Economic & Industrial

US steel market expects no impact from new rules against Section 232 tariffs

US steel market expects no impact from new rules against Section 232 tariffs
Mining News Pro - The US steel industry has mostly dismissed the recent World Trade Organization ruling against Section 232 tariffs on steel and aluminium imports and does not expect it to have much, if any, impact on the market
  Zoom:

According to Mining News Pro - The WTO on Friday December 9 ruled against the US in challenges brought by Norway, China, Switzerland and Turkey, concluding that the Section 232 tariffs violate WTO rules because they were not imposed “in time of war or other emergency in international relations.”

 
The US government denounced the ruling.

“The United States strongly rejects the flawed interpretation and conclusions in the [WTO report] regarding challenges to the United States’ Section 232 measures on steel and aluminium brought by China and others,” assistant US trade representative Adam Hodge said last week, “The United States has held the clear and unequivocal position, for over 70 years, that issues of national security cannot be reviewed in WTO dispute settlement, and the WTO has no authority to second-guess the ability of a WTO member to respond to a wide range of threats to its security.”

 
Steel industry reactions
Domestic steelmakers and trade associations mostly disapproved of the WTO decision.

“The WTO’s recent decision is one more example of overreaching and further undermines the legitimacy of the WTO dispute settlement system,” Nucor chairman, president and chief executive officer Leon Topalian said.

Section 232 has reduced the “repeated surges” in imports that threatened the domestic industry and incentivized more than $22 billion in investments in new, expanded and restarted steel production since March 2018, according to American Iron and Steel Institute president and CEO Kevin Dempsey.

“Unfortunately, the global steel overcapacity crisis continues to plague steelmakers worldwide, with excess capacity estimated to exceed 562 million metric tons in 2022 — more than six times total steel production in the United States,” he said.

Said Steel Manufacturers Association president Philip K Bell: “At the end of the day, these [WTO] reports do not change anything regarding the Section 232 duties. We are pleased to see the Biden administration’s strong response to this erroneous interpretation and its support of domestic steelmakers.”

Alliance for American Manufacturing Scott Paul noted that “a thriving domestic steel sector is essential to national security. After its implementation, Section 232 led to a resurgence in America’s steel sector, including billions of dollars in new investments and the creation of thousands of new, well-paid jobs. It must stay in place as long as the global steel overcapacity crisis remains unresolved.”

However, the Coalition of American Metal Manufacturers and Users supported the WTO decision and called for the termination of the tariffs.

“US manufacturers have paid billions of dollars in tariffs over the past several years, money that could be used for hiring workers, capital investment and research and development — all critical elements for the manufacturing sector to grow and recover from the challenges of the Covid-19 pandemic,” the organization said. “Section 232 ‘national security’ tariffs on imports of steel and aluminium are damaging the US manufacturing sector, and particularly downstream US steel and aluminum companies that buy these products, whether imported or domestic.”

Indeed, the tariffs have been beneficial for US steelmakers and investors, but not necessarily for buyers who used to rely on imports, according to Fastmarkets analyst Kim Leppold.

“Section 232 opened the door to the new capacity we are seeing in the US market now — giving steelmakers and investors the confidence that their investments would not be undercut by floods of imports — but it has not been a panacea for everyone,” she said. “Struggling facilities still struggled — now competing against domestic suppliers that are more efficient and lower-cost — and buyers, especially of more specialized grades, have had a harder time getting what they need, or had to pay more it. Add to it the effects of a global pandemic on the market and supplies, and it has not been rosy for everyone.”

Market participant reactions
The WTO decision will have little to no impact on the domestic steel market, particularly due to the US government’s refusal to recognize it, market participants said.

The US government may choose to formally appeal the ruling, but the WTO’s lack of power to enforce it means an appeal is not really necessary to prevent it from impacting market conditions, according to an eastern trader source.

“As a country, we’re not in agreement with [the WTO ruling], so it’s not much of a consideration,” a West Coast trader source said. “I don’t see our country doing anything different.”

Said Leppold: “If the WTO cannot force the US to comply with the ruling, then it doesn’t mean much for the market, as it will be business as usual.”

And, noting China’s involvement in the dispute, KeyBanc analyst Phil Gibbs told Fastmarkets: “[There is] always something politically going on in steel, and if China is throwing its hat in the ring against the US, that is going to fall on deaf ears.”

Fastmarkets’ biweekly assessment for steel hot-rolled coil, import, ddp Houston was $640-660 per ton ($32-33 per hundredweight) on Wednesday, December 7, down by 51.49% from $1,300-1,380 per ton in the same week last year. The assessment stood at $595-600 per ton on December 13, 2017.

Fastmarkets’ daily steel hot-rolled coil index, fob mill US was calculated at $34.25 per cwt ($685 per ton) on Tuesday, December 13, down by 58.02% from $81.58 per cwt a year ago. The weekly steel hot-rolled coil index was calculated at $32.62 per cwt on December 14, 2017.


   Short Link:  
Esfahan Mobarakeh Steel co.
HOSCO
khuzestan steel
chadormalu Co.
ghadir neiriz co
IranAluminaJaajarm
ahan o fulad golgohar