Global Steel Trade; Structural Problems and Future Solutions

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96. Id. 97. Id. See also Stefan Korshak, “Dragged Down by the Ruble. Struggle to Save Dwindling Exports to Russia Could Cripple Ukrainian Economy,” The Post, Kiev, Ukraine, October 2, 1998. 98. TACIS. In comparison with Russia, however, Ukraine managed to avoid a major bank crisis and succeeded in achieving certain other mitigating economic accomplishments. 99. Metal Bulletin Research Ltd., and Infomine-Ukraine, 77. 100. Ibid., 66. 101. Levine 102. Metal Bulletin Research Ltd., and Infomine-Ukraine, 65. 103. Ibid., 65. 104. Levine 105. Instituto Brasileiro de Siderurgia (IBS), Anuario Estatistico: Brazil Steel Data Book (Rio de Janiero, May 1999), 7/7. 106. Metal Bulletin Research Ltd., and Infomine-Ukraine. 107. InfoMine, Market Analysis Research of the Ukraine Steel Industry (1999), 25, Figure 6. [Hereinafter Infomine-Ukraine] See also Stefan Korshak, “Red Hot Prospects?” The Post, Kiev Ukraine, February 3, 1998, 2. See also Metal Bulletin Research Ltd., and InfoMine-Ukraine. 108. Metal Bulletin Research Ltd., and Infomine-Ukraine, 66–67. 109. Mikhail Melnik, “Ukraine Close to Resolving Debt Problem,” ITAR/TASS, FBIS, June 15 2000; Vitaly Sych, “Cabinet Offers Right to Manage Steel Plant,” The Post, Kiev, Ukraine December 22, 1998. “The prices for crude materials and production costs are very high, while world prices for steel are very low.” 110. Metals Russia representative Mohammed Zahoor, interview with Department of Commerce officials, February 2000, Moscow. 111. TACIS. 112. Stefan Korshak, “Red Hot Prospects?” The Post, Kiev Ukraine, February 3, 1998, 2. 113. Stefan Korshak, “Russian Investors Eye Donetsk Iron, Steel Works.” The Post, Kiev, Ukraine, February 13, 1998. 114. Stefan Korshak, “Red Hot Prospects?” 115. Id. 116. Id. 117. Ruslan Karpov, “Rada Seeks More Control Over Sell-Offs.” The Post, Kiev, Ukraine July, 22 1999. 118. Alex Berdnick, “SPF wants to eat its lunch its self,” The Post, Kiev, Ukraine, September 9, 1999. 119. Id. 120. Additional factors that inhibit foreign investment is the government’s ability to change conditions for foreign investment at the last minute. See Ana Nicholls, “Ukraine’s Reforms Have Been Sporadic So Far,” available from http://www.Sabre.org; Internet, accessed on October 27, 1999. 121. Nathan Hodge, “Government Throws Kryvorizhstal a Bone. Package of Tax Breaks, Debt Relief Cements Plant’s Reputation as a Government Favorite,” The Post, Kiev, Ukraine, January 28 1999. In early 1999, the government offered the steel giant assistance package that would forgive its massive indebtedness, the second time within a span of three years. 122. InfoMine-Ukraine, 17. 123. Vitaly Sych, “Cabinet Offers Right to Manage Steel Plant”, The Post, Kiev, Ukraine, December 22, 1998. “The prices for crude materials and production costs are very high, while world prices for steel are very low.” 124. InfoMine-Ukraine, 17. 125. Id. 126. “Ukraine-Steel and Mining Sectors-an Overview,” International Market Insight Reports, Financial Times Asia Intelligence Wire, February 11, 2000. 127. Metal Bulletin Research Ltd. and InfoMine-Ukraine. It is too early to determine the overall impact of this new legislation on the steel industry because several of the benefits are tax breaks and, depending on the profitability of the companies, the impact of these benefits may not be significant in the short term. 128. Nathan Hodge, “Government Throws Kryvorizhstal a Bone. Package of Tax Breaks, Debt Relief Cements Plant’s Reputation as a Government Favorite,” The Post, Kiev, Ukraine, January 28 1999. 129. Hodge. 130. Bureau of the Census import data taken from the ITC Dataweb. 131. Id. 232 Global Steel Trade: Structural Problems and Future Solutions
132. In terms of crude steel production, as of 1999. Data available from http://www.worldsteel.org; Internet. 133. Interview with Indian steel company official by Department of Commerce officials, February, 2000, New Delhi, India. 134. Ministry of Steel, available from http://www.allindia.com/gov/ministry/steel/scenario.htm; Internet. “Domestic production of Crude Steel has grown at an annual average compound rate of 6.1% and that of Finished Steel at the rate of 6.8% between 1948 and 1990.” 135. Customized Market Analysis of the Indian Steel Industry (authored by IndiaInfoline, Mumbai, India, February–May 2000), [Hereinafter CMA- India] 136. Government of India, Joint Plant Committee, Performance Review—Iron & Steel, 1998–1999, 3. [Hereinafter “JPC, Performance Review.”] 137. Interview with Indian steel company official by Department of Commerce officials, February, 2000, New Delhi, India. 138. JPC, Performance Review, 108. 139. Interview with Indian banking experts by Department of Commerce officials, March, 2000, Mumbai, India. 140. CMA–India. 141. JPC, Performance Review, 108. 142. CMA-India. 143. Id. 144. India’s federal budget deficit has continued to grow, reaching 5.6 percent of GDP in 1999/00, against its target of 4.0 percent. As a result, the government of Inidia recently appointed a committee to review existing subsidies and recommend ways in which the government can reduce spending. “India Appoints Panel To Review Subsidies, Govt Spending,” Wall Street Journal, March 2, 2000. 145. CMA-India. 146. “Probity Sector Update-Steel,” Indiainfoline, September, 1999. Indiainfoline available from http:// www.indiainfoline.com/steel; Internet. 147. CMA-India, Table VI: Price Movements. These prices represent averages, and do not account for product mix or product quality. See also “ Sector Update,” Indiainfoline, January 2000 148. “Probity Sector Update Steel,” Indiainfoline, September, 1999. 149. Steel Watch, available from http://www.indian-express.com/steel/statistics/19990125/table24.htm; Internet. Selected Southeast Asian countries represented are: China, Hong Kong SAR, Indonesia, Japan, Korea, Malaysia, Phillippines, Singapore, Taiwan, and Thailand. 150. CMA-India. 151. JPC, Performance Review, 32. 152. Probity Sector Update Steel,” Indiainfoline, September, 1999. 153. Indiainfoline,. Also, Interview with Indian Development banking experts by Department of Commerce officials, March, 2000, Mumbai, India. 154. Interview with Indian Development banking experts by Department of Commerce officials, March, 2000, Mumbai, India. 155. “Sector Report,” Indianinfoline. 156. Id. 157. These products, which were previously subject to surcharges of between 2 and 3 percent, are: metallurgical coal/coke, ferro alloys, charge nickel, ferro nickel, and limestone. CMA-India. 158. Interviews with Indian banking experts by Department of Commerce officials, March, 2000, Mumbai, India. 159. Interview with Indian investment banking executive by Department of Commerce officials, March, 2000, Mumbai, India. 160. The financial institutions have instituted new, more stringent conditions for additional financing. In order to obtain additional money (for existing projects), companies must: (1) ensure that the company group will not take on any new projects until the existing steel projects are complete; (2) raise 51 percent of the funds through equity sales; and (3) return funds to the steel companies that had been shifted to other operations in the company group. Interview with Indian banking experts by Department of Commerce officials, March, 2000, Mumbai, India. 161. Interviews with Indian banking experts by Department of Commerce officials, March, 2000, Mumbai, India. 162. Id. See also “Fis agree to finance ongoing steel projects,” The Hindustan Times, November 20, 1998, New Delhi, India. 163. CMA-India. 164. The SDF was established in 1978, and operated through 1994. Under this program, a SDF levy was imposed Notes 233
