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Old 03-03-2005, 05:00   #1 (permalink)
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US:Ford, Delphi fight to lift import duties from steel


Jean-Pierre Pingoud / Bloomberg News
Slabs of steel are stacked at the Companhia Siderurgica Paulista steel mill in Cubatao, near Sao Paulo, Brazil. The company, Brazil's largest producer of steel for the automobile industry, is not expected to rejoin the U.S. market.

Ford, Delphi fight to lift import duties from steel

U.S. International Trade Commission is due to rule on the tariffs by April 14.

By Mark Drajem / Bloomberg News


Charles Pertwee / Bloomberg News

A ship is loaded at the port of Tokyo. Japanese companies found customers in China when the U.S. added duties.

WASHINGTON -- 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 on Wednesday 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 5-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 Ford. "It is consuming the attention of every senior officer."

The share of flat-rolled steel used in the United States that was bought 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 protections 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 American steel producers, generated record profits last year because of the higher prices. On Wednesday 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 those nations subsidized their industries and "dumped" steel at bargain prices.

"This market could turn on a dime," Nucor 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. Those tariffs effectively block imports from those countries.

Russian companies are operating under a special suspension agreement that places a cap on how much they can export to the United States but doesn't levy any extraordinary tariffs.

"Unless and until the global remedy is reached to address steel subsidies the U.S. market will continue to be the market choice for these illegal and predatory practices," U.S. Rep. Philip English of Pennsylvania told the panel.

U.S. factories consume about 68 million tons a year of hot-rolled steel, the most commonly used steel product in cars and household appliances. On top of the hot-rolled duties that began in 1998, President Bush imposed across-the-board tariffs on steel in March 2002.

Even if the duties are dropped, many don't expect companies in Brazil, Japan and Russia to rush back in to the U.S. market, as they have found willing customers in China.
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