AK Steel, Allegheny Technologies Inc. face dumping charges

Joe Napsha
| Wednesday, June 3, 2009

Chinese trade authorities are investigating two companies with plants in Western Pennsylvania on charges they violated trade laws by selling steel at less than it costs to produce — the first such case against U.S. steel companies, experts say.

Allegheny Technologies Inc. of Pittsburgh and AK Steel Corp. of West Chester, Ohio, have been identified as the targets of the Chinese Ministry of Commerce's investigation into the sale of grain-oriented flat-rolled electrical steel in China. An unidentified Russian company also is targeted in the probe prompted by complaints from two Chinese steelmakers.

The investigation, which is to be completed by next June, will seek to determine whether so-called dumping and subsidies from the U.S. government damaged China's electrical steel industry and the extent of damage, the Chinese trade ministry said.

China said the probe will follow World Trade Organization rules, but did not say what sanctions it might impose.

Allegheny Technologies produces grain-oriented electrical steel at its ATI Allegheny Ludlum mill in Brackenridge and finishes it at its Bagdad plant in Allegheny Township, Westmoreland County. That kind of steel is used in making power distribution and power generation transformers for the electrical energy market.

AK Steel produces that kind of specialty electrical steel at its Butler plant. The company last year announced plans to invest $21 million to expand production capabilities because of strong demand in U.S. and global markets.

Allegheny Technologies spokesman Daniel Greenfield and AK Steel spokesman Alan McCoy could not be reached for comment. Allegheny Technologies has two offices in China's capital city of Beijing and a joint venture plant in Shanghai.

"It appears all these allegations are bogus. There's no evidence to support the allegations," said Nancy Gravatt, a spokeswoman for the American Iron and Steel Institute, a trade group based in Washington.

Gravatt, who said she was not aware of any previous Chinese trade complaint against a U.S. steelmaker, said it is ironic for the Chinese steel industry to raise such a complaint "when most of the Chinese steel companies are owned by the government and receive tens of billions of dollars in subsidies."

While China has filed trade complaints against other U.S. manufacturers, Roger Schagrin, a Washington attorney who has filed 15 trade complaints on behalf of U.S. steelmakers and the United Steelworkers union, said he has never seen China file a claim of its own.

Schagrin doubted the complaint by the Chinese companies is an indication of a pending trade war with the United States, nor did he see any significance that the news was released while Treasury Secretary Timothy Geithner is in China on trade talks.

In addition, it's unlikely the trade case was filed in retaliation for seven U.S. steelmakers in April seeking sanctions against Chinese producers of oil tubular products they claimed were dumped on the U.S. market, said David Phelps, president of the American Institute for International Steel Inc., a Washington trade group supporting free trade in steel.

"It doesn't make a lot of sense to file a dumping case on products that you need," Phelps said, referring to the electrical steel sold by U.S. companies. But "trade cases tend to bring on other trade cases," he said.

U.S. producers of electrical steel sheet products sold 7,800 tons in China in the first quarter, Phelps said, citing Department of Commerce statistics. China is the third or fourth largest importer of steel, he noted.

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