Category: Labour News

Trudeau’s Tariff Failure Threatens New Year Devastation for Many Canadians

The following opinion column by Ken Neumann, United Steelworkers National Director for Canada, has been published in the Globe and Mail.

A gloomy holiday season awaits thousands of Canadians whose livelihoods depend on our domestic steel and aluminum industries, their family gatherings sure to be tinged by a sense of foreboding for what lies ahead in the new year.

For months, workers and manufacturers across the country have increasingly been feeling the threat stemming from U.S. tariffs on Canadian steel and aluminum – levies that are widely recognized as illegal under international trade rules. These fears are exacerbated by recurring reports that the United States is making unacceptable demands for export quotas as alternatives to the illegal tariffs.

A chilling reality is setting in for more and more Canadians – our government has surrendered its leverage to fix the steel and aluminum crisis and avert devastation for so many families and communities.

Federal government data indicate that since the Trump administration’s “national security” tariffs came into effect in June, monthly Canadian steel exports to the United States have plummeted by up to 29 per cent and aluminum exports have dropped by as much as 25 per cent.

Canada’s steel and aluminum sectors directly and indirectly support 175,000 middle-class jobs across the country. With no positive resolution to the tariff dispute in sight, these Canadian families and businesses are bracing for the worst in 2019.

Business, community and labour leaders have been clear in warning Ottawa of the potential for massive, permanent damage from the crisis. Continue reading Trudeau’s Tariff Failure Threatens New Year Devastation for Many Canadians

Standing Up Against Unfair U.S. Tariffs on Canadian Steel and Aluminum

 

The USW Fights for All Canadian Steel and Aluminum Workers

 

Faced with absurd American ‘national security’ tariffs on Canadian steel and aluminum products, only the United Steelworkers has consistently stood up for our members and all workers in Canada’s steel and aluminum industries.

 

USW leaders on both sides of the border have been unequivocal in our opposition to the Trump administration’s baseless tariffs of 25% on Canadian steel and 10% on Canadian aluminum. On May 31, the USW International Executive Board unanimously and publicly condemned these bogus tariffs and Trump’s approach to the Canada-U.S. trading relationship.

 

Everyone knows Canada does not pose a national security threat to the U.S. – including Donald Trump. Trump acknowledged he was just using the baseless tariffs on Canadian steel and aluminum as leverage to extract concessions from Canada in the renegotiations on NAFTA.

 

Sadly, Canada’s Liberal government submitted to Trump’s numerous concession demands in the new trade deal – the USMCA. Even more unforgiveable, the Liberals did not even insist that Trump hold up his end of the bargain – lifting the bogus tariffs on Canadian steel and aluminum.

 

The magnitude of the Canadian government’s sell-out was made clear by Trump’s economics adviser, who gloated that “Canada gave very graciously.”

The Liberal government has attempted to justify the sell-out by arguing steel and aluminum tariffs were separate from the USMCA negotiations. However, Steelworkers – and the news media – have exposed this argument as patently false.

The USW has generated national media coverage by highlighting the fact that the Liberals agreed to a trade deal that legitimizes such baseless U.S. ‘national-security’ tariffs on our key industries – now and into the future. Canada’s national newspaper, the Globe and Mail, published my opinion column exposing this critical issue.

Unlike some others in the labour movement who are cheerleading this abject failure, Steelworkers are at the forefront in denouncing the USMCA for exactly what it is – a sell-out of tens of thousands of Canadian working families, in the steel and aluminum sectors, in dairy, egg and poultry farming, and the list goes on.

 

Those who negotiated this deal – with help from some in our labour movement – sold out steel and aluminum workers in exchange for some protections for auto workers.

 

It must be awkward for union leaders who support the USMCA and have members working in both the auto sector and the aluminum industry. As Steelworkers, we will never sell out one group of workers for another.

 

It is only the United Steelworkers who have consistently stood up for all Canadian steel and aluminum workers in our strong opposition to the tariffs and to the USMCA.

