As of April 2, in return for the “Section 232” 25% tariffs on Chinese metal products, China has enacted 25% retaliatory tariffs for a range of American products, including steel and aluminum scrap, and seamless steel pipe. This appears to already be applied to cargo that is on the water and en route. The US exported 958,584 tons of aluminum scrap to China last year, so the Chinese tariff would impact $1.2 billion in US scrap exports that are in strong demand by China.
Almost all Taiwan re-rolling mills have stopped importing scrap for a while, and some have said that they wanted to focus on buying local scrap instead, so their production is down.
Which is estimated to impact $3 billion out of the total of US agricultural exports to China (some $19.6 billion in 2017). This list includes tree nuts, vegetables, frozen and dried fruit. Other agricultural products China is considering a 25% tariff on include ginseng, wine and various pork products.
Chinese companies are said to own 240,000+ acres of US farmland, out of 27.3 million acres owned by foreign interests – which is an area bigger than the size of Tennessee. The Chinese have also purchased agricultural products manufacturers such as Smithfield Company, which produces pork products. A real “trade war” scenario could include leveraging these foreign farm investments as strategic resources. Given sheer numbers, we don’t believe tariffs on food could continue for very long.
All classes of steel and aluminum sheet and plate are up. All steel service centers are reporting severe shortages. Domestic mills are selling out of their capacity in mere days and two months ahead of time.
Industry news sources state that a number of US mills will be restarted, and there are plans for expansion and new builds, but these things take years to implement. The US is a long way from being able to compensate for the loss of the third of the steel supply it has been importing. The new reality is higher prices and longer lead times.
If you can estimate your usage for the upcoming year, it is essential and beneficial to enter into an agreement to both assure your supply in the face of shortages as well as price stability. We will stock what you buy and hold it for you exclusively. Those not on contract may not be able to buy as the supply squeeze wears on.
HOUSTON STEEL SUPPLIERS
(Minimum 750$ Order)