SMA President: 'We're Not Getting the Margins We Need'
10/29/2015 - Imports of Turkish-made rebar are poised to capture 25 to 30 percent of the U.S. market this year, handily exceeding the high-water mark, CMC Americas President Tracy Porter said on Thursday.
Porter, who spoke during a Steel Manufacturers Association press conference, said the highest the volume had been was around 10 to 12 percent of market share.
The press conference was called to draw attention to the flood of steel being imported into the U.S. Persistently high volumes are driving down prices and forcing producers to idle capacity and trim workforces.
Despite attempts to balance supply and demand, the situation isn’t easing, said SMA President Philip K. Bell.
“It seems as if nothing we do, whether through the legal route or the operational route, is reversing a trend that continues to get worse."
Bell and Porter were joined by three other industry executives, who said that these should be better times for U.S. producers.
Demand has grown as the economy has recovered from the Great Recession, they said, and some fabricated products without an imported equal are enjoying a record year.
But overall, the producers said they haven’t been able to participate in the recovery because the gains in demand have been gobbled up by imported steel.
Case in point – rebar. And that’s despite a successful trade case against Turkey.
Bell said there is an unusual dynamic at work.
In the past, the mere filing of a trade case was enough to alter behavior. But now, exporting producers are becoming brazen in the face of those cases.
They’re either rolling the dice and betting on a low margin or gaming the review process, Bell said.
“Since our system in the U.S. is retrospective, often playing these things out allows you to gain market share and increase your profits, no matter what the decision comes out to be,” he said.
In the rebar case against Turkey, producers said they believe the margin was too low to be of any consequence.
“We’re winning cases, but not getting the margins we need. We think this a trend that is becoming quite disturbing,” Bell said.
And even in cases where the resulting duty orders are effective, foreign producers are finding ways to skirt them by dumping products elsewhere on the value chain.
As an example, Porter said that imported Chinese billets are showing up in certain places at prices unfathomably low for the distance they had to be shipped. And in some cases, the cost is lower than the raw materials that went into them.
“You can buy billet cheaper than you can buy scrap,” Porter said.
The producers said the flood of imported steel originates in China, and therefore China needs to take some definitive steps to curtain its production.
“Which we’re a little skeptical that they’re going to do,” Bell said.
The press conference was called to draw attention to the flood of steel being imported into the U.S. Persistently high volumes are driving down prices and forcing producers to idle capacity and trim workforces.
Despite attempts to balance supply and demand, the situation isn’t easing, said SMA President Philip K. Bell.
“It seems as if nothing we do, whether through the legal route or the operational route, is reversing a trend that continues to get worse."
Bell and Porter were joined by three other industry executives, who said that these should be better times for U.S. producers.
Demand has grown as the economy has recovered from the Great Recession, they said, and some fabricated products without an imported equal are enjoying a record year.
But overall, the producers said they haven’t been able to participate in the recovery because the gains in demand have been gobbled up by imported steel.
Case in point – rebar. And that’s despite a successful trade case against Turkey.
Bell said there is an unusual dynamic at work.
In the past, the mere filing of a trade case was enough to alter behavior. But now, exporting producers are becoming brazen in the face of those cases.
They’re either rolling the dice and betting on a low margin or gaming the review process, Bell said.
“Since our system in the U.S. is retrospective, often playing these things out allows you to gain market share and increase your profits, no matter what the decision comes out to be,” he said.
In the rebar case against Turkey, producers said they believe the margin was too low to be of any consequence.
“We’re winning cases, but not getting the margins we need. We think this a trend that is becoming quite disturbing,” Bell said.
And even in cases where the resulting duty orders are effective, foreign producers are finding ways to skirt them by dumping products elsewhere on the value chain.
As an example, Porter said that imported Chinese billets are showing up in certain places at prices unfathomably low for the distance they had to be shipped. And in some cases, the cost is lower than the raw materials that went into them.
“You can buy billet cheaper than you can buy scrap,” Porter said.
The producers said the flood of imported steel originates in China, and therefore China needs to take some definitive steps to curtain its production.
“Which we’re a little skeptical that they’re going to do,” Bell said.
