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This morning in metals news, there has been a flood of applications from U.S. companies for exemptions from the Section 232 tariffs. Nickel prices reached a three-year high, stoked by fears of more sanctions, and Alcoa shares jumped in after-hours trade following rosy Q1 results.

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Applications for Tariff Waivers Surge

The U.S. Department of Commerce is being inundated with applications from American companies requesting waivers from the Section 232 tariffs on steel and aluminum, the Washington Post reported. As of last week, there have been more than 1,200 applications for exemptions from the steel tariffs and 125 applications regarding aluminum tariffs.

Kevin Dempsey, general counsel at the American Iron and Steel Institute, told the Post that he anticipates “several thousand exclusion requests” to be filed.

Nickel Price Reaches 3-Year High

Speculations that Russian nickel producer Norilsk Nickel will be added to U.S. sanctions have helped nickel prices reach their highest levels since 2014, according to MarketWatch.

Nickel prices rose to $15,875 per ton on Tuesday. This jump in nickel prices by more than 10% is also the biggest one-day move for the metal since 2008. Read more

As my colleague Sydney Lazarus reported yesterday, even though the European Union has a temporary exemption from the U.S.’s Section 232 tariffs on steel and aluminum, it is demanding compensation at the World Trade Organization as shown in a filing by that trade body two days ago, according to Reuters.

The EU is arguing that the U.S. tariffs were imposed only to protect U.S. industry, rather than for security measures.

MetalMiner Executive Editor Lisa Reisman took readers through how the U.S. Department of Commerce did its homework on the Section 232 steel investigation, in a top-read post originally published Feb. 23, 2018. Read the full text of Lisa’s article below.

By now most MetalMiner steel producers and steel buying organizations have pored over the Section 232 steel report published by the Department of Commerce. 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.

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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

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This morning in metals news, aluminum prices have risen to a seven-year-high following the London Metal Exchange’s ban on Rusal metal, the EU pushes back against the U.S.’s steel and aluminum tariffs, and renewable energy takes center stage among major U.S. companies.

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A 7-Year High for Aluminum Prices

Aluminum prices surged to their highest levels since 2011 in midst of the scramble that has resulted from U.S. sanctions on Russian producer Rusal, the Financial Times reported. On Monday, the price of aluminum rose more than 5% to push past $2,400 per ton, a seven-year high. This marks the biggest one-day gain for aluminum prices since 2011.

The London Metal Exchange has banned Rusal metal produced or sold after April 6, and the ban comes into effect tomorrow.

EU Challenges U.S. Tariffs

Although the European Union has a temporary exemption from the U.S.’s Section 232 tariffs on steel and aluminum, it is demanding compensation at the World Trade Organization, Reuters reported.

The EU is arguing that the U.S. tariffs were imposed only to protect U.S. industry, rather than for security measures. Read more

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

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Japan Confident in Section 232 Response

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

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

Ukraine Steel Production Falls 3%

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

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

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Turkey Lobbies for Tariffs Exemptions

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

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

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Japanese Aluminum Industry Calls Out Section 232 Tariff

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

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

U.S. Steel Exports Jumped 13% Last Year

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

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

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

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

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

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This morning in metals news, the E.U. is looking to make its exemption from the U.S.’s Section 232 steel and aluminum tariffs permanent, reports indicate Tata Steel’s bid for Bhushan Steel could be as much as $5.3 billion, and China announced plans to impose tariffs on a number of U.S. goods in response to President Trump’s move Thursday, one that potentially opened the door to $60 billion in tariffs on Chinese goods.

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After Winning Temporary Relief, E.U. Looks to Make Tariff Exemption Permanent

U.S. Trade Representative (USTR) Robert Lighthizer announced Thursday that President Trump granted temporary exemptions from the Section 232 steel and aluminum tariffs for a number of countries, plus the E.U.

Naturally, the E.U. wants to make the exemption permanent.

The exemption runs until May 1. According to a Financial Times report, E.U. leaders Friday said they would be ready to retaliate if necessary, calling the tariffs an “inappropriate remedy” to global overcapacity.

