The U.S. International Trade Commission (“USITC”) made a preliminary determination of injury yesterday and said that investigations will continue on unfairly traded imports of corrosion-resistant steel from five countries.
[ by Zacks Equity Research | July 17, 2015 | Zacks.com ]
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 ailing American steel industry.
The case will now move to the U.S. Department of Commerce (“DOC”) which will continue its investigations on such imports to determine whether these foreign steel makers are infringing the U.S. anti-dumping law by selling their products in the U.S. at less than fair value and violating the U.S. countervailing duty law covering government subsidies.
Corrosion-resistant steel is coated with a corrosion or heat-resistant metal such as zinc and aluminum to prevent corrosion, thus extending the service life of the products made from the steel. It is used in making automobiles, trucks, appliances, and industrial and agricultural equipment.
The nation’s biggest steel producers, on June 3, filed anti-dumping and countervailing duty petitions with the USITC and the DOC against five countries accused for illegally dumping cheap corrosion-resistant steel.
The petitions, which were filed by six major U.S. steelmakers including Nucor (NUE - Analyst Report), U.S. Steel (X - Analyst Report), AK Steel (AKS - Analyst Report), Steel Dynamics (STLD - Snapshot Report) and ArcelorMittal USA – a part of ArcelorMittal (MT - Analyst Report) – charge that a torrent of significantly subsidized imports of corrosion-resistant steel from China, India, Italy, South Korea and Taiwan are causing material injury to the country’s steel industry. The petitions also charge that these producers benefit from a number of countervailable subsidies provided by their respective governments.
Imports of corrosion-resistant steel from these countries have rocketed 85% between 2012 and 2014. These producers exported over $2.2 billion of corrosion-resistant steel to U.S. market last year.
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. Low costs of production have enabled the overseas producers (especially China) to sell their products at cheaper rates, leading to an industry-wide price decline, hurting margins of U.S. steel makers.
Imports of subsidized steel remains 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.
According to the American Iron and Steel Institute ("AISI") – an association of North American steel makers – total and finished steel imports for the first six months of 2015 rose 3% and 14% year over year, respectively, 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 32%, higher than 28% recorded for full-year 2014.
U.S. steel makers prevailed in a key trade case in Aug 2014 after the USITC imposed anti-dumping orders against six countries accused for illegally dumping cheap Oil Country Tubular Goods ("OCTG") products that play a pivotal role in building and maintaining America’s energy infrastructure. The ruling allowed the DOC to go ahead with the issue of countervailing and anti-dumping duty orders on OCTG imports.
The American steel industry recently 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 domestic 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. An eventual victory in the case will ensure a fairer and more competitive market for domestic steel makers and workers.