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Steel Market Intelligence

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Steel Market Intelligence Steel Trade Dealing From the Bottom of a Stacked Deck Michelle Applebaum May 19, 2009 847-433-8517 admin_at_michelleapplebaum.com – PowerPoint PPT presentation

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Title: Steel Market Intelligence


1
Steel Market Intelligence
  • Steel Trade Dealing From the Bottom of a
    Stacked Deck

Michelle Applebaum May 19, 2009 847-433-8517 admin
_at_michelleapplebaum.com
2
Steel Trade Dealing From the Bottom of a
Stacked Deck
Protectionism and Buy America Search Volume
Indices
Source Google and Steel Market Intelligence
3
Steel Trade Dealing From the Bottom of a
Stacked Deck
Trade Restrictiveness Indices by Country,
2005/2006
Note Red bars show tariff and non-tariff
barriers to trade, blue bars show tariffs only.
Source World Bank and Steel Market Intelligence
4
Steel Trade Dealing From the Bottom of a
Stacked Deck
Current Account Balances (in Billions), 2004-2008
Source International Monetary Fund and Steel
Market Intelligence
5
Steel Trade Dealing From the Bottom of a
Stacked Deck
6
Steel Trade Dealing From the Bottom of a
Stacked Deck
Smoot-Hawley Cheap Shot du jour average
tariff levels went from 5 to 20 on some 70 of
imports NOT EVEN CLOSE!
Source Clemens and Williamson (2004), Journal of
Economic Growth and Morgan Stanley
7
Steel Trade Dealing From the Bottom of a
Stacked Deck
WTO Complaints, 2H 2008 1
WTO Complaints, 2002-2007 1
1 Annualized
Source WTO, Report to the TPRB from the
Director-General, March 26, 2009 and Steel
Market Intelligence
8
Steel Trade Dealing From the Bottom of a
Stacked Deck
WHY WE NEED BUY AMERICA PART 1. The impact of the
Reagan-era trade suits Imports were running at
a 20 share of the market when the first trade
cases were filed in January 1982. During the
intervening years, imports peaked at 32 of the
market in July 1984, and the VRAs brought
imported steel back to around 20 of the market.
Monthly US Import Market Share, 1981-1986
Source Steel Market Intelligence and SteelFacts
including AISI and US Department of Commerce
9
Steel Trade Dealing From the Bottom of a
Stacked Deck
WHY WE NEED BUY AMERICA PART 2. Front Running
Why We DO NOT Talk About Trade Cases Chinese
OCTG shipments nearly TRIPLED in the six months
after trade cases became apparent.
Monthly Chinese OCTG Market Share, 2005-Current
Source Steel Market Intelligence, Canadian
International Trade Tribunal, American Metal
Market and SteelFacts including AISI and US
Department of Commerce
10
Steel Trade Dealing From the Bottom of a
Stacked Deck
Global Differences - Processes for Trade Remedies
Administrative Processes are LESS VISIBLE and
CHEAPER TOO!!!!!
  • Europe
  • Administrative process provisional duties can be
    imposed 60 days after initiation of a trade
    complaint. Target regions can appeal the
    investigation normally takes less than a year but
    must be completed in 15 months. Provisional
    duties can last 6-9 months.
  • US
  • Legal process Commerce determines whether or not
    dumping/subsidy has occurred while ITC determines
    injury or threat of injury. Final antidumping
    duties usually take 280-390 days from the date of
    petition while countervailing duties normally
    take 205-270 days.

