Domestic steelmakers seek gov't protection

The steel industry has appealed to the government for protective measures against a growing tide of cheap steel imports diverted to the Polish market by U.S. tariffs. Meanwhile, Polish steelmakers hope their exemption from the tariffs and soaring U.S. steel prices will finally give them a foothold in the U.S. market. The Polish steel industry is rapidly losing market share to imported products, which represented 46% of domestic steel sales in 2001, resulting in falling production and revenues, according to Metallurgical Chamber of Industry and Commerce (HIPH) figures. The 11.3% drop in first-quarter production this year comes at a time when the industry urgently requires funds to restructure, allowing it to compete on the European Union market without subsidies by 2005. Without government safeguards, recent market protection measures in the U.S. and EU countermeasures threaten to further compound these problems, steel makers said.

"The negative consequence of the U.S. and EU decisions is that exports … deflected from those markets can potentially find their way onto our market, increasing the already high volume of domestic imports," said Romuald Talarek, chairman of HIPH. "This chamber, which represents Polish producers ... has prepared an analysis of the Polish market that will form the basis for ministerial decisions." In April the United States introduced punitive tariffs of up to 30% on selected steel products and imposed additional anti-dumping duties on individual steel producers. The measures mean that steelmakers in Japan, South Korea, Russia and the European Union will need to find alternative markets for up to 1.5 million tonnes of steel this year, according to U.K. steel consultancy Meps. Fearful of the fate of its own mills, the EU followed by introducing import registration and strict import ceilings, allowing foreign producers to increase exports by only 10% compared to 1999-2001. So far Hungary is the only Central European country to introduce safeguards against U.S. overspill, which will apply from June 3 to December and protect a list of 15 domestically produced products. Last month the HIPH submitted a motion to the Economy Ministry to initiate protective measures against imports of all steel products that compete with domestic output. Talarek would not comment on the measures HIPH members would like to see the Economy Ministry impose. According to the Economy Ministry's press office, applications for protective measures may need to be examined for several months before a decision can be made.

Opportunity knocks But the U.S. tariffs could offer some benefits for steel producers in Poland, which along with all countries that deliver less than 3% of U.S. steel imports are exempt from tariffs under the rules of the World Trade Organization (WTO). After the launch of the U.S. import blockade, U.S. steel prices rose significantly as clients built up reserves in case of shortages, significantly increasing the profitability of Polish steel exports to the U.S. Last week a metric ton of hot-rolled coil fetched $255 in Europe and $400 in the U.S., according to U.K. steel consultancy Commodities Research Group (CRU). "Even discounting shipping costs this is still a substantial margin for profit," said John Johnson, carbon steel products research manager at CRU. One mill that jumped at the opportunity to sell its products at U.S. prices is Huta Buczek of Ostrowiec, which supplies rollers, stainless steel pipes and welded tubes and profiles to the steel, automotive, power, furniture and chemical industries. Last week the company appointed U.S. steel import company Polish Steel Sales to be its exclusive North American sales representative. "The U.S. has brought in barriers for other suppliers, but not for Poland," said Zbigniew Sikora, commercial director of Huta Buczek. "Perhaps this will serve as an opportunity for the Polish steel industry to debut on the U.S. steel market ... at the moment we have no sales in the U.S. so any sales would mean progress."