* U.S. Commerce Department says is reviewing request
* Russian steelmakers play down risk to sales
(Changes dateline, adds reaction from Russian steel producers)
By Krista Hughes
WASHINGTON/MOSCOW, July 11 U.S. steel producers
on Thursday accused Russia of flooding the market with cheap
flat-rolled steel, challenging a 15-year trade deal and
potentially reigniting a decades-old dispute over imports amid
heightened tensions between Washington and Moscow.
In a submission to the Commerce Department, Nucor Corp
, U.S. Steel Corp, ArcelorMittal USA LLC
and others said the agreement had not stopped
Russian producers from undercutting local prices or flooding the
U.S. market with a 1,400 percent shipment increase in the first
half of 2014 compared with the year-ago period.
"The agreement has failed in achieving its statutory purpose
and thus should be promptly terminated," said the submission,
released by steel industry lawyers.
Scrapping the 1999 agreement would be in line with the U.S.
administration's tougher stance towards Russia following a
flare-up in tensions over Ukraine, including dropping the
country from a trade benefits program.
Russian steelmakers played down the impact of scrapping the
deal, suggesting there would be little risk to their revenues as
the north American market took only a small part of their
overall exports. Russia's Severstal said it had met
the terms of the agreement.
The so-called suspension agreement has sheltered Russian
steelmakers from steep anti-dumping duties on hot-rolled coil
(HRC), instead setting a cap on imports and a minimum price.
Reuters reported last month that the industry was considering
challenging the trade deal.
But the industry's submission noted that the reference price
had been below U.S. market prices since 2004, with the gap
widening to more than $180 in the second quarter. Russian prices
were also lower than any other imports sold in U.S. markets.
"This consistent disconnect between the price of imports
from Russia and those from other markets demonstrates that the
suspension agreement is not working," said Alan Price, an
attorney from Wiley Rein representing Nucor Corp.
"The failure of the suspension agreement to prevent
underselling is allowing Russian producers to sell significant
and injurious volumes of hot-rolled steel into the U.S. market,"
The call to scrap the deal follows travel bans and asset
freezes imposed on Russian officials after Russia seized the
Crimean Peninsula from Ukraine earlier this year.
Russia is a major HRC supplier and the move also reflects
concerns about weak global prices, oversupply and sluggish
demand for hot-rolled steel, used in appliances and autos.
A Commerce Department official said the department was
reviewing the request, which came a day before a closely watched
decision over anti-dumping duties on imports of pipe used in the
oil and gas industries.
If the agreement is ditched, Severstal would be hit with
anti-dumping duties of 73.59 percent. Other Russian producers,
such as Novolipetsk Steel (NLMK) and Magnitogorsk Iron
and Steel Works (MMK), would face duties of 184.56
NLMK declined to comment on the report, but according to the
company's website it earned $510 million from sales to north
America in the first quarter, up 38 percent year-on-year in
dollar terms and up 56 percent in terms of volume.
Severstal said its HRC supplies were in line with the
agreement, while "a certain increase" in 2014 steel products
exports was due to the fact that levels were low in 2013.
MMK said its traditional markets were Russia and countries
belonging to the Commonwealth of Independent States, a loose
grouping of former Soviet states. Combined, the markets took 88
percent of its steel products production in 2013.
It added that the company derived two percent of its revenue
from supplies to north America in the first quarter.
"The company does not see risks if the U.S. government
raises import duties for rolled steel," MMK said in an emailed
The original deal was agreed as the United States moved to
stem a flood of Russian steel imports after the Cold War ended.
It can be terminated with 60 days notice and duties would apply
The submission was also signed by Gallatin Steel Company,
Steel Dynamics and SSAB.
(Reporting by Krista Hughes; Additional reporting by Svetlana
Burmistrova and Polina Devitt in Moscow; Editing by James
Dalgleish, Richard Chang and Keiron Henderson)