US aluminum scrap tariff takes effect in China

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The Ministry of Commerce of the People’s Republic of China issued a notice Monday, April 2, 2018, stating a previously announced 25 percent tariff on aluminum scrap imported from the United States would take effect immediately.

The ministry’s announcement claims the suggested tariffs on metal received widespread support within China during a brief comment period.

In early April, a scrap trader contacted by Recycling Today says aluminum scrap buyers in China scrambled to clear shipments of zorba, twitch and other types of aluminum scrap during the brief comment period. The trader indicates some buyers are signaling intentions to favor purchases of scrap from Europe and other parts of the world.

The April 2 Chinese Ministry of Commerce notice reads in part, “On March 23, the Ministry of Commerce issued a list of suspension and concession products for steel and aluminum imports from the United States and solicited public opinions. On March 31, the comment period ended. During the comment period, a large number of people expressed their support for measures and product lists by telephone, email, etc., and agreed that the government should take measures to safeguard the interests of the state and the industry. Some people also suggested increasing [the] measures. After evaluation, it was decided to implement the [existing] measures on 128 products imported from the United States.”

China’s government also defends the tariffs as a necessary countermeasure to the Section 232 tariffs previously announced by the Trump administration. “The Chinese side believes that the U.S. side adopts 232 measures on imported steel and aluminum products and abuses the ‘security exceptions’ clause of the World Trade Organization [and] that its measures [are] seriously violating the principle of nondiscrimination as a cornerstone of the multilateral trading system.”

Although trade-related negotiations are underway between U.S. and Chinese officials, the Chinese Ministry of Commerce states, “In view of the lack of agreement between the parties, on March 29, China notified the WTO of the suspension of the concession list and decided to impose tariffs on certain products imported from the United States in order to balance the loss of profits caused by the U.S. 232 measures against the Chinese side.”

The announcement concludes with a verbal olive branch, with the ministry commenting, “As the two largest economies in the world, cooperation between China and the United States is the only correct choice. The two sides should resolve their concerns through dialogue and negotiation, achieve common development and avoid subsequent actions that will cause greater damage to the overall Sino-U.S. cooperation.”

In a Wednesday, April 4, interview with National Public Radio, Director of the White House National Trade Council Peter Navarro said the Section 232 tariffs are necessary for national security reasons to protect America’s steel and aluminum industries. Regarding a broader “trade war,” Navarro indicated the Trump administration would continue to tie the future of U.S.-China trade to the status of intellectual property rights and technology transfer issues in China.

The Institute of Scrap Recycling Industries (ISRI), Washington, issued a statement commenting on the tariff’s impact: “A 25 percent tariff [will] mean a nearly $300 million price burden on a trade relationship that represents nearly 25 percent of the entire world’s trade in aluminum scrap.”

Following China’s announcement that it would be assessing the tariff on aluminum scrap imports from the U.S., the Office of the U.S. Trade Representative (USTR), as part of what it calls the “U.S. response to China’s unfair trade practices related to the forced transfer of U.S. technology and intellectual property,” April 5, 2018, published a proposed list of products imported into the U.S. from China that could be subject to additional or new tariffs.

According to the USTR, the list of products and intended tariff increases, which can be found at https://ustr.gov/sites/default/files/files/Press/Releases/301FRN.pdf, runs 45 pages in length and includes “approximately 1,300 separate tariff lines.”

The portion that lists metals and alloys covers nearly eight pages of that 45-page total and includes:

  • more than 55 types of iron and steel products;
  • nearly 20 types of stainless steel;
  • several dozen other types of alloyed steels, including tool steels and electrical steel; and
  • more than two dozen types of aluminum alloys, shapes or products.

Also included on the list is a wide range of appliances, machinery, electronics goods and vehicles.

The list of proposed products will undergo further review in a public notice and comment process, including a hearing. After that, USTR says it will issue what it calls a final determination of the products staying on the list.

Huron Valley to expand capacity in Alabama

Trenton, Michigan-based Huron Valley Steel Corp. (HVSC) has announced it plans to add a secondary aluminum production line at its Anniston, Alabama, facility.

The company cites “the improved steel market and recent scrap import restrictions imposed by China” as reasons why “HVSC anticipates greater volumes of zorba will be available to the United States domestic market for processing.”

HVSC states in the March 2018 news release, “The greater availability of zorba will allow the company to expand its secondary aluminum alloy production to the South while continuing to serve its current customers’ aluminum scrap needs.”

The company currently melts aluminum scrap and produces secondary aluminum ingot and sow at its Belleville, Michigan, facility. With a new scrap melting furnace in Alabama, HVSC indicates it plans to increase its secondary aluminum capacity to have more product to sell to the automotive die casting market in North America.

“2015 and 2016 were challenging years, not just for us but for the entire metals recycling industry,” says Eric “Randy” Fritz, president and CEO of HVSC. “Despite those challenges, HVSC has continued to invest in new technology and is planning for growth. Now with the improved market conditions, it is refreshing [to] realize those efforts are beginning to pay off.”

HVSC bills itself as one of the largest processors of shredded nonferrous mixed metals generated by auto shredding plants in the U.S. and Canada. The shredded nonferrous mix known as zorba is processed by HVSC at its two media plants in Belleville and Anniston. Aluminum alloys comprise approximately 80 percent of the nonferrous metal it recovers from zorba.

JSW to upgrade, expand Texas steel mill

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JSW Steel (USA) Inc., a subsidiary of India-based conglomerate the JSW Group, has signed a memorandum of understanding (MoU) with the state of Texas regarding an investment of $500 million (in phases) to expand its steelmaking complex in Baytown, Texas.

The investment will be used to expand the company’s plate and pipe mill in Baytown, which is near Houston. The proposed project will include the installation of an electric arc furnace (EAF) that will use ferrous scrap as a raw material.

Since purchasing the steel mill in 2007, JSW indicates it has been operating at around 30 percent of capacity, which the company hopes to boost. The state of Texas will assist with the expansion through the awarding of a Texas Enterprise Fund (TEF) grant offer of $3.4 million.

“The memorandum signed by (Texas Gov.) Greg Abbott and JSW USA is part of our long-term strategy to enhance our U.S. footprint,” says Parth Jindal of JSW Group. “It reiterates our commitment to stay invested and grow in the U.S. market. It also provides JSW USA an opportunity to participate in the USA’s infrastructure development and job creation priorities.”

Jindal continues, “Access to natural gas at extremely economical prices and the abundant availability of scrap steel in Texas make conditions very conducive for manufacturing through the electric arc furnace route.”

The Baytown mill produces hot-rolled plate widths up to 160 inches and thicknesses up to 6 inches, creating products primarily for the energy, petrochemical, defense and heavy equipment sectors.

The company will invest $150 million in the first phase (already underway) to augment current capabilities, which is expected to be complete by March 2020. JSW USA says it intends to use the rest of the investment, up to $350 million, to set up the new EAF facility (subject to approvals).

JSW says the investment will help it reach around 1 million metric tons of annual steelmaking capacity and allow the mill to stop sourcing finished or semifinished steel from outside the United States.