SeanPavonePhoto/Adobe Stock

This morning in metals news, the extension of pollution-curbing efforts in China is offering a boost to iron ore and steel futures, an Australian steel company is nervous about the possibility of Section 232-related steel tariffs from the U.S., and Mexico fined a steel company for stock manipulation.

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


Future is Bright for Iron Ore, Steel Futures

According to a report by the Financial Times, iron ore and steel prices rose to a year-to-date high after the announcement that winter capacity cuts in China’s top steelmaking region would continue.

Per the report, the local government of Tangshan, the biggest steelmaking city in China, announced Friday that cuts set to expire at the end of March will continue.

Australia’s BlueScope Awaits Section 232 Verdict as Turnbull Angles for Exemption

Despite assurances given last year by the U.S. that Australia would be exempted from Section 232-related tariffs, Prime Minister Malcolm Turnbull and some Australian companies might be getting concerned that those assurances won’t come to fruition.

Australian steelmaker BlueScope, for example, is one firm looking to secure assurances that it would be spared from possible hard-hitting tariffs, according to a report in The Sydney Morning Herald.

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

Mexico Fined Steel Firm for Stock Manipulation

Mexican company Industrias CH was fined $159,764 in late November for stock manipulation, according to a Reuters report citing government data.

gui yong nian/Adobe Stock

This morning in metals news, the U.S. Department of Defense recently indicated it would prefer targeted tariffs as opposed to a blanket strategy, Australian Prime Minister Malcolm Turnbull will press President Donald Trump on an assurance last year that Australia would be exempted and London copper is down for the week.

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

DoD Espouses Targeted Tariffs Approach

In light of the pending Section 232 probes of steel and aluminum imports, the Department of Defense said it would favor a more targeted approach to tariffs.

In addition, the DoD prefers a delay to any measures curbing aluminum imports, according to a Reuters report.

Turnbull Looks for U.S. to Honor Tariff Assurances

Australian Prime Minister Malcolm Turnbull plans to discuss with President Trump on Saturday the assurances given last year that Australia would be spared from Section 232-related steel and aluminum tariffs, according to the Financial Review.

The recently released Section 232 reports make no mention of an exception for Australia. According to the Financial Review report, Turnbull will seek to revisit assurances made last July vis-a-vis a carve-out for Australia.

Copper Down on the Week

London copper and zinc dropped this week as a result of profit taking, Reuters reported. In addition, the dollar strengthened and uncertainty about demand in China contributed to the drop this week.

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

According to the report, LME three-month copper dropped 0.7% to $7,110 a ton in official open outcry trading on Friday.

By now most MetalMiner steel producers and steel buying organizations have pored through the Section 232 steel report published by the Department of Commerce last Friday. In case you missed it, here is a link to the full report:

At its core, the Section 232 investigations represent the only public policy solution put forward by any major government to address the fundamental crisis involving extensive and pervasive global overcapacity for steel, stainless steel and aluminum.

Section 232 buying strategies – download MetalMiner’s Section 232 Investigation Impact Report today!

This overcapacity, the Department of Commerce believes, threatens U.S. national security interests because unfairly traded imports have caused substantial financial harm to U.S. producers.

Before you scream protectionism, read on!

Read more

gui yong nian/Adobe Stock

This morning in metals news, U.S. raw steel production in the year to date is down 1.9%, South Korea announced it would consider going to the World Trade Organization (WTO) if the Trump administration goes with through with steel tariffs and copper prices slide as the U.S. dollar continues its recovery from last week’s three-year low.

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

U.S. Raw Steel Production Falls

U.S. raw steel production fell 1.9% in the year to date as of Feb. 17 compared to the same period in 2017, according to the American Iron and Steel Institute’s weekly report.

The capability utilization during that time frame this year has been 73.6%. In the recently released Section 232 aluminum and steel reports, the Department of Commerce issued recommendations that included a stated desire to hit at least 80% in capability utilization for both steel and aluminum.

