Steel Executives: Global Overcapacity Still at Crisis Levels

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Cold-rolled steel

The top steel executives in the U.S. called the fight against cheap steel imports a “war” in the American Iron & Steel Institute‘s annual press conference at its general meeting in Salt Lake City, Utah. The picture they painted was bleak.

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Domestic steel capacity utilization averaged just 70% in 2015. It’s still only at 71.3% capacity utilization for Q1 of this year. They also said 13,000 steel jobs have been lost in the past year. All pointed the finger at global overcapacity.

Crisis Level

“Global overcapacity has been a problem for a long time but, today, it is a crisis,” said John Ferriola, chairman, president and CEO of Nucor Corporation and the newly elected chairman of the AISI for 2016. “This overcapacity, combined with declining demand from countries like China is fueling continued high levels of dumped and subsidized imports into the U.S. market. China has subsidized the growth of its steel industry through grants, low-interest loans, free land, low-priced energy and other raw material inputs. Simply stated, the Chinese government is a company disguised as a country and they are waging economic war on the United States.”

steelexecs

Executives from major North American steel companies addressed the media at the general meeting of the American Iron & Steel Institute in Salt Lake City. Source: Jeff Yoders/MetalMiner.

Thomas J. Gibson, president and CEO of AISI, called upon other steel making nations to take action to eliminate global steel overcapacity. Gibson also said the U.S. government should vigorously enforce trade laws to fight against the dumping of cheaper steel products and the implementation of market-distorting policies and practices by other steel producing nations, particularly China.

China’s Still a Non-Market Economy

The executives also said that China must continue to be treated as a non-market economy for anti-dumping purposes according to the World Trade Organization.

“Granting of (market economy) status to China before it has truly become one will undermine the effectiveness of U.S. trade laws,” Gibson said. “In the meantime, China has claimed that it should be automatically granted the status upon completion of 15 years of its accession to the WTO in December this year. Leading manufacturing associations have already opposed that, stating that China has not met the basic requirements set forth by the U.S. statutes and the Department of Commerce.”

Hacking and Intellectual Property

U.S. Steel CEO Mario Longhi addressed what he called a separate issue from market economy status and illegal dumping, the section 337 case his company filed last week alleging that a Chinese hacker stole U.S. Steel’s intellectual property regarding a high-strength, automotive alloy. The information, allegedly, allowed China’s Baosteel to offer the same product.

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“I believe we’ve been very consistent and very clear in saying we will use every condition within the law in order to make sure the proper playing field is presented to everyone,” Longhi said. “The 337 is just another measure we are entitled to under the law and, of course, we are always going to remain vigilant and we’ll bring actions whenever the conditions warrant it.”

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