All is not quiet on the domestic trade front, as action is expected to increase in the coming months and years, building on work U.S. mills have already undertaken to cut out a large swatch of offshore steel via three large, landmark flat-rolled trade cases filed in 2015 and completed last year.
After a whirlwind 2016, could the New Year bring less activity in Washington? Hardly. With Donald J. Trump as president, trade action is expected to increase, and not just via the traditional route of launching cases targeting specific products.
The government is expected to get much more involved in filing unfair trade actions, with holding China accountable for example one of Trumps key ideas during his campaign. This could include self-initiated trade actions like dumping cases or the more drastic Section 201 blanket import ban.
Domestic mills have already managed to cut out a large swatch of offshore steel via three landmark flat-rolled trade cases filed in 2015 and completed last year. These cases, on hot-rolled, cold-rolled and coated flat steel products, targeted a variety of countries and ultimately products. For example, the hot-rolled case also included coiled plate imports, while the coated steel filing targeted a variety of coated materials.
One of the major cases still pending is against cut-to-length plate from 12 countries. The U.S. International Trade Commission (ITC) recently found injury exists regarding imports from three countries, Brazil, South Africa and Turkey, while hearings are still due regarding product from Austria, Belgium, China, France, Germany, Italy, Japan, South Korea and Taiwan.
The case also prods the U.S. Commerce Department to look into some tool steel imports, which has generated an outcry amongst some end users. Commerce was set to release its final anti-dumping and countervailing duties regarding the remaining nine countries on Jan. 17, following which the ITC will make its final determination.
Another major pending case is targeting rebar from Turkey, Japan and Taiwan, essentially a retrial of Turkey, which largely avoided duties in a 2014 decision. The ITC in November voted to proceed with the case, which drew a rebuke from Turkish producers who felt they were hard done by after not being penalized in the earlier case. The case does not seem to have slowed Turkish rebar shipments so far, with imports till above 100,000 tonnes in November and likely in December, according to Commerce statistics.
Also still pending and still far from a resolution is U.S. Steel Corp.s Section 337 case targeting Chinese steel imports. While the case seeks a blanket ban on Chinese products, it has a long timeline, March 2018, to be exact, and some of U.S. Steels claims recently stalled.
The latest state of play is that the ITC reinstated the Pittsburgh-based steelmakers argument that Chinese steelmakers colluded to fix prices. Administrative Law Judge Dee Lord initially terminated the claims in mid-November, citing a conflict between antitrust and Section 337 laws.
U.S. Steels circumvention claim meanwhile was struck down by Lord in mid-January. Whether it will be reinstated similar to the price-fixing claim remains to be seen.
In addition to the pending fresh cases and actions, there are also numerous cases before the U.S. Court of International Trade regarding appeals on completed cases. For example, Turkey is still in litigation over the 2014 rebar case while already embroiled in the recently filed action.
What could the future hold? President-elect Trump has filled his administration with steel and import restriction-friendly nominees. For example, former steel industry magnate Wilbur Ross is Commerce Secretary, and trade hawk Robert Lighthizer was recently tapped as USTR.
While the steel industry likely was hoping for former Nucor Corp. executive Daniel DiMicco to be picked in the position, his influence on Trumps trade proposals has already been felt.
For example, one of DiMiccos key past concerns, Chinas alleged currency manipulation, is on the Trump radar. The President-elect has vowed to instruct the Treasury Secretary to label China a currency manipulator and renegotiate the North American Free Trade Agreement, according to his website.
Trump has also vowed to instruct the U.S. Trade Representative to bring trade cases against China, both in this country and at the World Trade Organization (WTO), adding that Chinas unfair subsidy behavior is prohibited by the terms of its entrance to the WTO.
He has also vowed to use every lawful presidential power to remedy trade disputes if China does not stop its illegal activities, including its theft of American trade secrets.
Analysts are bullish in the near term regarding Trumps policies and steel.
The long-term effect of these protectionist policies is rather more uncertain but in November, the month of the election, U.S. steel production increased by over 6 percent year on year, the first growth since May, the International Steel Statistics Bureau (ISSB) said in a recent note. Going forward, the Australian Department of Industry is now predicting U.S. steel production to grow by 6 percent this year and a further 13 percent in 2018 compared to the pre-election forecasts of 3 percent and 7 percent respectively.
In the short term imports are likely to be at reduced levels, adding to the quantities of surplus steel on the international market with the commensurate downward pressure on prices, ISSB continued. Longer term, trade restrictions are unlikely to lead to long-term prosperity with innovation and competitiveness on the global market likely to suffer.
The effect of the three flat-rolled cases completed last year in the U.S. market seemed to be apparent, but has become murkier recently. For example, in cold-rolled sheet, imports fell sharply through most of 2016 but rose again significantly towards the back end of 2016 on a spike in Turkish and Mexican shipments in November.
Theres a similar narrative in hot-dipped galvanized sheet. Imports fell sharply in late 2015 and early 2016, only to steadily pick up towards the end of 16 as Vietnam and Taiwan started shipping more.
U.S mills have filed a transshipment claim against China via Vietnam, the results of which are still pending, although the simple initiation of the probe by Commerce was considered a win for U.S. mills. So far, it has not affected Vietnamese flat-rolled shipments to U.S. shores substantially.
The most consistent decline has been seen in hot-rolled coil and coiled plate, where imports have fallen fairly dramatically after hitting a whopping 467,700 tonnes in January 2015. South Korean shipments of hot-rolled coil has seen particularly large contractions, according to Commerces statistics. That country was previously a significant shipper of hot-rolled to U.S. shores.