Anti-Dumping

\The Department of Commerce formally initiated new anti-dumping duty and countervailing duty investigations of imports of cold-rolled steel flat products from Brazil, China, India, South Korea, and Russia and anti-dumping investigations of imports of the same cold-rolled flat products from Japan, the Netherlands, and the United Kingdom.

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This action by commerce is in response to petitions filed by domestic producers on July 28th.

The petitioners are the usual group of US producers that have long said that foreign steel imports are subsidized by overseas governments in complete violation of US anti-dumping law. The group is composed of AK Steel Corp., ArcelorMittal USA LLC, Nucor Corp., Steel Dynamics, Inc. , and U.S. Steel Corp.

The products covered by these investigations are cold-rolled (cold-reduced), flat-rolled steel products, whether or not annealed, painted, varnished, or coated with plastics or other non-metallic substances. The products covered do not include those that are clad, plated, or coated with metal. The products covered also include coils that have a width or other lateral measurement of 12.7 millimeters or greater, regardless of form of coil (e.g., in successively superimposed layers, spirally oscillating, etc.).

The products covered further include products not in coils ( in straight lengths) of a thickness less than 4.75 mm and a width that is 12.7 mm or greater and that measure at least 10 times the thickness of the product. The group of products alleged to have been dumped also includes products not in coils (e.g., in straight lengths) of a thickness of 4.75 mm or more and a width exceeding 150 mm and measuring at least twice the product’s thickness.

The investigation will also take into account origin country. The petitioners allege that some cold-rolled products are shipped from their origin country and further processed in a third country before import into the US market. This is a key point for the domestic producers, particularly concerning exports of Chinese steel. The domestic producers have previously accused Chinese producers of shipping to third-party countries where the product are processed and changed in order to conceal the initial manufacturing country upon entry in US ports.

The US International Trade Commission (ITC) is scheduled to make its preliminary injury determinations on or before September 11.

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The alleged anti-dumping margins of each country:

Brazil: 30.28 to 35.43%
China: 265.79%
India: 43.12%
Korea: 75.42 to 177.50%
Russia: 69.12 to 227.52%
Japan: 71.35%
Netherlands: 39.43 to 121.53%
United Kingdom: 32.59 to 69.30%

All alleged subsidies by foreign governments, which would qualify the products for countervailing import duties are alleged to be above a 2% subsidy.

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Indian steel companies are asking for safeguards and some US hedge funds are placing big bear bets on domestic oil prices.

Tata, SAIL Want Safeguard Duties

Indian steel companies reeling under mounting imports from China, South Korea and Japan have urged the government to impose safeguard duties, to protect the domestic industry from the onslaught of cheaper imports, the Economic Times reports. Safeguards are measures designed specifically to protect local industry that go beyond anti-dumping or countervailing duties as outlined by the World Trade Organization.

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Safeguard duties are levied on imports as a temporary measure by the government to protect the local industry when they perceive a threat from a sudden surge in imports. State-owned Steel Authority of India (SAIL) and private steel makers such as Tata Steel have jointly filed a petition with the Director General of Safeguards (DGS) seeking the duties.

Hedge Funds Betting Against Oil

A relatively small group of hedge fund managers has placed a record bet on US oil prices declining further in the months ahead.

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Hedge funds and other money managers had accumulated gross short futures and options positions totaling 163 million barrels in the main NYMEX light sweet crude contract by Aug. 11, according to data released by the Commodity Futures Trading Commission.

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Chinese manufacturers have been sending pre-packaged steel shelves, without bolts, to the US and selling them at less than cost thanks to generous subsidies to manufacturers such as Zhongda United Holding Group Co. Ltd. (22.64%) and Zhejiang Limai Metal Products Co. Ltd. (50.23%) there.