South Korea Could Take Case to WTO if U.S. Imposes Steel Tariffs

One question many have asked is what actions Section 232 tariffs might inspire from other countries.

In the case of South Korea, it announced it would consider appealing to the WTO if the U.S. decides to impose tariffs on steel, according to a Nikkei Asian Review report.

Copper Falls as Dollar Rebounds

The price of copper fell as the U.S. dollar strengthened Tuesday, according to Reuters.

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

LME copper fell 0.7% to $7,071 per ton, according to the report.

The revival of steel production in mature markets does not need to be all about state aid and protection. Although some would argue the steel industry in the U.K. would not be in the condition it is now if it had state aid and protection in previous decades.

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

But years of underinvestment by corporate owners Corus and Tata Steel have left the U.K. steel industry technologically behind rivals in mainland Europe, according to an article in The Telegraph last week.

After considerable M&A activity over the last 2-3 years, there are now three major commodity steel producers in the U.K., although some 600 firms are active in the industry. Apart from what is left of Tata, there are two new contenders. First, the newly formed British Steel Limited, a long products steel business founded in 2016 from assets acquired from Tata Steel Europe by Greybull Capital. Secondly, there is Liberty House, a more diversified metals producer owned by entrepreneur Sanjeev Gupta and (at least as far as the steel part is concerned) formed largely out of the specialty steel division of Tata Steel Europe last year, when Tata sold off various assets prior to its current merger with ThyssenKrupp of Germany.

The question on everyone’s lips when Greybull and Liberty stepped in to buy parts of the Tata group was how they were going to make money out of these assets if Tata could not.

Somewhat to the market’s surprise, Greybull posted a profit of £47 million ($66 million) in the first 12 months following years of losses under Tata, but last year fell back into loss when production at its Queen Victoria blast furnace in Scunthorpe was temporarily halted in the summer due to technical problems, The Telegraph reports. The furnace, which is capable of producing 1.5 million tons of iron per year, was out of action for several weeks and cost the firm tens of millions of pounds. Although Greybull only paid £1 for the business. it clearly has faith in its long-term future, announcing this month plans to raise £100 million of funding to upgrade existing plant and invest in new technology. The margins are in value add and years of under investment have left the firm not just with creaking infrastructure, but outdated technology that deprives them of the opportunity to compete in more lucrative market segments.

Liberty was not quite so fortunate in buying Tata’s castoffs on the cheap. Liberty paid £100 million last year for the specialty steel division, but has already brought back capacity previously mothballed. The most recent example of that is an 800,000-ton electric arc furnace in Rotherham, fired up in a ceremony attended by the Prince of Wales this month, according to the BBC.

Even Tata is investing in upgrading plants. Just last November, it announced it was investing £30 million ($42 million) in its Port Talbot steelworks with the installation of a new 500-ton steelmaking vessel and would make other upgrades as part of a £1 billion, decade-long deal agreed with unions in return for their support for agreement to spin off the £15 billion ($21 billion) pension attached to Tata’s U.K. steel business.

How this long-term investment plan will shake out following the merger with ThyssenKrupp remains to be seen. Many still see Port Talbot as a prime candidate for closure for the enlarged group, particularly if Brexit changes the economics of the plant by putting tariff barriers in place between the U.K. and E.U.

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

Berlin and the E.U. will not favor preservation of Port Talbot over closure of continental steel plants, as the combined group looks to achieve cost savings and streamline the merged businesses.

When the Department of Commerce announced  last month that Secretary of Commerce Wilbur Ross had forwarded his Section 232 steel report (and the following week, aluminum) to President Donald Trump, the details of the report were not made public.

Section 232 buying strategies – download MetalMiner’s Section 232 Investigation Impact Report today!

That changed Friday, as the department released the reports outlining the potential strategies recommended to Trump (who met with lawmakers earlier this week to discuss potential tariffs on steel and aluminum imports).

“The United States is the world’s largest importer of steel,” Ross said during a briefing Friday morning. “Our imports are nearly four times our exports.”

