Articles in Category: Anti-Dumping

This week, we asked if cheap Chinese steel imports are really that bad for the U.S.? After all, if Beijing and China’s regional governments are subsidizing steel production exported to the U.S. to the tune of 522% for cold-rolled and 451% for corrosion-resistant, aren’t U.S. manufacturers gaining a huge cost advantage on the finished products they ship back to the People’s Republic? Or even sell domestically?

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U.S. Producers certainly don’t see it that way. Neither do steel producers in most of the developed world, save China. 12 Steel associations from the Americas and Europe released another strongly worded letter to governments around the world, lamenting Chinese overproduction. Just look at those tariffs! The steel associations really mean business this time!

Nice job on the ditch, USA! I’m China, I’m here to fill it back in. Source: Adobe Stock/Kara.

China, of course, doesn’t see it this way at all and has previously said, through its Ministry of Commerce, that its steel industry is merely “export competitive.” It’s certainly a novel defense, but it would also be the equivalent of Tom Brady saying his footballs are only “deflation competitive” without dealing with why they are so. Or Russia saying Crimea is “annexation competitive” without saying why it should stop being a part of Ukraine and start becoming a part of the federation.

What is Protectionism?

Still, U.S. regulators like the Commerce Department and the International Trade Administration may want to tone down their heavy anti-dumping and countervailing duties decisions as 522% and 451% is an awful lot of anti-dumping and countervailing duties and the extreme outlier positions that Commerce has staked out could garner sympathy for China in front of a future World Trade Organization court. Read more

The U.S. International Trade Commission has officially started an inquiry into the hacking and theft of trade secrets from U.S. Steel Corp., allegedly by Chinese hackers. China’s largest steel-producing province has ordered production cuts due to air pollution.

ITC Launches Hacking Probe

U.S. regulators on Thursday officially launched an investigation into complaints by United States Steel Corp. that Chinese competitors stole its secrets and fixed prices, in the latest trade spat between the two countries. The International Trade Commission said in a statement that it has not made any decisions on the merits of the case.

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The commission identified 40 Chinese steel makers and distribution subsidiaries as respondents, including Baosteel Group, Hebei Iron and Steel Group, Wuhan Iron and Steel Co Ltd., Maanshan Iron and Steel Group, Anshan Iron and Steel Group and Jiangsu Shagang Group.

U.S. Steel has accused Chinese hackers of stealing proprietary data to manufacture and sell dual-phase 980, a high-strength automotive steel alloy.

Tangshan Orders Steel Cuts

China’s top steelmaking city of Tangshan has ordered mills in and near the area to cut production for five days from Friday to ease air pollution, according to a notice from the local government.

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It was not clear how much capacity is affected but Tangshan is the biggest city in Hebei province, which accounts for more than 20% of China’s steel output.

The Commerce Department has delivered a final determination that imports of corrosion-resistant steel from China, India, Italy, South Korea, and Taiwan were illegally dumped in the U.S. The investigation found that countervailable subsidization of imports of corrosion-resistant steel products from China, India, Italy and South Korea occurred and that there were actually no countervailable subsidies of imports of corrosion-resistant steel from Taiwan.

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Companies from China received final anti-dumping duties of 209.97%. Many Chinese companies also did not cooperate with the countervailing duties investigation and were hit with CVD tariffs of 241.07%.

This means many Chinese companies received total import tariffs of 451.04%.

Hyundai Steel Company in South Korea got hit with anti-dumping duties of 40.97%. Read more

Domestic HRC steel prices have surged 67% since they hit a floor just six months ago.

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The duties imposed on steel products caused imports to taper down in a big way this year and U.S. steel mills now have the power to raise their base selling prices. Moreover, China’s stimulus measures boosted demand for steel in this first half, causing prices in China to rise, too.

Domestic HRC prices continue to surge

Domestic HRC prices continue to surge. Source: MetalMiner Index

Earlier this month we’ve heard many analysts say the recent steel price rally was purely speculative, without a fundamental justification for the price swings, as steel-rebar and iron-ore futures traded in China went into sharp decline in recent weeks. However, U.S. domestic prices are rising without looking back, at least for now.

Higher U.S Steel Prices: Is That What We Really Want?

Some firms have lost a ton of money in recent years as China created global oversupply, bringing global steel prices down with massive exports. In the face of rising imports, American production has dropped and U.S. steel producers are justifiably unhappy with the circumstances.

Now U.S. policymakers seem determined to follow a protectionist path because, truth to be said, it’s unfair that a company has to go out of business because of the stupidity of Chinese policymakers. These protectionism measures might or might not help the U.S. steel industry in the long-term, however, this raises another question: will this really help the broader U.S. economy?