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The Chinese steel shelves are sold at retailers and are mainly used for storage. They aren’t sold here in the volume of say hot-rolled or cold-rolled steel imports, but they were, nonetheless, found to have been dumped in the US by the Commerce Dept. in one of the first cases decided since new enforcement measures were put into place in June.

anti-dumping-watch-with-title

We remain ever vigilant on dumpwatch, here at MetalMiner.

Also included in the determination was a China-wide rate of 112.68% for other companies dumping the shelves here. The imports eventually found their way to big box retailers.

Why is this Important?

This investigation is one of the first to use a new comparison structure for Chinese imports. Previously, Chinese imports would be compared to market-based economies.

Chicago-based Edsal Manufacturing petitioned Commerce and the US International Trade Commission for anti-dumping relief in January, claiming that Chinese shelving companies were selling their products at prices ranging from 40 to 211% below fair market value and also flagged scores of government subsidy programs bolstering their production.

This investigation marks the first time that Commerce made the decision to use Bulgaria as the surrogate country for China to determine dumping and countervailable duty margins for the shelving units. Surrogate countries, used for comparison purposes by Commerce, have been a contentious issue for both Chinese and US manufacturers.

What is a “public body” in China is still a matter of great dispute. Difficulties in obtaining accurate surrogate values to compare Chinese prices and subsidy levels to for countries on Commerce’s list of surrogates — especially usable public financial statements — have limited their use. So, Bulgaria was used as a country to compare production costs and subsidy rates from public bodies with China’s in the steel shelving investigation.

The Bulgarian Surrogate

Why Bulgaria? Bulgaria has similar “public bodies” as China and it was believed it could be a suitable comparison for determining the subsidies Chinese manufacturers are receiving and how much of those subsidies go toward the Chinese manufacturers’ actual bottom lines.

Peter Koenig of Squire Patton Boggs US LLP, who represents Zhongda and affiliated companies in the case, told Law360.com Tuesday that he believed Commerce made the correct decision to use Bulgaria as the surrogate country to determine the dumping margins.

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“It is the first time that Commerce has used Bulgaria and it reflects changing world trends as to the most comparable country to China for use as a surrogate country to assess the dumping margin,” he said.

Koenig said he is hopeful his client’s preliminary anti-dumping duty margin, currently set at 22.64%, will become even lower once the facts are fully evaluated.

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Welcome to crazy MetalMiner’s low, low price week of falling metal prices, oil prices and devalued currency.

EVERYTHING MUST GO! Or Not…

…maybe prices will be lower next week? Who can tell in this crazy market? Check out our Metal Price Outlook for MetalMiner’s expert opinion. Free sample in the link.

Bears Everywhere

Our August MMI Report shows that nine of the 10 metals we track have hit an all-time low since we started tracking them in January 2012. It’s been a gradual fall for sub-indexes such as raw steels and renewables, whereas aluminum and copper suffered big drops this month that coincided with historic London Metal Exchange lows.

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The strong dollar continues to drag down all commodities, shunting investment dollars elsewhere and depressing prices of investment metals such as gold, which hit a six-year low last quarter, according to the World Gold Council. Guess what else hit a six-year low? Oil, of course!

So, with energy costs so low, metal production will cost less and prices must eventually go up again, right? Ummm, not so fast. Demand for metals is still, generally, low and, for some of them, prices are below production costs.

Computer generated 3D photo rendering.

Feel free to drive across the country. Won’t cost much.

China has come up with a novel way to combat this problem, by simply making their own currency less valuable than the steel, aluminum and other metals they produce so that those metals can, then, be exported and purchased in places with higher-valued currencies, such as the dollar. Yes, it’s similar to digging a hole just so that you can then pay someone to fill it, but tell that to the International Monetary Fund, which insists that China is not manipulating its currency. Seriously.

Anti-Dumping Deluge

Not so fast! say US Producers, who filed an anti-dumping action with the Commerce Dept. and US International Trade Commission for hot-rolled steel products against seven countries this week. Chinese steel is already subject to hot-rolled tariffs so it was not included in the petition.

