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Specialty steel commenters oppose 232

Jun 09, 2017 | 04:15 PM | Grace Lavigne

Tags  specialty steel, electrical steel, stainless steel, GOES, Section 232, AK Steel, Grace Lavigne


NEW YORK — Multiple companies have asked the U.S. Department of Commerce to exclude stainless steel and specialty metals such as grain-oriented electrical steels (GOES) from its Section 232 investigation.

The nearly 1,600 pages’ worth of comments, released on June 6, were mostly anti-232.

“The U.S. government already has a system in place to ensure that these critical materials are produced in the United States or in countries that support the United States,” Valbruna Slater Stainless Inc. secretary Valter Viero wrote. He asked that any remedy not interfere with the system already in place, and recommended that Commerce consider adopting a system similar to that used for specialty metals in defense procurements for non-defense transactions “so that designated or qualifying countries can continue to supply materials to the U.S. market.”

Fort Wayne, Ind.-headquartered Valbruna mainly uses semi-finished input from its Italian parent to manufacture its stainless long products, Viero noted. The company currently employs more than 200 people in the U.S.

Stainless distributor Ta Chen International Inc., as well as several manufacturers that purchase stainless steel products for automotive-related production, all cited Luxembourg-based Aperam SA as a critical supplier, and pointed to domestic producers’ vast control over the U.S. market as evidence that stainless imports do not pose a threat to U.S. national security.

“In order to stay competitive, we must maintain the kind of quality product that we are able to source from Aperam,” Ta Chen vice president John Hellinghausen wrote, noting that his company’s sourcing decision is based on the material’s technical specifications, not price.

Kelly E. Springer, chief operating officer of Metal Flow Corp., agreed, naming Aperam as well as Outokumpu Oyj and Rautaruuki Oyj in Finland and Tata Steel Ltd. in the Netherlands. Holland, Mich.-based Metal Flow consumes stainless steel for the production of deep-drawn stampings for the automotive industry. “U.S. steel companies command the vast majority of the U.S. market for stainless steel,” she wrote, noting Commerce’s final decision in the anti-dumping and countervailing duty cases against imports of Chinese stainless sheet and strip.

Two automotive trim components producers—Troy, Mich.-based SRG Global Inc. and Peru, Ill.-based American Nickeloid Co.—also named Aperam as a vital supplier.

In its own comment to Commerce via an attorney, Aperam cited a 2008 study by the Department of Defense’s Strategic Materials Protection Board that determined that stainless steel and alloy products are not critical to U.S. national security and thus do not require mitigation. The company also noted U.S. producers’ increasing stock prices, improved operating results and facility investments in recent months and years as evidence that stainless imports have not adversely affected those producers’ national security preparedness.

Aperam’s reference to the Defense study counters the Specialty Steel Industry of North America’s (SSINA’s) reference last month to a similar 2005 study it conducted with the Defense Department, which found that many critical defense applications rely on specialty metals.

However, the 2008 Defense study directly references the SSINA-Defense document: “While many important (Defense) systems do incorporate specialty metals, incorporation into a (Defense) system does not, by itself, make a material ‘critical to national security.’ If incorporation alone was sufficient, every type of material—from plastic to rubber and glass—would be a critical material. More discriminating criteria are needed to distinguish critical materials from the larger set of strategic materials,” according to department researchers.

“The health of the domestic specialty metals industry is, and will continue to be, determined by its ability to sell core commercial products to commercial customers,” the study added, noting that defense contracts accounted for less than 1 percent of total U.S. steel production and 8 to 10 percent of domestic titanium production.

GOES comments show more opposition
Multiple domestic power transformer manufacturers specifically brought up their concerns about GOES being included in the 232 probe.

The presidents from Delta Star Inc., SPX Transformer Solutions Inc. and Niagara Transformer Corp. requested that if Commerce imposes remedies for imported GOES, cut core or finished electrical-grade steel, any such remedies be “uniformly imposed” including “fully or partially assembled transformers imported into the United States.”

Those manufacturers were “deeply” troubled by the request to include electrical-grade steel in the probe, they wrote. While each company “wants to continue to work with AK Steel (Corp.) and maintain positive commercial relationships, the potential economic impact of an unrestricted sole-source domestic provider could be devastating on the domestic transformer manufacturing industry.”

“If imports of GOES are restricted, this could also potentially create a monopoly for GOES in the U.S.,” Central Moloney Inc. senior vice president Patrick Colclasure agreed.

Representatives from the International Brotherhood of Electrical Workers Local 2150 also wrote in support of SPX, citing concerns that “limiting the available steel supply ... would likely eliminate our ability to build transformers and result in a total plant shutdown of our plant in Waukesha, as well as other U.S. transformers manufacturing plants.”

Mitsubishi Electric Power Products Inc. echoed that sentiment, as tariffs or quotas on foreign-produced GOES could cause its manufacturing costs to “rise substantially.”

“Imposing new costs on internationally sourced GOES will have the unintended consequence of harming the U.S. transformer industry and encouraging dependence on foreign transformer factories and products,” Mitsubishi president and CEO Brian Heery warned.

Power Partners Inc. CEO Jack Roberts asserted that AK Steel does not manufacture all GOES products in the necessary grades, and asked that North American Free Trade Agreement members—specifically Canada—be exempt from 232 in order to protect its long-term supplier, Cogent Power Inc., which is based in Ontario.

“If adopted as recommended, (an imports ban) would severely damage the transformer marketplace, the underlying companies and their employees— including those working at Power Partners,” Roberts said.

Indeed, Toyota Tsusho America Inc. asked for itself and on behalf of its U.S. customers that “certain steel products that are unavailable from domestic steels … be excluded from the scope of the investigation,” including GOES.

In May, the top executives at AK Steel and Allegheny Technologies Inc. called on the Trump administration to include specialty metals in Section 232.

Grace Lavigne
grace.lavigne@amm.com



 

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