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Commerce
Under Pressure to Dump ‘Zeroing’
Various trade groups representing foreign producers and domestic
consumers of metals and other products are calling on the U.S. Department
of Commerce to cease the practice of “zeroing” in antidumping
determinations following the World Trade Organization’s recent
Appellate Body finding that the practice is inconsistent with WTO
rules.
In
response to the WTO’s finding, DOC officials have announced
plans to modify the way they calculate antidumping margins—which
may ultimately affect the prices of imported metals.
The
American Institute for International Steel, Washington, D.C.—which
represents foreign steel producers—is urging the DOC to expand
its proposal on zeroing in antidumping investigations. The DOC proposes
to eliminate zeroing for initial investigations, but only when it
uses the average-to-average comparison. AIIS, however, strongly
recommends that the DOC eliminate all forms of zeroing.
“While
the DOC proposal is a start, it’s not enough,” says Dave
Phelps, AIIS president. “By making this proposal, DOC is admitting
that zeroing is inconsistent with WTO obligations and is poor policy.”
“Zeroing
in antidumping cases artificially inflates dumping margins by selectively
ignoring certain transactions in the dumping margin calculation—that
is, non-dumped transactions that would reduce or eliminate the margin
of dumping,” says Steve Alexander, executive director of the
Con-suming Industries Trade Action Coalition in Washington, D.C.
“In so doing, ‘zeroing’ ends up punishing U.S. consumers
of imported products.”
Foreign
goods that are sold for less than their “normal value”
in the U.S. are considered “dumped.” Often, however, some
transactions occur at prices higher than the relevant normal value.
The DOC’s practice has been to ignore those higher-than-normal
value sales by treating them as “zero margin” sales rather
than averaging them into the calculation, which could reduce, or
negate, dumping margins. The WTO ruling declares that such “negative
margin” sales should be fully counted, thereby offsetting the
“positive margin” sales to arrive at a margin of dumping
for all the sales of a covered product.
Supporters
of the DOC’s traditional method of calculation argue that it
is a fair approach despite what the WTO says. Under the old approach,
the DOC averaged all sales of a product to determine if it was dumped.
Then officials segregated the fairly-traded products from the dumped
products and calculated the dumping margins or duties by averaging
the dumped products only. Failure to “zero out” the non-dumped
products gives credit to companies for obeying the law and allows
them to water down the actual violations, argue zeroing supporters.
Recognizing
that negative comparisons exist is basic to the fairness of the
dumping calculation, counters CITAC Counsel Lewis Leibowitz. “An
accurate measure of dumping can only be achieved when all pricing
comparison—both positive and negative—are factored into
the calculation.”
CITAC
maintains that a different method of calculation is needed to protect
American manufacturers and other consumers from excessive antidumping
duties. “By ensuring that the calculation of dumping duties
is conducted fairly, consuming industries would no longer be hurt
unnecessarily,” says Alexander.
AIIS
points out that there are negative commercial ramifications of zeroing
on U.S. manufacturing. The scope of trade cases covers both commodity
and high-value-added steel products under the same investigation.
Commodity-grade materials traded in these categories are generally
the source of the positive antidumping margins. The higher-value
products are generally imported at premium prices, often because
there is insufficient U.S. capacity to produce them. By considering
both within the same scope, the process eliminates commodity grade
products from trade and imposes higher costs on U.S. manufacturers
who need higher-value products, AIIS claims.
FMA
Coil Processing Workshop Slated for Mexico
The Fabricators & Manufacturers Association, Rockford, Ill.,
will offer a one-day Coil Processing Workshop July 18 at the Sheraton
Ambassador Hotel and Towers in Monterrey, Nuevo Leon, Mexico.
Sessions
will be presented by industry leaders on technology and best practices
topics that include: Slitting Lines, Getting More from Your Cut-to-Length
Line, Slitting Practices and Tooling Considerations, Maximizing
Coil Processing Scrap Value, Strapping and Packaging, Leveling,
Coil Processing Felt Applications, and Tension Roll Setup and Use.
Attendees
are urged to bring their specific challenges to a final roundtable
discussion and receive real-world solutions they can take back and
implement.
Program
content will be geared toward shop owners and managers, production
and setup supervisors, process engineers, quality control professionals
and anyone seeking to improve coil processing line productivity
and management.
This
workshop is being presented in co-sponsorship with Metal Center
News. A continental breakfast will be provided compliments of Herr-Voss
Stamco and a group lunch made possible by ASKO Inc.