Section 232 of the Trade Expansion Act of 1962 grants the president authority to limit or restrict imports that are determined to have an impact on national security. The last 232 investigation came in 2001, when the George W. Bush administration investigated semi-finished steel and iron ore imports. (The Department of Commerce ultimately determined the imports did not negatively impact national security.)

The U.S. currently has 169 anti-dumping and countervailing duty orders in place for steel, which some critics have argued has served as only a patchwork defense. Of those 169 orders, 29 are against China, Ross added.

Laying the background for the proposals, Ross cited findings of the report, including the global rise in steelmaking capacity, which is up to 2.4 billion metric tons (a jump of 127% since 2000). In addition, global excess capacity is 700 million tons, with China’s excess capacity exceeding the total U.S. steelmaking capacity, according to the report.

“Excessive steel imports have adversely impacted the steel industry,” the report states. “Numerous U.S. steel mill closures, a substantial decline in employment, lost domestic sales and market share, and marginal annual net income for U.S.-based steel companies illustrate the decline of the U.S. steel industry.”

Steel Recommendations Include 24% Tariff on All Products From All Countries

The 232 steel report lays out a trio of options, ranging from a blanket, all-encompassing tariff structure to more targeted approaches:

  1. A global tariff of at least 24% on all steel imports from all countries
  2. A tariff of at least 53% on all steel imports from 12 countries (Brazil, China, Costa Rica, Egypt, India, Malaysia, Republic of Korea, Russia, South Africa, Thailand, Turkey and Vietnam) with a quota by product on steel imports from all other countries equal to 100% of their 2017 exports to the United States
  3. A quota on all steel products from all countries equal to 63% of each country’s 2017 exports to the United States

When asked how the department created the list of 12 countries included in the second option, Ross said the selection process wasn’t “formulaic,” but they considered things like the rate of expansion of capacity in recent years and the nature of the products being shipped to the U.S., among other things.

“Anything in trade is very, very complex,” Ross said. “And therefore [there’s] not a single factor. The  rate of increase in exports to the U.S. was in each case a big factor.”

Administration Looks to Provide Jolt to Aluminum Industry

As for aluminum, the three recommendations were:

  1. A tariff of at least 7.7% on all aluminum exports from all countries
  2. A tariff of 23.6% on all products from China, Hong Kong, Russia, Venezuela and Vietnam, with all other countries be subject to quotas equal to 100% of their 2017 exports to the United States
  3. A quota on all imports from all countries equal to a maximum of 86.7% of their 2017 exports to the United States.

According to Ross during a Friday morning briefing, the goal is to up the domestic aluminum industry’s capacity, currently hovering around 48%, to 80%. According to the aluminum report, the U.S. imported five times as much tonnage of primary aluminum as it produced in 2016, with the import penetration level rising to 90% from 65% in 2012.

As with steel, the aluminum report pointed to Chinese excess capacity.

“China’s industrial policies encourage development and domination of the entire aluminum production chain,” the report states. “These policies are further intended to stimulate the export of aluminum processed into sheets, plates, rods, bars, foils and other semi-manufactures and to target development of increasingly sophisticated and high-value product sectors such as automotive and aerospace.”

According to Section 232, Trump has 90 days as of receipt of Ross’ report to act. In the case of steel, that makes for an April 11 deadline, with an April 19 deadline set for aluminum.

The Section 232 investigations were launched last April, after which it seemed as if the administration would be set to release its reports by the end of June. But, June came and went without an announcement, as did the remainder of the calendar year. During that year, steel imports rose 15.4% year over year, according to American Iron and Steel Institute report citing U.S. Census Bureau data, leading some domestic industry figures to point out the delay’s impact on import levels.

Ross admitted that timeline was overly ambitious.

“We were a little bit over-optimistic about how quickly such a complicated topic could be brought to a head,” Ross said. “Government tends to move slowly. It’s one of the many lessons I’ve learned coming down here.”