Tata’s Steel’s Big Bid

According to Bloomberg, Tata Steel has put in a bid of $5.3 billion for the bankrupt Bhushan Steel.

If the deal is completed by March 2019, according to the report, it would make Tata India’s biggest steelmaker.

China Announces Intention to Retaliate on Trade

Following President Trump’s announcement Thursday regarding the USTR’s Section 301 probe and the possibility of as much as $60 billion in tariffs on Chinese goods, China responded in kind.

According to a release on the Chinese Ministry of Commerce website, it has a list of 128 products targeted for tariffs amounting to $3 billion. The list of products includes stainless steel pipes and recycled aluminum, in addition to pork, fresh fruit, dried fruit and nut products, wine, modified ethanol, and more.

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“The United States’ practice of restricting the import of products based on ‘national security’ has severely damaged the multilateral trade system represented by the WTO and seriously interfered with the normal international trade order,” the Ministry of Commerce said. “It has been opposed by many WTO members. The Chinese side also negotiated with the United States through multiple levels and channels, and will take legal actions under the WTO framework to jointly maintain the stability and authority of the multilateral trade rules with other WTO members.”

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Amid President Trump’s announcement Thursday morning regarding the ongoing Section 301 investigation vis-a-vis Chinese trade practices, United States Trade Representative (USTR) Robert Lighthizer told the Senate Finance Committee that the European Union and several other trading partners would be granted temporary exemptions from the administration’s Section 232 steel and aluminum tariffs.

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Other countries garnering temporary exemptions are South Korea, Australia, Argentina and Brazil.

The tariffs of 25% and 10% on steel and aluminum imports, respectively, are scheduled to go into effect Friday, March 23. Canada and Mexico previously gained temporary exemptions; North American Free Trade Agreement (NAFTA) renegotiation talks continue with those countries. In addition to NAFTA, the U.S. is also working to “refurbish” the U.S.-Korea Free Trade Agreement (KORUS), Lighthizer said Wednesday during a House Ways and Means Committee hearing on trade policy.

Countries have lobbied for exemptions in the weeks since Trump signed the proclamation setting the tariffs in motion.

In the ensuing weeks following the Section 232 tariffs announcement, trading partners have threatened retaliation. The E.U., for example, said it would hit back with tariffs on American products, like Kentucky bourbon, blue jeans and Harley-Davidsons.

The exemptions announcement came a day after U.S. Secretary of Commerce Wilbur Ross and E.U. Trade Commissioner Cecilia Malmström issued a joint statement regarding impending discussions: “We have agreed to launch immediately a process of discussion with President Trump and the Trump Administration on trade issues of common concern, including steel and aluminum, with a view to identifying mutually acceptable outcomes as rapidly as possible.”

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Lighthizer addressed the subject of potential exemptions during a trade policy agenda hearing Wednesday before the House Ways and Means Committee.

In a tweet, the European Steel Association (EUROFER) said it would comment on the news of the exemption “after the moment of imposition has occurred.”

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U.S. Trade Representative (USTR) Robert Lighthizer, speaking before the House Ways and Means Committee Wednesday morning, addressed a wide range of issues regarding the Trump administration’s trade policy agenda, including steel and aluminum tariffs exemption negotiations with a number of countries.

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In the recently announced steel and aluminum tariffs of 25% and 10%, respectively, the administration formally announced an exemption process. As part of the tariffs announcement, fellow North American Free Trade Agreement (NAFTA) partners Canada and Mexico were granted temporary exemptions, “subject to a successful NAFTA renegotiation,” Lighthizer said. In addition, he said the U.S. is in discussions with South Korea, which is currently engaging the U.S. in talks vis-a-vis “refurbishing” the U.S.-Korea Free Trade Agreement (KORUS).

In addition, the USTR is talking to Australia, Argentina and the European Union about potential exemptions, Lighthizer added. A number of other countries have come forward with exemption requests, he added, with Brazil being one with which talks could soon commence.

“Our hope is by the end of April to have this part of the process resolved,” Lighthizer said in response to a question about the timeline of the exemption requests. “Having said that, the president has the authority at any time during the course of the program to let people out if he thinks its in the national economic interest.”

