Global Steel Trade; Structural Problems and Future Solutions

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Dumping Cases Outside the United States In April 1999, fearing that Brazilian producers were flooding its market with dumped hot-rolled steel, the government of Argentina imposed a temporary $410 per MT minimum price on all Brazilian noncoated hot-rolled steel while it continued an antidumping duty investigation. In November 1999, Argentina ended its investigation by accepting a proposal of CSN, Usiminas, and Cosipa that established a price per MT on Brazilian hot-rolled steel, and limited imports of the product to 36,000 MT for one year. In 1998, Mexico also found that Brazil dumped “special steel” at margins as high as 37.61 percent. Conclusion In the aftermath of the Asian financial crisis, a protected home market insulated Brazil’s steel producers from upheaval abroad. At the same time, they continued exporting aggressively to maintain overall export volumes, shifting their exports away from ailing economies in Asia to Latin America, Europe and, for certain products, the United States. 53 In order to maintain exports to the United States, Brazilian steel producers cut their U.S. export prices during 1998 in the face of low-priced competition, particularly from Japan and Russia. The depreciation of the Brazilian currency during this same period made exporting even more attractive to Brazilian steel producers, giving them greater flexibility to reduce prices. The confluence of these factors contributed to dramatically falling U.S. import prices at the same time that Brazilian home market prices remained high. As the events of 1997 and 1998 demonstrate all too clearly, a sheltered domestic market provides the Brazilian steel industry a secure, profitable base from which to aggressively increase or maintain export volumes. 106 Global Steel Trade: Structural Problems and Future Solutions
CHAPTER 4 U.S. Response to the Crisis Introduction The response of the Administration and Congress to the U.S. steel crisis has aided the recovery of U.S. steel prices and stimulated a recovery of the U.S. steel industry. The Administration developed a multi-pronged approach to dealing with the surge in low-priced imports focusing on three key elements: • Vigorous enforcement of U.S. trade laws. The U.S. Commerce Department expedited investigations and issued early critical circumstances findings. • Bilateral efforts to address the underlying problems that led to the crisis. The U.S. Trade Representative (USTR) launched consultations with Japan and Korea to work to remedy core structural problems, and the Commerce Department negotiated a comprehensive agreement to address steel imports from Russia. The Commerce Department also agreed to provide technical assistance to Russia and Ukraine, designed to help avoid trade disputes. • Import monitoring mechanisms. Improved reporting of steel import data has aided in early detection of potential import surges. Congress took legislative action to help alleviate the crisis. One effort now signed into law is the Emergency Loan Guarantee Program which will temporarily help provide financing to troubled steel companies unable to obtain loans at reasonable rates. These efforts helped put the industry back on the road to recovery. Following the early critical circumstances determinations in the hot-rolled steel investigations in November 1998, imports of these products decreased significantly—a pattern that was repeated in other investigations where determinations of dumping or subsidies occurred. By mid to late 1999, the decline in unfairly traded imports was having a beneficial impact on the domestic market, with production levels and capacity utilization rising significantly. However, inventory stockpiles of imports and other factors made for lackluster financial results for most U.S. steel producers in 1999, and the employment picture for steel workers has only recently begun to improve. Labor and Industry Seek Relief The United Steelworkers and the Independent Steelworkers unions launched the “Stand Up for Steel” campaign to call attention to the impact of low-priced steel imports on industry profits and competitiveness. In January 1999, steel workers marched on Washington to call for stronger actions against rising steel Chapter 4: U.S. Response to the Crisis 107
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Preface This report is the product
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Contents Preface ..................
