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Global Iron Or Steel Pipe And Tube Market Increased to $124.6B

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Global Iron Or Steel Pipe And Tube Market Increased to $124.6B

IndexBox has just published a new report: ‘World – Tubes, Pipes And Hollow Profiles (Of Iron Or Steel) – Market Analysis, Forecast, Size, Trends and Insights’. Here is a summary of the report’s key findings.

The revenue of the market for tubes, pipes and hollow profiles (of iron or steel) worldwide amounted to $124.6B in 2018, rising by 3.9% against the previous year. This figure reflects the total revenues of producers and importers (excluding logistics costs, retail marketing costs, and retailers’ margins, which will be included in the final consumer price).

Consumption By Country

China (23M tonnes) constituted the country with the largest volume of consumption of tubes, pipes and hollow profiles (of iron or steel), comprising approx. 21% of total volume. Moreover, consumption of tubes, pipes and hollow profiles (of iron or steel) in China exceeded the figures recorded by the second-largest consumer, India (10M tonnes), twofold. Russia (9M tonnes) ranked third in terms of total consumption with a 8.4% share.

In China, consumption of tubes, pipes and hollow profiles (of iron or steel) remained relatively stable over the period from 2007-2018.

Production 2007-2018

In 2018, the amount of tubes, pipes and hollow profiles (of iron or steel) produced worldwide amounted to 109M tonnes, rising by 2.2% against the previous year. In general, production of tubes, pipes and hollow profiles (of iron or steel) continues to indicate a relatively flat trend pattern. Over the period under review, global production of tubes, pipes and hollow profiles (of iron or steel) reached its maximum volume in 2018 and is likely to see steady growth in the near future.

Production By Country

China (30M tonnes) remains the largest iron or steel pipe and tube producing country worldwide, comprising approx. 28% of total volume. Moreover, production of tubes, pipes and hollow profiles (of iron or steel) in China exceeded the figures recorded by the second-largest producer, India (11M tonnes), threefold. The third position in this ranking was occupied by Russia (11M tonnes), with a 9.9% share.

From 2007 to 2018, the average annual growth rate of volume in China was relatively modest. The remaining producing countries recorded the following average annual rates of production growth: India (+10.7% per year) and Russia (+2.0% per year).

Exports 2007-2018

Global exports totaled 45M tonnes in 2018, growing by 7.3% against the previous year. Over the period under review, exports of tubes, pipes and hollow profiles (of iron or steel), however, continue to indicate a relatively flat trend pattern. The most prominent rate of growth was recorded in 2010 when exports increased by 20% y-o-y. The global exports peaked at 49M tonnes in 2008; however, from 2009 to 2018, exports failed to regain their momentum. In value terms, exports of tubes, pipes and hollow profiles (of iron or steel) amounted to $58.4B (IndexBox estimates) in 2018.

Exports by Country

In 2018, China (8.3M tonnes), distantly followed by Italy (3,421K tonnes), South Korea (3,392K tonnes), Germany (3,023K tonnes), Russia (2,472K tonnes) and Japan (2,157K tonnes) were the major exporters of tubes, pipes and hollow profiles (of iron or steel), together committing 51% of total exports. The following exporters – Turkey (1,995K tonnes), India (1,884K tonnes), Mexico (1,841K tonnes), Canada (1,233K tonnes), the U.S. (1,179K tonnes) and Austria (772K tonnes) – together made up 20% of total exports.

China experienced a relatively flat trend pattern of tubes, pipes and hollow profiles (of iron or steel) exports. At the same time, South Korea (+8.2%), Mexico (+7.9%), Russia (+6.7%), Turkey (+2.3%) and India (+2.3%) displayed positive paces of growth. Italy and Austria experienced a relatively flat trend pattern. By contrast, Canada (-1.4%), Germany (-2.0%), the U.S. (-2.6%) and Japan (-3.8%) illustrated a downward trend over the same period.

Export Prices by Country

In 2018, the average export price for tubes, pipes and hollow profiles (of iron or steel) amounted to $1,300 per tonne, rising by 2.8% against the previous year. Over the period under review, the export price for tubes, pipes and hollow profiles (of iron or steel), however, continues to indicate a slight downturn.

There were significant differences in the average prices amongst the major exporting countries. In 2018, the country with the highest price was the U.S. ($2,287 per tonne), while Turkey ($836 per tonne) was amongst the lowest.

Imports 2007-2018

Global imports stood at 43M tonnes in 2018, picking up by 7.4% against the previous year. Over the period under review, imports of tubes, pipes and hollow profiles (of iron or steel), however, continue to indicate a relatively flat trend pattern. In value terms, imports of tubes, pipes and hollow profiles (of iron or steel) amounted to $62.8B (IndexBox estimates) in 2018.

