U.S. Steel Manufacturers Decry Surge in Imports

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Researched by Industrial Info Resources (Sugar Land, Texas)--A 38% surge in steel imports last year prompted many U.S. steelmakers to ask government leaders to step up efforts to protect them against unfair trade practices.

The American Iron and Steel Institute (AISI) said steel imports in 2014 amounted to more than 44.3 million net tons, up 38% from 2013, while finished steel imports were 33.7 billion net tons, up 36%, according to preliminary U.S. Census bureau data.

The U.S. iron and steel trade deficit increased 56% in 2014 to $28.87 billion, according to the Census Bureau and the U.S. Bureau of Economic Analysis. Imports last year rose to $48.87 billion from $36.63 billion in 2013, while exports remained nearly flat at $18.41 billion.

Industrial Info is tracking 210 active U.S. steel manufacturing, processing finishing and fabrication projects worth $13.38 billion. Forty-five projects, valued at $7.8 billion, are in the planning phases, where factors could increase, decrease or totally eliminate the expected spending; 133 projects, worth $3.5 billion, are under construction; and 32 projects, valued at $2.1 billion, are in the planning stages. U.S. kickoffs this year total 162, with a total investment value of $4 billion.

Nucor Corporation (NYSE:NUE) (Charlotte, North Carolina) President and Chief Executive Officer John Ferriola said during the company's latest earnings conference call that imports had risen to an "unreasonable and unacceptable level."

For related information, see January 29, 2015, article - Nucor Steel to Cut Capital Spending 25% for 2015, U.S. Steel to Increase 55%.

The AISI says its membership represents more than 75% of both U.S. and North American steel manufacturing capacity.

The industry group has complained of alleged unfair trade practices by countries such as China, but it is Canada that is the largest exporter of steel to the U.S., sending 6.05 million net tons to the U.S. in 2014. The AISI said the largest offshore suppliers included: South Korea (5.45 million net tons, up 47%); China (3.19 million net tons, up 68%); Turkey (2.2 million net tons, up 82%), Japan (2.11 million net tons, up 11%) and Russia (1.42 million net tons, up 489%).

U.S. steel manufacturers continue to face "trade challenges from foreign government trade-distorting policies and practices, including in particular China's state-owned enterprises," the AISI said in its 2015 Public Policy Agenda. It continued: "Foreign government subsidies and other market-distorting policies in the steel sector have resulted in massive global steel overcapacity--estimated by the OECD [Organisation for Economic Co-operation and Development] at nearly 600 million net tons, over six times U.S. raw steel production.

"This overcapacity, combined with sluggish world demand and import barriers in other markets, has resulted in high levels of steel imports into the U.S. market in recent years. In 2014, these imports have captured a historically-high percentage of market share and cost thousands of U.S. jobs throughout the steelmaking supply chain."

The steel trade group called for a stronger U.S. trade policy to deal with what it called foreign trade-distorting practices. It applauded legislation to address currency manipulation (the practice of keeping currency rates artificially low to boost exports), noting it comes at a time when the Obama administration is working to open up foreign trade markets.

One of the legislation's authors, Senator Jeff Sessions (D-Alabama), said the Department of Commerce already has the authority to investigate whether currency undervaluation by a government provides an unfair subsidy, but it has repeatedly failed to do so despite repeated requests from U.S. industries. He said the legislation would clarify the circumstances in which the department would be required to investigate allegations of currency manipulation.

According to a recent presentation to the Steel Manufacturers Association by the law firm Wiley Rein LLP (Washington, D.C.), which specializes in trade law, the U.S. steel industry has won some recent trade cases, but much of the situation continues to be driven by flat global demand and growing steelmaking capacities. Other factors that are likely to increase U.S. steel imports include the comparatively strong U.S. market, and the strength of the U.S. dollar, according to the presentation.

Other industry groups have pointed to falling demand for steel pipe by U.S. oil companies as a result in the plunge in oil prices, which in turn may dampen steel imports.

The $1.85 billion, grassroot Bay City, Texas seamless steel pipe mill by Tenaris Tubular Technologies, part of Tenaris S.A. (NYSE:TS) (Luxembourg, Luxembourg), is the largest project being tracked by Industrial Info in terms of total investment value. It would produce 600,000 tons per year of seamless oil country tubular goods (OCTG) Steel Pipe. Completion was set for third-quarter 2016. However, the company is reevaluating the timeline for the project to determine if it should delay construction as a result of current market conditions.

Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, three offices in North America and 10 international offices, is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. Industrial Info's quality-assurance philosophy, the Living Forward Reporting Principle™, provides up-to-the-minute intelligence on what's happening now, while constantly keeping track of future opportunities.