Trump’s tariff talk stirs international markets

President Donald J. Trump’s announcement Thursday afternoon, March 1, that he intended to impose tariffs on imported steel and aluminum greeted metals producers and traders in the rest of the world as they awoke Friday morning, March 2.

Trump’s announcement was cited as the cause of a sell-off in the New York Stock Exchange and provoked numerous reactions and comments in North America and beyond. According to CBS News, the president “summoned steel and aluminum executives to the White House” March 1, saying, “We’ll be signing it next week,” regarding an executive order imposing new tariffs. Trump reportedly added, “You’ll have protection for a long time in a while.”

One Hong Kong-based scrap trader, who requested anonymity, notes that while China is pointed to most frequently as the problem by campaigning politicians, an analysis he read “suggests that it may be Canada, Germany, Japan and South Korea, all close allies of the United States, who will suffer most.”

Reactions from Canada and Europe have been strong, but coverage of the tariffs by the China Daily, considered closely aligned with the Beijing government, indicates China was responsible for just 2 percent of the imported steel shipped into the U.S. in 2017.

Shanghai-based investor John Browning of BANDS Financial observes in his daily dispatch to customers dated March 2, “In the popular press this morning [in China], the Trumpian trade tariffs news was placed below ‘China, Tonga agree strategic partnership.’ This may reflect the fact that in China these tariffs may largely be a nonissue.”

Figures for 2017 published by the Washington-based American Iron and Steel Institute (AISI) show China shipped less finished and semifinished steel into the U.S. in 2017 than it did in 2016, and the 813,000 metric tons it shipped were surpassed by Brazil (987,000), Taiwan (1.2 million), Germany (1.4 million), Japan (1.5 million), Turkey (2.2 million) and South Korea (3.7 million).

Some industry observers do express concern that much of the steel recorded as coming from South Korea and Taiwan may be produced in China and shipped via those two nations (and possibly via Canada) on its way to the U.S.

All those nations’ figures are topped by Canada, which in 2016 shipped more than 5.5 million metric tons of steel to the U.S.

At least one China-based critic appeared in the form of the China Nonferrous Metals Industry Association (CNIA), which includes as an affiliate the Metals Recycling Branch (CMRA). Bloomberg quotes CNIA Vice Chairman Wen Xianjun as saying the U.S. measures “overturn the international trade order” and that “other countries, including China, will take relevant retaliatory measures.” Bloomberg also quotes a China Iron and Steel Association (CISA) officer as calling the move “stupid.”

The Hong Kong trader also questions the use of America’s Section 232 national security measure as a means of imposing the tariffs. “He’s using a national security investigation from last year and invoking a loophole in international trade rules allowing restrictions in times of war. Is he bringing in the measures for political gain to stimulate the domestic economy and U.S. labor market, or is he preparing for something more serious or just hedging both bets?”

He concludes, “Any way you look at it, if he signs off on the order, other countries will follow [with measures of their own].”

In addition to the New York stock sell-off, on the Shanghai Futures Exchange on Friday morning, March 2, most aluminum contracts were trading higher, while copper and steel rebar pricing were moving lower.

Closer to home, Trump’s announcement was greeted with skepticism by several Republican Party elected officials in the U.S. According to CBS News, Sen. Orrin Hatch said the Trump advisors who pushed for the tariffs “ought to be reprimanded” because the new tariffs are “not going to help America.”

Sen. Ben Sasse of Nebraska, a Republican like Trump and Hatch, called the move “leftist economic policy” when contacted by CBS, adding that the U.S. had “tried it a bunch of times over the last two centuries, and every time American families have suffered. It is bad policy.”

The president of MillerCoors Brewing took to his Twitter account to say, “American workers and American consumers will suffer,” adding the company has been “selling an increasing amount of our beers in aluminum cans, and this action will cause aluminum prices to rise.”

The new tariffs, which went into effect March 23, put a 25 percent levy on imported steel and a 10 percent levy on imported aluminum.

Proclamations signed by Trump March 8 have exempted steel and aluminum from Canada and Mexico from the tariffs, while exemptions for Argentina, Australia, Brazil, European Union member countries and South Korea followed March 22.

The Trump administration announced that these exemptions would expire May 1 pending discussions with these countries “of satisfactory long-term alternative means to address the threatened impairment to U.S. national security.”

News reports have indicated the president sees deferring the tariffs temporarily as a way to spur the governments of Canada and Mexico into speeding up NAFTA renegotiations. “I have a feeling we’re going to make a deal on NAFTA,” Trump was quoted as saying at the March 8 proclamation signing ceremony.

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© Joseph Gough |

Owl’s Head Alloys expands in Kentucky

Owl’s Head Alloys Inc., a secondary aluminum producer based in Bowling Green, Kentucky, has announced plans to add a fourth furnace to its production facility there. The $3 million investment is needed to keep up with growing demand from its customers, the company says.

The new furnace, projected to come online in May 2018, will increase the company’s input capacity by 42,500 tons of scrap per year. Presently, Owl’s Head melts about 120,000 tons of aluminum scrap per year.

Owl’s Head processes a range of aluminum scrap, including used beverage containers (UBCs), automotive wheels, painted siding and highway signs. The company sorts and shreds the recycled aluminum products, melts the processed aluminum to customer specifications and casts it into ingots or sows or provides it in molten form for shipment to consumers in the automotive, beverage can and construction industries.

President David Bradford comments, “All end markets are pretty strong right now, although the automotive market is an area of great opportunity.”

“Owl’s Head Alloys has created a significant presence and reputation nationally in the secondary aluminum recycling industry simply by doing business as we should—delivering exceptional quality, serving our customers’ interests over our own and maintaining integrity,” says Kevin Mays, chief financial officer of Owl’s Head. “This expansion allows us to continue meeting our customers’ growing needs as well as provide additional economic development in our community.”

The Kentucky Economic Development Finance Authority (KEDFA) has preliminarily approved tax incentives of up to $150,000 through its Kentucky Business Investment program for the project. The performance-based incentive allows a company to keep a portion of its investment over the agreement term through corporate income tax credits and wage assessments by meeting job and investment targets.

© Corepics Vof |

China enters ferrous scrap export era

China’s national news service, citing data from the state-affiliated China Iron and Steel Association (CISA), says the nation exported 2.2 million metric tons of ferrous scrap in 2017, an exponential increase from the mere 1,000 metric tons exported in 2016.

According to the CISA data, the largest recipients of the exported ferrous scrap were ASEAN (Association of Southeast Asian Nations) countries, such as Indonesia, Thailand and Vietnam.

The leap in exports occurred despite a 40 percent export tariff on ferrous scrap that was in place throughout 2017, according to the Xinhua news service online article.

The change in China’s ferrous scrap balance has been created by its much larger generation of ferrous scrap compared with previous years and the government’s effort to shut down scrap-melting induction furnace operators.

According to Xinhua, the government’s effort to extinguish that sector resulted in the phaseout of as much as 140 million tons per year of scrap-fed melt shop capacity. The government cites anti-pollution efforts for the shutdowns. Some analysts, however, say favoritism toward state-owned steelmakers is why the induction furnace sector was targeted.