The U.S. steel industry continues to press its case that the federal government is allowing too much cheap foreign steel to be dumped on the American market, thereby jeopardizing the jobs of half a million U.S. steelworkers.
A report issued yesterday by the Economic Policy Institute supports the industry's case. The report states that global excess steel capacity is over half a billion metric tons—more that twice the volume of the surplus that followed the 1998 Asian financial crisis—and that state-backed foreign steelmakers have targeted America's large, open market to offload that excess supply.
The market sector feeling the biggest impact is oil-country tubular goods (OCTG)—the pipe and steel infrastructure used for energy exploration. The Economic Policy Institute report states that OCTG imports from nine countries, chief among them South Korea, more than doubled between 2010 and 2012, and, as a result, domestic steelmakers’ production, capacity utilization, shipments, and sales have all fallen.
And in a rare show of unity, Senators Sherrod Brown, D-Ohio, and Jeff Sessions, R-Ala.—both from heavy steel-producing states—participated in a media conference call to support that case.
"American steelmakers and workers can compete with anyone in the world with a level playing field," Brown said. "But American producers are increasingly losing sales to foreign competitors like Korea because OCTG imports are being dumped into the U.S. market. Full enforcement of our trade laws is critical for the future of this industry and its workers."
Sessions said the South Korean companies "see us as a big fat market that they can exploit when they're in trouble to keep their employees working."
"We're not in a free market," Sessions said. "I think the ideal of trade is correct, but I don't think the single, overriding goal must always be the lowest price for everybody in America."
Macro Market Damage
Scott Paul, president of the Alliance for American Manufacturing, said South Korea has no domestic demand for oil-country tubular goods and exports almost all of the OCTG it produces to the United States at below market value.
"If Congress doesn't act, we'll head down the path of swapping our dependence on foreign oil with a dependence on foreign energy infrastructure," Paul said.
And the damage extends beyond the OCTG market segment. According to the Economic Policy Institute report, the macro U.S. steel industry has sustained significant damage due to cheap imports of all types of steel since the economy started to rebound from the Great Recession.
The report states that domestic steel imports increased by 12.8% from 2011 to 2013, and surged even more sharply in the first two months of 2014, hitting 6.4 million net tons, an increase of 24.5% over the corresponding period of 2013.
The loss of market share has translated into depressed domestic steel production and revenues, leading to sharp declines in net income in the U.S. steel industry over the past two years, as well as layoffs for thousands of American workers, the EPI report states.