Scrap Price Bulletin
Following the late collapse in the September ferrous scrap market due to a sudden surge in material, trade sources are now speculating whether overhanging scrap flows could also keep prices flat next month. https://goo.gl/2bsiAA
The results of a long-running Section 232 investigation into aluminium and steel imports is approaching a conclusion, with President Donald Trump expected to obtain the results before the January deadline, according to one Commerce Department official.
What we are talking about is the revision of the U.S. Department of Commerce initiated a section 232 of the Trade Expansion Act of 1962. The U.S. imports the most steel from Canada (South Korea is a close second). With tariffs on Scrap metal, Canada may find itself in a surplus of scrap metal by January 2018. Initially, the U. S. is looking at a 20% tax increase for their steel imports. President Trump is saying “..in the case of steel, both the United States and global markets for steel products are distorted by large volumes of excess capacity.”
The surplus is primarily resting on the shoulders of China as the leader in steel (both ferrous and non-ferrous) production and exports. It is common knowledge that China can filter their scrap metal through other countries to distribute their dominance in the scrap metal industry.
President Trump is reportedly ‘hell bent’ on imposing steel tariffs despite objections from some advisors.
Ultimately, we should expect President Trump to imposes tariffs on imports of steel. Many countries will retaliate and file disputes with the World Trade Organization (“WTO”). There will be appeals. The case goes to the WTO Appellate Body who will issue a report that will tie things up for 3-4 year.
Interestingly enough, if you watched the debate with President Trump and Hilary Clinton then you may remember that Hilary stated that Trump’s buildings were built from low cost steel brought in from China. You can not blame ‘The Donald’ for buying steel made in China. You and I would do the same thing if the opportunity was there. Simply put, if Americans are forced to buy American steel they will do it.
It’s true that the steel industry has suffered in the US and Europe thanks in part to state-backed firms in China dumping cheap steel on the international market. But unilateral tariffs don’t promise a simple solution, since the US bought less than 2% of China’s steel exports in 2015, and less than 1% last year, a result of 20 trade remedies—rules that limit unfair sales—including four that went into effect last December after court wins against China by the Obama administration. Most US steel imports come from Brazil, Canada and South Korea.published in QZ.com
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