U.S Steelmakers Want Tariffs on Imported Steel
On August 11th, six of the biggest steelmakers in America filed a petition with the U.S. Commerce Department and the U.S. International Trade Commission insisting that any foreign steel imported into the U.S. be taxed. They also warned lawmakers that as China’s yuan loses value, the industry as a whole could see harsh ramifications from China’s supposed currency manipulation.
The petition is aimed at hot-rolled coils, used for car manufacturing and construction, which are flowing in from Australia, Brazil, Japan, the Netherlands, South Korea, Turkey, and the U.K. Because China already has existing tariffs imposed on them by the U.S. for these kinds of imports, they were excluded from the list. This is the third such complaint filed this summer by U.S. Steel Corp., Nucor Corp., AK Steel Holdings Corp., ArcelorMittal USA LLC, SSAB Enterprises LLC and Steel Dynamics Inc. Together, these companies are trying to curtail the “tsunami of foreign imports,” as John Ferriola, Nucor’s Chief Executive put it.
The U.S. index price for hot-rolled steel coil, a benchmark product, has plummeted over 20% so far this year to only $468 per ton. Though low, that price is still higher than Europe’s by about $100 and over $200 above Asia and should make the U.S. market more appealing. But imports from the seven countries mentioned above have risen close to 73%, from 1.9 million tons to 3.3 million tons, from 2012 to 2014, which has a hold on the more expensive domestic markets.
The six petitioners are trying to protect themselves from the barrage of imported steel flowing into our borders every day. Prices have been down, though demand remains strong… and foreign steel seems to be what is filling that demand. Steel companies have been forced to lay off workers by the thousands and shut down plants throughout the nation. AK Steel commented, “As a result of the increasing volumes of low-priced imports, U.S. producers have suffered significant declines in production, shipments, prices and profits.”
Steel makers and their counterparts say imports are to blame, mostly those coming from China, where they are inundated with excess product and are forcing it onto the global markets to cut their losses. In fact, China’s steel exports climbed 36% to 30.4 million tons during the first quarter of this year alone. A statement from the steel makers lawyers said, 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.” Some think they are devaluating the yuan to make their prices to low, no one can compete.
Lobbyists for steelmakers such as U.S. Steel and Nucor, warned that the devaluation of the yuan by the Chinese government could throw a wrench into the problem. One of those lobbyists, Thomas Gibson in Washington, said China’s currency issue is creating massive damage” to “our nation’s manufacturing sector, especially the steel industry.” While trade officials in China deny that they are purposefully under evaluating the yuan to try and increase their market share of steel, some in the U.S. remain unconvinced. “A 20% change in currency rates can make a difference of a $100 for a ton of steel coil,” said Mike Lee, plant manager one of Nucor’s mills. “If we can save 20 cents on operating costs, that’s a lot.”
If they are to win the case, they will have to provide evidence that foreign steel was sold at below-market prices or benefited from illegal state aid. Furthermore, that will have to prove that is response to these actions, domestic steelmakers lost part of the market share to them.
The United States International Trade Commission has 45 days to decide if American steelmakers have experience enough “injury” to warrant the requested tariffs. The Department of Commerce will then publish a first ruling by December of this year. Final rulings can be expected the middle of next year.