U.S. Steel and AK Steel Holding paced gains among metal producers after the U.S. government handed down anti-dumping measures on imports of galvanized carbon sheet products that exceeded some analysts' estimates.
Shares in Pittsburgh-based U.S. Steel and West Chester, Ohio-based AK Steel surged more than 7 percent on Thursday. They closed Thursday up 3.3 percent and 3 percent, respectively.
In a decision announced after the close of regular trading Wednesday, the Department of Commerce found a higher level of dumping from some South Korean exporters of corrosion-resistant steel, raising the level of potential tariffs to as much as 48 percent from a preliminary cap of 3.5 percent. Chinese producers may now face anti-dumping duties of 210 percent, compared with a preliminary finding of 256 percent in December.
"We view the outcome as stronger than anticipated, with the DOC levying higher duties on imports on all countries excluding China versus preliminary determinations issued in late 2015," KeyBanc analysts including Philip Gibbs and Tyler Kenyon wrote in a note. Even in the case of China, duty rates "remain prohibitive," they wrote.
The U.S. government's announcement marks a final decision in the first of a series of trade cases in which domestic steel producers have accused producers in China and four other countries of selling the metal unfairly. It clears the way for the first duties to be assigned on steel products since the U.S. industry began filing cases a year ago.
Companies including U.S. Steel and Nucor allege that mills in China, South Korea, India, Italy and Taiwan had dumped the metal in the United States. Citing unfair competition and the impact of low crude prices for oil pipe and tubing demand, U.S. Steel idled its steel mill Granite City Works, which put about 2,000 people out of work.
The International Trade Commission is scheduled to make its decision next month on whether domestic steelmakers were injured by unfair trade, after which the government would order duties on the products.
The ITC also announced on Thursday it launched an investigation into complaints by U.S. Steel Corp. that Chinese competitors stole its secrets and fixed prices, in the latest trade spat between the two countries.
The ITC said in a statement that it has not made any decisions on the merits of the case.
U.S. Steel, in its complaint under section 337 of the main U.S. tariff law, is seeking to halt nearly all imports from China's largest steel producers and trading houses.
The commission identified 40 Chinese steel makers and distribution subsidiaries as respondents.
U.S. Steel filed its original complaint a month ago, alleging that it was a victim of a 2011 computer hacking incident that also prompted U.S. federal cyber-espionage indictments against five Chinese military officials in 2014.
The U.S. steelmaker alleged the hackers stole research data on production techniques for a new generation of lightweight, high-strength steel now favored by automakers. It said this accelerated Chinese competitor Baosteel's ability to replicate the product, which took U.S. Steel a decade to develop.
Baosteel, the second-largest steelmaker in China and fourth-largest in the world, responded by saying the charges were "rootless speculation and subjective assumption and could even be described as an absurd statement."
China's Commerce Ministry said it was resolutely opposed to the probe and would encourage its firms to legally defend themselves.
The ministry said trade remedy measures recently being taken by the United States were protectionist, and would artificially interfere with trade rather than solve the industry's current problems.
U.S. Steel Chairman Mario Longhi applauded the ITC's decision to investigate the company's claims, which also allege that Chinese producers falsely named other countries as the origin of their products and illegally transhipped them through third countries to avoid anti-dumping and anti-subsidy duties.
"We remain confident that the evidence will prove the Chinese steel producers engaged in collusion, theft and fraud and we will aggressively seek to stop those responsible for these illegal trade actions," Longhi said in a statement.
Such intellectual property-based claims have only been made once before by U.S. steel producers, in 1978 against 35 Japanese makers and importers of welded stainless steel pipe. But the ITC, rather than barring imports of the products from Japan, instead ordered 11 firms to stop unfair pricing practices.
Source: stl today