Final Thoughts

As a result of this week’s preliminary circumvention ruling, Vietnamese traders here in the United States must pay the Chinese duties on the substrate used to produce cold rolled and CORE (corrosion resistant) steels if they are unable to prove the substrate used was from another country. Here’s the actual ruling: “The Department of Commerce (the Department) preliminarily determines that imports into the United States of certain corrosion-resistant steel products (CORE), processed in the Socialist Republic of Vietnam (Vietnam) from carbon hot-rolled steel (HRS) or cold-rolled steel (CRS) flat products manufactured in the People’s Republic of China (PRC), are circumventing the antidumping duty (AD) and countervailing duty (CVD) orders on CORE from the PRC.” Here’s what it means: that “significant transformation” no longer exists when a hot rolled or cold rolled product is made into galvanized, Galvalume or another corrosion resistant steel. This is huge and can have far-reaching implications for substrate from many other countries whose cold rolled or hot rolled is under antidumping or countervailing duty orders.

I asked a commercial officer at one of the steel mills what might happen next based on this ruling. He commented that perhaps countries like South Korea and Taiwan that ship their substrate to third countries for conversion may need to worry about that substrate then being shipped to the United States. Traders who are sourcing galvanized from conversion mills (like UAE) need to make sure that the substrate is not only not from China, but also not from another country with AD/CVD orders in the United States. It would make sense for the domestic mills (or the DOC) to file against them, as well, to prevent unfairly traded substrate from arriving in the U.S. through a third country.