Final Thoughts

Many analysts don’t understand that one of the targets of the domestic steel mills were conversion mills who bought hot rolled substrate in order to produce cold rolled and coated products. If those companies have to pay higher prices (or have to buy domestic steel in place of foreign) then the domestic mills win twice. They don’t have to compete against the conversion mills quite as hard and they may get to pick up some hot rolled substrate orders.

Australian mill Bluescope, which owns Steelscape and provides hot rolled substrate to the domestic rolling mill located in Washington state, was hit with a dumping margin of 23.25 percent.

Posco, which supplies hot band to their joint venture mill USS/POSCO in California, received a dumping margin of 7.33 percent which was the highest margin for any Korean company.

I spoke with one of the Turkish mill traders this evening after the announcement was made. They were expecting something but they were surprised at the rate they received. However, they advised me that after they spend a few days to let the market absorb what has happened they will be offering hot rolled steel for future delivery.

The Turkish trader advised that they felt the domestic steel mills tried to use a duty-draw back system that existed in Turkey for imported slabs against them. They vowed they would fight and felt what the U.S. mills did was illegal under WTO rules.

Tata Steel n the United Kingdom was hit the hardest with a dumping duty of 49.05 percent. I haven’t been able to speak to anyone at Tata this evening but my gut tells me the company was a mandatory respondent and they either didn’t cooperate or had missing documents which resulted in their high penalty.

From my perspective and opinion, the dumping margins are higher than anticipated and can be seen as a victory for the domestic steel industry. You can expect the domestic mills to continue to negotiate with the Department of Commerce and ITC for even higher margins when the final announcements are made. Mario Longhi of US Steel said as much during his talk at the Platts steel conference in Chicago earlier this week.

With Nucor announcing a plate price increase this afternoon I would expect a sheet increase to follow within the next couple of days. It will take a few weeks to figure out just how volatile prices will become but I would expect hot rolled to reach $450-$480 per ton or higher by May of this year.

As always your business is truly appreciated by all of us here at Steel Market Update.

John Packard, Publisher