Raw materials 2022: US steel imports on the rise

Strong points

Higher imports likely to put pressure on prices

Imports are unlikely to increase, but climb from low levels in 2019-2020

Record US steel prices in 2021 open door to imports

Steel imports to the United States are expected to increase enough in 2022 to keep the pressure on domestic prices which hit record levels in 2021, but these shipments will not necessarily represent an increase in imports, industry analysts say.

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John Anton, director of pricing and purchasing at IHS Markit, said steel import figures next year could appear to be a peak, but this is mainly due to the fact that imports since 2018 have been unusually low in due to tariffs, the coronavirus pandemic and logistics issues.

“I might see imports return to 2015-2017 levels, but I don’t see them increasing,” Anton said in a recent interview with S&P Global Platts.

Imports of some steel products such as hot-rolled coils have already increased in the last months of 2021, as high prices in the United States made low-priced imports more attractive despite the tariffs, Anton added.

US imports of HRC reached 458,994 mt in October, the only month in 2021 when shipments of the product exceeded 400,000 mt, according to data from the US Census Bureau.

UBS analyst Andreas Bokkenheuser said the availability of imports in 2022, along with the commissioning of new North American steel capacity, would ease the supply tightness and could weigh on high domestic prices, a trend that started at the end of 2021.

“A lot of buyers go to imports,” he told Platts. “That, combined with high inventories and short delivery times, is likely to push domestic prices even lower.”

The Platts TSI US hot-rolled coil index was valued at $ 1,500 / st EXW Indiana at the end of 2021, down from $ 1,009 / st at the start of the year, but down from a record 1 $ 960.25 / st in September.

According to Phil Gibbs, equity research analyst at KeyBanc Capital Markets, more moderate price points will evolve in 2022 as US producers react to increased imports.

“For domestic factories to recover their order books, they will need to entice buyers to come to them and prevent them from placing marginal import orders,” Gibbs said in a recent interview with Platts. “This will put pressure on the prices.”

Industry oversight of trade enforcement

Amid the recent surge in imports, US steel industry groups have said that the proper application of trade mechanisms in 2022 will be key to protecting domestic producers.

“We’re seeing a lot of steel coming, in part because we have a strong economy and high demand,” Kevin Dempsey, CEO of the American Iron and Steel Institute, told Platts.

“But we want to make sure that our trade laws, both 232 (tariffs) and anti-dumping and countervailing duty laws, are fully and effectively enforced, as a further increase in imports, imports subject to dumping and subsidized, could really hold back the progress of the industry.

The president of the Steel Manufacturers Association, Philip Bell, said the market share of finished steel imports into the United States had reached 25% through the end of October, a statistic that “should worry us. “.

“What we have seen is a steady increase in imports since the start of [2021]”Bell told Platts. We know we’ll need fair and legal trade imports to meet some of the demand in our country, but 25% are starting to approach historic highs.”

According to the latest AISI analysis, the market share of finished steel imports was estimated at 27% in November and is estimated at 22% in the first eleven months of 2021.

Anton said imports will continue to play an important role in the US market as long as domestic prices remain high above world prices. However, the price differences between steel produced in the United States and steel produced abroad represent a kind of “paradox,” he added.

“The costs per tonne in the US are lower than in Europe where they have older factories and even stricter labor laws, likely an impending carbon border tax and there are more natural resources. [in the US]”, he added. There is no reason why steel should be more expensive in the United States than in Europe.”

Quotas could help avoid peaks

The Biden administration began changing U.S. Section 232 tariffs on metals in October when it struck a deal with the EU that would allow a certain volume of shipments to enter the United States in duty-free under a quota, and similar agreements with other foreign governments could follow in 2022..

“[The tariff-rate quota with the EU] gives us some protection against a further increase in imports and it will be very important to ensure a full and effective application of this, ”said Dempsey.

Section 232 tariffs were imposed on most countries in 2018 under former President Donald Trump.

Bokkenheuser said the US industry is now “a bit stuck” as other countries pressure the US to change steel tariffs on its own exporters, but tariff changes will ultimately help downstream US manufacturers.

“Introducing cheaper steel to the country should help take the pressure off manufacturers,” he said. “Manufacturers will be more competitive by being able to purchase steel competitively from the United States, whether it is sourced domestically or from imports.”

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