US mills file circumvention claim against Vietnam sheet steel

According to reports by S&P Global Platts, recent filings with the USDOC show that California Steel Industries (CSI) and Steel Dynamics Inc. (SDI) are seeking Vietnam to be included in the duty orders on CRC and galvanized sheet.

CSI and SDI requested that USDOC initiate an investigation or issue a ruling within 45 days. A source close to the case said more comprehensive filings involving the majority of domestic steelmakers will follow shortly.

"Circumvention is different from a new trade case," the source said. "We have clear evidence that China is shipping its product into Vietnam for minor processing, and then exporting the finished corrosion-resistant steel to the United States to avoid antidumping and countervailing duties.”

“Therefore, USDOC should determine that Vietnamese corrosion-resistant steel imports are circumventing the orders and should be treated as subject to the duties on Chinese product."

USDOC found a 265.79% dumping margin and a 256.44% subsidy rate for Chinese CRC. For galvanized sheet, USDOC ultimately found a 199.43% dumping margin and 39.05%-256.44% subsidy rates after revising the duty margins.

These duty margins have been formalized by affirmative injury determinations by the US International Trade Commission.

US Steel, Nucor, ArcelorMittal USA, AK Steel and SDI petitioned for duties on CRC from China and other countries on July 28, 2015. Those mills and CSI petitioned for duties on galvanized sheet June 3, 2015.

US imports of cold-rolled coil from China totalled 334,873 short tons (st) in the first half of 2015 and 153,153 st in the second half. After the petition for the trade case was launched, imports of Chinese CRC dwindled to 153 st in the first half of 2016, according to the filing.

Imports from Vietnam amounted to 8,686 st in the first half of 2015, but in the second half of 2015 surged to 51,018 st. In the first half of 2016, Vietnamese CRC imports ballooned to 173,094 st.

"This would not be so remarkable in itself – when one country becomes subject to unfair trade orders, others may export more to take its place – but for one fact: Vietnam has no installed capacity to make steel flat products or hot-rolled coil, the input product for [CRC]," a filing said.

The mills claimed the majority of the Vietnamese CRC is made from Chinese HRC, and they made similar arguments in their request for an anti-circumvention inquiry for galvanized sheet.

US imports of galvanized sheet from China fell from 577,064 st in H1 2015 to 200,982 st in the second half and 10,153 st in H1 2016.

Meanwhile, imports of galvanized sheet from Vietnam went from 2,142 st in H1 2015 to 26,582 st in the second half, and in the first half of 2016 reached 130,986 st.

A US-based sheet trader said he's interested in whether USDOC will find cold-rolling and galvanizing sheet will be considered a significant transformation to HRC.

USDOC is authorized to broaden the scope of a duty order if it finds "the process of assembly or completion in the third country is minor or insignificant" and the "value of the parts or components produced in the foreign country subject to the AD/CVD order is a significant portion of the total value of merchandise exported to the United States," according to a USDOC antidumping manual."

The anti-circumvention inquiry may "just slow things down until people understand the ramifications," the trader said.

Buyers might opt to book CRC orders with Taiwan or Russia as the US investigates Vietnam, he said, but Taiwan also uses Chinese HRC.