Commerce Department Launches Probes Into Chinese Steelmakers
November 07 2016 - 5:20PM
Dow Jones News
The Commerce Department on Monday launched two new
investigations into whether Chinese steelmakers are shipping metal
to the U.S. via Vietnam to evade U.S. import tariffs.
The moves follow complaints made in September by U.S. makers of
steel, who say Chinese mills are making steel and then shipping it
to Vietnam for processing, in effect laundering the steel as
Vietnamese.
Vietnam has emerged as the U.S.'s biggest new source of steel
this year, with imports from Vietnam increasing to 556,000 metric
tons during the first nine months of 2016, from 36,000 tons in the
first nine months of last year, a surge that helped to deflate
domestic steel prices and keep pressure on profit margins in the
U.S.
At the same time, Chinese steel shipments to Vietnam are also
increasing.
Earlier this year, the U.S. imposed new tariffs, as high as
266%, on Chinese steel, a move that allowed U.S.-based steelmakers
to charge more.
With more steel from Vietnam starting to flood into U.S. ports
after the tariffs were erected against Chinese steel, steelmakers
including Steel Corp., Nucor Corp., AK Steel Holding Corp. and
ArcelorMittal, filed a complaint.
They allege Chinese steelmakers have built up networks of
processing companies in Vietnam that are in effect their
subsidiaries.
One inquiry will look at so-called "cold-rolled steel," which is
steel that has been processed and cut for its final customer after
it has been made at a mill and rolled into coils. The other inquiry
will scrutinize corrosion-resistant steel, metal that has been
coated with another metal such as zinc.
The probes could result in new tariffs on steel imported from
Vietnam that is believed to have originated in China, under rules
designed to prevent such a tariff-evading practice, known as
circumvention. They would prop up steel prices in the U.S. The
Commerce Department is likely to decide on the issue within 300
days.
The benchmark hot rolled coil index has fallen to $471 a ton,
from $630 a ton in early July.
The contest 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 07, 2016 17:05 ET (22:05 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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