WAR: Eramet and GAA (Nikopol and Felman) square off in the ITC over SiMn duties, part 1

The gloves were definitely OFF the recent ITC hearing on whether the US duties on imports of silicomanganese from Ukraine and China should be abolished. The duties are 150% against China and 163% against the Ukraine.

As opposed to virtually all US dumping cases, this one pits US producer (Eramet Marietta) against US producer Felman along with the Ukrainian producers.
The ITC will have the final word and will vote on Nov. 2 whether to lift the duties.

On one side are the two Ukrainian producers, Nikopol Ferroalloy Plant (NFP) and Zaporozhye (ZFP). The Ukrainian producers maintain that their major silicomanganese product contains high P and thus doesn’t pose a competitive threat to the standard-grade silicomanganese produced by Eramet and used by most of the US’s steel producers.

NFP and ZFP say their silicomanganese contains 0.5% P which is out of the normal ASTM specification of 0.20% P. As a result, it can’t compete against other imports or Eramet’s output. Also, the ITC made a distinction separating standard-grade silicomanganese from low-carbon silicomanganese for an earlier dumping investigation.

While NFP and ZFP can producer in spec silicomanganese it would require high-priced ore from Australia, which they couldn’t afford, and it would also pose logistical problems in getting the ore to the plants.

In addition, lawyers for NFP and ZFP say the third Ukrainian silicomanganese smelter, Stakhanov is 1) not in operation and is heavily damaged without water or power and 2) is no longer technically in the Ukraine but under “rebel” control in the Russian controlled Lugansk People’s Republic.

Furthermore, the Ukraine is a market economy and is a member of the EU. The Ukrainian producers have already developed long-term relationships that could preclude significant sales to the US. The producers would only gradually enter the US market and make limited fixed price sales for testing and certification purposes to US mills.

Eramet took the offensive almost immediately.

The largest US producer said that many US mills can use the high P silicomanganese and in fact NFP and ZFP have significant standard-spec silicomanganese production

As for future sales, NFP and UFP said their P material will be sold at market-based prices and is no longer under government scrutiny since 2006.

Finally, the producers’ lawyers told the ITC that it wasn’t fair to lump the Ukraine with China in this investigation since China is a non-market economy country and produces standard spec silicomanganese.

The two Ukrainian producers have developed long-term relationships and are unlikely to export much to the US.  They also don’t have any experience selling to US mills since the duties were imposed in 1994.

Finally, US steel production is increasing and will need more imports just when Indian steel is also increasing which will lead to India becoming a net importer of silicomanganese instead of an exporter.

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Alex Andreev

Patrick, nice report but two remarks. 1) Ukraine is NOT the member of the EU (so far at least), but the associated member. 2) It’s incorrect to use “the” with the name of Ukraine