Japan's JFE Steel's US Customers Still Paying 25% Tariff: CEO

Posted on: 17 Oct, 2018

Japan exported 1.7 million mt of steel to the US in 2017. JFE's share was 600,000 mt, or about 35% of all Japan's steel exports to the US.

Image Source: The Economist

Despite the trade tension between the US and Japan due to Section 232 tariffs on US imports of steel, most US customers of Japan-based JFE Steel Corporation "continue to pay the 25% tariff", JFE president and chief executive officer Koji Kakigi told S&P Global Platts on the sidelines of the World Steel Association general assembly in Tokyo on Tuesday.

"I do not say there is no impact by the trade measures," Kakigi said. "Many of the products we produce and export to the States are not being produced in the United States. Our customers continue to pay the 25% tariff -- they are still importing," he emphasized.

He said such products include packaging steels, and energy-related products -- in particular "premium pipe."

Japan exported 1.7 million mt of steel to the US in 2017. JFE's share was 600,000 mt, or about 35% of all Japan's steel exports to the US.

JFE, according to 2017 World Steel Association statistics produced 30.15 million mt of steel in 2017 -- ranking it the eighth largest steelmaker in the world.

Kakigi explained that since many of JFE's products are not being produced in the United States, "some of our customers have requested exemptions." He made clear that JFE is not the one to submit requests for exemptions; rather JFE's US-based "customers ask for the exemption" via a process established by the US Department of Commerce.

However, Kakigi said, "there are so many documents, so many pending cases at the Department of Commerce."


JFE and US-based Nucor are building a new galvanizing plant in the central part of Mexico as part of a 50-50 joint venture.

"Construction is progressing very smoothly," Kakigi said. The mill is on track for a mid-2019 start-up.

"We have a very good relationship with Nucor," he added.

Kakigi said he has regular conversations with Nucor CEO John Ferriola related to both the project in Mexico and other matters. For example, Kakigi is interested in the progress of the recently negotiated US-Mexico-Canada Agreement on trade.

"So many details are yet to be spelled out," Kakigi said of the USMCA. "For example, something to do with country of origin and other details."

Kakigi agreed with earlier statements made by Ferriola, noting that the USMCA, however, will not have a direct impact on the Mexican joint venture because the steel produced there will supply automotive demand in Mexico's domestic market.

The facility's planned 400,000 st of output is intended to purely supply Mexican original equipment manufacturers, or OEMs, serving the automotive sector.

The JV project is expected to cost about $270 million, and JFE and Nucor will each supply half of the galvanizing line's flat-rolled steel substrate requirements.

Source: S&P Global

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