From China Daily
Ford Motor Co, the second-largest U.S. automaker, and Delphi Corp, the world’s largest auto-parts company, asked the U.S. International Trade Commission yesterday to lift duties on steel imports from Brazil, Japan and Russia.
Executives from the two companies joined their automotive industry peers at a hearing in Washington, saying the five-year-old U.S. tariffs on hot flat-rolled steel from those nations have led to record steel prices, which are squeezing their profits.
“I cannot exaggerate the degree to which the steel supply situation is affecting Ford’s business,” said Jeff Engel, the executive director for purchasing at Dearborn, Mich.-based Ford. “It is consuming the attention of every senior officer.”
The amount of flat-rolled steel used in the United States that was purchased overseas has dropped to 7.1 percent from 15 percent since the duties were imposed. Prices jumped from $260 a ton in March 2002 to a record $756 in September 2004. Overall, the protection led to rare profitable years for a steel industry that had seen at least 19 bankruptcies since 1998 and the shutdown or takeover of dozens of other mills.
“There’s no doubt that last year was an excellent year,” U.S. Steel Corp Chief Executive John Surma said. “But a single good year will not be enough to make you whole, we have a long way to go to ensure our long-term health.”
U.S. Steel and Nucor Corp, the two largest U.S. steel producers, generated record profits last year because of the higher prices. Yesterday they were joined by two-dozen lawmakers in defending the tariffs, and said removing them would lead to more cheap imports. The United States already ruled the three nations subsidized their industries and “dumped” steel at bargain prices.
“This market could turn on a dime,” Nucor Chief CEO Daniel DiMicco told the panel.
Flat-rolled steel prices have dropped to $622 a ton since September, according to Purchasingdata.com, and analysts such as Koch Metals Trading Ltd are forecasting further declines.
The industry still “suffers” from overcapacity, DiMicco said. “Even with recent price declines, we expect 2005 to be a good year if the dumping orders are kept in place, but if the orders are lifted we expect the subject countries to divert steel to the U.S. quite rapidly.”
A decision on the duties is expected by April 14. Brazilian steel companies have been paying an average of 50 percent on steel shipped to the United States, while the Japanese pay 29 percent.
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