The president does have the authority to revise any of the proposals and come to the table with a different policy solution.

“He will decide what he is going to do,” Ross said of Trump. “It’s not for me to speculate what action he might take. But I do reemphasize that he is not bound by these exact recommendations. He can do something totally different.”

In a release, Scott Paul, president of the Alliance for American Manufacturing, urged action.

“We believe the action must be broad, robust and comprehensive, and the Commerce Department report makes a compelling case for immediate action. Any exclusions deserve appropriate scrutiny. Otherwise, the Washington swamp will be filled with importers trying to undermine American jobs.

“American workers are counting on President Trump to stand up for them.”

In its own response to the release of the reports, the Aluminum Association reiterated past statements, chiefly to ask for a solution that specifically addresses China and does not harm market economy trading partners like Canada and the European Union.

Want to see an Aluminum Price forecast? Take a free trial!

“We look forward to working with the president on a final decision that helps support continued growth in the U.S. aluminum industry,” said Heidi Brock, president and CEO of the Aluminum Association, in a prepared statement. “Ultimately, we favor a negotiated, enforceable government-to-government agreement with China on overcapacity.”

On the subject of retaliation and challenges to any potential trade action at the World Trade Organization, Ross pointed to other nations’ import barriers, citing the automobile tariffs among the U.S. (2.5%), E.U. (10%) and China (25%) as an example.

“There already are extreme protectionist measures,” he said. “I don’t believe there’s a country on the targeted list that we have that doesn’t have far more protective features on its industry than we do already.”

The full steel report is available on the Department of Commerce website, as is the full aluminum report.

The European Steel Association’s (EUROFER) recent steel market overview hailed 2017 as an “expansionary” year for the industry while also issuing positive sentiment about 2018 and 2019.

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

The overview said apparent steel consumption in Q3 2017 rose 1.1% year over year in the European Union.

As for imports, it was a tale of two halves.

According to the report, imports rose 8% year over year in the first half of 2017. That reversed in the second half, however, and imports ultimately fell 14% for the year as a whole.

“This decline has occurred in the context of improving in global steel prices – largely driven by the Chinese market – which narrowed the gap between EU domestic prices and imports,” the Eurofer market overview states. “Other restraining factors include the moderation of imports, particularly from China, but also other countries affected by the imposition of anti-dumping and anti-subsidy measures by the European Commission. However, other third country suppliers have triggered increased exports to the EU, substituting for this drop.”

Eurofer estimated steel demand jumped by approximately 1.9% in 2017. The association indicated positive feelings that that upward momentum can continue in 2018 and 2019.

“Prospects for the continued recovery of EU steel demand are positive,” said Axel Eggert, director general of Eurofer. “The expected strength of most steel-using sectors bodes well for the demand side of the EU steel market. The supply side situation could, however, continue to be negatively affected by import distortions.”

Last year was an expansionary one for steel-using sectors, according to Eurofer, with notable growth in Central Europe, in particular.

“The outlook for 2018 and 2019 is positive, although activity in steel-using sectors will settle back into a more moderate pace of expansion owing to waning momentum in the tube sector and automotive industry,” the report states. “Underlying economic conditions remain supportive to a steady pace of expansion in other sectors.”

Free Download: The February 2018 MMI Report

The full market overview is available on Eurofer’s website.

TTstudio/Adobe Stock

This morning in metals news, the Indonesian government is considering whether or not to extend the copper export contract with Freeport McMoRan, Reliance Steel and Aluminum announces its fourth quarter earnings.

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

Indonesia Considers Copper Contract Extension

The Indonesian government will consider whether or not to extend a copper concentrate export contract with the Freeport McMoRan mine, Reuters reported.

According to the report, Freeport’s current export permit will expire Feb. 16.

Aluminum Tariffs Could Mean Pricier Beer?

President Trump has met with lawmakers this week to discuss potential tariffs on steel and aluminum imports.

