U.S. Probes Chinese Stainless Steel
March 04 2016 - 05:10PM
Dow Jones News
The Department of Commerce announced a new investigation into
Chinese steelmakers that could result in increased import tariffs
on their goods.
The Commerce Department said Friday it would probe Chinese
manufacturers of stainless steel sheet, used in everything from
beverage cans to home furnishings, for possibly illegal subsidies
and sales of steel at below cost to improperly gain market
share.
The case, which concerns $302 million of steel sheet imports
last year, will be decided by March 28. It is one of three current
inquiries into Chinese companies dumping steel in the U.S.
The government's move ratchets up pressure on foreign
steelmakers and helps shore up prices in the U.S., sparking hope
that U.S. steelmakers could see a recovery this year after a
disastrous 2015.
After falling more than 35% last year, U.S. steel prices are on
the rise and investors are noticing. The benchmark hot-rolled coil
index has risen 10.4% to $402 a ton, up from $364 on December
2.
AK Steel Holding Corp. Â became the latest steelmaker to raise
prices. On Friday, it increased its base prices for carbon
flat-rolled steel products by a minimum $30 a metric ton, a move
similar to increases announced to customers by other big
steelmakers, including Nucor Corp., U.S. Steel Corp. and
ArcelorMittal. AK Steel's stock price closed up 3.6% Friday in New
York.
"There's strength in construction, appliance and automotive
markets," said John Packard of Steel Market Update. "Imports have
fallen, and service center inventories have been dropping, which
means service centers need to go out and buy more steel."
One area that isn't improving is the energy sector, Mr. Packard
said. Oil- and gas-related industries, traditionally heavy
consumers of steel, are in a protracted downturn because of
languishing fuel prices around the world.
Imports of steel into the U.S. during December were 26% lower on
the year, at 2.6 million tons, down from 3.5 million tons during
the same month in 2014.
In February, U.S. construction firms added 19,000 workers,
according to the Associated General Contractors of America.
Construction employment now totals 6.6 million, the most since
December 2008. Of all steel made in the U.S., 40% is used in
construction, so an uptick in hiring signals a ramp-up for steel
orders.
Low U.S. steel prices have driven down imports, but the volume
of foreign steel into the U.S. is also dropping amid increased
pressure from federal trade officials.
Earlier this week, the Commerce Department introduced
preliminary import tariffs on cold-rolled steel from seven
countries, including China. The government is also considering new
duties on three other steel categories, following complaints by AK
Steel and U.S. Steel, among others, that China, Brazil, Russia and
other countries are illegally dumping steel in the U.S.
Chinese officials have denied selling steel into the U.S. at
below cost.
"Resorting to trade remedy measures is not the right way to
solve the problem," said Zhu Haiquan, a spokesman for the Chinese
Embassy in Washington.
U.S. steelmakers are struggling through one of their toughest
cycles in years. AK Steel's shipments fell to 1.66 million tons in
the fourth quarter, down 17% from 2.01 million tons in the
year-earlier period. Sales were down because the company focused on
selling more higher-margin products, reducing the amount of carbon
steel sold into the spot market, AK Steel said.
Overall sales for AK Steel declined 23% to $1.54 billion in last
quarter of 2015 as the average selling price per ton dropped 5.3%
to $929.
William Mauldin contributed to this article.
Write to John W. Miller at john.miller@wsj.com and Joshua
Jamerson at joshua.jamerson@wsj.com
(END) Dow Jones Newswires
March 04, 2016 16:55 ET (21:55 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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