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JSW seeks 232 exclusion for Indian slabs

May 04, 2018 | 03:41 PM | Michael Cowden

Tags  JSW Steel (USA), JSW Steel Ltd, Section 232, exclusion request, slabs, cut-to-length plate, line pipe, steel imports Michael Cowden


CHICAGO — JSW Steel (USA) wants an exemption from the United States' Section 232 tariffs for steel slabs imported from its Indian parent company.

“These exclusions are critical to the continued operation of JSW’s plate mill and pipe mill in Baytown, Texas…” the company said in an exclusion request filed with the US government, citing lack of domestic slab supply as the company builds a $500-million electric-arc furnace (EAF) and slab caster as a key concern.

All told, JSW Steel Ltd plans to invest $1 billion in its US operations, including the flat-rolled steel mill that it recently acquired in Mingo Junction, Ohio, according to the exclusion petition.

“Without an exclusion from the Section 232 remedy, JSW will be unable to continue operating the Baytown plant on an economic basis while construction of the new EAF/caster is under way,” the company said in the request, which was posted online by the US government on Wednesday May 2.

India is not among the countries exempt from the 25% Section 232 steel import tariffs implemented by President Donald Trump's administration.

JSW Steel (USA) requires slabs between 8- and 12-in thick and as much as 70-in wide to make plate that it either sells to third parties or uses to feed its large-diameter line pipe mill. The company said it has no viable options in the US from which to source 10- and 12-in-thick slabs and only limited options for 8-in-thick material.

“If JSW is forced to source steel slab from a direct competitor, even A36 commodity grade slab, it is at a severe disadvantage in negotiating prices for the sale of cut-to-length plate made from that slab," it said, adding that even if JSW Steel (USA) sourced material from other US mills it would take the company about eight to 10 months to trial them for all of the grades produced by the company.

JSW Steel (USA) does not want to source from direct competitors - such as ArcelorMittal, which like JSW Steel (USA) makes cut-to-length plate - because doing so would require it to reveal not only its cost structure but also proprietary information on making line pipe in strengths of X80 and higher.

Slabs in thicknesses of 12 in are available only from ArcelorMittal’s plate mill in Coatesville, Pennsylvania, a direct competitor in the plate market. For the same reason, the company does not want to source 8- or 10-in-thick slabs from other ArcelorMittal mills in the US.

U.S. Steel Corp has a caster capable of making 10-in-thick slabs at its Fairfield Works in Alabama but that is not an option because the Fairfield Works hot end is idle, JSW Steel (USA) noted.

Slabs in 8-in thicknesses are available from ArcelorMittal, U.S. Steel and AK Steel. ArcelorMittal is a direct competitor, while U.S. Steel and AK Steel consume the slabs they produce internally to make hot-rolled coil. And while U.S. Steel might have some slabs to spare, AK Steel does not given that it has a slab casting capacity of 11 million tons and rolling a mill capacity of 14.3 million tons, the company said.

Non-US mills are also not an option, JSW Steel (USA) said. The company already sources the maximum quantity made available by ArcelorMittal from its Mexican operations and that quantity is "not sufficient to keep our plate mill operating at [a] reasonable level of capacity utilization," it added.

Brazil and South Korea are, in theory, options because they have been exempted from tariffs in exchange for agreeing to quotas. But Brazilian slab producers do not make the slab grades required by JSW Steel (USA) and South Korean mills don't have enough capacity available, the company said. "For this reason, the requested exclusion is narrowly limited to steel slab produced by JSW's parent company."

Exemptions have also been requested by other slab rerollers - including the US subsidiaries or Russian steelmakers Evraz and NLMK - for semifinished goods from their parent companies.

Michael Cowden
mcowden@amm.com

Editor's Note: This story was updated on Tuesday May 8.



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