Section 232: What to Know

Section 232 is part of the Trade Expansion Act of 1962. It gives the president the ability to penalize imports if he decides they pose a threat to national security.

232 Recommendations are Nearing Delivery to the President

The Trump administration said it plans to take “major action” once it receives the U.S. Commerce Department’s report in its Section 232 investigation.

The president has 90 days to review Commerce’s recommendations. However, it is anticipated that he will announce his plan of action within weeks of receiving Commerce’s report. This could include imposing tariffs on top of the current anti-dumping and countervailing duties already in place or imposing quotas that will limit import volumes or a combination of both.

Commerce Delayed Anticipated Determinations

The U.S. Commerce Department modestly delayed its anticipated determinations and recommendations to consider the concerns that have been voiced by manufacturers. Most do not support a potential blanket ban on imports.”

Some manufacturers and trade associations expressed apprehension regarding the investigation’s potential to cut off vital suppliers, greatly effect domestic steel prices, and impact American jobs.

Many even requested that their product, nation, or supplier be excluded from the Section 232 investigation.

Section 232 and National Security Concerns

While Section 232 is framed with concerns of national security, it casts a wider net well outside solely what we would think of as national security matters (e.g., military-related materials or intelligence-sensitive materials). Interpretation includes jobs, job security, ability of metals producers to remain profitable and viable, etc.

Domestic steelmakers have urged Commerce to define “national security” broadly. They would like to it to include not only military goods, but also products used in roads, bridges, and other infrastructure. Mills also said their commercial viability is a matter of national security. If they aren’t profiting, they can’t afford to invest in the research that is necessary to develop future military-grade steel.

Commerce is expected to issue the report by the end of the month.

For more information about the Section 232 investigation, contact your local sales representative.

Trade Case Toolbox: Trade Actions Available to Steelmakers

With news of trade cases filling steel industry media outlets it is important to understand exactly what a trade case is and the different trade actions the U.S. steel industry has available to it regarding international commerce.

In a previous post we discussed a brief background on steel trade cases as well as recent activity. In this post we will expound upon that by going into more detail about the different types of trade actions and provide another update on recent activity.

201, 232, 301, 332, 337. So, what do all these numbers mean?

Section 201

Trade Act of 1974

Section 201 allows domestic industries who have been seriously injured or threatened with serious injury by increased imports to petition the International Trade Commission (ITC) for import relief. If the ITC makes an affirmative decision it recommends a solution to prevent or resolve the injury and facilitate industry adjustment to import competition. The President makes the final decision whether to provide relief and the amount of said relief.

A 201 is probably the most commonly known trade action for steelmakers besides anti-dumping and countervailing duty cases.

Section 232

Trade Expansion Act of 1962

Section 232 investigations are used to determine the impact of imports on national security. Congress grants the President unprecedented authority to negotiate tariff reductions up to 50%. The Department of Commerce conducts an investigation on the imports and then makes recommendations to the President. The President then decides if he (or she) agrees and adjusts the imports.

Section 301

Trade Act of 1974

Section 301 is used to enforce trade agreements, resolve trade disputes, and open foreign markets to U.S. goods and services. It was designed to eliminate unfair foreign trade practices that have an adverse effect on U.S. trade. The President determines whether the alleged practices are unjustifiable, unreasonable, or discriminatory and burden or restrict U.S. commerce. If he (or she) decides action is necessary, the law directs that all appropriate action within the President’s power be taken.

Section 332

Tariff Act of 1930

The ITC investigates international trade, tariffs, and competition between the U.S. and foreign industries under section 332. The investigations and reports do not contain recommendations unless they have been specifically requested and do not provide a legal basis for other trade actions by the President.

Section 337

Tariff Act of 1930

The ITC, under section 337, determines whether there is unfair competition in the importation of products into the U.S. It declares infringement of a U.S. patent, copyright, registered trademark, or mask work to be an unlawful practice in import trade. It also declares that unlawful other unfair methods of competition and unfair acts in the importation of products in the U.S., the treat of which is to destroy or substantially injure a domestic industry, prevent establishment of such industry, or monopolize trade and commerce in the U.S.

