By John W. Miller And Lisa Beilfuss
Six steelmakers with major U.S. operations filed a petition on
Wednesday seeking tariffs on American imports of steel from China,
India, Italy, South Korea and Taiwan.
The petition, which concerns a common kind of coated steel used
in automotive and construction, 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 for
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 around 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 were up 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 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 imposed duties on imports of steel used in
the energy industry from South Korea and five other countries.
Those duties haven't been enough to stem 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."
A particular 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 for Bradford Research Inc., said
the steel companies are expected to argue before the ITC 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," says 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
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