Source European Commission, Canadian
International Trade Tribunal, US ITC and Steel
Market Intelligence
11
Steel Trade Dealing From the Bottom of a
Stacked Deck
Steel - New Protective Measures Since September
2008
  • China
  • Beijing eliminated export duties ranging from
    5-15 on hot-rolled sheet, plate, strip, heavy
    sections, coated wire, some alloy steels and
    welded pipe effective December 1, 2008.
  • China increased the export tax rebate to 13 from
    5 for cold-rolled sheet, hot-dipped galvanized
    steel, electrical steels, some alloy steels, and
    high speed bars, rods and wire effective April 1,
    2009.
  • India
  • On October 31, India withdrew a 15 export tax on
    semi-finished steel.
  • In November, the Indian government imposed a 5
    import duty on imports of pig iron, semi-finished
    steel, flat and long products. Steel products
    were also given export incentives of 4-5.
  • The government decided to launch an antidumping
    investigation on Chinese imports of hot-rolled
    coil in December.
  • India eliminated the 15 export tax on iron ore
    fines in December and reduced the export duty on
    iron ore lump to 5 from 15.
  • Introduced licensing requirements for imports of
    certain steel products some requirements were
    removed between December 2008 and January 2009.
  • Russia
  • In January, the Russian government announced
    plans to raise import tariffs on construction
    steel rod and pipe and tube products.
  • In April, the Russian ministry of industry and
    trade extended its antidumping investigation
    until July 21, 2009 for imports of pre-painted
    steel from China, South Korea, Belgium, Finland
    and Kazakhstan.
  • European Union
  • The European Commission (EC) decided to
    investigate imports of hollow structural sections
    from Turkey in December.
  • The EC decided to put dumping duties on imports
    of welded tubes and pipes from Belarus, China,
    Russia, Thailand and Ukraine in late December.
  • In January, the Commission decided to impose
    temporary duties on imports of bars and rods,
    hot-rolled, in irregularly wounds coils, of iron,
    non-alloy steel or alloy steel other than
    stainless steel from China and Moldova.
  • The EC imposed provisional dumping duties ranging
    from 15-51 on Chinese imports of seamless pipe
    in April.

Source American Metal Market, Steel Business
Briefing, WTO, Report to the TPRB from the
Director-General, March 26, 2009 and Steel
Market Intelligence
12
Steel Trade Dealing From the Bottom of a
Stacked Deck
Steel - New Protective Measures Since September
2008
  • Canada
  • In September, the Canadian International Trade
    Tribunal (CITT) issued antidumping and
    countervailing duties against imports of carbon
    steel welded pipe from China.
  • In January, the CITT decided to keep antidumping
    duties against plate imports from Bulgaria, the
    Czech Republic and Romania.
  • In December, the CITT came to a decision to
    maintain antidumping duties on imports of carbon
    and alloy hollow structural sections from South
    Korea, South Africa and Turkey.
  • Brazil
  • In February, the Brazilian government launched an
    antidumping investigation into imports of certain
    flat-rolled steel products. The investigation
    will scrutinize imports especially from Asian
    countries.
  • Ukraine
  • The government eliminated a natural gas surcharge
    used by steel companies on October 1, 2008.
  • The ministry of transport froze a tariff for
    cargo transportation for 1H 2009 while prices of
    electricity supplied to mining and steel mills
    are frozen through June 2009.
  • Australia
  • In December, Australia launched an investigation
    against imports of welded pipe from China.
  • Philippines
  • The Tariff Commission is investigating a
    safeguard petition that was filed by producers of
    angled bars this month.
  • Introduced a new mineral ore export permit for
    the transport/shipment of mineral ores.

Source American Metal Market, Steel Business
Briefing, WTO, Report to the TPRB from the
Director-General, March 26, 2009 and Steel
Market Intelligence
13
Steel Trade Dealing From the Bottom of a
Stacked Deck
Steel - New Protective Measures Since September
2008
  • Vietnam
  • Decided to impose a 10 duty on imports of
    boron-added long products in mid April to ensure
    that imports from China do not evade the import
    duty for construction long products which is 15.
    Alloy products quality for a 0 duty in the
    country.
  • Increased import tariffs on semi-finished
    products of iron or non-alloy steel.
  • Egypt
  • In February, the Egyptian government imposed
    temporary import duties on imports of cold-rolled
    sheet, galvanized sheet and plastic-coated sheet.
  • Turkey
  • In January, the Turkish government increased
    import duties on hot-rolled wide strip and plate,
    cold-rolled plate and sheet, hot and cold-rolled
    strip, tinplate and coated products from 5-7 to
    13-15.
  • Indonesia
  • The Indonesian Anti-Dumping (AD) Committee opened
    an investigation into alleged dumping of
    hot-rolled plate from Taiwan, China and Malaysia
    in November.
  • In April, the AD Committee issued a
    pre-notification to the governments of Korea and
    Malaysia saying that it will initiate an
    investigation into alleged dumping of HRC.
  • Introduction of mandatory standards for steel
    products (hot-rolled steel sheets and coils and
    zinc-aluminium alloy coated steel sheets and
    coils).
  • Argentina
  • Introduced non-automatic import licensing
    requirement, covering steel and metallurgical
    products.
  • Malaysia
  • Introduced new technical regulations for 57 steel
    products, requiring certificates of approval for
    conformity with Malaysian Standards.

