Rebar Dumping: Harder to Prove Than it is For a Senator to Allege

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Yesterday, US Senators Jeff Sessions and Richard Shelby of Alabama joined 29 of their colleagues in signing a letter to Commerce Secretary Penny Pritzker that asked her to consider the interests of the US steel industry as it investigates dumping allegations of reinforced bar, or rebar, from Turkey and Mexico.

Sessions and Shelby are joining a campaign long-waged by fellow Senator Charles Schumer (D-NY) against dumping of what they believe are inferior rebar products on the US market. The support of important legislators is great for the domestic manufacturers, but dumping by Turkey and Mexico still has to be proven.

“As the Department investigates dumping and subsidies, we respectfully request that the domestic rebar industry be given full consideration,” Shelby and Sessions’ letter to Pritzker said. “American businesses and workers expect that the Department will find dumping and subsidization where it is occurring, and will prosecute unfair trade practices to the full extent of the law.”

How We Got Here

Nucor, Gerdau Ameristeel US, Commercial Metals, Cascade Steel Rolling Mills and Byer Steel, along with the Rebar Trade Action Coalition, petitioned the Commerce Department and the US International Trade Commission to investigate antidumping and countervailing duties for rebar from Turkey, as well as antidumping duties for Mexican rebar back in September.

On Nov. 1, the US International Trade Commission preliminarily determined that imports of steel rebar from Mexico and Turkey were harming or threatening domestic producers. The commission’s votes of preliminary injury were 5-0 for Turkey and 4-1 for Mexico

Yet the Commerce Department, itself, ruled in February that Turkish metals, at least, were subsidized but not at a rate significant enough to unfairly benefit foreign manufacturers to the detriment of domestic steel producers. Both of these rulings were only preliminary decisions and the US producers and Turkish and Mexican importers made final claims today before the International Trade Administration in New York. A ruling in the case is expected soon.

How Is Dumping Proven?

As MetalMiner has previously shown, to prove dumping, a domestic producer must show that a foreign producer has sold a product into the US for less than what they sell it for in the home market. A determination that’s not as easy to make as it sounds on its face.

Demand for steel, particularly rebar, traditionally improves in the second quarter as construction and manufacturing activity firms, but a sluggish recovery in China and the lack of any major economic stimulus by Beijing is expected to pressure commodity prices for at least the rest of this quarter and probably the entire year.

China’s GDP grew 7.4% in the first quarter, down from 7.7% last year. The Chinese economy is a particularly large drag on the price of steel since China is the No. 1 user of construction metals and it also trades futures of rebar on the Shanghai Futures Exchange. The US manufacturers will have to show a difference between what was paid in the US and the readily available commodity-traded rates overseas.

The most-traded rebar for October delivery on the Shanghai Futures Exchange closed unchanged at 3,369 Chinese yuan a ton last week. It earlier touched 3,336 CNY, its lowest price in more than a week. On MetalMiner’s weekly Construction MMI® the price of Chinese rebar saw a 3 percent increase to CNY 3,470 per metric ton.

It’s difficult to imagine that the Turkish and Mexican producers would be selling at significantly different prices with a commodity-traded steel product such as rebar with a readily available market price without a significant state subsidy which, in the case of Turkey, has already been said to be not a significant difference maker.

So, while the support of senators such as Schumer, Sessions and Shelby is good for the steel manufacturers, the hurdles to proving dumping are still tall.

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