Continue reading Standing Up Against Unfair U.S. Tariffs on Canadian Steel and Aluminum

: Steel Quotas won’t work for most Canadian producers say MPs, industry reps (incl. Mark Rowlinson)

Federal MPs representing ridings affected by American tariffs on Canadian steel exports say they’re skeptical that a quota-based system can be a solution to the ongoing trade dispute, even after one major steel producer recently stepped forward to tell the House International Trade Committee that it would support certain quotas in exchange for a duty exemption.

At the committee meeting on Oct. 2, Kaylan Ghosh, president and CEO of Algoma Steel, located in Sault Ste. Marie, Ont., recommended the government “explore a quota-based system” as a solution for securing tariff exemptions.

Mr. Ghosh signalled openness to accepting a quota system similar to what Canada and the U.S. agreed to in the United States-Mexico-Canada Agreement (USMCA) on autos. Under the agreement in principle, Canada and Mexico will not be slapped with auto tariffs unless exports exceed 2.6 million units annually—a threshold significantly higher than current export volumes.

Such a scenario isn’t ideal for the industry, he said, but given that U.S. President Donald Trump indicated that quotas are his preferred approach, and that other countries have bowed down to those conditions, Canada could negotiate a similar fix.

Mr. Ghosh said a potential system should reflect historic exports levels to the U.S., and have the quota distributed company- and product-wise to ensure fairness and certainty over exports reaching American buyers. His company represents 40 per cent of the Sault Ste. Marie’s economic output, a city that has seen major job losses in the sector in the last generation.

His remarks to MPs came a day after USMCA was formally agreed upon by the three member countries, although the steel and aluminum tariff spat remains unresolved. On Oct. 1, Mr. Trump told journalists on the White House lawn that the tariffs will remain “until such time as we can do something different, like quotas, so that our industry is protected.” Continue reading : Steel Quotas won’t work for most Canadian producers say MPs, industry reps (incl. Mark Rowlinson)

Meeting with Minister Goodale

On Friday October 5th parts of your Union Executive met with Minister Ralph Goodale . In attendance for the Union was myself {Mike Day}, Ryan Mckenzie and  USW Staff Rep Patrick Veinot.

 

There was lots of discussion on what we can recycle, orders that we have down to the U.S. Questions on the Cheniere Line that we did that started the duties. He was also curious about the plants in the states, if they can do what we can. He brought up the LNG project that has been approved and hopes they use our products even though it is his understanding that some of it has to be brought in and can’t be produced here.

 

We brought up the obvious regarding the tariffs and the government leaving out steel and aluminum in the negotiations. How We had discussions with him over 15 months ago when this started coming to light{ section 232} and steel was what brought this to the for front and how could we be left  behind. We’ve seen Wilbur Ross talk about how a new agreement would then naturally have the tariffs go away. This is as important to him as it is to us and he told us they are actively working on it. Freeland and Lighthizer are meeting this week and continuing discussions. I told him we don’t see how a “quota system” is beneficial to anyone this side of border and isn’t good in general.

 

We brought up how dumping has increased here in Canada and their response was that in the next couple weeks we should here some news on the “Safeguards”. Below was just released from the Federal Government last night.

News Release

Backgrounder – Relief for Canadian Businesses from Countermeasures on Certain U.S. Imports

Backgrounder – Support for Canadian Steel Producers Through Provisional Safeguards on Certain Steel Imports

His office is to keep in touch with us to continue these discussions and would like to know what our membership would like to see. The initial response was Duties and Tariffs gone and Unions to have the ability to file trade/dumping cases .

 

Anonymous source says tariffs won’t be lifted anytime soon

Canada does not hold out much hope that Washington will quickly lift tariffs that it imposed on steel and aluminum exports and is resisting a U.S. push to agree to strict quotas, two sources familiar with the matter said.

The administration of U.S. President Donald Trump imposed the tariffs on Canada and Mexico in June, citing national security reasons. Although Canada and Mexico agreed a renewed continental trade deal last week, the measures remain in place.