A
complete brochure, including Spanish-language version, and registration
are available at www.fmanet.org, or by calling 815-399-8775. Registration
rates are $195 for FMA members and $245 for nonmembers.
AISI
U.S. Steel Producers Sound Import Alarm
The United States imported 3,888,000 net tons of steel in March,
including 2,916,000 net tons of finished steel, according to preliminary
Census Bureau data. Year-to-date imports in these two categories
climbed 32 percent and 27 percent, respectively, compared to the
first three months of 2005, reports the American Iron and Steel
Institute, Washington, D.C.
Finished
imports this March jumped 29 percent vs. March 2005. For both finished
and total steel imports, March 2006 was the highest monthly import
tonnage since November 1998, AISI says.
Based
on a three-month rolling average, finished steel imports are up
30 percent, with notable increases in wire rod (up 91 percent),
structural shapes (up 79 percent), cold-rolled sheets (up 61 percent),
reinforcing bars (up 54 percent), hot-dipped galvanized sheets and
strip (up 36 percent) and hot-rolled sheets (up 31 percent).
The
trend is particularly pronounced among products from certain countries
with a history of unfair trading, claim AISI officials, including
Taiwan (up 139 percent), Turkey (up 116 percent), China (up 86 percent),
South Korea (up 45 percent), Brazil (up 43 percent) and Japan (up
38 percent).
On
an annualized basis, based on imports during the first three months
of the year, total steel imports would hit 44.2 million net tons—an
all-time record, AISI officials report.
Key
products with large increases in March compared to the month before
include line pipe (up 63 percent), hot-rolled sheets (up 40 percent),
hot-dipped galvanized sheets and strip (up 33 percent), and cold-rolled
sheets (up 14 percent).
Products
with sizable year-to-date increases compared to 2005 include reinforcing
bars (up 125 percent), heavy structural shapes (up 95 percent),
galvanized electrolytic sheets and strip (up 53 percent), semifinished
steel (up 50 percent), bars-light shapes (up 48 percent), cut-to-length
plates (up 36 percent), galvanized hot-dip sheets and strip (up
36 percent), cold-rolled sheets (up 34 percent), wire rod (up 31
percent), hot-rolled sheets (up 28 percent) and several pipe products
including line pipe, oil country goods and standard pipe (up 45,
41 and 33 percent, respectively).
“The
steel import data for March and the first quarter underscore the
need for continued vigilance regarding steel trade flows in the
U.S. market,” says Louis Schorsch, president and CEO of Mittal
Steel USA and chairman of AISI. “Such import surges are ultimately
damaging to both producers and to our customers, who rely on stable
sources of domestic supply.
“Most
disturbing is the substantial percentage increase in imports from
countries such as China, where government subsidies are driving
uneconomic capacity increases,” Schorsch adds. “A transformed
and globally competitive
American
steel industry can compete on a level playing field against all
comers, yet unfair and disruptive trade can damage the good prospects
and ongoing, pro-customer modernization plans of even the healthiest
industry. This is why it remains a primary responsibility of the
U.S. government to defend, enhance and enforce our vital trade remedy
laws, both in our markets as well as in international trade negotiations.”
MSCI
Shipments Increase, Inventories Fall
Inventories of steel and aluminum products at U.S. and Canadian
service centers fell in March as U.S. shipments of both metals continued
their long-term rise, and Canadian aluminum shipments rose at a
double-digit rate, according to the Metals Service Center Institute,
Rolling Meadows, Ill.
U.S.
service centers shipped 5.3 million tons of steel products during
March, an increase of 5.9 percent from March 2005 and the eighth
consecutive month of rising year-over-year shipments. For the first
quarter, service center steel shipments totaled 14.7 million tons,
or 4.4 percent more than during the same quarter in 2005.
Steel
product inventories at the end of March totaled 13.5 million tons,
down 13.6 percent from March 2005. At the current shipping rate,
this represents a 2.5-month supply of steel, down 18.4 percent from
last year and 13.2 percent from February 2006.
Aluminum
shipments from U.S. service centers totaled 116,800 tons, an increase
of 6.1 percent from March 2005. First-quarter shipments of 319,900
tons were up 6.9 percent from the 2005 quarter. Aluminum product
shipments have recorded year-over-year increases every month for
the last two years.
Aluminum inventories at the end of March were 344,500 tons, down
5.7 percent from a year ago. At the current shipping rate, this
represents a 3.0-month supply, down 11.1 percent from a year ago
and a decrease of 15.1 percent from February.
