NEW YORK Carbon steel
wire rod makers in the United States are said to be mulling a
trade case against China and Turkey as frustration with highly
competitive imports builds.
Growing overseas capacity and a
slowdown in demand throughout Europe and Asia have made the
U.S. market one of the most attractive in recent periods,
domestic steelmakers have said. Paired with a crimped
construction sector and a slowdown in U.S. demand, sources say
business has become increasingly difficult for domestic rod
According to data from the U.S. Department of
Commerces Import Administration, some 114,913 tonnes of
Turkish wire rod arrived at U.S. ports during the first six
months of 2012, up from 77,533 tonnes in the same period of
2011. Chinese imports during the same period totaled 48,038
tonnes, up sharply from just 153 tonnes during the year-ago
Although no case has been filed
to date, a number of domestic steelmakers are said to be
monitoring the import data as they mull filing a case in an
attempt to halt the flow of allegedly under-priced imports.
But a successful trade case may
be difficult, market players said, given that order books at
many long product mills appear to have strengthened. For
example, Brazils Gerdau SA said earlier this year that it
planned to boost investments at its U.S. operations, given
demand for specialty steels (
amm.com, May 3); Charlotte, N.C.-based Nucor Corp.
said in April that it will construct a rod mill as part of an
expansion at its Darlington, S.C., facility (
amm.com, April 11); and Keystone Consolidated
Industries Inc. saw earnings more than double last year due to
increased shipments (
amm.com, March 19).
Domestic steelmakers will have
to face the hurdle of proving injury despite expansion plans, a
paradox that likely will be questioned at the U.S.
International Trade Commission (ITC), sources said.
"I honestly dont think the
mills can prove injury. ... In the first half of the year, rod
mills in the U.S. have actually done quite well from a profit
standpoint," one buyer said of the possibility of a successful
trade case. "At the end of the day, if you cant prove
injury, you dont have a case."
Other buyers who purchase
foreign material said that without Chinese and Turkish rod,
there would be little competition for U.S.-based
millswhich might hurt downstream industries.
"If you got Turkey and China
out, no one from the planet will be able to ship here.
Thats what the mills would love to see," a second buyer
said. "Technically, the mills are doing a pretty good job of
erasing their buyers future in the industry because the
finished goods market will pretty much exclusively go overseas
just because there wont be an ability to compete.
Ultimately, you cut off your nose to spite your face."
But even if a trade case is not
filed, the mere threat of action may deter some imports. "The
threat has been there since 2005, when a dumping case was
brought against several foreign producers," said Frederick P.
Waite, a lawyer at Vorys, Sater, Seymour & Pease LLP, which
represents the American Wire Producers Association (AWPA).
The ITC determined in 2005 there
was not a reasonable indication that the U.S. industry was
injured or threatened with injury by imports of carbon and
certain alloy steel wire rod from China, Germany and Turkey
allegedly sold in the United States at less than fair value (
amm.com, Dec. 27, 2005). Nevertheless, rod imports
fell dramatically, perhaps due to the simple threat of
According to Commerce Department
data, Turkish rod shipments slumped to 12,597 tonnes in 2007
from 227,631 tonnes the previous year; Chinese rod imports were
cut in half to 533,524 tonnes from 1.2 million tonnes in the
same comparison; and German rod shipments fell to 40,557 tonnes
from 90,880 tonnes.
"I think its probably a
scare tactic," one trader said of the trade case talk, noting
that he was surprised Turkey would be part of the
consideration. "I dont see anything strange with the
numbers from Turkey."
A second trader said that if a trade case were filed,
importers likely would be unwilling to bring product into U.S.
ports, given the possibility of a retroactive imposition of
duties. "I dont know if the mills can prove injury.
Id be interested to see how they prove it," he said.
"Turkish material is only slowly trickling back into the U.S.
market right now. But its not the cheapest product, and
theres definitely no surge."