Source American Metal Market, Steel Business
Briefing, WTO, Report to the TPRB from the
Director-General, March 26, 2009 and Steel
Market Intelligence
14
Steel Trade Dealing From the Bottom of a
Stacked Deck
15
Steel Trade Dealing from the Bottom of a
Stacked Deck
Myths and Realities Currency Trade Bill
  • Is foreign currency management a protectionist
    act? The currency reform bill would classify
    foreign currency misalignment as a trade
    subsidy. There is a lot of noise misinformation
    on the currency bill.
  • Realities
  • Currency management is protectionist. Duties
    would disappear when management does. Free-trade
    restoring.
  • Duties neutralize the protectionist subsidy.
  • It is not targeted at any country all countries
    level playing field.
  • Currently are a half dozen countries who would be
    impacted.
  • Foreign countries own our currency for stability
    safety NOT because were nice to them.
  • Diplomacy is a great idea but the process has
    been exhausted over many, many years.
  • Bill is completely consistent with WTO.
  • Holding trading partners accountable to their
    agreements and standing up for our own rights
    should not be a basis for retaliation otherwise
    the concept of rules-based free trade is plowed
    under mercantilism.
  • Myths
  • Protecting against currency management is
    protectionist.
  • Asian countries punished/esp. China.
  • Risk of poking finger at our banker.
  • Diplomacy works better.
  • WTO Consistent?
  • Starting a trade war?

Source Coalition for a Prosperous America,
Tradereform.org and Steel Market Intelligence
16
Steel Trade Dealing From the Bottom of a
Stacked Deck
Source Oanda.com and Steel Market Intelligence
17
Steel Trade Dealing From the Bottom of a
Stacked Deck
India Accusations of Green
Protectionism NEW DELHI, May 15 (Bernama)
-- India Thursday asked the BRIC members to
unitedly oppose the developed countries' move to
impose environmental taxes on the developing
nations in the name of "green protectionism" to
tackle climate change, the Press Trust of India
(PTI) reported.
Ahead of the first BRIC summit next month in
Russia, Shyam Saran, special envoy to Prime
Minister Manmohan Singh on climate change, warned
that "green should not become a label
'protection' (for the developed nations)". "We
are concerned that green is becoming a new label
for protection. We are now seeing on the grounds
of level-playing field and maintaining
competitiveness, the developing nations will be
forced to take up binding commitment on emissions
reduction or pay tariff," he said.
Source Bloomberg and Steel Market Intelligence
18
Steel Trade Dealing From the Bottom of a
Stacked Deck
Lobbying Financial Services/Real Estate and
Steel, 1990 and 2008
1990
2008
Source OpenSecrets.org and Steel Market
Intelligence
19
Steel Trade Dealing From the Bottom of a
Stacked Deck
Op-Eds Buy American Pro vs. Con
Source Steel Market Intelligence
20
Steel Trade Dealing From the Bottom of a
Stacked Deck
Editorials Buy American Pro vs. Con
Source Steel Market Intelligence
21
Steel Trade Dealing From the Bottom of a
Stacked Deck
Public Opinion of Trade, 2002 vs. 2007
Note Bars show percentage of respondents
agreeing with the statement that trade is good
for their country.
Source Pew Research Center and Steel Market
Intelligence
22
Steel Trade Dealing From the Bottom of a
Stacked Deck
US Respondents Agree Free Trade is Good for
our Economy
2002
2007
Source Pew Research Center and Steel Market
Intelligence
23
Steel Trade Dealing From the Bottom of a
Stacked Deck
EU Countries - Respondents Agree Free Trade is
Good for our Economy
2002
2007
Source Pew Research Center and Steel Market
Intelligence
24
Steel Trade Dealing From the Bottom of a
Stacked Deck
India - Respondents Agree Free Trade is Good
for our Economy
2002
2007
Source Pew Research Center and Steel Market
Intelligence
25
Steel Trade Dealing From the Bottom of a
Stacked Deck
China - Respondents Agree Free Trade is Good
for our Economy
2002
2007
Source Pew Research Center and Steel Market
Intelligence
26
Steel Trade Dealing From the Bottom of a
Stacked Deck
Joint Effort Eight Global Steel Trade
Associations
  • Unprecedented Eight global steel trade
    associations from 3 continents submitted comments
    to the Chinese Steel Authority suggesting
    compliance with WTO agreements as well as
  • The Chinese steel industry should be governed by
    market principles
  • Chinese steel mercantilist interventions are
    distorting global trade flows based on
    comparative advantage trading principles
  • Subsidies create artificial competitiveness
  • Raw material export control creates artificial
    cost structure

