Kloeckner remains unconcerned about US tariffs
Steel distribution group Klöckner & Co feels relatively immune to the impact of tariffs imposed by the US government, its chief executive Guido Kerkhoff said during a conference call on Wednesday.
The Germany-based group has operations in the USA as well as Mexico, which together make up a larger share of revenue than Klöckner’s European operations, in Germany and Switzerland. For its US sites, Klöckner sources 97% of product tonnage from US mills. Hence, “the penalty duties affect us only indirectly, if our customers are affected,” Kallanish heard from Kerkhoff. The firm’s pricing is not affected at all, he added.
Given the US government’s target of near-shoring the manufacturing industry, Klöckner’s local business range would in fact grow bigger. “We are a local player, after all,” Kerkhoff maintained.
Regarding the company’s warehouses in Mexico, 45% of the material can be sourced within Mexico, and another 25% is sourced from the USA. “Our sites are approved by the USMCA [United States-Mexico-Canada Agreement], so that we can enter the US market,” he explained. Many of Klöckner’s competitors, but also customers like some carmakers, are much more dependent on sourcing from overseas, he noted.
The company recently completed the acquisition of Haley Tool & Stamping near Nashville, Tennessee. The move expands Klöckner’s manufacturing capabilities with the addition of stamping presses, allowing it to leverage operational synergies across its locations in the region.
Christian Koehl Germany
Tariffs on Canada, Mexico definitely start Tuesday
Indicating that the time for negotiations on tariffs with Canada and Mexico is over, US President Donald Trump on Monday said he will proceed with the 25% tariffs on the two countries on Tuesday, Kallanish discovers from the White House press briefing.
Trump told reporters that there is no room for Canadian or Mexican officials to negotiate a reprieve from the levies.
“Tariffs, 25% on Canada, and 25% on Mexico … will start tomorrow,” Trump confirmed during the press gathering. “So they’re going to have a tariff, and what they have to do is build their car plants, frankly, and other things, in the United States, in which case you have no tariffs.”
Mexican President Claudia Sheinbaum on Monday said she was waiting for Trump to make a decision about tariffs and that she might talk with him before the deadline. “Everything is possible,” she said.
John Isaacson USA
US manufacturers confirm steel tariff-driven operational impediments
Operational upheaval caused by the recent bloat in US domestic steel prices and government tariff policies is seen as detrimental to various US businesses reliant on steel, Kallanish reports.
US farm equipment manufacturers, fabricators and automakers contend that President Donald Trump’s trade measures will impede growth and productivity in their respective industries.
Agriculture and construction equipment advocacy group Association of Equipment Manufacturers (AEM) unequivocally renounces any perceived benefits to those two sectors. Any significant increase in steel prices has a ripple effect, and the cross-border nature of steel and agricultural commodities and inputs means that everyone in the supply chain would be hit with higher costs, AEM argues.
“The fact remains: Tariffs are a tax paid by Americans, and their broad-based application will stifle economic growth and undermine the competitiveness of the United States,” AEM senior vice president Kip Eideberg says in a statement.
A Northern California-based agriculture original equipment manufacturer (OEM) tells Kallanish that the complications involved with the tariffs are farther-reaching than he initially expected. His projected growth plan for the business may be stifled.
“When everyone starts panic buying and we can’t get quotes on steel that’s already like 20% higher than when I quoted my customers, there’s no choice but to get steel and pay the tariffs. Some of the components and parts we use are only made outside the US, so that will cost more than before too,” the OEM owner comments. “That raises base product prices on machines that are six-figures, plus if I go to export a machine, it’s gonna cost a Canadian customer even more. Why wouldn’t someone just open their own business there? These machines should last more than 30 years, so how many am I gonna sell in just the US?”
Service centres and distributors across the US note that most domestic flat-steel mills closed order books and pushed lead times into in April. Nucor’s published price for hot-rolled coil has shot up to $820/short ton, an increase of $70/st just since early January. SSAB Americas increased all steel prices by a minimum of $100/st last week. On Friday, Cleveland-Cliffs increased its HRC base price to $900/st after maintaining a consistent $800/st level since December.
Service centres seem “a little apocalyptic,” states the co-owner of an Oregon-based custom metal fabrication studio focused on structural and ornamental steelwork for residential and commercial projects.