Imports by Country

In 2018, the U.S. (6.7M tonnes), distantly followed by Germany (2,210K tonnes) were the main importers of tubes, pipes and hollow profiles (of iron or steel), together comprising 21% of total imports. Australia (1,928K tonnes), Canada (1,581K tonnes), France (1,387K tonnes), Saudi Arabia (1,169K tonnes), Mexico (1,073K tonnes), Poland (970K tonnes), Italy (933K tonnes), the UK (926K tonnes), the United Arab Emirates (899K tonnes) and the Netherlands (876K tonnes) held a little share of total imports.

In value terms, the U.S. ($10B) constitutes the largest market for imported tubes, pipes and hollow profiles (of iron or steel) worldwide, comprising 16% of global imports. The second position in the ranking was occupied by Germany ($3.4B), with a 5.4% share of global imports. It was followed by Australia, with a 4.1% share.

Import Prices by Country

The average import price for tubes, pipes and hollow profiles (of iron or steel) stood at $1,460 per tonne in 2018, rising by 8.1% against the previous year.

Prices varied noticeably by the country of destination; the country with the highest price was the UK ($1,988 per tonne), while the United Arab Emirates ($1,205 per tonne) was amongst the lowest.

Source: IndexBox AI Platform

usmca

Sizing up the USMCA Compromise Package – How Various Industries Will be Impacted

On December 10, Speaker Nancy Pelosi, the Trump administration, along with leaders in Mexico and Canada, announced a compromise to the new North American trade deal, known as the U.S. Mexico and Canada Agreement.  Eleventh-hour concessions by the Administration and Mexico are likely to result in a win for labor, President Trump, and ultimately market stability.

The final deal gives Democrats in Congress a few big wins in the pharmaceutical and labor industries, as well as environmental standards, and gives President Trump the victory of having his new trade deal on the path to ratification by all countries involved. Canada managed to receive much of what they requested, despite the slight opening of the Canadian dairy market to U.S. producers.

One of the biggest changes from the original draft USMCA in the compromise trade agreement is the negotiated labor monitoring and penalties for noncompliance. While the original draft required Mexico to change its laws to make it easier for workers to unionize, the compromise created an interagency committee that will monitor Mexico’s labor reform, established benchmarks and penalties for Mexico’s labor reform process, and established labor attachés in Mexico for on-the-ground reporting about Mexico’s labor practices.

Below is an outline of the changes to the USMCA – the House is expected to vote on the deal next week, though the Senate will likely not address the bill until the impeachment process has concluded:

For workers, language was removed that made it difficult to prove that trading partners are not protecting workers from violence in their respective countries. Now, Mexico has agreed to a “rapid-response labor mechanism” (see ANNEX 31-A) that allows independent, multinational three-person panels to investigate Mexican factories. Mexico, too, can have a panel investigate factories in the U.S. If a violation of union rights is found, a complaint can be filed, and the country making the accusation can determine the period of time that the accused county can have to address the concern. Provisions against Forced Labor also remain strong in the agreement. The deal is expected to also create 176,000 new jobs in the U.S. (See Article 23.3-23.4, ‘Labor Rights.)

For the environment, Democrats have promised that the deal has an added commitment that all the countries will have seven multilateral environment agreements (MEAs), alongside language that will allow the list to grow over time. Provisions include prioritization and monitoring of MEA commitments, and maintain and strengthen the protection of endangered species, the Montreal Protocol, prevention of pollution from ships, regulation of whaling, protection of the Ozone Layer and more (Article 1.3 Amendment and Article 24.9 Amendment)

For the pharmaceutical industry, the deal’s former provision that gave biologics a 10-year exclusivity period on the market is now entirely taken out. Democrats argued against the exclusivity period, concerned it could increase the cost of drugs, and succeeded in eliminating language that allows patent evergreening – when brand-name drug manufactures extend patents an additional to maintain power in the market when a new or related drug is created. (See the deletion of Article 20.49 ‘Biologics’)

For the internet, a Democratic concession led to maintained protections in the USMCA for technology companies, giving legal immunity for content posted by their users, as well as legal protections when these companies seek to moderate platforms. These provisions remain the same from Section 230 of the Communications Decency Act of the USMCA.

For the steel industry, while the deal already exempted the Canada and Mexico from steel and aluminum tariffs, the revised agreement has strict rules of origin in the automotive industry. The deal states that seven years after entry into the USMCA, all steel manufacturing must occur in one or more of the countries involved, except for the refinement of steel additives. Ten years after the agreement, the countries will consider appropriate requirements in the interest of all parties for aluminum to also be considered. (See Chapter 4, ‘Rules of Origin’)

For Canada and dairy, the U.S. will be able to export 3.6% of Canada’s dairy market, currently at 1%. Dairy companies in the U.S. can sell their products into Mexico duty-free, with access to common-named cheeses, while Canada is opening its market with more duty-free quotas for U.S. dairy products. The deal eliminates Canada’s 6/7 milk pricing system, and holds Canadian export of dairy to the standards of international trade rules.

