The U.S. International Trade Commission (ITC) announced in July that imports of nails from China were injuring the domestic nail market. By a unanimous 6-0 decision, the ITC approved import tariffs ranging from 21.24% to 118%. The higher rate applies to suppliers across China that did not provide data for the ITC’s analysis. For all practical purposes, pallet nails from China have a 21.24% tariff, which became effective in January. Those Chinese tariffs had been as high as 48% until the ITC made some changes to its methodology. The ITC ruled earlier in the year that imports from the United Arab Emirates were not sold at less than fair value and would not be subject to a tariff.
The ITC ruled on a number of domestic producers that have sourced material from China as well. It concluded that Paslode Fasteners has not subsidized its nails while Chinese sources for Senco, Specialty Fastening, and Stanley will be subject to the tariff.
Investigations were initiated in May, 2007 at the request of petitioners Mid Continent Nail Corp., David Wire Corp., Gerdau Ameristeel Corp., Maze Nails, Treasure Coast Fasteners, Inc. and the United Steel, Paper and Forestry, Rubber, Manufacturing, Energy, Allied Industrial and Service Workers International Union. American consumers claimed that Chinese producers received massive subsidies from the Chinese government that allowed them to sell way below true market costs.
The ITC concluded, “Chinese imports made significant gains in market share over the period examined during a time of declining consumption. The increase in import share of the U.S. market from 2005 to 2007 was accompanied by a steady decline in domestic producers’ market share.”
While the legal council representing the nail industry seemed to be happy with this final resolution, the domestic producers have announced their intention to appeal the decision on the level of the duties that must be paid by importers.
Paul Rosenthal, lead council for the petitioning companies, said, “The Commerce Department’s dumping determination understates the level of dumping by foreign producers and we will appeal certain aspects of the agency’s determination to the Court of International Trade.” The appeal will also address the earlier decision to exclude nail imports from the United Arab Emirates.
The appeal is currently being considered and could impact the final tariff rate and who is covered depending on the outcome.
Rosenthal added, “The domestic industry plans to aggressively pursue importer schemes to evade or circumvent the antidumping duties that rightfully should be paid.” He mentioned that he expected duties to increase for certain companies as a result of future administrative proceedings.
Nails bought by the pallet industry are either manufactured domestically or imported from other countries. Nail prices started edging higher last year but turned into a huge increase from January through the spring months. The driving force behind these higher prices has been a worldwide commodity steel market that has been out of control.
Bulk pallet nail prices have increased at least 60-70% in the past nine months. The tariff had a limited impact on overall domestic nail prices and those from other major nail supplying countries, such as Korea. The market is still in flux as to whether some of the suppliers that had relocated to China from other Asian countries will move back to their former countries due to the tariffs.
What we do know is that China has gone from a major industry nail supplier to just about a nonentity since early this year. The nail tariff that took affect in January removed the advantages that China had as a nail supplier.
For more information, access a free copy of the ITC report by visiting http://hotdocs.usitc.gov/docs/pubs/701_731/pub4022.pdf.
Editor’s Note: Industrial Reporting has been reporting on the details behind the world steel shortage and its impact on pallet nails, including the nail tariff issue. We have used the Pallet Profile Weekly and Recycle Record as our primary publications to keep readers up to date with breaking details because of their timely delivery. This piece in the Pallet Enterprise combines the piece that first appeared in the Pallet Profile on July 11 with some additional material to put a current perspective on pallet nails and the nail tariff.
To keep updated on issues impacting pallet nail prices, pallet lumber prices, and other important factors that impact the pallet market, contact us at 804/550-0232 to get on the circulation list for the Pallet Profile, the only market related report for the pallet industry.
Covered Nails:
Certain steel nails having a shaft length up to 12 inches. Certain steel nails include, but are not limited to, nails made of round wire and nails that are cut. Certain steel nails may be of one piece construction or constructed of two or more pieces. Certain steel nails may be produced from any type of steel, and have a variety of finishes, heads, shanks, point types, shaft lengths and shaft diameters.
Excluded from the scope of this proceeding are all roofing nails and corrugated nails as well as certain brads and finish nails that are equal to or less than 0.0720 inches in shank diameter, round or rectangular in cross section, between 0.375 inches and 2.5 inches in length, and that are collated with adhesive or polyester film tape backed with a heat seal adhesive.
Nail Trends & Facts
• There has been a shift from sales of bulk nails to collated nails due in large part to the increased availability and affordability of nail guns.
• Apparent U.S. consumption of steel nails declined steadily from 1.18 million short tons in 2005 to 912,175 short tons in 2007, for an overall decrease of 22.7%. It has been impacted by the downturn in the construction market.
• U.S. producers’ reported capacity utilization decreased from 39.8% in 2005 to 22.7% in 2007. Overall, the level of capacity utilization indicates that U.S. producers of steel nails have large amounts of currently available capacity with which they could increase production of steel nails in the event of a price change.
• A number of U.S. producers of steel nails reported both mill closures and the consolidation and curtailment of production from 2005 to 2007. The domestic industry historically has supplied only a portion of the U.S. market for steel nails, with the remainder being supplied by imports.
• U.S. producers of steel nails have experienced numerous changes in the last three years. For example, in 2005, Mid Continent closed its Arkansas facility, in January 2007 it closed its Virginia plant, and in March 2007 it closed its Texas facility. In addition, Keystone ceased operations in December 2006, and Gerdau closed its nail production facility in January 2008. (Source: ITC)