“We already changed our agreements to five-day guarantees because that’s all our reps guarantee us. We have to charge a lot for the jobs we do and now customers don’t know if they want to pause or try to book us now and hope they can still afford the job when it comes time to start. It can take more than five days for them to even decide. Now, if I can’t even get steel, I don’t know what we will do. It’s very stressful. If we shut down then that’s less steel sold to anyone. Probably isn’t what anyone thought was going to happen but that is what will happen to us,” says the fabricator.
US automakers including Ford Motor and General Motors (GM) have voiced concerns about increasing costs to manufacturing and the uncompetitive pricing they may be forced to impose on consumers. At an automotive conference last week, GM chief financial officer Paul Jacobson floated the potential of relocating some of the company’s facilities.
“Those are questions that just don’t have an answer today, because (what) I can tell you is, as much as the market is pricing in a big impact of tariffs and lost profitability, we think about a world where on top of that, we’re spending billions of dollars in capital. So we can’t be whipsawing the business back and forth,” Jacobson stated bluntly.
Kristen DiLandro USA
Trump adds downstream goods to steel tariff order
The Trump administration is singling out a list of 167 “derivative” steel items destined for addition to Section 232 tariffs in the US, Kallanish learns from a White House proclamation on Tuesday.
A few examples of the downstream articles are welded angles, shapes and sections of iron or steel; bridges and bridge sections of iron or steel; grill, netting and fencing of iron or steel wire, plated or coated with zinc; parts for agricultural, horticultural or forestry machinery; modular building units of steel, and prefabricated buildings.
Increasing imports of certain derivative steel articles have depressed demand for goods produced by domestic steel producers, Trump argues. He says it is necessary to adjust the tariff to apply to the additional downstream goods. The presidential proclamation says the derivative steel articles may be subject to an additional 25% ad valorem rate of duty. The Secretary of Commerce now has 90 days to establish a process for including additional derivative steel articles within the scope of the duties.
“Section 232 … authorises the president to take action to adjust the imports of an article and its derivatives if the president concurs with the Secretary of Commerce’s finding that the article is being imported into the United States in such quantities or under such circumstances as to threaten to impair the national security,” the document states.
Tuesday’s proclamation includes an annex that lists the 167 goods by their numbers in the Harmonized Tariff Schedule of the United States.
“Except as otherwise provided in this proclamation, all imports of derivative steel articles specified in Annex I to this proclamation or in any subsequent annex to this proclamation, shall be subject to an additional 25% ad valorem rate of duty, with respect to goods entered for consumption, or withdrawn from warehouse for consumption,” adds the presidential order.
The document states that the initial 25% tariff imposed in March 2018 has been an effective means of reducing imports, encouraging investment and expansion of production by domestic steel producers, and minimised the threat to US national security. Following the initial imposition of 25% tariffs, the US steel capacity utilisation rate increased to above 80%. Recently, the utilisation rate has been 74-75% (see separate story).
Some producers in other countries allegedly have evaded the measures, processing covered steel articles into additional downstream steel derivative products that were not included in the additional tariffs proclaimed in January 2020.
John Isaacson USA
Trump will impose 25% tariffs on Steel and Aluminum
The US president said he planned sweeping tariffs on all steel and aluminum imports on Monday and would take other action to even out tariff rates with the rest of the world later this week.
Donald Trump has said he will announce new 25% tariffs on all steel and aluminum imports into the US on Monday that would affect “everybody’, including its largest trading partners Canada and Mexico, in another major escalation of his trade policy overhaul.
Trump’s pre-announcement came as China’s retaliatory tariffs, announced last week, came into effect. The measures target $14bn worth of products with a 15% tariff on coal and LNG, and 10% on crude oil, farm equipment and some vehicles.
The US president, speaking to reporters on Air Force One on Sunday, also said he would announce reciprocal tariffs – raising US tariff rates to match those of trading partners – on Tuesday or Wednesday, which would take effect “almost immediately”. “And very simply, it’s, if they charge us, we charge them,” Trump said of the reciprocal tariff plan.
The move on steel and aluminum brought a swift reaction from Doug Ford, the premier of the Canadian province of Ontario, who accused the US president of “shifting goalposts and constant chaos” that would put the economy at risk.
Monday’s tariffs would come on top of existing metals duties.
Amid wider pushback against Trump’s economic heavy-handedness, French President Emmanuel Macron warned in an interview broadcast on Sunday that he was willing to go “head-to-head” on tariffs with the US president. “I already did so, and I will did (sic) it again.”
Macron told CNN that the EU should not be a “top priority” for the US, saying: “Is the European Union your first problem? No, I don’t think so. Your first problem is China, so you should focus on the first problem.”