The Canadian government is pessimistic about the chances of the tariffs being removed soon, said the sources, who asked to remain anonymous, given the sensitivity of the situation. Continue reading Anonymous source says tariffs won’t be lifted anytime soon

Not true that steel and aluminum tariffs are separate issue from USMCA deal

USMCA’s fatal flaw: ‘national-security’ tariffs

Ken Neumann

Special to The Globe and Mail

Published 15 hours ago Updated October 10, 2018

Ken Neumann is the United Steelworkers’ national director for Canada.

Lost in the debate on the Canadian government’s many concessions in the proposed United States-Mexico-Canada Agreement – “Canada gave very graciously,” as U.S. President Donald Trump’s economics adviser gloated – are disturbing provisions allowing Mr. Trump and future U.S. presidents to continue to impose baseless “national-security” tariffs on key Canadian exports.

When the USMCA was announced last week, it was both shocking and profoundly disappointing to see Canadian officials toasting this new trade deal while the United States maintained devastating tariffs on Canadian steel and aluminum exports.

The Trump administration imposed the tariffs – 25 per cent on Canadian steel and 10 per cent on Canadian aluminum – on June 1, on the spurious basis that these imports pose a threat to U.S. national security under Section 232 of American trade law. Continue reading Not true that steel and aluminum tariffs are separate issue from USMCA deal

No obvious moves to remove tarifs on steel and aluminum says head of Rideau-Potomac Strategy Group – could uranium be next?

When you break norms, those norms are very difficult to re-establish,’ says one former policy adviser to the Canadian Embassy in Washington, D.C.

Despite the safeguards against damaging penalties on Canada’s auto industry under the continent’s newly renamed trilateral trade agreement, the American ability to impose destructive tariffs under the guise of national security protection remains a lingering threat, according to trade experts who warn the damage may have already been done with aluminum and steel.

Since May 31, Canadian aluminum and steel have been subject to tariffs of 10 per cent and 25 per cent, respectively, which were imposed under Section 232 of America’s Trade Expansion Act. The provision in the 1962 legislation allows the U.S. government to impose quotas or tariffs on imported products for national security reasons—a rarely used tool before the administration of U.S. President Donald Trump.

If the U.S. wants to impose more tariffs on Canadian goods, it can say anything is a national security threat, since it’s already done it once, said Eric Miller, a former senior policy adviser to the Canadian Embassy in Washington, D.C., and current head of the Rideau Potomac Strategy Group.

“You have this situation where something that was meant to be a rarely used instrument has now become something that, over the course of the last few months, has basically become a normal part of trade policy that is designed to drive changes and concessions from established U.S. trading partners,” Mr. Miller said.

Canadian negotiators were unable to get the steel and aluminum tariffs lifted as part of the USMCA talks, but speaking to reporters on Oct. 1 in the National Press Theatre, Prime Minister Justin Trudeau (Papineau, Que.) flanked by Foreign Minister Chrystia Freeland (University-Rosedale, Ont.) said, “moving forward on eliminating the tariffs on steel and aluminum remains a priority for us.”

Ms. Freeland added that Canada is looking to take advantage of the momentum that they have generated through the conclusion of USMCA negotiations to “intensify conversations” on steel and aluminum tariffs.

During negotiations, Canada was able to gain some protections from additional Section 232 actions, through two separate side letters in the trade pact. Canada is exempted from auto tariffs under a threshold of 2.6 million passenger vehicles exported to the U.S. from Canada annually, as well as on all light trucks, and $32.4-billion US worth of auto parts. Canada also was granted a 60-day reprieve before a Section 232 action comes into effect where Canada and the U.S. can negotiate a resolution to the dispute. Continue reading No obvious moves to remove tarifs on steel and aluminum says head of Rideau-Potomac Strategy Group – could uranium be next?

