The Canton Repository

October 7, 2001

Analysts predict steel imports to continue on downward slide 

By PAUL M. KRAWZAK 
Copley News Service

WASHINGTON — Steel imports, blamed by many American steel companies for their troubles, are unlikely to rise much and they may continue to fall, especially if the government orders additional limits on imports later this year, analysts and others in the industry say.

A slowing economy, low steel prices, increases in tariffs on foreign steel and the threat of additional sanctions are likely to hold down imports, they said.

“I think they (imports) will probably decline, but maybe at a lesser rate” than during the past year, said Leo Larkin, an analyst with Standard & Poors.

Analyst Mark Parr with McDonald Investments said damage to the economy caused by the Sept. 11 terrorist attacks “could result in more downward momentum on imports just strictly based on weaker demand.”

After soaring in 1998, 1999 and 2000, steel imports have been declining for about a year. Foreign steel companies shipped 19.5 million tons to the United States during the last eight months, down more than 30 percent from the same period last year.

American steel makers have charged that foreign competitors are subsidized by their governments, allowing them to drive down prices and force U.S. rivals into bankruptcy.

Recent increases in tariffs are putting a brake on imports, said William H. Barringer, an attorney who represents foreign steel companies.

Last month, for example, the government imposed anti-dumping duties on hot-rolled steel from Argentina, China, India and other countries after determining it was being sold below value in the United States.

Anti-dumping duties were imposed on plate steel from France, Italy, Korea and other nations last year and on hot-rolled steel from Brazil, Japan and Russia in 1999, he added.

Another factor is the ongoing investigation into steel imports launched by the U.S. International Trade Commission in June. At President Bush’s request, the commission has been looking into whether steel imports have harmed the
domestic industry.

If the commission determines injury has occurred when it announces its findings later this month, it will recommend a remedy to Bush that could include higher tariffs or import limits.

“If there is a broad-based injury determination made, that could result in some ... deterioration of imports,” Parr said.

Attorney Robert E. Lighthizer, who represents American steel companies that are seeking relief, said imports will not “go up much because prices are still completely in the can and the economy is slowing down. We do not think you’ll see a huge increase in imports in the near term.”

If the International Trade Commission investigation determines that imports have hurt the industry, he added, “then I can guarantee it.”

Barringer doubts the investigation will have any effect, no matter what the decision.

“That’s basically because the dumping cases have really taken care of the problem,” he said. “My view is that the (investigation) is a political game.”

The real reason American steel companies are pressing the trade commission to render an injury finding, he said, is to provide a rationale for government aid. That could include loan guarantees or assistance in financing “legacy” costs, or retiree benefits.

Barringer said the steel companies’ attitude is: “Since it’s imports (that are causing the problem) and there are these foreigners and it’s not competition from a lower-cost domestic producer, you — the government — have to help me.”

While many in the steel industry are seeking relief, others warn that import limits will raise the price of steel and hurt U.S. manufacturers who buy steel.

“We are extremely concerned about the large number of dumping cases that are already in place, the dumping cases that are currently being processed, and the 201 that is being adjudicated,” said David Phelps, president of the American Institute for International Steel. The group represents trading companies and other firms that provide services to importers and exporters.

If more curbs are imposed on imports, he said, “We believe we could go very quickly to a situation where there is an extreme shortage of supply and prices that are noncompetitive for” steel buyers.

Steel imports reached a peak of 41.5 million tons in 1998. That amounted to more than one-fourth of the steel used in the United States.

During the past year, a slowing demand for steel, low prices, U.S. government trade decisions and the trade commission investigation have caused imports to fall.

Steel prices are at their lowest levels in at least 20 years. Hot-rolled sheet, for instance, was selling for $230 a ton in September, down from $340 a ton in May of last year.