in 2017-2018.

LME copper prices have traded more sideways since the beginning of 2018, as copper prices took a backseat to aluminum and nickel. The Section 232 tariffs apply to both aluminum and nickel.

Global Copper Market

The global copper industry faces closures and mine disruptions, which could affect copper supply. However, given stronger global copper demand, mines have also tried to increase copper capacity. The supply and demand balance for copper calls for a slight surplus in 2018, but the forecast could change during this quarter.

The Indian Vedanta mine closed permanently in May due to protests, lack of compliance with environmental laws and a shooting incident. Vedanta’s Sterlite Copper smelter is one of only two major copper smelters in India.

Vedanta produces 400,000 tons of cathode copper per year. Plans to double capacity should have started after receipt of renewal consent. Rising capacity comes as a result of increased Indian copper consumption over the past few years. Current local demand growth is 7-8% yearly, positioning the country as a net copper importer at the end of the year.

Meanwhile, to meet profit targets, Chilean copper mines need to run at full capacity.

To achieve these objectives, copper output will likely increase. The Caserones copper mine could  produce around 110,000 tons of copper concentrate this year to the end of March 2019. This equates to a 91,000-ton production increase from last year.

However, current mine production levels suggest the mine is behind schedule due to technical problems. The Sierra Gorda Chilean mine is also suffering from technical challenges and running behind schedule.

Chinese Scrap Copper

Since the announcement of the ban on copper scrap in China last summer, MetalMiner has followed Chinese copper scrap prices closely.

Source: MetalMiner data from MetalMiner IndX(™)

LME copper prices and Chinese copper scrap prices tend to follow the same trend. Both appear to be in a long-term uptrend. However, scrap copper prices fell this month, while LME copper prices increased.

Therefore, the spread between Chinese copper scrap prices and LME copper prices has widened. The wider the spread, the higher the copper scrap consumption and, therefore, the price.

What This Means for Industrial Buyers

LME copper prices continued a recovery this month. Copper prices remain in a long-term uptrend. Therefore, buying organizations could expect further copper price increases.

Buying organizations reading the Metal Monthly Outlook had the opportunity to identify the buying signal at the beginning of April and reduce price risk by purchasing some volume. For those who want to understand how to reduce risks, take a free trial now to the MetalMiner Monthly Outlook.

Benchmark your current cold rolled coil sheet prices and see how it compares to the market

Actual Metal Prices and Trends

LME copper rose 0.2% to $6,834/mt as of June 1. Chinese primary cash copper fell 1.8% to $8,010.95/mt.

Chinese copper scrap fell 1.1% to $5,978.56/mt.

U.S. copper producer Grades 110 and 122 held at $3.82/pound, while Grade 102 held at $4.01/pound.

The Automotive Monthly Metals Index (MMI) picked up two points this month, rising for a reading of 104.

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U.S. Auto Sales

Sales in the U.S. bounced back in May after a slower April.

According to the New York Times, May auto sales jumped 2%, driven in part by a boost in Memorial Day weekend sales.

Fiat Chrysler’s sales rose 11% on the month, while Ford’s rose 0.7%, according to the report. According to a Ford release, F-Series sales in May were up 11.3%, boasting its best May since 2000.

While General Motors no longer reports sales on a monthly basis (instead now opting to report quarterly), industry experts estimate a 10% increase in sales for GM in May, according to the NYT report.

Sales in Canada

Meanwhile, sales in Canada dropped in May, according to Reuters.

Canadian automotive sales fell 0.7% last month. However, Canadian consumers, like their American counterparts, continue to show an affinity for the light truck. Canadian sales of light trucks rose 4% and accounted for 69% of total sales.

Honda’s Chinese Sales Continue to Fall

Elsewhere, Japanese automaker Honda has not been having a great time in the Chinese market this year.

Honda’s sales in the world’s largest automotive market dropped for a fourth straight month in May, according to Reuters, falling by 15.3%.

For the year to date (through May), Honda’s sales in the country are down 6.5%.

Auto Tariffs Talk

Last month during a brief window in which it seemed the U.S. and China had reached somewhat of a truce in trade talks, it was announced that China will reduce its automotive import tariff from 25% to 15%, Bloomberg reported.

In the same policy sphere, the U.S. announced it launched an investigation of auto imports, again using Section 232 of the Trade Expansion Act of 1962.

“There is evidence suggesting that, for decades, imports from abroad have eroded our domestic auto industry,” Secretary of Commerce Wilbur Ross said in a release. “The Department of Commerce will conduct a thorough, fair, and transparent investigation into whether such imports are weakening our internal economy and may impair the national security.”

According to the Commerce Department, in the past two decades, imported vehicles have increased as a percentage of total sales from 32% to 48%.

The Commerce Department also announced it would hold public hearings in July on the issue of automotive imports.

Actual Metal Prices and Trends

U.S. HDG steel rose 0.01% to $1,112/st as of June 1. U.S. shredded scrap steel fell $2 to $370/st.

Both platinum and palladium rose for the month. Platinum jumped up $3 to $905/ounce. Palladium rose 3.2% to $982/ounce.

LME copper rose 0.2% to $6,834/mt.

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

Chinese primary lead jumped 8.4% to $3,153.18/mt.

Pavel Ignatov/Adobe Stock

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%

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

The full worldsteel report can be downloaded here.

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