Browse By:


Monday October 20, 2014 Login |Register


A Project of

sponsored by

Steel: Price and Policy Issues

Bookmark and Share Report Misuse or Glitches

Publication Date: October 2007

Publisher(s): Library of Congress. Congressional Research Service

Series: RL32333

Topic: Manufacturing and industry (Metals industry)

Abstract:

Steel prices remain at historically elevated levels. The rapid growth of steel production and demand in China is widely considered as a major cause of the increases in both steel prices and the prices of steelmaking inputs. Steel companies have achieved much greater pricing power, in part through an ongoing consolidation of the industry. Most of the integrated side of the industry, nearly half of U.S. production, is controlled by just two companies: U.S. Steel, the traditional industry leader, and Mittal Steel, itself the result of multiple international mergers. Moreover, Mittal in 2006 merged with the global number-two producer, Arcelor. Nucor and Gerdau have been active major consolidators of U.S. minimill production.

U.S. steel production in 2005 was 104.6 million tons, a 5% decline from the high level of 2004. The net decline in output was mainly on the integrated side of the industry, which has continuously lost share. Imports also fell from the high level of 2004, although they rebounded by nearly 50% in early 2006. Input prices, especially ferrous scrap and iron ore, remain high and have contributed to higher production costs, which have been largely passed along to industrial consumers.

The growth of China contributed to a large increase in demand for both steel and steelmaking inputs. China has become both the world's largest steelmaker and steel consumer. By late 2005, it became a net exporter of steel, including an increase of exports to the U.S. market. The House has passed H.R. 3283, which would require the Commerce Department to consider petitions to establish countervailing duties against subsidized imports from China. The Senate agreed to the provisions of S. 295, a bill to force China to revalue its currency or face a 27.5% tariff on its exports to the United States. The Bush Administration initiated a U.S.-China Steel Dialogue in March 2006, and the U.S., Canada and Mexico have asked China whether its 2005 Steel Policy calls into question some of its WTO commitments.

Some policy developments in 2005-06 may affect domestic steel producers. The Organization for Economic Cooperation and Development abandoned the effort to achieve an international agreement to ban subsidies for steel mills. The federal deficit reduction law (P.L. 109-171) included a repeal of the Continued Dumping and Subsidy Offset Act ("Byrd Amendment"), under which domestic steel producers have received distributions of trade remedy duties. In December 2005 the U.S. International Trade Commission (ITC) terminated an antidumping case brought by domestic steel companies against steel wire rod imports, and President Bush decided in a safeguard case not to provide relief for domestic producers of steel pipe against imports from China. Later in 2006 the ITC will decide in a five-year review whether domestic producers are still injured by steel imports from a large number of countries. In April 2006 the World Trade Organization (WTO) Appellate Body ruled against the "zeroing" methodology used by the U.S. Commerce Department in calculating dumping margins. In the 109th Congress, 2nd Session, H.R. 5043 and H.R. 5529 were introduced, which would establish some changes sought by the steel industry in U.S. trade law, as well as a commission to review WTO decisions adverse to U.S. interests. This report will be updated as warranted by developments.

Publication

View Publication

Related Files

2004-04-16 version

Browse By