And for the auto industry, in order to avoid tariffs, a car or truck must have 75% of its components made in the U.S., Mexico or Canada, up from 62.5% today.  Also, workers making the cars or trucks, at least 30% of the work, must be earning at least $16 an hour. By 2023, that number is 40% of the work done on cars.

With the United States positioning itself to negotiate several more trade deals, labor hopes that these last-minute changes set a benchmark for labor standards and enforcement moving forward and, likewise, the President hopes it demonstrates he can close a major trade deal.

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Note: Ryan Bernstein, formerly chief of staff to Senator John Hoeven (R-ND) is a senior vice president with McGuireWoods Consulting federal public affairs group.Mariam Eatedali is a research associate at McGuireWoods Consulting; she previously consulted with former representatives and senators to address foreign economic and diplomatic concerns while she was a fellow for the U.S. Association of Former Members of Congress

How U.S. Manufacturers Can Mitigate the Impact of Steel & Aluminum Tariffs

President Trump’s imposition of additional tariffs on imports of steel and aluminum dominated global trade news headlines for most of 2018 and caught many manufacturers off guard. Prior to the first announcement in March, many in the industry believed that the President’s tariff threats were merely a negotiating tactic and would likely never materialize.  By June 2018, the Trump administration left no doubts that it would follow through.

On the basis of protecting U.S. national security, the U.S. imposed additional tariffs of 25 percent and 10 percent on steel and aluminum imports for almost all countries under Section 232 of the Trade Expansion Act of 1962.  Specifically, the Section 232 action affects steel articles classified under HTSUS subheadings 7206.10 through 7216.50, 7216.99 through 7301.10, 7302.10, 7302.40 through 7302.90, and 7304.10 through 7306.90, and aluminum articles described as follows: (a) unwrought aluminum (heading 7601); (b) aluminum bars, rods, and profiles (heading 7604); (c) aluminum wire (heading 7605); (d) aluminum plate, sheet, strip, and foil (flat rolled products) (headings 7606 and 7607); (e) aluminum tubes and pipes and tube and pipe fitting (headings 7608 and 7609); and (f) aluminum castings and forgings (HTSUS 7616.99.5160 and 7616.99.5170).

Since the administration’s initial announcement, the U.S. and its major trading partners, including the EU, South Korea, and China have traded a series of exemptions, extensions, and retaliatory tariffs.  Talks to deescalate trade tensions have had varying degrees of success. After imposing retaliatory duties on American-made goods, the European Union and the U.S. entered into talks to draw down to zero-tariff levels, but they haven’t yet reached a permanent agreement. Other countries, like South Korea, immediately sought and secured permanent exemptions from certain U.S.’ tariffs.

The U.S.’ trade relationship with China has been significantly more volatile. In the months following President Trump’s proclamations, the U.S. and China placed multiple rounds of tariffs on each other’s imports.  In 2018, the U.S. imposed tariffs on over $250 billion worth of imports from China under Section 301 of the Trade Act of 1974.  To date, nearly half of all Chinese goods brought into the U.S. are subject to additional tariffs, many at 10 percent and a significant portion at 25 percent if ongoing bilateral negotiations fail.

U.S. manufacturers have long relied on China as a source of affordable manufactured materials.  They had no need to explore alternative sources for decades.  Now, manufacturers are reexamining old assumptions.  At least for the duration of the current administration, tariffs will always be on the table—if not always in effect.  And there is no guarantee that future administrations will entirely remove existing tariffs or refrain from implementing new tariffs.

Tariffs are already disrupting manufacturers’ supply chains—increasing costs and eroding margins. Continued trade uncertainty is generally bad news for manufacturers, complicating business planning and hindering growth.

How, then, can manufacturers mitigate the impact of tariffs, and position their businesses for sustainable, long-term growth?

Submit Product Exclusion Requests

To avoid making major adjustments to supply chain—which may not be an option for manufacturers of specialty items or those that lack the significant time and capex allocations required—manufacturers affected by Section 301 tariffs submitted product exclusion requests to the Office of the U.S. Trade Representative (USTR) for goods described under Lists 1 and 2 (USTR is no longer accepting product exclusion requests for List 1 and 2 items and has yet to open a docket for List 3 requests).  Manufacturers affected by Section 232 tariffs may continue to submit product exclusion requests to the Department of Commerce.

