Strip steel coils.
The companies are claiming that Chinese producers are causing material injury to the domestic stainless steel industry by selling their stainless sheet and strip at unfairly low prices, undercutting those of the domestic market.
Antidumping and Countervailing Duty Petitions Against China
Antidumping duties are intended to offset the amount by which an imported product is sold at less than fair value or “dumped” compared to its domestic counterpart. Once the margin of dumping has been calculated, customs agents collect estimated duties in the amount of the dumping from importers at the time of importation.
In this case, the antidumping petition alleges that Chinese producers have been dumping stainless steel at margins ranging from 53.69 to 83.24 percent of the estimated value of domestic products.
Countervailing duties are intended to offset unfair subsidies provided by foreign governments to benefit the production of a particular good. The same four US stainless steel producers are also alleging that the Chinese government has provided significant subsidies to Chinese producers.
Increases in Chinese Stainless Steel Imports
The petitions were filed in response to the increasing volume of low-priced Chinese stainless steel imports over the past three years. According to the petitions, the volume of stainless steel sheet and strip imports from China has increased by 133 percent since 2013.
Moreover, Chinese products accounted for 81.2 percent of the total increase in US stainless steel sheet and strip imports in that time.
Coiled steel is loaded onto a cargo ship.
These petitions were filed hot on the heels of the US Senate passing the Trade Facilitation and Trade Enforcement Act of 2015, more commonly known as the customs bill. One of the bill’s stated aims is preventing the evasion of antidumping and countervailing duty orders—though it’s probably better known for extending the ban on Internet access taxes.
The sentiment also echoes a recent letter sent to the European Commission (EC) by ministers from the United Kingdom and six European Union (EU) countries, urging the EC to curtail cheap steel imports from China and Russia.
“China is financing overcapacity, which leads to overproduction, which leads to selling below reasonable prices, below the cost of production. Nobody can compete with that,” said Milan Nitzschke, spokesperson for Aegis Europe, an alliance representing 30 EU industries.
Expect Domestic Stainless Steel Price Increases
The US companies which filed the petitions are the four principal domestic stainless steel sheet and strip producers:
The petitions were filed concurrently with the US Department of Commerce and the US International Trade Commission (USITC). The former will determine whether to initiate the antidumping and countervailing duty investigations within 20 days, while the latter will reach a preliminary determination within 45 days.
China Shipping Lines cargo ship.
However, we may already be seeing the effects these duties would have if implemented.
AK Steel, one of the four producers which filed the petition, recently announced a base price increase for all stainless steel products, effective March 1, 2016.
The company will reduce the functional discount of its commodity, speciality and pipe and tube sheet and strip products by two percent, while all remaining products—including automotive sheet and strip—will see base price increases of $40 per ton.
North American Stainless, another partner in the petitions, has also announced a price increase based on a two percent reduction to the discount on cold rolled grades in its 200 and 300 series as well as type 430. In addition, the company will be increasing the base price of CMP and discrete plate by $.03/lb.
Although these price increases could be just another consequence of the injuries the proposed duties seek to remedy, they might also indicate that the companies are anticipating a favorable determination from the USITC next year.Follow Ian Wright on Twitter