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Steelmaker hit by dumping

June 5, 2012
Salem News

RG Steel's decision to file for Chapter 11 bankruptcy protection involves complex problems defying simplistic solutions. For the sake of hundreds of Ohio Valley families who depend on paychecks from the company, it is to be hoped ways can be found to keep the RG facilities open - under that company or others willing to buy the assets.

At its most basic, the challenge of buying and operating a steel company during a severe recession proved to be too much for RG Steel's parent company, based in New York. Times remain tough for many U.S. steelmakers. Though capacity utilization nationally has rebounded somewhat from the depths of the recession, it remains under 80 percent, up only slightly more than 5 percent since last spring.

Part of the reason for that is the recession, of course. But U.S. mills continue to suffer from foreign competition, and it may be growing stronger.

During 2011 and the first five months of this year, imports of steel from other countries skyrocketed. Imports in March were nearly 30 percent above those for March 2011, according to the Commerce Department.

And it may come as no surprise that China, a troublesome trading partner for many years, was a leading exporter of steel to the United States. Imports from that country in March were nearly 60 percent higher than for the same month last year.

China's slumping economy has been cited by some analysts as a factor in that. But that raises an old question about foreign competition in the steel industry: Unable to sell all their production domestically, are Chinese steelmakers "dumping" steel here?

Dumping, as most Ohio Valley residents probably remember, is the practice of selling goods at below the actual cost of production. Countries such as China, where the government remains a key player in industry, can do that. Steelmakers in the United States cannot engage in the practice for long, because they enjoy no government subsidies.

There probably is not much Congress can do to help the steel industry. A fresh look into dumping, however, may be in order.



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