Steel Products Prices North America

Steel Import Monitoring and Analysis System (SIMA)

January 9, 2014

At the end of 2013, David Phelps retired as president of the American Institute for International Steel (AIIS) and has just joined Steel Market Update as a contributing writer. Mr. Phelps will be writing about topics concerning the steel industry – particularly in the area of imports and foreign steel. Steel Market Update had a discussion with David regarding the U.S. Department of Commerce system of licensing foreign steel imports and we believe the system is misunderstood and needs some explanation. In the article below Mr. Phelps provides the history and his analysis of the steel import licensing system.

In conjunction with the Section 201 case initiated in early 2002, at the urging of the domestic steel industry, the Bush Administration proposed that the US require licenses for all steel mill product imports. There began a process for determining how that system would work. The domestic steel industry’s stated purpose was, of course, to have the government develop a system that would allow them to have an early warning system for imports so they could – surprise surprise – file trade cases faster. Their proposals for how the system would work would have, also not surprisingly, created a new impediment to importing steel.

Fortunately, the Bush Administration made it clear that while they wanted to develop a system, it had to be automatic, no cost and not an impediment to trade. AIIS, with all its expertise, played an important role in the development of the system we now have.

So, how does it work and what does the system tell us (and not tell us) on a monthly basis?

Every steel mill product import as well as some downstream products are required to have a license number in order to file the entry summary documents.
The license can be obtained as much 60 days prior to the expected date of entry of the steel product, or as late as 10 working days after the arrival of the import – at the same time that the other entry documents are required to be filed.
The process is fully automated and the government maintains a website for the process. http://enforcement.trade.gov/steel/license/

The SIMA system and resulting data can be accessed via that website. There are nearly 6,000 registered users of the system and there is a wealth of data on products, tonnages and value from each importing country. Many in the importing community believe that even given that the burden of obtaining the license falls on them, the system provides useful marketing data better than the normal import data that emanates from the government. Undoubtedly, the domestic industry and their trade lawyers also monitor the data as well for their own trade case-related purposes.

I have been many times asked to comment on the most recent summary license data, what do the data suggest about import levels, etc., but I have always demurred to comment other than to note that the data could show trends. Why? It is simple.

A license is not necessarily an import, certainly not necessarily an import in the month that it is requested and counted as such. A license could be requested in October for an import expected to arrive in December, for example. All of that shipment might or might not be sent on the same ship, might arrive early or late, or the tonnage might change due to issues with the producing foreign mill. A license therefore counted in October for an arrival in December is one iteration. Of course, a license can be obtained for an import expected 45 days, 30 days or closer to the actual expected date of import. Also, an import license could be cancelled or changed for any number of reasons – after all, there is no cost for a license other than internal or customs broker processing costs.

Finally, there are the licenses obtained at the same time as the summary import documents are filed, 10 working days following the importation. That means that those license data will coincide with the actual import data, but of course, the 10 day delay means that there are, in the normal course of business, imports that arrive in one month that are counted in the next.

The bottom line for SIMA data is that the data are useful for those following the detail data of what is being imported from which countries, values, etc. but can be deceiving as to which month the import will actually be part of the domestic supply. For SIMA data users, caveat emptor.

-David Phelps

PS: The SIMA website also includes data on US exports of steel, but those are the same data that are otherwise available in the government data base, published apparently for convenience purposes. No licenses are required for steel exports from the US.

SMU Note: David Phelps is the immediate past President of AIIS. He came to AIIS in 1996 and was responsible for helping the organization fulfill its mission to support free trade and economic growth through competition in the steel trade, and to oppose protectionist barriers to trade, including tariffs, non-tariff barriers and subsidies. He retired at the end of 2013 and is currently consulting on steel and steel trade issues.

Prior to joining AIIS, Mr. Phelps worked as a customs and steel products consultant. He was also an officer at the American Iron and Steel Institute (AISI), where he was employed for nearly 15 years. His areas of responsibility were customs, transportation, and public policy issues affecting steel market development programs.

Mr. Phelps holds an MA in economics from Virginia Polytechnical Institute and a BS in economics from George Mason University in Virginia.