Steel
product shipments from Canadian metals service centers totaled 369,800
tons during March, down 1.9 percent from March 2005. First-quarter
shipments of 1.05 million tons of steel were off 0.8 percent from
the 2005 quarter in Canada.
At the end of March, steel product inventories totaled 1.05 million
tons, down 21.8 percent from a year ago. At the current shipping
rate, this represents a 2.8-month supply, a decrease of 20.3 percent
from the end of March 2005 and down 10.5 percent from February 2006.
Canadian
service center aluminum shipments totaled 11,200 tons, up 8.3 percent
from March a year ago. First-quarter aluminum product shipments
were 30,400 tons, 6.6 percent higher than the 2005 quarter. Aluminum
inventories totaled 30,200 tons at the end of March, down 5.3 percent
from a year ago. At the current shipping rate, this represents a
2.7-month supply in Canada, a decrease of 12.5 percent from last
year and down 11.9 percent from last month.
IISI
Finished Steel Outlook
Confirms Strong Growth;
Steel Output Up in March
The International Iron and Steel Institute, Brussels, Belgium, forecasts
that the total use of finished steel products will continue to show
strong growth in all regions of the world. While the main focus
of the growth will be in China, total world steel demand is predicted
to grow 7.3 percent to 1.087 billion metric tons in 2006.
Data
for 2005 highlights the influence of inventory reduction by steel
industry customers, which will turn positive in 2006 as steel companies
replenish stocks. However, with a predicted growth of 5.8 percent
to 1.15 billion tons in 2007, the global outlook for steel demand
remains positive.
The
largest factor in this growth is the influence of China. Even with
a slowing of Chinese steel demand, double digit growth in China
is still predicted at 13 percent for 2006 and 12.1 percent in 2007.
This continued growth demonstrates the essential role that steel
plays in the functioning of modern society.
IISI
forecasts steel use in China will grow 13 percent to 356 million
tons this year, accounting for 32 percent of total steel demand
in 2006. Along with China, India also shows high steel demand growth
with a predicted increase of 8 percent for 2006 and 2007. In other
areas of the world, growth is forecast to be around 4.7 percent
or 33 million tons, followed by reduced growth in 2007 of 2.7 percent.
In
the European Union, apparent steel use fell by 4.6 percent in 2005
reflecting the reduction in steel stocks. However, IISI forecasts
an increase of 3.9 percent in 2006 and 1.5 percent in 2007.
IISI
expects economic growth in the United States to lift apparent steel
use there by 5.0 percent in 2006 and by a further 1.7 percent in
2007.
Growth
in the construction and automotive sectors is underpinning an anticipated
3.2 percent advance in Russia’s steel use in 2006, with an
estimated growth of 1.6 percent in 2007. Similar growth rates are
predicted for the Ukraine.
After
a slowdown of the market in 2005, the steel market in Brazil is
predicted to recover in 2006 with a 9.5 percent increase in steel
use. IISI expects a further increase there of 10.9 percent in 2007.
Figures for the whole of Central and South America are similar with
forecast increases of 7.6 percent in 2006 and 8.7 percent in 2007.
Predictions
suggest that the Japanese market will see growth of 3.3 percent
in apparent steel demand in 2006 with a leveling off in 2007. The
whole Asia-Pacific region will register a 3.9 percent growth in
steel use during 2006 and a 2.1 percent increase in 2007.
The
increasing value being placed upon steel as a material vital to
society’s needs and continued innovation in the production
of new steel grades combine to support the strong growth forecast
for global steel demand, according to IISI.
In other action, IISI reports that world crude steel production
was 99.7 million metric tons in March, 7.0 percent higher than for
the same month of 2005.
China
produced 32.9 million tons in March, 20.1 percent higher than March
2005. Japan produced 9.7 million tons of crude steel, up 0.8 percent
year-on-year. Total production in the Asia region was 51.7 million
tons, 12.7 percent higher than in March 2005.
Total
production in North America was 11.3 million tons in March, up 9.4
percent from the previous month, and 1.2 percent from March 2005.
In
the EU-25, total production in March was 17.3 million tons, an increase
of 4.0 percent over March 2005. France produced 1.8 million tons
of crude steel, up 8.7 percent year-on-year. The United Kingdom
produced 1.2 million tons, an increase of 11.8 percent.
Brazil
produced 2.5 million tons of crude steel in March. This is 10.2
percent lower than for the same month in 2005.
