232 Unlikely to Cover Downstream Wire

Read the article by Nat Rudarakanchana on the AMM website here.

NEW YORK — US Section 232 tariffs are unlikely to extend to downstream wire products, government officials have told the American Wire Producers Association (AWPA).

This means AWPA members, who buy wire rod and manufacture downstream wire products, will lose access to global rod supply and won’t gain protection against unfairly traded wire products brought into the United States, two AWPA executive officers told AMM in an interview on September 27. This is a real problem for the AWPA, because if 232 tariffs were imposed on primary steel products but not downstream items then AWPA members would have to get relief by filing individual trade cases, Mount Airy, N.C.-based Insteel Industries Inc. chief executive officer H.O. Woltz III, who also serves as chair of the AWPA’s government relations committee, was told by government officials.

“But think about it this way: If hot-rolled (rod) prices rise in the US to the extent they might, then our foreign competitors can undercut us in the US without dumping. So you have no recourse in that case,” he told AMM on the sidelines of AWPA’s annual government affairs conference in Alexandria, Va. In other words, if US rod and wire product prices rise enough, then wire product exporters can sell their product in the US at below domestic market prices without undercutting their own home market prices, and therefore without any dumping liability.

The 232 “is a highly simplistic approach to a very complex steel supply problem. … And while it sounds good and it makes good headlines, it’s terrible policy,” Woltz said.

“It’s always a concern when you cut off access to global rod supply,” Mid-South Wire Co. president and new AWPA president John T. Johnson told AMM in the interview. “It’s just one less supply option we have, but we compete in a global economy.”

Downstream wire imports, which have ballooned since 2000, are arguably the biggest threat that AWPA members encounter in a globalized economy, he said.

“We are all dealing with imports of our finished products that have grown in market penetration,” according to Woltz, whose company sells products like pre-stressed concrete strand (PC strand) and welded wire reinforcement product.

“To the extent that we don’t have access to world market wire rod, then we’re uncompetitive,” he said. “That’s the real issue. It’s not that we just want to buy cheap rod for cheap rod’s sake. It’s that the basis of competition for many of our products is set by foreign (downstream) competition.”

Rod market participants, including several members of Washington-based AWPA, have speculated actively in recent weeks on whether any 232 protections will extend to downstream wire.

Frankly, AWPA leadership has been “told not to expect that,” Woltz said. “There’s just not enough infrastructure to accomplish that (wider scope) in the federal government. We’ve actually been told not to expect that (wider scope).”

One key reason is simply that downstream wire products range across “thousands” of harmonized tariff schedule (HTS) codes, the framework US officials use to classify imports. The AWPA received a similar response many years ago, when it proposed to expand the steel import licensing and monitoring system to downstream products, he said.

“The steel importing monitoring system, when that came along, we said: ‘That’s a pretty good idea, and you should extend that licensing, monitoring and reporting to downstream products,’” according to Woltz. “The response we got (from government) was: ‘You’re talking about thousands of HTS codes, and there’s no way we could deal with that.’”

The 232 is also “unnecessary,” he said, noting that US rod mills already have access to US anti-dumping and countervailing duty trade investigations, which they’ve used “with abandon.”  US rod producers are now battling for rod duties against 10 nations, even while existing orders on carbon, alloy and stainless rod mitigate imports from 10 other countries. Still, dozens of trade orders on downstream wire products also exist.

Both Woltz and Johnson’s companies are major buyers of both US and global rod, buying some 450,000 tons and 200,000 tons per year, respectively, according to US International Trade Commission (ITC) testimony from April. Both companies testified at the ITC, protesting import curbs in an ongoing rod trade case, alongside other top US rod buyers like Bekaert Corp. and Heico Wire Group.

“It’s not in the best interest of the downstream industries for 232 to be enacted,” Johnson said, voicing a widespread view. He noted that certain Congressmen he had visited, including US House Wire and Wire Products Caucus chair Rep. Jim Cooper (D., Tenn.), are “totally in agreement with not supporting 232.”

AWPA is also part of a downstream coalition that signed a letter to President Donald Trump in September underlining the harmful fallout of implementing Section 232 tariffs.

Nat Rudarakanchana

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