You might say the first quarter results of America’s sheet steel producers hurt, but did not Hurt So Good, to quote a John Cougar Mellencamp song.
The mills reported either losses or reduced earnings, but the situation apparently was not dire enough that they could file unfair trade cases against a surge in imports. That would have been the good part of the Q1 hurt the mills suffered.
Instead, mill executives suggested trade case filings would take place somewhere down the road.
“What I can tell you is, it’s not a question of if, it’s a question of when,” US Steel CEO Mario Longhi told inquiring analysts on the steelmaker’s Q1 conference call late last month.
Market players are now speculating that petitions for duties to remedy dumping and/or subsidies could come in late July, presumably if second quarter results reveal a deeper level of injury – the level required by the US International Trade Commission – to win duties on sheet imports.
Even though the potential for these trade cases has been on the radar for about a year, it seems possible that a delay in filing them could extend beyond July. In response to queries about the timing of the filings, mill CEOs have said they are consulting with their lawyers AND that they are seeking changes in the language of US trade laws to make it easier to file cases. The latter seems to be a very tall order.
Yet, steelmakers have been on the case for a while. In late March, top US mill executives were in Washington urging steel-state legislators to press for the new language on injury. Longhi testified before the Congressional Steel Caucus that the initial intent of the injury standard, “made abundantly clear that it would be perverse to insist that an American company experience grievous harm before becoming entitled to the full protection of its nation’s laws.”
He said the US must apply the “correct industry standard” for injury, one that does not rely mainly on red ink, and takes into account other indications of injury like reduced net income, cash flow, employment, production, R&D and investment.
Members of the Caucus expressed interest in and support for the steel CEOs’ arguments and asked them for new language proposals. There is also hope that President Barack Obama’s need for trade promotion authority, AKA “fast track” negotiating power for global trade deals, will require some compromise that could include the more user-friendly language on injury.
But the wheels of government turn slowly and if US mills are dependent on the tweaking of the trade law to file their cases, it could be a long wait.
Source: Platts
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