NEW YORK The flow of
Russian hot-rolled steel into the U.S. market will likely slow
due to uncompetitive prices following last weeks revised
U.S.-Russian suspension agreement, market sources told
Under the terms of the draft
agreement, the minimum prices for Russian hot-rolled steel sold
in the United States would be increased to "bring them into
alignment with current U.S. prices."
Reference prices for the three
months ending Dec. 3 will rise about 47 percent, with
commercial- and structural-quality steel moving to $601.75 per
tonne from $409.01 per tonne, high-strength low-alloy steel to
$661.92 per tonne from $449.05 per tonne, and high-grade coil
and sheet for pipe and casing to $770.24 per tonne from $522.10
"At the new prices, no one would
be interested in paying for foreign product," one steel trader
said, noting that Russian prices now effectively match domestic
levels. "If the U.S. price weakens, even just a bit, it
wouldnt make any sense."
However, the domestic industry
argues that the revised agreement creates a more level playing
"The old agreements
reference prices were no longer preventing price undercutting
in the way the formula was calculated. This new agreement
establishes a new benchmark, which is more reflective of market
conditions," Alan Price, partner at Wiley Rein LLP and counsel
to Charlotte, N.C.-based Nucor Corp., told AMM.
"Under the existing statutes, a
suspension agreement must prevent undercutting. The new price
is much more likely to do so."
The U.S. Commerce Department and
Russia reached the tentative agreement on hot-rolled steel
imports Friday (
amm.com, Nov. 16).
The suspension agreement allows
Russia to ship steel to the United States as long as it remains
below a certain annual volume threshold and above a certain
quarterly pricing point. However, the Commerce
Departments International Trade Administration said
earlier this year that the deal no longer prevented the
undercutting of domestic prices, and as such was considering
terminating the arrangement if no compromise could be reached
amm.com, May 29).
Meanwhile, others argue that
with limited foreign mills offering hot-rolled steel at prices
competitive enough for the U.S. market, the increased prices
are bad for the spot market.
"It basically means Russia is
out of the running," a second trader said. "Basically, this
(draft) deal is more or less not even having a deal at all.
There are lower numbers from Brazil and Turkey out there;
itll be impossible to make Russia work."
Some 43,980 tonnes of Russian
hot-rolled sheet and some 92,493 tonnes of Russian
plate-in-coils hit U.S. shores in April, marking the highest
figures in more than a year, according to Commerce Department
data. Those tallies have since dropped off dramatically,
however, with just 941.7 tonnes of sheet and no plate licensed
to arrive at U.S. ports in October due to uncertainty over the
Moving forward, some say that
selling Russian hot-rolled steel will be a matter of where
domestic prices move.
"Right now, its a matter
of differential between domestic and foreign prices. The
domestic prices have been so volatile in the last three years;
thats what makes buying foreign steel risky," the first
trader said. "The Russians havent been selling here (in
the past few months), and maybe they dont care so much
Public comments can be submitted
to Commerce by Nov. 23, with final revisions to be signed by
Nov. 30, according to the draft.