CHICAGO — Texas ranch equipment supplier Priefert wants a Section 232 exemption for a Serbian flat-rolled steel mill previously owned by U.S. Steel Corp and now held by China's Hebei Iron & Steel (HBIS).
Priefert sources ultra-wide hot-rolled coil from the mill - HBIS Group Serbia Iron & Steel doo - and could lose jobs and income if that material is subject to tariffs, chief financial officer David K. Smith wrote in a letter to Commerce Secretary Wilbur Ross.
“While we understand the need to focus on restoring the health of the domestic steel industry, we do not want our small operation to get caught in the middle of a much larger dispute,” he wrote.
Priefert employs about 1,000 workers and records revenue of roughly $180 million per year, Smith noted in the letter, which was dated Friday March 30 but was not posted on the US government's website until May 2.
This is one of thousands of Section 232 product exclusion requests that the Commerce Department is wading through.
Priefert wants a waiver for HBIS Group Serbia because US mills are either unable or unwilling to make hot-rolled coil in the widths and thicknesses required by the domestic trailer industry in particular, according to paperwork supporting the exemption request.
Another problem is that US mills generally are not able to offer hot-rolled coil at an affordable price, Smith said, noting that a hot-rolled coil “price spike’ has resulted from the Section 232. “We are concerned that the higher cost will ultimately lead to substitute materials permanently taking away our market share.”
American Metal Market’s hot-rolled coil index stood at $43.87 per hundredweight ($877.40 per ton) on May 3, up 1.5% from $43.21 per cwt the prior week and up 34.4% from $32.63 per cwt at the beginning of the year.
Priefert also said that HBIS Group Serbia does not transship steel from China. “The material is melted and manufactured in the Republic of Serbia to the best of our knowledge."
US mills - contending that Chinese steel suppliers avoid duties by transshipping material through other countries - filed a duty-circumvention case against Vietnamese cold-rolled and coated flat-rolled steel produced from Chinese substrate, which they assert should be subject to the same 522.24% duties assessed against Chinese material.
HBIS Group Serbia, formerly known as Železara Smederevo doo, was purchased by HBIS for €46 million ($52.1 million) in 2016 from the Serbian government. The company had beat out other bidders, including Esmark, a private US company whose holdings include steel service centers. HBIS is the world’s third-largest steelmaker, according to World Steel Association figures.
Pittsburgh-based U.S. Steel sold the facility - Serbia’s only flat-rolled mill - to the Serbian government for $1 in 2012.
Serbia shipped 18,334 tonnes of steel to the US in the first quarter, nearly all of it hot-rolled coil or coiled plate. That’s more than double the 7,804 tonnes it shipped to the US in the first quarter of 2017 and about half the 36,424 tonnes supplied in 2017 as a whole, according to Commerce Department data. The country exported little or no steel to the US from 2010 to 2015.
Mount Pleasant, Texas-based Priefert also told American Metal Market last month that recent volatility in the steel market has led more customers to ask for fixed prices, creating new opportunities for suppliers to take advantage of hedging solutions.