Corrosion-resistant steel products
Previously, we saw that in the hot-rolled trade case, Korea, a major exporter, was let off with lighter-than-expected duties. In this part of the series, we’ll look at the duties on corrosion-resistant steel imports to help us understand if the duties will be enough to fend off imports.
The graph above shows the breakup of corrosion-resistant steel imports in 2014. China, which was the largest exporter of corrosion-resistant steel products in 2014, has been slapped with anti-dumping duties in excess of 250%. If we add the countervailing duty also, imports from China will see total duties up to 435%. Such prohibitive duties will essentially lock the US market (DIA) for Chinese corrosion-resistant steel products.
No duty on Taiwan
However, Taiwan, which was the second largest exporter of such products in 2014, has been let off without any punitive duty as the Commerce Department (or DOC) did not make an “affirmative preliminary determination.” As a result, imports of corrosion-resistant steel products from Taiwan won’t attract any anti-dumping duties. Taiwanese products escaped countervailing duties as well.
Lighter duties on Korea
Imports of corrosion-resistant steel products from Korea will attract total duties of ~5%. Korea accounted for ~18% of corrosion-resistant steel imports based on 2014 data. Lighter duties on Korean and Taiwanese steel products, which together accounted for more than 40% of 2014 imports, came in negative for markets. Not surprisingly, steel stocks fell hard after the DOC released the duty structure in December.
Note that corrosion-resistant coated steel products accounted for more than half of AK Steel’s (AKS) 4Q15 steel shipments and 24% of U.S. Steel’s (X) fiscal 2015 flat rolled shipments. According to Nucor (NUE), such steel products account for ~20% of its sheet shipments. Together, Nucor and Steel Dynamics (STLD) form 0.24% of the Vanguard High Dividend Yield ETF (VYM).
Meanwhile, US steel companies managed to get stiff duties imposed in the cold rolled case as we’ll explore in the next part of the series.