The monthly GOES MMI®, tracking the grain-oriented electrical steel (GOES) M3 price, fell 14 points, registering a value of 195 in September – a 6.7% drop from August. This is the lowest index reading in 9 years.
Meanwhile, the ITC ruled against the domestic producers in the case of Germany, Poland and Japan by finding that the domestic industry did not experience material injury due to imports from those countries. The ITC’s argument hinged on three factors the domestic industry experienced – lower raw materials prices, unused capacity and intra-industry competition.
But perhaps the bigger story within the case involves large GOES buyer Howard Industries and the ITC’s second and third arguments – unused capacity and intra-industry competition.
As MetalMiner previously reported (immediately after the filing of the anti-dumping case), the domestic price rout occurred when Howard Industries left Allegheny in 2012 (and took its substantial volume with it) due to a long-term contract dispute. (That dispute was awarded in favor of defendant, Allegheny Technologies). However, the damage was done. Because Allegheny and Howard Industries could not come to terms on renegotiating a long-term contract during the Great Recession, Allegheny sowed the seeds of its undoing.
The ITC also concluded that the domestic producers set the price for the domestic industry. With a big chunk of its volume gone, Allegheny had to find other customers, at lower prices to back-fill capacity. And that started the price rout. Other market participants soon discovered what happened and also took advantage of lower prices. The ITC explains all of this on pages 25 – 27 of its opinion, which can be accessed via the EDIS website.
Finally, the ITC also said despite significant import volumes, “most of the increase in subject import volume and market share was at the expense of non-subject imports.” In other words, most of the increase in volume came from shipments of high-permeability GOES, currently not produced by the domestic manufacturers.
With a 5-1 decision against the domestic producers, Germany, Japan and Poland will not see any increased duties placed on products supplied from their countries. But with so many buying organizations implementing their alternative sourcing plans (e.g. buying stacked and wound cores from Mexico and Canada), the surprise decision may create some price uncertainty. The domestic producers will now likely struggle to raise prices. Domestic surcharges for October decreased by $10/ton – not a significant decline, but evidence that the domestic producers may find it difficult to raise prices.
Note: MetalMiner tracks the spot market and not the contract market.
What Is The GOES Price This Month?
The US grain-oriented electrical steel (GOES) M3-grade coil price declined 6.6% over the month to $2,691 per metric ton.
The GOES M3 MMI® collects and weights the M3 global grain-oriented electrical steel price point to provide a unique view into price trends over a 30-day period. For more information on the GOES MMI®, how it’s calculated or how your company can use the index, please drop us a note at: info (at) agmetalminer (dot) com.