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Vietnam Trade Case: Why US Steelmakers Are Optimistic

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Vietnam trade case

During the week ended December 8, 2017, the US Department of Commerce imposed duties on cold rolled coil (or CRC) and corrosion-resistant steel products from Vietnam.

Steel companies such as Nucor (NUE), AK Steel (AKS), and ArcelorMittal USA (MT) alleged that Chinese steel was being rerouted through Vietnam to evade the strict duties on Chinese steel products. In 2016, the US slapped penalties on CRC and corrosion-resistant steel products from several countries, including South Korea and China.

CRC imports

After these duties, the US market was virtually closed for Chinese CRC and corrosion-resistant steel products given the prohibitive duties. After these duties, we saw an increase in CRC and corrosion-resistant steel products from Vietnam.

This was not the first time that China has been blamed for transshipments. We had seen an increase in OCTG (oil country tubular goods) imports from South Korea when duties were imposed on Chinese OCTG imports. Some steel companies alleged that Chinese steel was used in producing these OCTG products.

US Department of Commerce

After the US Department of Commerce announced the duties against Vietnam, we’ve seen mixed reactions from analysts. Some—including Axiom Capital—do not see the duties as a game-changer given the steep decline in steel imports from Vietnam over the last year. However, Axiom Capital holds a bearish view of US steel stocks such as U.S. Steel (X) and Cleveland-Cliffs (CLF).

US steel producers have issued statements hailing this move. In the next article, we’ll see why US steel producers are optimistic.

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