US to exempt some steel, Al from 232 quotas
The US will provide targeted relief from import quotas imposed on steel and aluminum from Argentina, Brazil and South Korea, but the move is expected to have "limited" impact on domestic steel trade flows and prices.
US President Donald Trump today authorized Commerce secretary Wilbur Ross to grant requests from US consumers for product exemptions from annual import quotas based on insufficient quantity or quality available from domestic producers. Exempted products would not be subject to the 25pc tariff on steel and 10pc tariff on aluminum.
The directive addresses a complaint among some US consumers that product exclusions were only available from the tariffs and now gives Commerce the same product exclusion authority for quotas.
The move is expected to further bottleneck a messy exclusion process marred by delays. Commerce has reviewed a only small fraction of more than 27,000 tariff-exemption requests submitted by US consumers.
Trump in his directive said that "projects in the US employing thousands of workers may be significantly disrupted or delayed," with some absolute quotas already filled for the year.
Commerce will expedite requests for import orders contracted prior to 8 March for use in facility construction in the US, provided that the value of the material constitutes 10pc or less of the cost of the facility and that the lack of relief would cause delays. But any such imports would be subject to the 25pc tariff if approved.
Investment bank Jefferies in a research note said it expects the impact on US steel imports and prices to be "limited," but singled out oil country tubular goods (OCTG) as a key beneficiary of today's announcement.
"We continue to see OCTG as the big winner of [Section] 232 as agreements with South Korea, Brazil and Argentina address 45pc of historical imports and ostensibly cap imports at 52pc below 2017 volumes," Jefferies said, even as OCTG prices were heard to be under pressure.
The company estimates that 93pc of the annual OCTG quota has been filled, driving expectations for a meaningful drop in second-half imports.
Still, Jefferies expects a majority of OCTG-related quota requests to be refused. OCTG utilization rates are the lowest of any major steel product and it will be challenging for consumers to prove that domestic material is not available, it said.
The move is also expected to benefit slab importers.
"While [quota-based exemptions] could ultimately amount to very modest changes to existing trade flows, it could also further the opportunity for Brazilian and Korean slab producers to enhance slab exports to the US," Cleveland-based investment bank KeyBanc said.
The president directed the Commerce secretary to issue the procedures for exclusion requests as soon as possible. Relief granted will be retroactive to the date the exclusion request was received by Commerce.
The US granted exemptions from the 25pc global tariff on steel imports, effective 23 March, to Argentina, Brazil and South Korea after the countries agreed to annual import quotas based on shipments in the prior three years. South Korea's exemption was also tied to a renegotiated trade deal that gives US automakers greater access to the South Korean market. Australia was exempted from the steel tariff but is not subject to an import quota.
Australia and Argentina are the only countries exempt from the 10pc tariff on aluminum imports, with Argentina subject to an annual import quota.
The four exempt countries accounted for 23pc of US carbon and stainless steel imports of 16mn t in the first half of 2018, down from 25pc of US imports of 18mn t in the same period a year earlier, according to Commerce.
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US Gulf oil shut-ins drop as Helene nears landfall
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Opec+, Saudis have no target oil price: sources
Opec+, Saudis have no target oil price: sources
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Italian service centres turn to secondary HRC
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Hurricane Helene shuts in 29pc of US Gulf oil
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