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. Last Updated: 07/27/2016

Accord to End Russia-U.S. Steel Spat

The signing of an accord on cold rolled steel exports from Russia to the United States this month should end the long trade dispute between the two countries, industry analysts say.

"There are no more big steel-related issues between the United States and Russia that are likely to come up at this point," said an analyst from the London-based Metals Bulletin, who declined to be identified.

According to Interfax, Russian producers will earn at least $625 million dollars from exports of cold rolled steel to the United States over the next five years, or $125 million per year. At their peak in 1997 and 1998, the value of these exports totaled about $210 million per year, according to U.S. Commerce Department figures, on volumes of about 600,000 tons per year, or just under twice the level set by the recent agreement.

The Jan. 13 agreement gives Russian producers the right to export 340,000 tons of cold rolled steel to the United States each year, with the possibility of a 6 percent annual increase subject to agreement. The agreement also sets a minimum floor price, averaging $345 per ton, of the high grade steel to insure that Russian producers are not able to significantly undercut American mills' prices.

Although Russia was named in a U.S. Commerce Department anti-dumping investigation, which concluded Tuesday, analysts said the 74 percent punitive tariff assessed against Russian cold rolled steel would not be collected.

"The [Commerce Department's] finding is irrelevant in the case of Russia," said the Metals Bulletin analyst, who explained that the investigation was superseded by the Jan. 13 agreement.

Since 1998, U.S. producers have filed a number of petitions with the Commerce Department alleging that producers from several countries, including Russia, were dumping steel on the domestic market, forcing them to close mills and lay off workers.

The petitions prompted a series of anti-dumping investigations, which resulted in punitive tariffs being levied on steel from countries in Asia and Latin America.

Russian steel, however, was exempted from the tariffs on condition that Russia agree to sign a raft of agreements limiting its exports of the metal to the United States.

"The Russian producers understood this was the best deal they were going to get, so they went along with it," said Kakha Kiknavelidze, a metals analyst with the Troika Dialog brokerage in Moscow.