Over the past year or so, nail prices in the United States have become extremely competitive and have reached levels that could hamper U.S. suppliers. In response, Mid Continent Steel & Wire, Inc. (Mid Continent) of Poplar Bluff, Missouri recently filed duty cases against foreign importers. The case seeks antidumping and countervailing duties on imports of steel nails from India, the Republic of Korea, Malaysia, the Sultanate of Oman, Taiwan, the Republic of Turkey, and the Socialist Republic of Vietnam.
The U.S. Department of Commerce (Commerce) and the U.S. International Trade Commission (ITC) will consider these petitions that could significantly alter the landscape of the construction and pallet nail markets. Mid Continent alleges that traded imports of steel nails from these seven countries are materially injuring the U.S. industry. This petition also identifies dozens of foreign government programs that likely provide unfair subsidies to producers of steel nails in these countries. The amounts of those subsidies will be determined by Commerce.
“Mid Continent Steel & Wire remains as firmly committed to U.S. manufacturing and the valuable jobs and benefits it brings to our community as the day my brother and I started the company over 25 years ago,” said David W. Libla, president and CEO of Mid Continent. “As this third set of cases in seven years should make clear, we will continue to vigorously defend our markets, our workers, and the bedrock principles of free and fair competition. We are and have always been ready and willing to compete with any producer in the world, so long as they abide by the trade laws their countries have agreed to follow. That will not change.”
Antidumping duties are intended to offset the amount by which a product is sold at less than fair value in the United States (i.e., the amount by which the product is sold below production costs or at a price that is below the price charged in a comparable market). Countervailing duties are intended to offset the amount by which a product is improperly subsidized by a foreign government.
Mid Continent stated that dumped imports of steel nails from these countries constitute a large and increasing share of the U.S. market. Imports of nails from these countries surged nearly 90% from 2011 to 2013, growing from 134,821 short tons in 2011 to nearly 255,639 short tons in 2013. Shipments of steel nails from the countries identified in the petition accounted for 51.2% of all nail imports in 2013, compared to 30.4% in 2011. This enormous increase far outstrips the improvements that have been made in the U.S. housing market in recent years, according to Mid Continent.
Pallet nail prices have dropped over the last year. One major importer said that in many cases prices are being quoted that are way below what has been traditional cost structures. This could be in part due to nails coming from China that are reboxed/finished in other countries as well as the impact of more dealers in the market competing for limited business.
George Skarich, executive vice president of Mid Continent said, “The nail prices on the street compared to the cost of good and the raw material prices are worse than they have ever been.”
This new set of cases comes two years after the Commerce Department imposed antidumping duties on imports of steel nails from the United Arab Emirates, and six years after antidumping duties were imposed on imports of steel nails from China. Both antidumping orders remain in place, and in January 2014 Commerce renewed the China order for at least another five years.
The filing of the petition starts the process by which Commerce will determine whether imports are being dumped and unfairly subsidized, and the ITC will determine whether the U.S. steel nail industry has been materially injured, or is threatened with injury, by reason of the imports. The ITC must reach its preliminary determination of material injury or threat of material injury within 45 days, or no later than July 14, 2014. Commerce is required to announce preliminary countervailing duties in 85 days and preliminary antidumping duties in 160 days, though both deadlines may be extended.
A likely timeline suggest that next year in the May/June timeframe the final determinations will be made by both Commerce and ITC. Assuming the petitions are approved, it looks like U.S. pallet companies should be able to continue to use existing imported nails until sometime next year.
Current suppliers who are importing from the targeted countries have a number of options. They can find new sources, which can be difficult due to the quality tolerances required, particularly for bulk nails used in automated lines. Or they can simply stop selling products or pay the duties. But nobody is going to really continue to do business if they have to pay the high duty rates. The costs and risks for the importer of record are just too high.
Mid Continent is bringing the petition on behalf of all U.S. nail producers. Mid Continent is one of the largest producers of steel nails in the United States with customers throughout the country.
