Courtesy of Mish
Price of steel is going up. Is that a good thing? For who? Please consider U.S. Trade Panel Rules for Domestic Steelmakers Against Chinese Imports.
The U.S. International Trade Commission sided with U.S. steelmakers in a case over Chinese steel Wednesday, voting that U.S. industry has been damaged by a flood of imports of subsidized steel from China.In the ITC’s largest-ever steel case, all six commissioners voted in the affirmative that imports of so-called oil country tubular goods from China have injured U.S. manufacturers. The commission will provide details of its decision later Wednesday.
The ruling, which will likely result in duties on future imports of Chinese steel pipes, adds more tension to the U.S.-China trade relationship. Ties between Washington and Beijing are already frayed by the Obama administration’s imposition of duties on Chinese tire imports and China’s criticism of U.S. moves as protectionist.
Last month, the Commerce Department imposed countervailing duties on the steel pipes ranging from 10.4% to 15.8%. The ITC’s decision Wednesday allows the government to finalize those duties. The commission will make a separate decision on antidumping duties next spring.
In the case, brought by U.S. steel manufacturers and the United Steelworkers union, the domestic industry has framed its case in terms of potential job losses — thousands of steel workers have been laid off or had their mills closed. In China, job losses have been few, as Chinese mills continue to operate despite weakened world demand.
The case was filed by Maverick Tube Corp.; United States Steel Corp.; TMK IPSCO; V&M Star LP; Wheatland Tube Corp.; Evraz Rocky Mountain Steel; and the United Steel, Paper and Forestry, Rubber, Manufacturing, Energy, Allied Industrial and Service Workers International Union.
Steel Grating Tariffs
It’s not just steel pipe under review. Please consider US imposes duties on China steel grating.
The US Commerce Department said on Tuesday that it has set preliminary anti-dumping duties (AD) on imports of steel grating from China, a move that might escalate trade disputes between the two countries.
The department said it “preliminarily determined that Chinese producers/exporters have sold steel grating in the United States at 14.36 to 145.18 percent less than normal value.”
As a result of this preliminary determination, Commerce will instruct US Customs and Border Protection to collect a cash deposit or bond based on these preliminary rates.
The Commerce Department said it set a preliminary anti-dumping duty of 14.36 percent on four Chinese producers or exporters in the steel grating investigations.
All other Chinese exporters or producers received an anti-dumping duty rate of 145.18 percent, the Commerce Department said.
The new case followed US President Barack Obama’s recent decision to impose punitive tariffs on all car and light truck tires from China for three years, a move quickly denounced by China as a “serious act of trade protectionism.”
Who Benefits From This?
Essentially no one. Potentially a few hundred steel workers get jobs back, but everyone using those products has to pay more. Demand will slow and price pressures will increase on everyone using those products. In aggregate, more jobs will be lost as a result of these tariffs than gained.
And that is just on the surface. Think China will not react? A nice clear message would be for China to cancel plane orders from Boeing or industrial goods from GE. Even if China is not so overt in its message, it is foolish to think there will be no repercussions over this.
The rising tide of protectionism is not a good thing. It never is.
Mike “Mish” Shedlock
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The suspicious van in Times Square has prompted the evacuation of the NASDAQ, according to Fox News.
This is unlikely to be impacting trading however, as the location is not central to trading.
Courtesy of The Pragmatic Capitalist
Institutions are beginning to favor equities again according to the latest data out of State Street. Investor confidence moved higher in December to 103.9 from the previous reading of 100.8. This shows that institutions still favor risky assets. This reallocation of capital has been most apparent during the rally and the recent tapering off of confidence explains much of the sideways movement in equity markets over the last few months. This data is corroborated by recent data we presented from the CFTC which shows small speculators are bearish while large speculators remain bullish.
Ken Froot, the co-founder of the index explained the recent performance:
“This month’s up-tick in global investor confidence stemmed largely from an improvement in the mood in Asia, where risk appetite rose to an eight-month high. Elsewhere portfolio reallocations were modest. With three of the four indices over the neutral level of 100, institutions are continuing to add to their risky asset positions, but at a slower pace than was evident earlier in the year. Investors will be watching for signs of renewed economic growth, and well-designed exit strategies from policy makers, before making more significant reallocations towards risk in 2010.”
Paul O’Connell added his thoughts on the full year performance and prescience of the index:
“For the year as a whole, investor confidence staged a meaningful recovery from the historic lows of twelve months ago, leading the way ahead of other measures such as equity prices, consumer confidence and surveys of investor expectations. By quantitatively measuring the actual risky asset allocations of institutional investors, the State Street Index shows that institutions were ‘ahead of the curve’ in anticipating the risk rally this year.”