Posted on 05 May 2020

 

Source: S&P Global Platts

The US Department of Commerce on Monday said it will initiate a Section 232 investigation to determine whether electrical transformer components are being imported in the US in such quantities or under such circumstances that is a threat to national security.

US Commerce Secretary Wilbur Ross on Monday said the investigation will focus on laminations for stacked cores for incorporation into transformers, stacked and wound cores for incorporation into transformers, electrical transformers, and transformer regulators.

The decision to launch an investigation under Section 232 of the Trade Expansion Act of 1962 follows inquiries and requests from multiple members of Congress as well as industry stakeholders, Commerce said. Commerce previously used Section 232 in March 2018 when it applied import tariffs of 25% and 10% on steel and aluminum, respectively.

As required by law, Ross will send a letter to Secretary of Defense Mark Esper informing him of the investigation, Commerce said.

"Laminations and cores made of grain-oriented electrical steel [GOES] are critical transformer components," Commerce said in its announcement. "Electrical steel is necessary for power distribution transformers for all types of energy – including solar, nuclear, wind, coal, and natural gas – across the country. An assured domestic supply of these products enables the United States to respond to large power disruptions affecting civilian populations, critical infrastructure, and US defense industrial production capabilities."

Lourenco Goncalves, CEO of Cleveland-Cliffs, which purchased the US' last grain oriented-electrical steel producer – AK Steel –in mid-March, highlighted the need for action to be taken to address GOES imports in front of lawmakers during the Congressional Steel Caucus' annual hearing March 5.

"AK Steel is the last producer of grain oriented-electrical steel in the US," he said. "It means we are the last man standing between this country's ability to produce transformers for the electric grid and having to import everything...232 took care of the dumped electrical steel from China, South Korea and Japan, but bad players always find a way to circumvent."

Without help in closing existing loopholes, it's likely AK Steel's facilities in Butler, Pennsylvania, and Zanesville, Ohio, will remain unprofitable and face idling, he said at the time.

"We are confident that this self-initiated investigation will reinforce the critical nature of ensuring a reliable domestic supply of GOES to support electric power distribution, and will address the circumvention of national security tariffs involving transformer laminations and cores of GOES," Goncalves said in a statement Monday. 

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