Steel Market Update received the following email from a gentleman who has been in the steel trading business in the U.S. market since the 1970's. With the recent announcement by US Steel/Posco (UPI) of their intention to layoff large numbers of employees due to a slowdown in business due to imports from China. Well, the news hit a nerve with our trading company executive who told us:

"Several publications reported that USS-POSCO, the Posco / US Steel joint venture in Pittsburgh,CA is considering to shut down operations for certain periods of time in the third and fourth quarter. As usual " an influx of low priced flat rolled steel imports from China ' were blamed.

If one is interested in the whole story one should consider the following:

1. When the joint venture was formed under the leadership of then US Steel chairman Roderick the imports of HRC from the Korean joint venture partner were exempt from being filed for dumping as long as the imported HRC was for the sole purpose of being converted into CRC, HDG or Tin Plate at UPI. That's why almost no HRC from Posco arrived in the USA for the last about 25 years. It is unknown whether this agreement still exists but it did.

2. UPI is next to CSI the largest steel importer into the West Coast.

3. Most international trading companies have noticed that internationally Posco has become the most aggressive supplier of flat rolled products, often undercutting every other supplier including the Chinese. While Posco has managed to keep imports into Korea under control which results in a very comfortable and high domestic price level they are bringing down the international price level.

Reminds me of the story with the glass house......"

You are welcome to comment.