Steel Dynamics, Along with Several Other Organizations, Files Trade Petitions Against Countries on Corrosion Resistant Flat Rolled Steel

Rhea-AI Summary

Steel Dynamics (NASDAQ: STLD) has filed trade petitions against ten countries for corrosion resistant flat rolled steel (CORE) imports. The company, along with four other organizations, is seeking antidumping duties against Australia, Brazil, Canada, Mexico, the Netherlands, South Africa, Taiwan, Turkey, UAE, and Vietnam, as well as countervailing duties against Brazil, Canada, Mexico, and Vietnam.

The petitions come in response to a 57% surge in CORE imports from these countries, rising from 1.25 million tons to nearly 2 million tons between the first half of 2023 and 2024. This increase has negatively impacted the domestic steel industry's volume, prices, and profits. Steel Dynamics has invested $3.7 billion in its steel divisions since June 2019, including a new 3.0-million-ton electric arc furnace mill and several galvanizing and paint lines.

Positive

• Steel Dynamics is taking proactive measures to address unfair trade practices
• The company has invested $3.7 billion in its steel divisions since June 2019
• Steel Dynamics has expanded its production capacity with new facilities

Negative

• 57% surge in CORE imports has negatively impacted domestic steel industry's volume, prices, and profits
• Unfair trade practices are affecting Steel Dynamics' market share and profitability

Insights

Trade Policy Expert

This trade petition is a significant move in the steel industry. The 57% surge in CORE imports from ten countries has prompted Steel Dynamics and others to seek government intervention. This action could have far-reaching implications for both domestic and international steel markets.

If successful, these petitions could lead to increased tariffs on CORE imports, potentially boosting domestic production but also raising costs for downstream industries like automotive and appliances. The timing is crucial, coinciding with Steel Dynamics' recent $3.7 billion investment in production capacity.

However, the process is lengthy and uncertain. With final rulings expected by October 2025, the market may see volatility as stakeholders anticipate potential outcomes. This case underscores the ongoing tensions in global trade and the challenges of balancing domestic industry protection with international trade relationships.

Steel Industry Analyst

Steel Dynamics' petition reflects the intense competition in the global steel market. The company's assertive stance, backed by $3.7 billion in recent investments, signals its commitment to defending market share against foreign competition.

The focus on CORE is strategic, given its wide application across vital sectors like automotive and construction. With annual U.S. demand exceeding 20 million tons, even small market share shifts can have substantial financial implications.

If successful, these trade actions could significantly alter market dynamics, potentially leading to higher domestic prices and improved profitability for U.S. producers. However, it may also strain international trade relationships and possibly trigger retaliatory measures. Investors should closely monitor this development, as it could be a pivotal factor in the industry's near-term performance.

Economic Policy Analyst

This trade petition highlights the ongoing tension between free trade and protectionism in the U.S. economy. The steel industry's push for antidumping and countervailing duties reflects a broader trend of industries seeking government intervention to level the playing field against foreign competition.

While such measures can protect domestic jobs and maintain industrial capacity, they often come at the cost of higher prices for consumers and potential retaliation from trading partners. The 20-million-ton annual demand for CORE products underscores the significant economic stakes involved.

The outcome of this petition could have ripple effects across multiple industries and potentially impact U.S. trade relations, especially with key partners like Canada and Mexico. Investors should consider the broader economic implications beyond the steel sector, as changes in CORE pricing could affect cost structures in automotive, construction and appliance industries.

FORT WAYNE, Ind., Sept. 5, 2024 /PRNewswire/ -- Steel Dynamics, Inc. (NASDAQ/GS: STLD) today petitioned the Department of Commerce (DOC) and the U.S. International Trade Commission (ITC) to apply antidumping duties against imports of corrosion resistant flat rolled steel (CORE) from Australia, Brazil, Canada, Mexico, the Netherlands, South Africa, Taiwan, Turkey, UAE, and Vietnam, and countervailing duties against imports of CORE from Brazil, Canada, Mexico, and Vietnam. The company was joined by four other organizations in at least one or more of these cases.

"Between the first half of 2023 and the first half of 2024, imports of CORE from the ten subject countries surged from less than 1.25 million tons to almost two million tons, a significant 57 percent increase. The surge of unfairly traded imports of CORE has had a significant negative impact on the domestic steel industry's volume, prices, and profits, necessitating these cases," said Barry T. Schneider, President and Chief Operating Officer.

CORE steel is used in various market sectors, including in the production of automobiles, appliances, and in many construction applications. CORE products consist of hot rolled and cold rolled steel, which has been coated with zinc, and in some cases aluminum, and may be painted or have other coatings applied to make the product corrosion resistant. The present annual U.S. market demand for these products is over 20 million tons.

