U.S. Steel charges at Chinese imports

John Wayne as Rooster Cogburn in "True Grit" (1969)

John Wayne as Rooster Cogburn in “True Grit” (1969)

U.S. Steel, once the vaunted industrial giant of the world, is taking one last Rooster Cogburn charge at the global steel crisis that has the Pittsburgh-based corporate titan cornered in some western meadow.

J.P. Morgan’s flagship corporation has been contracting for decades, illustrated perfectly by its move out of a Pittsburgh skyscraper into a much smaller suburban office complex. Like all steel companies, the recent glut of supply and downturn in steel prices has taken its toll on U.S. Steel.

The company reported bigger-than-expected losses in the first quarter of 2016, showing that its situation is dire.

U.S. Steel operates Minntac, the largest mine on the Iron Range, and Keewatin Taconite, which is currently shut down indefinitely. The company and its predecessors were instrumental in the early development of the Mesabi Iron Range, its story quite simply interwoven with that of Northern Minnesota’s people.

Now U.S. Steel is taking a dramatic step. It’s petitioning for an investigation into all Chinese steel imports that would halt the inflow of Chinese steel.

From the John Myers story in the Duluth News Tribune:

In a complaint to the U.S. International Trade Commission (ITC), U.S. Steel called on regulators to investigate dozens of Chinese producers and their distributors for allegedly conspiring to fix prices, stealing trade secrets and circumventing trade duties by false labeling.

Analysts said it could be the most significant development in U.S. steel trade in a quarter of a century, and probably will ratchet up tension between China and major steel-producing nations, as the global industry grapples with chronic oversupply and sluggish demand.

U.S. Steel’s move comes as China’s government directs its steel industry to resume heavy production, with an eye toward pushing the exports so vital to its enormous iron ore and steel sectors.

The global slowdown in steel has caused layoffs in the multi-millions in China, a much more socially disruptive event than the 2,000 layoffs we’ve seen on the Iron Range. Recent actions by the U.S. Commerce Department has prevented some of the most blatant “dumping” (selling steel for less than it costs to make). However, with a government-run industry like China’s, it’s difficult to prove and hard to prevent.

A sudden spike in steel prices, which many believe is part of a temporary mini-rally, only emboldens the Chinese decision to step up production.

From Bloomberg:

Steel prices have surged in China this year, with reinforcement-bar futures jumping 40 percent, after policy makers talked up growth, lending boomed and the property market rebounded. The gains have restored mills’ profitability and they are making more money on each ton produced than at any time since 2009, according to Bloomberg Intelligence.


China can just plain make steel cheaper than America, chiefly because it doesn’t need to worry about making a huge profit.

We’re now entering the next phase of this trade dispute. Addressing obviously illegal (or at least discouraged) steel dumping is one thing, but when does that policy enter the realm of protectionism, for which China could retaliate?

In True Grit, Rooster Cogburn prevails in his Quixotic double pistol charge against Ned Pepper’s bandits, but mostly by luck and with the help of others.

U.S. Steel will likely require the same. They don’t want a trade war. They need one.


  1. Independant says

    Don’t forget zero environmental regulations or labor laws as major factors in the price of Chinese steel.

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