WASHINGTON (Scrap Monster): The U.S Steel industry is planning to consider a challenging trade deal with Russia, which deals with imports of hot-rolled steel, potentially to resume the 10 years old dispute amid the increasing tension over Russia’s actions in Ukraine.
A suspension agreement after the Cold War has protected the steel makers of Russia from a high anti dumping duties on HR coil and instead setting a cap and a minimum price of HRC, which is believed to be very low by U.S steel industry, even after a 2012 revision. Sources familiar with the situation said that the steel firms were urging the American officials to drop or to adjust the exemptions.
Hot Rolled, Flat rolled and carbon quality steel products imports from Russia increased 162 percent in the three month starting from April when compared to the previous quarter. An attorney from Russia said given the volume of imports coming in, the industry is actively exploring their options to stop or modify their agreement and they are in the process of filing preparation to the American government.
The discussions come at a perspective time for American relations with Moscow and this followed by the U.S decision to enforce travel bans and freezing of asset on several Russian officials after Russia captured Crimea of Ukraine. This move also resulted in weak global prices, sluggish demand and oversupply for HR steel. Overcapacity has already resulted in other trade arguments which include a high profile American case over the steel tune imports, mainly used in oil and gas industry.
Still, the news will probably rattle the traders, who are already in a worry over the impacts of the Ukraine crisis. Russia is one of the major foreign HRC suppliers. If the trade deal is cancelled or revise, local companies like AK Steel, Nucor Corp, United States Steel Corp would benefit. If the agreement of 1999 is discarded, the Severstal of Russia would be imposed with high anti dumping duties of about 73.59% and others such as Magnitogorsk Iron and Steel Works and Novolipetsk Steel would face duties of about 184.56 %.
The original deal was agreed because the U.S moved to stop a flood of Russian imports of steel after the end of Cold War. It can be removed within 60 days or modified by negotiation and upon removal, duties would apply immediately. An official said the Department currently had no plans to further modify or cancel this remedy. Based on the agreement, the reference prices of Russian HR steel products of present quarter is from $554.61 per tonne to $709.90 per tonne.