by Coalition of American Metal Manufacturers and Users (CAMMU)
Steel prices continue to fall in the US (but also overseas). See the latest Steel Benchmarker Report June 2019 on hot-rolled steel. Steel prices continue to go down in the US and around the world, with the price difference narrowing but still greater than pre-tariff prices. The capacity utilization rate for domestic steel companies is 77%. This is not a surprise, as reflected in the pummeling that domestic steel company stocks have been taking over the past month. In the category of ‘told ya so,’ the stocks are taking a hit because analysts are seeing the domestic steel industry selling less steel due to a slowdown by steel-using manufacturers and the end of the steel tariffs on Canada and Mexico. In addition, analysts are criticizing steel companies for adding capacity instead of paying down debt. See Barron’s analysis here. A recent article in Yahoo Finance summed up the situation:
“Initially a boon for the industry, permitting steelmakers to raise prices and reap profits (because foreign competition couldn’t undercut their prices), the steel market was shaken earlier this month when the U.S. lifted its tariffs on Canadian and Mexican steel and cut tariffs on Turkish steel in half. At the same time, the Trump administration’s affinity for using tariffs as a tool of foreign policy has sparked a trade war with China that is dampening economies across the globe, depressing demand for steel…and pushing prices right back down again.”
New exclusion portal. Commerce retired Regulations.gov on June 12 with a new portal that you can view here. The user guide can be found here . As you may recall, several CAMMU members participated in the testing of the new portal months ago. Hat tip to Mike Dankler in Jackie Walorski’s office who reports: “The new portal and regulations.gov will operate side by side as any requests submitted to regulations.gov through June 12 will run their course. Doing a quick ballpark, there are still over 17,000 posted steel requests over 3,000 posted aluminum requests that don’t have a decision yet. However, there are probably thousands of unposted requests too.”
Waiting for Supreme Court decision on AIIS petition on constitutionality of Section 232 steel tariffs. As previously reported, the American Institute for International Steel (AIIS – a CAMMU member) and two AIIS member companies sued the US government to get the statute declared unconstitutional. At the Court of International Trade (CIT), they moved for summary judgement, claiming that Section 232 violated the “non-delegation doctrine.” This doctrine, first articulated by the Supreme Court in the 1920s, holds that the Congress violates separation of powers when it provides an overly-broad delegation of legislative power to the Executive Branch. The CIT assigned a 3-judge panel to the case due to its constitutional arguments. The judges all agreed that, because they were bound by Algonquin, they had to deny the SJ motion and rule for the US government but the opinions showed that all three judges were very uncomfortable with the outcome. Further, their opinions show that they all had grave reservations about whether the Trump Administration, as it was currently using the statute, was violating Article I, Section I of the Constitution. Largely based on these opinions, AIIS filed a Petition for Writ of Certiorari Before Judgment. The Supreme Court will consider such petitions when the plaintiffs make a strong argument that the appellate court will be constrained to rule in the same way as the district court due to existing precedent. A decision is expected by the end of the month. The National Foreign Trade Council filed an amicus brief with the Supreme Court in support of the AIIS petition.
India imposes retaliatory tariffs on US exports. India announced that it is imposing retaliatory tariffs on 28 US products beginning yesterday (June 16). The retaliation is for the Section 232 steel and aluminum tariffs, but India also is reacting to the US revoking India’s GSP privileges in May. Among the 28 products are walnuts and apples. India is by far the largest buyer of US almonds, accounting for half of US almond exports in 2018, and is the second-largest buyer of US apples.
US Trade Rep on Capitol Hill. Ambassador Robert Lighthizer is testifying in both the House and Senate this week.