Now that we have discussed the complicated part, here is a summary of the trade cases that have been filed. Final DOC and ITC anti-dumping and countervailing duty rulings:

  • ITC ruled in the affirmative the final determinations of anti-dumping and countervailing duties on corrosion resistant material for China, India, Italy, Korea, and Taiwan.
  • ITC also ruled in the affirmative the final determinations of anti-dumping and countervailing duties on cold rolled steel for Brazil, China, India, Korea, Japan, and the United Kingdom, but ruled to the negative for Russia.
  • ITC also ruled in the affirmative the final determinations of anti-dumping and countervailing duties on hot rolled steel for Australia, Brazil, Japan, Korea, Netherlands, Turkey, and the United Kingdom.
  • Preliminary determinations by both the ITC and DOC for stainless steel against China have been made with final determinations expected by January 2017.
  • U.S. Steel Corp., sought to have a Section 337 investigation by the ITC completed by Nov. 2, 2017, targeting Chinese mills back in August. It also proposed a single, 10-day evidentiary hearing on all claims in the case and no phased discovery process.
  • U.S. Steel Corp., gets 21-month time line for its Section 337 investigation targeting Chinese steelmakers.
  • The ITC found 14 Chinese companies are in default in the pending Section 337 investigation initiated by U.S. Steel Corp.

Contact your local sales representative or reference the ITC website trade.gov for more information.

Steel Trade Cases: The Steel Supply Chain

Background on Steel Trade Cases

To achieve economic and political objectives, many countries use industrial policies aimed at nurturing their domestic steel industry through trade protection and subsidies.

The U.S. steel industry claims to aspire only for a globally level playing field for international trade and commerce. So, the U.S. steel industry utilizes anti-dumping (to offset product sold below fair market value) and countervailing (to offset unfair subsidies) duty laws that require a significant amount of time, money, and resources to prepare and file. It also requires the U.S. International Trade Commission (ITC) and the Department of Commerce (DOC) to evaluate and determine if injury has occurred.

Recent Trade Case Activity

The 2015 year was filled with steel trade cases being petitioned and filed by many of the U.S. steel mills. Here is a recap of what we have seen recently:

The U.S. steel industry filed petitions in 2015.

  • Corrosion resistant material from China, India, Italy, South Korea, and Taiwan
  • Cold-rolled from Brazil, China, India, Korea, Netherlands, Russia, and United Kingdom
  • Hot-rolled from Australia, Brazil, Japan, and the Netherlands

Federal government passes Trade Preferences Extension Act (TPA) of 2015 providing an easier path of relief.

  • Material injury is no longer defined as an ‘unprofitable industry’ for several quarters and no recent improvement
  • Uncooperative parties named in petitions can now be assigned extremely high margins
  • The DOC can disregard certain distortive data that it previously could not

Latest Update on Steel Trade Cases

Now what you may be wondering is, does all this activity have an outcome or will it see the light at the end of the tunnel? It appears 2016 will see conclusions to these cases.

Corrosion Resistant Steels

Preliminary anti-dumping and countervailing duties of well over 200% for China and modest penalties of less than 10% for other countries have been established. Final determinations are currently expected to be announced on May 19, 2016.

Cold Rolled Steel

Preliminary determinations are scheduled to be announced on February 24, 2016, and final determinations are currently scheduled to be announced on May 10, 2016.

Hot Rolled Steel

Preliminary countervailing duties of 7% for Brazil have been placed. Preliminary anti-dumping determinations expected on March 9, 2016, and final determinations are currently scheduled for countervailing duties on March 24, 2016 and anti-dumping on May 24, 2016.

For more information on the steel supply chain contact your local sales representative.

 

By: Tony Hammes
Vice President Supply Chain
OFR Metals

Is a Strong US Dollar Good or Bad? Yes to Both…

strong us dollarIf you were to ask people if a strong US dollar is good, most would say, “yes.” And although there are many good things that come with a strong US dollar, it also comes with its challenges.

First, let’s take a look at three advantages of a strong dollar.

  1. Overall, a strong US dollar typically creates favorable global perception and often reflects a strong economy.
  2. It helps companies and consumers have greater access to global supplies and products through lower import prices-because the US dollar buys more foreign when it is stronger.
  3. Lastly, travelers and vacationers can get more local currency when traveling abroad.

