U.S. Commerce Department commissioners have decided to slap anti-dumping tariffs of up to 33.14 percent and countervailing duties of 57.04 percent on hot-rolled steel imports.
A final vote of the International Trade Commission, which would finalize the hot-rolled tariffs and duties, is scheduled for next month. Hot-rolled steel is one of the main products made at Northwest Indiana mills.
U.S. steelmakers, including ArcelorMittal USA, U.S. Steel, and Fort Wayne-based Steel Dynamics, asked for the tariffs on imports from Australia, Brazil, Japan, Korea, the Netherlands, Turkey and the United Kingdom after a record glut of cheap imports last year.
ArcelorMittal USA CEO John Brett testified before the International Trade Commission Thursday that such protections were necessary because it's a high-volume, high fixed-cost industry. He blamed imports for the closure of the 84-inch hot strip mill in ArcelorMittal Indiana Harbor, where 300 steelworkers had worked.
"To be successful, we have to maintain a large enough volume to absorb those high fixed costs," he said. "We also have to get a price that covers our costs and provides a reasonable rate of return on our investment."
Imports caused prices in the U.S. to collapse, making reasonable returns "more difficult, if not impossible to obtain," Brett said.
Foreign mills have just been dumping excess capacity at low prices in the United States so they can stay busy, Brett said. They shipped over 1.4 million more tons in 2014, when demand was still rising in the U.S. Though demand cratered in 2015, imports continued to escalate, causing hot-rolled steel prices to plunge.
"The immediate consequences of the domestic industry’s lower shipment volumes and prices were lower revenues and profits," Brett said. "While one can debate what might constitute a reasonable return on investment for this capital-intensive industry, it is clear that the domestic industry is not currently earning it. In 2015, the domestic hot-rolled steel industry lost money on a gross income, operating income, and net income basis."
Brett said a lack of profitability threatens both the company and the domestic industry. One example of the harm that could be done would be delays in maintenance that would only add to future costs.
"The preliminary duties on hot-rolled steel have begun to provide some relief to the domestic industry, but we continue to struggle in 2016," he said. "Without final orders in this case, additional injury to the industry will undoubtedly follow."