27
Steel Trade Dealing From the Bottom of a
Stacked Deck
Chinas Steel Market Distortions China
subsidizes its domestic steel industry causing
excess high-cost capacity that gets exported to
others markets
Chinese Steel Subsidies and Government Support
Practices A Selection
Grants, equity infusions, unpaid dividends and
other preferential access to capital
Access to policy-driven lending at favorable rates
Preferential tax programs
  • Transparency on central government programmes
    only, not on local level (tax refunds, tax breaks
    and tax cuts foregoing tax collection worth 7.6
    bn RMB from listed steelmakers)
  • 47 companies benefited from preferential lending
    through State Key Technology Renovation Project
    Fund including Anshan, Baosteel and Panzhihua (75
    bn RMB)
  • Low cost loans (3.4 bn for major listed steel
    companies such as Baosteel, Wuhan, Anshan and
    Shougang)
  • China Development Bank committed to provide
    Anshan with 18 bn RMB loan including 10 bn at
    preferential rates, to promote strategic
    development of the company
  • Government infusions (18 bn RMB Maanshan)
  • Debt-equity swap (27.5 bn RMB Anshan, Baosteel,
    Lanzhou, Shougang, Taiyuan)
  • Government foregoing dividend payment (industry
    profit around 190 bn RMB in 2007)
  • In-kind contribution Government provides
    productive assets to another company through
    govenment-mandated merger (51 stake in 3 MT
    Echeng to Wuhan at no cost)

Preferential access to inputs, land and energy
  • Free use of land or at less than adequate
    remuneration (Baosteel, Anshang, Xinyu)
  • State-owned steel companies provide steel
    substrate (HR) to rerollers at significantly low
    price levels

Source Eurofer and Steel Market Intelligence
28
Steel Trade Dealing From the Bottom of a
Stacked Deck
China has significant disadvantages in steelmaking
  • Plus
  • Dynamic domestic demand
  • Low labor costs
  • Very competitive leaders
  • Domestic coal supply
  • Minus
  • Dependence on iron ore imports
  • High energy cost
  • Low grade product
  • Small producers, non-competitive
  • Inland industrial network
  • Environmental issues
  • Transportation costs
  • High capital cost
  • Fragmented and inefficient supply chain

Source ArcelorMittal and Steel Market
Intelligence
29
Steel Trade Dealing From the Bottom of a
Stacked Deck
Chinas Golden Opportunity
  • Beijings Silver Lining
  • Opportunity to Restructure Chinese Steel Industry
  • Currently 50 of Global Capacity but 70 of
    Worlds Growth
  • Industry of Two Halves Modern Efficient
    Co-Exists with Backwards and Polluting
  • North American Echo North American
    Restructuring Took 20 Years
  • Entrenched Stakeholders Unions, Vendors,
    Political Interests Supported High Cost Players
  • According to the China Iron Steel Association,
    Chinese steelmakers lost 3.3B Yuan (483M) in 1Q
    2009 and 1.8B Yuan (262M) alone in March. Some
    20 out of 72 (34) large and medium sized
    steelmakers reported losses during the quarter.

30
Steel Trade Dealing From the Bottom of a
Stacked Deck
Chinese Market Share of U.S. Imports
Source Steel Market Intelligence, Import
Administration and SteelFacts including AISI and
US Department of Commerce.
31
Steel Trade Dealing From the Bottom of a
Stacked Deck
Chinese Steel Export Surges
EU 27 Imports from China
Source Eurofer and Steel Market Intelligence
32
Steel Trade Dealing From the Bottom of a
Stacked Deck
Chinese Net Imports Turned into Exports
Chinese Steel Trade Balance, 1994-2012E (Tonnes
in Millions)
of Chinese Consumption
Source World Steel Association and Steel Market
Intelligence
33
Steel Trade Dealing From the Bottom of a
Stacked Deck
Chinese steel consumption growth has outpaced
steel capacity growth most of the time
Chinese Steel Consumption vs. Production (Tonnes
in Millions) Assuming Consumption Drops 10
Source World Steel Association, National Bureau
of Statistics of China and Steel Market
Intelligence
34
Steel Trade Dealing From the Bottom of a
Stacked Deck
The homeless steel in the global market would
have a tsunami effect the impact of a 10
Decline in Chinese Steel Consumption 50MT!!!
  • 28 of Asian Market
  • 120 of Korean Market
  • 71 of Japanese Market
  • 26 of International Trade

Source World Steel Association and Steel Market
Intelligence
35
Steel Market Intelligence
  • Steel Trade Dealing From the Bottom of a
    Stacked Deck

Michelle Applebaum May 19, 2009 847-433-8517 admin
_at_michelleapplebaum.com
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