Investigation could result in increased tariffs
The U.S. Department of Commerce announced a new investigation into Chinese steelmakers that could result in increased import tariffs on their goods.
The Commerce Department said Friday it would probe Chinese manufacturers of stainless steel sheet, used in everything from beverage cans to home furnishings, for possible illegal subsidies and sales of steel at below cost to improperly gain market share.
The case, which concerns $302 million of steel sheet imports last year, will be decided by March 28. It is one of three current inquiries into possible dumping of steel in the U.S. by Chinese companies.
The government’s move ratchets up pressure on foreign steelmakers and works to shore up prices in the U.S., sparking hope that U.S. steelmakers could rebound this year from a disastrous 2015.
After falling more than 35% last year, U.S. steel prices are on the rise and investors are noticing. The benchmark hot-rolled coil index has risen to $402 a ton, up 10.4% from $364 on Dec. 2.
Steel stocks have been on the rebound. U.S. Steel, for example, rose more than 40% this past week, outperforming the market and closing Friday at $12.98, it highest value since September.
Corp. became the latest steelmaker to raise prices. On Friday, it increased its base prices for carbon flat-rolled steel products by a minimum $30 a metric ton, a move similar to increases announced to customers by other big steelmakers, including Nucor Corp., U.S. Steel Corp. and ArcelorMittal. AK Steel’s stock price closed up 3.6% Friday in New York.
“There’s strength in construction, appliance and automotive markets,” said John Packard of Steel Market Update. “Imports have fallen, and service center inventories have been dropping, which means service centers need to go out and buy more steel.”
One area that isn’t improving is the energy sector, Mr. Packard said. Oil- and gas-related industries, traditionally heavy consumers of steel, are in a protracted downturn because of languishing fuel prices around the world.
Imports of steel into the U.S. in December were 26% lower at 2.6 million tons, down from 3.5 million tons during the same month in 2014.
In February, U.S. construction firms added 19,000 workers, according to the Associated General Contractors of America. Construction employment now totals 6.6 million, the most since December 2008. Of all steel made in the U.S., 40% is used in construction, so an uptick in hiring signals a ramp-up for steel orders.
Low U.S. steel prices have discouraged imports, but the volume of foreign steel into the U.S. is also dropping amid increased pressure from federal trade officials.
Earlier in the week, the Commerce Department introduced preliminary import tariffs on cold-rolled steel from seven countries, including China. The government is also considering new duties on three other steel categories, following complaints by AK Steel and U.S. Steel, among others, that China, Brazil, Russia and other countries are illegally dumping steel in the U.S.
Chinese officials have denied selling steel into the U.S. at below cost.
“Resorting to trade remedy measures is not the right way to solve the problem,“ said Zhu Haiquan, a spokesman for the Chinese Embassy in Washington.
U.S. steelmakers are struggling through one of their toughest cycles in years. AK Steel’s shipments fell to 1.66 million tons in the fourth quarter, down 17% from a year earlier. Sales were hurt as the company focused on selling more higher-margin products, reducing the amount of carbon steel sold into the spot market, AK Steel said.
Overall sales for AK Steel declined 23% to $1.54 billion in last quarter of 2015 as the average selling price per ton dropped 5.3% to $929.
—William Mauldin contributed to this article.