Global Steel Trade; Structural Problems and Future Solutions

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on all sales made by India’s integrated producers; essentially, SAIL and TISCO were the major contributors. The proceeds from this levy were then remitted to the Joint Plant Committee (JPC), which then administered long-term loans from the fund at favorable rates. The steel producers’ contributions to the fund were determined by their volume of production, and only those producers that contributed to the fund were eligible to receive monies from it. In late 1998, Essar Steel, Ispat Industries, and Lloyds Steel went to the Finance Ministry to request that the SDF cease giving “concessional rates” to SAIL and TISCO. 165. CMA-India. 166. Interview with Indian investment banking executive by Department of Commerce officials, March, 2000, Mumbai, India. 167. Interviews with Indian banking experts and Indian steel company officials by Department of Commerce officials, February, March, 2000, Mumbai, India. 168. Singdha Sengupta, “Essar, Ispat, Lloyds Cry Foul Over SDF Loans for Steel Majors,” New Standard, Calcutta, November, 13, 1998. 169. CMA-India. 170. “Floor prices for imported hot-rolled spur debate in India.”Iron Age New Steel, June 1999. 171. JPC, Performance Review, 52. 172. CMA-India. 173. See 2000 National Trade Estimates Report on Foreign Trade Barriers, Office of the United States Trade Representative, March 2000. 174. For example, tariffs on steel products in Brazil range from 9 to 19 percent. CMA-Brazil. 175. CMA-India. 176. Note: The programs discussed have been found to be countervailable by the Commerce Department , ITC, Certain Cut-to-Length Carbon-Quality Steel Plate From India, 64 FR 73131 (December 29, 1999). [Hereinafter CTL Plate Final] 177. Competition in Indian Industries, by N. Ravichandrau. 178. On March 31, 2000, the Indian government announced that the SIL program will have been completely eliminated by March 31, 2001, in compliance with India’s WTO obligations and pursuant to a WTO dispute settlement panel determination in response to a complaint (WT/DS90/1) filed by the United States. See Cable: New Delhi 2171 Routine. 179. Ministry of Commerce, Handbook of Procedures, Volume I, April 1, 1997 thru March 31, 2002 (incorporating amendments made up to 13th April, 1998). 180. The receipt and use of a SIL does not exempt a company from having to pay the import duty on the imported item. 181. CTL Plate Final. 182. According to the Government of India, the passbook program was discontinued on April 1, 1997. However, exporters can, conceivably, continue to use credits earned under the PBS program until their credits have been used up or until March 31, 2000. Id. 183. Id. 184. “Probity Sector Update Steel,” Indiainfoline, September, 1999. 185. Id. 186. “Steel-makers form Indofer to Help Boost Usage,” by Rajarshi Roy. India Times, December 25, 1998. 187. Id. 188. Represents the overall index of six infrastructural industries as reported by Steelworld, Indian Steel News Digest, May, 2000. 189. Id. 190. JPC, Performance Review, 11–12. 191. TISCO has spent approximately US$1.9 billion on modernization projects in the last decade. Interview with Indian investment banking executive by Department of Commerce officials, March, 2000, Mumbai, India. 192. JPC, Performance Review, 78. 193. CMA-India, Tables 5 and 12. 194. Not only do the companies employ large numbers of people, they bear a large part of the country’s infrastructure burden. Steel companies have traditionally built entire towns (roads, schools, hospitals, etc.) surrounding their plants, and to a large extent serve as a surrogate for social programs. Moreover, India does not have a social security system, or any other type of old age security. This places a large emphasis on longevity of employment, and makes it more difficult for companies to reduce their workforces without costly measures such as voluntary retirement. 234 Global Steel Trade: Structural Problems and Future Solutions
195. The capacity of the new steel producers is very small relative to that of the large integrated mills. Even if the secondary producers were to export all of their capacity, selling absolutely nothing domestically, these companies would be exporting cumulatively less than 10 million MT. 196. Interviews with Indian steel company officials by Department of Commerce officials, February–March, 2000, New Delhi and Mumbai, India. 197. CMA-India, Table III: Total Exports. 198. JPC, Performance Review, 60. Chapter 7 1. The antidumping statute does not dictate a minimum period for the completion of antidumping investigations. The Agreement on Implementation of Article VI of the General Agreement on Tariffs and Trade 1994 also establishes no minimum time periods for completing investigations. Moreover, Article 6.14 of the Agreement states: “The procedures set out above are not intended to prevent the authorities of a Member from proceeding expeditiously with regard to initiating an investigation, reaching preliminary or final determinations, whether affirmative or negative, or from applying provisional or final measures in accordance with the relevant provision of this Agreement.” 2. Organization for Co-operation and Development, The OECD Review of Regulatory Reform in Korea (Paris, June 2000). Cited in Peter Montagnon, “OECD warns South Korea of ‘complacency’ over reforms,” Financial Times, June 2, 2000. 3. In developing new data programs, potential antitrust concerns must be addressed by avoiding, inter alia, the creation of short-term market forecasts. 4. The International Development Association (IDA) of the World Bank Group provides financing to the least developed countries. The term “IDA-only” excludes those countries that are “blend countries” which are eligible for both IDA and IBRD funds. For a list of current IDA-eligible borrowers, see http://www.worldbank.org/ida/ eligible.htm; Internet. Notes 235
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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
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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 and 238: 60. “PRC To Further Cut Steel Out
Page 239: 132. In terms of crude steel produc
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Global Steel Trade; Structural Problems and Future Solutions

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