BIG
VARIATIONS IN STEEL PRICES WILL DRAW ASIAN EXPORTS TO NORTH AMERICA
AND EU
Trade lawyers from Washington to Brussels
must be rubbing their hands in anticipation. Legal actions against
so-called “unfairly traded” imports look like being a big growth
area in the steel industry for the next few months.
US producers of wire rods this month fired
the first round. They filed unfair trade cases against imports from
China, Turkey and Germany, asking their government to impose dumping
margins as high as 330 percent. Until recently, the steel companies’
considerable profits had prevented them filing such claims, as they
would be unable to argue that they had suffered injury – one of
the criteria needed to prove dumping under WTO rules. But now, with
mill profits falling, their lawyers will argue that the declines
have been caused by “dumped” or “subsidised” imports.
Steel makers in Europe might be the next to
consider sanctions. They are looking to gather evidence against wire
rod imports particularly from Brazil, as well as flat product
imports from other countries. Dumping complaints may follow.
Elsewhere, Indian steel companies are contemplating legal action
against what they see as unfair imports.
Wide disparities in steel prices in
different parts of the world are helping to fuel the dumping claims.
Prices in North America are a lot higher than the rest of the world,
and values in Europe are above those in Asia.
In North America, the MEPS
average all products transaction price is $US651 per tonne this
month. 18 percent higher than the EU average price of $US552 per
tonne, and a massive 37 percent above Asia’s figure of $US474 per
tonne.
With such high prices available in North
America, it is surprising that only relatively modest amounts of
foreign supplies are being sucked in. US steel imports in the first
nine months of this year were, in fact, 8 percent below the same
2004 period. But September figures show sharp month-on-month
increase for flat rolled products – hot rolled sheets were up 30
percent, coiled plate 44 percent and electro-zinc coated sheet 29
percent.
The price differences between North America
and the rest of the world have been magnified by the increase in the
value of the dollar against the euro and other currencies, which
makes the USA a still more attractive market. Since July, North
American prices have moved up 16 percent, EU values by more than 7
percent and in Asia a drop of 7 percent has been recorded.
These discrepancies will lead to a
heightened state of tension in international steel trade, which will
keep the lawyers busy in the months to come.
