Nail and Steel Tariff Update
FOR IMMEDIATE RELEASE:
Nail & Steel Tariff Information/Update
March 5, 2018
Dear Valued Customer;
Continental Materials, as a market leader and one of the largest suppliers of roofing nails from China and construction nails from other origins, continues to be committed to keeping our customers and the market informed with accurate ‘in the moment’ information to help you manage your business better. Now in our 60th year in business we know how important it is to have reliable information so our customers can make decisions that allow them to run their businesses successfully.
1. STEEL TARRIF ANNOUNCEMENT AND UPDATE:
On February 16, 2018 the US Government announced the implementation of restrictions on imports of both steel and aluminum per Section 232 Trade Expansion Act Investigation into the Steel and Aluminum Industry and the impact on U.S. national security (click here, for the recent release). As an extension of the Trade Expansion Act of 1962, for national security purposes the President and Commerce Department can put into effect duty and tariffs without going through the normal legislative, regulatory and review process. If they deem these actions are necessary to protect US national interests they have the authority to put these tariffs and duties in place unilaterally on specific products.
On March 1, 2018 the President announced his intent to move forward with these tariffs quickly, and though final rates are not set yet, they have been announced at 25% on steel and 10% on aluminum. Please keep in mind China is not the largest exporter of these metals to the US; Canada, Mexico and Brazil are larger in their supply of these raw materials.
The Product Scope of the Investigation (click here), lists the Harmonized Product Codes (the item numbers that define all products commercially by classification) covered under the expected Tariff announcements. All nail products from any origin come under the heading of code 7317. We have been working with our US customs lawyers in Washington who are specialists in this field, and we believe clearly that nails are not included in this proposed tariff. The real intent is unfinished product commonly referred to as ingots, flat sheets, tubes and pipe products, sheets including strips and plates, as well as long products like bars rails, rods and beams.
We strongly believe there is no action on nails of any type and will keep you informed as we continue to gather information and clarify details that may be forthcoming.
2. GALVINIZING AND POLLUTION UPDATE:
The roofing nail industry experienced a tremendous shortfall of product last summer linked to the new strict environmental policies that were implemented in China and continue to be refined, leading to long delays that in some cases have led to continued extended lead times and rising costs due to the implementation of these new regulations. We work to monitor this situation closely and CMI has its own staff on the ground in China to monitor and manage this business. Our staff believes there could be some spot mandated down time at galvanizing mills from May through July 2018 as part of their continued “Blue Sky Initiative” to reduce pollution. There are several large Government meetings that will take place near nail mills in May and June that we think could cause galvanizing interruptions (as well as in other unrelated industries) in the period prior to and soon after those meetings. If galvanizing mills are forced to take down time it most likely could lead to some delays, though not as severe as in the summer of 2017.
This is just current information to allow you to manage your business; with the normal lead times still around 120 –150 days you may want to consider an inventory buffer.
3. MAJOR TRUCKING ISSUES AND COST IMPACT
The new ELD, Electronic Logging Device Rule (as part of MAP 21), that has been congressionally mandated is affecting all aspects of trucking though much of the impact may still not be evident at this point. This federally mandated policy, that took effect on December 18, 2017, was ‘designed to create a safer work environment for drivers and ultimately safer truckers on the road’ by eliminating the potential cheating on driver hours, has had a real and severe impact on ‘freight’. This has simultaneously led to a shrinkage in driver capacity available, service level issues and generally a reduction in truck availability, all leading to increased product costs. Many containers that arrive into a port, that have more than a 3-hour drive to the final destination, are having trouble being covered. Drivers wait to get containers loaded, then have to drive three hours and then wait to be unloaded; they cannot get back to return the empty containers in the allowed time and the ELD shuts them down.
You will begin seeing tougher stances on waiting time to unload, demurrage recovery cost attempts and basically higher costs that someone will have to pay for. Over time the truckers and their customer will figure out how to operate in this environment but this current situation presents many challenges especially on long haul and drayage moves.
We will continue to keep you informed to help you make decisions to manage your business. Please feel free to call us for clarification or if you have any questions we may not have answered specifically.
Thank you for the privilege to serve you.
Continental Materials, Inc. (CMI) is a national supplier of roofing system component materials and known for BUR (built-up roofing) asphalt with “No Smell”™ odor eliminating technology and its WeatherSeal™ protective packaging, All-Weather™ asphalt felts and coated organic rolls, CMI All-Weather™ modified bitumen rolls, SureGrip™ construction fasteners and roofing nails, Continental’s eco-friendly high density fiberboard roof insulation board and a premium line of SecureGrip™ synthetic roof underlayment products that are sold and used widely throughout the country. CMI has provided value added products and superior service to the roofing industry since 1958.
For more information on CMI products, call (215) 884-4930, visit www.continentalmaterials.com or contact your local CMI Sales Representative.