SSINA
Stainless Imports Show Declines
Imports of total stainless steel in the first two months of the
year decreased 6 percent compared with the same period last year,
while U.S. consumption, at 395,495 tons, was down 3 percent, according
to the Specialty Steel Industry of North America, Washington, D.C.
SSINA
reports the following data comparing year-to-date imports and consumption
through February vs. the same two-month period last year:
- Stainless
steel sheet/strip: Imports were 76,024 tons, a 3 percent decrease,
while U.S. consumption was 286,049 tons.
- Stainless
steel plate: Imports were 12,225 tons, a 9 percent increase, while
U.S. consumption was 50,777 tons, a 19 percent increase.
- Stainless
steel bar: Imports were 16,435 tons, a 12 percent decrease, while
U.S. consumption was 34,654 tons, a 12 percent decrease.
- Stainless
steel rod: Imports were 5,385 tons, a 38 percent decrease, while
U.S. consumption was 11,361 tons, a 17 percent decrease.
- Stainless
steel wire: Imports were 7,401 tons, a 3 percent increase, while
U.S. consumption was 12,654 tons, a 2 percent decrease.
- Alloy tool
steel: Imports were 16,980 tons, a 10 percent decrease, while
U.S. consumption and import penetration are not calculable.
- Electrical
steel: Imports were 14,710 tons, an 11 percent decrease, while
U.S. consumption was 67,652 tons, a 5 percent increase.
Imports
of total specialty steel in the two-month period—including
stainless steel, alloy tool steel and electrical steel—were
149,160 tons, a 7 percent decrease, while U.S. consumption was 476,598
tons, a 2 percent decrease. Overall, import penetration was 31 percent,
a two percentage point decrease, according to SSINA.
CBSA
Copper Shipments Off to a Good Start
Two months into 2006, total copper and brass service center shipments
were 13.6 percent ahead of the companion period of 2005, according
to monthly data from the Copper and Brass Servicenter Association,
Wayne, Pa.
Through February, total copper shipments were up 21.5 percent, and
alloy shipments were up 9.1 percent.
Unlike
2005, when many service centers did extremely well in January then
trailed off sharply in February, this year the business level was
more consistent, CBSA officials report. February’s total shipments
were 7.8 percent ahead of those achieved during the second month
of the previous year. The average daily shipping rate year to year
showed a gain of 7.8 percent.
Shipments
were up in February 2006 vs. February 2005 in all copper categories,
led by a 21.9 percent increase in copper plate shipments. Copper
sheet improved 6.4 percent, copper rod 12.4 percent and copper pipe
6.1 percent.
Among alloys, 200 series brass sheet shipments were up 16.0 percent
and 300 series rod and bar were up 13.2 percent, while 200 series
brass plate was down 28.9 percent.
During
the April CBSA convention, executives were generally upbeat about
business conditions, not only for the just completed first quarter,
but also for the April-June period.
In
other action, Denis Brady, vice president of Nonferrous Products
Inc., Franklin, Ind., was installed as president of CBSA at the
group’s annual meeting last month in San Diego.
Elected
to a one-year term, Brady was joined by other newly elected officers:
Vice President Dan Erck, Cambridge-Lee Industries Inc., Reading,
Pa.; Treasurer Robert Lewis, AJ Oster West, Inc., Yorba Linda, Calif.;
and Secretary Joseph Yereb, Guardian Metal Sales, Morton Grove,
Ill.
Elected
to three-year terms as CBSA directors were: Keith Kessler, marketing
manager-brass and copper, Ryerson Inc., Chicago; Frank G. Kevane,
CEO, Copper and Brass Sales, Southfield, Mich; and James Barker,
president, Sequoia Brass & Copper Co. Inc., Hayward, Calif.
Joseph
Walton, president of Williams Metals & Welding Alloys, Wayne,
Pa., was named to the board for a single year, to fill an unexpired
term. Dick Farmer, co-president of Farmer’s Copper Ltd., Galveston,
Texas, was elected to the board for two years, also to fill an un-expired
term.
Retained
as a voting director was Bruce V. Seeger, who has just completed
two terms as the organization’s president. He is president
of Seeger Metals & Plastics Inc., Toledo, Ohio.
Briefs
The Association of Women in the Metal Industries named Lori Masset
of Howard Precision Metals Inc., Milwaukee, the 2005 Member of the
Year at its International Board of Directors Meeting. Masset has
worked in the metals industry for 14 years and served in AWMI for
13 years.
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