Friday, July 14, 2006

Steel leaders blast China policies

If the Chinese government continues to subsidize its steel market, it could have devastating consequences for the future of American steel companies, industry heavyweights said Thursday.They called on the U.S. government to act aggressively in ensuring that China competes fairly in the global steel market.
Four steel industry groups released a report -- "The China syndrome: How subsidies and government intervention created the world's largest steel industry" -- which they have presented to the U.S. trade representative, the Department of Commerce and other relevant government agencies.The report was prepared under the sponsorship of the American Iron and Steel Institute, The Steel Manufacturers Association, The Speciality Steel Industry of North America and The Committee on Pipe and Tube Imports."The growth of the Chinese steel industry has been at the expense of its international competitors," the report states. The authors accused China of boosting the Chinese steel industry by providing a number of advantages, including loans at preferential rates, debt forgiveness, cash grants and manipulation of raw material prices.Daniel DiMicco, chief executive officer of Nucor Corp., said the Chinese steel industry has "exploded" over the last five years because its government is subsidizing steel imports and exports."The Chinese steel industry grew because the Chinese government decided it would," DiMicco said.Alan Price, a partner at Wiley Rein and Fielding LLP, who prepared the report, said that some of the Chinese government's steel subsidies violate their World Trade Organization agreement."We are asking them (China officials) to live up to its WTO obligations," DiMicco said. "It doesn't get much more simple than that, or fair.""The industry is very healthy," DiMicco said. "The issue is what is going to happen down the road."In the late 1990s, the U.S. steel industry experienced a crisis as a wave of illegal imports flooded the market, DiMicco said . "This is what we are looking at keeping from not happening," he said, adding that steel imports to the United States have increased 140 percent.Thomas Danjzcek, president of the Steel Manufacturers Association, said many steel plants in Indiana still enjoy a "strong customer base," and though China is a problem, the state's steel industry is "still competitive today."David Allen, spokesman for Chicago-based Mittal Steel USA, said business has been good over the past year, but company officials are aware of Chinese steel production."Just the very size of China makes it a big player," Allen said.U.S. Rep. Pete Visclosky, D-Ind., said it is time for President Bush to "take a stand" against China's illegal trade activity."This report is further proof that the Chinese will do whatever it takes to illegally dump steel into the global marketplace, causing more American jobs to be shipped overseas," Visclosky, of Merrillville, said in a statement Thursday.The president of the Independent Steelworkers Union, Mark Glyptis, said U.S. steelworkers have been aware of the "danger" China's industry presents.Glyptis said China's steel industry currently is producing primarily for its domestic market, but in the near future "we will see Chinese steel flowing into American markets."Steel analyst Charles Bradford, however, was critical of Thursday's report. He said it neglected to mention that China consistently has been a big net importer of steel "until the last few months.""Their exports go much more to South Korea than to us," said Bradford, of New York-based Bradford Research. "What they are exporting to us is a low-calibre product. What the U.S. steel industry is good at is blaming foreigners for domestic problems."

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