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AK Steel Lauds ITC Ruling Against Hot-Rolled Steel Imports

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AK Steel Holding CorporationAKS welcomed a preliminary determination made by the U.S. International Trade Commission ("ITC"), stating that hot-rolled steel produced in seven foreign countries is causing injury to the company and the domestic steel industry. This preliminary injury determination by the ITC indicates that all cases against imports of hot-rolled steel from the seven named countries would proceed.

On Aug 11, 2015, AK Steel, along with other domestic steel producers, filed anti-dumping and countervailing duty petitions with the ITC and the U.S. Department of Commerce ("DOC"). The petitions accused unfairly traded imports of hot-rolled steel from Australia, Brazil, Japan, the Netherlands, South Korea, Turkey, and the U.K., of causing material injury to the domestic industry.

While anti-dumping cases were filed against all the seven countries, countervailing duty petitions were filed against only Brazil, South Korea and Turkey. These cases will now proceed to the DOC so that it can be decided whether the U.S. anti-dumping clauses are being violated by foreign producers as they sell their products at lower than fair value in the U.S. Additionally, it will be determined whether foreign manufacturers are breaching U.S. countervailing duty law by selling merchandise that gains from unfair government subsidies.

The petitions, which were submitted in response to surging volumes of cheap imports of hot-rolled steel flat products from the alleged seven countries since 2012, also charge that producers in Brazil, South Korea and Turkey benefit from a number of countervailable subsidies provided by their respective governments. The petitions identified 33 different subsidy programs in Brazil, 41 in South Korea and 17 in Turkey.

Imports of hot-rolled steel flat products from these countries have soared 73% between 2012 and 2014. The import rush continued this year, surging a further 54% year over year during Jan-May 2015. These imports have also captured an increasing share of the U.S. market, thereby hurting production, shipments, selling prices and margins of U.S. steel makers.

The DOC will evaluate appropriate dumping margins to offset the amount by which the products are sold below the fair value and subsidy rates to offset the amount of benefits from unfair government subsidies. The DOC will further collect the estimated countervailing and anti-dumping duties per the scheduled dates of the determinations, which are likely to be on or about Nov 4, 2015 and Jan 18, 2016, respectively. However, if the foreign producers try to increase shipments to the domestic market prior to the DOC's preliminary determinations in an attempt to counter this situation, anti-dumping and countervailing duties can be imposed retroactively, beginning 90 days prior to the preliminary determinations.

According to James L. Wainscott, Chairman, President and CEO of AK Steel, this decision by the ITC was a significant move to tackle the issue of unfairly traded imports of hot-rolled steel. Hot-rolled steel is used in appliances, automotive products, heavy machinery, machine parts, commercial construction and transportation equipment.

Zacks Rank

AK Steel currently carries a Zacks Rank #3 (Hold).

Better-ranked stocks in the basic materials sector include Fortescue Metals Group Limited ArcelorMittal MT , ThyssenKrupp AG TYEKF and Asanko Gold Inc. AKG , all carrying a Zacks Rank #2 (Buy).

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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