Macron said tariffs would harm European economies but also the US, given the level of economic ties. “It means if you put tariffs on a lot of sectors, it will increase the costs and create inflation in the US. Is it what your people want? I’m not so sure,” he said.
He said the EU must be ready to react to US actions, but stressed that the 27-nation bloc should mainly “act for ourselves”. “This is why, for me, the top priority of Europe is competitiveness agenda, is defence and security agenda, is AI ambition, and let’s go fast for ourselves.
“If in the meanwhile, we have [a] tariff issue, we will discuss them and we will fix it.”
Trump has long complained about the EU’s 10% tariffs on auto imports being much higher than the US car rate of 2.5%. He frequently states that Europe “won’t take our cars” but ships millions west across the Atlantic every year.
US extends rebar AD order on 7 nations, including Poland and Latvia
The US International Trade Commission (ITC) has ruled that antidumping duties on imports of rebar from seven nations should not be removed, Kallanish discovers in a federal document.
“Revocation of the antidumping duty orders on rebar from Belarus, China, Indonesia, Latvia, Moldova, Poland and Ukraine would be likely to lead to continuation or recurrence of material injury to an industry in the United States within a reasonably foreseeable time,” the ITC writes in a notice circulated Thursday.
The latest determination is a result of a fourth round of five-year sunset reviews.
After the prior review in 2018, the Department of Commerce issued average dumping margins of 114.53% for Belarus, 133% for China, 71.01% for Indonesia, 16.99% for Latvia, 232.86% for Moldova, 52.07% for Poland and 41.69% for Ukraine. Commerce’s case originated in 2001.
The AD order includes all steel concrete reinforcing bars sold in straight lengths. Excluded are plain round bars and processed rebar that has been bent or coated.
Dom Yanchunas USA
EU HRC prices fall slightly amid uncertainty over US presidential election results
Domestic European hot-rolled coil prices fell slightly Nov. 6, as the announcement of Donald Trump’s victory in the US presidential election created uncertainty for market participants, over the prospect of higher protectionism in the US market under a Trump administration.
Market activity remained subdued as demand was unchanged.
“The market is half dead,” a Germany-based trader source said. “Announced price increases from mills are not working, as there is no demand.”
The source described price increases by European mills as “wishful thinking,” while calling the situation “a fight for the lowest price.”
The source said there was no damage to mill orderbooks because of the election’s result, as most orderbooks were full until the end of the year.
According to the same source, there was “no real strengthening of the market,” due to poor construction and automotive demand domestically.
Platts assessed Northwest European HRC at Eur555/mt ex-works Ruhr Nov. 6, stable on the day.
Offers were reported at Eur560-640/mt ex-works Ruhr.
Platts assessed domestic HRC in Southern Europe at Eur550/mt ex-works Italy, down Eur5 on the day.
Platts assessed imported HRC in Northwest Europe at Eur520/mt CIF Antwerp, down Eur10 on the day.
Platts assessed imported HRC in Southern Europe at Eur525/mt CIF Italy, down Eur10 on the day.
US steel associations applaud introduction of ‘Prove It’ Act
Two US domestic steel associations are supporting this week’s congressional introduction of the so-called “Prove It” Act, which would verify the carbon intensity of steel from various sources, Kallanish learns from association statements.
The American Iron and Steel Institute (AISI) and the Steel Manufacturers Association (SMA) applaud the formal introduction of the “Providing Reliable, Objective, Verifiable Emissions Intensity and Transparency Act” to the US House of Representatives on 9 July.
The Prove It Act authorises a comprehensive study by the Department of Energy to compare the greenhouse gas (GHG) emission intensities of certain goods, including steel, produced in the US to those produced internationally. The study is expected to provide detailed, specific and transparent data on emissions to assess the environmental standards of foreignly produced products.
AISI president and chairman Kevin Dempsey explains that passing the Prove It Act protects US domestic steel producers and their investments in emissions-reduction efforts.
“The Prove It Act would do as its name implies by creating an official source to verify the superior carbon efficiency of vital American industries, like steel, and give policymakers the data needed to make the case for action,” states Dempsey.
Dempsey notes that US steel producers are at a disadvantage when inexpensive foreign products with fewer GHG restrictions are permitted to be sold in the US.
“Trade-distorting policies in many countries continue to contribute to massive global overcapacity in steel, much of which is from countries that are producing steel that is much more carbon emissions-intensive than American steel, including China, India, Indonesia and other Southeast Asian nations,” Dempsey mentions.