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CHAPTER 1 Overview Introduction Ove
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steel prices and still make money (
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History of Steel Trade Friction The
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• Led by “mini-mill” companie
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New Players in the Global Steel Mar
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CHAPTER 2 The U.S. Steel Import Cri
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The Steel Workers’ Perspective on
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1997: A Cloud Behind Every Silver L
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These productivity increases and sh
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In mid-1998, financial crisis hit R
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concerns regarding purchase allocat
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percent from Korea, and 59 percent
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from Brazil, Japan, and Russia. 58
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finished steel prices is very compl
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Department of Commerce determined t
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The Role of Trading Companies Tradi
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Trading companies viewed these atyp
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Weirton, W.V.: A Community Unites i
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CHAPTER 3 Behind the Crisis Introdu
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Competition has been restrained by
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When the Asian economic crisis sapp
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The Russian steel industry has made
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steel is traded between the world
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estructuring of companies and predi
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Under the conditions of introducing
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When prices began to escalate after
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pension payments) reached almost 20
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Page 63 and 64: Trading Companies and the Marketing
Page 65 and 66: these intermediaries, one source es
Page 67 and 68: • Domestic demand for hotrolled s
Page 69 and 70: Although the production facilities
Page 71 and 72: 3.2 Structural Factors and Japanese
Page 73 and 74: apparent in the marked differences
Page 75 and 76: High Domestic Prices The apparent c
Page 77 and 78: outstripped growth in domestic dema
Page 79 and 80: Noncompetitive Domestic Market and
Page 81 and 82: Professor Tilton’s price analysis
Page 83 and 84: The Product Certification System Ad
Page 85 and 86: Three factors contributed to tippin
Page 87 and 88: Collapse of Asian Export Markets At
Page 89 and 90: at a loss. The rationale for pricin
Page 91 and 92: 3.3 Korea’s Steel Industry in The
Page 93 and 94: negotiations for the purchase of Ha
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Page 103 and 104: denominated revenue. For other mini
Page 105 and 106: Rounding Out the Big Three Usiminas
Page 107 and 108: Chapter 3: Behind the Crisis—Braz
Page 109 and 110: Import Licensing System Importers m
Page 111: they were able to cut their prices,
Page 115 and 116: compared to November 1998 and conti
Page 117 and 118: downstream products. The U.S. indus
Page 119 and 120: for by the WTO. The industry argues
Page 121 and 122: Effect of Excess Inventories Much o
Page 123 and 124: coke but also to the large increase
Page 125 and 126: The Role of the Chinese Coke Indust
Page 127 and 128: CHAPTER 5 Reforms and Restructuring
Page 129 and 130: The current dramatic economic and s
Page 131 and 132: While this analysis is largely corr
Page 133 and 134: these four heavyweights will be abl
Page 135 and 136: Government Initiatives to Encourage
Page 137 and 138: U.S. Firm Takes Over Hanbo Steel Pr
Page 139 and 140: ensure that the commercial banks fo
Page 141 and 142: Again, while these efforts hold pro
Page 143 and 144: Brazil-IMF Reform Program Throughou
Page 145 and 146: CHAPTER 6 New Players in the Global
Page 147 and 148: • Be subject to strong subsidy di
Page 149 and 150: Technological Backwardness. China
Page 151 and 152: 100 kg at present. Per capita consu
Page 153 and 154: Current Reform Efforts in the State
Page 155 and 156: wire rod production with an annual
Page 157 and 158: Notwithstanding the negative impact
Page 159 and 160: Media reports and interviews with v
Page 161 and 162: Baoshan is not equipped to provide
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Domestic Consumption In 1998, Ukrai
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two firms, Enakievo and Konstantino
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• Barter. Ukrainian steel compani
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Today India is the world’s tenth
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among steel-intensive sectors, such
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Banks’ Debt and Equity Exposure D
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Tariffs. High tariff rates also con
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new sales growth. 196 By 1998, even
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CHAPTER 7 Avoiding Future Crises In
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propose to monitor additional data
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determination of dumping. In Octobe
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Engaging Korea On Hanbo In late 199
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Korea Korea’s steel industry has
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New Players: China, Ukraine, and In
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government and private sector assis
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Notes Chapter 1 1. Difference of av
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massive layoff data shows 9,550 emp
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also possess weaknesses, which the
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64. Ibid., 145-177. 65. Id. Bethleh
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ITC considered numerous factors. On
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104. Harry Thuedaus was recently re
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Frank Markus, Successes and Failure
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Decrepit Steel Plant in the Urals,
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2. WTO. At the time of this report,
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Among those who have written on thi
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line pipe markets, the European and
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97. Merrill Lynch, “Steel Industr
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chaebol to downside risk. This crea
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provided after 1991 by domestic ban
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61. Catholic University of Korea Pr
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acquired on economically viable ter
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date of publication in printed vers
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Producers of iron ore and coke, the
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production may be shut down by the
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56. U.S. government sources. 57.
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79. World Bank-Korea, 12. 80. Seong
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24. 24. “Hard Times for China’s
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60. “PRC To Further Cut Steel Out
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132. In terms of crude steel produc
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195. The capacity of the new steel
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