"Steel Dynamics has invested $3.7 billion in our steel divisions since June 2019, including investments in a new state-of-the-art 3.0-million-ton electric arc furnace flat rolled steel mill, four flat rolled galvanizing lines with Galvalume® capability, and three flat rolled paint lines. Corrosion-resistant flat rolled steel is a strategically important product to the domestic steel industry, and the restoration of fair trade is critically important," said Christopher A. Graham, Senior Vice President, Flat Roll Steel Group.

Under the unfair trade statutes, the DOC must determine whether to initiate the requested investigations within 20 days, and the ITC must make a preliminary determination of injury within 45 days. Subject to initiation, the company expects preliminary determinations on subsidies later this year and on dumping early next year, though these determinations are subject to extension. Final rulings by both agencies should be completed by October 2025.

About Steel Dynamics, Inc.

Steel Dynamics is one of the largest domestic steel producers and metals recyclers in North America, based on estimated annual steelmaking and metals recycling capability, with facilities located throughout the United States, and in Mexico. Steel Dynamics produces steel products, including hot roll, cold roll, and coated sheet steel, structural steel beams and shapes, rail, engineered special-bar-quality steel, cold finished steel, merchant bar products, specialty steel sections, and steel joists and deck. In addition, the company produces liquid pig iron and processes and sells ferrous and nonferrous scrap.

Forward-Looking Statements

This press release contains some predictive statements about future events, including statements related to conditions in domestic or global economies, conditions in steel, aluminum, and recycled metals market places, our revenues, costs of purchased materials, future profitability and earnings, and the operation of new, existing or planned facilities and decarbonization goals and sustainability efforts. These statements, which we generally precede or accompany by such typical conditional words as "anticipate", "intend", "believe", "estimate", "plan", "seek", "project", or "expect", or by the words "may", "will", or "should", are intended to be made as "forward-looking", subject to many risks and uncertainties, within the safe harbor protections of the Private Securities Litigation Reform Act of 1995. These statements speak only as of this date and are based upon information and assumptions, which we consider reasonable as of this date, concerning our businesses and the environments in which they operate. Such predictive statements are not guarantees of future performance, and we undertake no duty to update or revise any such statements. Some factors that could cause such forward-looking statements to turn out differently than anticipated include: (1) domestic and global economic factors; (2) global steelmaking overcapacity and imports of steel, together with increased scrap prices; (3) pandemics, epidemics, widespread illness or other health issues; (4) the cyclical nature of the steel industry and the industries we serve; (5) volatility and major fluctuations in prices and availability of scrap metal, scrap substitutes and supplies, and our potential inability to pass higher costs on to our customers; (6) cost and availability of electricity, natural gas, oil, and other energy resources are subject to volatile market conditions; (7) increased environmental, greenhouse gas emissions and sustainability considerations from our customers or related regulations; (8) compliance with and changes in environmental and remediation requirements; (9) significant price and other forms of competition from other steel and aluminum producers, scrap processors and alternative materials; (10) availability of an adequate source of supply of scrap for our metals recycling operations; (11) cybersecurity threats and risks to the security of our sensitive data and information technology; (12) the implementation of our growth strategy; (13) litigation and legal compliance; (14) unexpected equipment downtime or shutdowns; (15) governmental agencies may refuse to grant or renew some of our licenses and permits required to operate our business; (16) our senior unsecured credit facility contains, and any future financing agreements may contain, restrictive covenants that may limit our flexibility; and (17) the impacts of impairment charges.

More specifically, we refer you to our more detailed explanation of these and other factors and risks that may cause such predictive statements to turn out differently, as set forth in our most recent Annual Report on Form 10-K under the headings Special Note Regarding Forward-Looking Statements and Risk Factors, in our Quarterly Reports on Form 10-Q, or in other reports which we file with the Securities and Exchange Commission. These reports are available publicly on the Securities and Exchange Commission website, www.sec.gov, and on our website, www.steeldynamics.com under "Investors – SEC Filings."

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SOURCE Steel Dynamics, Inc.

FAQ

What trade petitions has Steel Dynamics (STLD) filed regarding corrosion resistant flat rolled steel?

Steel Dynamics (STLD) has filed petitions for antidumping duties against 10 countries and countervailing duties against 4 countries for corrosion resistant flat rolled steel (CORE) imports.

How much has CORE imports increased according to Steel Dynamics (STLD)?

According to Steel Dynamics (STLD), CORE imports from the ten subject countries increased by 57%, from less than 1.25 million tons to almost 2 million tons between the first half of 2023 and the first half of 2024.

What investments has Steel Dynamics (STLD) made in its steel divisions since June 2019?

Steel Dynamics (STLD) has invested $3.7 billion in its steel divisions since June 2019, including a new 3.0-million-ton electric arc furnace flat rolled steel mill, four galvanizing lines, and three paint lines.

When does Steel Dynamics (STLD) expect final rulings on the trade petitions?

Steel Dynamics (STLD) expects final rulings on the trade petitions by both the Department of Commerce and the U.S. International Trade Commission to be completed by October 2025.