Bekaert seeks wire rod exclusion from Section 232 tariff

Rod buyer and tire cord producer NV Bekaert SA has requested an exemption to the United States' Section 232 steel tariffs for grade 1078 and above high-carbon wire rod, the company said on Thursday March 29.

High-carbon wire rod at that grade and higher must be made in basic oxygen furnace steel works for required strength and cleanliness and thus can’t be made by US rod mills, which all use electric-arc furnaces, Bekaert wrote in its request to the US Bureau of Industry and Security (BIS), which oversees exemptions.

Bekaert made its request jointly with Kiswire America and Tokusen USA. All three companies make tire cord in the US. Bekaert operates five North American plants, Kiswire operates two and Tokusen operates one, jointly employing 1,700 workers, the letter to the BIS said.

“Good, high-paying US jobs in the tire cord industry will be eliminated while all of this production will be transferred to overseas manufacturers” if the key raw material for tire cord – namely, this high-carbon wire rod – faces US import barriers, the three companies said.

If the exemption is granted, the US will become more dependent on imports for national defense purposes, they argued. Tire cord is necessary for the tires produced for military aircraft, and if doemstic tire cord isn’t supplied then the US military will be forced to use imported tire cord, they said.

“US jobs will be lost, not created; foreign suppliers will gain a competitive advantage in supplying the US tire market; and the production of important national defense products will become more dependent on imports,” the companies warned.

The exclusion request cited reports and testimony by the US Commerce Department in its own Section 232 report and from the US Tire Manufacturers Association, supporting the claim that tire cord wire rod can’t be made in the US.

“The Department should grant an immediate, permanent, blanket exclusion for grade 1078 and above wire rod used to produce tire cord in the United States,” the letter added.

Bekaert itself consumed about 55,000 tonnes of such rod annually from 2015 to 2017, according to the exclusion request filed to the BIS.

From the time of order, it can take about 75 days for Bekaert to take ownership of any such rod while it plans to route the material through the ports of Charleston, South Carolina; Savannah, Georgia; and New Orleans, according to its detailed exemptions request.

The BIS has 90 days to consider each exclusion request. US steel mills can also object to requests for exclusions, effectively commenting on the requests and disputing them.

Notably, Bekaert, a multibillion dollar global company, has tried and failed to qualify all US rod producers – including Nucor; Gerdau; Keystone Steel; the mill at Georgetown, South Carolina; Charter Steel; Evraz North America; and Sterling Steel – as suitable to produce this rod, Bekaert’s filing showed.

“No North American steel supplier has tried to supply Bekaert with high-carbon 1078 and above tire cord-grade wire rod in the past three years,” Bekaert wrote. “US producers do not have the capabilities to manufacture tire cord-grade wire rod.”

Tire cord-quality rod has a higher carbon content and more specialized properties than other grades of high-carbon rod, like 1045 high-carbon rod.

American Metal Market’s latest assessment of high-carbon wire rod, which mostly uses 1045 high-carbon rod as a benchmark, stands at $39.50 per cwt fob US mill. Higher-carbon rod typically sells at a premium to lower-carbon rod.

US tire production consumed 429,266 tonnes of steel in 2016, consisting largely of imports from 27 countries, the US Tire Manufacturers Association has said.