Steel Exports, Tariff Economics

The cost of import restrictions directly equals the harm they do to manufacturers of value-added products that use steel as an input. According to Department of Commerce statistics, downstream steel manufacturers that utilize steel generate much more jobs and wealth to the U.S economy than what metal manufacturers generate.

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This subject is very controversial and, perhaps, there is not a right answer to the issue as someone is always going to get hurt. What’s true is that China is losing money in the form of subsidies to save its steel industry and keep its massive population employed, and by doing that China is actually transferring so much of its wealth into the U.S. by selling low-priced steel. Which, doesn’t sound as bad as U.S. steel producers make it sound

Steel imports into the U.S. were down in April and, if the numbers are able to be believed, China is importing more nickel ore than ever before.

Steel Imports Down in April

Based on preliminary Census Bureau data, the American Iron and Steel Institute reported that the U.S. imported a total of 2,456,000 net tons of steel in April 2016, including 2,014,000 nt of finished steel (down  5.6% and  4.1%, respectively, vs. March final data).

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Year-to-date through four months of 2016 total and finished steel imports are 9,982,000 and 8,442,000 nt, respectively, down 34% and 33% vs. the same period in 2015.

Annualized total and finished steel imports in 2016 would be 29.9 and 25.3 million nt, down 23% and 20% respectively vs. 2015. Finished steel import market share was an estimated 24% in April and is estimated at 25% on the year-to-date.

Key finished steel products with a significant import increase in April compared to March are line pipe (up 38%), hot rolled bars (up 35%), structural pipe and tube (up 27%), standard pipe (up 17%) and cold-rolled sheets (up 15%).

Chinese Nickel Imports

China is importing more nickel than ever before. Headline imports of refined metal hit a new all-time record high of 49,012 metric tons in April. The cumulative tally of 157,600 mt over the first four months of the year represents a 115,000-mt increase over the same period of last year.

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Reuters’ Andy Home writes that there is too much going on to get a good idea of what the imports really are and where they’re being used.

12 Global steel trade associations today released a statement urging the leaders of the G7 nations to take steps to address the current global steel overcapacity situation which is negatively affecting economies, industries and workers around the world.

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The American Iron and Steel Institute, the Japan Iron and Steel Federation, Eurofer (the European Steel Association), Canadian Steel Producers Association, UK Steel, the German Steel Federation (WV-Stahl), Alliance des Minerais, Minéraux et Métaux (A3M), Federacciai (the Federation of the Italian Steel Companies), the Steel Manufacturers Association (SMA), the Committee on Pipe and Tube Imports (CPTI), the Specialty Steel Industry of North America (SSINA), and the European Steel Tube Association said:

“Government support measures and other policies have contributed to significant global excess capacity in steel, unfair trade and distortions in steel trade flows around the world. Among other things, these market-distorting government policies have prevented adequate industry adjustment in some markets in response to changes in global demand. This is an issue of concern in countries where government policies encourage steel capacity growth without regard to market signals, or where government actions sustain uneconomic or consistently loss-making steel plants that otherwise would exit the market.

“Steel producers in the G7 nations, and elsewhere around the world, highly appreciate intergovernmental attempts so far to cope with the global overcapacity issue, and urge their governments to take urgent action to address this global problem, building upon the work program outlined by high-level government representatives in Brussels in mid-April to address the overcapacity and adjustment challenges facing the steel industry,” the statement, in part, read.

“It is critical that all major steel-producing nations participate in efforts to eliminate trade-distorting policies that are contributing to the current steel crisis,” it continued. “Otherwise, as was noted at the OECD Steel Committee meeting in May 2015, ‘a failure to address or halt market distortions will result in subsidized and state-supported enterprises surviving at the expense of efficient companies operating in environments with minimal government support.’

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“In this regard, we urge the G7 summit in Japan to discuss the need to maintain effective remedial measures, consistent with their WTO rights and obligations, against exports from countries in which market economy conditions do not prevail.”

Jennifer Diggins is the director of Government Affairs at Charlotte, N.C.-based Nucor Corp., the largest steelmaker in the U.S. and North America’s largest recycler of any material (Nucor recycled 16.9 million tons of scrap steel in 2015 at its 23 electric arc furnace mills). Diggins serves as the firm’s liaison to Washington, D.C. MetalMiner’s editorial staff recently had a chance to sit down with Jennifer for a MetalMiner Q&A to discuss recent issues in steel, including Chinese overproduction, the tariffs recently passed against some imports and the role of the international scrap market.

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MetalMiner: Recently, executives from the five leading steel companies in the U.S. told the Congressional Steel Caucus that unfair foreign trade practices have caused an increase in steel imports resulting in the loss of more than 13,000 jobs in the industry this year. How was that number arrived at? Could it be even worse than the 13,000 estimated?

jennifer_diggins_headshot_300_Nucor_052116Jennifer Diggins: There is the potential for the number to be much worse when you factor in job losses in industries that support steel.

