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SSINA: Chinese steel tests embargo.

U.S. stainless steel producers say they're getting shafted by an embargo that prevents them from buying Cuban nickel--and by lax enforcement of that same embargo, which allows China to compete unfairly, undercutting domestic steelmakers.

For two years now, the Specialty Steel Industry of North America has asked the U.S. government to investigate potential abuses of the embargo, but to no avail.

"Nickel is one of the most important alloys in the production of stainless steel, and our industry is concerned that there is a lot of Cuban nickel in Chinese steel exports to the United States," said attorney Laurence Lasoff of the prominent Washington law firm of Kelley Drye & Warren.

Lasoff represents the Specialty Steel Industry of North America, half of whose 10 member companies are based in Pennsylvania (see box at right) .

"Over 90% of Cuba's nickel production is ultimately exported to China," Lasoff told CubaNews. "We believe China is getting a significant benefit by the fact it can source Cuban nickel and U.S. producers cannot. So we have this dilemma. In order to have some degree of parity here, either we enforce the embargo against Chinese imports, or it's time to remove the embargo so that U.S. stainless steel producers are not put at a disadvantage."

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Anywhere from 15% to 25% of American consumption of stainless steel is currently imported, and China consistently ranks as one of the world's top three suppliers to the U.S. market, along with Mexico and Taiwan.

From January to August 2010, according to SSINA statistics, Mexico shipped 55.8 million kg of long and flat stainless-steel products to the United States, or 15.73% of all imported steel. In 2nd place was China, supplying 45.4 million kg, or 12.82% of the total, followed by Taiwan, Germany and Sweden.

"We are concerned. There's a long history of our industry being highly import-sensitive," said Lasoff, noting that China is now getting into the super-alloy market, which has a number of applications in aerospace and defense.

"The embargo regulations make it explicit that not only does it extend to goods of Cuban origin, but also to materials bearing Cuban nickel," Lasoff explained. "In the 1980s, the U.S. banned imports of stainless steel from the Soviet Union because they refused to certify that the product did not contain Cuban nickel."

In testimony submitted earlier this year to the House Ways & Means Committee, SSINA officials demanded to know why the Treasury Department's Office of Foreign Assets Control (OFAC) has not pursued a more aggressive policy against Chinese companies that export stainless steel to the United States.

"Indeed, the U.S. previously entered into bilateral agreements with respect to stainless steel producers in Japan, Italy and France, to ensure that imports from those producers did not contain Cuban nickel," said SSINA Chairman Sunil Widge, who's also senior vice-president at Carpenter Technology in Reading, Pa.

Widge complained that "a failure to enforce the embargo ... places the domestic specialty metals industry at a distinct disadvantage by allowing China to avail itself of the world's largest nickel reserves, while simultaneously denying the U.S. industry the same access."

OFAC spokeswoman Marti Adams did not return phone calls seeking comment.

Details: Larry Lasoff, Kelley Drye & Warren, 3050 K St. NW, Washington, DC 20007. Tel: (202) 342-8530. URL: www.ssina.com.

The following 10 companies are members of the Specialty Steel Industry of North America (SSINA), which wants to investigate U.S. imports of Chinese stainless steel due to potential Cuban nickel content: Allegheny Ludlum (Pittsburgh, PA); ATI Allvac (Monroe, NC); Carpenter Technology (Reading, PA); Electralloy (Oil City, PA); Latrobe Specialty Steel (Latrobe, PA); North American Stainless (Ghent, KY); Outokumpu Stainless (Schaumburg, IL); Talley Metals Technology (Hartsville, SC); Universal Stainless & Alloy Products (Bridgeville, PA), and Valbruna Slater Stainless (Fort Wayne, IN).
2010

2008   Phase One of an expansion project
       ureases Moa Nickel plant
       capacity to 37,000 tons per year.
       Further expansion is tied to market
       prices and temporarily halted.

2007   Record-high world nickel prices
       prompt various expansion and
       development projects involving
       Chinese, Venezuelan, Australian
       and Canadian investors. They are
       later shelved as prices collapse.

2000   After a last effort to finish Las
       Camariocas project with Russia's
       Norilsk Nickel failed, the plant is
       permanently abandoned.

1994   With production at its lowest in
       30 years, Sherritt International
       Corp. joints Cuba's Compania
       General del Niquel to operate the
       Pedro Soto plant (renamed Moa
       Nickel S.A.).

1991   Soviet Union vanishes. Las
       Camariocas project is halted at
       70% completion.

1990   The Ernesto Guevara
       plant temporarily shuts
       down to save fuel.

1986   The Ernesto Guevara plant
       begins operations using 6.5 times
       more fuel than the old Moa plant.

1903   Construction of a fourth plant starts
       at Las Camariocas, Moa with
       capacity of 30,000 tons per year.

1980

1974   The future Ernesto Guevara
       plant breaks ground at Moa.

1972   Cuba enters the CMEA group
       of communist economies.

1970

1961   The new plat at Moa, renamed
       Pedro Soto, begins production.

1960   Cuba's nickel industry
       is nationalized without
       compensation.

1957   A new plant built by Freeport
       Sulphur Co. breaks ground at Moa.

1952   Nicaro restarts during the Korean
       War. Through 1959 it yields
       118,114 tons of nickel oxide.

1950

1947   The pioneering plant at Nicaro is
       shut down and mothballed after
       the end of World War II.

1943   Cuba's first nickel plant opens
       at Nicaro during World War II
       to supply war metal needs. In
       five years it delivers 31,300 tons
       to the United States.

1940

11.2   Production record per decade
       (in thousands of tons)
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Author:Luxner, Larry
Publication:CubaNews
Geographic Code:5CUBA
Date:Sep 1, 2010
Words:929
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