Steel: Cold-roll, coated trade cases said near: AMM Poll

NEW YORK - March 26, 2015 - PRLog -- Nearly 70 percent of industry participants expect cold-rolled and coated trade cases to be filed in 2015, according to an American Metal Market survey. http://www.amm.com/Default.aspx

That overwhelming response—only 30 percent said a trade complaint was unlikely—comes despite overall steel imports declining 18.4 percent to 3.25 million tonnes in February from nearly 3.99 million tonnes the previous month, according to preliminary data from the U.S. Commerce Department’s Enforcement and Compliance division.

"The steel industry is currently working on gathering data for a potential flat-rolled trade case filing," Evan Kurtz, an analyst at New York-based Morgan Stanley Equity Research, said in a recent research note, echoing public comments from industry executives and trade attorneys

"We don’t have anything concrete to base (trade case rumors on) other than we all epect them to happen, and the rumors have been around for a year," one trader said.

Trade action might target not just cold-rolled and coated steel but other flat-rolled products as well, some market participants said, noting elevated imports of plate and hot-rolled coil.

"Now is the time for them to do it. Some mills are losing money. Capacity utilization is under 70 percent and there are still a lot of imports, so they can prove injury," a second trader said.

Finished steel imports accounted for about a 32-percent share of the U.S. market in February, with year-to-date finished imports up 36 percent compared with the first two months of 2014, the American Iron and Steel Institute said. Some products have seen much bigger import gains, including a 120-percent jump in cut-to-length plate in the first two months of 2015 vs. a year earlier, the AISI said.

One mill source described such numbers as "depressing," adding that continued high levels of plate imports to the Gulf Coast mean distributors will take longer than expected to work down bloated inventories. Russian hot-rolled also is weighing on stocks and prices despite—in theory—being blocked by high tariffs following the end of an agreement suspending duties.

Russia shipped 7,794 tonnes of hot-rolled coil and 7,608 tonnes of coiled plate to the United States in February vs. zero in January, according to Commerce data.

But should mills wait much longer to file, they risk seeing the prospects of a successful case fading as domestic demand recovers and a decline in import arrivals begins in earnest because of a narrowing gap between domestic and offshore tags, trader sources said.

AMM’s spot price for hot-rolled coil, for example, stands at $470 per ton ($23.50 per hundredweight), not enough above a c.i.f. Port of Houston price of $440 to $460 per ton ($22 to $23 per cwt) to be attractive to buyers not close to major ports, market sources said.

That downward import trend is already apparent, according to Commerce’s preliminary import data. Most products saw significant month-on-month declines last month, including hot-rolled sheet (down 40.6 percent to 277,877 tonnes from 467,776 tonnes) and cold-rolled sheet (down 8.9 percent to 190,841 tonnes from 209,381 tonnes).

But other products continued to see increases, including hot-dipped galvanized sheet and strip, with imports in February climbing 12.1 percent to 274,026 tonnes from 244,533 tonnes in January and 31.3 percent higher than 208,673 tonnes in February 2014.

China was the main driver for the jump in hot-dipped galvanized imports, with shipments to U.S. ports hitting 100,612 tonnes in February, more than double the 45,180 tonnes the previous month and a fourfold gain vs. 24,870 tonnes in February 2014. And while total cold-rolled imports declined in general, shipments from China jumped 21.5 percent to 53,718 tonnes last month from 44,226 tonnes in January and surged 93.9 percent from 27,699 tonnes in February last year.

Several big trading houses are avoiding Chinese cold-rolled in anticipation of a trade petition, a third trader said. "I’m hoping in two weeks we’ll finally know what we’re dealing with."

There have been rumors of a trade case being filed on or around April 3, but previous talk about a filing before Labor Day proved to be unfounded.

Should a case be filed, players such as Brazil and Vietnam are already waiting in the wings to fill any void, trader sources said.

Vietnam shipped 7,316 tonnes of cold-rolled to the United States in February, its first significant cargo in at least a year, and Brazil’s Cia. Siderúrgica Nacional SA expects its shipments to the United States to double this year.
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