January 2004

Weirton Steel Cautiously Optimistic About Steel Industry Future

Weirton, WV— Weirton Steel Corp. officials indicated that while they are disappointed President Bush decided to end the Section 201 steel import tariffs, the company will not be as negatively impacted as once believed.

“We thank President Bush for providing the tariffs for the past 20 months. They have helped our industry. However, we prefer the tariffs would have continued as a safeguard from future import surges and to send a strong message to the World Trade Organization and its member nations not to interfere in our affairs or violate our trade laws,” said D. Leonard Wise, Weirton Steel chief executive officer.

Wise said other nations arbitrarily place trade barriers on imports, but the U.S. only does so after conducting thorough investigations based on law.

Life without tariffs
“Now that the tariff decision has been made, we’re at least fortunate the world economic climate has improved since last year when the tariffs were imposed. This will ease any negative effects of losing the tariffs. Steel industry forecasters expect improvements within the industry in 2004 and possibly through early 2005. There is reason for optimism.”

Wise said benefits of the Section 201 tariffs and positive signs for the industry include:
•The tariffs helped force overseas steel prices to rise, making foreign steel markets more attractive than U.S. markets to foreign competitors.
•With foreign steel markets improved—coupled with a weaker U.S. dollar, which makes foreign steel more expensive—it is expected that steel imports will not reach crisis levels as they did during the late 1990s through early 2002.
•Improvements and growth in the U.S. economy and in foreign economies helped increase global demand for steel.
•Increased ocean freight rates make raw materials more expensive for foreign competitors and finished steel imports more expensive than in the U.S.
•Price increases set for early 2004 by U.S. steel producers on specific products are expected to be implemented while foreign producers’ price hikes in overseas markets are expected to do the same.
•Steel imports through October of this year have dropped 29 percent compared to the same year-to-date period in 2002.

“Weirton Steel has many issues to tackle including increased raw material and energy costs. But regarding the marketplace, the timing couldn’t be better for us. If we’re able to meet our restructuring goals, we could emerge from bankruptcy in time to take full advantage of an upswing in the marketplace. We need to get the job done here so we don’t miss this opportunity,” Wise noted.

Wise added that although the steel tariffs are ending, Weirton Steel’s tin mill products (TMP) will continue to be shielded from Japan, one of the company’s largest competitors in domestic TMP markets.

“Currently, there is a 95 percent antidumping duty on Japanese TMP imports. This particular tariff wasn’t imposed under the president’s 201 program. Therefore, the 95 percent tariff will remain in place through at least 2005,” Wise noted.

The Japanese TMP tariff is the result of a trade complaint Weirton Steel filed in 2000 with the U.S. Commerce Department and the U.S. International Trade Commission. The government agreed Japan was selling its TMP in the U.S. at prices that violated U.S. trade laws.

Wise said the Bush administration and Congress must address certain issues to prevent another steel import crisis.

“Based on the world economic landscape, we presently don’t foresee foreign steelmakers having the incentive to dump their products here in 2004. However, our government leaders must help resolve the issues of global steel overproduction, subsidization of foreign steel mills and manipulation of currencies. The U.S. needs to reach a settlement with other nations on these matters or we could very well see another devastating flood of imports,” Wise noted.