In late December 2018, USTR announced the first set of products, all under List 1, that it approved for exclusion from its Section 301 action.  The exclusions are retroactive as of July 6, 2018.  Anyone that imports goods approved for exclusion under the Section 301 stand to benefit because approvals are not limited to specific requestors.  Manufacturers and importers should examine the Section 301 list of excluded products to see whether their imports qualify for relief.  Approved exclusions will remain in effect for one year.  USTR indicated it is still reviewing other Section 301 product exclusion requests and decisions will be forthcoming.

According to a recent Wall Street Journal report, the Department of Commerce granted about 75% of the 19,000 requests it received to exclude products subject to Section 232 tariffs on foreign steel in 2018.  The Steel Manufacturers Association received approvals for exclusion on 66 of 132 requested tariff lines—a significantly higher success percentage than other industries, The Wall Street Journal reported in October 2018. For comparison, the National Retail Federation and National Restaurant Association were granted less than 5 percent of their requested exclusions.

Successful requests involve significant investments of time and resources.  The Steel Manufacturers Association’s success was the result of a strategic, coordinated effort: a combination of data-driven exclusion requests and government relations efforts.  Manufacturers should keep track of their direct and indirect costs resulting from the tariff actions and model impacts on growth plans as part of internal strategy data analytics.  When preparing exclusion requests, manufacturers should seek to establish that there are either no feasible alternative suppliers of items in the U.S. or abroad and/or tariffs will have serious adverse economic impacts on their business’ operations, their downstream and upstream partners’ operations, as well as their industry as a whole.  To understand the full scope of tariffs’ impact on their business, manufacturers need to have open channels of communication with upstream and downstream business partners whose respective supply chains may also be impacted.  Additionally, manufacturers should maintain coordinated government relations efforts to ensure elected representatives are aware of how tariff actions are impacting their constituents’ bottom lines and job prospects.

Rethink the Supply Chain

Nevertheless, many requests for product exclusion are denied. As such, business owners should not assume that pending applications will receive a favorable outcome.  If a manufacturer is unable to secure an approval for exclusion, they may need to consider alternative sources for imports. If alternative sources exist, then businesses need to evaluate cost and quality across those options.

If no alternative sources exist, for example, for highly specialized and customized goods, manufacturers may need to redesign products in a manner that allows them to change countries of origin.  This endeavor may entail building entirely new supply sources. Rebuilding supply chains has inspired déjà vu among many manufacturers, who haven’t had to make these kinds of ground—up sourcing decisions since inception years ago.

Under the current administration, trade imbalances and national security are used as justification for additional tariffs. When evaluating alternative sources, manufacturers should consider whether the new source country’s overall trade posture and geopolitical sensitivities are likely to threaten the United States.  If so, the new source country may be a potential target for future tariffs.

Plan for the long term: Revaluate the Core Business

The safest route for long-term planning is to act as if tariffs are here to stay. Tariffs will likely always be on the table under the current administration, and there are no guarantees that a future administration will shift course if tariffs yield favorable geopolitical results.

As manufacturers assess their options, they may discover that locating or creating an entirely new supply source for certain may not be financially feasible. Business owners may need to reevaluate whether it makes fiscal sense to continue producing certain products at all, and whether they need to refocus or shift production to products less impacted by trade barriers.

 

About Johny Chaklader 

Johny Chaklader is Export Controls and International Trade Practice Lead within BDO’s Industry Specialty Services – Government Contracts Group.  He can be reached at jchaklader@bdo.com.

 

 

Houston Handles Record Steel Shipments

Houston, TX – The Port of Houston handled more steel shipments in July than in any month since 2008 as 844,000 tons of the product were handled at the port, according to Executive Director Roger Guenther.

Addressing the most recent meeting of the Port Commission of the Port of Houston Authority (PHA), Guenther also noted that the port had achieved a record with operating revenues in July 2014 of more than $24 million.

Steel and bulk cargo grew by “a solid 5 percent” in July, he said, adding that more than 22 million tons of cargo moved across PHA docks during the first seven months of the year.

Container volume was relatively flat compared to last year, but recorded a four percent increase in the number of loaded boxes year to date.

This was offset, Guenther said, “by a reduced number of empty containers being imported through PHA terminals due to an increase in loaded imports.”

Combining the strength in revenues and controlled spending, PHA has generated more than $65 million in operating cash flow for the year, a growth of 5 percent, he reported.

Following the first two quarters of 2014, the PHA said that it’s prepared a “re-forecast budget” for the remainder of the year, reflecting a $5.8 million increase in annual operating revenue, a decrease of $2.1 million in annual operating expense.

“This revenue generated will be reinvested in the infrastructure assets needed to increase capacity and provide for increased economic activity and job growth for the region,” said Guenther.

09/11/2014