Essar Algoma wants tariffs gone, explore quota system (USW is not in favour of quotas

Canadian steelmaker Essar Steel Algoma Inc. yesterday appealed to the Commons trade committee for help against U.S. duties. One factory owner told MPs’ tariff hearings that all Canadians are now paying for cross-border taxes.

“This has had a significant impact on Algoma’s exposure to the United States in the short period of time these tariffs have been in place,” said CEO Kalyan Ghosh. “We have seen a drop in exports to key states where we send the majority of our products – Minnesota, Michigan, Illinois and others.”

American tariffs are 25 per cent on Canadian steel and 10 per cent on aluminum. Cabinet imposed comparable retaliatory tariffs on U.S. imports July 1 worth more than $300-million.

“We recommend the government explore a quota-based system in exchange for tariff exemption,” said Ghosh; “Trade quotas could be divvied up between Canadian steelmakers based on historical performance”, he said. Continue reading Essar Algoma wants tariffs gone, explore quota system (USW is not in favour of quotas

LNG Canada project in BC approved by shareholders

By Canadian Press. Published on Oct 2, 2018

VANCOUVER — Investors have given final approval for a massive liquefied national gas project in northern British Columbia.

The five partners have agreed to the $40-billion joint venture that includes a gas liquefaction plant in Kitimat on B.C.’s coast and a 670-kilometre pipeline delivering natural gas from the northeast corner of the province.

The partners — Royal Dutch Shell, Mitsubishi Corp., the Malaysian-owned Petronas, PetorChina Co. and Korean Gas Corp. — delayed the final investment decision in 2016, citing a drop in natural gas prices. Continue reading LNG Canada project in BC approved by shareholders

NAFTA Deal a Sell-Out for Canadian Steel, Aluminum Workers

TORONTO, 1 October 2018 – Tens of thousands of Canadian families have been left in the lurch from concessions made by the Liberal government to get a deal with the Unites States on a renegotiated North American Free Trade Agreement, the US-Mexico-Canada Agreement (USMCA).

 

“Time and time again during the NAFTA renegotiations, the Liberal government assured Canadians that it was defending our steel and aluminum sectors and the livelihoods of tens of thousands of Canadian families,” said Ken Neumann, United Steelworkers (USW) Canadian Director.

 

“Given the Liberal government’s rhetoric throughout the process, it was inconceivable that it would agree to any deal that harms Canada’s steel and aluminum sectors,” Neumann said.

 

“Instead, the Canadian government struck a deal with the U.S. that fails to remove the senseless and damaging tariffs on Canadian steel and aluminium imposed by the Trump administration in June,” he said.

 

“Canadians expected that an agreement on NAFTA would result in the U.S. lifting the bogus national-security tariffs on Canadian steel and aluminium. Instead, it appears Canadian steel and aluminum workers are among those being sacrificed in the concessions made by the Liberal government in this deal,” he said.

 

“Rather than give-and-take negotiations that would generate new provisions to improve Canada’s trading position with the U.S., the Liberal government engaged strictly in concession bargaining,” Neumann said.

 

“The Liberals made concession after concession, until the Trump administration got the deal it wanted. In the process, Canadian government sold out Canadian steel and aluminum workers. So much for the ‘win-win-win’ deal promised by this government,” he said.

 

“Canada’s government must draw a line on this issue. The U.S. tariffs on Canadian steel and aluminum must be lifted immediately.”

 

Steel and aluminum tariffs remain in place despite new trade deal, Ross says

Commerce Secretary Ross says the new trade deal between the U.S., Canada and Mexico – to be known as USMCA going forward, not NAFTA – will not result in the removal of steel and aluminum tariffs, which he says will be handled separately and have no timeline.

“There are problems specific to steel and aluminum relating to our national defense, and at this point of time, those stay the same,” Ross tells Fox Business Network. “For that matter, there’s also a provision in here that if we put in a [Section] 232 on automobiles in the future, there will be an exemption of current levels from within the Canadian, Mexican manufacturing.”

