Final Thoughts
Final Thoughts
Written by John Packard
December 6, 2017
As a result of this week’s preliminary circumvention ruling, Vietnamese traders here in the United States must pay the Chinese duties on the substrate used to produce cold rolled and CORE (corrosion resistant) steels if they are unable to prove the substrate used was from another country. Here’s the actual ruling: “The Department of Commerce (the Department) preliminarily determines that imports into the United States of certain corrosion-resistant steel products (CORE), processed in the Socialist Republic of Vietnam (Vietnam) from carbon hot-rolled steel (HRS) or cold-rolled steel (CRS) flat products manufactured in the People’s Republic of China (PRC), are circumventing the antidumping duty (AD) and countervailing duty (CVD) orders on CORE from the PRC.” Here’s what it means: that “significant transformation” no longer exists when a hot rolled or cold rolled product is made into galvanized, Galvalume or another corrosion resistant steel. This is huge and can have far-reaching implications for substrate from many other countries whose cold rolled or hot rolled is under antidumping or countervailing duty orders.
I asked a commercial officer at one of the steel mills what might happen next based on this ruling. He commented that perhaps countries like South Korea and Taiwan that ship their substrate to third countries for conversion may need to worry about that substrate then being shipped to the United States. Traders who are sourcing galvanized from conversion mills (like UAE) need to make sure that the substrate is not only not from China, but also not from another country with AD/CVD orders in the United States. It would make sense for the domestic mills (or the DOC) to file against them, as well, to prevent unfairly traded substrate from arriving in the U.S. through a third country.
This, in my opinion, is a big win for the domestic steel mills.
This ruling will be challenged, especially on hot rolled base, which is then cold reduced and coated (two separate processes). In this case, traders and trade attorneys feel there is “significant transformation” to change the product and thus the origin of the steel.
On another subject, please note we had a boo-boo in Tuesday evening’s issue in the article about Steel Dynamics’ extras. The incorrect G90 extras were referenced. We have corrected the article on our website and the tables in the website are correct.
I got a note from a source in China late today informing me that a correction in pricing has started there. Coking coal dropped 14 percent, iron ore 7 percent and rebar 4.5 percent. Since there are a lot of speculators in the Chinese markets, we will need to watch this closely to see what is going on and if it will carry into countries other than China.
The mood at the HARDI conference was upbeat. Just about every wholesaler I spoke with reported solid business conditions. That is not to say they didn’t complain about competition — especially competition from service centers. They also complained about tight margins. In some cases, we heard that 2017 sales were flat in terms of volume, but much higher in terms of dollars due to the appreciation of the pricing over the course of the year.
I am working on next year’s SMU Steel Summit Conference and I am starting to invite a few core speakers. I am also looking at what I think will be important for manufacturing, distribution, trade and steel mills by the time we reach late August 2018. If you have any ideas of subjects or speakers you would like us to consider, please send me an email at: John@SteelMarketUpdate.com.
As always, your business is truly appreciated by all of us here at Steel Market Update.
John Packard, Publisher
John Packard
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