NEW YORK Large volumes of foreign wire rod have hit U.S. shores in recent months, but those shipments might not have been classified correctly in the Commerce Departments import statistics, market sources said, skewing crucial data used by the steel industry and perhaps making a possible trade case against such imports more challenging.
In late spring and early summer 2012, sources in the wire rod market said they expected shipments as high as 100,000 tons to arrive from China in the fourth quarter due to a widening price spread between domestic and imported material (amm.com, Sept. 20).
Multiple sources contacted by AMM confirmed they had received Chinese wire rod shipments in November, while a number of trading sources said they facilitated large-tonnage deliveries in the fourth quarter.
"My steel hit the port in November and I received it in early December," one buyer of Chinese rod said.
However, steel import data distributed by Commerces Import Administration division shows no record of this material in the wire rod category. According to the government data, only 16.3 tonnes of Chinese rod arrived at U.S. ports in September, with no material arriving in October and November and just 4,950 tonnes hitting shores in December.
"What I can tell you is that there has been more wire rod coming into this country than what that government website says," one trader said.
Some market participants have been puzzledand others, concernedby the small volumes registered on the government website, they said, contending that large quantities of material already received havent been properly reflected in the data.
"There was definitely rod that came in October, November and December in significant quantities," one mill source said. "(The discrepancy) has to be in the classification. Ive got plenty of customers who told me close to 100,000 tons have come in. Were watching this closely."
Market sources speculated that the "missing" wire rod might actually be in the import statistics, but might have been classified as Chinese hot-rolled bars instead because the product contains a fair amount of boron.
Although neither Chinese wire rod nor hot-rolled bars face import duties into the United States, adding boron allows Chinese rod mills to avoid Chinese export taxes, as well as gain a 9-percent tax rebate from the Chinese government, thus making the value-added product a slightly more attractive financial opportunity than traditional wire rod.
A Commerce Department official declined to comment on whether wire rod from China had perhaps been classified as hot-rolled bar, noting that licensing data is "always subject to revision."
But market players said it appears that is exactly what happened. The volume of Chinese hot-rolled bar licensed to arrive in November was 52,079 tonnes, according to data listed on Commerces website as of midday Friday, marking the highest figure in more than a year and a more than sixfold increase from the 8,204 tonnes registered for import in October. Preliminary imports for November ended up totaling just 26,866 tonnes, but thats still about three times the volume brought in the previous month and in the same month last year.
Meanwhile, December licenses for hot-rolled bar from China totaled 37,920 tonnes compared with just 8,026 tonnes imported in December 2011.
In addition, average unit values for Chinese hot-rolled bar fell to $644 per tonne in November, according to Commerce license data, down 47.1 percent from the average value in October. Average unit values for the same product fell even further to $610 per tonne in December, a far cry from the $1,917-per-ton average value recorded in December 2011. That suggests lower-value materiallike wire rodmight be bringing down the average price of material classified as hot-rolled bar.
"The numbers of wire rod look so small and there was a huge increase in hot-rolled bars. Theres always a fair amount of hot-rolled bars coming in, but Ive never seen it (volumes) that high in the market," a second trader said. "Its definitely more expensive on the whole. This looks like some sort of misclassification issue."
Market sources said they couldnt say what, if any, legal implications a possible misclassification would have. However, it could still have ramifications for the industry as a whole, particularly if domestic mills were to move forward with possible plans to file a trade case against Chinese wire rod (amm.com, Aug. 28).
"To be honest, I dont know if classification makes that much of a difference. The steel is already here, and there are no duties on either product, so theres no difference. It only hurts the mills if they want to file a dumping suit and they dont have the data they need," the second trader said.