Ross says a benefit of the new agreement is that 40%-45% of auto content will be produced at wages more than $16/hour, “meant to assure that the U.S. gets its fair share

Ford CEO says Trump’s metal tariffs cost automaker $1-billion

Steel and aluminum tariffs imposed by the Trump administration have cost Ford Motor Co about $1-billion in profits, its chief executive officer said on Wednesday, while Honda Motor Co said higher steel prices have brought “hundreds of millions of dollars” in new costs.

“From Ford’s perspective the metals tariffs took about $1-billion in profit from us,” CEO James Hackett said at a Bloomberg conference in New York, “The irony of which is we source most of that in the U.S. today anyway. If it goes on any longer, it will do more damage.”

Hackett did not specify what period the $1-billion covered, but a spokesman said the automaker’s CEO was referring to internal forecasts at Ford for higher tariff-related costs in 2018 and 2019. Continue reading Ford CEO says Trump’s metal tariffs cost automaker $1-billion

Duties on Canadian Made Pipe

The United States has opened a new battleground in its trade war with the world, announcing preliminary anti-dumping duties on large-diameter welded pipe from Canada and five other countries.

The U.S. is to immediately begin collecting 24.38 per cent cash deposits on imports from Canada that were worth almost US$180 million in 2017, the U.S. Department of Commerce announced on Tuesday.

The other countries being hit with duties are China, Greece, India, Korea, and Turkey, with penalties ranging from 3.45 per cent for Turkey to more than 132 per cent for China.

India is the only country on the list that had greater exports of the pipe to the U.S. in 2017 than Canada, at $295 million US.

The decision is “disappointing” but it affects only one of his members, said Joe Galimberti, president of the Canadian Steel Producers Association, which represents the $15-billion primary steel production industry here.

He said the Canadian arm of Chicago-based Evraz North America is the only manufacturer of large-diameter welded pipe in Canada. Continue reading Duties on Canadian Made Pipe

Federal Steel Measures a Needed Step

Federal Steel Measures a Needed Step: Steelworkers

Aug. 14, 2018 – “The United Steelworkers union (USW) welcomes today’s announcement by the federal government commencing consultations on steel safeguards and protection measures our union has been requesting for months,” said Ken Neumann, USW National Director.

“In addition to consultations, the USW continues to call for Canadian trade unions to have the right to initiate trade complaints,” emphasized Neumann.

The dumping of steel on the international market by countries including China, South Korea, Turkey and Vietnam has been a problem for the North American steel industry and workers for a number of years.

Once U.S. President Donald Trump imposed tariffs on steel and aluminum earlier this year, it was obvious the Canadian government would need to take strong action to avoid increased and specific dumping into Canada as a result.

In addition to fighting the imposition of U.S. tariffs onto Canada, the Steelworkers have consistently insisted that measures need to be taken by our federal government to protect Canada from further dumping as an indirect avenue into the American market.

“Today the federal government has taken a needed step towards aiding and safeguarding the Canadian steel industry. We welcome it and look forward to further measures to aid this essential Canadian industry,” added Neumann.

 

Court against company that fired worker over drug test results

An appeals court has ruled against a company that fired an employee for failing a drug test. The judgment by the Newfoundland & Labrador Court of Appeal is the first since Parliament voted to legalize marijuana.

Justice Gale Welsh dismissed an appeal by the Hibernia Platform Employers’ Organization over the firing of Gary Carroll, a longtime helicopter deck hand on a Hibernia rig. Carroll tested positive for banned tranquilizers under a company Drug And Alcohol Policy permitting tests “after a significant incident or a safety incident as determined by management.” The test followed repeated complaints of misplaced luggage aboard choppers that ferried crew from the offshore platform.

Unifor Local 2121 challenged Carroll’s firing as disproportionate, and the drug test as unnecessary. An arbitration board and lower court agreed, ruling misplaced luggage was not so serious a “safety incident” that it justified testing all eight helicopter deck hands on duty. Unifor argued managers conducted so many drug tests after trivial incidents that it “amounted to random drug testing” in breach of a 2013 Supreme Court ruling that tests could only be performed with cause and consent.

