Shares of a number of U.S. steelmakers moved north last Friday after the U.S. International Trade Commission (“USITC”) confirmed the imposition of anti-dumping orders against six countries accused for illegally dumping cheap steel products into the U.S. market. The ruling marks a much-needed triumph for U.S. producers struggling to defend their turf from a flood of cheap steel from foreign manufacturers, especially from South Korea.
In a big move, the USITC, on Aug 22, voted to levy anti-dumping duties on imports of Oil Country Tubular Goods (:OCTG) products on six of the alleged nine nations including South Korea. These countries accounted for over 90% of the unfairly priced imports that flowed into the U.S. market last year, placing thousands of jobs at risk. The USITC spared Thailand and the Philippines in its final voting while Saudi Arabia was dropped from the case earlier.
The move comes after the final verdict of the U.S. Department of Commerce (“DOC”) released last month. U.S. steelmakers cheered the verdict of the DOC which found that intense dumping of subsidized OCTG products by South Korea and other 8 countries has caused significant harm to the American market and workers. The positive decision of the DOC allowed the OCTG trade case to move ahead to the USITC hearing.
OCTG products, which play a pivotal role in building and maintaining the nation’s energy infrastructure, are being illegally dumped at unfairly low prices in the domestic market which happens to be the most open and attractive market in the world and a hotspot for overseas steelmakers looking to capitalize on the country’s booming shale oil and gas industry.
The DOC found significant unfair trade margins against most of OCTG imports from South Korea and other countries and levied duties (as much as 118%) on OCTG imports from these nations. The DOC, last month, noted that South Korean producers would be subject to tariffs of up to 15.75%. South Korea exported OCTG worth $818 million to the U.S. last year, according to the DOC.
As a result of the USITC ruling, the DOC can now go ahead with the issue of countervailing and anti-dumping duty orders on OCTG imports.
Shares of U.S. Steel ( X), which was one of the petitioners in the trade case, rose 2.7% to close at $37.81 last Friday. Its compatriot AK Steel’s ( AKS) shares shoot up around 6.7% while Universal Stainless & Alloy Products ( USAP) and Northwest Pipe ( NWPX) saw a roughly 2% and 1.2% gain, respectively. Steel Dynamics’ ( STLD) shares were up around 0.7% whereas Nucor ( NUE) closed the day flat.
U.S. steel producers and United Steelworkers union have been actively pressing Congress to stop unfair trade practices and enforce America’s trade laws so as to maintain the country’s economic and national security. The prime concern against which they raised their voices was the alarming inflow of imported OCTG products into the American market. Domestic steelmakers has suffered heavily due to a surge of cheap steel imports, reflected by declined orders, idling of mills and jobs losses.
U.S. steelmakers remain battered by challenging steel market fundamentals. The domestic steel industry continues to contend with oversupply, which in addition to high levels of steel imports, have been pressurizing prices and prospects of steel producers.
Nevertheless, the victory in the anti-dumping case is expected to ensure a fairer and more competitive OCTG market for domestic steelmakers and workers as well as bolster the nation’s steel business.
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