One lawmaker, Wisconsin Republic Ron Johnson, pointed out tariffs on aluminum could have an impact on the price of beer, as tariffs could lead to a higher cost to can.

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

Reliance Steel and Aluminum Announces Q4 Earnings

Reliance Steel and Aluminum released its Q4 earnings results this week. In Q4, revenue jumped 15.5% year over year to reach $2.38 billion.

The U.S. Department of Commerce. qingwa/Adobe Stock

This morning in metals news, the U.S. Department of Commerce kicks off a new anti-dumping and countervailing duty probe, China urges the U.S. to exercise restraint when it comes to tariffs on steel imports and President Trump plans to meet with lawmakers to discuss tariffs on metals.

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

New DOC Investigation Targets Pipe From Six Nations

The Department of Commerce today announced the initiation of an anti-dumping and countervailing duty investigation of large diameter welded pipe from Canada, Greece, China, India, Korea and Turkey.

“With an 81 percent increase in trade cases initiated since President Trump took office, this Administration has made it clear that we will vigorously administer antidumping and countervailing duty laws,” Secretary of Commerce Wilbur Ross said in a release. “When initiating a trade investigation, the Department of Commerce begins an open and transparent process that allows American companies and workers to gain relief from the market-distorting effects of injurious dumping and subsidization of imports.”

China Warns on Possible U.S. Tariffs

Chinese official on Tuesday urged the U.S. to show restraint when it comes to tariffs on steel, according to a Reuters report.

The official, Wang Hejun, who heads the Chinese Ministry of Commerce’s Trade Remedy and Investigation Bureau, said that protectionism would lead to a “vicious circle” of trade actions, according to the report.

Trump to Meet with Lawmakers to Talk Trade Tariffs

President Trump today is meeting with lawmakers to discuss potential tariffs on steel and aluminum imports and other trade issues, according to Bloomberg.

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

Secretary of Commerce Wilbur Ross sent Trump his Section 232 recommendations for steel and aluminum last month. As of receipt of the reports, the president has 90 days to decide what to do.

The Steel Market Development Institute (SMDI) presented results of a new study on steel’s lightweighting capabilities during the Chicago Auto Show on Thursday, Feb. 8, at McCormick Place in Chicago. Photo by Fouad Egbaria

Use of aluminum in automotive bodies has gained steam in recent years — and the metal’s rivalry with steel has heated up in the process.

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

For example, Ford Motor Co. shook up the marketplace when it announced its all-aluminum body F-150 2015 model. Aluminum, despite being more costly than steel, is lauded for its lighter weight and, thus, ability to provide better fuel economy.

Not so fast on that front, according to a study presented by the Steel Market Development Institute (SMDI) on Thursday, Feb. 8, during the annual Chicago Auto Show.

SMDI, a business arm of the American Iron and Steel Institute (AISI), presented results of a study that concludes steel is a superior option to aluminum when it comes to lightweighting and curbing environmental impacts.

Tom Gibson, president and CEO of the American Iron and Steel Institute. Photo by Fouad Egbaria

Tom Gibson, president and CEO of AISI (and president of SMDI), touted the more than 60 steel-intensive vehicles debuted in the last year at auto shows in Detroit, Chicago, New York and Los Angeles.

“Steel continues to play an integral role in new vehicle debuts,” Gibson said. “In the last month, we’ve seen the 2019 Chevrolet Silverado, Ford Ranger, all-new Ram 1500, Toyota Avalon, Honda Accord and Kia Forte, all touting the benefits of advanced, high-strength steels.

“With the mix of materials available to designers and engineers today, no other material provides the complete package steel provides with performance, value and innovation, as well as being the most environmentally sound material for automakers and consumers.”

Jody Hall, vice president, automotive market, of SMDI, presented the Life Cycle Assessment (LCA) study findings, comparing steel with aluminum. The LCA study tested five different vehicles and went through a 10-month review, Hall said, and was validated by a “panel of experts” from Harvard University, Argonne National Laboratory, the Massachusetts Institute of Technology and consultancy firm thinkstep.

