U.S.A. STEELMAKERS SEEK PROTECTION AGAINST EUROPEAN PRODUCTS

U.S.A. STEELMAKERS SEEK PROTECTION AGAINST EUROPEAN PRODUCTS

By Silvia Antonioli, August 1, 2013

LONDON (Reuters) - A U.S. steel industry group has asked the government trade representative to intervene to protect domestic producers from growing imports of steel products from Europe.

U.S. steelmakers have grown increasingly worried over the last couple of years about the inflow of steel from abroad, which has intensified due to rising global oversupply.

Last month a group of U.S. steel pipe producers launched one of the biggest steel trade cases in years, asking the U.S. International Trade Commission to stem what they said was a flood of unfairly traded products from nine countries.

This week, the Steel Manufacturers Association (SMA), which includes some of the world's largest steelmakers such as Nucor (NUE.N) and ArcelorMittal (ISPA.AS), urged the U.S. trade representative to undertake a diplomatic initiative to curb imports of cut-to-length steel plate and other products.

"The European governments should be encouraged to take steps to curb their own excess steel capacity," the SMA said in a letter to Michael Froman, the chief U.S. negotiator and adviser to the president on trade.

"The United States cannot be the dumping ground for other countries' excess supply."

The SMA includes 36 North American steelmakers, with about 75 percent of domestic output. They produce steel mainly in electric arc furnaces, which use scrap as a raw material.

U.S. PREMIUM EXACERBATES ISSUE

The steel market is structurally in better shape in the United States, where economic growth has been picking up, than in Europe, and this has led to more aggressive U.S. imports in the past 18 months.

After a bleak first half of this year, prices in the United States and North America have risen in the last few weeks and are currently at a substantial premium over levels in other regions, attracting an even growing number of imports.

"The U.S. is trading at an unsustainable premium to the rest of the world," Colin Hamilton, Macquarie head of commodity research, said.

"At the moment what you are going to see is that any ship in the world that is carrying steel is going to point towards the U.S., and that is going to put the U.S. prices under pressure."

Although the record overcapacity has boosted shipments of many types of steel into the United States, the increase of imports of cut-to-length plate from Europe has been particularly harmful, the SMA said.

This is steel plate that is cut to order for the building of bridges, ships, shipping containers, skyscrapers, oil rigs, tanks, helicopters and other uses.

In 2012, imports of this product increased by 20 percent from Germany, 63 percent from France, 120 percent from Poland and 4,655 percent from Italy compared with 2011, data from the association showed.

"These increased imports are not being driven by demand in the U.S. market. Instead, they are largely fueled by significant steel overcapacity elsewhere in the world," the SMA said in the letter.

European steel producers have not taken the painful but necessary steps to cut plants and output, and some European governments have intervened to prevent or delay plant shutdowns, exacerbating the supply-demand imbalance, the U.S. group said.

(Editing by Jane Baird)