Minimum prices allowed for steel imports into the United States will go up about 5 percent Jan. 1, the Treasury Department announced yesterday.
The so-called trigger prices for steel imports were last raised at the beginning of this year. Setting minimum prices for steel imports was adopted last year to prevent foreign producers from selling steel in the United States at less than it cost the world's most efficient producers, the Japanese, to make and ship it.
Treasury Undersecretary Anthony Solomon said trigger prices have not risen this year because a sharp drop in the value of the yen has offset cost increases incurred by Japanese producers.
Actually, Treasury set the new price of $358.31 per net ton about 4 percent higher than its estimate of production and transportation costs, presumably anticipating a recovery of the yen's value.
Solomon would not confirm that, saying, "I don't want to make any exchange-rate forecast." But he added, "We are struck by the unusual and large depreciation of the yen."
Treasury authorities have a 5-percentage-point "flexibility band" on either side of the precise cost estimate that they can use at their discretion, for instance, to smooth the effect of exchange-rate fluctuations on trigger prices. Solomon said Treasury had used both sides of that band this year in setting the prices.
Solomon began a press conference yesterday by saying that all major U.S. steel producers had told Treasury they were in compliance with the administration voluntary wage and price standards. The Council on Wage and Price Stability confirmed that fact, he said.
Producer prices for steel made in the United States increased about 9 percent in the last 12 months.
Treasury adopted the trigger price mechanism as an alternative to having U.S. steel companies continue to file suits charging foreign steel was being dumped in the United States, that is, being sold at less than fair value. Treasury wanted to avoid the potential disruption in international relations that could have resulted from the suits. It also sought to keep the minimum import price as low as possible, while still relating it to actual costs of production, in order not to provide sweeping protection of inefficient U.S. producers.
Soloman said the very fact steel companies "have not filed dumping cases" means that the "trigger price mechanism is of greater advantage from their point of view."
Trigger prices have "stopped dumping," he declared, and have given "a good deal of stability in international trade (in steel) and in the (U.S. steel) industry."