However, there are some disadvantages to the strong dollar as well.

  1. Corporations that sell products around the globe become more expensive. Those corporations employ Americans and bring that revenue back into the US. This impacts corporate profits and causes concern from shareholders and potential investors.
  2. In addition, the US tourist industry also suffers when foreign currency does not get as much in the US.

Ultimately, dollar strength causes shifts in consumer and corporate behavior. But there are actually benefits to both a strong and a weak dollar.

By: Tony Hammes
Vice President of Supply Chain
O’Neal Flat Rolled Metals

The Steel Supply Chain Part 3

Part Three: Our Customers and the Steel Supply Chain

It’s finally time to dig deeper into our customers. The final part of our three-part series on the steel supply chain deals with how our customers take basic forms of steel material and transform it into the everyday objects we know and love.

This post is difficult to write because our customers cover every industry imaginable and use steel in so many different ways. Though we can’t cover all the amazing processes used by our customers, I will break down some of the most common processes for forming steel sheets and coils into end products.

Waterjet cutter, retro systems waterjetCutting

For many applications, our customers cut sheet metal (and coils). Depending on their final applications, customers may use a laser, a water jet, or a punch press (these are the most common ways of cutting material).

A Water Jet cuts materials, like steel, using a jet of pressurized water as high as 60,000 psi (Tesko). Often, water is mixed with an abrasive to ensure cleanly cut materials with tight tolerances.

A Laser cuts material using a gas laser. This high-energy, high-heat laser can process material at slightly better tolerances, but can sometimes cause thermal stress and partial burring to the material as it is processed (Tesko). Lasers are very efficient in cutting material as they are speedy and accurate.

A Punch Press is often very economical and has a wide variety of uses including stamping, rolling, and forming as well as cutting material.

waterjet cutting, steel supply chainAs materials are cut into various shapes tolerance becomes very important. If cut holes lack precision, the entire end product can be compromised so it is important to our customers that they get precision material from their suppliers and then process it with accuracy.

Bending

The next time you are in an industrial building, check out the rafters. It’s likely that you’ll see some square ducting (you’re also likely to see spiral ducting too). These nice square angles are achieved by steel manufacturers bending material. Material bending is used to produce steel lockers, office equipment, storage facilities, machinery and more. Depending on the end application, our customers will bend a variety of steel products. To bend material, our customers use a brake. The four most common brakes used in sheet metal are the Cornice Brake, the Box-and-Pan Brake, the Bar Folder, and the Press Brake.

Want to learn more about each one?

No?! What do you mean no?! What on earth are you doing on a sheet metal blog if you aren’t extremely interested in the intricacies of sheet metal bending? Does YouTube just not have enough interesting videos for you to waste your time on?

Fine! Well for those of you in the peanut gallery who would like more information, here’s a link that breaks it down pretty succinctly. For the rest of you, on to the final common sheet-metal process.

bending, punching, stamping, construction workStamping/Punching

OK, this may sound a bit weird but punching is my favorite sheet-metal processing technique. Punching is a lot like using a very large, very intricate paper-hole puncher. Our customers use dies (the tooling used to produce stamped parts) to punch out so many designs. Stamping may be used to help create complex computer hardware or customers may just be punching round holes in sheet metal to make room for lighting in signs. Stamping processes can be very technical, requiring hundreds of hours in design and tooling work. Mostly, I just like the satisfying sound of sheet metal being stamped out.

No matter how our customers process the sheet steel we provide them with, they all have the same end goal- the satisfaction of their consumers. The steel industry continues to grow more technologically advanced as we seek to cut-costs, eliminate wastes, and provide a better product to our customers. However, one thing about this industry shouldn’t change and that is its reliance on relationships to get things done right.

The Steel Supply Chain Part 2

Part Two: The Role of Service Centers in the Steel Supply Chain

Steel mills excel at manufacturing steel- it is, after all, their business.

Once steel has been formed into hot-rolled slab it can be further processed into various types of steel products like hot rolled, cold rolled and galvanized product. It will be thinned out across a gamut of thicknesses (referred to as gauges) using different types of processes. To keep it simple, just realize that hot-rolled slab is processed in lots of different ways and that each process adds to the final material’s properties and appearance.