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The Commerce Dept. and ITC will be busy in the next few months as they were already investigating imports of cold-rolled coil (China IS including in this investigation) and began another investigation this week of carbon steel pipe from Mexico, Turkey and South Korea.

US dollar vs. RMB

Guess which one is manipulated?

If you want to do your part to protect the US steel industry, send coffee, tea or over-the-counter stimulants to the Herbert Hoover building in Washington, DC, to speed the investigation along.

What About That Dollar?

An interest rate increase from the Federal Reserve might be around the corner. Some are predicting it will happen next month. This would be great news for metals and other commodities, but what about emerging markets? Doom and gloom. The Fed has a delicate dance ahead of it.
We will report every pirouette in the next few weeks.

 

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The Commerce Dept. has begun an anti-dumping investigation of imports of heavy walled rectangular welded carbon steel pipes and tubes from South Korea, Mexico, and Turkey, and a countervailing duty investigation of imports from Turkey.

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The products subject to the investigations are heavy walled rectangular welded steel pipes and tubes of rectangular (including square) cross section, having a nominal wall thickness of not less than four millimeters. Such pipes are used as structural members in construction and industrial manufacturing.

The products include, but are not limited to, the American Society for Testing and Materials (ASTM) A-500, grade B specifications, or comparable domestic or foreign specifications.

The domestic manufacturers petitioning for the investigations are Atlas Tube, a division of JMC Steel Group; Bull Moose Tube Company; EXLTUBE; Hannibal Industries, Inc.; Independence Tube Corporation; Maruichi American Corporation; Searing Industries; Southland Tube; and Vest, Inc.

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They are alleging dumping margins of 53.8% for imports from South Korea, 11.9% from Mexico and 102.1 to 113.7% for the Turkish welded carbon steel pipes. Turkey is also accused of illegally subsidizing its exports, hence the countervailing investigation.

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Anti-dumping petitions from US producers AK Steel, Nucor Corp., ArcelorMittal USA, SSAB Enterprises, U.S. Steel and Steel Dynamics charge that imports hot-rolled steel flat products from Australia, Brazil, Japan, South Korea, the Netherlands, Turkey and the United Kingdom are causing material injury to the domestic industry or being “dumped.

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The petitions allege that producers in each of the seven countries are selling hot-rolled steel in the US market at less than fair value, with the following substantial margins of dumping:

Australia: 99.20%
Brazil: 21.80%
Japan: 19.53% – 30.90%
South Korea: 86.96% – 158.93%
Netherlands: 55.21% – 173.17%
Turkey: 96.44% – 200.78%
The United Kingdom: 50.63% – 161.75%

The petitions also allege that the foreign producers in Brazil, South Korea, and Turkey benefit from numerous countervailable subsidies provided by their governments. The petitions identify 33 different subsidy programs in Brazil, 41 subsidy programs in South Korea, and 17 subsidy programs in Turkey.

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China is not one of the countries named in these petitions because imports of hot-rolled steel from China are already subject to an anti-dumping order. The petitions were filed concurrently with the Department of Commerce and the US International Trade Commission.

This is the third filed flat-rolled sheet trade case in the last three months as US producers filed petitions against corrosion-resistant imports at the start of June and followed that with petitions against cold-rolled imports at the end of July.

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There is growing speculation that a hot-rolled trade case will be filed by US producers next week. US oil refiners, however, has found a sweet spot.

Hot-Rolled Dumping Case Next Week?

The anticipated filing next week of a hot-rolled trade case may yet perk up US flat-rolled pricing, Platts reported, though conditions are steadily deteriorating, market sources said Thursday.

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One buyer told Platts “All this stuff is adding up, but the buyer is yawning because it’s not affecting the market,” he said. “But it will, and they’re going to get caught. It’s almost like the fuse has been lit, but it’s a long fuse.”

