Six steelmakers with major U.S. operations filed a trade
complaint on Wednesday seeking punitive tariffs for alleged unfair
pricing of imported steel from China, India, Italy, South Korea and
Taiwan.
The suit, which concerns a common kind of coated steel used in
automobile and construction industries, is the first salvo in the
campaign this year by the beleaguered U.S. steel industry to
protect itself against a record flood of imports.
The steelmakers are United States Steel Corp., Nucor Corp.,
Steel Dynamics Inc., ArcelorMittal USA, AK Steel Corp. and
California Steel Industries. All are based in the U.S. except
ArcelorMittal, the world's biggest steelmaker, which is based in
Luxembourg and London but owns big mills in Indiana and elsewhere
in the country.
The petitioners are frustrated because prices have been
sluggish—down about 25% since the start of the
year—despite strong demand. That has forced the
companies, which make most of their steel near auto factories in
the Midwest and South, to lay off thousands of workers and idle
plants around the country.
They blame imports, particularly from China. Slowing demand in
that country has led its steelmakers to export excess capacity,
flooding global markets. Exports of steel from China rose 36% to
30.4 million tons during the first four months of the year.
Imports have "devastated pricing in the U.S. market, increased
their share of the U.S. market by undercutting U.S. producers'
prices and caused injury to U.S. producers and their workers,"
lawyers for the six steelmakers said in a statement.
The United States International Trade Commission must decide
within 45 days whether the business of U.S. producers was
sufficiently "injured" to merit duties. The Department of Commerce
will issue a preliminary ruling by the end of 2015. Final rulings
by both agencies are due by mid-2016.
The U.S. last year slapped duties on imports of steel used in
the energy industry from South Korea and five other countries.
Those duties haven't stemmed the tide of shipments.
To win this new case, the U.S. companies will have to prove that
the foreign companies sold their steel at below-market prices or
benefited from illegal state aid, and that these tactics allowed
them to win market share in a way that damaged the profits of
domestic steelmakers.
The U.S. isn't the only country to protest higher imports. The
European Commission last month passed provisional tariffs on the
import of a valued-added steel product called grain-oriented steel
electrical steel from China, Russia, the U.S., Japan, and South
Korea.
The European Commission also levied provisional tariffs on the
import of stainless steel cold rolled sheet from China and Taiwan
earlier this year and has launched two separate investigations into
the import of two different kinds of steel from China.
"We're having a direct impact from these tonnages which are sold
at cut rate prices" into Europe, said Jeroen Vermeij, director of
market analysis & economic studies at the European Steel
Association, known as Eurofer.
"It is clear that Chinese exports are threatening the long-term
viability of the European steel industry," he said.
A concern for American steelmakers is that foreign-produced
steel benefits from unfair help from home governments. The
petitions filed by U.S. companies identified 48 separate subsidy
programs in China, 88 in India, 12 in Italy, 43 in South Korea, and
22 in Taiwan.
Imports of corrosion-resistant steel from the five countries
jumped 85% between 2012 and 2014, to 2.75 million tons, the
petitioning steelmakers said. In 2014, the five countries exported
more than $2.2 billion of corrosion-resistant steel to the U.S.,
the companies said. Steel company officials from China and other
countries have denied unfair trade practices.
Tom Conway, vice president for the United Steelworkers union,
which represents workers at ArcelorMittal and U.S. Steel, said he
was delighted with the petition for duties. He also suggested
taxing "customers who knowingly purchase such illegally priced and
dumped products."
Charles Bradford, an analyst at New York-based investment
research firm Bradford Research Inc., said the steel companies are
expected to argue before the USITC that foreign companies benefit
from subsidies from their governments and from currencies that have
been intentionally depreciated relative to the dollar. "Currencies
are a big deal for the steelmakers," said Mr. Bradford.
"A 20% change in currency rates can make a difference of a $100
for a ton of steel coil," said Mike Lee, plant manager at Nucor's
mill in Decatur, Alabama. By comparison, he says, "if we can save
20 cents on operating costs, that's a lot."
Alex MacDonald in London contributed to this article.
Write to John W. Miller at john.miller@wsj.com and Lisa Beilfuss
at lisa.beilfuss@wsj.com
Access Investor Kit for Vale SA
Visit
http://www.companyspotlight.com/partner?cp_code=P479&isin=BRVALEACNOR0
Access Investor Kit for Vale SA
Visit
http://www.companyspotlight.com/partner?cp_code=P479&isin=BRVALEACNPA3
Access Investor Kit for JFE Holdings, Inc.
Visit
http://www.companyspotlight.com/partner?cp_code=P479&isin=JP3386030005
Access Investor Kit for ArcelorMittal SA
Visit
http://www.companyspotlight.com/partner?cp_code=P479&isin=LU0323134006
Access Investor Kit for AK Steel Holding Corp.
Visit
http://www.companyspotlight.com/partner?cp_code=P479&isin=US0015471081
Access Investor Kit for ArcelorMittal SA
Visit
http://www.companyspotlight.com/partner?cp_code=P479&isin=US03938L1044
Access Investor Kit for Nucor Corp.
Visit
http://www.companyspotlight.com/partner?cp_code=P479&isin=US6703461052
Access Investor Kit for Steel Dynamics, Inc.
Visit
http://www.companyspotlight.com/partner?cp_code=P479&isin=US8581191009
Access Investor Kit for United States Steel Corp.
Visit
http://www.companyspotlight.com/partner?cp_code=P479&isin=US9129091081
Access Investor Kit for Vale SA
Visit
http://www.companyspotlight.com/partner?cp_code=P479&isin=US91912E1055
Access Investor Kit for Vale SA
Visit
http://www.companyspotlight.com/partner?cp_code=P479&isin=US91912E2046
Subscribe to WSJ: http://online.wsj.com?mod=djnwires