Anticipated Impact on NEON: US Tariffs on China Steel Increased Further
China is critical to the electronic supply chain, especially for noble gases like NEON. Reduction in China steel production means reduced Neon supply, a by-product of the ASUs which support steel factories with oxygen. Recently, the U.S. Department of Commerce imposed even more duties on steel imports from China.
The longer this tariff is in place the more likely Chinese Neon production capacity will be negatively impacted.
For details on the NEON supply and demand forecast, please see TECHCET’s Neon report.
Key points from an article released May 26, 2016, by CNBC http://www.cnbc.com/2016/05/26/ is as follows:
On Wednesday, the department’s International Trade Administration, which has conducted an investigation into the “dumping” of steel products into U.S. markets, said it had found the “dumping of imports of corrosive-resistant steel (CORE) products from China, India, Italy, Korea and Taiwan” by various steel producers that it named within those countries.
As a result, the department said that Chinese corrosion-resistant steel would be subject to a final anti-dumping duty of 210 percent and anti-subsidy duty of between 39 percent and up to 241 percent.
From another article, May 18, 2016, by UK’s Telegraph, http://www.telegraph.co.uk/business/2016/05/18/america-slaps-522pc-trade-duty-on-imports-of-subsidised-chinese/
China is the world’s biggest steel producer, responsible for more than half of the 1.6bn produced globally each year, and has pledged to reduce its capacity by shutting down plants.
However, Mr Stace [director of industry association UK Steel] said despite pledges from the Chinese leadership, no action has yet been taken.
“China has promised to work to tackle global oversupply but, instead, continues to dump cheap steel on the world market,” he said. “If any demonstration were needed that China isn’t accepting its responsibility to work with the rest of the world steel industry to address this problem then this is it.”
While these tariffs may restore the US trade balance in steel, the semiconductor market dependence on China produced Neon will be negatively impacted by a reduction in steel production if these tariffs accomplish the intended outcome, reducing China steel production. A NEON shortage situation may come sooner than later. Fabs should make sure they can access Neon from sources outside of China to mitigate possible supply issues.