Steel Imports

Frontrunning: May 25

  • World stocks hit record after Fed minutes (Reuters)
  • OPEC extends oil output cut by nine months to fight glut (Reuters)
  • Father and Brother of Manchester Bomber Arrested in Libya (BBG)
  • In testing Montana vote for Trump, Republican caught up in brawl (Reuters)
  • NATO to Take New Counterterrorism Measures (WSJ)

Trump Adminstration Begins Probe Into Aluminum Imports' "National Security Threat"

Having slapped Canadian softwood with tariffs, and begun investigating steel imports last week, it appears - as Commerce Secretary Wilbur Ross promised - the Trump adminstration has shifte its focus to aluminum imports. Specifically, as AP reports, Washington has begun an investigation into whether aluminum imports are jeaoparding national security.

Wall Street Throws Up On US Steel's "Nightmare On Elm Street" Results

"If things are so bad during good times, 2Q-4Q is set to resemble a "Nightmare on Elm Street."Next move in U.S. steel industry fundamentals is lower, given scrap prices now in full-on correction mode, negative seasonality around the corner for U.S. steel mills, iron ore price declines, rising steel imports and correction in coking coal prices."

China Threatens Retaliation To Trump's Steel "Protectionism"

"If the U.S. does take protectionist measures, then other countries are likely to take justifiable retaliatory actions against U.S. companies that have an advantage ... in fields such as finance and high-tech, leading to a tit-for-tat trade war that benefits no one," the official China Daily said in an editorial on Monday warning it would retaliate to any protectionism unleashed by the Trump administration.

IMF Drops Pledge To "Resist All Forms Of Protectionism"

A communique from the IMF’s steering committee released on Saturday in Washington echoed the G-20 reversal, and said that officials “are working to strengthen the contribution of trade to our economies" while omitting a call from its last statement in October to “resist all forms of protectionism."

Frontrunning: April 21

  • Attack overshadows last campaign day in France (Reuters)
  • Paris Gunman Was Questioned by Police in February (WSJ)
  • French PM knocks Le Pen, Fillon stance on security after Paris shooting (Reuters)
  • Battle zone scenes at Paris Champs Elysees (Reuters)
  • In ‘Buy American’ Push, Trump Is Starting in a Hole (WSJ)

European, US Stocks In Eerie Calm As French Vote Looms

Global markets were oddly calm on Friday, the last day of trading before the first round of France's closely fought presidential election, with European stocks posting modest declines ahead of Sunday's main event, Asian shares rising, and set for first weekly gain in the past month, while U.S. futures were unchanged.

Dave Collum's 2016 Year In Review - "And Then Things Got Really Weird..."

"Markets don’t have a purpose any more - they just reflect whatever central planners want them to. Why wouldn’t it lead to the biggest collapse? My strategy doesn’t require that I’m right about the likelihood of that scenario. Logic dictates to me that it’s inevitable..."

The Stunning Idiocy Of Steel Tariffs

It took these several centuries of learned debate to finally get rid of most of Charlemagne’s extensive and absurd price controls. So essentially, today’s bureaucrats are assuming the role  once played by kings, popes and their representatives in determining “just” prices. It sounds almost as though more than a thousand years of progress have just gone “poof”. Obviously though, the governments involved in this trade spat are only acting in the best interests of steel workers. Just as they are only acting in the best interests of taxi drivers when regulating Uber out of existence in a city. Why, we should actually consider bringing back VHS video while we’re at it. Someone must have made those tape machines and tapes, and obviously they’re all out of a job as well. How are we ever going to have jobs if we don’t stop progress?

Unintended Consequences: Easy Money = Overcapacity = Trade Wars

So what happens to all that Chinese steel that was on its way to the US and EU before slamming into those prohibitively high tariffs? One of three things: Either it’s sold elsewhere, probably at even steeper discounts, thus pricing US and EU steel exports out of those markets. Or it’s stockpiled in China for future use, thus lowering future demand for new steel production and, other things being equal, depressing tomorrow’s prices. Or many of China’s newly-built steel mills will close, and China will eat the losses related to this malinvestment. Each scenario results in lower prices and financial losses somewhere. Put another way, as far as steel is concerned, the world’s fiat currencies are rising in value, which is the common definition of deflation.