Trump
The U.S. Department of Commerce has announced that President Donald Trump had signed a proclamation allowing steel and aluminium product exclusions for quota countries.
Alex Griffiths, principal analyst, steel and iron ore markets, at Wood Mackenzie, said: “The 70% quota on steel imports from South Korea, which was the source of 25% of US steel tube and pipe imports in 2017, has restricted the availability of oil country tubular goods (OCTG) in the US.
“OCTG are used heavily by the energy industry. The lack of availability of OCTG has forced some users to abandon purchases or, if available, switch to domestic supply.
“Domestic production of OCTG relies heavily on certain imported plate and HR coil - which may also be subject to section 232 tariffs and quotas - thus domestic OCTG prices have risen further still alongside plate and HR coil prices.”
He added: “We believe that the proclamation allowing the Department of Commerce to provide targeted relief from quotas imposed on South Korea (as well as Argentina and Brazil) is in response to the widespread concerns of OCTG users, particularly those in the energy sector.
“Companies can apply for product exclusions based on insufficient quantity or quality available from US producers – if an exclusion is granted then no further charge would apply.
“In selected cases, where products have been purchased prior to the quota decision and cannot presently enter the US due to the aforementioned quota, the products may enter only after the payment of the 25% duty.”
Mr Griffiths said: “This, in theory, should improve OCTG availability and reduce pressure on both OCTG prices and plate prices (which is used to make OCTG). But when and to what degree prices will drop remains unclear given that the terms of trade continue to change at short notice.
“The announcement signals a further dilution of the tariffs and quotas imposed under Section 232, and comes in response to increasing discontent amongst steel end users.”