“The employer submits that the board’s decision was unreasonable because the interpretation of the Drug And Alcohol Policy resulted in an interference with management’s right to order drug testing,” wrote Justice Welsh. The Court dismissed the company’s appeal.

The Senate by a June 19 vote of 52 to 29 passed into law Bill C-45 An Act Respecting Cannabis. The legislation to take effect October 17 legalizes recreational marijuana, including public possession of up to 30 grams of dried cannabis. Employers’ groups unsuccessfully appealed to Parliament to amend the bill to permit random workplace drug tests. Continue reading Court against company that fired worker over drug test results

Steel makers win in court challenge on Asian anti-dumping

The Federal Court of Appeal in a win for Canadian steelmakers has rejected a challenge of anti-dumping duties by Asian exporters. The Court said Chinese-made steel pipe transshipped through other countries could not evade duties.

“The final determination is made in relation to goods of a certain country and not goods of a certain exporter,” wrote Justice Wyman Webb; “The term ‘exporter’ is not defined in the Special Import Measures Act.”

The Canadian International Trade Tribunal in 2016 cited Japanese traders for dumping steel originating from state-owned mills in China. The Tribunal argued it “was important to look behind the transactions to see who knowingly provided the goods in issue for export to Canada,” the Court noted.

“The goods were dumped during the period under review, and the margin of dumping for the same period was not insignificant,” wrote Justice Webb. The Canada Border Services Agency beginning in 2008 imposed anti-dumping duties of up to 396 percent on Chinese steel products as a threat to Canadian manufacturers.

The 2016 duties were unsuccessfully challenged by a coalition of Japanese exporters including Nippon Steel, JFE Steel, Sumitomo Metal Corp. and others. Local steelmakers that sought the anti-dumping duties included Evraz Inc., a steel pipe manufacturer with facilities in Regina, Red Deer and Camrose, Alta.

Evraz CEO Conrad Winkler in 2017 testimony at the Commons trade committee said price-cutting by Chinese mills had cost Canadian jobs. “Free trade must be fair,” said Winkler.

“China has heavily subsidized and overbuilt its steel industry,” said Winkler. “China has more than 60 percent of the global steel overcapacity, and exports more than ten times the soze of the Canadian market annually.”

“Evraz has suffered job losses due to dumped and subsidized Chinese steel,” said Winkler; “We have to be at the top of our game every day to make a very small margin.”

The Court of Appeal decision follows an earlier ruling by the Trade Tribunal that cited South Korean shippers for price-cutting on steel pipe. Korean imports to Canada increased 580 percent in a single year, 2016, after regulators cited Chinese steel mills for similar unfair trade practices.

Canada has run a trade deficit in steel since 1996. National steel output as a portion of world production has fallen by half in the past 20 years.The Tribunal found the flood of Asian imports triggered a 22 percent price drop in steel product.

 

Freeland tells Trade Committee that steel and aluminum “support package” is coming

Foreign Affairs Minister Chrystia Freeland says the Canadian government is working on a support package for this country’s steel and aluminum industries in light of stiff American import tariffs.

In testimony in front of the House of Commons trade committee Tuesday, Freeland acknowledged direct support for workers was needed. The minister was joined by senior department officials, including Canada’s Chief NAFTA Negotiator Steve Verheul.

“It is absolutely the case that our steel and aluminum…industries need our support,” she said, noting Finance Minister Bill Morneau and Industry Minister NavDeep Bains are “working on ways” to support the two sectors.

Canada and the United States are embroiled in an escalating trade war. U.S. President Donald Trump has publicly criticized Canadian trade practices. Continue reading Freeland tells Trade Committee that steel and aluminum “support package” is coming

NDP gov’t seeking feedback on changes to enviro assessment and impact of major resource projects

VANCOUVER—The B.C. government has opened the doors for public feedback on proposed changes to the environmental assessment regime, which considers the impact of major resource projects on the environment and communities.

