The American Iron and Steel Institute (AISI) submitted their comments on behalf of US producer members companies to United States Trade Representatives (USTR), to review Indonesia’s access to Generalized System of Preferences (GSP), as the country, according to AISI does not fulfill the criteria to attain the GSP beneficiary status.

 

The appeal comes on the heels of Indonesia, one of the world’s largest producers of the metal, reinstating a full ban on nickel ore exports, which has proved detrimental to the US stainless steel industry. 

 

AISI has appealed to the USTR to revoke Indonesia’s GSP beneficiary status because with this continued ban on nickel ore exports US processors are likely to shut their facilities and lay off workers, leaving the country to rely solely on foreign sources to produce stainless steel. 

 

Indonesia had initially imposed a ban on nickel ore exports in 2014 but lifted it three years later after setting many rules for companies exporting the ore from the country. In August 2019, the Indonesian ministry of Energy and Mineral Resources reinstated the nickel ore export ban that went into effect from January 1, 2020. 

 

According to AISI, some Asian steel companies have much to benefit from this restriction. Citing the example of Tsingshan Holdings Group, a Chinese steelmaker, AISI pointed out that the steelmaker had incorporated a mill in Indonesia in August 2017 to export stainless steel to other global markets including the US and European Union from Indonesia. Now, because of the restriction, the company would not only benefit from past exports but also look at capturing a larger share of the stainless-steel market by taking advantage of the ban and producing stainless steel within Indonesia to export globally.

 

The nickel ore export ban has created an oversupply of nickel ore in Indonesia and along with the export tax on low grade nickel and minimum export price, the domestic nickel ore Indonesian prices have dropped significantly creating artificially depressed nickel prices in Indonesia that are not in line with the globally traded nickel price on the London Metal Exchange (LME).

 

In the months running up to the start of the Jan 2020 nickel ore ban, nickel prices saw a heavy spike on the LME with contracts going up by more than 60pc between June to September 2019. AISI has alleged that the hike was due to moves made by Tsingshan and the Indonesian government to create a shortage of nickel right before the government declared its intention of banning exports of the ore.

 

According to AISI, the US has seen a rapid growth in stainless steel and nickel ore imports from Indonesia since 2017, with the Average Unit Values (AUV) from the island country in Asia more than $1000/mt lower than the global AUV. The low AUV indicates that nickel ore was dumped into the country. 

 

Furthermore, AISI has alleged that a joint venture between Allegheny Technologies Incorporate (ATI), with Tsingshan is to be blamed for the ore dumping. Since the joint venture, ATI has solely relied on imported stainless steel from Tsingshan which is further processed by the US steelmaker. 

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