Steel Mills

NLMK USA Sues Feds (Again) Over Section 232 Tariffs

September 17, 2021

NLMK USA has again sued the U.S. government over Section 232 and wants at least $130 million awarded to it for tariffs it claims were “wrongfully extracted” by the Commerce Department.

The steelmaker and slab converter – a subsidiary of Russia’s Novolipetsk Steel – also claims that “secret,” undocumented and “off-record” meetings and communications between Commerce and domestic mills violated its right to due process and fair treatment.

NLMK “The Department’s decisions … were not merely arbitrary but prejudged and preordained,” NLMK USA claimed in a complaint filed earlier this month at the U.S. Court of International Trade (CIT).

At issue are slab exclusion requests filed by NLMK USA in 2020 and in 2021. The steelmaker said domestic mills do not make the material in question or do not make it in sufficient quantities.

“These companies have no interest in supplying this critical feedstock to their competitors,” NLMK USA said in the complaint, noting that one had gone so far as to suggest that the company buy coils from it instead.

NLMK USA seeks exclusions from the steel tariffs, damages equal to the tariffs it has paid – plus interest, or an order instructing U.S. Customs and Border Patrol to refund the tariffs it has collected.

The company said it has paid nearly $130 million in tariffs on imported slabs because its exclusions requested this year and last were denied.

NLMK USA said it and others have filed nearly 1,000 exclusion requests for approximately 41 million tons of slab. “Commerce has denied every single one of those requests” even though it is “literally impossible” for domestic mills to make some of the material the company sought.

Case in point: NLMK USA requires 10-inch-thick and 8-inch-thick slabs to convert into coils. Ten-inch slabs are not available from U.S. mills, and domestic mills have never been able to supply more than 20% of the 8-inch slab required by the company in any given month, per the complaint.

“Accordingly, NLMK must rely in imported slabs, as it has for years,” the company said.

NLMK USA sourced most of its slabs from its Russian parent company until the Trump administration rolled out 25% tariffs on imported material in 2018. The move resulted in the company switching sourcing to Brazil, which is subject to a quota rather than a tariff.

And NLMK USA said Commerce has long been aware of its difficulties sourcing slabs from domestic mills because it has been requesting exclusions from Section 232 tariffs since 2018. Despite this, the steelmaker contends that the department has done nothing more than issue “boilerplate decisions” with “no analysis or reasoning.”

The company said its inability to source slabs has also forced it to “indefinitely forestall” plans to spend $664 million on expansions at its U.S. operations.

NLMK USA claimed U.S. Steel, Cleveland-Cliffs and Nucor objected to its exclusion requests despite being unable to supply the slab NLMK had requested.

The Commerce Department and Cleveland-Cliffs did not respond to a request for comment for this article. A Nucor spokeswoman said the company was “unable” to comment.

A U.S. Steel spokeswoman said the company does not typically comment on pending litigation, but would make an exception in this case.

“We objected to NLMK’s exclusion requests based on our ability to mine, melt, and pour NLMK’s steel slabs in the USA. Other domestic steelmakers made similar objections,” she said. “The Department of Commerce – not U.S. Steel – continues to deny NLMK’s repeated requests, and NLMK has once again appealed Commerce’s decisions.

“We are committed to American manufacturing, American jobs and American steel and will not waiver from that commitment,” she added.

NLMK USA also filed a lawsuit in the Court of Common Pleas of Allegheny County, Pa., seeking to recoup at least $100 million in Section 232 tariffs it claims were unjustly levied against the company.

By Michael Cowden, Michael@SteelMarketUpdate.com

Michael Cowden

Michael Cowden is editor-in-chief for Steel Market Update. Cowden has covered the steel industry since 2007. He specializes in flat-rolled steel but has also reported on steel long products, steel pipe and tube, and aluminum. Before joining SMU, Cowden held reporting jobs at Fastmarkets AMM in Chicago, the Associated Press in Pittsburgh, and the Cambodia Daily in Phnom Penh. He has also worked as a copy editor and in marketing at the University of Chicago Press. Cowden has a BA in English from the University of Chicago and an MSJ journalism from Northwestern University’s Medill School of Journalism. Contact him at michael@steelmarketupdate.com or 724-759-7872.