US steel wonders if interventions are enough to keep imports at bay

A couple decades or so ago, Bethlehem Steel, then the USA’s second largest steelmaker, introduced a team of trade attorneys as it was about to embark on another round of massive unfair trade case filings against steel imports.

It wasn’t unusual for mills to have trade case attorneys, either in-house or on retainer, but Bethlehem was making a statement: This is how we roll. International steel dumpers, we’re coming to get you.

It was as though Bethlehem was establishing a new division as it prepared to continuously cast trade litigation. Its efforts and those of other US mills were not wasted. Multiple unfair trade case filings against multiple countries covering multiple steel products overwhelmed the US government, leading to multi-year blanket protection programs like America’s 7.5-year Voluntary Restraint Agreements on global steel trade in the late 1980s and the Section 201 market safeguards of the early 2000s.

Today it’s different. US mills still file trade cases, sometimes massively, but it seems the days when the government would step in to enact comprehensive solutions are over. Even standard remedies such as the establishment of anti-dumping  (AD) and countervailing duties (CVD) against subsidized steel are not as robust as they used to be.

Witness the government rulings so far on the three 2015 dumping and subsidy cases filed against sheet imports: hot-rolled coil (HRC), cold-rolled coil (CRC) and hot-dip galvanized sheet (HDG). Earlier this week the US Commerce Department, usually domestic mills’ friendliest ally in Washington, dismissed the charges against two of three defendant countries in the HRC subsidy case — Turkey and South Korea — and put a relatively small CVD of 7.42% on HRC imports from Brazil. It was just a preliminary determination, but US mills had been used to virtual rubber-stamp treatment at this stage of the investigation.

US mills have a chance to turn the tables and argue for the imposition of stronger CVDs against exporters in all three nations for the final Commerce determination on May 23, but then the case goes to the International Trade Commission (ITC) for its final injury ruling. The ITC traditionally has been a much tougher customer for those seeking duties on steel imports.

Analysts at KeyBanc Capital Markets were underwhelmed by this week’s decisions regarding  CVDs on HRC imports, noting that they were in line with Commerce determinations in the other sheet trade cases. “We expect a muted reaction for the group [of US mill petitioners] . . . considering expectations for uplifting trade case outcomes have largely dissipated following the recent de minimis CVD outcomes for countries involved, and the CVD outcome represents only a portion of an "all in" duty rate calculation as we wait for more clarity in [Commerce’s] preliminary antidumping determination in early March.”

KeyBanc said the more important duty determinations will be for dumping, but even there outcomes have been disappointing thus far. Just before Christmas, Commerce set a preliminary dumping duty of 256% on coated sheet steel imports from China. That whopper was in stark contrast to the provisional dumping duties set for other cited exporters: India (7%), Italy (0-3%), Korea (3-4%) and Taiwan (0%).

US sheet market players openly questioned whether these low preliminary AD duties, if finalized, would be enough to keep these imports out of the market, although additional CVDs of 3-8% on Indian coated sheet and 0-38% against Italian mills could help.

Bank of America Merrill Lynch deemed the late December coated sheet duty determinations “largely disappointing” and James Wainscott, CEO of US sheet producer AK Steel, said the non-Chinese preliminary duty determinations “do not appear to adequately address the dumping that we believe is occurring.”

The third sheet trade case, covering CRC imports, has been similarly disappointing. The ITC excused the Netherlands from the case after a preliminary investigation and no CVD determination was made regarding imports from Korea. CVDs for three other nations in the case, Brazil, Russia and India, were considered low at roughly 4-7%.

China once again got walloped with a preliminary CVD of 227% — so at least there’s that.