Manufacture This

The blog of the Alliance for American Manufacturing

Secretary Penny Pritzker and Sen. Sherrod Brown talk steel overcapacity in Cleveland.

Commerce Secretary Penny Pritzker joined Ohio Sen. Sherrod Brown (D) on Monday to tour the hot dip galvanizing line at the ArcelorMittal steel plant in Cleveland.

But Pritzker’s visit wasn’t just a fun photo op — it was about business. Brown, Pritzker and ArcelorMittal staff gathered to talk about the challenges facing the U.S. steel industry, most notably how China’s massive industrial overcapacity (and subsequent dumping of steel into the U.S. market) has led to about 19,000 layoffs and plant closures across the country.

Pritzker came to Cleveland offering some help. On Monday, the Commerce Department released a new series of reports looking at current steel trade flows among the world’s top importing and exporting countries. These reports will be the basis of a new Global Steel Trade Monitor that is expected to be implemented in 2017.

“The reports we are releasing today are in direct response to our industry’s desire for more comprehensive and transparent information about global steel trade trends, which will strengthen our companies and our government’s ability to address challenges facing this critical sector,” Pritzker said in a statement.

"Cleveland's ArcelorMittal is a testament to the productivity of our steelworkers and how competitive our steel manufacturers can be. But that success will be threatened if we don't deal with steel overcapacity long-term." Sen. Sherrod Brown (D-Ohio)

According to the Commerce Department, the new tool will define steel products across countries and will include graphical and data components, allowing users to compare and evaluate markets. The reports also will provide global steel data to “inform the public about current trends in steel trade flows.”

All of that data is important because it could help stem the flow of steel making its way into the U.S. from third-party nations.

Here's why that is so important.

There’s little doubt China is currently making way more steel than it needs. Despite repeated pledges to cut back on production, China continues to subsidize its steel industry and turn out product. But China has to get rid of all that extra steel, so it is dumping it into the U.S. market at rock bottom prices.

That’s unfair to U.S. companies and workers, who compete in an open market. The Commerce Department rightly has recognized this, and issued appropriate tariffs to help level the playing field. But some foreign producers have attempted to get around paying tariffs by selling their steel to third-party countries, who then dump it into the U.S. market.

The new monitoring tool is designed to track the excess capacity going into third party markets to see if it is making its way onto U.S. shores. “The Global Steel Monitor significantly enhances the scope of the Department’s monitoring and analysis of the steel sector,” said Paul Piquado, the assistant secretary for enforcement and compliance at the Commerce Department.

Unfairly traded steel imports remain a significant challenge for domestic steelmakers like ArcelorMittal, according to John Brett, president and CEO of ArcelorMittal USA. Antidumping and countervailing duty laws are “the most important tools available to us to combat unfair trade and allow us to compete at home and in the global marketplace,” he said.

Brown, who serves as co-chair of the Senate Steel Caucus, called ArcelorMittal’s Cleveland plant “a testament to the productivity of our steelworkers and how competitive our steel manufacturers can be.”

But he warned the United States must deal with the overcapacity problem in the long term.

“We must hold China to its trade obligations and that starts with finally reducing steel overcapacity that hurts U.S. workers,” Brown said. “I’m grateful Secretary Pritzker accepted by invitation to visit Ohio and learn firsthand what our steel companies face each day.”