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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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exports extremely profitable, the b
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Trading Companies and the Marketing
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these intermediaries, one source es
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• Domestic demand for hotrolled s
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Although the production facilities
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3.2 Structural Factors and Japanese
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apparent in the marked differences
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High Domestic Prices The apparent c
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outstripped growth in domestic dema
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Noncompetitive Domestic Market and
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Professor Tilton’s price analysis
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The Product Certification System Ad
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Three factors contributed to tippin
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Collapse of Asian Export Markets At
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at a loss. The rationale for pricin
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3.3 Korea’s Steel Industry in The
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negotiations for the purchase of Ha
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almost 700 percent (Chart 3-31). By
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of 1997 and 1998, when capacity uti
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• Regulating POSCO after privatiz
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approximately 32 percent from 1997
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denominated revenue. For other mini
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Rounding Out the Big Three Usiminas
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Chapter 3: Behind the Crisis—Braz
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Import Licensing System Importers m
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they were able to cut their prices,
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CHAPTER 4 U.S. Response to the Cris
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compared to November 1998 and conti
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downstream products. The U.S. indus
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for by the WTO. The industry argues
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Effect of Excess Inventories Much o
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coke but also to the large increase
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The Role of the Chinese Coke Indust
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CHAPTER 5 Reforms and Restructuring
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The current dramatic economic and s
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While this analysis is largely corr
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these four heavyweights will be abl
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Government Initiatives to Encourage
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U.S. Firm Takes Over Hanbo Steel Pr
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ensure that the commercial banks fo
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Again, while these efforts hold pro
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Brazil-IMF Reform Program Throughou
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CHAPTER 6 New Players in the Global
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• Be subject to strong subsidy di
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Technological Backwardness. China
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100 kg at present. Per capita consu
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Current Reform Efforts in the State
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wire rod production with an annual
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Notwithstanding the negative impact
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Media reports and interviews with v
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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
Page 187 and 188: Korea Korea’s steel industry has
Page 189 and 190: New Players: China, Ukraine, and In
Page 191 and 192: government and private sector assis
Page 193 and 194: Notes Chapter 1 1. Difference of av
Page 195 and 196: massive layoff data shows 9,550 emp
Page 197 and 198: also possess weaknesses, which the
Page 199 and 200: 64. Ibid., 145-177. 65. Id. Bethleh
Page 201 and 202: ITC considered numerous factors. On
Page 203 and 204: 104. Harry Thuedaus was recently re
Page 205 and 206: Frank Markus, Successes and Failure
Page 207 and 208: Decrepit Steel Plant in the Urals,
Page 209 and 210: 2. WTO. At the time of this report,
Page 211 and 212: Among those who have written on thi
Page 213 and 214: line pipe markets, the European and
Page 215 and 216: 97. Merrill Lynch, “Steel Industr
Page 217 and 218: chaebol to downside risk. This crea
Page 219 and 220: provided after 1991 by domestic ban
Page 221 and 222: 61. Catholic University of Korea Pr
Page 223 and 224: acquired on economically viable ter
Page 225 and 226: date of publication in printed vers
Page 227 and 228: Producers of iron ore and coke, the
Page 229 and 230: production may be shut down by the
Page 231 and 232: 56. U.S. government sources. 57.
Page 233 and 234: 79. World Bank-Korea, 12. 80. Seong
Page 235 and 236: 24. 24. “Hard Times for China’s
Page 237: 60. “PRC To Further Cut Steel Out
Page 241: 195. The capacity of the new steel
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