SMA president Philip Bell applauds the effort by both major political parties to bring the legislation to the US House.
“SMA supports the bipartisan Prove It Act because we know that it will demonstrate conclusively that American steel has the lowest carbon emissions in the world. A US Department of Energy study determining the emissions intensity of domestically produced goods will show the world that American steelmakers have a significant carbon advantage over their counterparts in Europe, Asia, the Middle East and everywhere steel is made. We look forward to working with Congress to make sure we get the best bill possible,” states Bell.
Republican Representative John Curtis of Utah and Democratic Representative Scott Peters of California introduced the Prove It Act to the US House of Representatives. Earlier this year, Republican Senator Kevin Cramer of North Dakota and Democratic Senator Chris Coons of Deleware introduced the bill in the US Senate Environment and Public Works Committee (see Kallanish 16 May).
Kristen DiLandro USA
USS ceo ‘extremely confident’ Nippon deal will close
US Steel’s (USS) top executive still expects that the takeover of the iconic Pittsburgh, Pennsylvania-based company by Japan’s Nippon Steel will receive all approvals by the end of 2024, Kallanish hears at the Global Steel Dynamics Forum in New York.
Speaking on the conference stage late Tuesday, USS president and chief executive officer David Burritt reiterates that a merger with Nippon is “the right choice” for his 123-year-old company and for US national security and economic well-being.
“I’m extremely confident that we will be able to close the deal this year,” Burritt proclaims.
The acquisition agreement, announced last year, has faced opposition not only from the United Steelworkers but also from both major US presidential candidates and members of Congress in Pennsylvania and other states. The arrangement is undergoing an in-depth review by the US Department of Justice (DoJ).
Burritt says his employees will come to understand that they will benefit from the takeover. He says Nippon pledges to honor current labour contracts through 2026 and will invest over $1 billion in the business, a capex commitment that exceeds existing thresholds in pacts with the union.
“They’re experts in integrated mills, and they want to invest here,” Burritt explains. “They’re upping the ante beyond what’s in the basic labor agreement.”
He argues that the “friendshoring” arrangement with a buyer based in Japan, a key US ally in the Asia-Pacific region, “strengthens national security.” Additionally, Burritt finds it a breath of fresh air that there will be technology transfer into the US instead of the usual route out of the US.
The USS ceo says there was so much interest in acquiring his company that “something like 19 NDAs” were signed, referring to non-disclosure agreements that precede negotiations. Some proposals would have bumped into antitrust roadblocks, but not with Nippon.
“Customers love it so much that they have written letters to the DoJ saying this deal will strengthen competition,” Burritt states.
Dom Yanchunas USA
Biden administration confirms China 25% steel tariff
The Biden administration confirms it will increase the tariff rate on certain China-origin steel and aluminium products under Section 301 from 0-7.5% to 25% in 2024. This follows an in-depth review by the United States Trade Representative.
The move is part of tariff action against multiple Chinese products, designed to encourage China to “eliminate its unfair trade practices regarding technology transfer, intellectual property, and innovation”, a White House statement says.
Besides steel and aluminium, the tariff rate on Chinese semiconductors will increase to 50% by 2025, on electric vehicles under Section 301 to 100% in 2024, on lithium-ion EV batteries to 25% in 2024, and on solar cells (whether or not assembled into modules) to 50% from 2024. Ship-to-shore cranes and medical products are also impacted.
“China’s forced technology transfers and intellectual property theft have contributed to its control of 70, 80, and even 90% of global production for the critical inputs necessary for our technologies, infrastructure, energy, and health care – creating unacceptable risks to America’s supply chains and economic security,” notes the White House statement seen by Kallanish.
“Furthermore, these same non-market policies and practices contribute to China’s growing overcapacity and export surges that threaten to significantly harm American workers, businesses, and communities,” it adds.
“We will continue to work with our partners around the world to strengthen cooperation to address shared concerns about China’s unfair practices – rather than undermining our alliances or applying indiscriminate 10% tariffs that raise prices on all imports from all countries, regardless whether they are engaged in unfair trade,” the note concludes.
Some of the impetus to review trade agreements with China came from Chinese customs data that showed a 30.7% year-on-year increase in steel exports during the first quarter.
The review has received support from US steel industry leaders. Last month, American Iron and Steel Institute president Kevin Dempsey said that while direct Chinese steel shipments have not grown to the US to this extent, Chinese steel exports to third country markets are often further processed into downstream manufactured products that are supplied to the US.