People often fail to appreciate the broad impact the steel industry has on the rest of the economy. Every one job in the steel industry supports seven other jobs in the economy. These are jobs in businesses that supply steelmakers with raw materials, contractors who do maintenance work at steel mills, truck drivers who transport our products, just to name a few. When steel production decreases like it has, workers in these supporting industries also are impacted. Read more

The CME Group is taking actions to more directly compete with the London Metal Exchange and China’s Ministry of Commerce has responded to tough U.S. tariffs and anti-dumping duties.

CME Group Will Take on the LME

The CME Group is talking to several warehouse companies to expand its metal storage network globally, three metal industry sources exclusively told Reuters, a move that could further challenge the London Metal Exchange‘s (LME) dominance.

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In recent years the CME, the world’s largest futures market operator, has been steadily building its storage network , partly as a result of controversy surrounding the LME warehouse system.

Chinese Ministry of Commerce Slams U.S. Steel Tariffs

U.S. efforts to protect its steel industry will not solve the sector’s fundamental problems, which stem from “past protectionist measures,” China’s Ministry of Commerce said on Saturday.

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The comments were posted on the ministry’s website following a decision on Friday by the U.S. International Trade Commission to continue probing imports of certain steel products from 12 countries, including China and Korea.

The Commerce Department delivered final determinations in the case of Chinese cold-rolled steel this week, and while Commerce upheld the 265% duties initially placed on the imports, the agency also added 256% countervailing subsidy duties, nearly doubling the duties on Chinese cold-rolled.

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It’s safe to say the gauntlet’s been thrown down when it comes to Chinese steel imports. Doubling up the duties shows that Commerce finally isn’t kidding around and that the reforms passed by Congress last year have teeth.

Freight train with cargo containers passing by

Freight, whether by boat or by train, is being checked and inspected more vigorously by U.S. Customs and Border Protection.

Still, we wondered what effect this would have on U.S. manufacturers. Not only the ones accustomed to lower prices from foreign imports, but also the ones who export their finished goods to China. To paraphrase J.R.R. Tolkien, open trade war is upon you whether you’d risk it or not!

Chinese Response

China’s not taking it with a grain of salt, either. The Ministry of Commerce said on Saturday that it was gearing up for a legal challenge over the steel duties, most likely by opening an arbitration panel in the World Trade Organization.

The WTO is a better venue for China than Commerce or the U.S. International Trade Commission, which is likely why most Chinese steelmakers did not respond to Commerce’s requests for information in the cold-rolled case. What more might come out at the WTO is anybody’s guess.

“China will encourage and support its steel companies to defend themselves according to law, and China will safeguard the legitimate rights and interests of its steel companies using World Trade Organization rules,” the Ministry said in a statement today, less than 24 hours after Commerce announced further investigations into China’s steel industry.

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Understandable since there probably aren’t even any Chinese steel mills that can make money exporting goods to the U.S. with 522% tariffs upon entry. My colleague Katie Benchina Olsen reported this week that Customs and Border Protection is getting better at flagging trans-shipments and other tricks to avoid the duties, too.

The trade war is definitely on. Whether it ends quickly is up to the countries and companies involved.

In the last year, the U.S. steel industry has aggressively pursued anti-dumping and countervailing duty lawsuits against Chinese producers of various steel products.

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U.S. Customs and Border Patrol has stepped up efforts to enforce U.S. trade law. Earlier this week, the Department of Commerce confirmed the cold-rolled steel anti-dumping margins from China (265.79%) and Japan (71.35%) as well as a countervailing subsidy for China of (256.44%). This makes for a total of 522% duties on Chinese cold-rolled steel.

The U.S. steel industry says we are at economic war with China. With cold-rolled steel being used in automobile panels, appliances and construction, could the anti-dumping and countervailing duties lawsuits against Chinese producers actually be hurting the United States?

Steel’s War

The steel industry directly employs 142,000 people which is part of the 12 million U.S. manufacturing jobs according to the National Association of Manufacturers (NAM). The newly elected chairman of American Iron and Steel Institute — John Ferriola, chairman, president and CEO of Nucor Corp. — said at a recent AISI CEO press briefing that steel jobs declined by 13,000 in 2015. Although steel jobs declined last year, manufacturing jobs in other subsectors have picked up the slack. According to the Bureau of Labor Statistics, a total of 13,000 manufacturing jobs were created in 2015.

china-ship-and-buildings

Trade is a two-way street, what if China begins to tariff the goods U.S. manufacturers sell there? Source: iStock.

Steel prices have been rising in the U.S. as domestic mills are now shielded from imports China and other countries named in the trade cases. According to numerous sources, the domestic lead times have extended which is leaving some companies scrambling for metal.  Read more