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Domestic steelmakers fighting back on import issues

Sep 30, 2014 | 08:00 PM | Fastmarkets AMM staff

After winning an oil country tubular goods trade case in August, U.S. steelmakers may be ready to challenge imports of other products.

A number of domestic steel producers are staking better prospects for sales and profits on a series of challenges to the tonnages and prices of imported steel products.

After winning a case in August before the U.S. International Trade Commission (ITC) against imports of oil country tubular goods (OCTG) from six countries, U.S. steelmakers may now set their sights on other products they claim have been unlawfully harming the health of the domestic industry.

“Unfairly traded imports of OCTG from these countries have been very damaging to American steel producers, taking away significant sales in the energy sector, which should be a bright spot for the industry, given increased oil and gas development in the U.S.,” American Iron and Steel Institute president and chief executive officer Thomas J. Gibson said.

A line pipe trade case that some say might be filed as early as mid-October could be bolstered by high U.S. steel product imports in August. “That would not surprise me if they filed it two to three months after the OCTG case, just like what they did with the Chinese,” one trader said.

Domestic producers filed a seamless line pipe case shortly after winning an OCTG case against Chinese producers in 2009.

“Why wouldn’t they (file a line pipe case)? It’s essentially the same case,” the trader said, although he wondered which countries other than South Korea would be targeted. “When you start looking at the tons, there’s just nothing out there but the Koreans.”

U.S. imports of line pipe were on track to reach 198,253 tonnes in August, according to license data from the U.S. Commerce Department’s Enforcement and Compliance division updated Sept. 2, a 10-percent increase from 180,200 tonnes the previous month and 23.5 percent higher than 160,584 tonnes a year earlier.

The OCTG case was settled in mid-August, with most of the targeted countries receiving import duties after the ITC ruled unanimously that imports from India, Korea, Taiwan, Turkey, Ukraine and Vietnam were harming the domestic industry.

“This is a resounding victory for a number of domestic steel producers, their employees and surrounding communities,” Steel Manufacturers Association (SMA) president Philip K. Bell said in a statement. “Trade cases are a last resort due to the cost and uncertainty involved, as well as to the fact that injury has long since occurred before any remedy is seen. But they are also essential, as one of the few options available to ensure that our trading partners comply with the rules of international trade.”

The ITC decision resulted in Commerce imposing anti-dumping and countervailing duties ranging from 2.52 to 111.47 percent on shipments from the countries, with Korean anti-dumping duties ranging from 9.89 to 15.75 percent, although one mill source said it hasn’t provided relief. “There’s still a fair amount of import competition,” he said.

U.S. imports of OCTG were set to reach 269,571 tonnes in August, down 23.1 percent from July, while Korean OCTG shipments to the domestic market were on target to fall 36 percent to 102,355 tonnes in the same comparison.

Overall, U.S. imports of steel mill products were poised to reach 3.22 million tonnes in August, down 7.3 percent from nearly 3.48 million tonnes in July. Flat-rolled steel product imports logged significant dips in August, with coiled plate at 146,540 tonnes (down 34 percent from July) and hot-rolled sheet at 277,136 tonnes (off 31.4 percent), driven in part by sharp drops in Russian shipments.

Sources were split on whether a rumored trade case against cold-rolled and coated products was still in the cards. U.S. steelmakers might have been pushed to delay the case due to a recent ruling against domestic steelmakers in a grain-oriented electrical steel (GOES) trade case, the inability of domestic mills to maintain production and meet demand during a difficult winter, and recent strong margins on flat-rolled steel, trader sources said.

“What we’re hearing is that the cold-rolled and coated case might not be coming,” a second trader source said.

But others said the possible delay could be due to U.S. steelmakers realizing that the ITC might be suffering “trade-case fatigue” and, therefore, would be less inclined to look favorably on any new filings. “Maybe their strategy was ‘shock and awe.’ But if I were them—and if my case wasn’t a slam dunk—I would let the dust settle,” a source said.

But one service center source said the affirmative ruling on OCTG imports outweighed the GOES decision and had only bolstered the case for further trade action.

In long products, preliminary margins on Chinese wire rod will likely further diminish that country’s shipments to the United States. “I don’t expect it to move prices so much,” a second mill source said. “But ... if you take your eyes off (China) they can come back very quickly with a very, very big splash.”

In the OCTG case, the ITC ruled that imports from the Philippines and Thailand were not injuring the U.S. market, while Saudi Arabia shipments also are not subject to duties after a recalculation by Commerce’s International Trade Administration amended its dumping margin to de minimis.

“That’s going to make prices continue to firm up,” one southern energy tubular distributor said of the affirmative determinations on Korea and other large players in the case.

“We’re just very pleased that they confirmed the (Commerce) recommendations. Hopefully we can move on from here and the industry can improve its financial health,” said Barry Zekelman, chairman and chief executive officer of Chicago-based JMC Steel Group Inc. .

Mario Longhi, president and chief executive officer of Pittsburgh-based U.S. Steel Corp., applauded the ITC decision, but said in a statement that the steelmaker is evaluating “all of its options, including further litigation,” with regards to the Philippines, Thailand and Saudi Arabia. Staff Report


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