Premier John Horgan tasked Environment Minister George Heyman with updating the assessment process last summer to ensure a “strong, transparent” process that respects the legal rights of First Nations.

It was “about time,” Gavin Smith, a lawyer with West Coast Environmental Law, said in a blog post earlier this year, “because our current approach to assessment and planning in B.C. is not working.” Continue reading NDP gov’t seeking feedback on changes to enviro assessment and impact of major resource projects

NDP: THE CPTPP TRADE DEAL WILL COST CANADA TENS OF THOUSANDS OF JOBS

The implementing legislation for the Trans-Pacific Partnership was tabled today despite the overwhelming evidence that this trade deal is a betrayal to Canadian workers, the manufacturing sector, and our supply management system. The CPTPP will put 58 000 Canadian jobs at risk and jeopardize both the auto industry and supply managed sectors. The NDP urges the Liberal government to put workers first during this difficult time and not accept this trade deal, which has a weak economic forecast according to the government’s own impact analysis.

“If this deal is implemented, tens of thousands of Canadian jobs will be at risk. When negotiating trade deals, the Liberals cannot sacrifice good paying jobs in the Canadian auto industry and farmers in supply managed sectors, such as dairy, poultry, and eggs,” said Tracey Ramsey, the NDP International Trade Critic.

Despite the “progressive” label in the name of the deal, the CPTPP has no gender chapter, weak labour provisions, no Indigenous consent, no environmental protections, and the weakest cultural language ever in a trade agreement. The deal also has low environmental standards, which will further prevent Canada from meeting our climate change commitments, and regressive investor-state dispute settlement provisions, which significantly undermine Canada’s sovereignty and its ability to regulate in the public interest.

“The Liberals negotiated the CPTPP behind closed doors. Piece by piece, Canadians have learned the extent of the problems with this deal. The NDP urges the Liberals to stand up for Canadian workers and refuse trade deals that will cost our country tens of thousands of jobs. Simply put, the CPTPP is a bad deal for Canada,” said Karine Trudel, NDP Deputy International Trade Critic.

China Steel

BEIJING/MANILA (Reuters) – China’s steel output surged to a record in May as mills ramped up production to chase fat profit margins, with a strong outlook for demand likely to keep mills running at nearly full capacity for the rest of the year.

 

The increased output comes despite China’s efforts to limit production in key areas as part of its anti-pollution campaign and highlights Beijing’s challenge in tackling overcapacity in the world’s top steel producer.

China produced 81.13 million tonnes of crude steel last month, up 5.8 percent from the previous month and 8.9 percent from the same month last year, according to data from the National Bureau of Statistics. Year-to-date output rose 5.4 percent to 369.86 million tonnes.

To view a graphic on China’s Monthly Crude Steel Output, click: reut.rs/2MohKT6

 

Daily average output climbed 2.4 percent to 2.62 million tonnes in May from April, according to Reuters’ calculations based on the official data.

“Steel mills have been running full-load and adding scrap steel to increase output in order to cash in on strong margins,” said Zhuo Guiqiu, senior analyst at Jinrui Futures.

Given firm demand and smog-battling production curbs in areas including the key steelmaking hubs of Hebei and Jiangsu provinces, analysts say mills can earn up to 900 yuan ($141) by producing a ton of steel at present, not far from more than 1,000 yuan late last year.

The utilization rate at steel firms across the country was above 71 percent from late May, a level last seen before winter production curbs which kicked in in October and lasted through March.

Recent environmental inspections in some 10 regions have forced some mills to cut production. But analysts do not expect the curbs to last long, unless new environmental policies add to pressure on supplies.

“Demand from downstream sectors may be better than expected,” said Zhuo. “The market generally believes the infrastructure construction sector is more active in the second half than in the first half, which could lift demand for steel products.”

Underlining firm demand, steel stockpiles at both mills and traders declined in May despite rising output, Mysteel consultancy data showed.