Lighthizer outlined a series of trade policy goals during his opening statement, including: supporting the president’s national security strategy; working to make U.S. companies and workers competitive in overseas markets; negotiating trade deals “that will work for Americans”; enforcing and defending U.S. trade laws; and reformation of the multilateral trading system, with Lighthizer calling out the World Trade Organization (WTO) in his remarks.

“For too long, the WTO has failed to promote trade liberalization,” he said. “Too many members remain committed to an outdated Doha Round Agenda that is incapable of addressing modern issues like digital trade. Too many members also think that they can get their way through litigation, rather than negotiation.

“Perhaps most worryingly of all, the WTO has proven to be wholly inadequate to deal with China’s version of a state-dominated economy that rejects market principles.”

U.S Rep. Kevin Brady (R-TX), chairman of the committee, initiated the hearing with some comments on trade and other topics.

“I am hopeful we will be able to vote on and pass a new, modern NAFTA for America by year end,” Brady said. “That said, the road ahead isn’t easy. Congress wants strong protection for intellectual property, increased market access for our dairy farmers, and an end to Canada and Mexico’s harshly restrictive customs barriers, such as unreasonably low de minimis levels.”

Brady continued: “We need workable solutions on rules of origin and and procurement, that recognize how Americans benefit from global supply chains — otherwise, we lose out to China.”

Brady also addressed Chinese steel oversupply, which has “put many Americans out of work,” he said.

“It’s a blatant theft of our companies’ technology and intellectual property, and it can’t be tolerated,” he said.

NAFTA and the ISDS Debate, Proposed Sunset Clause

Regarding NAFTA, which recently underwent a seventh round of renegotiation talks, Brady, citing supporting from more than 100 Congressional Republicans, touched on the importance of strong investor-state dispute settlement (ISDS) provisions in any renegotiated iteration of NAFTA.

“This is a key part of passing a strong NAFTA agreement that we’re convinced you’ll negotiate well for us,” Brady said to Lighthizer.

Lighthizer enumerated reasons for skepticism regarding ISDS, including questions of sovereignty.

“Why should a foreign national be able to come in and not have the rights of Americans in the American court system but have more rights than Americans have in the American court system?” he asked. “It strikes me as something that at least we ought to be skeptical of and analyze.”

Committee member U.S. Rep. Sam Johnson (R-TX), meanwhile, expressed concerns regarding a proposed sunset clause put forth by U.S. negotiators — by which all three NAFTA nations would have to periodically reapprove NAFTA every five years — citing businesses’ need for “certainty.”

“The idea is if it’s such a good agreement, we’ll naturally roll it over,” Lighthizer said. “If it’s not a good agreement, we won’t.”

During the lifespan of NAFTA, which is now 24 years old, Lighthizer said the economy has changed and the U.S. has gotten “way out of whack” with what its deficits are.

Committee member and U.S. Rep. Sander Levin (D-MI) addressed the impact of Mexican labor policies, citing low take-home pay for Mexican workers as having a negative impact on the U.S. Lighthizer agreed that wage increases in Mexico are in the U.S.’s interest.

Section 301 Probe and Intellectual Property Rights

Media reports early this week indicated an announcement would soon be coming regarding the imposition of new tariffs against China — which could amount to about $60 billion — in response to what the U.S. perceives as intellectual property theft by China.

Last August, the USTR launched a Section 301 probe under the Trade Act of 1974, which sought to  “determine whether acts, policies, and practices of the Government of China related to technology transfer, intellectual property, and innovation are unreasonable or discriminatory and burden or restrict U.S. commerce.”

“Our view is that we have a very serious problem of losing our intellectual property, which is really the biggest single advantage of the American economy, in my opinion,” said Lighthizer, adding that the U.S. is losing that intellectual property in ways that are “not reflective of the underlying economics.”

In response to the problem, Lighthizer said, potential remedies include actions on the tariffs and investor fronts.

An Update on KORUS

Lighthizer updated the committee on the progress of KORUS talks, explaining that negotiators are down to “the last few issues.”

