HELSINKI (Reuters) - Finland’s Outokumpu, one of the world’s largest stainless steelmakers, said the United States would grant very few steel tariff exemption requests, adding it expected U.S. stainless prices to resume their upward trend as a result.
U.S. President Donald Trump slapped a 25 percent tariff on imported steel this spring but allowed companies to apply for exemptions if the metals they needed were not available in sufficient quality or quantity, or in reasonable time.
As of Aug. 20, the U.S. Commerce Department had received more than 37,000 exemption requests but approved just 1,780, despite hiring extra employees and contractors to deal with the deluge of requests.
U.S. stainless prices have recently held steady despite the tariffs, but Outokumpu said the pause was temporary and U.S. prices should resume their upward trajectory.
“As always with trade disruptions, the dust has to settle,” Outokumpu Chief Executive Roeland Baan told Reuters at an industry gathering in Helsinki.
He said U.S. importers were officially paying the tariff but steelmakers outside the United States were effectively absorbing it by lowering their export prices by some 25 percent.
“They’re doing this because they expect that ultimately their clients will get exemptions. That’s not going to happen. When (this) becomes clear, I see more upside potential for pricing in the U.S.,” he said.
Outokumpu reported record high stainless deliveries in the second quarter, but earnings fell 32 percent due to higher U.S. costs and lower stainless prices in Europe, where imports have surged as an indirect result of the U.S. tariffs.
Baan said European orders had yet to pick up despite the EU having, since July, imposed both tariffs and quotas on steel imports in a bid to prevent steel originally meant for the United States from being diverted to Europe.
“(Stainless) imports are still taking up almost a third of the EU market,” said Baan. But he said EU producers would feel the benefits of the EU measures by the end of the year as import quotas would by then be full.
Outokumpu’s largest competitors include China’s Tsingshan and TISCO, Spain’s Acerinox and Luxembourg-based Aperam.
Reporting by Maytaal Angel; Editing by Edmund Blair