Perfect Conditions for US Oil Refiners

Low crude prices and strong demand for gasoline are creating near-perfect conditions for oil refineries across the United States, especially those geared towards maximizing gasoline production.Valero, the country’s largest independent refiner, made a gross margin of more than $13 on every barrel of oil processed in the second quarter, and a net margin of almost $8.50, both the highest since 2007.

Last Chance for the July MMI Report

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It was no surprise last week when AK Steel Corp., ArcelorMittal USA LLC, Nucor Corp., Steel Dynamics, Inc., and U.S. Steel Corp. filed petitions with the Commerce Dept. and the US International Trade Commission against eight countries the domestic industry believes are receiving illegal government subsidies and “dumping” flat cold-rolled coil products here.

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The eight countries included in the anti-dumping petitions and the dumping margins alleged by AK Steel and the domestic industry are:

  • Brazil, 50 to 59.74% subsidy rate
  • China, 265.98%
  • India, 42.28%
  • Japan, 82.58%
  • South Korea, 93.32 to 176.13%
  • Netherlands, 47.36 to 136.46%
  • Russia, 69.12 to 320.45%
  • The United Kingdom 47.64 to 84.34%

The petitions also allege that the foreign producers benefit from numerous countervailable subsidies.

Coiledsteel_585

Could the cold-rolled coil anti-dumping cases set a new precedent for dumping steel in the US?

Again, this was no surprise as the case with China, in particular, has been well-documented and this isn’t the first go around with anti-dumping duties with most of these countries. What will be interesting to see, however, is how new trade remedy measures adopted by the federal government as part of two trade bills signed by President Obama in June, will affect enforcement of anti-dumping or countervailable duties that come out of these petitions.

At the time American Iron and Steel Institute President and CEO Thomas Gibson said, “We thank the Administration for recognizing the critical role of the steel industry by supporting these initiatives to improve the effectiveness of our anti-dumping and countervailing duty laws.”

Part of the remedies in the trade package was language that would force US Customs Enforcement and Border Protection to tariff imports more stringently, eliminating loopholes that allowed countries to essentially created stops in other ports to disguise the origin of shipments.

“AK Steel and the domestic industry have been facing a surge of what we believe are unfairly dumped and subsidized imports of cold-rolled steel coming into this country,” James L. Wainscott, chairman, president and CEO of AK Steel said in a statement. “The negative impact to our company and to other U.S. producers has been significant in terms of pricing, production, sales and earnings.”

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If the new measures deliver high margin tariffs and enforceable import protections it will be the culmination of decades of legislative of enforcement work by the US steel industry. Work that began as far back as the North American Free Trade Agreement.

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Domestic steel producers have filed new anti-dumping petitions against eight countries, charging them with unfairly subsidizing steel exports into the US. Also, the Senate Energy Committee has advanced a bill that would lift the 40-year US oil export ban but it faces a tough road with the full Senate.

Domestic Producers File New Steel Anti-Dumping Cases

AK Steel Corp., ArcelorMittal USA LLC, Nucor Corp., Steel Dynamics, Inc., and U.S. Steel Corp. – filed petitions recently with the Department of Commerce and the US International Trade Commission charging that unfairly-traded imports of cold-rolled steel flat products from Brazil, China, India, Japan, South Korea, Netherlands, Russia and the United Kingdom are causing material injury to the domestic industry.

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The petitions allege that producers in each of the eight countries are dumping cold-rolled steel in the US market at substantial margins, all above 42% government subsidy.

Bill to Lift US Oil Export Ban Advances

The US Senate Energy Committee on Thursday narrowly passed a bill to lift a 40-year-old ban on the export of crude oil, but the measure faces an uphill battle in getting passed by the full Senate, Reuters reported. The bill would allow the US to export oil and boost state revenue-sharing for offshore oil and gas drilling. It passed along party lines by a vote of 12-10.

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EU Upholds Stainless Steel Anti-Dumping Duties on China and Taiwan. More anti-dumping duties on Chinese and Taiwanese stainless steel have been upheld, this time in Europe. A major nickel producer is also slashing output.

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