Domestic steelmakers push back on Ternium’s 232 exclusion requests

After multiple calls to address a supposed surge in steel imports from Mexico, President Joe Biden revived the 232 tariffs in July. A caveat was added: If the steel products are melted and poured in the US, Mexico, or Canada, they will not be subject to the 25% tariff.

Recall that Ternium Mexico is currently constructing a $3.2-billion, 2.6-million-short-ton-per-year EAF/DRI slab mill in Pesquería, in the northeastern Mexican state of Nuevo León, but melting operations there are not slated to begin until 2026.

The company’s current business model relies on importing semi-finished steel slabs, mainly from sister companies in Brazil, and then rolling them into finished steel products. Shreveport, La.-based Ternium USA then imports those products for further processing and/or sale to US customers.

Exclusion requests

The US Department of Commerce publishes a list of exclusion requests for public inspection. Any individual or organization in the US can file an objection to an exclusion application within 30 days of its posting.

From July through the morning of Sept. 10, Ternium filed 36 exclusion requests for a range of sizes of hot-rolled, cold-rolled, and galvanized coils. The company’s exclusion asks now total 88 so far this year, compared to 87 requests over the prior four years combined, according to the government website. Some requests have been granted over the years, while others have been denied.

All 36 requests since July have a ‘pending’ status, but only 20 still have an open public objection window. For another 14, the rebuttal window is open, giving Ternium the opportunity to respond to any objections received. The surrebuttal window for the two July requests is now closed and decisions are pending.

While some of Ternium’s exclusions have been requested due to “insufficient US availability,” others are because of the melt-and-pour requirements announced in July.

For the latter requests, Ternium points out that the Mexican government declared in July that its agreement with the US ensures that the melt-and-pour requirement doesn’t apply to Mexican steel products made from slabs imported from Brazil.

Exclusion objections

Domestic steelmakers, including U.S. Steel, Nucor, and Steel Dynamics Inc. (SDI), have been quick to respond and push back on Ternium’s requested exclusions. Note that not all the exclusion requests have received objections.

 “U.S. Steel emphasizes that the United States and Mexico have no agreement or mechanism for excluding Mexican-origin steel products that were melted and poured in Brazil from the Section 232 tariffs,” the steelmaker states in its objections.

Nucor also says, “There is no legal basis” for Ternium’s argument about the Brazil carve-out. As such, “This request should be denied,” Nucor states.

USS’ objections further add, “The requestor is a foreign-owned rolling/finishing mill with a business model focused on importing and consuming upstream steel products manufactured by its affiliates in lower-cost markets (e.g., Mexico and Brazil) rather than the United States.”

Ternium is based in Luxembourg and is one of Latin America’s leading steel producers, with 17 production centers in Argentina, Brazil, Columbia, Guatemala, Mexico, and the US.

In their objections, U.S. Steel, Nucor, and SDI state that they are able and willing to produce the products for which Ternium has requested exclusions.

“Such an exclusion would fail to increase the capacity utilization rates of US steelmakers and, as such, undermine the broader national security goals of the Section 232 action,” USS argues.

Ternium could not be reached for comment.