Commodities Roundup: Trump Takes Step Toward Heavy Chinese Tariffs, Countries Get Steel and Aluminum Tariff Exemptions
For the buyers and category managers out there, especially those of you deep in the weeds of buying and managing commodities, here’s a quick rundown of news and thoughts from particular commodity markets.
From price movements to policy decisions, our MetalMiner editors scour the landscape for what matters. This week:
Section 232 Tariff Exemptions and Section 301 Tariffs
Thursday marked a big day for U.S. trade policy.
President Trump signed a memorandum authorizing the U.S. Trade Representative (USTR) Robert Lighthizer to take the next steps in the administration’s Section 301 probe, which launched last August. The probe assesses perceived unfair Chinese trade practices, including issues related to intellectual property theft.
The memo signed by Trump could lead to as much as $60 billion in tariffs on Chinese products, the president said Thursday. According to report, the proposed list of products that could be subject to tariffs includes around 1,300 items. The USTR now has 15 days to publish a list of products, after which a review period will commence.
And as if that news wasn’t enough, Lighthizer also told the Senate Finance Committee Thursday that the European Union and four others (Australia, Brazil, Argentina and South Korea) would be granted exemptions from the Section 232 tariffs on steel and aluminum. The exemptions, which go into effect Friday, March 23, are temporary, pending further negotiations with those parties. In the meantime, they offer a window of relief for trading partners, who lobbied for exemptions throughout March.
Chinese Iron Ore and Port Stocks
MetalMiner’s Stuart Burns earlier this week addressed the issue of dropping Chinese iron ore prices.
“So when Reuters reports that the Dalian commodity exchange May iron ore contract price touched a low of 475.50 yuan per ton this week and China’s Qingdao port price dropped below $70 per ton — the lowest since Dec. 11 — analysts readily refer to record port stocks as being the cause,” Burns wrote.
But port stocks don’t tell the whole story.
As a result of Beijing’s crackdown on polluting industries, Chinese steel mills are increasingly turning to the higher-purity iron ore grades, leading to a buildup of low-grade iron ore in port stocks, Burns explained.
Tin Looking Good
Burns also wrote on the prospects for tin, which look to be fairly sunny.
“Doubters may suggest the lead acid battery is doomed, along with the internal combustion engine — in the long run, they would probably be right,” he wrote. “But for the foreseeable future, tin is riding both horses with considerable aplomb.”
Tin prices have been trending up since last year, and the supply market is supportive of further increases, he added.
Steel Capacity Utilization Rate Hits 74.8%
Last month, the Trump administration announced a goal of reaching an 80% capacity utilization rate for both the domestic steel and aluminum industries.
According to the American Iron and Steel Institute’s most recent raw steel production report, the capacity rate for the year through March 10 sat at 74.8%.
Production in the year to date amounted to 17,187,000 net tons.
USITC Makes Final Ruling on Chinese Aluminum Foil
Concluding the anti-dumping and countervailing duty investigation of Chinese aluminum foil imports — investigations which began last March — the U.S. International Trade Commission issued a final affirmative determination.
As a result, the Department of Commerce will soon issue orders on the imports. Anti-dumping duties ranging from 48.64 to 106.09% and countervailing duties ranging from 17.14 to 80.97% could be applied.
In other trade cases, the U.S. Department of Commerce issued a final affirmative determination in its anti-dumping and countervailing duty investigation of carbon and alloy steel wire rod from five countries: Italy, Korea, Spain, Turkey and the U.K.