“In the opinion of many people, Korea is a particular problem in the area of steel primarily,” he said. “We’re trying to work our way through all of those things and we’re hopeful that we can make headway on it. [My] objective would be … to have amendments to the agreement that will satisfy this committee.”

Committee member and U.S. Rep. Dave Reichert (R-WA) expressed concerns regarding the Section 232 tariffs exclusion process and the possibility of tariffs stemming from the Section 301 probe, saying that American manufacturers and consumers would be hurt by an ineffective exclusion process and new tariffs on other imports. He also questioned Lighthizer regarding the transparency of the KORUS process, also asking if the USTR could publish a list of negotiation objectives.

Lighthhizer said it’s unlikely that such a list would be published, but said he would be open to talking privately with committee members and reaching an agreement in principle “fairly quickly.”

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“My objective is to try to do this as quickly as possible with as little disruption as possible,” Lighthizer said regarding the KORUS talks.

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This morning in metals news, the U.S. is in talks with several nations regarding possible exemptions from its steel and aluminum tariffs, Shanghai copper hits a six-month low Wednesday and the U.S. drops a bargaining point in the ongoing North American Free Trade Agreement (NAFTA) renegotiation talks.

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Countries in Talks With U.S. Over Exemptions from Metals Tariffs

U.S. Trade Representative Robert Lighthizer on Wednesday said the U.S. is in negotiations with the E.U., Australia and Argentina regarding potential exemptions from the recently announced steel and aluminum tariffs, Reuters reported.

Lighthizer, addressing the House Ways and Means Committee, added he expected a decision soon from President Trump regarding potential tariffs on Chinese imports, which media reports earlier this week indicated could be valued at $60 billion.

Shanghai Copper Slides

Shanghai copper dropped to a six-month low Wednesday, Reuters reported, marking the fourth consecutive day of price drops.

U.S. Ditches Auto Content Request in NAFTA Talks

According to a report by Reuters citing The Globe and Mail, the U.S. has dropped its auto content rules request vis-a-vis the ongoing NAFTA renegotiation talks.

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The U.S. has been pushing an auto content benchmark that calls for at least 50% of materials sourced from the U.S. for all vehicles made in Canada and Mexico that are exported to the U.S.

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

This morning in metals news, the U.S. Department of Commerce announced its tariff exclusion process for steel and aluminum, world leaders announce the intention to work together on steel overcapacity, and bank accounts have been seized in connection to a corruption probe involving Rio Tinto’s Mongolia mine.

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DOC Publishes Tariff Exclusion Procedure in Federal Register

Entities looking to obtain exclusions from the newly passed steel and aluminum tariffs received some clarity on how to do so recently when the Department of Commerce posted the procedures for tariff exclusion.

“These procedures will allow the Administration to further hone these tariffs to ensure they protect our national security while also minimizing undue impact on downstream American industries,” Secretary of Commerce Wilbur Ross said in a DOC statement Sunday. “Starting tomorrow, domestic industry will be able to apply for exclusions through a fair and transparent process run through Commerce’s Bureau of Industry and Security.”

The DOC posted the procedures in a Federal Register notice.

According to the DOC, “Only individuals or organizations using steel or aluminum articles identified in Presidential Proclamations 9704 and 9705 and engaged in business activities in the United States may submit exclusion requests. Exclusion requests will be posted for a 30-day comment period on”

Merkel, Xi to Work Together on Steel Overcapacity

German Chancellor Angela Merkel and Chinese President Xi Jinping plan to work together to tackle global steel overcapacity, the Financial Times reported.

The comments, on the heels of the newly announced U.S. steel and aluminum tariffs, came ahead of Group of 20 meetings scheduled for today and Tuesday, according to the report.

Bank Accounts Seized in Probe Involving Rio Tinto’s Mongolia Mine

Switzerland’s highest court upheld the seizure of $1.85 million in bank accounts as part of a corruption probe related to a Mongolia finance minister and a mine operated by Rio Tinto in the country, Reuters reported.

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According to the report, anti-graft authorities in Mongolia are looking into a 2009 agreement with the miner, which eventually led to the startup of the miner’s copper-gold project in the Gobi Desert.