U.S. Steel Corp. reported its revenue fell by 34 percent in the first quarter, pointing a finger at foreign steelmakers that dump steel in the United States after getting massive subsidies that American steelmakers don't get.
But American steelmakers have had enough.
U.S. Steel, ArcelorMittal, Fort Wayne-based Steel Dynamics Inc., mini-mill titan Nucor Corp. and other major steelmakers have filed a sweeping trade case against eight countries that are flooding the United States with cold-rolled steel, one of the major products made at Northwest Indiana's mills. They're accusing China, Brazil, India, Japan, South Korea, the Netherlands, the United Kingdom and Russia of dumping steel for as much as 320 percent less than its value. Those are eight of the ten largest importers of steel to the United States.
Domestic steelmakers allege China for instance has 46 different subsidy programs, South Korea has 45 and India has 47. Such subsidies make foreign steel artificially cheaper and are illegal under international trade laws.
U.S. mills filed the massive trade case during earnings season, likely to keep their stock from slipping too low after another dreadful quarter. They've been suggesting another trade case against hot-rolled imports could be coming soon.
"The United States is the most open market in the world. We believe that American manufacturers can compete against any nation's products as long as the playing field is level," U.S. Steel said in a statement. "Unfortunately, other nations have mastered the use of illegal and market-distorting practices to take market share, suppress prices, and harm American producers."
American steelmakers are pursuing anti-dumping and countervailing duties of between 42.28 and 320.45 percent.
Imports of cold-rolled steel from the eight targeted countries have skyrocketed by 120 percent between 2012 and 2014, when it hit 1.75 million tons or about $1.2 billion worth of steel. The imports increased even further year-over-year in 2015, rising to 790,361 tons in May.
Overall, foreign imports have captured nearly a third of the U.S. market after gaining a record 28 percent market share last year, according to the American Iron and Steel Institute. With the foreign competition squeezing prices, cold-rolled coil sunk to $587 per ton in the United States, as compared to $647 per ton last year, according to the Steel Benchmarker price index.
"AK Steel and the domestic industry have been facing a surge of what we believe are unfairly dumped and subsidized imports of cold-rolled steel coming into this country," said James Wainscott, Chairman, President and CEO of AK Steel, one of the companies pursuing the trade case. "The negative impact to our company and to other U.S. producers has been significant in terms of pricing, production, sales and earnings."
Wainscott said during a conference call with investors the cold-rolled steel trade case will ensure free trade is fair trade, and said additional trade cases could be coming.
"As for a third carbon steel trade case covering hot-rolled products, let me just say, stay tuned," he said. "As we speak, data has been gathered and is being assessed. You can expect more to follow on this subject as well as on the possibility of stainless steel trade cases."
With cold-rolled steel, U.S. steelmakers allege Brazil has a dumping margin of 50 percent, Japan of 82 percent, China of nearly 266 percent and Russia of more than 320 percent.
Unfairly low prices will continue, gobbling up more market share, if no action is taken, the steelmakers argued in their petition to the U.S. Commerce Department's International Trade Commission.
"A surge of dumped and subsidized imports of cold-rolled steel has caused severe injury to the U.S. industry with no end in sight," the steel industry's lawyers wrote. "In the absence of trade relief, subject imports will continue pouring into this market, causing substantial harm to U.S. mills and their workers."