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U.S. Sets Countervailing Duties on Cold-Rolled Steel Imports

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The U.S. Department of Commerce ("DOC") has made a preliminary decision in the cold-rolled steel trade case and said on Wednesday that imports of cold-rolled steel from Brazil, China, India, and Russia are benefiting from unfair subsidies from their respective governments and should be subject to countervailing duties. The ruling marks another important step in repelling the tide of these unfairly traded foreign imports.

The DOC will now instruct U.S. Customs and Border Protection to start requiring U.S. importers of these steel products from these four countries to deposit estimated countervailing duties at the time of import.

The DOC has imposed a massive subsidy duty rate of 227.29% on imports from China. This will badly hit Chinese exporters such as Angang Group Hong Kong Co., Ltd., Benxi Iron and Steel (Group) Special Steel Co., Ltd. and Qian'an Golden Point Trading Co., Ltd. who were named "big violators" of U.S. trade laws by the commerce department.

With respect to South Korea, the DOC found that countervailable government subsidies were not more than the de minimus level of 1%. South Korea is one of the eight countries accused of illegally dumping these products in the original petitions.

The biggest U.S. steel producers, in Jul 2015, filed anti-dumping petitions with the U.S. International Trade Commission ("USITC") and the DOC against eight countries (Brazil, China, India, Japan, the Netherlands, Russia, South Korea and the UK) alleged for illegally dumping cold-rolled steel that is used to make automotive products and appliances, among others. Countervailing duty petitions were filed against Brazil, China, India, Russia and South Korea.

The petitions, which were filed by Nucor NUE , U.S. Steel X , AK Steel AKS , ArcelorMittal USA - a part of ArcelorMittal MT - and Steel Dynamics STLD , charge that an influx of subsidized imports of cold-rolled steel from these foreign producers are causing significant injury to the country's steel industry. The petitions also charge that these producers benefit from a number of countervailable government subsidies.

Imports of cold-rolled steel from these countries rocketed 120% between 2012 and 2014. These producers exported over $1.2 billion of cold-rolled steel to the U.S. market last year.

These products are being illegally dumped by foreign steel producers in the American market at unfairly low prices that considerably undercut the prices of U.S. steel makers. 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. Low costs of production have enabled overseas producers (especially China) to sell their products at cheaper rates, leading to an industry-wide price decline.

The USITC, in Sep 2015, concluded that the quantity of imports of these products from the Netherlands was negligible (less than 3% of total cold-rolled steel imports during the 12 months preceding the filing of the trade case) and hence did not cause or threatened to cause injury to the U.S. industry. As such, the USITC terminated the investigation on imports from the Netherlands.

The DOC will next make preliminary anti-dumping determinations with respect to Brazil, China, India, Russia, South Korea, Japan and UK on or about Feb 23, 2015. Expected anti-dumping duties resulting from those determinations are generally added to the estimated countervailing duties.

The commerce department will also verify the factual information submitted by the foreign producers and their governments. This will be followed by an opportunity for parties to submit case and rebuttal briefs to the DOC and to participate in a hearing. The commerce department will issue its final rulings following these events.

The U.S. steel industry remains under the threat of unfairly-traded, cheaper imports in the wake of a stronger dollar. Domestic producers are struggling to cope with falling steel prices as a result of the combined impact of imports and overcapacity in the industry. Price declines are expected to continue if tariffs are not imposed on imports.

Domestic steel makers, in Nov 2015, applauded the DOC's preliminary determination on the corrosion-resistant steel case that was filed In June. The DOC imposed countervailing duties on imports of corrosion-resistant steel from China, India, Italy and South Korea after concluding that these countries are benefiting from unfair government subsidies. The commerce department is expected to make preliminary anti-dumping determinations on this case on or about Dec 21, 2015.

U.S. steel makers, in Aug 2015, also filled anti-dumping and countervailing duty petitions against seven countries accused for illegally dumping certain hot-rolled steel flat products into the American market. The USITC made a preliminary determination on this case in Sep 2015 stating that hot-rolled steel produced in these countries is causing injury to the U.S. steel industry.

Favorable final rulings in these trade cases will ensure a fairer and more competitive market for American steel makers and workers.

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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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