Analysis

Final Thoughts

September 28, 2016

The complaint filed by the domestic steel mills against China for circumvention of duties by converting Chinese substrate in Vietnam and then shipping it to the U.S. as Vietnamese products goes against trade rules that have been in place for many years. It has been understood that transforming hot rolled into cold rolled and/or galvanized is significant transformation thus changing the HTS codes (Harmonized Tariff Schedule). So, it appears the domestic mills are trying to use the political climate in an effort that the U.S. can overturn (overlook) what has been in place since 1988 and is recognized by 200 countries around the world.

As trade attorney Lewis Leibowitz mentioned in a previous article on the subject, the US Department of Commerce has the flexibility to rule in favor of the domestic steel mills. Most likely, any ruling in favor of the domestic mills (should that happen) would be over-turned by the World Trade Organization.

For the moment, the goal appears to be to diminish the amount of Vietnamese cold rolled and coated coming into the market. At the moment the mills are somewhat successful. I say somewhat because not everyone in Vietnam is fleeing the market.

I would expect orders to the UAE (United Arab Emirates) to increase in the coming months.

A quick note to let everyone know our Steel 101 workshop scheduled for Memphis in November is now officially sold out. We will announce when and where our next workshop will be held soon.

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Yesterday, I spoke with the head of purchasing for a major metropolitan area. We spoke about the difficulties they were having with being able to understand when prices were moving and how to justify price increases. I provided the gentleman some options (including non-SMU products). He sent the following email later in the day, “John, thank you for returning my call and taking the time to speak with me earlier today. I found our conversation illuminating and educational. I’ll briefly research the pricing sources you mentioned (i.e. CRU, PLATTS and TSI) but I’m probably going to need to rely mostly on the BLS PPI index for as the basis of escalation language in the current project I’m working on due to time constraints… I will however give careful thought to the complimentary subscription posted on your web page. Again, I found your site to be very well organized and loaded with useful steel industry information.”

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