U.S. steelmakers battle against cheap imports, again
Inside U.S. Steel's plant in Lorain, Ohio, steel tubes are cast, trimmed, and threaded. You can feel their heat from more than 20 feet away.
Inside U.S. Steel's plant in Lorain, Ohio, steel tubes are cast, trimmed, and threaded. The freshly-cast tubes are a dazzling, neon orange -- like a light saber from "Star Wars" -- you can feel their heat from more than 20 feet away.
"Here at Lorain Tubular, we've made significant investments over the last three to four years, to about $200 million,” says plant manager John Wilkinson.
Wilkinson says that's largely in response to the oil and gas boom from the Marcellus shale development. But another big reason was China had backed off from dumping its steel into the market. That happened in 2009, after several trade cases were filed. Wilkinson says after that, the company was feeling pretty good about things.
But since then, he says, “we have now seen the Korean imports start to take the place of the Chinese, and actually exceed the levels of where they were during that timeframe."
In other words, it's now South Korea that's doing the dumping.
And the oil companies are all too willing to buy this cheap steel. Wilkinson says because of that, production at U.S. Steel's Lorain plant is just a third of what it could be. There's just not enough demand for its steel tubes.
"This facility here would usually run around the clock, 24-7,” he says. “A lot of these countries that are dumping into our market, I can't even make the product for what they're selling."
The Economic Policy Institute looked at this trend, and saw that steel imports shot up 26 percent in the first three months of 2014. Right now, there are nearly 34,000 steel jobs in Ohio. But if this dumping continues, there's concern that plants will close.
"China, South Korea, India, and others, have been investing in surplus steel capacity,” says Rob Scott, an economist with the EPI. “We now have over half a billion tons of surplus steel production capacity, much of that is generating steel that's being dumped on the United States. And as a result, steel producers have begun to lay off workers."
U.S. Steel blames dumping for its decision to idle plants in Texas and Pennsylvania.
"Once you lose a steel mill and it shutters, it's pretty hard to bring it back,” says Ned Hill, an economist at Cleveland State University.
Hill says not only are foreign companies selling cheap steel here in the U.S., there are claims that they're also making knockoff steel for global buyers.
"Every piece of tube that comes out of a U.S. steel plant, has a stamp that indicates the quality, and there have been charges that those stamps have been forged internationally. And if you have a weak piece of pipe, that can cause problems,” says Hill.
Meanwhile, U.S. Steel has filed suit against South Korea for circumventing fair trade laws, with the U.S. Department of Commerce expected to hand down a ruling by mid-July.