No. 10 — March 10, 2000

 

Weekly Review

NOTES

Japan's steel mills — on the defensive for the last 18 months because of U.S. industry-leveled charges that they had unfairly priced virtually all of the surging volume of carbon and stainless steel mill products shipped to the United States in 1998 — finally got a break on the trade-complaint front. In a March 3 vote that stunned Japanese exporters and their American competitors alike, five members of the six-person International Trade Commission decided that no link existed between cut-rate sales of made-in-Japan carbon cold-rolled steel products and any problems that U.S. producers of this high-strength sheet metal for vehicles and appliances had experienced. The ITC's negative final injury determination applied as well to cold-rolled steel supplied by Argentina, Brazil, Russia, South Africa and Thailand.

The trade agency's voting record on the Japan steel dumping cases that had preceded the cold-rolled steel investigation had led everyone, executives of Kawasaki Steel Corp., Kobe Steel, Ltd., Nippon Steel Corp. and Nisshin Steel Co., Ltd. no doubt included, to assume that the ITC would find at a minimum that underpriced imports factored somehow into the U.S. steel industry's self-described business crisis. Of the five Japan-targeted unfair-pricing proceedings already completed, the commission had found injury in all but one (stainless steel round wire). Notably, in both the carbon hot-rolled steel products inquiry and the complaint involving carbon cut-to-length steel plate products, the injury determinations were unanimous (see JEI Report No. 7B, February 18, 2000).

The hefty dumping margin of 53.04 percent that the Department of Commerce had assigned to Japanese-made cold-rolled steel added to the presumption of an affirmative ITC injury ruling. So did the 67.7 percent jump in imports to 428,700 tons in 1998.

The report detailing how the commission arrived at its no-injury determination will not be available until early April. Analysts speculate, however, that the small share of the U.S. cold-rolled steel market controlled by Japanese mills might have influenced the decision. Despite the shipment surge, products brought in from Japan claimed only 1.1 percent of apparent U.S. consumption of cold-rolled steel in 1998 counting sheet used in-house by producers or 2.5 percent if just open-market shipments are included. For higher-volume hot-rolled steel, the corresponding 1998 figures were 3.6 percent and 8.1 percent.

Of course, lawyers for the four Japanese exporters would argue that their presentation at a January 20 ITC hearing carried the day. Central to it was an econometric model that tied the drop in U.S. cold-rolled steel prices to falling prices for hot-rolled sheet, the starting point for the downstream product. At the time, counsel for the eight U.S. mills and the union that filed the dumping complaint against Japanese suppliers in June 1999 labeled this conclusion the result of "voodoo economics." If the cold-rolled/hot-rolled pricing correlation did prove persuasive to the five commissioners who voted against injury, USX Corp./U.S. Steel Group and Bethlehem Steel Corp., the prime movers behind the barrage of dumping charges, are likely to appeal the verdict to the Court of International Trade.

The views expressed in this report are those of the author
and do not necessarily represent those of the Japan Economic Institute

Issue Index aaaa 2000 Archive Index aaaa Subscriber Area aaaa Home