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 mills.
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 period.
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 action.
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."