U.S. companies will keep watch on recent increase in steel imports

The Outlook

February 09, 1997|By Sean Somerville

LAST MONTH Bethlehem Steel Corp. forecast intense competition that includes what the company calls unfairly traded imports.

Curtis H. Barnette, Bethlehem chairman and CEO, said the company would "closely monitor" a recent increase in such imports. In November, the U.S. imported almost 3.2 million tons of steel products, reportedly the highest level in a single month ever. Imports in the first 11 months of 1996 surpassed all of 1995.

Stainless steel imports in the first 10 months of 1996 -- the most recent available statistics -- were up about 15 percent from the previous year. The largest source was from countries in the European Union, although the Ukraine and China also showed large increases.

Why are imports rising? Are they unfair? To what extent will they hurt American steelmakers?

Charles Bradford

Steel industry analyst, UBS Securities Corp.

I think complaints about imports are grossly overstated. Clearly, November imports, which are the latest available numbers, were the highest ever recorded. But American steel mills themselves bought between 740,000 and 1 million of the 3 million tons imported.

They made the purchases because they had outages and other difficulties. Most of the mills are not in balance. They have more rolling capacity than they have steelmaking capacity. So in periods of high demand, they buy imported, semifinished steel.

There are only two companies that have filed lawsuits against foreign steel companies -- Geneva and Gulf States.

Other people in the industry don't believe that these guys have a case. There are two things you have to prove in order to win a trade case: Either you have to prove that the foreign guy is subsidized or that he's dumping.

You also have to prove you're injured by an unfair action.

I'm not sure you can prove dumping, because foreign prices are lower than U.S. prices in Europe, China and Latin America. They're not selling below that level here. U.S. steel companies almost always complain about foreign steel if they're not doing well here. Everybody grouses about competition.

And some of this is a little like the pot calling the kettle black. U.S. companies say they make less money on foreign sales.

What do you think the other guys are doing here?

The U.S. is a pretty protected market. For a foreign steelmaker to get steel into the U.S., there's a pretty healthy shipping charge.

Bert Delano

Director of Public Affairs, Specialty Steel Industry of North America

Imports in our business are coming from a number of countries in Europe and a number of Asian countries as well. It affects a number of our product lines, which include stainless steels, alloy tool steels, electrical steels, super alloys and other high technology materials.

There's an incentive to do it, especially because this is a growth market. The only way they can compete is by cutting the price. A lot of the foreign producers can cut the price because they are owned by their countries.

We don't name the companies that we think are trading unfairly. The records show that the products are coming from a whole host of countries. They know we're studying and pursuing trade cases.

It's not the rising dollar that is driving imports. In general, it's a continuation of overcapacity in some of these countries and all of their economies are down. The only nation that will take their products is the U.S.A.

Recently, we've seen indications that they are recognizing that they are hurting themselves in the market, and that their prices are coming more in line with their costs.

F. Kenneth Iverson

Chairman of Nucor Corp., a low-cost steel maker

That problem's been around 100 years. Imports went up during the last part of last year and some of them are coming in very cheaply, especially some from Russia.

The quality is not as good, but some have elected to use it because it's cheaper.

I'm basically against tariffs.

The truth is sometimes a foreign producer can make a product more cheaply than we can.

Bethlehem has always played a role in the protective tariff area. I guess part of it is traditional. And part of it comes from the standpoint that they became so inefficient that foreign producers could produce steel so much more efficiently.

Some of the imports are coming from European countries and some are also coming from Japan and Korea. The cheapest ones are coming out of Russia. All they're trying to do is get cash.

With a higher dollar, it's more advantageous to ship it in. And our prices are pretty good right now.

I think the complaints will go up in the coming months, particularly if demand goes down and competition becomes greater.

If the steel market strengthens outside the U.S., we may see steel imports drop.

Pub Date: 2/09/97

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