The CATO Institute recently published a trade briefing paper on the health of the steel industry. Despite the removal of the Section 201 steel tariffs, imported steel remains subject to hundreds of antidumping and countervailing duty orders. Those duties artificially reduce supply, putting steel-consuming industries at the mercy of domestic producers who are virtually unrestrained from setting high prices, according to the paper. Accordingly, the paper advises, the president, through the Secretary of Commerce, should exercise his authority to undertake "changed circumstances" reviews of all outstanding antidumping and countervailing duty orders on steel products with an eye towards terminating those measures that no longer make sense. Many have been in place for more than a decade, a period during which circumstances have obviously changed. Lifting, even temporarily, some of the 188 antidumping and countervailing duty orders now in effect against 35 countries would alleviate some of the burden and be a shot in the arm for US manufacturing. Since December, steel prices have entered record territory. Average prices for a basket of 10 carbon steel mill products tracked by Purchasingdata.com were 60% higher in April 2004 than in December 2003, and 71% higher than in April 2003. According to Purchasing magazine, steel prices "have skyrocketed past any heights previously entered in records dating back to 1950." The causes of the dramatic price increases of 2004 are many. Rising world demand, led by China, for finished steel and steel-making materials has unleashed a simultaneous demand-pull, cost-push rise in steel prices. To compensate for the rise in materials costs, steel producers have been imposing surcharges on their deliveries, many of which exceeded $100 per ton in the first quarter. A relatively weak dollar has also driven up the prices for American purchasers and has made the US market less attractive to foreign producers, thus reducing supply. Further, US production has been curtailed as a result of capacity reduction stemming from large-scale industry consolidation. During the past couple of years, an industry comprised of too many unprofitable, uncompetitive producers has undergone a significant restructuring. The consolidation process, initiated before the Section 201 tariffs were imposed, has created an industry on much firmer footing.
 American Wire Producers Association |
