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Canada to implement 25% safeguard duties

Oct 11, 2018 | 04:44 PM | Michael Cowden

Tags  steel, Canada, safeguard, imports, Section 232, imports, Michael Cowden


CHICAGO — Canada plans to impose temporary safeguard duties of 25% on imported steel to protect domestic steelmakers, the country’s Department of Finance said on Tuesday October 11.

The duties will go into effect on October 25 and will apply to the following products:

  • Heavy plate
  • Concrete reinforcing bar
  • Energy tubular products
  • Hot-rolled sheet
  • Pre-painted steel
  • Stainless steel wire
  • Wire rod

They 25% safeguard will be levied “in cases where the level of imports from trading partners exceeds [the] historical norm,” Canada's Department of Finance said.

The provisional measures will remain in place for 200 days, pending an investigation by the Canadian International Trade Tribunal (CITT), the department said.
CITT will then determine whether final safeguards are necessary.

The safeguards are intended to protect Canadian steelmakers and workers from “harm caused [by] excessive imports” of steel as well as from steel that has been diverted from other countries to the Canadian market. The Finance Department said such measures are appropriate under international law, given “exceptional circumstances.” It did not explicitly target imports from any particular country.

The department also softened countermeasures aimed at US steel imports and imposed in retaliation to the President Donald Trump administration’s Section 232 tariffs and quotas.

Canada hit its northern neighbor with retaliatory tariffs on July 1 after the US had slapped Canadian steel with 25% Section 232 tariffs on June 1.

“Given the longstanding integration of Canada-US supply chains, the government recognizes that Canadian countermeasures against US imports can create challenges for Canadian manufacturers that rely on steel and aluminium imported from the United States,” the Finance Department said. The Canadian government therefore unveiled a process for Canadian companies to request relief from the countermeasures.

“A portion of this relief will be temporary, offered until such time that Canadian producers are able to adequately meet domestic demand,” the Finance Department said. And relief will be granted only on a case-by-case basis, it added.
 
Fastmarkets AMM reported ahead of the announcement that safeguard measures were expected to be rolled out on October 11.

Canada in August launched a public consultation on possible safeguard measures to protect its domestic steelmakers from imports on key products such a plate, rebar and hot-rolled coil.

Trump in March set 25% tariffs on most steel imports into the country, triggering a wave of knock-on safeguards in regions such as the European Union. Governments and industry representatives have feared that steel destined for the US, the world’s top steel importer, could be diverted elsewhere en masse, disrupting markets.

That happened in August when Trump doubled Section 232 tariffs on Turkish steel to 50%. The move resulted in shipments initially destined for the US being diverted to other markets, such as Canada, market sources have told Fastmarkets AMM.

Canada makes more sheet than it consumes, and so that country's sheet prices have declined after Canadian mills lost some of their access to the US spot market. Prices there also lost ground because some steel shipments bound for the US from Turkey were redirected to Canada following the US' doubling of the tariff versus Turkey, sources said.

The result is that US and Canadian HRC prices, prior to June 1, had moved roughly in tandem after taking into account the exchange rate between the US and Canadian dollars. Since the tariffs went into effect, Canadian HRC prices have declined.

Fastmarkets AMM's hot-rolled coil index currently stands at $41.28 per hundredweight ($829.60 per ton). Canadian steel prices, in contrast, are at $35-36 per cwt - a spread of approximately $5-6 per cwt.

Michael Cowden



 

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