BlueScope Faces 23% Tariff on US Steel Exports
17 March 2016
BlueScope Steel is set to face dumping margins of 23.25 per cent on steel it exports to the United States as governments around the world move to protect their domestic industries from a global supply glut.
In a preliminary determination, the US Commerce Commission said the tariff would be applied against Australian exports of hot rolled coil, a commodity steel used in structural sections, tanks and gas cylinders.
BlueScope exports between 200,000 tonnes and 300,000 tonnes of hot rolled coil to the US annually, a fraction of the 2.6 million tonne production capacity of the Port Kembla blast furnace.
Only a fraction of those US export tonnes, about 60,000, are sold to plants operated by rivals. The rest go to BlueScope-owned businesses.
BlueScope and fellow Australian steel maker Arrium have been extremely vocal about the inadequacy of Australia's protections against dumping in the midst of a flood of cheap Chinese steel exports.
Credit Suisse analyst Michael Slifirski said the impact on BlueScope was likely to be small.
He expects the gross revenue impact to be between $16 million and $32 million.
The company reported revenue of $8.6 billion in 2014-15.
It may be up to a year before the US regulator makes a final determination regarding exports from Australia, South Korea, Britain, Turkey and the Netherlands.
While duties will not apply until the final determination is made, they can be backdated up to the date of the preliminary ruling.
BlueScope declined to comment on Thursday.
However, it is understood the company is making alternative arrangements to supply its US affiliates and will redirect Port Kembla exports to other markets.
Steel makers globally are struggling to cope because of the huge surplus steel production capacity and slowing Chinese steel demand.
With Arrium's Whyalla steelworks facing a potential closure decision, Innovation, Industry and Science Minister Christopher Pyne recently asked Anti-Dumping Commissioner Dale Seymour to inquire into dumping of Asian steel.
Dumping occurs when foreign producers land imported products at below the usual cost in their domestic market, and anti-dumping inquiries can lead to special tariffs that lift the price of imports.
The Productivity Commission, a key economic adviser to the Australian government, last month published a scathing report of the nation's anti-dumping system.
The report attacked the system as a mechanism for a small subsection of local industry, particularly steel, to protect itself at the expense of the broader economic good.
Source : smh.com.au