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. Last Updated: 07/27/2016

Russia Accused of Dumping Steel




Russian steel, suddenly cheap in dollar terms thanks to the ruble devaluation, is pouring into Western markets, and U.S. and European steel companies are demanding that their home governments protect them with hefty import duties.


Prices for steel in the United States have dropped sharply, from $480 a ton last year to $320 in July. Russian steel sells for far less, about $263 per ton.


U.S. steel manufacturers say that if foreign steel held just 4.3 percent of the U.S. market in 1995, today Russian manufacturers alone hold about 7 percent, and foreigners all told a whopping 28 percent.


Now the August ruble devaluation is driving the price of Russian steel to new lows f at a time when U.S. companies, which have already eliminated hundreds of thousands of jobs over the past two decades, are again being forced to make cuts.


U.S. steel companies have called upon the U.S. Commerce Department and the U.S. International Trade Commission to impose hefty duties on steel from Russia, Japan and Brazil f three nations whose currencies have eroded in value in recent months.


"As I look at this industry today, we are in an absolute crisis," said Paul Wilhelm, president of U.S. Steel Group, in remarks quoted by Reuters. "In my 35 years in the business I have never seen such unprecedented levels of imports or the cutthroat prices we are seeing."


The U.S. Commerce Department is expected to make a preliminary ruling on whether Russia is unfairly dumping steel on the U.S. market sometime in the next few weeks.


The U.S. steel lobby has ratcheted up the pressure with a national advertising campaign, a full-court press in Congress and a public call on President Bill Clinton to step in with executive action.


Should the United States sanction Russia, the European Union is likely to follow suit, said Christian Mari, a spokesman for Eurofer, the association of European steel manufacturers.


"We are worried that when Russia will no longer be able to sell on the U.S. market it will redirect its sales into the European market," Mari said.


In dozens of other countries f among them Mexico, Canada, Argentina and Brazil f steel companies are also pushing their governments to introduce quotas or other protectionist measures, said Alexei Ruzhin, head of the department that handles trade arguments in the Russian Trade Ministry.


If the U.S. and European markets close their doors to Russian steel, it will be a sore blow. Russia's largest steel plants export almost 75 percent of their product, most of it to North America and Europe.


"The consequences [of U.S. and European trader barriers] would be catastrophic," said Vladimir Kushnaryov, head of a Magnitogorsk Metals Plant bureau that deals with anti-dumping disputes.


"We would have to dramatically reduce our production and fire our staff. More than half of Magnitogorsk would be affected and no one can predict the social consequences," he said.


Magnitogorsk Metals employs about 55,000 people and is one of the three biggest Russian steel companies. Together the other two f Novolipetsk Metals Plant, which employs 40,000, and Cherepovets Metals Plant, which employs 45,000 f it accounts for 80 percent of all Russian steel exports.


To hit these steel plants with anti-dumping measures, the U.S. Commerce Department would have to conclude that they were charging less for steel sold abroad than for steel sold at home; or, more murkily, that the companies were selling it for "less than fair value."


A "fair value" for steel imports can be determined, according to a U.S. Commerce Department web site, on the basis of "the weighted average of the exporter's home market prices, on prices to third countries, or on a constructed value during the period of the investigation" f in other words, more or less at the U.S. government's discretion.


According to Ruzhin of the Russian Trade Ministry, U.S. steel producers are claiming that Russian producers are charging twice or three times as much for steel sold abroad as they are at home.


"These figures must have been simply plucked out of the air," he complained.


He said that the average Russian export price of $263 per ton of hot-rolled steel is higher than that of steel sold within Russia.


Russian steel manufacturers agreed.


If Novolipetsk Metals was selling a ton of hot-rolled carbon steel in July on the domestic market for 1,446 rubles ($229.50) f not too far from the average price of exports f the same ton of steel for the same ruble price now works out to only about $127, said Alexander Delazhi, the Novolipetsk executive in charge of domestic sales.


Already Russia faces anti-dumping quotas around the world f from the United States, the European Union, India, Brazil and South Korea f on exports ranging from mineral fertilizers to newsprint and from textiles to technical rubber.


"Most Russian exporters [of such goods] did not even put up a fight. Upon hearing that a country was threatening them with anti-dumping procedures, they simply withdrew," said a source at the Trade Ministry.