U.S. Steelmakers Again Ask for Tariffs on Imports

12 August 2015

American steelmakers on Tuesday filed another petition demanding tariffs on imports of foreign steel, and warned that China’s devaluation of the yuan could have severe repercussions on their industry.

Six of the nation’s biggest steelmakers— U.S. Steel Corp. , Nucor Corp. , AK Steel Holdings Corp. , ArcelorMittal USA LLC, SSAB Enterprises LLC and Steel Dynamics Inc. —filed their third trade complaint of the summer, as they attempt to stem what Nucor Chief Executive John Ferriola has called a “tsunami of foreign imports.”

The request targeted imports of hot-rolled coil—used in making cars—from Australia, Brazil, Japan, South Korea, the Netherlands, Turkey and the U.K. China wasn’t named in the petition because the U.S. already has tariffs on imports of that kind of steel from China. The petition was filed with the U.S. Commerce Department and the U.S. International Trade Commission.

Overall steel imports into the U.S. have tapered off after rising 7% in the first quarter. For the first six months, they were off 4.6% from a year earlier at 20.9 million tons, according to Global Trade Information Services.

The problem for U.S. steelmakers is sluggish prices, which are held down by inexpensive imports. The U.S. index price for hot-rolled coil, a benchmark product, has fallen more than 20% this year to $468 per ton.

That is still about $100 higher than the price in Europe and $200 above that in Asia, according to steel buyers, making the U.S. a tempting market.

Imports of hot-rolled steel from the seven countries named in the latest petition increased by about 73% from 2012 to 2014, rising from 1.9 million tons to 3.3 million tons, AK Steel said. “As a result of the increasing volumes of low-priced imports, U.S. producers have suffered significant declines in production, shipments, prices and profits.”

The problem could be compounded by China’s move this week to devalue its currency.

Thomas Gibson, a lobbyist in Washington for U.S. Steel, Nucor and other steelmakers, said China’s currency is undervalued and is causing “massive damage” to “our nation’s manufacturing sector, especially the steel industry.”

Chinese trade officials have denied intentionally trying to gain market share for steel through currency manipulation.

For U.S. steelmakers, these aren’t easy times. U.S. Steel had a loss of $261 million in the second quarter, and other steelmakers have also taken hits to their bottom lines despite strong demand from auto makers.

Potentially complicating the market, ArcelorMittal and U.S. Steel are both locked in tense negotiations with the United Steelworkers union over a new three-year labor deal. The talks could theoretically end up in a strike, disrupting production.

But buyers aren’t worried, says John Packard, publisher of Steel Market Update, who said he recently surveyed a large swath of the market.

“Steel is easy to get right now,” he said. “Lead times are short, and service centers have had an abundance of inventory. And there’s a perception there’s quite a bit of unsold foreign available, so buyers have gotten complacent.”