Trade Cases

Steel Users Oppose Ban on Chinese Steel Products

Written by Sandy Williams

US Steel has spearheaded an attempt to exclude all Chinese steel products from the U.S. market. But as is usually the case with drastic actions, there are a number of opponents to the move.

Companies that use foreign steel in their products have asked the U.S. International Trade Commission to throw the complaint out. Steel users cite a range of reasons from quality and quantity issues to loss of competitive steel pricing.

The Pittsburgh Post-Gazette quoted several steel users who are anxious to see the Section 337 request buried. Excerpts from that article are repeated here:

Daniel Cosio of Ball Metal Food Container in Westminster, Colo., told the ITC that banning Chinese steel imports would lead to “short supplies, higher prices and fewer alternatives for companies like ours.”

“The products we buy from [China] are not available from U.S. producers in the quality and quantity provided by the [Chinese],” Mr. Cosio wrote. “The level of service that [Chinese producers] provide is superior to the service provided by domestic steel producers.”
Michael Papera, who purchases steel for Allstate Can in Parsippany, N.J., told the agency that the steel his company buys from Baosteel of China “is by far superior to anything purchased domestically in the way of shape and performance.”

Baosteel is one of the Chinese producers targeted by U.S. Steel.

Neal Lux, president of Global Tubing, said the Dayton, Texas, company worked with an unnamed U.S. steelmaker to provide steel used to make tubing for the energy industry.

“The results were disastrous,” he wrote.

Mr. Lux said Global Tubing paid more than $2 million to settle damage claims filed by companies that purchased the tubing and was stuck with another $1.9 million in inventory.

Baosteel, the 2nd largest steel maker in China, has challenged the complaint filed by US Steel to block Chinese imports.

“Never before has a single company sought to use this agency to erect what would be a total blockade of steel trade from an entire country,” wrote Baosteel America in a May 11 filing with the USITC.

Baosteel said that charges of stolen technology, transshipment, and anti-competitive pricing, even if true, should be addressed by the government officials not through a trade process intended for patent infringement cases. Baosteel said if US Steel prevails in its petition, it “would have profound and long lasting effects” on economic relations between the U.S. and China.

Hunan Valin Steel, also named in the trade case, said US Steel’s actions are “not a campaign against individual private entities but against the Chinese government itself.”

The American Iron and Steel Institute, which has been vocal in its opposition to market economy status for China, said a ban on Chinese steel products would allow domestic producers “to increase production and employment in the steel industry in the United States, and would encourage additional investment in the domestic steel industry,”

Economic war

Overwhelming volumes of low priced steel products and China generated steel overcapacity have been blamed for the downturn in the US steel industry. China announced plans to curtail steel production but exports of steel products continue to rise on a year over year basis. From January through April steel exports from China to the world increased 6.4 percent YoY to 9.1 million tonnes.

According to The China Iron and Steel Association, the U.S. is not a main market for steel imports, receiving less than 2 percent of China’s steel exports, while Asia accounts for 70 percent and the EU less than eight percent.

Last week Lourenco Goncalves, CEO of Cliffs Natural Resources remarked to reports at a steel industry association meeting, “This is war. This is not trade. China is waging economic war. We ought to recognize that and act accordingly.”

The economic war with China concerns much more than steel and goes both ways. The Obama administration has pressed 12 challenges against China with the World Trade Organization regarding tariffs imposed by China on U.S. exports ranging from agricultural products to technology. Most recently a challenge was brought to the WTO on poultry exports to China from the U.S.

China has brought its own complaints about the U.S. to the WTO. Last week Beijing told the organization that Washington is failing to implement WTO rulings on punitive U.S. tariffs on Chinese products. The WTO ruled in favor of China on complaints regarding tariffs on a 15 products that included diverse range of goods including thermal paper, steel sinks, lawn equipment, solar panels, wind towers and steel pipe used in the oil industry.

The deadline for implementing that ruling and recommendations by the WTO expired on April 1, 2016.

“By disregarding the WTO rules and rulings, the United States has severely impaired the integrity of WTO rules and the interests of Chinese industries,” The Chinese Ministry of Commerce said in a statement.

Final AD/CVD determinations are due in the next few weeks and months on trade cases initiated by the U.S. on cold-rolled steel, galvanized and cut to length steel plate imports from China.

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