Fearing a flood of steel, Canada bolsters borders to avoid becoming world\u2019s dumping ground<\/a><\/li>\n<\/ul>\n\u201cChina keeps adding capacity year after year and they are in a surplus,\u201d said Jean Simard, chief executive of the Canadian association. \u201cThere has to be a way between nations to circumscribe that, to make China part of a level playing field.\u201d<\/p>\n
But even the Global Forum on Steel Excess Capacity has struggled to address a massive oversupply of the alloy \u2014 a key frustration for U.S. President Donald Trump\u2019s administration.<\/p>\n
Steel production capacity eased one per cent last year due to a reduction in some Asian producers, according to the The Organisation for Economic Co-operation and Development. But supply still far exceeds demand with the global surplus in steelmaking capacity estimated to have reached around 737 million metric tonnes in 2016, the highest level in the history of the steel industry, according to the global steel forum. The surplus has been identified as a key factor in the disruption of world trade relationships.<\/p>\n
“I don\u2019t think they\u2019ve been successful at all and there are all kinds of problems with these forums,\u201d said Charles Bradford of New York-based Bradford Research. \u201cFor starters there are huge issues with defining what is and isn\u2019t a subsidy.\u201d<\/p>\n
And any forum is unlikely to be successful without China\u2019s full engagement in developing measures to tackle the problem, said Bart Melek, global head of commodity strategy at TD Securities.<\/p>\n
\u201cI think it\u2019s valid to say China doesn\u2019t respond to the same market rules as we do,\u201d Melek said. \u201cBut without them, I don\u2019t know how successful any of this is.\u201d<\/p>\n
The call for global engagement comes at a time of unprecedented volatility for the aluminum industry. U.S. sanctions on the Russian producer Rusal sent prices surging to a 6-1\/2 year peak of US$2,435 on Tuesday on the London Metal Exchange, compared to $1,978 at the start of the month.<\/p>\n
Prices for alumina and bauxite \u2013 key ingredients in the production of aluminum \u2013 were also up amid disruptions to supply sources in Brazil and questions about the future of the Rusal\u2019s alumina refineries in Ireland and Jamaica.<\/p>\n
Meantime, Canadian firms \u2013 which export 84 per cent of their product to the U.S. \u2014 still face the looming threat of U.S. tariffs. The U.S. has temporarily exempted Canada from levies of 25 per cent on steel and 10 per cent on aluminum until May 1, pending the outcome of the NAFTA negotiations.<\/p>\n
As the tariffs kick in for other international producers, Canadian aluminum industry representatives met with federal officials in Ottawa last week to discuss how to prevent Canada from being used as a hub for transhipping and the circumvention of trade rules.<\/p>\n
Illegal trans-shipping occurs when one country exports a product to a second country in order to falsify the product\u2019s country of origin to dodge tariffs in a third country. Last month, Canada announced plans to bolster its defenses against such practices by granting extra powers to the Canada Border Services Agency.<\/p>\n
It is also creating new industry-government committees and ushering in anti-circumvention measures that would allow officials to investigate companies trying to avoid duties by slightly modifying their products before shipping them elsewhere.<\/p>\n
Though official estimates indicate China accounts for only a small percentage of steel and aluminum imports into the United States \u2013 U.S. officials have insisted the figure is much higher due to the widespread use of these practices.<\/p>\n
\u201cThe exemption from the U.S. tariffs is predicated not just on NAFTA but on our ability to watch America\u2019s back and prevent transhipped metal from entering the United States through our borders,\u201d Simard said. \u201cWe cannot expose ourselves to one single case because it sends the wrong signal.\u201d<\/p>\n
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