WASHINGTON – The Commerce opened an investigation Wednesday on a complaint by American steel producers, asking the government to impose duties on low-cost corrosion-resistant steel products imported from five countries.
Six petitioners, including United States Steel Corp., complained that the low import prices of corrosion-resistant steel products imported from China, India, Italy, South Korea and Taiwan have exerted downward pricing pressure across the entire domestic market for corrosion-resistant steel products, which are typically used in the automotive, construction and equipment industries.
In recent months tons of imported steel products from China, India, South Korea and Taiwan accounted for a combined 30 percent of total steel imports, or 40 percent if imported tonnage from NAFTA trade partners Canada and Mexico are excluded, according to a recent research from Morningstar Inc., a Chicago-based investment research firm.
“For a publicly traded company, even just the filing of the trade case changes the competitive landscape,” said Andrew Lane, equity analyst with Morningstar Inc.
After the filing of the case on June 3, shares of Nucor Corporation – one of the complainants — closed at 49.77, up 0.7 percent and shares of another petitioner, ArcelorMittal, closed at 11.40, up 1.7 percent.
”If indeed the trade case is determined in that there is illegal dumping going on, the sanctions are applied retroactively all the way back to the date that the trade case was filed,” Lane said in a phone interview. “Importers would become more wary about importing goods that may be subjected to a retroactive tariff. Therefore the publicly traded domestic steel makers will see an uptick in the shipment volumes. They take a little bit of the share from those companies, which helps their profitability.”
Volume of corrosion-resistant steel imports increased 85 percent to 2.8 million tons in 2014 from 1.5 million tons in 2012, according to the U.S. steelmakers who filed the petition earlier this month. Also joining the complaint: AK Steel Corp., Steel Dynamics Inc., and California Steel Industries Inc.
The import of corrosion-resistant steel accounted for 7% of total U.S. steel imports in 2014.
“Steel indices that track pricing for corrosion-resistant steel are down significantly this year,” Daniel Mull, the Executive Vice President for sales and marketing at ArcelorMittal USA., said in a statement Wednesday. “Because demand has been strong, one would have expected pricing to have risen.”
Mull thinks the price is negatively driven by the large and increasing supply of “dumped” and subsidized products at low prices.
The U.S. International Trade Commission is scheduled to make a preliminary injury determination no later than July 20, according to the Commerce Department. If the trade commission decides that there is a reasonable indication of dumping, the investigation will continue. The final decision could be made later this year.
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