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US starts China-related anti-circumvention probes on Vietnamese steel

Houston — The US Department of Commerce on Monday initiated anti-circumvention inquiries to determine whether US imports of cold-rolled steel coil and corrosion-resistant sheet from Vietnam made from Chinese substrate are circumventing antidumping and countervailing duty orders on China.

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ArcelorMittal USA, Nucor, US Steel, AK Steel, Steel Dynamics and California Steel Industries petitioned Commerce for the investigations in mid-September.

Domestic steelmakers secured high duty margins on Chinese CRC and corrosion-resistant sheet this year, after petitioning for the standard trade case investigations on July 28, 2015, and June 3, 2015, respectively. Chinese CRC is subject to a 265.79% dumping margin and a 256.44% subsidy rate, and Commerce found a 199.43% dumping margin and 39.05%-256.44% subsidy rates on Chinese corrosion-resistant sheet, or galvanized sheet.

Commerce expects to issue its final determinations within 300 days of the publication of the anti-circumvention initiation.

Article Continues below...

US steelmakers petitioned for the investigations of alleged circumvention on the grounds that merchandise subject to duties was being completed or assembled in a third-party country -- Vietnam in this case.

After duty orders on Chinese galvanized sheet and CRC became effective, Chinese CRC and galvanized sheet imports dissipated, while imports from Vietnam surged. US CRC imports from Vietnam totaled 8,686 st in H1 2015, but in H2 2015 rose to 51,018 st. Vietnamese CRC imports grew to 173,094 st in the first half of 2016, according to the petition.

Galvanized sheet imports from Vietnam went from 2,142 st in H1 2015 to 26,582 st in H2 2015, and in this year's H1 jumped 130,986 st.

The petitioners requested that Commerce make a preliminary affirmative determinations with its initiation, but Commerce said the record did not support making a simultaneous preliminary ruling.

Multiple traders told S&P Global Platts that they canceled orders of mainly Vietnamese galvanized sheet for fear that they would be subject to Chinese duties, and they have not offered any new Vietnamese galvanized sheet or CRC. One trader on Monday said he was relieved that Commerce did not make an affirmative preliminary ruling because that would have resulted in suspended liquidation and high effective duty orders.

Commerce said the petitioning steelmakers sufficiently indicated the level of investment in re-rolling facilities in Vietnam is "minimal when compared with the level of investment for basic steel making facilities"; there's little to no relevant research and development happening in Vietnam; the CRC production facilities in Vietnam are "more limited" than those in China; and the value of the processing happening in Vietnam is "a small proportion of the value" of the CRC imported into the US. Commerce said the HRC produced in China represents 80%-90% of the value of finished CRC.

Duferco Steel; Metallia U.S.A and affiliates; Summit Global Trading, a subsidiary of Sumitomo Corporation of Americas; Vietnam Competition Authority under the Ministry of Industry and Trade of Vietnam; and Vietnamese steelmaker Ton Dong A and others have written to Commerce in opposition of the allegations that sheet imports from Vietnam are circumventing US duty orders on China.

--Estelle Tran,
--Edited by Richard Rubin,