U.S. Steel Files Trade Complaint Against China -- Update

By John W. Miller 

PITTSBURGH -- U.S. Steel Corp. on Tuesday filed a tough new trade complaint against China as it reported another quarter of disappointing results.

The company posted a net loss for the first quarter of $340 million, or $2.32 per share, down from $75 million, or $0.52 per share, in the same quarter a year ago. U.S. Steel now lost money in seven of the past eight quarters.

Net sales declined 30% to $2.3 billion from $3.3 billion.

Chief executive Mario Longhi said in a statement that the company would "remain focused on reducing our costs, improving the quality and reliability of our operations," and selling "differentiated," or higher quality, steel. That steel includes lighter-weight steel for auto manufacturing, at a time when car makers are looking for lighter materials and aluminum is increasingly competing with steel.

Mr. Longhi said the company is positioned to benefit in the second quarter from rising steel prices, which are being helped by falling inventories, and a pickup in demand, especially in the automotive market. The benchmark hot-rolled coil index has risen to $520 per ton, up 37% since Jan. 1., after falling 33% last year.

In addition, steel imports into the U.S., which had been increasing, declined 35% to 5.1 million tons in January and February of 2016 compared with the same period a year ago. Imports from China fell 70% to 119,895 tons.

But U.S. Steel is still seeking more trade protection. In a complaint filed Tuesday with the International Trade Commission it demanded penalties on Chinese steel imports which could include a total ban on imports into the U.S. In particular, U.S. Steel said that Chinese steelmakers conspired to fix prices, stole trade secrets and circumvented duties with false labeling.

"We have said that we will use every tool available to fight for fair trade," said Mr. Longhi. "With today's filing, we continue the work we have pursued through countervailing and anti-dumping cases and pushing for increased enforcement of existing laws."

The move by U.S. Steel comes amid rising tension between American metal makers and China, which has dramatically ramped up production and exports of steel and aluminum this decade. Chinese steel exports rose 22% last year to 100.4 million tons, while aluminum shipments increased 9% to 6.7 million tons.

This year already, the U.S. has slapped tariffs on imports of several categories of Chinese steel, partly as a result of complaints made last year by U.S. Steel. This month, the ITC announced an investigation into overproduction in global aluminum, a move that could pave the way for new tariffs on Chinese imports.

U.S. Steel made the announcement about the complaint shortly before reporting first quarter earnings. A spokesman for ArcelorMittal, which operates steel mills in the same regions as U.S. Steel, said the company hadn't been asked to support the petition.

A spokeswoman for the ITC said the complaint was being processed but it doesn't comment on the content of complaints.

The ITC held hearings in Washington earlier this month on damage suffered by the American steel sector.

The ITC now has 30 days to evaluate the petition and decide whether to initiate a case. After that, such a case can take up to 18 month to prosecute, according to trade experts.

Write to John W. Miller at [e-mail]

(END) Dow Jones Newswires

April 26, 2016 18:35 ET (22:35 GMT)

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