U.S. Steelmakers Take Another Step to Stem Import Rush
U.S. steel makers have taken yet another major step in their ongoing battle against unfairly traded, cheap imports that continue to flood the American market.
The nation’s biggest steel producers, yesterday, filed anti-dumping and countervailing duty petitions with the U.S. Department of Commerce (“DOC”) and the U.S. International Trade Commission (“USITC”) against seven countries accused of illegally dumping certain hot-rolled steel flat products. Hot-rolled steel is used in appliances, automotive products, heavy machinery, machine parts, commercial construction and transportation equipment.
The petitions, which were filed by six U.S. steel makers including Nucor NUE, U.S. Steel X, AK Steel AKS, Steel Dynamics STLD and ArcelorMittal USA – a part of ArcelorMittal MT – charge that a torrent of significantly subsidized imports of hot-rolled steel flat products from Australia, Brazil, Japan, South Korea, the Netherlands, Turkey and the UK are causing significant injury to the country’s steel industry.
The petitions, which were submitted in response to surging volumes of cheap imports of hot-rolled steel flat products from the alleged seven countries since 2012, also charge that producers in Brazil, South Korea, and Turkey benefit from a number of countervailable subsidies provided by their respective governments. The petitions identified 33 different subsidy programs in Brazil, 41 in South Korea and 17 in Turkey.
Imports of hot-rolled steel flat products from these countries have rocketed 73% between 2012 and 2014. The import rush continued this year, surging by a further 54% year over year during Jan-May 2015.
These products are being illegally dumped by foreign steel producers in the American market at unfairly low prices that significantly undercut the prices of U.S. steel makers. These imports have also captured an increasing share of the U.S. market, thereby hurting production, shipments, selling prices and margins of U.S. steel makers.
The hot-rolled steel trade case follows last month’s filing of antidumping and countervailing duty petitions against eight countries alleged by major U.S. steel makers for illegally dumping cold-rolled steel that is used to make automotive products and appliances, among others.
Imports of subsidized steel remain a significant concern for the U.S. steel industry that directly or indirectly supports over a million jobs. Domestic producers are struggling to cope with falling steel prices as a result of the combined impact of imports and overcapacity in the industry. Price declines are expected to continue if tariffs are not imposed on imports.
Steel imports shot up 38% year over year in 2014. An improving economy along with a stronger dollar has made the U.S. an attractive market for finished steel imports. U.S. steel makers have suffered heavily due to a surge in subsidized steel imports, as reflected in declining orders, idling of mills and layoffs across the country.
According to the American Iron and Steel Institute ("AISI") – an association of North American steel makers – finished steel imports rose 9% year over year in the first seven months of 2015, based on the Commerce Department’s most recent Steel Import Monitoring and Analysis (“SIMA”) data. Estimated year-to-date market share of finished steel import is 31%, higher than 28% recorded for full-year 2014.
Adding to the pain is China’s move to devaluate its currency. Beijing’s earth-shaking move has sent fresh tremors across the U.S. steel industry as a cheaper yuan will make Chinese exports less expensive in overseas markets. This may trigger accelerated steel exports from the world’s second-largest economy. AISI President and CEO Thomas J. Gibson said yesterday that an undervalued yuan is causing “massive damage” to the American manufacturing sector, particularly the steel industry.
Domestic steel makers, last month, cheered the USITC’s preliminary determination of injury on a trade case that was filed In June. The USITC found reasonable indications that a barrage of subsidized imports of certain corrosion-resistant steel products from China, India, Italy, Korea, and Taiwan are causing material injury to the U.S. steel industry. The DOC is expected to make preliminary countervailing duty determinations on the corrosion-resistant steel case by Aug 27, and preliminary antidumping duty determinations by Nov 10.
The American steel industry has also commended President Obama for signing two major trade bills – Trade Promotion Authority (“TPA”) and Trade Adjustment Assistance (“TAA”) – that should help domestic producers protect their turf against illegally dumped cheap steel products. U.S. steel makers continue to actively press Congress to stop unfair trade practices and enforce new trade laws to rescue the ailing American steel industry.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report >>
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
AK STEEL HLDG (AKS): Free Stock Analysis Report
STEEL DYNAMICS (STLD): Free Stock Analysis Report
ARCELOR MITTAL (MT): Free Stock Analysis Report
UTD STATES STL (X): Free Stock Analysis Report
NUCOR CORP (NUE): Free Stock Analysis Report
To read this article on Zacks.com click here.
Zacks Investment Research