“The bottom line is, the result of this expert-validated study shows for the vehicles studied, lightweighting with advanced, high-strength steel produces lower greenhouse gas emissions than lightweighting with aluminum,” Hall said. “The difference comes, primarily, from the material production phase emissions of advanced high-strength steel and aluminum. These are emissions not captured when focusing only on tailpipe emissions under current EPA regulations.”

Hall further emphasized the case for steel, saying that if one lightweighted the five vehicles in the study with aluminum instead of steel, “the life cycle greenhouse gas emissions increase is estimated at 12 million tons of CO2 emissions. That’s the equivalent of the amount of electricity used to power 1.6 million homes.”

More details on the study, titled “Life Cycle Greenhouse Gas and Energy Study of Automotive Lightweighting,” and its methodology can be found at

AK Steel CEO Roger Newport. Photo by Fouad Egbaria

During the presentation, AK Steel CEO Roger Newport also delivered some comments on the state of the steel industry vis-a-vis the automotive world. Newport said steel has evolved to meet changing consumer demands in recent decades, and noted there’s been a “remarkable change” in the importance of materials when it comes to automotive construction.

“Materials are front and center,” he said.

It remains to be seen how much market share aluminum can capture. In the meantime, the steel industry will no doubt continue to tout its virtues compared with aluminum.

“The SMDI along with AK Steel are very excited about the potential of new, innovative steel products,” Newport said. “We continue our efforts to support the changes in the automotive world.”

Odds and Ends from Day 1 at the Auto Show

A few other miscellaneous notes from the first day of the Chicago Auto Show on Thursday, Feb. 8:

Subaru Presents 50th Anniversary Lineup

Subaru presented its 50th anniversary lineup, composed of nine vehicles, during

Subaru’s 50th anniversary lineup of vehicles. Photo by Fouad Egbaria

an unveiling ceremony. Tom Doll, president and chief operating officer of Subaru of America, Inc., touted the automaker’s growth since 2008, a period during which its market share rose from 1.4% to 3.8%, he said, and has seen it become the seventh-best selling brand in the industry.

“We’re not that small, fledgling little car company anymore,” Doll said.

Production quantities will be limited to 1,050 for Crosstrek, Forester, Impreza, Legacy and Outback, while WRX, STI and BRZ will have a combined total of 1,050, according to a Subaru release.

Kia Stinger Wins MotorWeek’s Best of the Year Award

Thursday afternoon at the Grand Concourse media stage, MotorWeek presented its Best of the Year award, which this year went to the Kia Stinger.

MotorWeek’s John Davis (left) presents Michael Sprague, chief operating officer of Kia Motors America, with the publication’s Best of the Year award for the Kia Stinger. Photo by Fouad Egbaria

MotorWeek host and creator John Davis said they try to pick a vehicle each year that captures “that moment in the automotive landscape,” in addition to, simply, being fun to drive.

“Our Best of the Year for 2018 really is the perfect definition of our award,” Davis said. “It’s a lot of fun to drive but moreover it is the result of a brand setting and achieving a new bar of prowess that is on par with the world’s best.”

The vehicle has a 3.3-liter twin turbo V6, an 8-speed automatic transmission and available performance-oriented all-wheel-drive system.

Michael Sprague, chief operating officer of Kia Motors America, accepted the award from Davis.

“It was introduced back in 2011 at the Frankfort Auto Show as a concept vehicle,” Sprague said. “Many people here in the audience told us ‘you have to build this car.'”

Klairmont Kollections Brings Retro Vibe

You won’t see too many cars like these on the streets today, but Klairmont Kollections took drivers down memory lane during its first ride as an exhibitor at the Chicago Auto Show.

Photo by Fouad Egbaria

Want to see an Aluminum Price forecast? Take a free trial!

The collection of unique vehicles, some dating back to the early 1900s, is based in Chicago and owned by World War II veteran and Highland Park, Illinois resident Larry Klairmont.