NLMK USA has paid more than $160 million in tariffs and has been waiting almost a year for a response to its filing for a slab exclusion request, president and chief executive officer Robert Miller told Fastmarkets.
“To my knowledge the other steel manufacturing companies that we’re competing against have been paying virtually zero dollars in tariffs,” Miller said in a telephone interview. “That makes it very hard to compete in the marketplace.”
The majority of the $3.6 billion that the Section 232 tariffs raised in their first nine months came from steel. Duties collected since tariffs were imposed totaled $2.76 billion in the nine months to November 2018, US International Trade Commission (ITC) data show.
“When you look at what happened to the marketplace in 2018, our economy was very good and there was a lot of steel demand out there,” Miller said. “It drove pricing and spreads between raw materials and finished pricing to a pretty high level for most of the year.”
Because of last year’s strong market, NLMK USA was able to pay the tariffs and still make money, he noted.
“When you look at where the market is going right now, we’ve seen some retreating of selling prices and we’ve also seen raw material prices go up,” Miller said. “The spread that is out there is now much smaller.”
Fastmarkets AMM's daily US Midwest hot-rolled coil index stood at $35.16 per hundredweight on Monday March 11, up by 2.7% from $34.35 one month earlier but down by 15.4% from $41.56 at the same time last year.
NLMK USA filed slab exclusion requests around March 21, 2018, prior to the Section 232 tariffs taking effect two days later, Miller said.
“Something that was supposed to take 90 days is very rapidly approaching the one-year anniversary, so it’s obviously an inefficient process that has had a tremendously negative impact on our business,” he said. “The process is taking so long with so much uncertainty.”
Other exclusion requests by US slab importers Evraz North America and California Steel Industries (CSI) have been denied by the Commerce Department’s Bureau of Industry and Security (BIS).
These slab request denials underscore "that the [President Donald Trump] administration is willing to play trade hardball for longer,” KeyBanc analyst Phillip Gibbs said in a research note.
CSI was denied exclusions for 100,000 tons of slab from Japan, and the denials for Evraz could amount to 400,000 tons of slab from Russia.
“Everyone in the industry is certainly aware that we have a shortage of steel slabs,” Miller said. “Simply, they’re just not available at quantities where we need them.”
More recently, Commerce has granted steel pipe and tube producer Tenaris an exemption from tariffs for some round steel billet imports.
“The Commerce Department has set the rules, we have complied in a very efficient and quick way and there’s really nothing else for us to do right now,” Miller said.
While it’s now a waiting game for NLMK USA, the outlook remains positive. “Our view is longer term; we believe we’re going to get a refund of the tariffs we paid,” he added.