Mills are exceptional at manufacturing these various types of steel and they do great at delivering it to customers across the street and across the world.

There’s just one problem, mill coiled steel looks like this:

Service center Coil Receiving

In case the person standing next to these coils didn’t demonstrate fully for you, these coils are massive. Try 10,000-20,000 pounds massive on for size. Just two of these coils max out the load on a full-size semi-truck. That’s well enough, assuming your facility has massive overhead cranes and equipment sturdy enough to handle 20,000 pounds of pressure.

Oh…your fabrication services require 8’ by 10’ sheets of metal? Yeah, huge coils might not be what you’re looking for.

Lucky for you, companies like OFR Metals exist. We buy from steel mills and then process their mammoth coils according to each customer’s specification-slitting and re-coiling material into smaller coils, leveling coiled material and then cutting it to specified lengths and widths, etc.

Our real purpose is linking our customers to the steel mills. That is how we fit in the steel supply chain.steel supply chain link

We take that role seriously. We believe it means more than just providing customers with material. Linking customers to the steel mills means providing them with the expertise that they would expect to get if they bought directly from the mill. We are unique that way. We host open houses where customers are invited to meet with metallurgists (someone who is an expert in making and using metal) from the mills. We gather market intelligence from mill representatives to help our customers make smart buying decisions.

Additionally, lean metal distributors, like OFR Metals, know how to shorten lead times, maximize inventory efficiency and minimize material delays. We try to tighten the steel supply chain so our customers experience less down-time and have the information they need to make decisions in real time.

In the next segment, we’ll talk about our customers (it’s one of our favorite topics!). How do they use this processed metal? What happens on their manufacturing floors that take blank steel sheets and form them into recognizable, everyday items?

It might just surprise you to find out. Check back for part three of the Steel Supply Chain series.

The Steel Supply Chain Part 1

Part 1: Our Suppliers

The steel supply chain is a complex network that spans the globe and delivers steel products across the world and back again. In this three-part series we’ll explain the steel supply chain in simplified terms and identify the work that goes on to increase efficiency throughout.

Part one of this series focuses on the process our suppliers use to manufacture raw steel slab. Part two of this series will deal with the supply chain moving from various processing and rolling techniques and the import/export dynamic of large steel coils. Part three of this series will delve into our company’s process and will explore the relationship between service centers and end manufacturers.

Iron Output, steel supply chainThe Beginning of the Steel Supply Chain

Steel production starts off with a bang as iron ore is extracted from the ground using massive explosions. The ore is gathered using large magnets and is heated and formed into small round pellets. By itself, iron ore isn’t very useful- it lacks the strength needed for structural and manufacturing applications. Combined with carbon and other elements, it becomes stronger. Processed, it becomes malleable enough to be useful in many different applications.

Iron ore mining companies include corporations like Vale, BHP Billiton and Rio Tinto. Iron ore is extracted out of the earth and is smelted (heated up and chemically treated) using coke (high-carbon fuel). This makes a substance known as pig iron which is a more raw form of iron that is shipped around the world to steel manufacturing plants in North America, South America, Europe, and Asia (and elsewhere).

OFR Metals Steel Suppliers

OFR Metals works with various steel mills, most domestically located in the U.S., to maximize product quality and deliver efficiency. These include companies like US Steel, CSI, North American Stainless, and many others. These mills melt pig iron using massive amounts of heat and add in other elements (for example nickel and manganese) to give the steel the desired characteristics (surface finish, hardness, malleability, etc.). The liquid metal is then typically continuously cast into long metal slabs. These slabs will eventually be rolled out, put through various baths and eventually coiled (like a roll of paper towels) to ship out to distributors.

What’s it to You

Steel is strong, but it’s also malleable. Our many customers use different types of steel in various applications from building roofs for buildings to making the heating and ventilation systems in your homes more efficient. Steel becomes strong as it experiences heat and pressure, and as all the combined elements work in tandem.

Steel is our product, and it’s a product we believe in. We are all about emulating the strength that comes from working well with the parts that make up our chains of steel. We value relationships, and we work to forge those every day.

For customers or interested parties who want more information about our suppliers contact us at: purchasing@ofrmetals.com.