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Austria's Voestalpine sees U.S. delays over steel tariff exclusion requests

Stock MarketsJun 11, 2018 06:08AM ET
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© Reuters. FILE PHOTO: Eder, CEO of Austrian specialty steelmaker Voestalpine, talks during a Reuters interview in Linz

By Maytaal Angel

LONDON (Reuters) - Austrian steelmaker Voestalpine (VI:VOES) said it expected prolonged delays from Washington in dealing with thousands of applications for exclusions from steel tariffs it has received from companies in the United States.

The steelmaker, which last week reported bumper annual profits, said about a third of its U.S. sales would be impacted by Washington's steel import tariffs, adding that it was talking to its customers about who would bear the cost.

Voestalpine generates about 10 percent of its revenue in the United States, while about two thirds comes from Europe and 8 percent from Asia.

"As far as we know, none of these (tariff exclusion) applications have been answered. We have received no reply," outgoing Voestalpine CEO Wolfgang Eder told Reuters.

He said the application process was so cumbersome that the U.S. Commerce Department might not get round to responding to the bulk of the 10,000 or so exclusion requests it had received.

The U.S. tariffs of 25 percent on incoming steel and 10 percent on aluminum came into effect on March 23. They have been imposed on Europe, Canada and Mexico since Friday, June 1, after their temporary exemptions expired.

Companies operating in the United States can apply to the U.S. Commerce Department for tariff exclusions for product grades they might struggle to source locally.

U.S. authorities previously said the process for dealing with such requests would not normally exceed 90 days.

Eder said that out of a total of 1.3 billion euros ($1.5 billion) of U.S. sales, Voestalpine expected 400 million euros worth would be subject to tariffs because they involved products imported into the United States rather than produced there.

Although there tend to be no set agreements in contracts between steelmakers and their customers as to who pays in the event of a tariff, industry experts expect that at present most U.S. customers will agree to pay the cost.

This is because the premium for U.S. versus global steel prices is so wide that even after paying a 25 percent tariff, imported steel might still be cheaper than locally sourced steel.

The European steel industry says an 8 percent surge in EU steel imports this year is due to Washington's import tariffs, which have caused trade flows to be deflected to Europe's shores.

The EU has said it could impose preliminary measures, in the form of tariffs or quotas, to safeguard its steel and aluminum industries as early as July, mainly to prevent Asian producers flooding the European market.

The U.S. tariffs have fanned trade war fears, with countries the world over poised to retaliate in products beyond steel. Critics also says the tariffs are inflationary for the U.S. consumer, and will result in critical product shortages.

(This version of the story has been refiled to fix grammar error in last paragraph)

Austria's Voestalpine sees U.S. delays over steel tariff exclusion requests
 

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