Commodities Roundup: Excess Steel Capacity, Oil Prices and U.S.-China Trade

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:

Excess Steel Capacity

Last week, the Global Forum on Steel Overcapacity brought steel-producing nations together to continue a dialogue on a common goal: curbing global steel overcapacity.

“The global challenge of overcapacity has strained trade relations and the global trade architecture to its breaking point,” E.U. Trade Commissioner Cecilia Malmström said in a statement. “Progress in this Forum at this sensitive time demonstrates that multilateral cooperation is not only possible, but that it is actually the best tool to tackle global challenges. Putting this agreed package in place is something that the European Union will now follow closely. Our workforce and our industry depend on these commitments being carried out.”

The European Commission also went after the U.S.’s Section 232 tariffs, which remain in effect against the E.U.

“The EU currently has an unprecedented number of trade defense measures in place targeting unfair imports of steel products, with a total of 53 anti-dumping and anti-subsidy measures,” a European Commission statement reads. “The EU has also activated all legal and political tools at its disposal to fight unjustified US 232 measures.”

Oil on the Rise

How high can the oil price go this year?

MetalMiner’s Stuart Burns delved into oil price trends, as the Brent crude price reached its highest level since late 2014.

As always, a number of factors are contributing to the price spikes.

“A combination of supply disruption from Libya, a collapse in Venezuelan output and the imminent sanctions on Iran have combined to spook markets into believing there will be acute shortages,” Burns wrote.

“According to CNBC, analysts say about 650,000 barrels of Iranian oil have already been taken off the market, with estimates that 1 million barrels or more of Iranian crude could be off the market by year end.”

Crude Steel Production Up 2.6%

According to the World Steel Association’s global crude steel production report, production jumped 2.6% in August compared with August 2017.

In total, the 64 countries reporting to the World Steel Association produced 151.7 million tons. China, in particular, saw its production rise 2.7% year over year; however, its production growth has been on the decline since May, when it had hit 8.9%.

Department of Commerce Adds Rebuttal System to Tariff Exclusion Process 

Requests for exclusions from the Trump administration’s metals tariffs continue to rise, leading to consternation among the business community regarding long-standing requests that have yet to receive a response.

In general, the tariff exclusion process has come in for much criticism, as the Department of Commerce has seemingly struggled to keep up with the volume of requests that have been received (in addition to objections filed to those requests).

Earlier this month, the Department of Commerce announced it had implemented an updated rebuttal system.

U.S.-China Tensions Continue Apace

The U.S. and China traded new rounds of tariffs against one another this past week, with the U.S. targeting $200 billion in Chinese goods and China retaliating with tariffs on $60 billion of U.S. goods.

The war of words continued, too, as China released a white paper outlining its criticism of the U.S.’s approach to trade policy with China.

“Since taking office in 2017, the new administration of the US government has trumpeted ‘America First,’” the paper states. “It has abandoned the fundamental norms of mutual respect and equal consultation that guide international relations. Rather, it has brazenly preached unilateralism, protectionism and economic hegemony, making false accusations against many countries and regions – particularly China – intimidating other countries through economic measures such as imposing tariffs, and attempting to impose its own interests on China through extreme pressure.”