US steel production up across the board

US raw steel production was 1,826,000 net tons in the week ended Mar. 17, 2018 while the capability utilization was 78.3%, according to the AISI. Production was up 6.4% vs. the same 2017 period when output was 1,716,000 net tons while the capability utilization was 73.6%. Production for the week ended Mar. 17, 2018 is up 0.7% from the previous week when production was 1,813,000 net tons and the capability utilization was 77.8%.

Adjusted year-to-date production through Mar. 17, 2018 was 19,013,000 net tons at a capability utilization rate of 75.1%. That is up 0.4% from the 18,937,000 net tons during the same period last year when the capability utilization was 74.6%.

ZCE’s FeSi and SiMn contracts down

The ZCE continued its steady erosion on ferroalloy prices. The May ferrosilicon contract traded down to rmb 6,140 per mt, down rmb 22, on only 118,462 contracts trading while the May silicomanganese contract fell rmb 34 to rmb 7,634 per mt on 173,338 contracts changing hands.

Federal Register information on steel and aluminum exemptions

Steel and aluminum tariffs to take effect on Mar. 23

The new US duties of 25% on imports of steel and 10% on aluminum is due to take effect on Mar. 23 but there won’t be any exemptions granted for up to 90 days to allow for Commerce’s application process. There will be a public comment period included.

The Administration is signaling that exemptions will be very limited and based national security. Instead the Administration wants the duties to push domestic companies to produce more—a process that will take much longer than 90 days. Backers of the tariffs are pushing for product exclusions to be temporary or subject to renewal.

EU to postpone the decision on LC FeCr; expected to exempt 0.10% and 0.15% C

The EU will NOT impose provisional duties on imports of low-carbon ferrochrome from Russia, Turkey, and China. The provisional duties were expected to be announced on Mar. 23.

Usually, the decision not to impose provisional duties means that the EU will not impose final duties, but this isn’t the case with low-carbon ferrochrome. Instead, the EU is using the time to change (liberalizing) its designation for low-carbon ferrochrome. Currently the designation for low carbon is any ferrochrome with a carbon content of 0.5% C, which is the same designation in the US.

However, most of the low-carbon sold in the EU—and in the US –is 0.10% C and above, normally 0.15% C. With European mills OPPOSED to the duties on 0.10% C and above, the separation of low carbon for ultra low carbon made sense. Also, Russia, Turkey and China are very small in the ultra low-carbon ferrochrome market anyway.

Afarak, who initiated the dumping case last year, probably won’t object since its market is ultra low carbon material, which provides the highest profit margins for the company. Afarak has never been that competitive in the 0.10% C market, consumers say. “The ultra low market is very small,” one supplier admitted. “Usually, the material has to be qualified so someone would find it very difficult to enter. Afarak has a lock on that market.” Also, Afarak has substantially increased its ultra low carbon sales to the US.

The EU is expected to hold a hearing on the matter later this month. The only problem is getting Customs in changing the designation for low carbon to more than one grade and away from the 0.5% C standard.

Meanwhile, a few merchants have taken positions in Europe in anticipation of duties. If the duties are restricted to material above 0.051% C, the question is whether the material will be dumped into the market driving prices down or whether the resellers will hold on to their positions in hopes of a general recover

Will the EU’s decision on LC FeCr affect Si metal decision?

The EU’s plan to change definition for low-carbon ferrochrome by segregating the material according to grade and application and its willing to adapt by listening to consumers could send signal on its plans for silicon metal. Various consumers have objected to the single definition for silicon metal based on the silicon content of the metal. Instead, non-EU silicon metal producers and EU consumers want to divide up the silicon designation based on impurities and/or use, i.e., metallurgical vs. chemical vs. polysilicon.

By opening the door on low-carbon, the EU might take a similar step with silicon metal.


More challenges to US trade laws

The US government’s trade policy and use of dumping duties is taking hit after hit. After the government imposed significant duties on virtually all imports of PV modules, SunPower has found a way to challenge them. The company is the first to file an exemption request to the USTR for a formal exemption from the duties for its Interdigiated Back Contact (IBC) solar cells and modules made from these cells.

SunPower acknowledged that its primary products are not manufactured in the US—instead in the Philippines, Malaysia and Mexico–but it buys polysilicon from US producers and the equipment it uses to make its product is produced in the US. Furthermore it might even build a US facility if it is granted an exception.

So, restrictive tariffs are easy to impose but impossible to administer the US government is learning.

For the USTR guidelines on exemptions:

Proclamation- Jan 23 2018