Will Anti-Dumping Measures Help the US Steel Industry?

26/05/2015 12:00 - 510 Views

As per recent reports, U.S. Steel (X) is close to filing anti-dumping complaints against imports of certain steel products. The US steel industry has been complaining for a long time about the high penetration of imported steel products. In this part of the series, we’ll analyze the recent trend of steel imports into the US (SPY) (IVV).

Steel imports

The previous chart shows US steel imports on a monthly basis. In the first three months of the current year, US steel imports totaled 10.6 million metric tons, a year-over-year (or YoY) increase of 20%. Imported steel products accounted for one third of US steel demand in March. In contrast, the penetration of imported steel stood at around 25% a year back.

The surge in steel imports is having a negative impact on the US steel industry. U.S. Steel has issued notices under the Worker Adjustment and Retraining Notification (or WARN) act to almost 40% of its North American workforce. Some of these employees could be laid off in the coming quarters if steel market conditions don’t improve. On the other hand, Nucor (NUE) has a practice of not laying off employees even in the most challenging conditions.

Anti-dumping measures

Anti-dumping measures would definitely help the US steel industry. However, the complaints from the US steel companies have to go through the US Department of Commerce (or DOC). Once ratified, the International Trade Commission (or ITC) takes up the matter. In the past, the DOC has turned down several cases from US steel companies.

At times cases cleared by the DOC fail to get through the ITC. Last year, the ITC turned down an anti-dumping duty imposed on electric grade steel products despite the DOC finding a case against such imports. The case was filed by AK Steel (AKS), which is a leading producer of electrical grade steel products.

Investors should closely watch the upcoming anti-dumping complaints that the US steel companies file.

Source: marketrealist.com