OECD slams US state subsidies on aluminium production
The Organization for Economic Cooperation and Development (OECD) recently slammed the US president’s state subsidies on domestic aluminium production, calling them ‘widespread and pervasive’, and not in a good way. Now a white paper from the American Primary Aluminum Association, the APAA, says Trump’s subsidies are having a genuinely harmful impact on home-grown producers as well as farther afield.
According to the APAA Counsel Robert DeFrancesco, as reported in Aluminium Insider, “The OECD’s report confirms that widespread subsidisation across multiple countries is creating a race-to-the bottom whereby governments who provide subsidies maintain and expand capacity and countries where subsidies are not provided like the U.S., see capacity shrink.
The report found that from 2013-2017, significant subsidies were provided by China, India, the Gulf Cooperation Council (GCC) countries, Norway, Australia, and Canada. It is no coincidence that the aluminum industries in each of these countries were able to expand their capacity despite an ongoing collapse in the global aluminium price.
Further, the subsidies themselves distort market dynamics and create a misperception that these regions are inherently more cost-competitive than other non-subsidised regions; without the subsidies producers in those regions would not be able to maintain and expand capacity.”
The APAA’s report recommends Trump’s Section 232 import duties are broadly applied, exempting no source of overseas aluminium. designing aluminium-ion batteries.
Trump’s steel wall
The American steel sector enjoyed increased profits post-Trump’s 25% tariff on their foreign competitors. Now they might have found a way to make even more money, but only if the President’s much-maligned wall along the Mexican border goes ahead, and only if it’s built from steel.
The president has expressed a preference for a steel slat barrier instead of a concrete wall, and it would take unimaginable quantities of steel to build such a wall. According to Tom Gibson, president and CEO of the American Iron and Steel Institute, the sector wasn’t surprised by the news. The topic of a barrier has been under discussion since the early days of Trump’s administration and steel prototype walls have actually been constructed. He estimates the barrier, around 1000 miles long, would require 3 million tons or so of steel. Last year the US made around 90 million tons of steel, which means Trump’s steel wall idea represents a mere drop in the ocean.
Will the EU approve its steel import curb?
Reuters reports that EU nations are expected to approve a scheme to limit imports of steel following Trump’s tariffs on steel and aluminium entering the US. The main exporters of steel to the EU are China, India, Russia, South Korea, Turkey and Ukraine. The vote takes place on 16th January, and would effectively cap steel imports for the next three years in a move to tackle concerns that the EU could be flooded by steel that isn’t being imported by the USA any more.
The so-called safeguard measures might affect imports of 23 different kinds of steel product types, in a temporary measure that has so far been backed by every EU nation except two, both of whom abstained.
Quotas will be set at the average of the last three years plus 5%, and there will be limits for major exporting countries. The quotas will apply for limited three month periods to prevent stockpiling, and could be upped by another 5% a year if needs be.
The European car manufacturers association ACEA disagrees with the move, claiming steel exports to the US have only dropped a small amount and there’s very little being diverted to the EU. But Eurofer welcomed the news.
US sanctions boost Iranian steel exports
Iran’s currency has nosedived, but there’s positive news. The country’s fast-growing steel sector is enjoying steady exports despite Trump’s new sanctions. In August 2018 the US brought in secondary sanctions against Iran’s steel, aluminium, gold and precious metals, graphite and coal sectors, in an attempt to throttle Iran’s economy.
More sanctions arrived in late 2018, targeting Iranian oil, energy and shipping sectors, and they drove a sharp drop in oil exports. The good news for Iran is their metals industry, which remains unfazed by the USA’s moves, remains healthy and the country’s steel exports have become highly competitive.
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