U.S. to Launch New Chinese Steel Probe
November 06 2016 - 9:00PM
Dow Jones News
The Department of Commerce is expected to launch a formal
investigation Monday into whether Chinese steel companies are
shipping steel through Vietnam to avoid U.S. import tariffs,
according to a person familiar with the matter.
The decision to investigate follows a complaint in September
from U.S. steelmakers, and is an escalation of U.S. efforts to stop
a glut of China-made metal from flooding U.S. markets. The inquiry
could result in new tariffs on steel imported from China via
Vietnam, under rules designed to prevent such a tariff-evading
practice, known as circumvention.
U.S. steel producers alleged in their complaint that Chinese
steelmakers have shipped metal to Vietnam, made enough changes to
it that they could then classify it as Vietnamese and then shipped
it to the U.S. under the lower tariffs charged on Vietnamese
steel.
A spokesman for the Dept. of Commerce declined to comment.
At the heart of the issue is whether the changes—for example
adding zinc to make it corrosion-resistant—fundamentally alter the
steel enough to make it essentially a brand new product that is
"Made in Vietnam."
A letter written to Commerce by lawyers for some U.S.-based
steelmakers says that coating the steel involves "relatively small
investment, adds relatively little value, and adds no components or
mass whatever."
Importers of Asian steel in the U.S., who could end up paying
higher prices, complain that they're being unfairly penalized.
Minmetals, Inc., a New Jersey-based steel trading company that is
opposing the investigation, argued in a letter to Commerce that "a
substantial transformation occurs" when steel is coated.
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. That initially allowed U.S.-based
steelmakers to charge more for their steel, so they grew concerned
when steel from Vietnam started flooding into U.S. ports. And in
September, four of the steelmakers—U.S. Steel Corp., Nucor Corp.,
AK Steel Holding Corp. and ArcelorMittal— filed their petition with
Commerce.
A spokesman for ArcelorMittal said the company was looking
"forward to the outcome of the investigation."
Independent trade data supports what the steelmakers are
alleging. 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 in
the year earlier period. 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
extends beyond steel. Commerce and the Department of Homeland
Security are also looking at whether China Zhongwang Holdings Ltd.,
one of that nation'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.
Write to John W. Miller at john.miller@wsj.com
(END) Dow Jones Newswires
November 06, 2016 20:45 ET (01:45 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
AK Steel (NYSE:AKS)
Historical Stock Chart
From Aug 2024 to Sep 2024
AK Steel (NYSE:AKS)
Historical Stock Chart
From Sep 2023 to Sep 2024