Bell Shares Vision for Trade Remedies
By Tim Triplett
In the U.S. steel industry’s relentless fight for “free and fair trade,” its customers are suffering collateral damage. Trade cases have helped to raise the price of hot-rolled steel by 50 percent in the past year. Facing a room full of steel buyers at FMA’s annual meeting last month in New Orleans, Steel Manufacturers Association President Phil Bell called for more communication and cooperation among different links in the supply chain. He advocated for “a shared vision of what trade remedies really do and how they can benefit everyone.”
SMA represents minimill steel producers in North America. Along with the integrated mills, U.S. steelmakers have filed more antidumping and countervailing duty trade cases than any other industry. Why? Primarily because China continues to produce far more steel than the world needs. By some estimates, global steel capacity exceeds demand by more than 800 million tons. China and its 3,000 mostly state-owned mills are responsible for much of that overproduction, which they continually dump on the world market. China exported more than 100 million tons of steel to the United States in 2015, roughly equivalent to what the entire U.S. steel industry produces in a year.
Recent trade case rulings have slowed the flow of imports into the United States and allowed prices to rise. Imports accounted for about 23 percent of consumption last year, down from 30 percent in 2015. But they are still a cause for concern, Bell said. U.S. steel mills are running at only 73 percent of capacity, well below the 85 percent utilization rate necessary for healthy returns.
What’s the path forward? First, the Chinese must be convinced to reduce their overcapacity, Bell said. “That’s the 800-pound gorilla. It requires real net capacity reductions.” Second, the industry should seek out new and creative supply chain solutions that provide relief for everyone, not just the mills. “If we get a 300 percent duty, why doesn’t that flow down to everybody in some way? This is something we need to talk about, although it would require changing the trade laws.”
SMA also supports “self-initiation” of trade cases, a concept favored by the Trump administration. Self-initiation would allow the government to initiate trade actions, rather than just the private sector. “It would be powerful to have the government step in. It would also fast track the process, cutting the time industries suffer at the hands of trade violators. And it would be cheaper. Self-initiation is a concept that can help fabricators and small businesses, too,” he said.
Steel buyers have a vested interest in a strong domestic steel industry, even if it means paying somewhat higher prices. As Bell said, “We are all in this together.”