U.S. Steelmakers Ready China Complaints -- WSJ
September 23 2016 - 3:03AM
Dow Jones News
By John W. Miller
Steel producers in the U.S. plan to file complaints with the
Commerce Department on Friday and Monday, alleging Chinese
steelmakers have been routing metal shipments through Vietnam to
avoid U.S. import tariffs, a lawyer for the steelmakers told The
Wall Street Journal.
The petitions are backed by U.S. Steel Corp., Nucor Corp., AK
Steel Holding Corp. and ArcelorMittal.
The complaints represent a new front in the campaign by American
industry to stem a flood of excessive Chinese metal onto markets,
which has caused factories, mills and smelters in the U.S. and
Europe to lose money, lay off workers and sometimes close.
The complaints allege the Chinese have shipped steel to Vietnam,
modified it, for example adding zinc to make it
corrosion-resistant, and then sent it to the U.S., while paying
Vietnam's U.S. tariff rate, which is much lower than China's.
The names of the Chinese steelmakers allegedly undertaking that
practice will be kept confidential as part of the complaints, Paul
Rosenthal of Kelley Drye & Warren LLP, a lawyer for
ArcelorMittal USA., said.
Under pressure from American steelmakers, the U.S. in the past
year has imposed tariffs as high as 266% on at least four new
categories of steel from China. Those tariffs "helped to restore
balance to U.S. steel markets," said Bill Steers, a spokesman for
Luxembourg-based ArcelorMittal, the world's biggest steelmaker,
which operates large mills in Indiana and Alabama.
The Chinese embassy in Washington didn't respond to a request
for comment.
The Commerce Department will have 45 days to decide whether to
open an investigation. Under rules designed to prevent such a
tariff-evading practice, known as circumvention, the department
could expand tariffs on metal that originates in China and comes
into the U.S. from Vietnam.
The Commerce Department said it couldn't comment on cases yet to
be filed.
Lawyers for the steel producers in the U.S. began hearing
reports of Chinese competitors routing metal shipments through
Vietnam "soon after" they filed a request for tariffs on
corrosion-resistant steel, Mr. Rosenthal said.
"With all the new tariffs, you're going to see more attempts at
circumvention," he said. "And we're going to be very vigilant about
addressing them." China, he added, is "not the only country
attempting to circumvent."
Independent trade data appear to lend credence to the steelmaker
claims. In the first six months of 2016, shipments of steel from
Vietnam to the U.S. increased to 312,329 tons, from 25,756 tons.
Over the same period, Chinese exports of steel to Vietnam rose 46%
to 6.3 million tons from 4.3 million tons, according to data firm
Global Trade Information Services.
The fight to contain the market glut of metals from China
doesn't just concern steel. The Commerce Department is also
investigating claims that China Zhongwang Holdings Ltd., one of
China's biggest aluminum producers, improperly shipped aluminum
through Mexico and transformed the metal at a plant in New Jersey
to avoid U.S. import tariffs.
China Zhongwang has denied any improper activity.
China aggressively has built up its metal-making capacity under
its industrialization push. It now produces and consumes roughly
half the world's key industrial commodities: steel, aluminum,
copper and zinc.
As the pace of its economic growth has slowed of late, China has
found itself with excess capacity and has exported more to keep its
plants going. In the first six months of 2016, Chinese steel
exports rose 11% to 51.6 million tons, according to GTIS.
Despite promises to curb output, Chinese steelmakers appear to
be increasing output. Chinese steel production rose 3% to 68.6
million tons in August from the same month a year ago, according to
the World Steel Association.
Write to John W. Miller at john.miller@wsj.com
(END) Dow Jones Newswires
September 23, 2016 02:48 ET (06:48 GMT)
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