To view a graphic on Steel products inventory at Chinese mills, click: reut.rs/2JKFm2H

 

China’s output has been increasing despite its closure of 255 million tonnes in steel production capacity in the past two years, including illegal induction furnaces.

That is part of Beijing’s vow to address overcapacity that has dogged its steel sector for years.

Outside China, Chinese steel companies have built or acquired 13.5 million tonnes of capacity and are building an additional 8.6 million tonnes over the next few years, Morgan Stanley analysts said.

 

CDNPRESS/Ross Marowits: US Steel Tariffs Prompt Company to Force Worksharing

MONTREAL—ADF Group Inc. says uncertainty over U.S. steel tariffs reduced orders and prompted it to introduce worksharing for employees at its Quebec plant.

“Backlog growth is paramount to our success and unfortunately the uncertainty surrounding the steel import duty was a game-changer for many of our clients and negatively impacted our capacity to successfully close major bids during the first quarter,” co-chair and CEO Jean Paschini said

The company announced temporary layoffs at the end of March.

As of Monday, about 120 employees at its Terrebonne plant have seen their working hours cut 40- to 60-per cent and will receive Employment Insurance benefits to offset the reduction.

ADF said the program approved by the federal government will allow the company to manage its costs until steel fabrication work begins on recently awarded projects.

“As the U.S. trade policy on steel became somewhat clearer and uncertainties subsided in the following weeks we were able to secure $95-million worth of new contracts in the United States before the close of the first quarter,” he told analysts.

The Trump administration imposed 25 per cent tariffs on imports of steel and 10 per cent tariffs on aluminum against several countries effective March 23.

It initially gave Canada, Mexico and the European Union exemptions, but those were lifted June 1, prompting a retaliation from the Canadian government.

Paschini said the company is looking for every opportunity to improve the efficiency of its plants and has a strong pipeline of potential new contracts.

“No doubt the road ahead will be challenging but as we did in the past we will continue to work hard, roll up our sleeves to adapt to a prevailing market condition and trend.”

 

ADF lost $910,000 or three cents per share in its fiscal first quarter as revenue dropped by more than 40 per cent year-over-year.The loss compared with a year-earlier net income of $354,000, or one cent per share.

Revenue for the period ended April 30 fell to $28.5 million from $48.6 million because of a drop in business volume, as certain fabrication projects were nearly completed before newly-signed contracts were started.

Its order backlog was $158.7 million, up from $85.5 million at Jan. 31. The backlog includes $95 million worth of contract awards in the United States that were announced on April 23.

In addition to Terrebonne, ADF has plants in Great Falls, Mont., and Miami, Fla.

NDP GETS UNANIMOUS CONSENT IN HOUSE TO SUPPORT MOTION

 

OTTAWA – Today, NDP International Trade Critic Tracey Ramsey (Essex) received unanimous consent for her motion calling on all Members of the House of Commons to support the following:

 

That the House: (a) recognize the importance of Canada’s long-standing, mutually beneficial trading relationship with the United States of America; (b) stand with Canadian workers and communities that directly or indirectly depend on this trading relationship; (c) strongly oppose the illegitimate tariffs imposed by the U.S. government against Canadian steel and aluminum workers; (d) stand in solidarity with the Government of Canada in its decision to impose retaliatory tariffs; (e) remain united in support of Canadian farmers and supply management, which is integral for dairy, chicken, turkey, and egg farming; and (f) reject disparaging ad hominem statements by U.S. officials which do a disservice to bilateral relations and work against efforts to resolve this trade dispute.

 

“I believe this was an important step to show the solidarity and united front of Canada’s Parliament against the deliberately divisive actions of the President of the United States after his visit to Canada and the G7 meetings this weekend,” stated Ramsey. “Thousands of Canadian workers and communities rely upon trade with our closest neighbour and ally, and it is incumbent for the entirety of Parliament to show stabilty and a united front, in these turbulent times.”